Global Net Lease, Inc. · NYSE:GNL
Global Net Lease — Q3 2022 Earnings Presentation
29 slides from Global Net Lease's earnings presentation, Nov 3, 2022
Slide 1: Global Net Lease Third Quarter 2022 Investor Presentation
Global Net Lease Third Quarter 2022 Investor Presentation Pictured – McLaren Campus in Woking , U.K.
Slide 2: Third Quarter 2022 Company Highlights
THIRD QUARTER 2022 COMPANY HIGHLIGHTS Best - in - Class, Mission Critical, Net Lease Focused Portfolio : Featuring high portfolio occupancy of 98.6% and complete Original Cash Rent collection (1) for the eighth consecutive quarter, highlighting strong overall operating performance 1 2 Note: Metrics
Slide 3: Third Quarter 2022 Portfolio Highlights
3 THIRD QUARTER 2022 PORTFOLIO HIGHLIGHTS Portfolio Overview Q3’22 Q3’21 Properties 310 312 Square Feet (millions) 39.5 38.3 Tenants 141 134 Industries 51 48 Countries and Territories 11 12 Leased 98.6% 99.1% Weighted Average Remaining Lease Term (1) 8.1 years 8.2 years % of SLR derived from Investm
Slide 4: Geographically Well-Balanced & High Investment Grade Tenancy
4 Auto Manufacturing 12% Financial Services 11% Consumer Goods 6% Healthcare 6% Technology 5% Freight 4% Government 4% Logistics 4% Telecommunications 4% Energy 3% Pharmaceuticals 3% Metal Fabrication 3% Engineering 3% All Other 24% Investment Grade 61% Non - Investment Grade Rated 35% Not Rated 4%
Slide 5: Attractive Portfolio in Line with Investment Grade Rated Peers
5 ATTRACTIVE PORTFOLIO IN LINE WITH INVESTMENT GRADE RATED PEERS GNL’s diversified portfolio of assets are primarily leased to Investment Grade rated tenants and are located in select North American and European countries and compares favorably to GNL’s investment grade rated peers Weighted Average
Slide 6: GNL Total Return vs. Peers
6 *Denotes externally advised REIT. 1) Source: S&P Capital IQ. Data as of October 31, 2022. - 81% - 55% - 36% - 35% - 32% - 28% - 25% - 18% - 10% - 4% -90% -80% -70% -60% -50% -40% -30% -20% -10% 0% ILPT* DHC* LXP Peer Avg. OPI* BNL RMZ S&P 500 GNL* WPC GNL and Peers Year - To - Date Total Return Pe
Slide 7: Best-in-Class Top Ten Tenant Base
7 Tenant Credit Rating Country Property Type % of SLR (1) Caa1 (Moody’s) / B - (Fitch) U.K. Industrial 5% Baa2** U.S. / Canada Distribution 4% Baa1 U.S. / Italy Industrial / Distribution 4% Aaa** U.S. Office 3% Baa2* U.S. Industrial / Distribution 3% Baa3* U.K. Office 3% Baa1 U.S. Industrial 3% Aa3
Slide 8: Focused on Markets with Quality Sovereign Debt Ratings
8 Office Distribution Industrial Only Focused on Markets with Quality Sovereign Debt Ratings (S&P) U.S. Finland Luxembourg Germany The Netherlands Canada U.K. France Guernsey Spain Italy AA+ AA+ AAA AAA AAA AAA AA AA AA - A BBB Moody’s: A1 Moody’s: Aaa** Moody’s: Aa3 Moody’s: Aa3 Moody’s: Baa2 Moody
Slide 9: Comprehensive Hedging Program
9 COMPREHENSIVE HEDGING PROGRAM Hedging Foreign Currency Exchange Risk • GNL locks in fixed rates through forward contracts and converts foreign currencies into USD quarterly, stabilizing USD cash flows despite currency fluctuations • GNL’s utilization of financial instruments to protect against a w
Slide 10: Differentiated Investment Process
10 DIFFERENTIATED INVESTMENT PROCESS Structuring & Pricing • Long term net leases with contractual rental increases (1) • Disciplined contract and lease negotiations, including tenant security deposits and key lease terms • Leverage extensive international relationships to generate risk - adjusted a
Slide 11: Acquisitions Summary
11 Note: Ratings information is as of September 30, 2022. *Represents Moody’s Implied Rating. ** Represents Tenant Parent Rating ev en if not a guarantor on the lease. 1. Represents the contract purchase price and excludes acquisitions costs which are capitalized per GAAP. The acquisition costs for
Slide 12: Transaction Overview: Momentum Manufacturing Group
12 Transaction Overview Tenant Momentum Manufacturing Group (“MMG”) Property Type Industrial Credit Rating (1) Momentum Manufacturing Group, LLC (Moody’s Implied): B3 Location Georgetown, MA Purchase Price $6.7 million Square Feet 57,600 Weighted Average Remaining Lease Term (2) (years) 20.0 Tenant
Slide 13: Lease Renewal and Expansion Activity
13 GNL continues to generate significant lease renewal and expansion activity in 2022 by completing an additional two lease renewals and one tenant expansion project in Q3’22. Year - to - date, GNL’s leasing activity totaled 3.6 million square feet and $117 million of net new straight - line rent ov
Slide 14: Global Geographic Balance
