UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One) 
xANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the fiscal year ended December 31, 20172018
OR
¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from _________ to __________
Commission file number: 001-37390
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Global Net Lease, Inc.
(Exact name of registrant as specified in its charter)
Maryland  45-2771978
(State or other jurisdiction of incorporation or organization)  (I.R.S. Employer Identification No.)
405 Park Ave., 43thrd Floor New York, NY 10022
(Address of principal executive offices)     
 
(Registrant’s telephone number, including area code): (212) 415-6500
 
Securities registered pursuant to section 12(b) of the Act:
   
Title of each class Name of each exchange on which registered
Common Stock, $0.01 par value New York Stock Exchange
7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value New York Stock Exchange
Securities registered pursuant to section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No o 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No
Indicate by check mark whether the registrant submitted electronically and posted on its corporate Web Site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). x Yes ¨ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer x
Accelerated filer ¨
Non-accelerated filer ¨(Do not check if a smaller reporting company)
Smaller reporting company ¨
 
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No
The aggregate market value of the registrant's common stock held by non-affiliates of the registrant was $1.5$1.4 billion based on the closing sales price on the New York Stock Exchange as of June 30, 2017,2018, the last business day of the registrant's most recently completed second fiscal quarter.
On February 15, 2018,22, 2019, the registrant had 67,336,34383,840,503 shares of common stock outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement to be delivered to stockholders in connection with the registrant’s 20182019 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K. The registrant intends to file its proxy statement within 120 days after its fiscal year end.


GLOBAL NET LEASE, INC.

FORM 10-K
Year Ended December 31, 20172018


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Forward-Looking Statements
Certain statements included in this Annual Report on Form 10-K are forward-looking statements including statements regarding the intent, belief or current expectations of Global Net Lease, Inc. (the "Company," "we,("we," "our" or "us") and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as "may," "will," "seeks," "anticipates," "believes," "estimates," "expects," "plans," "intends," "should" or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
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:
All of our executive officers are also officers, managers, employees or holders of a direct or indirect controlling interest in the AdvisorGlobal Net Lease Advisors, LLC (the "Advisor") and other entities affiliated with AR Global Investments, LLC (the successor business to AR Capital LLC, "AR Global"). As a result, our executive officers, Global Net Lease Advisors, LLC (the "Advisor")the Advisor and its affiliates face conflicts of interest, including significant conflicts created by the Advisor's compensation arrangements with us and other investment programs advised by AR Global affiliates and conflicts in allocating time among these investment programs and us. These conflicts could result in unanticipated actions.
Because investment opportunities that are suitable for us may also be suitable for other investment programs advised by affiliates of AR Global, the Advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and these conflicts may not be resolved in our favor.
We are obligated to pay fees which may be substantial to the Advisor and its affiliates.
We depend on tenants for our rental revenue and, accordingly, our rental revenue is dependent upon the success and economic viability of our tenants.
Increases in interest rates could increase the amount of our debt payments.
We may be unable to repay, refinance, restructure or extend our indebtedness as it becomes due.
Adverse changes in exchange rates may reduce the value ofnet income and cash flow associated with our properties located outside of the United States ("U.S.").
The Advisor may not be able to identify a sufficient number of property acquisitions satisfying our investment objectives on a timely basis and on acceptable terms and prices, or at all.
We may be unable to continue to raise additional debt or equity financing on attractive terms, or at all, and there can be no assurance we will be able to fund the acquisitions contemplated byfuture acquisitions.
Provisions in our investment objectives.
Ourrevolving credit facility (our “Revolving Credit Facility”) and the related term loan facility (our “Term Loan”), which together comprise our senior unsecured multi-currency credit facility (our ‘‘Credit Facility’’), may limit our ability to pay dividends on our common stock, $0.01 par value per share ("Common Stock") or, our 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share ("Series A Preferred Stock"). or any other stock we may issue.
We may be unable to pay or maintain cash dividends or increase dividends over time.
We may not generate cash flows sufficient to pay dividends to our stockholders or fund operations, and, as such, we may be forced to borrow at unfavorable rates to pay dividends to urour stockholders or fund our operations.
Any dividends that we pay on our Common Stock, orour Series A Preferred Stock, or any other stock we may issue, may exceed cash flowflows from operations, reducing the amount of capital available to invest in properties and other permitted investments.
We are subject to risks associated with our international investments, including risks associated with compliance with and changes in foreign laws, fluctuations in foreign currency exchange rates and inflation.
We are subject to risks associated with any dislocations or liquidity disruptions that may exist or occur in the credit markets of the U.S. and Europe from time to time.
We may fail to continue to qualify as a real estate investment trust for U.S. federal income tax purposes ("REIT"), which would result in higher taxes, may adversely affect operations, and would reduce the trading price of our Common Stock and Series A Preferred Stock, and our cash available for dividends.
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 discussions with respect to exiting the European Union (the “Brexit Process”).

Our ability to refinance or sell properties located in the United Kingdom and continental Europe may be impacted by the economic and political uncertainty in these regions including due to the Brexit Process.
We may beare exposed to changes in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, and changes in conditions of U.S. or international lending, capital and financing markets, including as a result of the Brexit Process.U.K.’s potential or actual withdrawal from the European Union or any other events that create, or give the impression they could create, economic or political instability in Europe, which may cause the revenue derived from, and the market value of, properties located in the United Kingdom and continental Europe to decline.
All forward-looking statements should be read in light of the risks identified in Part I, Item 1A of this annual reportAnnual Report on Form 10-K.


PART I
Item 1. Business.
Overview
We were incorporated on July 13, 2011 as a Maryland corporation that elected and qualified to be taxed as a real estate investment trust ("REIT") for United States ("U.S.") federal income tax purposes beginning with the taxable year ended December 31, 2013. OnWe completed our initial public offering on June 30, 2014 and, on June 2, 2015, (the "Listing Date"), we listed shares of our Common Stock on the New York Stock Exchange ("NYSE")NYSE under the symbol "GNL" (the "Listing"). "GNL."
We invest in commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties. Substantially all of our business is conducted through the Global Net Lease Operating Partnership, L.P. (the "OP"). Our properties are managed and leased to third parties by Global Net Lease Properties, LLC (the "Property Manager"). Pursuant to our advisory agreement with the Advisor, we have retained the Advisor to manage our affairs on a day-to-day basis. The Advisor and the Property Manager are under common control with AR Global, and these related parties receive compensation and fees for various services provided to us.
As of December 31, 2018, we owned 342 properties consisting of 27.5 million rentable square feet, which were 99.2% leased, with a weighted average remaining lease term of 8.3 years. Based on the percentage of annualized rental income on a straight-line basis as of December 31, 2018, 55.7% of our properties are located in the United States ("U.S.") and 44.3% in Europe. We may also originate or acquire first mortgage loans, preferred equity or securitized loans (secured by real estate). As of December 31, 2018, we did not own any first mortgage loans, mezzanine loans, mezzanine loans, preferred equity or securitized loans.
Following the termination of Moor Park Capital Partners LLP (the "Former Service Provider"), effective as of March 17, 2018, the Advisor, together with its service providers, assumed full management responsibility of our European real estate portfolio. Prior to the termination of the Former Service Provider, the Former Service Provider provided, subject to the Advisor's oversight and pursuant to a service provider agreement (the “Service Provider Agreement”), certain real estate related services, as well as sourcing and structuring of investment opportunities, performance of due diligence, and arranging debt financing and equity investment syndicates, solely with respect to investments in Europe. Since the termination of the Former Service Provider, the Advisor has built a European-focused management team and engaged third-party service providers to assume certain duties previously performed by the Former Service Provider. See Item 3. Legal Proceedings for additional information.
Merger Transaction
On August 8, 2016, we entered into an agreement and plan of merger (the "Merger Agreement") with American Realty Capital Global Trust II, Inc. ("Global II"). We and Global II each are or were sponsored, directly or indirectly, by an affiliate of AR Global. AR Global, which, through its affiliates, provide or provided asset management services to us and Global II pursuant to advisory agreements. On December 22, 2016 (the "Merger Date"), pursuant to the Merger Agreement, Global II merged with and into Mayflower Acquisition LLC (the "Merger Sub"), a Maryland limited liability company and wholly owned subsidiary of ours, at which time the separate existence of Global II ceased and we became the parent of the Merger Sub (the "Merger"). In addition, pursuant to the Merger Agreement, American Realty Capital Global II Operating Partnership, L.P., a Delaware limited partnership and the operating partnership of Global II (the "Global II OP"), merged with Global Net Lease Operating Partnership, L.P. (the "OP"),the OP, a Delaware limited partnership and our operating partnership, with the OP being the surviving entity (the "Partnership Merger" and together with the Merger, the "Mergers"). As a result of the Mergers, we acquired the business of Global II, which immediately prior to the effective time of the Merger, owned a portfolio of commercial properties, including single tenant net-leased commercial properties, two of which were located in the U.S., three of which were located in the United Kingdom, and 10 of which were located in continental Europe (see Note 3 — Merger Transaction to our audited consolidated financial statements included in this Annual Report on Form 10-K).
Pursuant toCommon Stock Offerings
ATM Program — Common Stock
We have an “at the Fourth Amended and Restated Advisory Agreement, dated June 2, 2015, among us, the OP and the Advisormarket” equity offering program (the "Advisory Agreement"“ATM Program”), we retained the Advisor to manage our affairs on a day-to-day basis. Substantially all of our business is conducted through the OP. Our properties are managed and leased by Global Net Lease Properties, LLC (the "Property Manager"). The Advisor, Property Manager, and Global Net Lease Special Limited Partner, LLC (the "Special Limited Partner") are under common control with AR Global, the parent of our sponsor, and as a result are related parties. These related parties receive compensation and fees for various services provided to us.
On August 8, 2015, we entered into the Second Amended and Restated Service Provider Agreement (the “Service Provider Agreement”) with the Advisor and Moor Park Capital Partners LLP (the "Service Provider"), pursuant to which we may sell shares of Common Stock, from time to time through our sales agents. During the Service Provider agreed to provide, subject to the Advisor's oversight, certain real estate-related services, as well as sourcing and structuring of investment opportunities, performance of due diligence, and arranging debt financing and equity investment syndicates, solely with respect to investments in Europe. On January 16, 2018, we notified the Service Provider that it was being terminated effective as of March 17, 2018. Additionally, as a result of our termination of the Service Provider, the property management and leasing agreement among an affiliate of the Advisor and the Service Provider will terminate by its own terms. As required under its existing Advisory Agreement with us, the Advisor and its affiliates will continue to manage our affairs on a day to day basis (including management and leasing of our properties) and will remain responsible for managing and providing other services with respect to our European investments. The Advisor may engage one or more third parties to assist with these responsibilities, all subject to the terms of the Advisory Agreement. See Item 3. Legal Proceedings.
As ofyear ended December 31, 2017, we owned 321 properties consisting of 22.9 million rentable square feet, which were 99.5% leased, with a weighted-average remaining lease term of 8.8 years. Based on original purchase price or acquisition value with respect to properties acquired in the Merger, 50.6% of our properties are located in the U.S. and Puerto Rico and 49.4% of our properties are located in Europe. We may also originate or acquire first mortgage loans, mezzanine loans, preferred equity or securitized loans secured by real estate. As of December 31, 2017, we did not own any first mortgage loans, mezzanine loans, preferred equity or securitized loans.
Reverse Stock Split
On February 28, 2017, we completed a reverse stock split of Common Stock, limited partnership units in the OP ("OP Units") and long term incentive plan units in the OP ("LTIP Units"), at a ratio of 1-for-3 (the “Reverse Stock Split”). No OP Units were issued in connection with the Reverse Stock Split and we repurchased any fractionalsold 820,988 shares of Common Stock resulting fromthrough the Reverse Stock SplitATM Program for cash. No payments were made in respectgross sales proceeds of any fractional OP Units. The Reverse Stock Split was applied to all$18.7 million, before issuance costs of $0.4 million. During the outstandingyear ended December 31, 2018, we sold 164,927 shares of Common Stock through the ATM program for gross proceeds of $3.5 million, before commissions paid of $35,140 and therefore did not affect any stockholder’s relative ownership percentage. As a resultadditional issuance costs of $0.3 million. These costs are recorded in additional paid-in capital on the Reverse Stock Split, the number of outstandingaccompanying audited consolidated balance sheets.
During January 2019, we sold 7,759,322 shares of Common Stock was reduced from 198.8through the ATM Program for gross proceeds of $152.8 million, before commissions of $1.5 million and additional issuance costs of $2,000. Following these sales, we had raised all $175.0 million contemplated by our existing equity distribution agreement related to 66.3the ATM Program and, in February 2019, we terminated our existing equity distribution agreement and entered into a new equity distribution agreement with substantially the same sales agents on substantially the same terms. The new equity distribution agreement provides for the continuation of our ATM Program to raise additional aggregate sales proceeds of up to $250.0 million. See Note 16 — Subsequent Events to our

Effective May 24, 2017, following approval by our boardconsolidated financial statements included in this Annual Report on Form 10-K and “Item 9B. Other Information” for further information.
Underwritten Offerings — Common Stock
On August 20, 2018, we completed the issuance and sale of directors, we filed an amendment to our charter with the Maryland State Department of Assessments and Taxation to decrease the total number of shares that we have authority to issue from 350.0 million to 116.7 million shares, of which (i) 100.0 million is designated as Common Stock; and (ii) 16.7 million is designated as Preferred Stock, $0.01 par value per share ("Preferred Stock"). As of December 31, 2017, our authorized capital stock consisted of 100.0 million4,600,000 shares of Common Stock 5.4(including 600,000 shares issued and sold pursuant to the underwriters' exercise of their option to purchase additional shares in full) in an underwritten public offering at a price per share of $20.65. The gross proceeds from this offering were $95.0 million before deducting the underwriting discount of $3.8 million and additional offering expenses of $0.3 million.
On November 28, 2018, we completed the issuance and sale of 4,000,000 shares of Series A PreferredCommon Stock and 11.3 million shares of Preferred Stock
All references made to share orin an underwritten public offering at a price per share amounts inof $20.20. The gross proceeds from this offering were $80.8 million before deducting the accompanying audited consolidated financial statementsunderwriting discount of $3.2 million and applicable disclosures have been retroactively adjusted to reflect this Reverse Stock Split.additional offering expenses of $0.1 million.
Preferred Stock Offerings
On September 7, 2017,ATM Program — Series A Preferred Stock
In March 2018, we entered intoestablished an underwriting agreement“at the market” equity offering program for our Series A Preferred Stock (the “Underwriting Agreement”"Preferred Stock ATM Program") with BMO Capital Markets Corp. and Stifel, Nicolaus & Company, Incorporated, as representatives of the underwriters listed on Schedule I thereto pursuant to which we agreedmay raise aggregate sales proceeds of $200.0 million through sales of shares of Series A Preferred Stock from time to issuetime through our sales agents. During the year ended December 31, 2018, we sold 7,240 shares of Series A Preferred Stock through the Preferred Stock ATM Program for gross proceeds of $0.2 million, before commissions paid of $2,724 and selladditional issuance costs of $0.4 million.
Underwritten Offerings — Series A Preferred Stock
On September 12, 2017, we completed the issuance and sale of 4,000,000 shares of the Series A Preferred Stock in an underwritten public offering at a public offering price equal to the liquidation preference of $25.00 per share. Pursuant to the Underwriting Agreement, we also granted the underwriters a 30-day option to purchase up to an additional 600,000 shares of Series A Preferred Stock. On September 12, 2017, we completed the initial issuanceshare, and, sale of 4,000,000 shares of Series A Preferred Stock, which generated gross proceeds of $100.0 million and net proceeds of $96.3 million, after deducting underwriting discounts and offering costs paid by us.
Onon October 11, 2017, the underwriters exercised an option to purchase additional shares of Series A Preferred Stock,we issued and we sold an additional 259,650 shares of Series A Preferred Stock which generatedpursuant to the underwriters’ partial exercise of their option to purchase additional shares in accordance with terms of the underwriting agreement. The gross proceeds from this offering were $106.5 million before deducting the underwriting discount of $6.5$3.4 million after adjusting for the amountand additional offering expenses of dividends declared per share for the period from September 12, 2017 to September 30, 2017 and payable to holders of record as of October 6, 2017, and resulted in net proceeds of $6.3 million, after deducting underwriting discounts and offering costs paid by us.$0.5 million.
On December 19, 2017, we completed the issuance and sale of 1,150,000 additional shares of the Series A Preferred Stock (including 150,000 shares pursuant to the underwriter’s exercise of its option to purchase additional shares in full) in an underwritten public offering at ana public offering price equal to the liquidation preference of $25.00 per share, which generatedshare. The gross proceeds offrom this offering were $28.8 million before deducting the underwriting discount of $0.8 million and net proceedsadditional offering expenses of $27.8$0.2 million. These additional shares of shares of Series A Preferred Stock have been consolidated to form a single series, and are fully fungible with the outstanding Series A Preferred Stock. The Series A Preferred Stock is listed on the New York Stock Exchange, under the symbol "GNL PR A."
Equity Distribution Agreement
We have entered into an Equity Distribution Agreement with UBS Securities LLC, Robert W. Baird & Co. Incorporated, Capital One Securities, Inc., Mizuho Securities USA Inc., FBR Capital Markets & Co. and KeyBanc Capital Markets Inc. (together, the “Agents”) to offer and sell shares of Common Stock, to raise aggregate sales proceeds of up to $175.0 million, from time to time, pursuant to an “at the market” equity offering program (the “ATM Program”). Common Stock issued under the ATM Program is registered pursuant to our shelf registration statement on Form S-3 (Registration No. 333-214579). During the twelve months ended December 31, 2017, we sold 820,988 shares of Common Stock through the ATM Program for net sales proceeds of $18.3 million, after issuance costs of $0.4 million. These fees were charged to additional paid-in capital on the accompanying audited consolidated balance sheet during the ATM Program as of December 31, 2017.
Investment Strategy
Our investment strategy is to own and acquire a portfolio of commercial properties that is diversified in terms of geography, industry, and tenants. Based on original purchase price or acquisition value with respect to properties acquired in the Merger, we have approximately 50.6%percentage of annualized rental income on a straight-line basis as of December 31, 2018, 55.7% of our investmentsproperties are located in the U.S. and the Commonwealth of Puerto Rico and 49.4%44.3% in the United Kingdom and Continental Europe. Based on annualized rental income on a straight-line basis as of December 31, 2017,2018, approximately 58.8%53% of our investments are in office properties, 31.6%39% of our investments are in industrial/distribution properties, and 9.6%8% of our investments are in retail properties. No individual tenant accounted for more than 10% of our annualized rental income aton a straight-line basis for the years ended December 31, 2017.2018, 2017 and 2016.
We seek to:
support a stable and consistent dividend by generating stable and consistent cash flows by acquiring properties with, or entering into new leases with, long lease terms;
facilitate dividend growth by acquiring properties with, or entering into new leases with, contractual rent escalations or inflation adjustments included in the lease terms; and
enhance the diversity of our asset base by continuously evaluating opportunities in different geographic regions of the U.S. and Europe and leveraging the market presence of the Advisor.


Acquisition and Investment Policies
Primary Investment Focus
We primarily focus on acquisitions ofacquiring net lease properties with existing net leases, or we acquire properties pursuant to sale-leaseback transactions. We mayare in the future acquire or originatebusiness of acquiring real estate debt such as first mortgage debt loans, mezzanine loans, preferred equity or securitized loans secured by real estate. As of December 31, 2017, we have not invested in any preferred equity or securitized loans.
In January 2018, we announced that we are pursuing a strategy of growth through property acquisitions, primarily of properties located inand leasing the U.S.properties to tenants. Our goal is to grow through acquiring additional properties. We have signed two non-binding letters of intent and one definitive purchase and sale agreement to acquire $500 milliona total of three net lease properties, duringall of which are located in the United States, for an aggregate purchase price of $42.0 million. The two letters of intent may not lead to definitive agreements and the one definitive agreement is subject to conditions. There can be no assurance we will complete any of these acquisitions on their contemplated terms, or at all. During the year endingended December 31, 2018.2018, we acquired 23 properties for $479.6 million, including capitalized acquisition costs. As part

of thisour acquisition strategy, we intend to increase the percentage (based on original purchase price) of our portfolio located in the U.S. to 60% and increase the percentage (based on annualized straight-line rental income) of our portfolio consisting of industrial/distribution properties.properties which was 39.0% based on annualized straight-line rent as of December 31, 2018. As of December 31, 2017,2018, we owned 321342 properties, including 252273 properties located in the U.S. and Puerto Rico,, 43 properties located in the United Kingdom and 26 properties located across continental Europe.    
Investing in Real Property
When evaluating prospective investments in real property, our management, the Advisor considers relevant real estate and financial factors, including the location of the property, the leases and other agreements affecting the property,it, the creditworthiness of its major tenants, its income producing capacity, its physical condition, its prospects for appreciation, its prospects for liquidity, tax considerations and other factors. In this regard, the Advisor has substantial discretion with respect to the selection of specific investments, subject to board approval.
We did not haveapproval and any tenant whose total annualized rental income on a straight-line basis was more than 10%guidelines established by our board of our aggregate annual income for the years ended December 31, 2017, 2016 and 2015.directors.
The termination, delinquency or non-renewal of leases by any major tenant may have a material adverse effect on our revenues.
OpportunisticOther Investments
We believe that the presence of the Advisor in the commercial real estate marketplace may present attractive opportunities to invest in properties other than long-term net leased properties, such as partially leased properties, multi-tenanted properties, vacant or undeveloped properties and properties subject to short-term net leases. In addition, weWe may in the future acquire or originate investments in commercial real estate-related debt. Real estate-relatedestate debt investments includesuch as first mortgage debt loans, subordinated interests in first mortgage loans and mezzanine loans, related to commercialpreferred equity or securitized loans secured by real estate. We may also invest in real estate-related securities issued by real estate market participants such as real estate funds or other REITs. Real estate-related securities include commercial mortgage-backed securities ("CMBS"), preferred equity and other higher-yielding structured debt and equity investments. Investments in these opportunistic investments would be subject to maintaining the requirements for continued qualification as a REIT and for our exemption from the Investment Company Act of 1940, as amended (the "Investment Company Act"). As of December 31, 2017,2018, we do not own any of these types of investments.
Acquisition Structure
We acquire properties through the OP and its subsidiaries. We have acquired properties through asset purchases and through purchases of the equity of entities owning properties. We typically acquire fee interests in a property (a “fee interest” is the absolute, legal possession and ownership of land, property, or rights), although we have acquired 1113 leasehold interest properties (a “leasehold interest” is a right to enjoy the exclusive possession and use of an asset or property for a stated definite period as created by a written lease).
We may enter into joint ventures, partnerships and other co-ownership arrangements (including preferred equity investments) for the purpose of making investments, provided these investments would not cause us to be required to register as an "investment company" under the Investment Company Act.Act of 1940, as amended.
Financing Strategies and Policies
On July 24, 2017, we, through the OP, entered into a credit agreement with KeyBank National Association (“KeyBank”), as agent, and the other lender parties thereto, that provides for a $500.0 million senior unsecured multi-currency revolving credit facility (the “Revolving Credit Facility”), and a €194.6 million ($225.0 million USD equivalent at closing) senior unsecured term loan facility (the “Term Facility” and, together with the Revolving Credit Facility, the “Credit Facility”). The aggregate total commitments under the Credit Facility are $725.0 million USD equivalents at closing. Upon our request, subject in all respects to the consent of the lenders in their sole discretion, these aggregate total commitments may be increased up to an aggregate additional amount of $225.0 million, allocated to either portion or among both portions of the Credit Facility, with total commitments under the Credit Facility not to exceed $950.0 million (seeNote 6 — Credit Facilities to our audited consolidated financial statements in this Annual Report on Form 10-K for further information on our Credit Facility). In addition, weWe have various mortgage loans outstanding, which are secured by our properties. Our mortgage loans typically bear interest at margin plus a floating rate which is mostly fixed through interest rate swap agreements (see Note 5 — Mortgage Notes Payable, Net to our audited consolidated

financial statements in this Annual Report on Form 10-K for mortgage loans in respective currency and interest rate detail). As of December 31, 2017, approximately $65.1 million was available for future borrowings under the Revolving Credit Facility.
We may obtain additionalused financing for futureacquisitions and other investments, property improvements, tenant improvements, leasing commissions and other working capital needs. We expect to obtain additional financing for similar purposes in the future. The form of our indebtednessindebtedness will vary and could be long-term or short-term, secured or unsecured, or fixed-rate or floating rate. We will not enter into interest rate swaps or caps, or similar hedging transactions or derivative arrangements for speculative purposes, but may do so in order to manage or mitigate our interest rate risk on variable rate debt. As of December 31, 2017,2018, and based on the prevailing exchange rates on that date, our aggregate gross borrowings are equal to 48.9%49.3% of the aggregate acquisition valuepurchase price of our assets,real estate investments, or 50.2%54.0% of our nettotal assets.
We may reevaluate and change our financing policies without a stockholder vote. Factors that we would consider when reevaluating or changing our debt policy include among other things, current economic conditions, the relative cost and availability of debt and equity capital, our expected investment opportunities, the ability of our investments to generate sufficient cash flow to cover debt service requirements.
Mortgage Notes Payable
We have various mortgage loans outstanding, which are secured by our properties. Our mortgage loans typically bear interest at margin plus a floating rate which is mostly fixed through interest rate swap agreements (see Note 5 — Mortgage Notes Payable, Net to our consolidated financial statements included in this Annual Report on Form 10-K for mortgage loans in respective currency and interest rate detail).
Credit Facility
On July 24, 2017, we, through the OP, entered into a credit agreement with KeyBank National Association (“KeyBank”), as agent, and the other lender parties thereto, which as of December 31, 2018 provides for a $632.0 million senior unsecured multi-currency revolving credit facility (the “Revolving Credit Facility”), and a €246.5 million ($286.8 million USD equivalent as of August 16, 2018) senior unsecured term loan facility (the “Term Loan” and, together with the Revolving Credit Facility, the “Credit Facility”).

