Global Net Lease, Inc. · NYSE:GNL
Global Net Lease — Q1 2018 Earnings Presentation
30 slides from Global Net Lease's earnings presentation, May 8, 2018
Slide 1: First Quarter 2018 Investor Presentation
First Quarter 2018 Investor Presentation
Slide 2: Overview
2 OVERVIEW Long Duration Leases to Investment Grade Rated Tenants (1) Proactive Asset Management to Drive Long Term Portfolio Value High - Quality, Mission Critical, Diversified Portfolio Differentiated Strategy with International Exposure Highly Experienced Management Team Ability to Capitalize on
Slide 3: Portfolio Highlights
3 PORTFOLIO HIGHLIGHTS Properties 327 Square Feet (millions) 23.7 Tenants 103 Industries 41 Countries 7 Leased 99.5% Weighted Average Remaining Lease Term (1) 8.6 years % of SLR derived from Investment Grade Tenants (2)(3) 78.3% % of leases with contractual rent increases (4) 91.5% Portfolio Overvie
Slide 4: Well Balanced Portfolio
4 Non Investment Grade 19.6% Investment Grade 78.3% Not Rated 2.1% United States 49% United Kingdom 22% The Netherlands 7% Germany 9% Finland 6% France 5% Luxembourg 2% WELL BALANCED PORTFOLIO As of March 31, 2018 1. Me tric based on SLR. Refer to SLR definition included in the footnotes to page 3.
Slide 5: Well Diversified Tenant Base
5 Tenant Rating Country Property Type % of SLR (1) Baa2** U.S. Distribution 5% Aaa** U.S. Office 5% Baa3* U.K. Office 5% Baa3* GER Office 4% Aa3 NETH Office 4% Aa1** FIN Industrial 4% Baa3** U.S. Retail 3% Baa3* U.K. Distribution 3% Aa3 U.S. Office 3% AA - FIN Office 2% WELL DIVERSIFIED TENANT BASE
Slide 6: Focus on High-Quality Tenants
6 Financial Service Providers Government Services Multinational Corporations FOCUS ON HIGH - QUALITY TENANTS $2.4t n Only Focused on Markets with Quality Sovereign Debt Ratings (S&P) U.S. Luxembourg Germany The Netherlands Finland U.K. France AA+ AAA AAA AAA AA+ AA AA Best - in - class portfolio lea
Slide 7: Differentiated Investment Strategy
7 DIFFERENTIATED INVESTMENT STRATEGY Geography Asset Type Property Fundamentals Credit Quality Structure and Pricing Focused on single - tenant commercial properties to generate superior risk - adjusted returns • Focus on the U.S. and strong sovereign debt rated countries in Continental Europe • Cri
Slide 8: Company Initiatives
8 COMPANY INITIATIVES GNL continues to execute on corporate, financing and investment actions that enhance the Company’s value and capabilities Q4 2017 $187 Million CMBS Offering • Closed on $187 million of CMBS debt with Credit Suisse • Interest rate of approximately 4.37% with a 10 - year term; cl
Slide 9: GNL Capital Structure Progress
9 GNL CAPITAL STRUCTURE PROGRESS GNL continued to improve its capital structure throughout 2018 by extending debt maturities, maintaining a low cost of debt and optimizing the debt structure for continued future growth $1,496 $1,473 $1,385 $1,136 $100 $139 $135 $773 $799 $992 $1,047 $722 $648 $532 $
Slide 10: Fully Aligned Management Structure
10 Chris Masterson Chief Financial Officer, Treasurer and Secretary FULLY ALIGNED MANAGEMENT STRUCTURE Fully integrated external management team creates highly scalable platform with an acquisition pipeline generated by a proven, country - focused origination network No transactional fees allows for
Slide 11: 2018 Investment Activity
11 2018 INVESTMENT ACTIVITY Tenant Closing Date Properties Asset Type Purchase Price (millions) GAAP Cap Rate (1) Acquisitions Chemours Company, FC LLC 2/26/2018 1 Distribution $18.6 6.96% Lee Steel Holdings, LLC 3/21/2018 1 Industrial $8.8 8.31% LSI Steel Processing 3/29/2018 3 Industrial $17.8 8.2
Slide 12: Robust Pipeline
12 ROBUST PIPELINE As of March 31, 2018 After Pipeline % Change No. of Properties 327 334 +2.1% Investment Grade and Implied Investment Grade (3 ) 78.3% 79.1% +1.0% Square Feet 23.7 million 26.3 million +11.3% Purchase Price $3.2 billion $3.4 billion +7.1% Lease Term Remaining 8.6 years 8.8 years +1
Slide 13: Geographic Balance (Including Pipeline)
13 GEOGRAPHIC BALANCE (INCLUDING PIPELINE) U.S. Number of Assets: 265 Remaining Lease Term: 8.6 years (1) % of GNL SLR: 52.0 % (2) Europe Number of Assets: 69 Remaining Lease Term: 9.0 years (1) % of GNL SLR: 48.0 % (2) 1. Refer to basis for metric calculation included in the footnotes to page 4. 2.
