Global Net Lease(US:GNL)2022-08-04 20:14PART I - FINANCIAL INFORMATION Financial Statements This section presents the company's unaudited consolidated financial statements for the periods ended June 30, 2022 Consolidated Balance Sheets Total assets and equity decreased as of June 30, 2022, compared to the end of 2021 | Balance Sheet Items (In thousands) | June 30, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total real estate investments, net | $3,695,533 | $3,880,662 | | Total Assets | $4,044,536 | $4,182,956 | | Total Liabilities | $2,516,618 | $2,556,321 | | Total Equity | $1,527,918 | $1,626,635 | Consolidated Statements of Operations The company reported a net loss in Q2 2022 due to higher impairment charges, though six-month net income improved | (In thousands, except per share data) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenue from tenants | $95,177 | $99,564 | $192,310 | $188,954 | | Operating income | $14,804 | $28,966 | $47,653 | $54,741 | | Net (loss) income | $(716) | $2,588 | $9,825 | $6,772 | | Net loss attributable to common stockholders | $(5,847) | $(2,428) | $(364) | $(3,260) | | Net loss per share - Basic and Diluted | $(0.06) | $(0.14) | $(0.01) | $(0.15) | - Impairment charges significantly increased to $16.0 million in Q2 2022 from $6.7 million in Q2 2021, contributing to the quarterly net loss13 Consolidated Statements of Comprehensive (Loss) Income A comprehensive loss was recorded for Q2 2022, driven by significant negative foreign currency translation adjustments | (In thousands) | Three Months Ended June 30, 2022 | Three Months Ended June 30, 2021 | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net (loss) income | $(716) | $2,588 | $9,825 | $6,772 | | Other comprehensive (loss) income | $(24,823) | $3,418 | $(25,060) | $9,230 | | Comprehensive (loss) income | $(25,539) | $6,006 | $(15,235) | $16,002 | Consolidated Statements of Changes in Equity Total equity declined in the first half of 2022 due to dividend payments and negative currency translation adjustments - For the six months ended June 30, 2022, key changes to equity included net income of $9.8 million, offset by common and preferred stock dividends totaling $93.4 million and a cumulative translation adjustment loss of $38.0 million20 Consolidated Statements of Cash Flows Net cash from operations increased significantly, while investing activities decreased and financing activities used cash | (In thousands) | Six Months Ended June 30, 2022 | Six Months Ended June 30, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $105,893 | $57,898 | | Net cash used in investing activities | $(35,444) | $(269,786) | | Net cash (used in) provided by financing activities | $(39,667) | $264,672 | | Net change in cash, cash equivalents and restricted cash | $30,782 | $52,784 | - A significant non-cash financing activity in 2022 was the conversion of a $268.5 million Term Loan into the Revolving Credit Facility26 Notes to Consolidated Financial Statements This section details accounting policies and financial data for the company's portfolio, debt, and equity activities - As of June 30, 2022, the company owned 311 properties totaling 39.5 million rentable square feet, with a 98.9% lease rate and a weighted-average remaining lease term of 8.3 years29 - The portfolio is diversified, with 62% of annualized rental income from the U.S. and Canada and 38% from Europe; by property type, 55% is industrial/distribution29 - In Q2 2022, the company recorded a significant impairment charge of $16.0 million on a property in France76 - On April 8, 2022, the company amended its Credit Facility, increasing total commitments from $1.17 billion to $1.45 billion and extending the maturity to October 202695100 Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes financial condition, operational results, liquidity, and capital resources for the reporting period Overview and COVID-19 Impact The company maintains a stable, globally diversified portfolio with strong rent collection rates and high-quality tenants - As of July 31, 2022, the company collected approximately 100% of the original cash rent due for the second quarter of 2022, demonstrating strong tenant performance249 - The portfolio's tenant base is strong, with 62.3% of annualized straight-line rental income derived from tenants with actual or implied Investment Grade ratings247 Results of Operations Q2 2022 revenue decreased due to foreign exchange rates, while a net loss was driven by a large impairment charge - Q2 2022 revenue from tenants decreased to $95.2 million from $99.6 million in Q2 2021, primarily due to unfavorable foreign exchange rates262 - A $16.0 million impairment charge on a property was the primary driver for the increased net loss attributable to common stockholders in Q2 2022260268 - For the six months ended June 30, 2022, interest expense increased to $47.6 million from $45.4 million year-over-year, mainly due to new mortgage loans299 Liquidity and Capital Resources The company maintains adequate liquidity through cash reserves and its credit facility, with manageable debt maturities - As of June 30, 2022, total debt was $2.4 billion with a weighted-average interest rate of 3.5%, of which 76.0% was fixed-rate or swapped to a fixed rate323324 - The company is managing several mortgage covenant issues through letters of credit or cash reserves as per loan agreements340343345 - For the six months ended June 30, 2022, 100% of the $93.4 million in total dividends and distributions were covered by cash flows from operations312368 | (In thousands) | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | | FFO attributable to common stockholders | $49,481 | $95,083 | | Core FFO attributable to common stockholders | $49,956 | $95,566 | | AFFO attributable to common stockholders | $45,019 | $89,350 | Quantitative and Qualitative Disclosures About Market Risk The company reports no material change in its market risk exposure during the first half of 2022 - There were no material changes in the company's market risk exposure during the first six months of 2022375 Controls and Procedures Management concluded that the company's disclosure controls and internal controls over financial reporting were effective - The company's management concluded that its disclosure controls and procedures were effective as of the end of the period covered by the report376 - There were no material changes to the company's internal control over financial reporting during the quarter ended June 30, 2022377 PART II - OTHER INFORMATION Legal Proceedings The company reports no material pending or contemplated legal proceedings - The company reported no legal proceedings379 Risk Factors A new risk factor was added concerning geopolitical instability, specifically the Russia-Ukraine conflict - A new risk factor was added regarding the geopolitical instability from the Russia-Ukraine conflict, which could impact tenants' financial condition381382 Unregistered Sales of Equity Securities and Use of Proceeds The company did not sell unregistered securities or repurchase common stock during the quarter - The company did not engage in any unregistered sales of equity securities or repurchase any of its common stock during the second quarter of 2022386 Defaults Upon Senior Securities The company reports no defaults upon senior securities during the period - The company reported no defaults upon senior securities387 Mine Safety Disclosures This item is not applicable to the company Other Information The company reports no other information for disclosure during this period - The company reported no other information388 Exhibits This section lists the exhibits filed with the quarterly report, including agreements and officer certifications