The aggregate total commitments under the Credit Facility were $725.0 million based on USD equivalents at closing on July 24, 2017. On July 2, 2018, upon our request, the lenders under the Credit Facility increased the aggregate total commitments from $722.2 million to $914.4 million, based on the prevailing exchange rate on that date, with approximately $132.0 million of the increase allocated to the USD portion of the Revolving Credit Facility and approximately €51.8 million ($60.2 million based on the prevailing exchange rate on that date) allocated to the Term Loan. We used the proceeds from the increased borrowings under the Term Loan to repay amounts outstanding under the Revolving Credit Facility. Upon our request, subject in all respects to the consent of the lenders in their sole discretion, the aggregate total commitments under the Credit Facility may be increased up to an aggregate additional amount of $35.6 million, allocated to either or both portions of the Credit Facility, with total commitments under the Credit Facility not to exceed $950.0 million. The availability of borrowings under the Revolving Credit Facility is based on the value of a pool of eligible unencumbered real estate assets owned by us and compliance with various ratios related to those assets. As of December 31, 2018, approximately $42.2 million was available for future borrowings under the Revolving Credit Facility. For additional information, seeNote 6 — Credit Facilities to our consolidated financial statements included in this Annual Report on Form 10-K for further information on our Credit Facility.
Tax Status
We qualifiedelected to be taxed as a REIT for U.S. federal income tax purposes under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), commencing with our taxable year ended December 31, 2013. Commencing with such taxable year, we were organized and began operating in such a manner as to qualify for taxation as a REIT under the Code.Code and believe we have so qualified. We intend to continue to operate in such a manner to continue to qualify as a REIT for such purposes, but no assurance can be given that we will operate in a manner so as to remain qualified as a REIT for U.S. federal income tax purposes. In order to continue to qualify for taxation as a REIT, we must, among other things, distribute annually at least 90% of our REIT taxable income. REITs are subject to a number of other organizational and operational requirements. Even if we continue to qualify for taxation as a REIT, we may be subject to certain federal, state, local and foreign taxes on our income and assets, including alternative minimum taxes, taxes on any undistributed income and state, local or foreign income, franchise, property and transfer taxes if we were subject to any of these forms of taxation, it would decrease our earnings and our available cash.
On December 22, 2017, the Tax Cuts and Jobs Act was signed into law by the U.S. President. We are not aware of any provision in the final tax reform legislation or any pending tax legislation that would adversely affect our ability to operate as a REIT or to qualify as a REIT for U.S. federal income tax purposes. However, new legislation, as well as new regulations, administrative interpretations, or court decisions may be introduced, enacted, or promulgated from time to time, that could change the tax laws or interpretations of the tax laws regarding qualification as a REIT, or the federal income tax consequences of that qualification, in a manner that is adverse to our qualification as a REIT.
In addition, our international assets and operations, including those designated asowned through direct or indirect qualified REIT subsidiaries or otherthat are disregarded entities of a REIT,for U.S. federal income tax purposes, continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.
Competition
The commercial real estate market is highly competitive. In all of our markets we compete for tenants with other owners and operators of real estate. Factors affecting competition for tenants include location, rental rates, security, suitability of the property’s design to prospective tenants’ needs and the manner in which the property is operated and marketed. The adverse impact of competition may have a material effect on our occupancy levels, rental rates and/or operating expenses of our properties.properties and may require us to make capital improvements.
In addition, we compete with other parties engaged in real estate investment activities to identify suitable properties to acquire and to find tenants and purchasers for our properties. These competitors include American Finance Trust, Inc. ("AFIN"), a REIT sponsoredadvised by an affiliate of AR Global, with an investment strategy similar to our investment strategy with respect to properties located in the U.S., other REITs, specialty finance companies, savings and loan associations, banks, mortgage bankers, insurance companies, mutual funds, institutional investors, investment banking firms, lenders, governmental bodies and other entities. There are also other REITs with asset acquisition objectives similar to ours, and others that may be organized in the future. Some of these competitors, including larger REITs, have substantially greater marketing and financial resources than we have, and may be able to accept more risk than we can prudently manage, including risks with respect to the creditworthiness of tenants. In addition, these same competitors seek financing through similar channels as us, which may impact our ability to obtain financing. Therefore, we compete for financing in a market where funds for real estate investment may decrease.
Competition from these and other real estate investors may limit the number of suitable investment opportunities available to us. Competition also may cause us to face higher prices to acquire assets, lower yields on assets and a narrower spread of yields over our borrowing costs, making it more difficult for us to acquire new investments on attractive terms. In addition, competition for desirable investments could delay investments in desirable assets, which may in turn reduce our earnings per share and negatively affect our ability to maintain dividends to stockholders.

Regulations - General
Our investments are subject to various federal, state, local and foreign laws, ordinances and regulations, including, among other things, zoning regulations, land use controls, environmental controls relating to air and water quality, noise pollution and indirect environmental impacts such as increased motor vehicle activity. We believe that we have all permits and approvals necessary under current law to operate our investments.

Regulations - Environmental
As an owner of real estate, we are subject to various environmental laws of federal, state and local governments and foreign governments at various levels. Compliance with existing laws has not had a material adverse effect on our financial condition or results of operations, and management does not believe it will have such an impact in the future. However, we cannot predict the impact of unforeseen environmental contingencies or new or changed laws or regulations on properties in which we hold an interest, or on properties that may be acquired directly or indirectly in the future. As part of our efforts to mitigate these risks, we typically engage third parties to perform assessments of potential environmental risks when evaluating a new acquisition of property, and we frequently require sellers to address them before closing or obtain contractual protection (indemnities, cash reserves, letters of credit, or other instruments) from property sellers, tenants, a tenant’s parent company, or another third party to address known or potential environmental issues.
Advisory Agreement
We are externally managed by the Advisor pursuant to the terms of our advisory agreement with the Advisory Agreement.Advisor, which was subsequently amended on August 14, 2018 (the "August Amendment") and November 6, 2018 (the "November Amendment"). The Advisory Agreementadvisory agreement requires us to pay a base management fee (the “Base Management Fee”) in a minimum amount of $18.0 million per annum, payable in cash on a pro rata monthly basis at the beginning of each month, and includingplus a variable fee amount equal to 1.25% of the cumulative net proceeds raisedrealized by us from additionalthe issuance of any common equity, issuances, including any common equity issued in exchange for or conversion of preferred stock or exchangeable notes, as well as, from any other issuances of OP Units and Series A Preferred Stock, andcommon, preferred, or other forms of our equity, including units of any operating partnership. Additionally, we pay the Advisor an incentive fee ("Incentive Compensation"), payable 50% in cash and 50% in shares of Common Stock,Stock.
Under the advisory agreement, prior to the August Amendment, the Incentive Compensation was equal to 15% of our Core AFFO (as defined in the Advisory Agreement)advisory agreement) in excess of $2.37 per share plus 10% of our Core AFFO in excess of $3.08 per share. Under the advisory agreement, as amended by the August Amendment, the Incentive Fee Lower Hurdle (as defined in the advisory agreement) was decreased from $2.37 to (a) $2.15 for the 12 months ending June 30, 2019, and (b) $2.25 for the 12 months ending June 30, 2020, and the Incentive Fee Upper Hurdle (as defined in the advisory agreement) was decreased from $3.08 to (a) $2.79 for the 12 months ending June 30, 2019, and (b) $2.92 for the 12 months ending June 30, 2020.
In addition, the August Amendment revised the provisions in the advisory agreement governing adjustments to these annual thresholds. The $2.37 and $3.08 incentive hurdles are eligible for annual increasesthresholds may, beginning with effect from July 1, 2020, be increased each year in the sole discretion of 1% to 3% based on a determination by a majority of our independent directors in(in their good faith reasonable judgment, after consultation with the Advisor), by a percentage equal to between 0% and 3% instead of 1% and 3%. In addition, in August 2023 and every five years thereafter, the Advisor will have a right to request that our independent directors reduce the then current Incentive Fee Lower Hurdle and Incentive Fee Upper Hurdle and make a determination whether any reduction in the annual thresholds is warranted.
We reimburse the Advisor or its affiliates for expenses of the Advisor and its affiliates incurred on our management. The amounts payablebehalf, except for those expenses that are specifically the responsibility of the Advisor under the advisory agreement, such as fees and compensation paid to any third-party service providers engaged by the Advisor and the Advisor's overhead expenses, rent and travel expenses, professional services fees incurred with respect to the Advisor are capped, subjectfor the operation of its business, insurance expenses (other than with respect to an annual adjustment, based on the level of assets under management.our directors and officers) and information technology expenses.
No later than April 30 of each year, our independent directors are required to determine, in good faith, whether the Advisor has satisfactorily achieved annual performance standards for the immediately preceding year based primarily on actions or inactions of the Advisor, and determines the annual performance standards for the next year.
We reimburse the Advisor or its affiliates for expenses of the Advisor and its affiliates incurred on our behalf, except for those expenses that are specifically the responsibility of the Advisor under the Advisory Agreement, such as fees and compensation paid to the Service Provider and the Advisor's overhead expenses, rent and travel expenses, professional services fees incurred with respect to the Advisor for the operation of its business, insurance expenses (other than with respect to our directors and officers) and information technology expenses.
The Advisory Agreementadvisory agreement has an initial term expiring June 1, 2035, with automatic renewals for consecutive 5-yearfive-year terms unless terminated in accordance with the terms of the Advisory Agreement.advisory agreement. In the event of a termination in connection with a change in control of us or the Advisor's failure (based on a good faith determination by our independent directors) to meet annual performance standards for the year based primarily on actions or inactions of the Advisor, we would be required to pay a termination fee that could be up to 2.5two and a half times the compensation paid to the Advisor in the previous year, plus expenses.
See Note 11 — Related Party Transactions to our audited consolidated financial statements included in this Annual Report on Form10-K for further details.
Employees
As of December 31, 2017,2018, we have one employee based in Europe. The employees of our Advisor, Property Manager and other affiliates of AR Global perform a full range of real estate services for us, including acquisitions, property management, accounting, legal, asset management wholesale brokerage, transfer agent and investor relations services. Pursuant to the Service Provider Agreement, the Former Service Provider agreed to provide, subject to the Advisor's oversight, certain real estate-related services, as well as sourcing and structuring of investment opportunities, performance of due diligence, and arranging debt financing and equity investment syndicates, solely with respect to investments in Europe. As discussed above, on January 16, 2018, we notified the Former Service Provider that it was being terminated effective as of March 17, 2018. We depend on third parties and affiliates for services that

are essential to us, including asset acquisition decisions, property management and other general administrative responsibilities. In the event that any of these companies were unable to provide these services to us we would be required to provide such services ourselves or obtain such services from other sources at potentially higher cost. As a result of ourSince the termination of the Former Service Provider, the propertyAdvisor has built a European-focused management team and leasing agreement among an affiliate ofengaged third-party service providers to assume certain duties previously performed by the Advisor and theFormer Service Provider will terminate by its own terms. As required under our existing Advisory Agreement, the Advisor and its affiliates will continueProvider.

to manage the Company’s affairs on a day to day basis (including management and leasing of our properties) and will remain responsible for managing and providing other services with respect to our European investments.
Financial Information About Industry Segments
Our current business consists of owning, managing, operating, leasing, acquiring, investing in and disposing of real estate assets. All of our consolidated revenues are derived from our consolidated real estate properties. We internally evaluate operating performance at the individual property level, and view all of our real estate assets as a single industry segment, and, accordingly, all of our properties are aggregated into one reportable segment.
Available Information
We electronically file annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, and proxy statements, with the SEC. You may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549, or you may obtain information by calling the SEC at 1-800-SEC-0330. The SEC maintains an internetSEC's Internet address located at http://www.sec.gov thatwww.sec.gov. The website contains reports, proxy statements and information statements, and other information, which you may obtain free of charge. In addition, copies of our filings with the SEC may be obtained from the website maintained for us and our affiliates at www.globalnetlease.com. Access to these filings is free of charge. We are not incorporating our website or any information from the website into this Form 10-K.

Item 1A. Risk Factors
Set forth below are the risk factors that we believe are material to our investors. The occurrence of any of the risks discussed in this Annual Report on Form 10-K could have a material adverse effect on our business, our financial condition, our results of operations, our ability to pay dividends and the trading price of our Common Stock and Series A Preferred Stock.

Risks Related to Our Properties and Operations
We may be unable to enter into and consummate property acquisitions on advantageous terms or our property acquisitions may not achieve our acquisition goals.perform as we expect.
Our goal is to acquire $500 million ofgrow through acquiring additional properties, during the year ending December 31, 2018. There can be no assurance we will be ableand pursuing this investment objective exposes us to meet our goal for numerous reasons,risks, including:
competition from other real estate investors with significant capital, including both publicly traded REITs and institutional investment funds;
agreements towe may acquire properties that are typically subject to conditions to closing thatnot accretive;
we may not be satisfiedsuccessfully manage and lease the properties we acquire to meet our expectations or waived;market conditions may result in future vacancies and lower-than expected rental rates;
we may be unable to obtain debt financing or raise equity required to fund acquisitions on favorable terms, or at all.all;
Moreover, we dependmay need to spend more than budgeted amounts to make necessary improvements or renovations to acquired properties;
agreements for the acquisition of properties are typically subject to customary conditions to closing that may or may not be completed, and we may spend significant time and money on potential acquisitions that we do not consummate;
the process of acquiring or pursuing the acquisition of a new property may divert the attention of our management team from our existing business operations; and
we may acquire properties without recourse, or with only limited recourse, for liabilities, whether known or unknown.
We rely upon our Advisor and the real estate professionals affiliated with our Advisor to identify a sufficient number of property acquisitions on acceptable termssuitable investments, and prices. There alsothere can be no assurance thethat our Advisor will be able to do sosuccessful in obtaining suitable further investments on financially attractive terms or that our objectives will be achieved. If our Advisor is unable to timely locate suitable investments, we willmay be unable or limited in our ability to pay dividends and we may not be able to integrate and operate the properties we acquire.meet our investment objectives.
Our ability to obtain sufficient funding to implement our acquisitionbusiness strategy depends on our ability to access capital from external sources, and there can be no assurance we will be able to so on favorable terms or at all.
In order to meet our acquisition goal,strategic goals, which include acquiring additional properties, we will need to access third-party sources of capital. Our access to capital depends, in part, on:
general market conditions;
the market’s view of the quality of our assets;
the market’s perception of our growth potential;
our current and expected debt levels;
our current and expected future earnings;
our current and expected cash flow and cash dividend payments; and
market price per share of our Common Stock, Series A Preferred Stock and any other class or series of equity security we may seek to issue that is listed on a national securities exchange.issue.
We cannot assure you that we will be able to obtain debt financing or raise equity on terms favorable or acceptable to us or at all. If we are unable to do so, our ability to successfully pursue our strategy of growth through property acquisitions will be limited. Failure to achieve this strategic objective could adversely affect us.
There is no assurance
If we are not able to increase the amount of cash we have available to pay dividends, including through additional cash flows we expect to generate from completing acquisitions, we may have to reduce dividend payments or identify other financing sources to fund the payment of dividends at their current levels.
We cannot guarantee that we will be able to continue payingpay dividends on our Common Stock or Series A Preferred Stock at the current rate or,a regular basis with respect to our Common Stock, increase dividends over time.
We may not continue paying dividends at the current rate in the future for various reasons, including the following:
rents from properties may not increase, and future acquisitionsour Series A Preferred Stock, or any other classes or series of properties, real estate-related debt or real estate-related securities may not increase our cash available for distributions to stockholders;
preferred stock we may not generate sufficient cash from operations to fund our other capital needs;
decisionsissue in a future offering. Decisions on whether, when and in whichwhat amounts to makepay any future distributionsdividends will remain at all times entirely at the discretion of our board of directors, which reserves the right to change our dividend policy regarding Common Stock at any time and for any reason;
we may desirereason. Any accrued and unpaid dividends payable with respect to retain cash to maintain or improve its credit ratings; and
the amount of distributions that our subsidiaries may distribute to us may be subject to restrictions imposed by state law, restrictions that may be imposed by state regulators and restrictions imposed by the terms of any current or future indebtedness that these subsidiaries may incur.
Our common stockholders have no contractual or other legal right to dividends or distributions that have not been declared. Moreover, failure to meet the market's expectations with regard to future earnings and cash dividends likely would adversely affect the market price of our Common Stock.
Dividends paid from sources other than our cash flows from operations will result in us having fewer funds available for the acquisition of properties and other real estate-related investments, which may adversely affect our ability to fund future dividends with cash flows from operations.

Our cash flows provided by operations were $131.0 million for the year ended December 31, 2017. During the year ended December 31, 2017, we paid dividends of $143.9 million, which includes payments to holders of our Common and Series A Preferred Stock and distributions to holders of OP Units and LTIP Units. Of these payments, $131.0 million, or 91.0%, was funded from cash flows provided by operations, $2.3 million, or 1.6%, was funded from proceeds from sales of real estate investments and $11.0 million, or 7.7%, was funded from available cash on hand.
We are obligated under the terms of our Series A Preferred Stock to pay dividends to holdersbecome part of our Series A Preferred Stock in an amount equal to $2.5 million per quarter for each quarter based on 5,409,650 shares of Series A Preferred Stock outstanding as of December 31, 2017.the liquidation preference thereof.
Series A Preferred Stock ranks seniorPursuant to our Common StockCredit Facility, we may not pay distributions, including cash dividends payable with respect to dividend rights and rights upon our voluntary or involuntary liquidation, dissolution or winding up. If we do not generate sufficient cash flows from its operations to fund dividends, we may have to reduce or suspend dividend payments on our Common Stock or pay dividends from other sources, such as from borrowings or the sale of additional securities.
Funding dividends from borrowings could restrict the amount we can borrow for property acquisitions and investments. Funding dividends with the sale of assets, or using the proceeds from issuance of our Common Stock, Series A Preferred Stock, or any other equity securities to fund dividends rather than invest in assets,classes or series of preferred stock we may affect our ability to generate cash flows. Funding dividends from the sale of additional securities could also resultissue in a dilutionfuture offering, or redeem or otherwise repurchase shares of our stockholders’ investment.
The Credit Facility may limit our ability to pay dividends.
The Credit Facility prohibits us from paying distribution, including cash dividends on ourcapital stock, Common Stock, and Series A Preferred Stock, or redeemingany other classes or otherwise repurchasing sharesseries of our capitalpreferred stock including our Common Stock and Series A Preferred Stock,we may issue in an aggregate amount exceedinga future offering, that exceed 95% of our “Adjusted FFO”Adjusted FFO as defined in theour Credit Facility (which is different from AFFO as discussed and analyzed in this Annual Report on Form 10-K) for any period of four consecutive fiscal quarters, except in limited circumstances, including that for one fiscal quarter in each calendar year, we may pay cash dividends,distributions, make redemptions and make repurchases in an aggregate amount equal to no more than 100% of our Adjusted FFO.
Further, We used this exception to pay dividends that were between 95% of Adjusted FFO to 100% of Adjusted FFO during the quarter ended on June 30, 2018. On November 19, 2018, the lenders under our Credit Facility prohibits usconsented to an increase in the maximum amount we may use to pay cash distributions, make redemptions and make repurchases from paying distributions, including cash95% of Adjusted FFO to 100% of Adjusted FFO solely for the quarter ended December 31, 2018 and, during that quarter, we paid dividends payablethat were between 95% of Adjusted FFO to 100% of Adjusted FFO. There can be no assurance that our lenders will consent to any additional modifications to the restrictions in our Credit Facility on our Common Stock and Series A Preferred Stock, or redeeming or otherwise repurchasing shares of our capital stock, including our Common Stock and Series A Preferred Stock, after the occurrence and during the continuance of a default or an event of default under the Credit Facility, except in limited circumstances, including asability to pay dividends necessary to enable us to maintain our qualification as a REIT. Ifcompliance thereunder if we default underpay dividends that exceed 95% of Adjusted FFO in more than one fiscal quarter during 2019 or any future calendar year. In addition, the Credit Facility in any way, we would be unable to borrow additional amounts thereunder, and upon the occurrence of an event of default under the Credit Facility, any amounts we have borrowed thereunder could become immediately due and payable.
The agreements governing our future debt instrumentsagreements may also include additional restrictions on our ability to pay dividends.
Our ability to pay dividends in the future is dependent on our ability to generate cash flows from our operations. Our cash flows provided by operations were $144.6 million for the year ended December 31, 2018. During the year ended December 31, 2018, we paid dividends of $157.8 million, which includes payments to holders of our Common and Series A Preferred Stock and distributions to holders of the ordinary units of limited partner interest in the OP ("OP Units") and long term incentive plan units of limited partner interest in the OP ("LTIP Units"). Of these payments, $134.8 million, or redemptions85.4%, was funded from cash flows provided by operations after payment of preferred dividends and $23.1 million was funded from cash on hand, consisting of proceeds from borrowings.
Our ability to maintain compliance with the restrictions on the payment of distributions in our Credit Facility depends on our ability, and the time needed, to invest the approximately $151.2 million of net proceeds we received from the sale of approximately 7.8 million shares of Common Stock pursuant to our ATM Program during January 2019 in new acquisitions. There can be no assurance we will complete acquisitions on a timely basis or repurchases,on acceptable terms and conditions, if at all. If we fail to do so (and we are not otherwise able to increase the amount of cash we have available to pay dividends and distributions), our ability to comply with the restrictions on the payment of distributions in our Credit Facility may be adversely affected. Moreover, we could be subject to similar considerations in connection with any other offering of Common Stock or other equity securities we may conduct in the future.
If we are not able to generate sufficient cash from operations or otherwise maintain compliance with our Credit Facility, we may have to reduce the amount of dividends we pay or identify other financing sources to fund the payment of dividends at their current levels. There can be no assurance that other sources will be available on favorable terms, or at all. Funding dividends from borrowings restricts the amount we can borrow for property acquisitions and investments. Using proceeds from the sale of assets or the issuance of our Common Stock, and Series A Preferred Stock.Stock or other equity securities to fund dividends rather than invest in assets will likewise reduce the amount available to invest. Funding dividends from the sale of additional securities could also result in a dilution of our stockholders’ investment.
We are dependentdepend on the Advisor and its affiliate, the Property Manager, to provide us with executive officers, key personnel and all services required for us to conduct our operations and our operating performance may be impacted by any adverse changes in the financial health or reputation of the Advisor.
We have no employees. Personnel and services that we require are provided to us under contracts with the Advisor and its affiliate, the Property Manager. We depend on the Advisor, and any entities it may engage with our approval, and the Property Manager to manage our operations and to acquire and manage our portfolio of real estate assets.
Thus, our success depends to a significant degree upon the contributions of our executive officers and other key personnel of the Advisor. Neither we nor the Advisor has an employment agreement with any of these key personnel, except for the agreement between Mr. Nelson and the Advisor, and we cannot guarantee that all, or any particular one, will remain affiliated with us oremployed by the Advisor.Advisor and available to continue to perform services for us. If any of our key personnel were to cease their affiliation with the Advisor, our operating results, business and prospects could suffer. Further, we do not maintain key person life insurance on any person.