Slide 14: Pro Forma Portfolio Composition with Pipeline
14 PRO FORMA PORTFOLIO COMPOSITION WITH PIPELINE Continued Focus towards United States Industrial and Distribution Properties Geographic concentration split changes from 49% and 51% to 52% and 48%, for the United States and Europe, respectively with the addition of the 2018 pipeline. Office 54% Indu
Slide 15: First Quarter Acquisition: Fiat Chrysler
15 FIRST QUARTER ACQUISITION: FIAT CHRYSLER Transaction Overview Property and Tenant Overview Tenant FCA US, LLC Property Type Industrial Credit Rating (1) Moody’s: Baa2 Location Sterling Heights, MI Square Feet 127,974 Lease Term (years) 9.9 Purchase Price $18.2 million GAAP Cap Rate (2) 8.56% Tena
Slide 16: Pipeline Highlights: Rubbermaid
16 PIPELINE HIGHLIGHTS: RUBBERMAID Transaction Overview Property and Tenant Overview Tenant Rubbermaid Property Type Industrial Credit Rating (1) Baa3 Location Akron, OH Square Feet 668,592 Lease Term (years) 10.0 Purchase Price $21.4 million GAAP Cap Rate (2) 7.43% Tenant/Guarantor • The parent com
Slide 17: Improved Performance
17 $- $5 $10 $15 $20 $25 $30 $35 $40 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 IMPROVED PERFORMANCE Q1 2018 Q1 2017 % Change Total Revenue $68.1 million $62.8 million +8.4% Operating Income $21.8 million $20.3 million +7.6% AFFO (1) $35.1 million
Slide 18: Debt Overview
18 USD 36% EUR 42% GBP 22% Fixed Rate 82.9% Floating Rate 17.1% 0% 0% 2% 1% 7% 10% 25% 14% 9% 3% 29% DEBT OVERVIEW Net Debt to Enterprise Value (1) 54.5% Net Debt to Adjusted EBITDA (annualized) (1) (2) 7.4x Interest Coverage Ratio (3) 4.4x Weighted Average Interest Rate (4) 2.8% Weighted Average De
Slide 19: Comprehensive Hedging Program
19 COMPREHENSIVE HEDGING PROGRAM GNL continues to employ a comprehensive hedging program, with a number of components designed to limit the impact of currency and interest rate movements to its European portfolio Hedging Foreign Currency Exchange Risk (“Cash Flow Hedging Instruments”) • Provides pro
Slide 20: Investor Inquiries
INVESTOR INQUIRIES 1 - 866 - 902 - 0063 investorrelations@globalnetlease.com www.GlobalNetLease.com
Slide 21: Forward Looking Statements
21 FORWARD LOOKING STATEMENTS This presentation contains certain statements that are the Company’s and Management’s hopes, intentions, beliefs, expectations, or projections of the future and might be considered to be forward - looking statements under Federal Securities laws . Prospective investors
Slide 22: Risk Factors
22 RISK FACTORS The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward - looking statements . See the section entitled “Item 1 A . Risk Factors” in GNL’s Annual Repo
Slide 23: Risk Factors (Continued)
23 RISK FACTORS (CONTINUED) • We may be unable to pay or maintain cash dividends on our 7 . 25 % Series A Cumulative Redeemable Preferred Stock (the “Series A Preferred Stock”) . • Our credit facility may limit our ability to pay dividends to holders of Series A Preferred Stock . • We may be unable
Slide 24: Risk Factors (Continued)
24 RISK FACTORS (CONTINUED) • We may be exposed to risks due to a lack of tenant diversity, investment types and geographic diversity . • The revenue derived from, and the market value of, properties located in the United Kingdom and continental Europe may decline as a result of the U . K . 's discu
Slide 25: Projections
25 PROJECTIONS • This presentation includes estimated projections of future operating results . These projections were not prepared in accordance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentat
Slide 26: Definitions
26 DEFINITIONS • Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts ("NAREIT"), an industry trade group, has promulgated a measure known as funds from operations ("FFO"), which we believe to be an ap
Slide 27: Definitions (Continued)
27 DEFINITIONS (CONTINUED) • Changes in the accounting and reporting promulgations under GAAP (for acquisition fees and expenses from a capitalization/depreciation model to an expensed - as - incurred model) that were put into effect in 2009 and other changes to GAAP accounting for real estate subse
Slide 28: Definitions (Continued)
28 DEFINITIONS (CONTINUED) • Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management's analysis of the operating performance of the Company . Additionally, fair value adjustments, which are based on the impact of current market f
Slide 29: Non-GAAP Reconciliations
29 NON – GAAP RECONCILIATIONS Three Months Ended March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 EBITDA: Net income $ 4,812 $ 8,449 $ 2,487 $ 5,200 Depreciation and amortization 29,496 28,558 29,879 27,497 Interest expense 12,975 12,806 12,479 11,634 Income tax expense 1,070 964 76
Slide 30: Non-GAAP Reconciliations (FFO)
30 Three Months Ended March 31, 2018 December 31, 2017 September 30, 2017 June 30, 2017 Funds from operations (FFO): Net income attributable to common stockholders (in accordance with GAAP) $ 2,361 $ 5,998 $ 2,104 $ 5,200 Depreciation and amortization 29,496 28,558 29,879 27,497 (Gains) losses on di