14 GLOBAL GEOGRAPHIC BALANCE Note: Metrics as of September 30, 2022, unless otherwise noted. 1. Refer to basis for metric calculation included in the footnotes on slide 3. 2. Metric based on SLR. Refer to SLR definition included in the footnotes on slide 3. U.S. and Canada Number of Assets: 236 Weig
Slide 15: Continued Portfolio Focus on Industrial and Distribution Assets
15 Office 41% Industrial & Distribution 56% Retail 3% Office 43% Industrial & Distribution 52% Retail 5% United States & Canada 66% Europe 34% Continued Focus Towards Industrial and Distribution Properties and Balanced Geographic Diversification United States & Canada 60% Europe 40% September 30, 20
Slide 16: Third Quarter 2022 Key Highlights
16 Third Quarter 2022 Key Highlights • Year - to - date, GNL completed 3.6 million square feet of renewal and expansion leasing activity which is expected to generate $117 million of net new straight - line rent over the new weighted average Remaining Lease Term • Over 94% of GNL’s leases featured a
Slide 17: Continued Focus on Driving Earnings Growth
17 $3,173 $3,421 $3,763 $4,319 $4,691 $4,363 $135 $149 $146 $135 $171 $193 50 70 90 110 130 150 170 190 210 2017 2018 2019 2020 2021 CONTINUED FOCUS ON DRIVING EARNINGS GROWTH Historical Revenue Growth Core Funds From Operations (1) Real Estate Assets at Cost Adjusted Funds From Operations (1) $259
Slide 18: Third Quarter 2022 Key Metrics
18 $4 $231 $303 $69 $665 $605 $ 500 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2022 2023 2024 2025 2026 Thereafter Mortgages Credit Facility Unsecured Notes 1% 3% 11% 7% 4% 4% 11% 11% 48% THIRD QUARTER 2022 KEY METRICS Metric Q3’2022 Net Debt to Enterprise Value (1) 62.3% Net Debt to Adjusted EBITD
Slide 19: Management Structure
19 Management structure fully aligned to compensate based on operational outperformance, in turn delivering increased value to shareholders James L. Nelson Chief Executive Officer and President No transactional fees allows for low general and administrative costs, which allows AR Global to provide g
Slide 20: Forward-Looking Statements
20 The statements in this presentation that are not historical facts may be forward - looking statements . These forward - looking statements involve risks and uncertainties that could cause actual results or events to be materially different . In addition, words such as “may,” “will,” “seeks,” “ant
Slide 21: Risk Factors
21 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 . • We may be unable to acquire properties on advantageous terms or our p
Slide 22: Risk Factors (Continued)
22 RISK FACTORS (CONTINUED) • In owning properties we may experience, among other things, unforeseen costs associated with complying with laws and regulations and other costs, potential difficulties selling properties and potential damages or losses resulting from climate change . • We depend on our
Slide 23: Disclaimers
23 DISCLAIMERS • 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 24: Definitions
24 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 25: Definitions (Continued)
25 DEFINITIONS (CONTINUED) • In calculating Core FFO, we start with FFO, then we exclude certain non - core items such as acquisition, transaction and other costs, as well as certain other costs that are considered to be non - core, such as debt extinguishment costs, fire loss and other costs relate
Slide 26: Definitions (Continued)
26 DEFINITIONS (CONTINUED) • As a result, we believe that the use of FFO, Core FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our performance including relative to our peers and a more informed and appropriate basis on which to make decisions in
Slide 27: Non-GAAP Reconciliations
27 NON – GAAP RECONCILIATIONS (Amounts in thousands) Three Months Ended September 30, 2022 September 30, 2021 EBITDA: Net income $ 14,838 7,390 Depreciation and amortization 37,791 41,665 Interest expense 24,207 24,858 Income tax expense 3,052 1,930 EBITDA (1) $ 79,888 75,843 Impairment charges 796
Slide 28: FFO and AFFO Reconciliations
28 FFO AND AFFO RECONCILIATIONS 1. FFO, Core FFO and AFFO for the three months ended September 30, 2021 include income from a lease termination fee of $2.2 mill ion , which is recorded in revenue from tenants in the consolidated statements of operations. The termination fee of approximatel y $ 9.0 m
Slide 29: Annual FFO and AFFO Reconciliations
29 ANNUAL FFO AND AFFO RECONCILIATIONS (Amounts in thousands, except per share numbers) Twelve Months Ended December 31, 2017 December 31, 2018 December 31, 2019 December 31, 2020 December 31, 2021 Funds from operations (FFO): Net income (loss) attributable to common stockholders (in accordance with