We believe that our success depends, in large part, upon the ability of the Advisor to hire, retain or contract services of highly skilled managerial, operational and marketing personnel. Competition for skilled personnel is intense, and there can be no assurance that the Advisor will be successful in attracting and retaining skilled personnel. If the Advisor loses or is unable to obtain the services of key personnel, the Advisor's ability to manage our business and implement our investment strategies could be delayed or hindered, and the value of an investment in shares of our stock may decline.
On March 8, 2017, the creditor trust established in connection with the bankruptcy of RCS Capital Corp. (“RCAP”), which prior to its bankruptcy filing was under common control with the Advisor, filed suit against AR Global, the Advisor, advisors of other entities sponsored by affiliates of AR Global, and AR Global’s principals. The suit alleges, among other things, certain breaches of duties to RCAP. We are neither a party to the suit, nor are there allegations related to the services the Advisor provides to us. On May 26, 2017, the defendants moved to dismiss. On November 30, 2017, the Court issued an opinion partially granting the defendants’ motion. On December 7, 2017, the creditor trust moved for limited reargument of the court's partial dismissal of its breach of fiduciary duty claim, and on January 10, 2018, the defendants filed a supplemental motion to dismiss certain claims. On April 5, 2018, the court issued an opinion denying the creditor trust's motion for reconsideration while partially granting the defendants' supplemental motion to dismiss. The Advisor has informed us that it believes the suit is without merit and intends to defend against it vigorously.

On November 5, 2018, the defendants moved for leave to amend their answers and for partial summary judgment on certain of the claims at issue in the case. The creditor trust opposed the motion, and it was argued before the court on February 6, 2019. The court has not yet ruled on the motion. On January 18, 2019, the defendants requested that the scheduling order governing the case be modified to bifurcate liability and damages issues for discovery purposes and trial. That request is also pending.
Any adverse changes in the financial condition or financial health of, or our relationship with, the Advisor, including any change resulting from an adverse outcome in any litigation, could hinder its ability to successfully manage our operations and our portfolio of investments. Additionally, changes in ownership or management practices, the occurrence of adverse events affecting the Advisor or its affiliates or other companies advised by the Advisor and its affiliates could create adverse publicity and adversely affect us and our relationship with lenders, tenants or counterparties.
We may terminate the Advisory Agreementadvisory agreement in only limited circumstances, which may require payment of a termination fee.
We have limited rights to terminate the Advisor. The initial term of the Advisory Agreementadvisory agreement expires on June 1, 2035, but is automatically renewed for consecutive five-year terms unless notice of termination is provided by either party 365 days in advance of the expiration of the term. Further, we may terminate the agreement only under limited circumstances. In the event of a termination in connection with a change in control of us or the Advisor’s failure (based on a good faith determination by our independent directors) to meet annual performance standards for the prior year based primarily on actions or inactions of the Advisor, we would be required to pay a termination fee that could be up to 2.5two and a half times the compensation paid to the Advisor in the previous year, plus expenses. The limited termination rights of the Advisory Agreementadvisory agreement will make it difficult for us to renegotiate the terms of the Advisory Agreementadvisory agreement or replace the Advisor even if the terms of the Advisory Agreementadvisory agreement are no longer consistent with the terms generally available to externally-managed REITs for similar services.
Moreover, our property management and leasing agreement with the Property Manager is only terminable without cause upon 12 months prior notice, which will make it difficult for us to renegotiate the terms of the property management and leasing agreement or replace the Property Manager even if the terms of the property management and leasing agreement are no longer consistent with the terms generally available to externally-managed REITs for similar services.
We rely significantly on major tenants and therefore are subject to tenant credit concentrations that make us more susceptible to adverse events with respect to those tenants.
As of December 31, 2017, we derived 5.0% of our consolidated annualized rental income on a straight-line basis from FedEx. Reductions or revisions in FedEx’s budget may adversely affect its ability to make payments pursuant to the terms or its lease. The value of our investment in a real estate asset is historically driven by the credit quality of the underlying tenant, and an adverse change in a major tenant’s financial condition or a decline in the credit rating of such tenant may result in a decline in the value of our investments. As of December 31, 2018, we derived 5% of our consolidated annualized rental income on a straight-line basis from FedEx.

A high concentration of our properties in a particular geographic area magnifies the effects of downturns in that geographic area and could have a disproportionate adverse effect on the value of our investments.
As of December 31, 2017, we derived2018, the following countries and states accounted for 5.0% or more of our consolidated annualized rental income on a straight-line basis from the following countries and states:basis:
Country December 31, 20172018
European Countries:  
United Kingdom 22.1%19.0%
Germany 8.5%7.4%
The Netherlands 7.0%6.1%
Finland 6.2%
France5.2%5.4%
Other European Countries 2.1%6.4%
Total European Countries 51.1%44.3%
United States & Puerto Rico: 
Michigan13.7%
Texas 8.2%
Michigan7.7%
California5.1%8.8%
Other States and Puerto Rico 27.9%33.2%
Total United States and Puerto Rico 48.9%55.7%
Total 100.0%
Any adverse situation that disproportionately affects the states and countries listed above may have a magnified adverse effect on us. Factors that may negatively affect economic conditions in these states or countries include:
restrictions on international trade;
business layoffs, downsizing or relocations;
industry slowdowns;
changing demographics;
climate change;
increased telecommuting and use of alternative work places;
infrastructure quality;

any oversupply of, or reduced demand for, real estate;
concessions or reduced rental rates under new leases for properties where tenants defaulted; and
increased insurance premiums.
Brexit and other events that create, or give the impression they could create, economic or political instability in Europe could adversely affect us.
On June 23, 2016, the United Kingdom held a referendum in which a majority of voters approved an exit from the European Union, commonly referred to as “Brexit.” On March 29, 2017, the United Kingdom gave formal notice of its exit from the European Union and commenced the two-year period of negotiations to determine the terms of the United Kingdom’s relationship with the European Union after the exit, including, among other things, the terms of trade between the United Kingdom and the European Union. These negotiations are ongoing. AnyOn June 26, 2018, the European Union (Withdrawal) Act was enacted into law, which made most existing European Union law the domestic law of the United Kingdom and provides that the European Union can no longer enact future laws for the United Kingdom. The European Union (Withdrawal) Act also fixed the “exit day” as 11.00 p.m. on March 29, 2019. On January 15, 2019, the Parliament of the United Kingdom voted to reject Prime Minister Theresa May’s draft EU withdrawal agreement, which had previously been agreed to between the European Union and United Kingdom representatives. Discussions continue, and any final agreement requireson different terms will require the approval of Parliament in both the United Kingdom and the European Union. The uncertainty surrounding when and on what terms the United Kingdom will ultimately exit the European Union, as well as uncertainty surrounding the ultimate impact of these events on both the United Kingdom and the European Union, has caused, and may continue to cause, significant volatility in global stock markets and currency exchange fluctuations, including a sharp decline in the value of the British pound sterling as compared to the U.S. dollar and other currencies. In addition to the long-term effects of Brexit that depend on whether the United Kingdom is able to retain access to European Union markets either during a transitional period or more permanently, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations as the United Kingdom determines which European Union laws to replace or replicate. As a general matter, Brexit may:
adversely affect European and worldwide economic and market conditions;

adversely affect commercial property market values and rental rates in the United Kingdom and continental Europe;
result in foreign currency exchange rate fluctuations that could adversely affect our results of operations, especially if we are unable to effectively hedge currency exchange exposure; and
adversely affect the availability of financing for commercial properties in the United Kingdom and continental Europe, which could impair our ability to acquire properties and may reduce the price for which we are able to sell properties we have acquired.
The effects of Brexit, including effects we cannot anticipate, could adversely affect us. However, until the terms, timing and timingeffects of Brexit become moreare not clear at this time, and it is not possible to determine the ultimate impact that the United Kingdom’s departure from the European Union or any related matters may have on us.
In addition to Brexit, there are other events that create, or give the impression they could create, economic or political instability in Europe. For example, concerns persist regarding the debt burden of certain Eurozone countries, their potential inability to meet their future financial obligations, and the overall stability of the European Union, and these concerns could lead to the introduction of individual currencies in one or more Eurozone countries, or, in more extreme circumstances, the possible dissolution of the Euro currency entirely. These potential developments, or market perceptions concerning these and related issues, could materially adversely affect the value of our investments and obligations in Europe (including the United Kingdom).
We are subject to additional risks from our international investments.
Based on original purchase price or acquisition value with respect to properties acquired in the Merger, 50.4%percentage of annualized rental income on a straight-line basis as of December 31, 2018, 44.3% of our properties are located in Europe, primarily in the United Kingdom, France, Germany, Luxembourg, The Netherlands, Finland, France and Finland,Luxembourg, and 49.6%55.7% of our properties are located in the U.S. and the Commonwealth of Puerto Rico. As part of our strategy of growth through property acquisitions, we intend to increase the percentage (based on original purchase price) of our portfolio located in the U.S. to 60%60.0%, but, even while implementing this strategy, we may purchase other properties and may make additional investments in Europe or elsewhere. These investments may be affected by factors peculiar to the laws and business practices of the jurisdictions in which the properties are located. These laws and business practices may expose us to risks that are different from and in addition to those commonly found in the U.S. Foreign investments pose several risks, including the following:
the burden of complying with a wide variety of foreign laws;
changing governmental rules and policies, including changes in land use and zoning laws, more stringent environmental laws or changes in such laws;
existing or new laws relating to the foreign ownership of real property or loans and laws restricting the ability of foreign persons or companies to remove profits earned from activities within the country to the person's or company's country of origin;
the potential for expropriation;
possible currency transfer restrictions;
imposition of adverse or confiscatory taxes;
changes in real estate and other tax rates and changes in other operating expenses in particular countries;
possible challenges to the anticipated tax treatment of the structures that allow us to acquire and hold investments;
adverse market conditions caused by terrorism, civil unrest and changes in national or local governmental or economic conditions;
the willingness of domestic or foreign lenders to make loans in certain countries and changes in the availability, cost and terms of loan funds resulting from varying national economic policies;
general political and economic instability in certain regions;
the potential difficulty of enforcing obligations in other countries; and
the Advisor’s limited experience and expertise in foreign countries relative to its experience and expertise in the U.S.

Investments in properties or other real estate investments outside the U.S. subject us to foreign currency risks.risk.
Investments we make outside the U.S. are generally subject to foreign currency risk due to fluctuations in exchange rates between foreign currencies and the U.S. dollar. Revenues generated from properties or other real estate investments acquiredlocated in foreign countries are generally denominated in the local currency. AsFurther, as of December 31, 2017,2018, we had $992.3$1.1 billion ($474.6 million, ($301.0 million, £223.2€325.6 million and €325.7£230.0 million) in gross outstanding mortgage debt, $298.9$363.9 million ($209278.6 million, £40.0€30.0 million and €30.0£40.0 million) in outstanding debt under the Revolving Credit Facility and $229.9$278.7 million, net (€194.6246.5 million) of outstanding debt under the Term Facility.Loan. We may continue to borrow in localforeign currencies when purchasing properties outside the Unites States, including draws under our revolving credit facility. As a result, changesRevolving Credit Facility. Changes in exchange rates of any of these foreign currencies to U.S. dollars may affect our revenues, operating margins and the amount of cash generated by these properties and the amount of cash we have available to pay dividends anddividends. Changes to exchange rates may also affect the book value of our assets and the amount of stockholders' equity.

Changes in foreign currency exchange rates used to value a REIT's foreign assets may be considered changes in the value of the REIT's assets. These changes may adversely affect our status as a REIT.
Foreign exchange rates may be influenced by many factors, including:
changing supply and demand for a particular currency;
the prevailing interest rates in one country as compared to another country;
monetary policies of governments (including exchange control programs, restrictions on local exchanges or markets and limitations on foreign investment in a country or an investment by residents of a country in other countries);
trade restrictions and other factors that could lead to changes in balances of payments and trade;
trade, restrictions;including the recent and proposed tariffs by the U.S. government and the potential for an international trade war; and
currency devaluations and revaluations.
Also, governments from time to time intervene in the currency markets, directly and by regulation, in order to influence prices.exchange rates. These events and actions are unpredictable.
We use foreign currency derivatives including options, currency forward and cross currency swap agreements to managehelp reduce our exposure to fluctuations in GBP-USD and EUR-USD exchange rates, but there can be no assurance our hedging strategy will be successful. If we fail to effectively hedge our currency exposure, or if we experience other losses related to our exposure to foreign currencies, our operating results could be negatively impacted and cash flows could be reduced.
Market and economic challenges experienced by the U.S. and global economies may adversely impact aspects of our operating results and operating condition.
Our business may be affected by market and economic challenges experienced by the U.S. and global economies. These conditions may materially affect the commercial real estate industry, the businesses of our tenants and the value and performance of our properties, and may affect our ability to pay dividends, and the availability or the terms of financing that we have or may anticipate utilizing. Challenging economic conditions may also impact the ability of certain of our tenants to enter into new leasing transactions or satisfy rental payments under existing leases. Specifically, global market and economic challenges may have adverse consequences, including:
decreased demand for our properties due to significant job losses that occur or may occur in the future, resulting in lower rents and occupancy levels;
an increase in the number of bankruptcies or insolvency proceedings of our tenants and lease guarantors, which could delay or preclude our efforts to collect rent and any past due balances under the relevant leases;
widening credit spreads as investors demand higher risk premiums, resulting in lenders increasing the cost for debt financing;
reduction in the amount of capital that is available to finance real estate, which, in turn, could lead to a decline in real estate values generally, slow real estate transaction activity, a reduction the loan-to-value ratio upon which lenders are willing to lend, and difficulty refinancing our debt;
a decrease in the market value of our properties, which may limit our ability to obtain debt financing secured by our properties;
a need for us to establish significant provisions for losses or impairments;
reduction in the value and liquidity of our short-term investments and increased volatility in market rates for such investments; and
reduction in cash flows from our operations as a result of foreign currency losses resulting from our operations in continental Europe and the United Kingdom if we are unsuccessful in hedging these potential losses or if, as part of our risk management strategies, we choose not to hedge some or all of the risk.

Continuing concerns regarding European debt, market perceptions concerning the instability of the Euro and recent volatility and price movements in the rate of exchange between the U.S. Dollar and the Euro could adversely affect our business, results of operations and our ability to obtain financing.
Concerns persist regarding the debt burden of certain Eurozone countries and their potential inability to meet their future financial obligations, the overall stability of the Euro. These concerns could lead to the re-introduction of individual currencies in one or more Eurozone countries, or, in more extreme circumstances, the possible dissolution of the Euro currency entirely. If the European Union dissolves, the legal and contractual consequences for holders of Euro-denominated obligations would be uncertain. This uncertainty would extend to, among other factors, whether obligations previously expressed to be owed and payable in Euros would be re-denominated in a new currency (with considerable uncertainty over the conversion rates), what laws would govern and which country’s courts would have jurisdiction. These potential developments, or market perceptions concerning these and related issues, could materially adversely affect the value of our Euro-denominated investments and obligations.
Furthermore, market concerns about economic growth in the Eurozone relative to the U.S. and speculation surrounding the potential impact on the Euro of a country sovereign default or exit from the Eurozone may continue to exert downward pressure on the rate of exchange between the U.S. Dollar and the Euro.
Inflation may have an adverse effect on our investments.
Certain countries have in the past experienced extremely high rates of inflation. Inflation, along with governmental measures to curb inflation, coupled with public speculation about the possible future governmental measures to be adopted, has had significant negative effects on these international economies in the past and this could occur again in the future.
Inflation could erode the value of long-term leases that do not contain indexed escalation provisions. High inflation in the countries in which we own or purchase real estate or make other investments could also increase expenses, and we may not be able to pass these increased costs onto our tenants. An increase in our expenses or a decrease in revenues could adversely impact results of operations. As of December 31, 2017,2018, certain of our leases, based on annualized rental income on a straight-line basis, for properties in foreign countries contain upward adjustments to fair market value every five years or contain capped indexed escalation provisions, but there can be no assurance that future leases on properties in foreign countries will contain such provisions or that such provisions will protect us from all potential adverse effects of inflation.

Conversely, low inflation can cause deflation, or an outright decline in prices. Deflation can lead to a negative cycle where consumers delay purchases in anticipation of lower prices, causing businesses to stop hiring and postpone investments as sales weaken. Deflation would have a serious impact on economic growth and may adversely affect the financial condition of our tenants and the rental rates at which we renew or enter into leases.
A high concentration of our tenants in a similar industry magnifies the effects of downturns in that industry and would have a disproportionate adverse effect on the value of investments.
If tenants of our properties are concentrated in a certain industry category, any adverse effect to that industry generally would have a disproportionately adverse effect on our portfolio. As of December 31, 2017,2018, the following industries had concentrations of properties representingaccounting for 5.0% or more of our consolidated annualized rental income on a straight-line basis:
Industry December 31, 20172018
Financial Services 13.9%12.2%
Technology 6.6%6.4%
Discount Retail 6.4%5.7%
Aerospace 6.2%
Healthcare5.4%5.3%
Telecommunications 5.9%
Government Services5.7%5.2%
Freight 5.2%
UtilitiesGovernment 5.2%5.1%
Any adverse situation that disproportionately affects the industries listed above may have a magnified adverse effect on our portfolio.

Our bank deposits in excess of insured limits expose us to risk of failure of any bank in which we deposit our funds.
We hold cash and cash equivalents at several banking institutions. These institutions are generally insured by the Federal Deposit Insurance Corporation in the U.S. or other entities in Europe, and each of these entities generally only insure limited amounts per depositor per insured bank. We have cash and cash equivalents and restricted cash deposited in interest-bearing accounts at certain financial institutions exceeding these insured levels. If any of the banking institutions in which we have deposited funds ultimately fails, we may lose the portion of the deposits that exceed the insured levels.
Our business and operations could suffer if theour Advisor or any other party that provides us with services essential to our operations experiences system failures or cyber incidents or a deficiency in cyber security.cybersecurity.
Despite system redundancy, the implementation of security measures and the existence of a disaster recovery plan for theThe internal information technology networks and related systems of theour Advisor and other parties that provide us with services essential to our operations these systems are vulnerable to damagesdamage from any number of sources, including computer viruses, unauthorized access, energy blackouts, natural disasters, terrorism, war and telecommunication failures. Any system failure or accident that causes interruptions in our operations could resultsresult in a material disruption to our business. We may also incur additional costs to remedy damages caused by suchthese disruptions.
A cyber incident is considered to be any adverse event that threatens the confidentiality, integrity or availability of information resources. More specifically, a cyber incident is an intentional attack or an unintentional event that can include gaining unauthorized access to systems to disrupt operations, corrupt data or steal confidential information. As reliance on technology has increased, so have the risks posed to the systems of thethose systems. Our Advisor and other parties that provide us with services essential to our operations. In addition,operations must continuously monitor and develop their networks and information technology to prevent, detect, address and mitigate the risk of aunauthorized access, misuse, computer viruses, and social engineering, such as phishing. We are continuously working, including with the aid of third party service providers, to install new, and to upgrade our existing, network and information technology systems, to create processes for risk assessment, testing, prioritization, remediation, risk acceptance, and reporting, and to provide awareness training around phishing, malware and other cyber incident, including by computer hackers, foreign governmentsrisks to ensure that our Advisor, other parties that provide us with services essential to our operations and we are protected against cyber terrorists, has generally increased as the number, intensityrisks and sophistication of attempted attackssecurity breaches. However, these upgrades, processes, new technology and intrusionstraining may not be sufficient to protect us from around the world have increased.all risks. Even the most well protected information, networks, systems and facilities remain potentially vulnerable because the techniques and technologies used in such attempted attacks and intrusions evolve and generally are not recognized until launched against a target,target. In some cases, attempted attacks and in some casesintrusions are designed not to be detected and, in fact, may not be detected.
The remediation costs and lost revenues experienced by a victimsubject of a cyber incidentan intentional cyberattack or other event which results in unauthorized third party access to systems to disrupt operations, corrupt data or steal confidential information may be significant and significant resources may be required to repair system damage, protect against the threat of future security breaches or to alleviate problems, including reputational harm, loss of revenues and litigation, caused by any breaches. Additionally, any failure to adequately protect against unauthorized or unlawful processing of personal data, or to take appropriate action in cases of infringement may result in significant penalties under privacy law.
In addition,Furthermore, a security breach or other significant disruption involving the information technology networks and related systems of theour Advisor or any other party that provides us with services essential to our operations could:

result in misstated financial reports, violations of loan covenants, missed reporting deadlines and/or missed permitting deadlines;
affect our ability to properly monitor our compliance with the rules and regulations regarding our qualification as a REIT;
result in the unauthorized access to, and destruction, loss, theft, misappropriation or release of, proprietary, confidential, sensitive or otherwise valuable information (including information about tenants), which others could use to compete against us or for disruptive, destructive or otherwise harmful purposes and outcomes;
result in our inability to maintain the building systems relied upon by itsour tenants for the efficient use of their leased space;
require significant management attention and resources to remedy any damages that result;
subject us to claims for breach of contract, damages, credits, penalties or termination of leases or other agreements; or
adversely impact our reputation among itsour tenants and investors generally.
Although theour Advisor and other parties that provide us with services essential to our operations intend to continue to implement industry-standard security measures, there can be no assurance that those measures will be sufficient, and any material adverse effect experienced by theour Advisor and other parties that provide us with services essential to our operations could, in turn, have an adverse impact on us.
We are inThere can be no assurance as to whether the litigation with the Service Provider related to our termination of the Former Service Provider.Provider will be settled on the anticipated terms, or at all.
On January 25, 2018, the Former Service Provider filed a complaint against us and the Advisor, the Property Manager, the Special Limited Partner, the OP, the Advisor (collectively, the "GNL Defendants") and AR Capital Global Holdings, LLC and AR Global (the "AR Global Defendants") in the Supreme Courtand various of the State of New York, County of New York. The complainttheir respective affiliates alleges that terminating the termination of theFormer Service Provider Agreement, was a pretext to enable the Advisor and AR Global Defendants to seize the Former Service Provider’sProvider's business with us. The complaint further alleges breach of contract against the GNL Defendants, and tortious interference against the AR Global Defendants. The complaint seeks, among other things:seeks: (i) monetary damages against the defendants, and (ii) to enjoin the GNL Defendants from terminatingtermination of the Former Service Provider Agreement, based onand (iii) judgment declaring the Termination Letters. On January 26,termination to be void. The parties are currently engaged in discovery. During the year ended December 31, 2018, we incurred $2.9 million of litigation costs relating to the Service Provider madematter and recorded a motion seekingreserve of $7.4 million related to preliminarily enjoin the defendantsanticipated settlement of this litigation. The settlement is not, however, final and remains subject to the parties agreeing to a definitive settlement agreement. The terms and conditions of this agreement, including the amounts we agree to pay, may differ from terminating the Service Provider Agreement pending resolution of the lawsuit. On February 13, 2018, the defendants responded and moved to dismiss. Both motions remain pending.amount reserved.
We believe this lawsuit is without merit and, if we are unable to reach agreement on a settlement, we intend to continue to contest it vigorously, but there can be no assurance that we will be successful.the suit vigorously. An unfavorable judgment against us could have a material adverse impact on our financial condition, liquidity, our

business and our acquisition strategy. Further, if the termination is enjoined, the Advisor would be required to maintain its relationship with the Former Service Provider, which could adversely affect the quality of the services provided to us. As with any litigation, the dispute and resulting litigation may divert management’s attention from the day-to-day operations of our business and result in substantial cost to us, including amounts that may become payable to reimburse the AR Global, the Advisor and their affiliates for their legal costs in defending themselves against the Former Service Provider’s lawsuit pursuant to our indemnification obligations to them.
We may in the future acquire or originate real estate debt or invest in real estate-related securities issued by real estate market participants, which would expose us to additional risks.

As of the date of this Annual Report on Form 10-K, we have not invested in any first mortgage debt loans, mezzanine loans, preferred equity or securitized loans, commercial mortgage-backed securities ("CMBS"), preferred equity and other higher-yielding structured debt and equity investments. In the future, however, we may choose to acquire or originate real estate debt or invest in real estate-related securities issued by real estate market participants, which would expose us not only to the risks and uncertainties we are currently exposed to through our direct investments in real estate but also to additional risks and uncertainties attendant to investing in and holding these types of investments, such as:
risk of defaults by borrowers in paying debt service on outstanding indebtedness and to other impairments of our loans and investments;
increased competition from entities engaged in mortgage lending and, or investing in our target assets;
deterioration in the performance of properties securing our investments may cause deterioration in the performance of our investments and, potentially, principal losses to us;
fluctuations in interest rates and credit spreads could reduce our ability to generate income on our loans and other investments;
difficulty in redeploying the proceeds from repayments of our existing loans and investments;
the illiquidity of certain of these investments;
lack of control over certain of our loans and investments;
the potential need to foreclose on certain of the loans we originate or acquire, which could result in losses additional risks, including the risks of the securitization process, posed by investments in CMBS and other similar structured finance investments, as well as those we structure, sponsor or arrange; use of leverage may create a mismatch with the duration and interest rate of the investments that we financing; and
the need to structure, select and more closely monitor our investments such that we continue to maintain our qualification as a REIT and our exemption from registration under the Investment Company Act of 1940, as amended.

