Global Net Lease(US:GNL)2020-08-05 19:31Financial Data and Key Metrics Changes - Total revenue increased by 6.6% to $81.1 million compared to $76.1 million in Q2 2019 [17] - Net operating income grew by 6.1% to $73.3 million from $69.1 million in Q2 2019 [17] - Adjusted EBITDA for Q2 2020 was $61 million, up from $58.6 million in 2019 [18] - AFFO decreased year-over-year to $0.44 per share, with total AFFO at $39.8 million [18] - Net debt at the end of Q2 2020 was $1.8 billion, with a weighted average interest rate of 3.2% [19] Business Line Data and Key Metrics Changes - The company completed 8 new acquisitions in Q2 2020, totaling $31 million, with an average remaining lease term of 18.1 years [11] - The property portfolio is nearly fully occupied at 99.6% leased, with a weighted average remaining lease term of 8.9 years, up from 8 years a year ago [13] - The property mix is currently 48% office, 47% industrial and distribution, and 5% retail, compared to 53% office, 41% industrial and distribution, and 6% retail a year ago [14] Market Data and Key Metrics Changes - Cash rent collection rates were over 98%, with 99% from top 20 tenants, 99% from U.K. assets, 100% from other European tenants, and 96% from U.S. assets [8][9] - Industrial and distribution assets grew by nearly 15% year-over-year, now making up 47% of the portfolio [15] Company Strategy and Development Direction - The company remains focused on acquiring high-quality industrial and distribution properties, along with select office properties leased to investment-grade tenants [16] - The company is actively engaged in the acquisition marketplace, adjusting cap rate targets while maintaining a focus on credit quality [12][31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate challenges posed by COVID-19, highlighting strong rent collection and a solid portfolio [22] - The company anticipates that bids and asks will converge to establish a new, potentially more attractive normal in the acquisition market [12] Other Important Information - The company has a well-cushioned interest coverage ratio of 3.9x and liquidity of approximately $331.1 million as of June 30, 2020 [20][21] - The company has not abated any rents during the pandemic, instead opting for deferrals to be paid back in 2021 [27][28] Q&A Session Summary Question: How is the company handling nonpayers of rent? - The company has deferred portions of rent for about a dozen tenants, with repayment scheduled for 2021, but has not abated any rents [27][28] Question: What changes has the company made to its expectations regarding acquisitions? - The company is seeing increased deal flow and is still focused on high-quality industrial and distribution properties, adjusting cap rate expectations due to perceived risks [31] Question: What is the reason for the lower collection rate in the U.S.? - Management indicated that the lower collection rate is not solely attributable to retail but is spread across various sectors, with the U.S. being hit harder than Europe [33][34] Question: How is the competitive landscape for acquisitions evolving? - The company remains selective but is finding good deals, with an average cap rate of 8.51% for closed transactions in 2020 [36] Question: What is the company's approach to maintaining liquidity? - The company plans to keep cash on the balance sheet for the time being, evaluating the need for equity or debt market access on a case-by-case basis [37] Question: How is the acquisition pipeline compared to pre-COVID levels? - The company is starting to see more deals and is being selective, but has not disclosed specific pipeline sizes [40][42] Question: What is the status of the office portfolio in light of remote work trends? - The company is confident in its office properties, which are primarily single-tenant and investment-grade, and is not overly concerned about the shift to remote work [43] Question: Are there any requests from tenants for additional rent or CapEx? - The company has had discussions with tenants about expanding properties, particularly in Europe, and is open to investing in properties as needed [49][51]