Global Net Lease(US:GNL)2023-02-23 14:33Financial Data and Key Metrics Changes - For the full year 2022, revenue was $378.9 million with a net loss attributable to common stockholders of $8.4 million, compared to a significant termination fee and receivable recorded in 2021 that provided a revenue benefit of approximately $14 million [46] - In Q4 2022, revenue was $93.9 million, with FFO of $23.6 million or $0.23 per share and AFFO of $42.2 million or $0.41 per share [47] - The company recorded $288.1 million in adjusted EBITDA for the year, with FFO of $166.9 million or $1.61 per share, and AFFO of $172.9 million or $1.67 per share [46][47] Business Line Data and Key Metrics Changes - The portfolio consisted of 309 properties at year-end, with 56% in industrial and distribution and 41% in office, while occupancy was at 98% with a weighted average remaining lease term of eight years [36] - In 2022, the company completed 12 lease renewals and four tenant expansions, totaling 3.8 million square feet, resulting in $154 million in net new straight-line rent [39][35] Market Data and Key Metrics Changes - The company noted that nearly 95% of leases feature annual rental increases averaging 1.2%, with 63% being fixed rate and 26% based on the consumer price index [40] - The company’s balance sheet ended Q4 2022 with net debt of $2.3 billion at a weighted average interest rate of 4%, with a net debt to adjusted EBITDA ratio of 8.5 times [48] Company Strategy and Development Direction - The company remains focused on industrial and distribution properties, with a strategic approach to acquisitions and dispositions, emphasizing high-quality tenants and long-term leases [15][42] - The company completed a $75 million acquisition of eight properties leased to Boots UK Limited, despite not focusing on retail assets, due to the compelling cap rate of 10.6% [41][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the portfolio's resilience despite rising inflation and interest rates, noting that GNL's common stock outperformed the S&P 500 by 11% and its peer group by 32% in total return [34] - The company anticipates continued opportunities in both the U.S. and Europe, with rising interest rates leading to better cap rates [63][90] Other Important Information - The company disposed of three properties for $56 million in 2022, believing they had reached maximum value [45] - The company has a well-cushioned interest coverage ratio of 2.9 times and liquidity of approximately $192.3 million as of December 31, 2022 [49] Q&A Session Summary Question: What is the outlook for leasing activity and tenant renewals? - Management confirmed proactive engagement with tenants for renewals and expansions, expecting more activity in 2023 [60] Question: Regarding the Walgreens Boots acquisition, is there potential for more retail acquisitions? - Management stated that while retail is not a focus, compelling opportunities at attractive cap rates would be considered [61][75] Question: What are the expectations for acquisition opportunities in 2023? - Management indicated that both the U.S. and Europe present good opportunities, with rising cap rates making acquisitions more favorable [63][90] Question: Can you elaborate on the acquisition pipeline and pricing trends? - Management noted that cap rates are rising, with current asks around 7% to 8.5%, compared to lower rates in previous years [87] Question: What is the plan for managing debt maturities and interest rates? - Management discussed using the credit facility for flexibility and evaluating the potential for swaps as interest rates fluctuate [92][95]