Risks Related to Conflicts of Interest
The Advisor faces conflicts of interest relating to the purchase and leasing of properties, and these conflicts may not be resolved in our favor, which could adversely affect our investment opportunities.
We rely on AR Globalthe Advisor and the executive officers and other key real estate professionals at the Advisor to identify suitable investment opportunities for us. Several of the other key real estate professionals ofat the Advisor are also the key real estate professionals at the parent of AR Global and their other public programs.entities advised by affiliates of AR Global. Many investment opportunities that are suitable for us may also be suitable for other programs sponsored directly or indirectlyentities advised by the parentaffiliates of AR Global. For example, AFIN seeks, like us, to invest in a diversified portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties, in the U.S. Thus,, and we are party to an investment opportunity allocation agreement with AFIN pursuant to which each opportunity to acquire one or more domestic office or industrial properties will be presented first to us, and each opportunity to acquire one or more domestic retail or distribution properties will be presented first to AFIN. There can be no assurance the executive officers and real estate professionals ofat the Advisor couldwill not direct attractive investment opportunities to AFIN, which has contractual priority over us with respect to domestic retail or distribution properties, or other entities such as AFIN.advised by affiliates of AR Global.
We and other programs sponsored directly or indirectlyentities advised by the parentaffiliates of AR Global also rely on these real estate professionals, to supervise the property management and leasing of properties. OurThese executive officers and key real estate professionals, as well as AR Global, are not prohibited from engaging, directly or indirectly, in any business or from possessing interests in other businesses and ventures, including businesses and ventures involved in the acquisition, development, ownership, leasing or sale of real estate investments.
The Advisor faces conflicts of interest relating to joint ventures, which could result in a disproportionate benefit to the other venture partners at our expense.
We may enter into joint ventures with other programs sponsored directly or indirectlyentities advised by the parentaffiliates of AR Global for the acquisition, development or improvement of properties. The Advisor may have conflicts of interest in determining which programs sponsored directly or indirectlyentity advised by the parentaffiliates of AR Global should enter into any particular joint venture agreement. The co-venturer may have economic or business interests or goals that are or may become inconsistent with our business interests or goals. In addition, the Advisor may face a conflict in structuring the terms of the relationship between our interests and the interest of the affiliated co-venturer and in managing the joint venture. Due to the role of the Advisor and its affiliates, agreements and transactions between the co-venturers with respect to any such joint venture will not have the benefit of arm’s-length negotiation of the type normally conducted between unrelated co-venturers, which may result in the co-venturer receiving benefits greater than the benefits that we receive. In addition, we may assume liabilities related to the joint venture that exceeds the percentage of our investment in the joint venture.
Our officers and directors face conflicts of interest related to the positions they hold with related parties, which could hinder our ability to successfully implement its business strategy and to generate returns to you.parties.
Certain of our executive officers, including James Nelson, chief executive officer and president, and Christopher Masterson, chief financial officer, treasurer and secretary, also are officers of the Advisor and the Property Manager. Our directors also are

directors of other REITs sponsored directly or indirectly by the parent of AR Global. As a result, these individuals owe fiduciary duties to these other entities which may conflict with the duties that they owe to us.
These conflicting duties could result in actions or inactions that are detrimental to our business. Conflicts with our business and interests are most likely to arise from involvement in activities related to (a) allocation of new investments and management time and services between us and the other entities, (b) our purchase of properties from, or sale of properties, to entities sponsored by or affiliated with AR Global, (c) the timing and terms of the investment in or sale of an asset, (d) development of our properties by affiliates of AR Global, (e) investments with affiliates of the Advisor, and (f) compensation to the Advisor and its affiliates, including the Property Manager.
Moreover, involvement in the management of multiple REITs by certain of the key personnel of the Advisor may significantly reduce the amount of time they are able to spend on activities related to us, which may cause our operating results to suffer.
The Advisor faces conflicts of interest relating to the structure of the feescompensation it may receive.
Under the Advisory Agreement, the partnershipadvisory agreement, of the OP, and the OPP (as defined in “Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Share-Based Compensation-Multi-Year Outperformance Agreement”), the Advisor is entitled to substantial minimum compensation regardless of performance. Further, becauseperformance as well as incentive compensation, and, under the 2018 OPP, the Advisor is entitled to earn LTIP Units (see Note 11 — Related Party Transactions and Note 13 — Share-Based Compensation to our consolidated financial statements included in this Annual Report on Form 10-K). These arrangements, coupled with the fact that the Advisor does not maintain a significant equity interest in us, and is entitled to receive fees and earn LTIP Units (as definedmay result inItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities-Share-Based Compensation-Multi-Year Outperformance Agreement”) based on performance, the Advisor may be incentivized to

recommendtaking actions or recommending investments that are riskier or more speculative than investments recommended by an advisor with a more significant investment in us.us might take or recommend.

Risks Related to our Corporate Structure, Common Stock and Series A Preferred Stock
The trading prices of our Common Stock and Series A Preferred Stock may fluctuate significantly.
Our Common Stock and Series A Preferred Stock are listed on the NYSE. The trading prices of our Common Stock and Series A Preferred Stock are impacted by a number of factors, many of which are outside our control. Among the factors that could affect the prices of our Common Stock and Series A Preferred Stock are:    
our financial condition and performance;
our ability to achieve our strategy of growth through property acquisitions, and the terms, including with respect to financing availability and our pace of completing acquisitions, upon which we are able to do so;
the financial condition of our tenants, including the extent of tenant bankruptcies or defaults;
actual or anticipated quarterly fluctuations in our operating results and financial condition;
the amount and frequency of our payment of dividends;
additional issuances of equity securities, including Common Stock or Series A Preferred Stock;
the reputation of REITs and real estate investments generally and the attractiveness of REIT equity securities in comparison to other equity securities, and fixed income securities;
our reputation and the reputation of AR Global, its affiliates or entities sponsoredadvised by AR Global;
uncertainty and volatility in the equity and credit markets;
fluctuations in interest rates and exchange rates;
changes in revenue or earnings estimates, if any, or publication of research reports and recommendations by financial analysts or actions taken by rating agencies with respect to our securities or those of other REITs;
failure to meet analysts’analyst revenue or earnings estimates;
strategic actions by us or our competitors, such as acquisitions or restructurings;
the extent of investment in our Common Stock by institutional investor interest in us;investors;
the extent of short-selling of our Common Stock;
general financial and economic market conditions and, in particular, developments related to market conditions for REITs and other real estate related companies;
failure to maintain our REIT status;
changes in tax laws;
domestic and international economic factors unrelated to our performance; and
all other risk factors addressed elsewhere in this Annual Report on the Form 10-K.
Moreover, although an activea market has developed for our Series A Preferred Stock, there can be no assurance that an active and liquid trading market will be developed or maintained. If an active and liquid trading market is not developed or maintained, the market price and liquidity of our Series A Preferred Stock may be adversely affected.

We depend on our OP and its subsidiaries for cash flow and are structurally subordinated in right of payment to the obligations of our OP and its subsidiaries.
Our only significant asset is the partnershipour interest we own in our OP. We conduct, and intend to continue conducting, all of our business operations through our OP. Accordingly, our only source of cash to pay our obligations is dividendsdistributions from our OP and its subsidiaries. Until such time as the LTIP Units held by the Advisor are fully earned in accordance with the provisions of the OPP, the LTIP Units are entitled to dividends equal to 10% of the dividends made on the OP Units. After the LTIP Units are fully earned, they are entitled to a catch-up distribution and then receive the same distribution as the OP Units.
There is no assurance that our OP or its subsidiaries will be able to, or be permitted to, pay dividendsdistributions to us that will enable us to pay dividends to our stockholders holders of OP Units and distributions to holders of LTIP Units from cash flows from operations or otherwise pay any other obligations. Each of our OP's subsidiaries is a distinct legal entity and, under certain circumstances, legal and contractual restrictions may limit our ability to obtain cash from these entities. In addition, any claims we may have will be structurally subordinated to all existing and future liabilities and obligations of our operating partnershipOP and its subsidiaries. Therefore, in the event of our bankruptcy, liquidation or reorganization, our assets and those of our OP and its subsidiaries will be available to satisfy the claims of our creditors or to pay dividends to our stockholders only after all the liabilities and obligations of our OP and its subsidiaries have been paid in full.
A stockholder's interest in us could be diluted if weWe may issue additional equity securities which could adversely affectin the value of our Common Stock and Series A Preferred Stock.future.
Existing stockholders do not have preemptive rights to any shares issued by us in the future. Our charter authorizes us to issue up to 116,670,000166,670,000 shares of stock, consisting of 100,000,000150,000,000 shares of common stock, par value $0.01 per share, and 16,670,000 shares of preferred stock, par value $0.01 per share. As of December 31, 2017,February 22, 2019, we had the following stock issued and outstanding: (i) 67,287,23183,840,503 shares of Common Stock, and (ii) 5,409,6505,416,890 shares of Series A Preferred Stock. Subject to the approval rights of holders of

our Series A Preferred Stock regarding authorization or issuance of equity securities ranking senior to the Series A Preferred Stock, our board of directors, without stockholder approval, may amend our charter from time to time to increase or decrease the aggregate number of authorized shares of stock, or the number of authorized shares of any class or series of stock, or may classify or reclassify any unissued shares into the classes or series of stock without the necessity of obtaining stockholder approval. All of our authorized but unissued shares of stock may be issued in the discretion of our board of directors.The issuance of additional shares of our Common Stock could dilute the interests of the holders of our Common Stock, and any issuance of shares of preferred stock senior to our Common Stock, such as our Series A Preferred Stock, or any incurrence of additional indebtedness, could affect our ability to pay dividends on our Common Stock. The issuance of additional shares of preferred stock ranking equal or senior to our Series A Preferred Stock, including preferred stock convertible into shares of our Common Stock, could dilute the interests of the holders of Common Stock and Series A Preferred Stock, and any issuance of shares of preferred stock senior to our Series A Preferred Stock or of additional indebtedness could affect our ability to pay dividends on, redeem or pay the liquidation preference on our Series A Preferred Stock. These issuances could also adversely affect the trading price of our Common Stock and our Series A Preferred Stock.
In addition, we may issue shares of our Common Stock pursuant to stock awards granted to our officers and directors, pursuant to the Advisory Agreementadvisory agreement in payment of fees thereunder, or in connection with the Advisor earning LTIP Units pursuant to the 2018 OPP. As of December 31, 2017, no shares of our Common Stock have been issued pursuant to the Advisory Agreement and no LTIP Units have been earned. LTIP Units are convertible into OP Units subject to beingafter they have been earned and vested andsubject to several other conditions. We may also issue OP Units to sellers of properties we acquire. We also may issue shares of our Common Stock or Series A Preferred Stock pursuant to our ATM Programexisting at-the-market programs or any similar future program.
Any issuance of additional equity securities by us could dilute the interest of our existing stockholders.
The limit on the number of shares a person may own may discourage a takeoverthird party from acquiring us in a manner that could otherwisemight result in a premium price to our stockholders.
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT. Unless exempted by our board of directors, no person may own more than 9.8% in value of the aggregate of the outstanding shares of our stock or more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of shares of our stock. This restriction may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might provide a premium price for holders of our Common Stock.
The terms of our Series A Preferred Stock, and the terms other preferred stock we may issue, may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
The change of control conversion and redemption features of our Series A Preferred Stock may make it more difficult for a party to acquire us or discourage a party from seeking to acquire us. Upon the occurrence of a change of control, holders of Series A Preferred Stock will, under certain circumstances, have the right to convert some of or all their shares of Series A Preferred Stock into shares of our Common Stock (or equivalent value of alternative consideration) and under these circumstances we will also have a special optional redemption right to redeem shares of Series A Preferred Stock. These features of our Series A Preferred Stock may have the effect of discouraging a third party from seeking to acquire us or of delaying, deferring or preventing a change of control under circumstances that otherwise could provide the holders of our Common Stock and Series A Preferred Stock with the opportunity to realize a premium over the then-current market price or that stockholders may otherwise believe is in their best interests. We may also issue other classes or series of preferred stock that could also have the same effect.

We have a classified board, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders.
Our board of directors is divided into three classes of directors. At each annual meeting, directors of one class are elected to serve until the annual meeting of stockholders held in the third year following the year of their election and until their successors are duly elected and qualify. The classification of our board of directors may have the effect of delaying, deferring or preventing a change in control of us, including an extraordinary transaction (such as a merger, tender offer or sale of all or substantially all our assets) that might result in a premium price for our stockholders.
Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may discourage a takeoverthird party from acquiring us in a manner that could otherwisemight result in a premium price to our stockholders.
Under Maryland law, “business combinations” between a Maryland corporation and an interested stockholder or an affiliate of an interested stockholder are prohibited for five years after the most recent date on which the interested stockholder becomes an interested stockholder. These business combinations include a merger, consolidation, share exchange or, in circumstances specified in the statute, an asset transfer or issuance or reclassification of equity securities. An interested stockholder is defined as:
any person who beneficially owns, directly or indirectly, 10% or more of the voting power of the corporation’s outstanding voting stock; or
an affiliate or associate of the corporation who, at any time within the two-year period prior to the date in question, was the beneficial owner, directly or indirectly, of 10% or more of the voting power of the then outstanding stock of the corporation.
A person is not an interested stockholder under the statute if the board of directors approved in advance the transaction by which he or she otherwise would have become an interested stockholder. However, in approving a transaction, the board of directors may provide that its approval is subject to compliance, at or after the time of approval, with any terms and conditions determined by the board.

After the five-year prohibition, any business combination between the Maryland corporation and an interested stockholder generally must be recommended by the board of directors of the corporation and approved by the affirmative vote of at least:
80% of the votes entitled to be cast by holders of outstanding shares of voting stock of the corporation; and
two-thirds of the votes entitled to be cast by holders of voting stock of the corporation other than shares held by the interested stockholder with whom or with whose affiliate the business combination is to be effected or held by an affiliate or associate of the interested stockholder.
These super-majority vote requirements do not apply if the corporation’s common stockholders receive a minimum price, as defined under Maryland law, for their shares in the form of cash or other consideration in the same form as previously paid by the interested stockholder for its shares. The business combination statute permits various exemptions from its provisions, including business combinations that are exempted by the board of directors prior to the time that the interested stockholder becomes an interested stockholder. Pursuant to the statute, our board of directors has exempted any business combination involving the Advisor or any affiliate of the Advisor. Consequently, the five-year prohibition and the super-majority vote requirements will not apply to business combinations between us and the Advisor or any affiliate of the Advisor. As a result, the Advisor and any affiliate of the Advisor may be able to enter into business combinations with us that may not be in the best interest of our stockholders, without compliance with the super-majority vote requirements and the other provisions of the statute. The business combination statute may discourage others from trying to acquire control of us and increase the difficulty of consummating any offer.
Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Baltimore Division, is the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf, (b) any action asserting a claim of breach of any duty owed by any of our directors or officer or other employees to us or our stockholders, (c) any action asserting a claim against the us or any of our directors or officers or other employees arising pursuant to any provision of Maryland law, our charter or our bylaws, or (d) any action asserting a claim against us or any of our directors or officers or other employees that is governed by the internal affairs doctrine for certain types of actions and proceedings that may be initiated by our stockholders with respect to us, our directors, our officers or our employees. This choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable.  Alternatively, if a court were to find this provision of our bylaws inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving these matters in other jurisdictions.

Maryland law limits the ability of a third-party to buy a large stake in us and exercise voting power in electing directors, which may discourage a takeoverthird party from acquiring us in a manner that could otherwisemight result in a premium price to our stockholders.
The Maryland Control Share Acquisition Act provides that holders of “control shares” of a Maryland corporation acquired in a “control share acquisition” have no voting rights except to the extent approved by the stockholders by the affirmative vote of stockholders entitled to cast at least two-thirds of all the votes entitled to be cast on the matter. Sharesmatter, excluding all shares of stock owned by the acquirer, by officers or by employees who are directors of the corporation, are excluded from shares entitled to vote on the matter.corporation. “Control shares” are voting shares of stock which, if aggregated with all other shares of stock owned by the acquirer or in respect of which the acquirer can exercise or direct the exercise of voting power (except solely by virtue of a revocable proxy), would entitle the acquirer to exercise voting power in electing directors within specified ranges of voting power. Control shares do not include shares the acquiring person is then entitled to vote as a result of having previously obtained stockholder approval or shares acquired directly from the corporation. A “control share acquisition” means the acquisition of issued and outstanding control shares. The control share acquisition statute does not apply (a) to shares acquired in a merger, consolidation or share exchange if the corporation is a party to the transaction, or (b) to acquisitions approved or exempted by the charter or bylaws of the corporation. Our bylaws contain a provision exempting from the Maryland Control Share Acquisition Act any and all acquisitions of our stock by any person. There can be no assurance that this provision will not be amended or eliminated at any time in the future.
Our board of directors may change our investment policies without stockholder approval, which could alter the nature of our portfolio.approval.
Our board of directors may change our investment policies over time. The methods of implementing our investment policies also may vary, as new real estate development trends emerge and new investment techniques are developed. Our investment policies, the methods for their implementation, and our other objectives, policies and procedures may be altered by our board of directors without the approval of our stockholders. As a result, the nature of a stockholder's investmentour investments could change without the consent of stockholders.stockholder approval.
OurSubject to conditions and exceptions, we have indemnified our officers, directors, the Advisor and its affiliates against claims or liability they may become subject to due to their service to us, and our rights and the rights of our stockholders to recover claims against our officers, directors, and the Advisor and its affiliates are limited, which could reduce recoveries against them if they cause us to incur losses.limited.
Maryland law provides that a director has no liability in that capacity if he or she performs his or her duties in good faith, in a manner he or she reasonably believes to be in the corporation’s best interests and with the care that an ordinarily prudent person in a like position would use under similar circumstances. In addition, subject to certain limitations set forth therein or under Maryland law, our charter provides that no director or officer will be liable to us or our stockholders for monetary damages and requirespermits us to indemnify our directors and officers from liability and advance certain expenses to them in connection with claims or liability they may become subject to due to their service to us, and we are not restricted from indemnifying our Advisor or its affiliates on a similar basis. We have entered into indemnification agreements to this effect with our directors and officers, certain former directors and officers, the Advisor and the Advisor’s affiliates and permitsus to indemnify our employees and agents.certain of its affiliates. We and our stockholders also may have more limited rights againstour directors, officers, employees and agents, and the Advisor and its affiliates, than might otherwise exist under common law, which could reduce recoveriesthe recovery of our stockholders and our recovery against them. In addition, we may be obligated to fund the defense costs incurred by our directors, officers, employees and agents or the Advisor and its affiliates in some cases. Subject to conditions and exceptions, we also indemnify our Advisor and its affiliates from losses arising in the performance of their duties under the advisory agreement and have agreed to advance certain expenses to them in connection with claims or liability they may become subject to due to their service to us..
Payment of fees to the Advisor and its affiliates reduces cash available for investment and other uses including payment of dividends to our stockholders.
The Advisor its affiliates perform services for us in connection with the selection and acquisition of our investments, the management of our properties, the servicing of our debt, and the administration of our investments. They are paid substantial fees for these services, which reduces cash available for investment, other corporate purposes, including payment of dividends to our stockholders.

Risks Related to Net Lease Sale-Leaseback Investments
The inability of a tenant in single-tenant properties to pay rent will materially reduce our revenues.
Substantially all of our properties are occupied by single tenants and, therefore, the success of our investments is materially dependent on the financial stability of these individual tenants. Many of our single tenant leases require that certain property level operating expenses and capital expenditures, such as real estate taxes, insurance, utilities, maintenance and repairs (other than, in certain circumstances structural repairs, such as repairs to the foundation, exterior walls and rooftops) including increases with respect thereto, be paid, or reimbursed to us, by our tenants. A default of any tenant on its lease payments to us would cause us to lose the revenue from the property and potentially increase our expenses and cause us to have to find an alternative source of revenue to meet any mortgage payment and prevent a foreclosure if the property is subject to a mortgage. In the event of a default, we may experience delays in enforcing our rights as landlord and may incur substantial costs in protecting our investment and reletting our property. If a lease is terminated, there is no assurance that we will be able to lease the property for the rent previously

received or sell the property without incurring a loss. A default by a tenant, the failure of a guarantor to fulfill its obligations or other premature termination of a lease, or a tenant’s election not to extend a lease upon its expiration, could have an adverse effect.
Single-tenant properties may be difficult to sell or re-lease upon tenant defaults or early lease terminations.
If a lease for one of our single-tenant properties is terminated or not renewed or, in the case of a mortgage loan, if we take such property in foreclosure, we may be required to renovate the property or to make rent concessions in order to lease the property to another tenant or sell the property. Special use single-tenant properties may be relatively illiquid compared to other types of real estate and financial assets. This illiquidity will limit our ability to quickly change our portfolio in response to changes in economic or other conditions. In addition, in the event we are forced to sell the property, we may have difficulty selling it to a party other than the tenant or borrower due to the special purpose for which the property may have been designed. These and other limitations may affect our ability to re-lease or sell properties.
Acquisitions of properties inIf a sale-leasebacktransactions could be transaction is recharacterized in a tenant’s bankruptcy proceeding, which could adversely affect our financial condition and ability to pay dividends.dividends to our stockholders could be adversely affected.
We have entered and may continue to may enter into sale-leaseback transactions, whereby we would purchase a property and then lease the same property back to the person from whom we purchased it.In the event of the bankruptcy theof a tenant, a transaction structured as a sale-leaseback may be re-characterizedrecharacterized as either a financing or a joint venture.venture, and either type of recharacterization could adversely affect our business. If the sale-leaseback was re-characterizedwere recharacterized as a financing, we might not be considered the owner of the property, and as a result would have the status of a creditor, not a property owner.creditor. In that event, we would no longer have the right to sell or encumber our ownership interest in the property. Instead, we would have a claim against the tenant for the amounts owed under the lease. The tenant/debtor might have the ability to propose a plan restructuring the term, interest rate and amortization schedule of its outstanding balance. If such athis plan iswere confirmed by the bankruptcy court, we couldwould be bound by the new terms. If the sale-leaseback were characterizedrecharacterized as a joint venture, our lessee and we could be treated as co-venturers with regard to the property. As a result, we could be held liable, under some circumstances, for debts incurred by the lessee relating to the property.
Highly leveraged tenants may have a higher possibility of filing for bankruptcy or insolvency.
Highly leveraged tenants that experience downturns in their operating results due to adverse changes to their business or economic conditions may have a higher possibility of filing for bankruptcy or insolvency. In bankruptcy or insolvency, a tenant may have the option of vacating a property instead of paying rent. Until such a property is released from bankruptcy, our revenues may be reduced.
If a tenant or lease guarantor declares bankruptcy or becomes insolvent, we may be unable to collect balances due under relevant leases.
Any of our tenants, or any guarantor of a tenant’s lease obligations, could become insolvent or be subject to a bankruptcy proceeding pursuant to Title 11 of the bankruptcy laws of the United States.States Code. A bankruptcy filing of our tenants or any guarantor of a tenant’s lease obligations would barresult in a stay of all efforts by us to collect pre-bankruptcy debts from these entities or their assets, unless we receive an enabling order from the bankruptcy court. Post-bankruptcy debts would be required to be paid currently. If a lease is assumed by the tenant, all pre-bankruptcy balances owing under it must be paid in full. If a lease is rejected by a tenant in bankruptcy, we would have a general unsecured claim for damages. If a lease is rejected, it is unlikely we would receive any payments from the tenant because our claim is capped at the rent reserved under the lease, without acceleration, for the greater of one year or 15% of the remaining term of the lease, but not greater than three years, plus rent already due but unpaid.unpaid as of the date of the bankruptcy filing (post-bankruptcy rent would be payable in full). This claim could be paid only if funds were available, and then only in the same percentage as that realized on other unsecured claims.
A tenant or lease guarantor bankruptcy could delay efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums. A tenant or lease guarantor bankruptcy could cause a decrease or cessation of rental payments that would mean a reduction in our cash flow and the amount available for dividends to our stockholders. In the event of a bankruptcy, there can be no assurancewe cannot assure our stockholders that the tenant or its trustee will assume our lease.lease, and that our cash flow and the amounts available for dividends to our stockholders will not be adversely affected.
For any foreign tenant or lease guarantor, the tenant or lease guarantor could become insolvent or be subject to an insolvency or bankruptcy proceeding pursuant to a foreign jurisdiction instead of Title 11 of the United States Code. The effect of the insolvency or bankruptcy proceeding on us will depend in each case on the relevant jurisdiction and its own insolvency regime or code but in all events we will face difficulties in collecting amounts owed to us with respect to the applicable lease under these circumstances.
The credit profile of our tenants may create a higher risk of lease defaults and therefore lower revenues.
Based on annualized rental income on a straight-line basis as of December 31, 2017, 23.7%2018, 21.7% of our tenants are not evaluated or ranked by credit rating agencies, or are ranked below "investment grade," which includes both actual investment grade ratings

of the tenant and “implied investment grade,” which includes ratings of the tenant’s parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or lease guarantor. Implied Investment Grade ratings are also determined using a proprietary Moody’s analytical tool, which compares the risk metrics of the non-rated company to those of a company

with an actual rating. Of our “investment grade” tenants, 39.0% have actual investment grade ratings and 39.3% have “implied investment grade” ratings.
Our long-term leases with certain of these tenants may therefore pose a higher risk of default than would long-term leases with tenants who have investment grade ratings.
Net leases may not result in fair market lease rates over time, which could negatively impact our income.time.
As of December 31, 2017, allAll of our rental income wasis generated from net leases, which generally provide the tenant greater discretion in using the leased property than ordinary property leases, such as the right to freely sublease the property, to make alterations in the leased premises and to terminate the lease prior to its expiration under specified circumstances. Net leases may not result in fair market lease rates over time, which could negatively impact our income.results of operations.
Long-term leases may result in income lower than short term leases.
We generally seek to enter into long-term leases with our tenants. As of December 31, 2017, 23.5%2018, 21.7% of our annualized rental income on a straight-line basis was generated from net leases, with remaining lease term of more than 10 years. Leases of long duration, or with renewal options that specify a maximum rate increase, may not result in fair market lease rates over time if we do not accurately judge the potential for increases in market rental rates.
CertainSome of our leases do not contain any rent escalation provisions. As a result, our income may be lower than it would otherwise be if we did not lease properties through long-term leases. Further, if our properties are leased for long term leases at below market rental rates, our properties will be less attractive to potential buyers, which could affect our ability to sell the property at an advantageous price.

General Risks Related to Investments in Real Estate
Our operating results are affected by economic and regulatory changes that have an adverse impact on the real estate market in general. These changes affectgeneral, and we cannot assure our profitability and ability tostockholders that we will be profitable or that we will realize growth in the value of our real estate properties.
Our operating results and value of our properties are subject to risks generally incident to the ownership of real estate, including:
changes in general, economic andor local economic conditions;
changes in supply of andor demand for similar or competing properties in the areas in which our properties are located;an area;
changes in interest rates and availability of debt financing; andmortgage financing on favorable terms, or at all;
changes in tax, real estate, environmental and zoning lawslaws; and
the possibility that one or more of our tenants will be unable to pay their rental obligations.
These and other factorsrisks may affect the profitability andprevent us from being profitable or from realizing growth or maintaining the value of our real estate properties.
Properties thatmay have vacancies for a significant period of time could be difficult to sell, which could diminish the return on your investment.time.
A property may experiencehave vacancies either by the continued default of tenants under their leasesdue to tenant defaults or the expiration of tenant leases. Properties that are vacant will produce no revenue, and the costIf vacancies continue for a long period of owning the propertytime, we may be substantial. Vacancies will resultsuffer reduced revenues resulting in less cash being available to be distributed to stockholders.for things such as dividends. In addition, because properties’the market values depend principally upon the value of a property depends principally on the properties’ leases,cash generated by the property, the resale value of propertiesa property with prolonged vacancies would be lower.could decline significantly.
We generally obtain only limited warranties when we purchase a property and therefore have only limited recourse if our due diligence does not identify any issues that lower the value of our property, which could adversely affect our financial condition and ability to pay dividends to you.
We have acquired, and may continue to acquire, properties in “as is” condition on a “where is” basis and “with all faults,” without any warranties of merchantability or fitness for a particular use or purpose. In addition, purchase agreements may contain only limited warranties, representations and indemnifications that will only survive for a limited period after the closing. The purchase of properties with limited warranties increases the risk that we may lose some or all of our invested capital in the property as well as the loss of rental income from that property.
We may be unable to secure funds for future tenant improvements or capital needs, which could impact the value of the applicable property or our ability to lease the applicable property on favorable terms.
If a tenant does not renew its lease or otherwise vacate its space, we likely will be required to expend substantial funds for tenant improvements and tenant refurbishments to the vacated space. In addition, we will likely be responsible for any major structural repairs, such as repairs to the foundation, exterior walls and rooftops, even if our leases with tenants require tenants to pay routine property maintenance costs. We will have to obtain financing from sources, such as cash flow from operations, borrowings, property sales or future equity offerings to fund these capital requirements. These sources of funding may not be available on attractive terms or at all. If we cannot procure additional funding for capital improvements, the value of the applicable property or our ability to lease the applicable property on favorable terms could be adversely impacted.

We may not be able to sell a property when we desire to do so.
The real estate market is affected by many factors, such as general economic conditions, availability of financing, interest rates and other factors, including supply and demand, that are beyond our control. In addition, we may not have funds available to correct defects or make improvements that are necessary or desirable before the sale of a property. We cannot predict whether we will be able to sell any property for the price or on the terms set by us, or whether any price or other terms offered by a prospective purchaser would be acceptable to us. We cannot predict the length of time needed to find a willing purchaser and to close the sale of a property. In addition, our ability to sell properties that have been held for less than two years is limited as any gain recognized on the sale or other disposition of such property could be subject to the 100% prohibited transaction tax, as discussed in more detail below.
We have acquired or financed, and may continue to acquire or finance, properties with lock-out provisions which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties.
Lock-out provisions, such as the provisions contained in certain mortgage loans we have entered into, could materially restrict us from sellingour ability to sell or otherwise disposingdispose of or refinancingrefinance properties, including by requiring the payment of a yield maintenance premium in connection with the required prepayment of principal upon a sale or disposition. Lock-out provisions may also prohibit us from reducing the outstanding indebtedness with respect to any properties, refinancing such indebtedness on a non-recourse basis at maturity, or increasing the amount of indebtedness with respect to such properties. Lock-out provisions could also impair our ability to take other actions during the lock-out period that may otherwise be in the best interests of our stockholders. In particular, lock-out provisions could preclude us from participating in major transactions that could result in a disposition of our assets or a change in control. Payment of yield maintenance premiums in connection with dispositions or refinancings could adversely affect our results of operations and cash available to pay dividends.
Rising expenses could reduce cash flow.
AnyThe properties that we own now or buy in the futuremay acquire are and will be subject to operating risks common to real estate in general, any or all of which may negatively affect us. If any property is not fully occupied or if rents are being paid in an amount that is insufficient to cover operating expenses, we could be required to expend funds with respect to that property for operating expenses. The properties willProperties may be subject to increases in tax rates, utility costs, operating expenses, insurance costs, repairs and maintenance and administrative expenses. Renewals of leases or future leases may not be negotiated on that basis, in which event we may have to pay those costs. If we are unable to lease properties on a triple-net-lease basis or on a basis requiring the tenants to pay all or some of such expenses, or if tenants fail to pay required tax, utility and other impositions, we could be required to pay those costs which would, among other things, limit the amount of funds we have available for other purposes, including the payment of dividends and future acquisitions.
Real estate-related taxes may increase and if these increases are not passed on to tenants, our incomecash available for dividends will be reduced.
Some local real property tax assessors may seek to reassess some of our properties as a result of our acquisition of the property, and, from time to time, our property taxes may increase as property values or assessment rates change or for other reasons deemed relevant by the assessors. An increase in the assessed valuation of a property for real estate tax purposes will result in an increase in the related real estate taxes on that property. There is no assurance that renewal leases or future leases will be negotiated on the same basis. Increases not passed through to tenants will adversely affect our income.cash available for dividends.
Our properties and our tenants may face competition that may affect tenants’ ability to pay rent.
Our properties typically are, and we expect properties we acquire in the future will be, located in developed areas. Therefore, there are and will be numerous other properties within the market area of each of our properties that will compete with us for tenants. The number of competitive properties could have a material effect on our ability to rent space at our properties and the amount of rents charged. We could be adversely affected if additional competitive properties are built in locations competitive with our properties, causing increased competition for customer traffic and creditworthy tenants. Tenants may also face competition from such properties if they are leased to tenants in a similar industry. For example, as of December 31, 2017, 9.6%2018, 8% of our properties, based on annualized rental income on a straight-line basis, were retail properties, and our retail tenants face competition from numerous retail channels such as discount or value retailers, factory outlet centers and wholesale clubs. Retail tenants may also face competition from alternative retail channels, such as mail order catalogs and operators, television shopping networks and shopping via the internet. Competition that we face from other properties within our market areas, and competition our tenants face from tenants in such properties could result in decreased cash flow from tenants and may require us to make capital improvements.
Costs of complyingWe may incur significant costs to comply with governmental laws and regulations, including those relating to environmental matters, may adversely affect our income and the cash available for any dividends.matters.
All real property and the operations conducted on real property are subject to federal, state and local laws and regulations, and various foreign laws and regulations, relating to environmental protection and human health and safety. These laws and regulations generally govern wastewater discharges, air emissions, the operation and removal of underground and above-ground

storage tanks, the use, storage, treatment, transportation and disposal of solid and hazardous materials, and the remediation of

contamination associated with disposals. Environmental laws and regulations may impose joint and several liability on tenants, owners or operators for the costs to investigate or remediate contaminated properties, regardless of fault or whether the acts causing the contamination were legal. This liability could be substantial. In addition, the presence of hazardous substances, or the failure to properly remediate them, may adversely affect our ability to sell, rent or pledge a property as collateral for future borrowings.
Some of these laws and regulations have been amended so as to require compliance with new or more stringent standards as of future dates. Compliance with new or more stringent laws or regulations or stricter interpretation of existing laws may require material expenditures by us. State and federal laws in this area are constantly evolving. Future laws, ordinances or regulations may impose material environmental liability. Additionally, our tenants’ operations, the existing condition of land when we buy it, operations in the vicinity of our properties, such as the presence of underground storage tanks, or activities of unrelated third parties may affect our properties. In addition, there are various local, state and federal fire, health, life-safety and similar regulations with which we may be required to comply, and that may subject us to liability in the form of fines or damages for noncompliance.
AlthoughState and federal laws, and various foreign laws and regulations, in this area are constantly evolving, and we generally hire third partiesmonitor these laws and take commercially reasonable steps to conductprotect ourselves from the impact of these laws, including obtaining environmental reviewsassessments of the real propertymost properties that we purchase,acquire; however, we maydo not obtain an independent third-party environmental assessment for every property we acquire. In addition, any assessment that we do obtain may not reveal all environmental liabilities or reveal that a prior owner of a property did not createcreated a material environmental condition not knownunknown to us. We may incur significant costs to defend against claims of liability, comply with environmental regulatory requirements, remediate any contaminated property, or pay personal injury claims.
If we sell properties by providing financing to purchasers, we will be exposed to defaults by the purchasers.
In some instances, we may sell our properties by providing financing to purchasers. If we provide financing to purchasers, we will bear the risk that the purchaser may default, which could negatively impact our cash dividends to stockholders. Even in the absence of a purchaser default, the distribution of the proceeds of sales to our stockholders, or their reinvestment in other assets, will be delayed until the promissory notes or other property we may accept upon the sale are actually paid, sold, refinanced or otherwise disposed of. In some cases, we may receive initial down payments in cash and other property in the year of sale in an amount less than the selling price and subsequent payments will be spread over a number of years.
Our costsCosts associated with complying with the Americans with Disabilities Act may affect cash available for dividends.
Our domestic properties are subject to the Americans with Disabilities Act of 1990 (the "Disabilities Act"(“Disabilities Act”). Under the Disabilities Act, all places of public accommodation are required to comply with federal requirements related to access and use by disabled persons. The Disabilities Act has separate compliance requirements for “public accommodations” and “commercial facilities” that generally require that buildings and services, including restaurants and retail stores, be made accessible and available to people with disabilities. The Disabilities Act’s requirements could require removal of access barriers and could result in the imposition of injunctive relief, monetary penalties, or, in some cases, an award of damages. However, there can be no assurancewe cannot assure our stockholders that we will be able to acquire properties or allocate responsibilities in this manner.
Terrorist attacks and other acts of violence, civilian unrest, or war may affect the markets in which we operate our business and our profitability.
We own and acquire real estate assets located in major metropolitan areas as well as densely populated sub-markets that are susceptible to terrorist attack. In addition, any kind of terrorist activity or violent criminal acts, including terrorist acts against public institutions or buildings or modes of public transportation (including airlines, trains or buses) could have a negative effect on our business. These events may directly impact the value of our assets through damage, destruction, loss or increased security costs. Although we may obtain terrorism insurance, we may not be able to obtain sufficient coverage to fund any losses we may incur. The Terrorism Risk Insurance Act, which was designed for a sharing of terrorism losses between insurance companies and the federal government, will expire on December 31, 2020, and there can be no assurance that Congress will act to renew or replace it.
More generally, any terrorist attack, other act of violence or war, including armed conflicts, could result in increased volatility in, or damage to, the worldwide financial markets and economy. Increased economic volatility could adversely affect us and our properties.
UpcomingRecent changes in U.S. and international accounting standards regarding operating leases may make the leasing of our properties less attractive to our potential tenants, which could reduce overall demand for our properties.
Under current authoritative accounting guidance for leases through December 31, 2018, a lease iswas classified by a tenant as a capital lease if the significant risks and rewards of ownership arewere considered to reside with the tenant. Under capital lease accounting for a tenant, both the leased asset and liability arewere reflected on their balance sheet. If the lease doesdid not meet any of the criteria for a capital lease, the lease iswas considered an operating lease by the tenant, and the obligation doesdid not appear on the tenant’s balance sheet, rather, the contractual future minimum payment obligations arewere only disclosed in the footnotes thereto. Thus, entering into an operating lease can appearcould have appeared to enhance a tenant’s balance sheet in comparison to direct ownership. The upcoming standard,new standards, which is expected to becomewere effective inas of January 1, 2019, could affect both our accounting for leases as well as that of our current and potential tenants. These changes

may affect how the real estate leasing business is conducted. For example, as a result of the revised

accounting standards regarding the financial statement classification of operating leases, companies may be less willing to enter into leases in general or desire to enter into leases with shorter terms because the apparent benefits to their balance sheets could be reduced or eliminated. For additional information on the new standard issued in the U.S., which the Company adopted on January 1, 2019, seeNote 2 — Summary of Significant Accounting PoliciesRecently Issued Accounting Pronouncements to our consolidated financial statements included in this Annual Report on Form 10-K.
Risks Associated with Debt Financing
Our level of indebtedness may increase our business risks.
As of December 31, 2018, we had total outstanding indebtedness of approximately $1.8 billion, net. In addition, we may incur significant additional indebtedness in the future for various purposes. The amount of this indebtedness could have material adverse consequences for us, including:
hindering our ability to adjust to changing market, industry or economic conditions;
limiting our ability to access the capital markets to raise additional equity or debt on favorable terms or at all, whether to refinance maturing debt, to fund acquisitions, to fund dividends or for other corporate purposes;
limiting the amount of free cash flow available for future operations, acquisitions, distributions, stock repurchases or other uses; and
making us more vulnerable to economic or industry downturns, including interest rate increases.
We generally acquire real properties by using either existing financing or borrowing new funds. In addition, we typically incur mortgage debt and may pledge all or some of our real properties as security for that debt to obtain funds to acquire additional real properties or fund working capital. As of December 31, 2017, our aggregate indebtedness was $1.5 billion. We may incur significant additional debt in the future, including borrowings under the Revolving Credit Facility, for various purposes including to fund future acquisitions and other working capital requirements.
We may also borrow if we need funds to continue to satisfy the REIT tax qualification requirement that we generally distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP) to our stockholders,, determined without regard to the deduction for dividends paid and excluding any net capital gain. We also may borrow if we otherwise deem it necessary or advisable to ensure that we maintain our qualification as a REIT.
If there is a shortfall between the cash flow from a property and the cash flow required to service mortgage debt on a property, then we must identify other sources to fund the payment or risk defaulting on the indebtedness. In addition, incurring mortgage debt increases the risk of loss because defaults on indebtedness secured by a property may result in lenders initiating foreclosure actions. In that case, we could lose the property securing the loan that is in default. For U.S. federal income tax purposes, a foreclosure of any of our properties would be treated as a sale of the property for a purchase price equal to the outstanding balance of the debt secured by the mortgage. If the outstanding balance of the debt secured by the mortgage exceeds our tax basis in the property, we would recognize taxable income on foreclosure, but would not receive any cash proceeds. In this event, we may be unable to pay the amount of dividends required in order to maintain our REIT status. We may give full or partial guarantees to lenders of mortgage debt to the entities that own our properties. If we provide a guaranty on behalf of an entity that owns one of our properties, we will be responsible to the lender for repaying the debt if it is not paid by the entity. If any mortgages contain cross-collateralization or cross-default provisions, a default on a single property could affect multiple properties.
The Credit Facility, and certain of our other indebtedness, contains restrictive covenants that limit our operating flexibility.
The Credit Facility imposes certain affirmative and negative covenants on us including restrictive covenants with respect to, among other things, liens, indebtedness, investments, distributions, mergers, asset sales and replacing the Advisor, as well as financial covenants requiring us maintain, among other things, ratios related to leverage, secured leverage, fixed charge coverage and unencumbered debt services, as well as a minimum consolidated tangible net worth. Our mortgage loans also generally require compliance with certain property-level financial covenants, such as debt service coverage ratios, interest coverage ratios and loan-to-value ratios. Certain of our other indebtedness, and future indebtedness we may incur, contain or may contain similar restrictions. These or other restrictions may adversely affect our flexibility and our ability to achieve our investment and operating objectives.
Changes in the debt markets could have a material adverse impact on our earnings and financial condition.
The domestic and international commercial real estate debt markets are subject to changing levels of volatility, resulting in, from time to time, the tightening of underwriting standards by lenders and credit rating agencies. If our overall cost of borrowings increase, either due to increases in the index rates or due to increases in lender spreads, we will need to factor such increases into the economics of future acquisitions. This may result in future acquisitions generating lower overall economic returns. If these disruptions in the debt markets persist, our ability to borrow monies to finance the purchase of, or other activities related to, real estate assets will be negatively impacted.
If we are unable to borrow monies on terms and conditions that we find acceptable, we likely will have to reduce the number of properties we can purchase, and the return on the properties we do purchase may be lower. In addition, we may find it difficult, costly or impossible to refinance maturing indebtedness.

In addition, the state of the debt markets could have an impact on the overall amount of capital investing in real estate, which may result in price or value decreases of real estate assets. This could negatively impact the value of our assets after the time we acquire them.
Increases in mortgage rates may make it difficult for us to finance or refinance properties.
We have incurred, and may continue to incur, mortgage debt. We run the risk of being unable to refinance theour mortgage loans when they come due or of being unablewe otherwise desire to refinancedo so on favorable terms.terms, or at all. If interest rates are higher when the properties are refinanced, we may not be able to refinance the loan and we may be required to obtain equity financing to repay the mortgage or the property may be subject to foreclosure.

Increases inIncreasing interest rates could increase the amount of our debt payments and we may be adversely affect our ability to pay dividends.affected by uncertainty surrounding the LIBOR.
We have incurred, and may continue to incur, variable-rate debt. As of December 31, 2018, approximately 20.1% of our $1.8 billion in total outstanding debt was variable-rate debt and not fixed by swap. Increases in interest rates on our variable-rate debt would increase our interest cost. In addition, if
Some or all of our variable-rate indebtedness may use the London Inter-Bank Offered Rate (“LIBOR”) or similar rates as a benchmark for establishing the applicable interest rate. LIBOR rates increased in 2018 and may continue to increase in future periods. If we need to repay existing debt during periods of rising interest rates, we could be requiredmay need to liquidatesell one or more of our investments in properties at timeseven though we would not otherwise choose to do so.
Moreover, in July 2017, the Financial Conduct Authority (the authority that may not permit realizationregulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee ("ARRC") has proposed that the maximum returnSecured Overnight Financing Rate ("SOFR") is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. ARRC has proposed a paced market transition plan to SOFR from USD-LIBOR and organizations are currently working on such investments.industry wide and company specific transition plans as it relates to derivatives and cash markets exposed to USD-LIBOR. The consequence of these developments cannot be entirely predicted but could include an increase in the cost of our variable rate indebtedness.
U.S. Federal Income Tax Risks
Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and potentially state and local tax, and would adversely affect our operations and the market price of our Common Stock and Series A Preferred Stock.
We qualifiedelected to be taxed as a REIT, for U.S. federal income tax purposes, commencing with our taxable year ended December 31, 2013 and intend to operate in a manner that would allow us to continue to qualify as a REIT for U.S. federal income tax purposes. However, we may terminate our REIT qualification, if our board of directors determines that not qualifying as a REIT is in the best interests of our stockholders, or inadvertently. Our qualification as a REIT depends upon our satisfaction of certain asset, income, organizational, distribution, stockholder ownership and other requirements on a continuing basis. We have structured and intend to continue structuring our activities in a manner designed to satisfy all the requirements for qualification as a REIT. However, the REIT qualification requirements are extremely complex and interpretation of the U.S. federal income tax laws governing qualification as a REIT is limited. Furthermore, any opinion of our counsel, including tax counsel, as to our eligibility to remain qualified as a REIT is not binding on the Internal Revenue Service (the "IRS") and is not a guarantee that we will continue to qualify as a REIT. Accordingly, we cannot be certain that we will be successful in operating so we can remain qualified as a REIT. Our ability to satisfy the asset tests depends on our analysis of the characterization and fair market values of our assets, some of which are not susceptible to a precise determination, and for which we will not obtain independent appraisals. Our compliance with the REIT income or quarterly asset requirements also depends on our ability to successfully manage the composition of our income and assets on an ongoing basis. Accordingly, if certain of our operations were to be recharacterized by the IRS, such recharacterization would jeopardize our ability to continue to satisfy all the requirements for continued qualification as a REIT. Furthermore, future legislative, judicial or administrative changes to the U.S. federal income tax laws could be applied retroactively, which could result in our disqualification as a REIT.
If we fail to continue to qualify as a REIT for any taxable year, and we do not qualify for certain statutory relief provisions, we will be subject to U.S. federal income tax on our taxable income at the corporate rates.rate. In addition, we would generally be disqualified from treatment as a REIT for the four taxable years following the year of losing our REIT qualification. Losing our REIT qualification would reduce our net earnings available for investment or distributions to stockholders because of the additional tax liability. In addition, distributions to stockholders would no longer qualify for the dividends paid deduction, and we would no longer be required to make distributions. If this occurs, we might be required to borrow funds or liquidate some investments in order to pay the applicable tax.
Even if we continue to qualify as a REIT, in certain circumstances, we may incur tax liabilities that would reduce our cash available for distribution to you.
Even if we maintain our status as a REIT, we may be subject to U.S. federal, state and local income taxes. For example, net income from the sale of properties that are “dealer” properties sold by a REIT and that do not meet a safe harbor available under

the Code (a “prohibited transaction” under the Code) will be subject to a 100% tax. We may not make sufficient distributions to avoid excise taxes applicable to REITs. Similarly, if we were to fail an income test (and did not lose our REIT status because such failure was due to reasonable cause and not willful neglect) we would be subject to tax on the income that does not meet the income test requirements. We also may decide to retain net capital gain we earn from the sale or other disposition of our property and pay U.S. federal income tax directly on such income. In that event, our stockholders would be treated as if they earned that income and paid the tax on it directly. However, stockholders that are tax-exempt, such as charities or qualified pension plans, would have no benefit from their deemed payment of such tax liability unless they file U.S. federal income tax returns and thereon seek a refund of such tax. We also will be subject to corporate tax on any undistributed REIT taxable income. We also may be subject to state and local taxes on our income or property, including franchise, payroll and transfer taxes, either directly or at the level of our operating partnership or at the level of the other companies through which we indirectly own our assets, such as our taxable REIT subsidiaries, which are subject to full U.S. federal, state, local and foreign corporate-level income taxes.
To continue to qualify as a REIT we must meet annual distribution requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our investment objectives.
In order to continue to qualify as a REIT, we must distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. We will be subject to U.S. federal income tax on our undistributed REIT taxable income and net capital gain and to a 4% nondeductible excise tax on any amount by which distributions we make with respect to any calendar year are less than the sum of (a) 85% of our ordinary income, (b) 95% of our capital gain net income and (c) 100%

of our undistributed income from prior years. These requirements could cause us to distribute amounts that otherwise would be spent on investments in real estate assets and it is possible that we might be required to borrow funds, possibly at unfavorable rates, or sell assets to fund these distributions. Although we intend to make distributions sufficient to meet the annual distribution requirements and to avoid U.S. federal income and excise taxes on our earnings while we continue to qualify as a REIT, it is possible that we might not always be able to do so.

Recharacterization of sale-leaseback transactions may cause us to lose our REIT status.
With respect to properties acquired in sale-leaseback transactions, we will use commercially reasonable efforts to structure any such sale-leaseback transaction such that the lease will be characterized as a "true lease" for U.S. federal income tax purposes, thereby allowing us to be treated as the owner of the property for U.S. federal income tax purposes. However, the IRS may challenge such characterization. In the event that any such sale-leaseback transaction is challenged and recharacterized as a financing transaction or loan for U.S. federal income tax purposes, deductions for depreciation and cost recovery relating to such property would be disallowed. If a sale-leaseback transaction were so recharacterized, we might fail to continue to satisfy the REIT qualification "asset tests" or "income tests" and, consequently, lose our REIT status effective with the year of recharacterization. Alternatively, the amount of our REIT taxable income could be recalculated which might also cause us to fail to meet the dividenddistribution requirement for a taxable year.
Certain of our business activities are potentially subject to the prohibited transaction tax.
For so long as we continue to qualify as a REIT, our ability to dispose of property during the first few years following acquisition may be restricted to a substantial extent as a result of our REIT qualification. Under applicable provisions of the Code regarding prohibited transactions by REITs, while we qualify as a REIT and provided we do not meet a safe harbor available under the Code, we will be subject to a 100% penalty tax on the net income from the sale or other disposition of any property (other than foreclosure property) that we own, directly or indirectly through any subsidiary entity, including our operating partnership, but generally excluding taxable REIT subsidiaries, that is deemed to be inventory or property held primarily for sale to customers in the ordinary course of a trade or business. Whether property is inventory or otherwise held primarily for sale to customers in the ordinary course of a trade or business depends on the particular facts and circumstances surrounding each property. We intend to avoid the 100% prohibited transaction tax by (1) conducting activities that may otherwise be considered prohibited transactions through a taxable REIT subsidiary (but such taxable REIT subsidiary will incur corporate rate income taxes with respect to any income or gain recognized by it), (2) conducting our operations in such a manner so that no sale or other disposition of an asset we own, directly or through any subsidiary, will be treated as a prohibited transaction or (3) structuring certain dispositions of our properties to comply with the requirements of the prohibited transaction safe harbor available under the Code for properties that, among other requirements, have been held for at least two years. Despite our present intention, no assurance can be given that any particular property we own, directly or through any subsidiary entity, including our operating partnership, but generally excluding taxable REIT subsidiaries, will not be treated as inventory or property held primarily for sale to customers in the ordinary course of a trade or business.
Our taxable REIT subsidiaries are subject to corporate-level taxes and our dealings with our taxable REIT subsidiaries may be subject to a 100% excise tax.

A REIT may own up to 100% of the stock of one or more taxable REIT subsidiaries. Both the subsidiary and the REIT must jointly elect to treat the subsidiary as a taxable REIT subsidiary. A corporation of which a taxable REIT subsidiary directly or indirectly owns more than 35% of the voting power or value of the stock will automatically be treated as a taxable REIT subsidiary. Overall, no more than 20% (25% for our taxable years beginning prior to January 1, 2018) of the gross value of a REIT’s assets may consist of stock or securities of one or more taxable REIT subsidiaries. A taxable REIT subsidiary may hold assets and earn income that would not be qualifying assets or income if held or earned directly by a REIT, including gross income from operations pursuant to management contracts. Accordingly, we may use taxable REIT subsidiaries generally to hold properties for sale in the ordinary course of a trade or business or to hold assets or conduct activities that we cannot conduct directly as a REIT. A taxable REIT subsidiary will be subject to applicable U.S. federal, state, local and foreign income tax on its taxable income. In addition, the rules, which are applicable to us as a REIT, also imposeCode imposes a 100% excise tax on certain transactions between a taxable REIT subsidiary and its parent REIT that are not conducted on an arm’s-length basis.
If our operating partnership failed to qualify as a partnership or is not otherwise disregarded for U.S. federal income tax purposes, we would cease to qualify as a REIT.
If the IRS were to successfully challenge the status of our operating partnership as a partnership or disregarded entity for suchU.S. federal income tax purposes, itour operating partnership would be taxable as a corporation. In such event, this would reduce the amount of distributions that the operating partnership could make to us. This also would result in our failing to maintain our REIT qualification and becoming subject to a corporate level tax on our income. This substantially would reduce our cash available to pay distributions to our stockholders. In addition, if any of the partnerships or limited liability companies through which our operating partnership owns its properties, in whole or in part, loses its characterization as a partnership and is otherwise not disregarded for U.S. federal income tax purposes, itthe partnership or limited liability company would be subject to taxation as a corporation, thereby reducing distributions to the operating partnership. Such a recharacterization of an underlying property owner could also threaten our ability to maintain our REIT qualification.

Our investments in certain debt instruments may cause us to recognize income for U.S. federal income tax purposes even though no cash payments have been received on the debt instruments, and certain modifications of such debt by us could cause the modified debt to not qualify as a good REIT asset, thereby jeopardizing our REIT qualification.
Our taxable income may substantially exceed our net income as determined based on GAAP, or differences in timing between the recognition of taxable income and the actual receipt of cash may occur. For example, we may acquire assets, including debt securities requiring us to accrue original issue discount ("OID"), or recognize market discount income, that generate taxable income in excess of economic income or in advance of the corresponding cash flow from the assets. In addition, if a borrower with respect to a particular debt instrument encounters financial difficulty rendering it unable to pay stated interest as due, we may nonetheless be required to continue to recognize the unpaid interest as taxable income with the effect that we will recognize income but will not have a corresponding amount of cash available for distribution.
As a result of the foregoing, we may generate less cash flow than taxable income in a particular year and find it difficult or impossible to meet the REIT distribution requirements in certain circumstances. In such circumstances, we may be required to (a) sell assets in adverse market conditions, (b) borrow on unfavorable terms, (c) distribute amounts that would otherwise be used for future acquisitions or used to repay debt, or (d) make a taxable distributions of our shares of our Common Stock as part of a distribution in which stockholders may elect to receive shares of our Common Stock or (subject to a limit measured as a percentage of the total distribution) cash, in order to comply with the REIT distribution requirements.
The failure of a mezzanine loan to qualify as a real estate asset would adversely affect our ability to continue to qualify as a REIT.
In general, in order for a loan to be treated as a qualifying real estate asset producing qualifying income for purposes of the REIT asset and income tests, the loan must be secured by real property or an interest in real property. We may acquire mezzanine loans that are not directly secured by real property or an interest in real property but instead are secured by equity interests in a partnership or limited liability company that directly or indirectly owns real property. In Revenue Procedure 2003-65, the IRS provided a safe harbor pursuant to which a mezzanine loan that is not secured by real estate would, if it meets each of the requirements contained in the Revenue Procedure, be treated by the IRS as a qualifying real estate asset. Although the Revenue Procedure provides a safe harbor on which taxpayers may rely, it does not prescribe rules of substantive tax law and in many cases it may not be possible for us to meet all the requirements of the safe harbor. We cannot provide assurance that any mezzanine loan in which we invest would be treated as a qualifying asset producing qualifying income for REIT qualification purposes. If any such loan fails either the REIT income or asset tests, we may be disqualified as a REIT.
We may choose to pay dividendsmake distributions in our own stock, in which case you may be required to pay U.S. federal income taxes in excess of the cash dividendsportion of distributions you receive.
In connection with our continued qualification as a REIT, we are required to distribute annually to our stockholders at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard to the deduction for dividends paid and excluding net capital gain. In order to satisfy this requirement, we may make distributions with respect to our Common Stock that are payable in cash and/or shares of our Common Stock (which could account for up to 80% of the aggregate amount of such distributions) at the election of each stockholder. Taxable stockholders receiving such distributions will be required to include the full amount of such distributions as ordinary dividend income to the extent of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes. As a result, U.S. stockholders may be required to pay U.S. federal income taxes with respect to such distributions in excess of the cash portion of the dividend received. Accordingly, U.S. stockholders receiving a distribution of our shares may be required to sell shares received in such distribution or may be required to sell other stock or assets owned by them, at a time that may be disadvantageous, in order to satisfy any tax imposed on such distribution. If a U.S. stockholder sells the stock that it receives as part of the distribution in order to pay this tax, the sales proceeds may be less than the amount included in income with respect to the distribution, depending on the market price of our stock at the time of the sale. Furthermore, with respect to certain non-U.S. stockholders, we may be required to withhold U.S. tax with respect to such distribution, including in respect of all or a portion of such distribution that is payable in stock, by withholding or disposing of part of the shares included in such distribution and using the proceeds of such disposition to satisfy the withholding tax imposed. In addition, if a significant number of our stockholders determine to sell shares of our Common Stock in order to pay taxes owed on dividend income, such sale may put downward pressure on the market price of our Common Stock.
Various tax aspects of such a taxable cash/stock distribution are uncertain and have not yet been addressed by the IRS. No assurance can be given that the IRS will not impose requirements in the future with respect to taxable cash/stock distributions, including on a retroactive basis, or assert that the requirements for such taxable cash/stock distributions have not been met.

The taxation of distributions to you can be complex; however, distributions that we make to you generally will be taxable as ordinary income, which may reduce the anticipated return from an investment in us.
Distributions that we make to our taxable stockholders out of current and accumulated earnings and profits (and not designated as capital gain dividends or qualified dividend income) generally will be taxable as ordinary income. For tax years beginning after December 31, 2017, noncorporate stockholders are entitled to a 20% deduction with respect to these ordinary REIT dividends which would, if allowed in full, result in a maximum effective federal income tax rate on them of 29.6% (or 33.4% including the 3.8% surtax on net investment income). ; although the 20% deduction is scheduled to sunset after December 31, 2025.

However, a portion of our distributions may (1) be designated by us as capital gain dividends generally taxable as long-term capital gain to the extent that they are attributable to net capital gain recognized by us, (2) be designated by us as qualified dividend income taxable at capital gains rates generally to the extent they are attributable to dividends we receive from our taxable REIT subsidiaries, or (3) constitute a return of capital generally to the extent that they exceed our accumulated earnings and profits as determined for U.S. federal income tax purposes. A return of capital is not taxable, but has the effect of reducing the tax basis of a stockholder’s investment in our stock. Distributions that exceed our current and accumulated earnings and profits and a stockholder’s tax basis in our stock generally will be taxable as capital gain.
Dividends payable by REITs generally do not qualify for the reduced tax rates available for some dividends.
Currently, the maximum tax rate applicable to qualified dividend income payable to U.S. stockholders that are individuals, trusts and estates is 20%. Dividends payable by REITs, however, generally are not eligible for this reduced rate. Although this legislation does not adversely affect the taxation of REITs or dividends payable by REITs, the more favorable rates applicable to regular corporate qualified dividends could cause investors who are individuals, trusts and estates to perceive investments in REITs to be relatively less attractive than investments in the stocks of non-REIT corporations that pay dividends, which could adversely affect the value of the shares of REITs, including our stock.Common Stock and Series A Preferred Stock . Tax rates could be changed in future legislation.
Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities.
The REIT provisions of the Code may limit our ability to hedge our liabilities. Any income from a hedging transaction we enter into to manage risk of interest rate changes, price changes or currency fluctuations with respect to borrowings made or to be made to acquire or carry real estate assets or in certain cases to hedge previously acquired hedges entered into to manage risks associated with property that has been disposed of or liabilities that have been extinguished, if properly identified under applicable Treasury Regulations, does not constitute “gross income” for purposes of the 75% or 95% gross income tests. To the extent that we enter into other types of hedging transactions, the income from those transactions will likely be treated as non-qualifying income for purposes of both of the gross income tests. As a result of these rules, we may need to limit our use of advantageous hedging techniques or implement those hedges through a taxable REIT subsidiary. This could increase the cost of our hedging activities because our taxable REIT subsidiaries would be subject to tax on gains or expose us to greater risks associated with changes in interest rates than we would otherwise want to bear. In addition, losses in a taxable REIT subsidiary generally will not provide any tax benefit, except for being carried forward against future taxable income of such taxable REIT subsidiary.
Complying with REIT requirements may force us to forgo or liquidate otherwise attractive investment opportunities.
To continue to qualify as a REIT, we must ensure that we meet the REIT gross income tests annually and that at the end of each calendar quarter, at least 75% of the value of our assets consists of cash, cash items, government securities and qualified REIT real estate assets, including certain mortgage loans and certain kinds of mortgage-related securities. The remainder of our investment in securities (other than government securities that qualify for the 75% asset test and securities of qualified real estate assets)REIT subsidiaries and taxable REIT subsidiaries) generally cannot include more thanexceed 10% of the outstanding voting securities of any one issuer or more than 10% of the total value of the outstanding securities of any one issuer. In addition, in general, no more thanissuer, or 5% of the value of our assets can consist of the securities ofas to any one issuer (other than government securities and qualified real estate assets), andissuer. In addition, no more than 20% of the value of our total assets canmay be represented by securities of one or more taxable REIT subsidiaries.subsidiaries and no more than 25% of our assets may be represented by publicly offered REIT debt instruments that do not otherwise qualify under the 75% asset test. If we fail to comply with these requirements at the end of any calendar quarter, we must correct the failure within 30 days after the end of the calendar quarter or qualify for certain statutory relief provisions to avoid losing our REIT qualification and suffering adverse tax consequences. As a result, we may be required to liquidate assets from our portfolio or not make otherwise attractive investments in order to maintain our qualification as a REIT.
The ability of our board of directors to revoke our REIT qualification without stockholder approval may subject us to U.S. federal income tax and reduce distributions to you.
Our charter provides that our board of directors may revoke or otherwise terminate our REIT election, without the approval of our stockholders, if it determines that it is no longer in our best interest to continue to qualify as a REIT. While we intend to continue to qualify as a REIT, we may terminate our REIT election if we determine that continuing to qualify as a REIT is no longer in our best interests. If we cease to be a REIT, we would become subject to corporate-level U.S. federal income tax on our taxable income (as well as any applicable state and local corporate tax) and would no longer be required to distribute most of our taxable income to our stockholders, which may have adverse consequences on our total return to our stockholders and on the market price of our Common Stock and Series A Preferred Stock.

We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the market price of our Common Stock and Series A Preferred Stock.
In recent years, numerous legislative, judicial and administrative changes have been made in the provisions of U.S. federal income tax laws applicable to investments similar to an investment in shares of our Common Stock or Series A Preferred Stock. Additional changes to the tax laws are likely to continue to occur, and there can be no assurance that any such changes will not adversely affect the taxation of a stockholder. Any such changes could have an adverse effect on an investment in our shares or on the market value or the resale potential of our assets. Investors are urged to consult with an independent tax advisor with respect to the impact of recent legislation on any investment in our shares and the status of legislative, regulatory or administrative developments and proposals and their potential effect on an investment in our shares. Investors also should note that our counsel’s tax opinion is based upon existing law, applicable as of the date of its opinion, all of which will be subject to change, either prospectively or retroactively.
Although REITs generally receive better tax treatment than entities taxed as regular corporations, it is possible that future legislation would result in a REIT having fewer tax advantages, and it could become more advantageous for a company that invests in real estate to elect to be treated for U.S. federal income tax purposes as a corporation. As a result, our charter provides our board of directors with the power, under certain circumstances, to revoke or otherwise terminate our REIT election and cause us to be taxed as a regular corporation, without the vote of our stockholders. Our board of directors has fiduciary duties to us and our stockholders and could only cause such changes in our tax treatment if it determines in good faith that such changes are in the best interest of our stockholders.
The share ownership restrictions of the Code for REITs and the 9.8% share ownership limit in our charter may inhibit market activity in our shares of stock and restrict our business combination opportunities.
In order to continue to qualify as a REIT, five or fewer individuals, as defined in the Code, may not own, actually or constructively, more than 50% in value of our issued and outstanding shares of stock at any time during the last half of each taxable year, other than the first year for which a REIT election is made. Attribution rules in the Code determine if any individual or entity actually or constructively owns our shares of stock under this requirement. Additionally, at least 100 persons must beneficially own our shares of stock during at least 335 days of a taxable year for each taxable year, other than the first year for which a REIT election is made. To help ensure that we meet these tests, among other purposes, our charter restricts the acquisition and ownership of our shares of stock.
Our charter, with certain exceptions, authorizes our directors to take such actions as are necessary and desirable to preserve our qualification as a REIT while we so qualify. Unless exempted by our board of directors, for so long as we continue to qualify as a REIT, our charter prohibits, among other limitations on ownership and transfer of shares of our stock, any person from beneficially or constructively owning (applying certain attribution rules under the Code) more than 9.8% in value of the aggregate of our outstanding shares of stock and more than 9.8% (in value or in number of shares, whichever is more restrictive) of any class or series of our shares of stock. Our board of directors may not grant an exemption from these restrictions to any proposed transferee whose ownership in excess of the 9.8% ownership limit would result in the termination of our continued qualification as a REIT. These restrictions on transferability and ownership will not apply, however, if our board of directors determines that it is no longer in our best interest to continue to qualify as a REIT or that compliance with the restrictions is no longer required in order for us to continue to qualify as a REIT.
These ownership limits could delay or prevent a transaction or a change in control that might involve a premium price for our Common Stock or Series A Preferred Stock or otherwise be in the best interest of the stockholders.
Non-U.S. stockholders will be subject to U.S. federal withholding tax and may be subject to U.S. federal income tax on distributions received from us and upon the disposition of our shares.
Subject to certain exceptions, distributions received from us will be treated as dividends of ordinary income to the extent of our current or accumulated earnings and profits. Such dividends ordinarily will be subject to U.S. withholding tax at a 30% rate, or such lower rate as may be specified by an applicable income tax treaty, unless the distributions are treated as “effectively connected” with the conduct by the non-U.S. stockholder of a U.S. trade or business. Pursuant to the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"), capital gain distributions attributable to sales or exchanges of “U.S. real property interests" ("USRPIs"), generally will be taxed to a non-U.S. stockholder (other than a qualified foreign pension plan) as if such gain were effectively connected with a U.S. trade or business. However, a capital gain dividend will not be treated as effectively connected income if (a) the distribution is received with respect to a class of stock that is regularly traded on an established securities market located in the U.S. and (b) the non-U.S. stockholder does not own more than 10% of the class of our stock at any time during the one-year period ending on the date the distribution is received.
Gain recognized by a non-U.S. stockholder upon the sale or exchange of our Common Stock or Series A Preferred Stock generally will not be subject to U.S. federal income taxation unless such stock constitutes a USRPI under FIRPTA. Our Common Stock and Series A Preferred Stock will not constitute a USRPI so long as we are a “domestically-controlled qualified investment entity.” A domestically-controlled qualified investment entity includes a REIT if at all times during a specified testing period, less

than 50% in value of such REIT’s stock is held directly or indirectly by non-U.S. stockholders. We believe, but there can be no assurance, that we will be a domestically-controlled qualified investment entity.
Even if we do not qualify as a domestically-controlled qualified investment entity at the time a non-U.S. stockholder sells or exchanges our Common Stock or Series A Preferred Stock, gain arising from such a sale or exchange would not be subject to U.S. taxation under FIRPTA as a sale of a USRPI if: (a) the shares are of a class of our stock that is “regularly traded,” as defined by applicable Treasury regulations, on an established securities market, and (b) such non-U.S. stockholder owned, actually and constructively, 10% or less of our outstanding shares of that class at any time during the five-year period ending on the date of the sale.
Potential characterization of distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors.
If (a) we are a “pension-held REIT,” (b) a tax-exempt stockholder has incurred (or is deemed to have incurred) debt to purchase or hold our Common Stock, or (c) a holder of our Common Stock is a certain type of tax-exempt stockholder, dividends on, and gains recognized on the sale of, Common Stock by such tax-exempt stockholder may be subject to U.S. federal income tax as unrelated business taxable income under the Code.
Item 1B. Unresolved Staff Comments.
None.

Item 2. Properties.
We acquire and operate commercial properties. All such properties may be acquired and operated by us alone or jointly with another party. Our portfolio of real estate properties was comprised of the following properties as of December 31, 20172018:
Portfolio Acquisition Date Country Number of Properties Square Feet 
Average Remaining Lease Term (1)
 Acquisition Date Country Number of Properties Square Feet (in thousands) 
Average Remaining Lease Term (1)
McDonald's Oct. 2012 UK 1 9,094
 6.5 Oct. 2012 UK 1 9 5.2
Wickes Building Supplies I May 2013 UK 1 29,679
 7.0 May 2013 UK 1 30 5.8
Everything Everywhere Jun. 2013 UK 1 64,832
 9.8 Jun. 2013 UK 1 65 8.5
Thames Water Jul. 2013 UK 1 78,650
 4.9 Jul. 2013 UK 1 79 3.7
Wickes Building Supplies II Jul. 2013 UK 1 28,758
 9.2 Jul. 2013 UK 1 29 8.0
PPD Global Labs Aug. 2013 US 1 76,820
 7.2 Aug. 2013 US 1 77 6.0
Northern Rock Sep. 2013 UK 2 86,290
 5.9 Sep. 2013 UK 2 86 4.7
Wickes Building Supplies III Nov. 2013 UK 1 28,465
 11.2 Nov. 2013 UK 1 28 9.9
Con-way Freight Nov. 2013 US 7 105,090
 6.2 Nov. 2013 US 7 105 4.9
Wolverine Dec. 2013 US 1 468,635
 5.3 Dec. 2013 US 1 469 4.1
Western Digital Dec. 2013 US 1 286,330
 3.2
Encanto Dec. 2013 PR 18 65,262
 7.8 Dec. 2013 PR 18 65 6.5
Rheinmetall Jan. 2014 GER 1 320,102
 6.3 Jan. 2014 GER 1 320 5.0
GE Aviation Jan. 2014 US 1 369,000
 8.3 Jan. 2014 US 1 369 7.0
Provident Financial Feb. 2014 UK 1 117,003
 18.1 Feb. 2014 UK 1 117 16.9
Crown Crest Feb. 2014 UK 1 805,530
 21.4 Feb. 2014 UK 1 806 20.1
Trane Feb. 2014 US 1 25,000
 6.2 Feb. 2014 US 1 25 4.9
Aviva Mar. 2014 UK 1 131,614
 11.7 Mar. 2014 UK 1 132 10.5
DFS Trading I Mar. 2014 UK 5 240,230
 12.5 Mar. 2014 UK 5 240 11.2
GSA I Mar. 2014 US 1 135,373
 4.9 Mar. 2014 US 1 135 3.6
National Oilwell Varco I Mar. 2014 US 1 24,450
 5.8 Mar. 2014 US 1 24 4.6
Talk Talk Apr. 2014 UK 1 48,415
 7.5 Apr. 2014 UK 1 48 6.2
GSA II Apr. 2014 US 2 25 4.1
OBI DIY Apr. 2014 GER 1 143,633
 6.3 Apr. 2014 GER 1 144 5.1
GSA II Apr. 2014 US 2 24,957
 5.4
DFS Trading II Apr. 2014 UK 2 39,331
 12.5 Apr. 2014 UK 2 39 11.2
GSA III Apr. 2014 US 2 28,364
 7.6 Apr. 2014 US 2 28 6.3
GSA IV May 2014 US 1 33,000
 7.8 May 2014 US 1 33 6.6
Indiana Department of Revenue May 2014 US 1 98,542
 5.3 May 2014 US 1 99 4.0
National Oilwell Varco II May 2014 US 1 23,475
 12.4 May 2014 US 1 23 11.2
Nissan May 2014 US 1 462,155
 11.0 May 2014 US 1 462 9.8
GSA V Jun. 2014 US 1 26,533
 5.5 Jun. 2014 US 1 27 4.2
Lippert Components Jun. 2014 US 1 539,137
 8.9 Jun. 2014 US 1 539 7.7
Select Energy Services I Jun. 2014 US 3 135,877
 9.1 Jun. 2014 US 3 136 7.8
Bell Supply Co I Jun. 2014 US 6 79,829
 11.3 Jun. 2014 US 6 80 10.0
Axon Energy Products (3)
 Jun. 2014 US 3 213,634
 6.9
Axon Energy Products (2) Jun. 2014 US 3 214 3.8
Lhoist Jun. 2014 US 1 22,500
 5.3 Jun. 2014 US 1 23 4.0
GE Oil & Gas Jun. 2014 US 2 69,846
 6.0 Jun. 2014 US 2 70 6.5
Select Energy Services II Jun. 2014 US 4 143,417
 9.1 Jun. 2014 US 4 143 7.9
Bell Supply Co II Jun. 2014 US 2 19,136
 11.3 Jun. 2014 US 2 19 10.0
Superior Energy Services Jun. 2014 US 2 42,470
 6.5 Jun. 2014 US 2 42 5.3
Amcor Packaging Jun. 2014 UK 7 294,580
 7.2 Jun. 2014 UK 7 295 5.9
GSA VI Jun. 2014 US 1 6,921
 6.5 Jun. 2014 US 1 7 5.3
Nimble Storage Jun. 2014 US 1 164,608
 4.1 Jun. 2014 US 1 165 2.8
FedEx -3-Pack Jul. 2014 US 3 338,862
 4.8 Jul. 2014 US 3 339 3.5
Sandoz, Inc. Jul. 2014 US 1 154,101
 8.8 Jul. 2014 US 1 154 7.6
Wyndham Jul. 2014 US 1 31,881
 7.6 Jul. 2014 US 1 32 6.3
Valassis Jul. 2014 US 1 100,597
 5.6 Jul. 2014 US 1 101 4.3
GSA VII Jul. 2014 US 1 25,603
 7.1 Jul. 2014 US 1 26 5.9
AT&T Services Jul. 2014 US 1 402 7.5

Portfolio Acquisition Date Country Number of Properties Square Feet 
Average Remaining Lease Term (1)
 Acquisition Date Country Number of Properties Square Feet (in thousands) 
Average Remaining Lease Term (1)
AT&T Services Jul. 2014 US 1 401,516
 8.8
PNC - 2-Pack Jul. 2014 US 2 210,256
 11.8 Jul. 2014 US 2 210 10.6
Fujitisu Jul. 2014 UK 3 162,888
 12.5
Fujitsu Jul. 2014 UK 3 163 11.2
Continental Tire Jul. 2014 US 1 90,994
 4.8 Jul. 2014 US 1 91 3.6
Achmea Jul. 2014 NETH 2 190,252
 6.3 Jul. 2014 NETH 2 190 5.0
BP Oil Aug. 2014 UK 1 2,650
 8.1 Aug. 2014 UK 1 3 6.8
Malthurst Aug. 2014 UK 2 3,784
 8.1 Aug. 2014 UK 2 4 6.9
HBOS Aug. 2014 UK 3 36,071
 7.8 Aug. 2014 UK 3 36 6.6
Thermo Fisher Aug. 2014 US 1 114,700
 6.9 Aug. 2014 US 1 115 5.7
Black & Decker Aug. 2014 US 1 71,259
 4.3 Aug. 2014 US 1 71 3.1
Capgemini Aug. 2014 UK 1 90,475
 5.5 Aug. 2014 UK 1 90 4.3
Merck & Co. Aug. 2014 US 1 146,366
 7.9 Aug. 2014 US 1 146 6.7
Dollar Tree - 65-Pack Aug. 2014 US 58 485,992
 11.9 Aug. 2014 US 58 486 10.7
GSA VIII Aug. 2014 US 1 23,969
 6.9 Aug. 2014 US 1 24 5.6
Waste Management Sep. 2014 US 1 84,119
 5.3 Sep. 2014 US 1 84 4.0
Intier Automotive Interiors Sep. 2014 UK 1 152,711
 6.6 Sep. 2014 UK 1 153 5.4
HP Enterprise Services Sep. 2014 UK 1 99,444
 8.5 Sep. 2014 UK 1 99 7.2
FedEx II Sep. 2014 US 1 12 5.3
Shaw Aero Devices, Inc. Sep. 2014 US 1 130,581
 5.0 Sep. 2014 US 1 131 3.7
FedEx II Sep. 2014 US 1 11,501
 6.5
Dollar General - 39-Pack Sep. 2014 US 21 199,946
 10.5 Sep. 2014 US 21 200 9.2
FedEx III Sep. 2014 US 2 221,260
 6.8 Sep. 2014 US 2 221 5.6
Mallinkrodt Pharmaceuticals Sep. 2014 US 1 89,900
 6.9 Sep. 2014 US 1 90 5.7
Kuka Sep. 2014 US 1 200,000
 6.8 Sep. 2014 US 1 200 5.5
CHE Trinity Sep. 2014 US 2 373,593
 5.2 Sep. 2014 US 2 374 3.9
FedEx IV Sep. 2014 US 2 255,037
 5.3 Sep. 2014 US 2 255 4.1
GE Aviation Sep. 2014 US 1 102,000
 5.3 Sep. 2014 US 1 102 4.0
DNV GL Oct. 2014 US 1 82,000
 7.4 Oct. 2014 US 1 82 6.2
Bradford & Bingley Oct. 2014 UK 1 120,618
 12.0 Oct. 2014 UK 1 121 10.8
Rexam Oct. 2014 GER 1 175,615
 7.4 Oct. 2014 GER 1 176 6.2
FedEx V Oct. 2014 US 1 76,035
 6.8 Oct. 2014 US 1 76 5.5
C&J Energy Oct. 2014 US 1 96,803
 6.1 Oct. 2014 US 1 97 4.8
Dollar Tree II Oct. 2014 US 34 282,730
 12.0 Oct. 2014 US 34 283 10.8
Panasonic Oct. 2014 US 1 48,497
 10.8 Oct. 2014 US 1 48 9.5
Onguard Oct. 2014 US 1 120,000
 6.3 Oct. 2014 US 1 120 5.0
Metro Tonic Oct. 2014 GER 1 636,066
 8.0 Oct. 2014 GER 1 636 6.8
Axon Energy Products Oct. 2014 US 1 26,400
 7.1 Oct. 2014 US 1 26 5.8
Tokmanni Oct. 2014 FIN 1 800,834
 15.9 Nov. 2014 FIN 1 801 14.7
Fife Council Nov. 2014 UK 1 37,331
 6.4 Nov. 2014 UK 1 37 5.1
Dollar Tree III Nov. 2014 US 2 16,442
 11.9 Nov. 2014 US 2 16 10.7
GSA IX Nov. 2014 US 1 28,300
 4.6 Nov. 2014 US 1 28 3.3
KPN BV Nov. 2014 NETH 1 133,053
 9.3 Nov. 2014 NETH 1 133 8.0
RWE AG Nov. 2014 GER 3 594,415
 7.2 Nov. 2014 GER 3 594 5.9
Follett School Nov. 2014 US 1 486,868
 7.3 Dec. 2014 US 1 487 6.0
Quest Diagnostics Dec. 2014 US 1 223,894
 6.9 Dec. 2014 US 1 224 5.7
Diebold Dec. 2014 US 1 158,330
 4.3 Dec. 2014 US 1 158 3.0
Weatherford Intl Dec. 2014 US 1 19,855
 8.1 Dec. 2014 US 1 20 6.8
AM Castle Dec. 2014 US 1 127,600
 7.1 Dec. 2014 US 1 128 5.8
FedEx VI Dec. 2014 US 1 27,771
 6.9 Dec. 2014 US 1 28 5.7
Constellium Auto Dec. 2014 US 1 320,680
 12.2 Dec. 2014 US 1 321 10.9
C&J Energy II Mar. 2015 US 1 125,000
 6.1 Mar. 2015 US 1 125 4.8
Fedex VII Mar. 2015 US 1 12,018
 7.0 Mar. 2015 US 1 12 5.8
Fedex VIII Apr. 2015 US 1 26 5.8

Portfolio Acquisition Date Country Number of Properties Square Feet 
Average Remaining Lease Term (1)
 Acquisition Date Country Number of Properties Square Feet (in thousands) 
Average Remaining Lease Term (1)
Fedex VIII Apr. 2015 US 1 25,852
 7.0
Crown Group I Aug. 2015 US 3 295,974
 17.8 Aug. 2015 US 3 296 7.1
Crown Group II Aug. 2015 US 3 642,595
 17.9 Aug. 2015 US 3 643 10.7
Mapes & Sprowl Steel, Ltd. Sep. 2015 US 1 60,798
 12.3 Sep. 2015 US 1 61 11.0
JIT Steel Services Sep. 2015 US 2 126,983
 12.3 Sep. 2015 US 2 127 11.0
Beacon Health System, Inc. Sep. 2015 US 1 49,712
 8.5 Sep. 2015 US 1 50 7.3
Hannibal/Lex JV LLC Sep. 2015 US 1 109,000
 12.0 Sep. 2015 US 1 109 10.8
FedEx Ground Sep. 2015 US 1 91,029
 7.8 Sep. 2015 US 1 91 6.5
Office Depot Sep. 2015 NETH 1 206,331
 11.4 Sep. 2015 NETH 1 206 10.2
Finnair Sep. 2015 FIN 4 656,275
 6.9 Sep. 2015 FIN 4 656 5.7
Auchan (2)
 Dec. 2016 FR 1 152,235
 5.9
Pole Emploi (2)
 Dec. 2016 FR 1 41,452
 5.8
Veolia Water (2)
 Dec. 2016 US 1 70,000
 8.3
Sagemcom (2)
 Dec. 2016 FR 1 265,309
 6.3
NCR Dundee ()
 Dec. 2016 UK 1 132,182
 9.1
FedEx Freight (2)
 Dec. 2016 US 1 68,960
 6.3
DB Luxembourg (2)
 Dec. 2016 LUX 1 156,098
 6.2
ING Amsterdam (2)
 Dec. 2016 NETH 1 509,369
 7.8
Worldline (2)
 Dec. 2016 FR 1 111,338
 6.3
Foster Wheeler (2)
 Dec. 2016 UK 1 365,832
 6.8
ID Logistics I (2)
 Dec. 2016 GER 1 308,579
 7.1
ID Logistics II (2)
 Dec. 2016 FR 2 964,489
 7.2
Harper Collins (2)
 Dec. 2016 UK 1 873,119
 7.9
DCNS (2)
 Dec. 2016 FR 1 96,995
 7.0
Auchan Dec. 2016 FR 1 152 4.6
Pole Emploi Dec. 2016 FR 1 41 4.5
Sagemcom Dec. 2016 FR 1 265 5.1
NCR Dundee Dec. 2016 UK 1 132 7.9
FedEx Freight I Dec. 2016 US 1 69 4.7
DB Luxembourg Dec. 2016 LUX 1 156 5.0
ING Amsterdam Dec. 2016 NETH 1 509 6.5
Worldline Dec. 2016 FR 1 111 5.0
Foster Wheeler Dec. 2016 UK 1 366 5.6
ID Logistics I Dec. 2016 GER 1 309 5.8
ID Logistics II Dec. 2016 FR 2 964 5.9
Harper Collins Dec. 2016 UK 1 873 6.7
DCNS Dec. 2016 FR 1 97 5.8
Cott Beverages Inc Feb. 2017 US 1 170,000
 9.3 Feb. 2017 US 1 170 8.1
FedEx Ground - 2 Pack Mar. 2017 US 2 157,660
 9.0 Mar. 2017 US 2 162 7.7
Bridgestone Tire Sep. 2017 US 1 48,300
 9.8 Sep. 2017 US 1 48 8.6
GKN Aerospace Oct. 2017 US 1 97,864
 9.0 Oct. 2017 US 1 98 8.0
NSA-St. Johnsbury I Oct. 2017 US 1 87,100
 14.8 Oct. 2017 US 1 84 13.8
NSA-St. Johnsbury II Oct. 2017 US 1 84,949
 14.8 Oct. 2017 US 1 85 13.8
NSA-St. Johnsbury III Oct. 2017 US 1 40,800
 14.8 Oct. 2017 US 1 41 13.8
Tremec North America Nov. 2017 US 1 127,105
 9.8 Nov. 2017 US 1 127 8.8
Cummins Dec. 2017 US 1 58,546
 7.4 Dec. 2017 US 1 59 6.4
GSA X Dec. 2017 US 1 25,604
 12.0 Dec. 2017 US 1 26 11.0
NSA Industries Dec. 2017 US 1 82,862
 15.0 Dec. 2017 US 1 83 14.0
Chemours Feb. 2018 US 1 300 9.1
Fiat Chrysler Mar. 2018 US 1 128 9.2
Lee Steel Mar. 2018 US 1 114 9.8
LSI Steel - 3 Pack Mar. 2018 US 3 218 8.8
Contractors Steel Company May 2018 US 5 1,392 9.1
FedEx Freight II Jun. 2018 US 1 22 13.7
DuPont Pioneer Jun. 2018 US 1 200 10.0
Rubbermaid - Akron OH Jul. 2018 US 1 669 10.1
NetScout - Allen TX Aug. 2018 US 1 145 11.7
Bush Industries - Jamestown NY Sep. 2018 US 1 456 19.8
FedEx - Greenville NC Sep. 2018 US 1 29 14.1
Penske Nov. 2018 US 1 606 9.9
NSA Industries Nov. 2018 US 1 65 19.9
LKQ Corp. Dec. 2018 US 1 58 12.1
Walgreens Dec. 2018 US 1 86 6.9
Grupo Antolin Dec. 2018 US 1 360 13.8
VersaFlex Dec. 2018 US 1 113 20.0
Total 321 22,897,326
 8.8 342 27,505 8.3


(1) 
If the portfolio has multiple properties with varying lease expirations, average remaining lease term is calculated on a weighted-average basis. Weighted-average remaining lease term in years is calculated based on square feet as of December 31, 2017.2018.
(2)
Properties acquired as part of the Merger.
(3) 
Of the three properties, one location is vacant while the other two properties remain in use.

The following table details distribution of our portfolio by country/location as of December 31, 2017:2018:
Country Acquisition Date Number of
Properties
 Square
Feet
 Percentage of Properties by Square Feet 
Average Remaining Lease Term (1)
 Acquisition Date Number of
Properties
 Square
Feet (in thousands)
 Percentage of Properties by Square Feet 
Average Remaining Lease Term (1)
Finland Nov. 2014 - Sep. 2015 5 1,457,109
 6.4% 11.2 Nov. 2014 - Sep. 2015 5 1,457
 5.3% 10.6
France Dec. 2016 7 1,631,818
 7.1% 6.3 Dec. 2016 7 1,632
 5.9% 5.6
Germany Jan. 2014 - Dec. 2016 8 2,178,410
 9.5% 6.8 Jan. 2014 - Dec. 2016 8 2,179
 7.9% 6.0
Luxembourg Dec. 2016 1 156,098
 0.7% 6.0 Dec. 2016 1 156
 0.6% 5.0
The Netherlands Jul. 2014 - Dec. 2016 5 1,039,005
 4.5% 8.4 Jul. 2014 - Dec. 2016 5 1,039
 3.8% 7.1
United Kingdom Oct. 2012 - Dec. 2016 43 4,079,576
 17.8% 9.5 Oct. 2012 - Dec. 2016 43 4,080
 14.8% 10.1
United States Aug. 2013 - Dec. 2017 234 12,290,048
 53.7% 9.7 Aug. 2013 - Dec. 2018 255 16,897
 61.4% 8.3
Puerto Rico Dec. 2013 18 65,262
 0.3% 7.5 Dec. 2013 18 65
 0.2% 6.5
Total 321 22,897,326
 100.0% 8.8 342 27,505
 100.0% 8.3

(1) 
If the portfolio has multiple properties with varying lease expirations, average remaining lease term is calculated on a weighted-average basis. Weighted average remaining lease term in years is calculated based on square feet as of December 31, 2017.2018.

The following table details the tenant industry distribution of our portfolio as of December 31, 20172018:
Industry Number of Properties Square Feet Square Feet as a Percentage of the Total Portfolio 
Annualized Rental Income (1)
 Annualized Rental Income as a Percentage of the Total Portfolio Number of Properties 
Annualized Straight-Line Rent (1)             (in thousands)
 Annualized Straight-Line Rent as a Percentage of the Total Portfolio Square Feet (in thousands) Square Feet as a Percentage of the Total Portfolio
     (In thousands)  
Financial Services 13 $34,081
 12% 2,316
 8%
Technology 9 17,831
 6% 906
 3%
Discount Retail 116 15,871
 6% 1,786
 6%
Aerospace 8 1,355,720
 5.9% $15,608
 6.2% 7 14,868
 5% 1,258
 5%
Telecommunications 5 14,500
 5% 913
 3%
Freight 25 14,433
 5% 1,446
 5%
Government 15 14,400
 5% 536
 2%
Healthcare 4 13,680
 5% 647
 2%
Metal Processing 12 13,162
 5% 2,472
 9%
Utilities 4 12,521
 4% 673
 2%
Energy 29 11,891
 4% 1,043
 4%
Logistics 4 11,710
 4% 1,879
 7%
Engineering 1 10,818
 4% 366
 1%
Pharmaceuticals 4 10,808
 4% 476
 2%
Retail Food Distribution 3 7,313
 3% 1,128
 4%
Auto Manufacturing 8 1,939,861
 8.5% 6,617
 2.6% 9 6,856
 2% 2,068
 8%
Automation 1 200,000
 0.9% 1,092
 0.4%
Automotive Parts Manufacturing 3 259,557
 1.1% 2,209
 0.9%
Publishing 1 6,535
 2% 873
 3%
Metal Fabrication 10 6,117
 2% 785
 3%
Automotive Parts Supplier 2 411,096
 1.8% 3,583
 1.4% 3 3,897
 1% 469
 2%
Biotechnology 1 114,700
 0.5% 1,014
 0.4%
Consulting 1 82,000
 0.4% 576
 0.2%
Auto Manufacturer 1 3,767
 1% 360
 1%
Consumer Goods 3 271,874
 1.2% 2,117
 0.8% 4 3,691
 1% 940
 3%
Contract Research 1 76,820
 0.3% 895
 0.4%
Defense 1 96,995
 0.4% 1,671
 0.7%
Discount Retail 116 1,785,944
 7.8% 16,165
 6.4%
Education 1 486,868
 2.1% 1,935
 0.8%
Electronics 1 48,497
 0.2% 686
 0.3%
Energy 29 1,042,692
 4.6% 11,848
 4.7%
Engineering 1 365,832
 1.6% 11,462
 4.5%
Environmental Services 1 70,000
 0.3% 570
 0.2%
Financial Services 13 2,315,896
 10.1% 35,140
 13.9%
Foot Apparel 2 588,635
 2.6% 2,141
 0.8%
Freight 23 1,391,075
 6.1% 13,248
 5.2%
Government Services 15 535,949
 2.3% 14,365
 5.7%
Healthcare 4 647,199
 2.8% 13,680
 5.4%
Home Maintenance 4 230,535
 1.0% 2,356
 0.9%
Hospitality 1 31,881
 0.1% 403
 0.2%
Logistics 3 1,273,068
 5.6% 3,352
 1.3%
Marketing 1 100,597
 0.4% 1,194
 0.5%
Metal Fabrication 9 719,597
 3.1% 5,368
 2.1%
Metal Processing 2 448,280
 2.0% 2,862
 1.1%
Office Supplies 1 206,331
 0.9% 2,437
 1.0%
Packaging Goods 7 294,580
 1.3% 1,145
 0.5%
Petroleum Services 3 6,434
 *
 714
 0.3%
Pharmaceuticals 3 390,367
 1.7% 9,789
 3.9%
Publishing 1 873,119
 3.8% 6,924
 2.7%
Restaurant - Quick Service 19 74,356
 0.3% 3,401
 1.3% 19 3,390
 1% 74
 %
Retail Banking 3 36,071
 0.2% 1,154
 0.5%
Retail Food Distribution 3 1,127,765
 4.9% 7,656
 3.0%
Specialty Retail 7 279,561
 1.2% 3,090
 1.2% 7 2,916
 1% 280
 1%
Technology 9 1,047,265
 4.6% 16,832
 6.6%
Telecommunications 5 913,125
 4.0% 14,838
 5.9%
Utilities 4 673,065
 2.9% 13,142
 5.2%
Waste Management 1 84,119
 0.6% 358
 0.1%
Other [2]
 37 24,874
 12% 3,811
 16%
Total 321 22,897,326
 100% $253,637
 100% 342 $279,930
 100% $27,505
 100%

(1)Annualized rental incomestraight-line rent converted from local currency into USD as of December 31, 20172018 for the in-place lease in the property on a straight-line basis, which includes tenant concessions such as free rent, as applicable. Assumes exchange rates of £1.00 to $1.27 for British Pounds Sterling ("GBP") and €1.00 to $1.14 for EUR, as of December 31, 2018 for illustrative purposes, as applicable.
*Amount is below 0.1%.

The following table details the geographic distribution, by U.S. state or country/location, of our portfolio as of December 31, 20172018:
CountryState Number of Properties Square Feet Square Feet as a Percentage of the Total Portfolio 
Annualized Rental Income (1)
 Annualized Rental Income as a Percentage of the Total Portfolio
     (In thousands)  
Region Number of Properties 
Annualized Straight-Line Rent (1)   (in thousands)
 Annualized Straight-Line Rent as a Percentage of the Total Portfolio 
Square Feet (in thousands)
 Square Feet as a Percentage of the Total Portfolio
United States 255 $152,603
 54.6% 16,898
 61.3%
Michigan 23 38,483
 13.7% 4,503
 16.5%
Texas 46 24,566
 8.8% 2,014
 7.3%
California 2 10,478
 3.7% 389
 1.4%
New Jersey 4 9,012
 3.2% 397
 1.4%
Tennessee 12 7,123
 2.5% 789
 2.9%
Ohio 9 6,476
 2.3% 1,437
 5.2%
Indiana 7 4,841
 1.7% 1,414
 5.1%
Illinois 7 4,095
 1.5% 789
 2.9%
New York 3 3,959
 1.4% 677
 2.5%
Missouri 5 3,427
 1.2% 309
 1.1%
South Carolina 14 3,318
 1.2% 414
 1.5%
Florida 8 3,014
 1.1% 206
 0.7%
Pennsylvania 5 2,971
 1.1% 320
 1.2%
Kentucky 6 2,740
 1.0% 355
 1.3%
Massachusetts 3 2,453
 0.9% 192
 0.7%
North Carolina 8 2,290
 0.8% 221
 0.8%
Minnesota 4 2,143
 0.8% 150
 0.5%
Mississippi 11 2,105
 0.8% 381
 1.4%
Kansas 7 2,092
 0.7% 292
 1.1%
Maine 3 1,990
 0.7% 59
 0.2%
South Dakota 2 1,287
 0.5% 54
 0.2%
Nebraska 7 1,267
 0.5% 116
 0.4%
Louisiana 7 1,264
 0.5% 137
 0.5%
Vermont 3 1,166
 0.4% 213
 0.8%
Colorado 1 1,088
 0.4% 27
 0.1%
Alabama 9 1,021
 0.4% 123
 0.4%
West Virginia 1 980
 0.4% 104
 0.4%
Iowa 3 886
 0.3% 232
 0.8%
North Dakota 3 884
 0.3% 47
 0.2%
Oklahoma 9 825
 0.3% 89
 0.3%
Maryland 1 785
 0.3% 120
 0.4%
Idaho 3 644
 0.2% 38
 0.1%
New Mexico 5 556
 0.2% 46
 0.2%
Georgia 5 452
 0.2% 41
 0.1%
Montana 1 441
 0.2% 58
 0.2%
New Hampshire 1 399
 0.1% 83
 0.3%
Utah 2 397
 0.1% 20
 0.1%
Delaware 1 362
 0.1% 10
 %
Arizona 2 156
 0.1% 16
 0.1%
Arkansas 1 91
 % 8
 %
Virginia 1 76
 % 8
 %
United Kingdom 43 53,047
 19.0% 4,080
 14.8%
Germany 8 20,730
 7.4% 2,178
 7.9%
The Netherlands 5 16,963
 6.1% 1,039
 3.8%
FinlandFinland 5 1,457,109
 6.4% $15,623
 6.2% 5 14,985
 5.4% 1,457
 5.3%
France 7 1,631,818
 7.1% 13,275
 5.2% 7 12,872
 4.4% 1,632
 6.1%
Germany 8 2,178,410
 9.5% 21,576
 8.5%
LuxembourgLuxembourg 1 156,098
 0.7% 5,418
 2.1% 1 5,518
 2.0% 156
 0.6%
The Netherlands 5 1,039,005
 4.5% 17,654
 7.0%
United Kingdom 43 4,079,576
 17.8% 56,070
 22.1%
United States and Puerto Rico:        
Alabama 9 73,554
 0.3% 804
 0.3%
Arizona 2 15,605
 0.1% 156
 0.1%
Arkansas 1 8,320
 *
 91
 *
California 3 674,832
 2.9% 12,890
 5.1%
Colorado 1 26,533
 0.1% 1,088
 0.4%
Delaware 1 9,967
 *
 361
 0.1%
Florida 8 205,690
 0.9% 3,017
 1.2%
Georgia 5 41,320
 0.2% 452
 0.2%
Idaho 2 16,267
 0.1% 203
 0.1%
Illinois 4 570,737
 2.5% 2,629
 1.0%
Indiana 6 1,113,636
 4.9% 4,490
 1.8%
Iowa 2 32,399
 0.1% 296
 0.1%
Kansas 6 178,807
 0.8% 1,275
 0.5%
Kentucky 6 355,420
 1.6% 2,740
 1.1%
Louisiana 7 136,850
 0.6% 1,265
 0.5%
Maine 2 49,572
 0.2% 1,879
 0.7%
Maryland 1 120,000
 0.5% 785
 0.3%
Massachusetts 2 127,456
 0.6% 1,757
 0.7%
Michigan 16 2,423,379
 10.6% 19,643
 7.7%
Minnesota 4 149,690
 0.7% 2,138
 0.8%
Mississippi 10 80,968
 0.4% 810
 0.3%
Missouri 5 308,536
 1.3% 3,427
 1.4%
Montana 1 54,148
 0.2% 441
 0.2%
Nebraska 7 116,118
 0.5% 1,222
 0.5%
New Hampshire 1 82,862
 0.4% 346
 0.1%
New Jersey 4 397,264
 1.7% 9,012
 3.6%
New Mexico 5 46,405
 0.2% 556
 0.2%
New York 2 221,260
 1.0% 2,398
 0.9%
North Carolina 7 192,277
 0.8% 1,547
 0.6%
North Dakota 3 47,330
 0.2% 884
 0.3%
Ohio 8 618,481
 2.7% 4,533
 1.8%
Oklahoma 9 88,770
 0.4% 825
 0.3%
Pennsylvania 4 234,260
 1.0% 1,952
 0.8%
South Carolina 14 414,081
 1.8% 3,280
 1.3%
South Dakota 2 54,152
 0.3% 1,301
 0.5%
Tennessee 12 789,295
 3.4% 7,104
 2.8%
Texas 45 1,869,526
 8.2% 20,590
 8.1%
Utah 2 19,966
 0.1% 398
 0.2%
Vermont 3 212,849
 0.9% 1,166
 0.5%
Virginia 1 7,954
 *
 76
 %
West Virginia 1 103,512
 0.5% 980
 0.5%
Puerto Rico18 65,262
 0.3% 3,214
 1.3%
Puerto Rico 18 3,212
 1.1% 65
 0.2%
Total 321 22,897,326
 100% $253,637
 100% 342 $279,930
 100% 27,505
 100%

*(1)Amount is below 0.1%. Annualized straight-line rent converted from local currency into USD as of December 31, 2018 for the in-place lease in the property on a straight-line basis, which includes tenant concessions such as free rent, as applicable. Assumes exchange rates of £1.00 to $1.27 for GBP and €1.00 to $1.14 for EUR as of December 31, 2018 for illustrative purposes, as applicable.

(1)
Annualized rental income converted from local currency into USD as of December 31, 2017 for the in-place lease in the property on a straight-line basis, which includes tenant concessions such as free rent, as applicable.
Future Minimum Lease Payments
The following table presents future minimum base rent payments, on a cash basis, due to us over the next ten calendar years and thereafter on the properties we owned as of December 31, 20172018:
(In thousands) 
Future Minimum
Base Rent Payments (1)
 
Future Minimum
Base Rent Payments (1)
2018 $249,495
2019 252,541
 $275,118
2020 255,589
 278,651
2021 253,689
 279,630
2022 244,151
 270,569
2023 220,035
 247,237
2024 174,757
 203,067
2025 112,674
 143,213
2026 81,207
 112,644
2027 63,643
 95,490
2028 78,208
Thereafter 241,676
 224,216
Total $2,149,457
 $2,208,043

(1) 
Assumes exchange rates of £1.00 to $1.35$1.27 for GBP and €1.00 to $1.20$1.14 for EUR as of December 31, 20172018 for illustrative purposes, as applicable.
Future Lease Expirations
The following is a summary of lease expirations for the next ten calendar years on the properties we owned as of December 31, 20172018:
Year of Expiration Number of Leases Expiring 
Annualized Rental Income (1)
 Annualized Rental Income as a Percentage of the Total Portfolio Leased Rentable Square Feet Percent of Portfolio Rentable Square Feet Expiring Number of Leases Expiring 
Annualized Straight-Line Rent (1)
 Annualized Straight-Line Rent as a Percentage of the Total Portfolio Leased Rentable Square Feet Percent of Portfolio Rentable Square Feet Expiring
 (In thousands)       (In thousands)   (In thousands)  
2018  $
 % 
 %
2019  
 % 
 % 1 $150
 0.1% 232
 0.9%
2020 2 3,467
 1.4% 386,015
 1.7% 1 1,055
 0.4% 100
 0.4%
2021 2 4,944
 1.9% 322,938
 1.4% 2 4,944
 1.8% 323
 1.2%
2022 16 23,773
 9.4% 1,552,953
 6.8% 16 23,758
 8.5% 1,553
 5.7%
2023 30 28,271
 11.1% 2,410,818
 10.6% 30 28,156
 10.1% 2,497
 9.1%
2024 45 70,000
 27.6% 5,886,635
 25.9% 45 67,919
 24.3% 5,887
 21.6%
2025 39 38,870
 15.3% 3,269,353
 14.4% 39 38,256
 13.7% 3,285
 12.0%
2026 16 21,213
 8.4% 2,038,071
 8.9% 16 20,938
 7.5% 2,042
 7.5%
2027 12 5,251
 2.1% 499,105
 2.2% 16 7,077
 2.5% 745
 2.7%
2028 39 26,377
 9.4% 3,625
 13.3%
Total 162 $195,789
 77.2% 16,365,888
 71.9% 205 $218,630
 78.3% 20,289
 74.4%

(1)
Assumes exchange rates of £1.00 to $1.35$1.27 for GBP and €1.00 to $1.20$1.14 for EUR as of December 31, 20172018 for the in-place lease in the property on a straight-line basis, which includes tenant concessions such as free rent, as applicable.
Tenant Concentration
As of December 31, 2017,2018, we did not have any tenant whose rentable square footage or annualized rental income represented greater than 10% of total portfolio rentable square footage or annualized rental income, respectively.

Significant Portfolio Properties
The rentable square feet or annual straight-line rental income of the FedEx properties represents 5% or more of our total portfolio's rentable square feet or annual straight-line rental income as of December 31, 2017. The FedEx portfolio comprises a total of 16 properties and is located in 12 different U.S. states. The buildings are comprised of 1,285,985 total rentable square feet. As of December 31, 2017, the tenants2018, we did not have an average of 6.3 years remaining on their leases, which expire between April 2022 and December 2029. The leases haveany property whose rentable square footage or annualized rental income on a straight-line basisrepresented greater than 5% of $12.3 million.total portfolio rentable square footage or annualized rental income, respectively.

Property Financings
See Note 5 — Mortgage Notes Payable, Net and Note 6 — Credit Facilitiesto our audited consolidated financial statements included in this Annual Report on Form 10-K for property financings as of December 31, 20172018 and 2016.2017.
Item 3. Legal Proceedings.
Former Service Provider Complaint
On January 25, 2018, the Former Service Provider filed a complaint against (i) us and the OP; (ii) the Property Manager, theGlobal Net Lease Special Limited Partner, the OP,LLC, an affiliate of AR Global that directly owns the Advisor which we refer to collectively asand the GNL Defendants,Property Manager, and the Advisor (collectively, the “GNL Advisor Defendants”); and (iii) AR Capital Global Holdings, LLC, and AR Global which we refer to as(together, the AR Global Defendants,“AR Defendants”), in the Supreme Court of the State of New York, County of New York.York ("New York Supreme Court"). The complaint alleges that the notice sent to the Former Service Provider by us on January 15, 2018, terminating the Former Service Provider Agreement, as well as two other letters sent terminating other agreements with the Service Provider (collectively, the “Termination Letters”), werewas a pretext to enable the AR Global Defendants to seize the Former Service Provider's business with us.business. The complaint further alleges breach of contract against us, the OP and the GNL Advisor Defendants, and tortious interference against the AR Global Defendants. The complaint seeks: (i) monetary damages against the defendants, (ii) to enjoin the GNL Defendants from terminatingtermination of the Service Provider Agreement, based on the Termination Letters, and (iii) judgment declaring the Termination Letterstermination to be void. The defendants believe the allegations in the complaint are without merit, and intend to defend against them vigorously. On January 26, 2018, the Former Service Provider made a motion seeking to preliminarily enjoin the defendants from terminating the Service Provider Agreement pending resolution of the lawsuit. On February 13, 2018, the defendants responded and moved to dismiss. Both motions remain pending. See Note
At a hearing on March 15, 2018, the New York Supreme Court issued a ruling (i) denying the Former Service Provider’s request for a preliminary injunction preventing defendants from terminating the Former Service Provider, (ii) dismissing the Former Service Provider’s claim for a declaratory judgment that the termination is void and of no force and effect, and (iii) allowing the Former Service Provider’s remaining claims to proceed. On April 16, — Subsequent Events 2018, the defendants filed answers and counterclaims against the Former Service Provider alleging damages resulting from the Former Service Provider’s underperformance of its duties, as well as damages related to the Former Service Provider’s retention of approximately $91,000 in pre-paid fees for the post- termination period. The New York Supreme Court held a preliminary conference on April 17, 2018 at which it set a discovery schedule, and the parties are currently engaged in discovery. As with any litigation, the dispute and resulting litigation may divert management’s attention from the day-to-day operations of our business and result in substantial cost to us, including amounts that may become payable to reimburse AR Global, the Advisor and their affiliates for their legal costs in defending themselves against the Former Service Provider’s lawsuit pursuant to our auditedindemnification obligations to them. During the year ended December 31, 2018, we incurred $2.9 million of litigation costs relating to the matter and recorded a reserve of $7.4 million related to the anticipated settlement of this litigation. The settlement reserve was recorded in the fourth quarter of 2018 as a result of settlement discussions with the Former Service Provider through February of 2019. Based on the progression of these discussions, we were able to reasonably estimate an amount to reserve, however the actual settlement, if any, may differ from the amount reserved. These costs are included in acquisition, transaction and other costs in our consolidated financial statements in this Annual Report on Form 10-K.statement of operations.
Item 4. Mine Safety Disclosures.
Not applicable.

PART II
Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information
Our Common Stock is traded on the NYSE under the symbol "GNL." Set forth below is a line graph comparing the cumulative total stockholder return on our Common Stock, based on the market price of the Common Stock, with the FTSE National Association of Real Estate Investment Trusts Equity Index ("NAREIT"), Modern Index Strategy Indexes ("MSCI"), and the New York Stock Exchange Index ("NYSE Index") for the period commencing June 2, 2015, the date on which we listed our shares on the NYSE and ending December 31, 2017.2018. The graph assumes an investment of $100 on June 2, 2015.
For each calendar quarter indicated, the following table reflects high and low sales prices for the Common Stock as reported by NYSE and the amounts paid to our stockholders in respect of these shares which we refer to as "dividends." On February 28, 2017, we completed the Reverse Stock Split. Prior period amounts in the table below have been retroactively adjusted to reflect the Reverse Stock Split.
2017: First Quarter Second Quarter Third Quarter Fourth Quarter
High $25.25
 $24.45
 $22.66
 $22.42
Low $22.36
 $21.61
 $20.71
 $20.09
         
Dividends per share $0.534
 $0.534
 $0.534
 $0.534
2016: First Quarter Second Quarter Third Quarter Fourth Quarter
High $25.95
 $26.92
 $26.46
 $24.69
Low $17.31
 $22.38
 $23.01
 $20.76
         
Dividends per share $0.531
 $0.531
 $0.531
 $0.531
chart-0ef1bb803cca5cc1ba9.jpg

Holders
As of February 15, 2018,22, 2019, we had 67.383.8 million shares outstanding held by 2,1361,816 stockholders of record.

Dividends
We qualifiedelected to be taxed as a REIT, for U.S. federal income tax purposes, commencing with our taxable year ended December 31, 2013. As a REIT, we are required to distribute at least 90% of our REIT taxable income to our stockholders annually. We pay dividends on the 15th day of each month in an amount equal to $0.1775 per share to common stockholders of record as of close of business on the 8th day of such month. The amount of dividends payable to our common stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT. Dividends on our Series A Preferred Stock accrue in an amount equal to $0.453125 per share per quarter to Series A Preferred Stock holders, which is equivalent to 7.25% of the $25.00 liquidation preference per share of Series A Preferred Stock per annum. Dividends on the Series A Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day) to holders of record on the close of business on the record date set by our board of directors, which must be not more than 30 nor fewer than 10 days prior to the applicable payment date. We cannot guarantee that we will be able to pay dividends with respect to the Series A Preferred Stock or our Common Stock on a regular basis in the future. Our ability to pay dividends in the future is dependent on our ability to operate profitably and to generate cash flows from our operations. In addition, pursuant to the Credit Facility, we may not pay distributions, including cash dividends payable with respect to Series A Preferred Stock and Common Stock, or redeem or otherwise repurchase shares of our capital stock, including Series A Preferred Stock and Common Stock, in an aggregate amount exceeding 95% of our Adjusted FFO as defined in the Credit Facility (which is different from AFFO as discussed and analyzed in this Annual Report on Form 10-K) for any period of four consecutive fiscal quarters, except in limited circumstances, including that for one fiscal quarter in each calendar year, we may pay cash dividends, make redemptions and make repurchases in an aggregate amount equal to no more than 100% of our Adjusted FFO. For additional information on the restrictions on dividends and other distributions in our Credit Facility, see Note 6 — Credit Facilities to our consolidated financial statements included in this Annual Report on Form 10-K and "Item 1A. Risk Factors - If we are not able to increase the amount of cash we have available to pay dividends, including through additional cash flows we expect to generate from completing acquisitions, we may have to reduce dividend payments or identify other sources to fund the payment of dividends at their current levels.”
For tax purposes, of the amounts distributed during the year ended December 31, 2018, 73.7%, or $1.57 per share per annum, and 26.3%, or $0.56 per share per annum, represented a return of capital and ordinary dividends, respectively. During the year ended December 31, 2017, 18.3%, or $0.39 per share per annum, and 81.7%, or $1.74 per share per annum, represented a return of capital and ordinary dividends, respectively. During the year ended December 31, 2016, 62.0%, or $1.32 per share per annum, and 38.0%, or $0.81 per share per annum, represented a return of capital and ordinary dividends, respectively. See Note 9 Stockholders' Equity to our audited consolidated financial statements included in this Annual Report on Form 10-K for further discussion on tax characteristics of dividends.

Dividends to Common Stockholders
We generally pay dividends on our Common Stock on the 15th day of each month (or, if not a business day, the next succeeding business day) to Common Stock holders of record on the applicable record date during the month at an annualized rate of $2.13 per share or $0.1775 per share on a monthly basis. Prior to July 2018, the record date for our regular monthly dividend was generally the 8th day of the applicable month. The following table reflectsamount of dividends declared and paid in cashpayable to our common stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, our financial condition, provisions in our Credit Facility or other agreements that may restrict our ability to pay dividends, capital expenditure requirements, as wellapplicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT. We cannot guarantee that we will be able to pay dividends relatedwith respect to participating LTIP Unitsour Common Stock on regular basis in the future.
Dividends to Series A Preferred Stock Holders
Dividends on our Series A Preferred Stock accrue in an amount equal to $0.453125 per share per quarter to Series A Preferred Stock holders, which is equivalent to 7.25% of the $25.00 liquidation preference per share of Series A Preferred Stock per annum. Dividends on the Series A Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and OP Units duringOctober of each year (or, if not on a business day, on the years ended December 31, 2017 and 2016. For information regardingnext succeeding business day) to holders of record on the close of business on the record date set by our board of directors, which must be not more than 30 nor fewer than 10 days prior to the applicable payment date. We cannot guarantee that we will be able to pay dividends paid with respect to the Series A Preferred Stock please see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations below.on a regular basis in the future.
(In thousands) 
Dividends
Paid in Cash
 
Other Distributions Paid in Cash (1)
 
Total
Dividends Paid
 Dividends Declared
Q1 2017 $35,293
 $255
 $35,548
 $35,543
Q2 2017 35,466
 160
 35,626
 35,652
Q3 2017 35,834
 159
 35,993
 36,016
Q4 2017 36,146
 165
 36,311
 35,955
Total $142,739
 $739
 $143,478
 $143,166
(In thousands) Dividends
Paid in Cash
 
Other Distributions Paid in Cash (1)
 Total
Dividends Paid
 Dividends Declared
Q1 2016 $30,020
 $857
(2) 
$30,877
 $30,503
Q2 2016 30,019
 487
 30,506
 30,503
Q3 2016 30,097
 405
 30,502
 30,502
Q4 2016 30,250
 259
 30,509
 30,511
Total $120,386
 $2,008
 $122,394
 $122,019

(1)
Represents distributions for LTIP Units and OP Units. As of December 31, 2017 there were no more OP Units outstanding.
(2)
Includes 2015 accrued LTIP Units distributions of $0.4 million which were paid during Q1 2016.

Share-Based Compensation
The following table sets forth information regarding securities authorized for issuance under our stock option plan (the “Plan”), our employee and director incentive restricted share plan (the “RSP”) and Multi-Year Outperformance Agreement, dated February 25, 2016our multi-year outperformance agreement entered into with the Advisor in July 2018 (the “OPP”"2018 OPP") as of December 31, 2017:2018:
Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights Number of Securities Remaining Available For Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)
 (a) (b) (c) (a) (b) (c) 
Equity Compensation Plans approved by security holders $
 $
 $
 
 
 
 
Equity Compensation Plans not approved by security holders 
 
 9,909.323
 2,554,930
(1) 

 7,992,251
(2) 
Total $
 $
 $9,909,323
 2,554,930
(1) 

 7,992,251
(2) 
(1) Represents shares of Common Stock Option Plan
The Plan authorizesunderlying LTIP Units awarded pursuant to the grant2018 OPP. These LTIP Units may be earned by the Advisor based on our achieving of non-qualified stock optionsthreshold, target or maximum performance goals based on our absolute and relative total stockholder return over a performance period commencing on June 2, 2018 and ending on the earliest of (i) June 2, 2021, (ii) the effective date of any Change of Control (as defined in the 2018 OPP) and (iii) the effective date of any termination of the Advisor’s service as our advisor. LTIP Units earned as of the last day of the performance period will also become vested as of that date. Effective as of that same date, any LTIP Units that are not earned will automatically and without notice be forfeited without the payment of any consideration by us. For additional information on the 2018 OPP, please see Note 13 Share-Based Compensation to our independent directors, subject to the absolute discretion of the board of directors and the applicable limitations of the Plan. The exercise price for all stock options granted under the Plan will be equal to the fair market value of a shareconsolidated financial statements included in this Annual Report on the last business day preceding the annual meeting of stockholders. Form 10-K.
(2) A total of 0.5 million500,000 shares have been authorized and reserved for issuance under the Plan.
Restricted Share Plan
The RSP provides As of December 31, 2018, no stock options had been awarded under the ability to grant awards of restricted shares of Common Stock (“Restricted Shares”) and restricted stock units (“RSUs”) to our directors, officers and employees, employees of our Advisor and its affiliates, employees of entities that provide services to us, directors of the Advisor or of entities that provide services to us, certain consultants to us and the Advisor and its affiliates or to entities that provide services to us.
Prior to being amended and restated on April 8, 2015, the RSP provided for the automatic grant of 1,000 Restricted Shares to each of the independent directors, without any further action by our board of directors or the stockholders, on the date of initial election to the board of directors and on the date of each annual stockholder’s meeting. Restricted Shares issued to independent directors vest over a five-year period following the first anniversary of the date of grant in increments of 20% per annum. On April 8, 2015, pursuant to this amendment and restatement, among other things, RSUs were added as a permitted form of award and the fixed amount of shares that are automatically granted to the independent directors and the fixed vesting period of five years was removed. Under the RSP, the annual amount granted to the independent directors is determined by the board of directors.
Effective upon the Listing, our board of directors approved the following changes to independent director compensation: (i) increasing in the annual retainer payable to all independent directors to $100,000 per year, (ii) increase in the annual retainer for the non-executive chair to $105,000, (iii) increase in the annual retainer for independent directors serving on the audit committee, compensation committee or nominating and corporate governance committee to $30,000. All annual retainers are payable 50% in the form of cash and 50% in the form of RSUs which vest over a three-year period. In addition, the directors have the option to elect to receive the cash component in the form of RSUs which would vest over a three-year period. Under the RSP, restricted share awards entitle the recipient to receive shares of Common Stock from us under terms that provide for vesting over a specified period of time or upon attainment of pre-established performance objectives. Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient's employment or other relationship with us. In connection with the Listing, our board of directors also approved a one-time retention grant of 13,333 RSUs to each of the directors valued at $25.56 per unit, which vest over a five-year period. On July 13, 2015, we granted an annual retainer to each of its independent directors comprising of 50% (or $0.1 million) in cash and 50% (or 2,451) in RSUs which vest over a three-year period with the vesting period beginning on June 15, 2015. In addition, we granted $0.1 million in non-executive chair compensation in cash and 1,961 in RSUs which vest over a three-year period with the vesting period beginning on June 15, 2015. On August 18, 2016, we granted an annual retainer to each of our independent directors comprising of $0.1 million and 2,881 in RSUs which vest over a three-year period with the vesting period beginning on June 28, 2016. In addition, we granted $0.1 million in non-executive chair compensation in cash and 2,327 in RSUs which vest over a three-year period with the vesting period beginning on June 28, 2016.
On January 3, 2017, following approval by our board of directors, 10,667 unvested restricted shares owned by Mr. Kahane became vested simultaneously with his resignation as a member of the board of directors.Plan. The board of directors had accelerated the vesting of 8,000 of these unvested restricted shares upon Mr. Kahane’s voluntary resignation.

Prior to being amended and restated on April 8, 2015, the total number of shares of Common Stock granted under the RSP could not exceed 5% of our outstanding shares on a fully diluted basis at any time, and in any event could not exceed 2.5 million shares (as such numberthat may be adjusted for stock splits, stock dividends, combinations and similar events). On April 8, 2015, pursuantissued under or subject to this amendment and restatement the number of shares of our Common Stock, available for awards under the RSP was increased to 10%is 10.0% of our outstanding shares of Common Stock on a fully diluted basis at any time. The RSP also eliminated the limitAs of 2.5 millionDecember 31, 2018, we had 76,080,210 shares of Common Stock permitted to be issued as RSUs.
Restricted shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of restricted shares may receive cash dividends prior to the time that the restrictionsoutstanding on the restricted shares have lapsed. Any dividends payable ina fully diluted basis, and 115,700 shares of Common Stock shall behad been issued under or were subject to the same restrictions as the underlying restricted shares. As of December 31, 2017, there were 49,112 unvested restricted shares issued pursuant toawards under the RSP.
Multi-Year Outperformance Agreement
In connection with the Listing and modifications to the Advisory Agreement, we entered into the OPP. Under the OPP, the Advisor was issued 3,013,933 long term incentive plan units ("LTIP Units") in the OP with a maximum award value For additional information on the issuance date equal to 5.00% of our market capitalization (the “OPP Cap”). The LTIP Units are structured as profits interests in the OP.
The Advisor will be eligible to earn a number of LTIP Units with a value equal to a portion of the OPP Cap upon the first, second and third anniversaries of the Effective Date, which is the listing date, June 2, 2015, based on our achievement of certain levels of total return to its stockholders (“Total Return”), including both share price appreciation and Common Stock dividends, as measured against a peer group of companies, as set forth below, for the three-year performance period commencing on the Effective Date (the “Three-Year Period”); each 12-month period during the Three-Year Period (the “One-Year Periods”);Plan and the initial 24-month period of the Three-Year Period (the “Two-Year Period”), as follows:
    Performance Period Annual Period Interim Period
Absolute Component: 4% of any excess Total Return attained above an absolute hurdle measured from the beginning of such period: 21% 7% 14%
Relative Component: 4% of any excess Total Return attained above the Total Return for the performance period of the Peer Group*, subject to a ratable sliding scale factor as follows based on achievement of cumulative Total Return measured from the beginning of such period:      
 100% will be earned if cumulative Total Return achieved is at least: 18% 6% 12%
 50% will be earned if cumulative Total Return achieved is: —% —% —%
 0% will be earned if cumulative Total Return achieved is less than: —% —% —%
 a percentage from 50% to 100% calculated by linear interpolation will be earned if the cumulative Total Return achieved is between: 0% - 18% 0% - 6% 0% - 12%

*The “Peer Group” is comprised of Gramercy Property Trust Inc., Lexington Realty Trust, Select Income REIT, and W.P. Carey Inc.
The potential outperformance award is calculated at the end of each One-Year Period, the Two-Year Period and the Three-Year Period. The award earned for the Three-Year Period is based on the formula in the table above less any awards earned for the Two-Year Period and One-Year Periods, but not less than zero; the award earned for the Two-Year Period is based on the formula in the table above less any award earned for the first and second One-Year Period, but not less than zero. Any LTIP Units that are unearned at the end of the Performance Period will be forfeited.
Subject to the Advisor’s continued service through each vesting date, one third of any earned LTIP Units will vest on each of the third, fourth and fifth anniversaries of the Effective Date. Any earned and vested LTIP Units may be converted into OP Units in accordance with the terms and conditions of the limited partnership agreement of the OP. The OPP provides for early calculation of LTIP Units earned and for the accelerated vesting of any earned LTIP Units in the event the Advisor is terminated or in the event we incur a change in control, in either case prior to the end of the Three-Year Period. As of June 2, 2017 (end of the Two-Year Period) and June 2, 2016 (end of the first One-Year Period), no LTIP units were earned by the Advisor under the terms of the OPP with the Three-Year Period remaining during which the LTIP Units may be earned.
We record equity-based compensation expense associated with the awards over the requisite service period of five years on a graded vesting basis. Equity-based compensation expense is adjusted each reporting period for changes in the estimated market-related performance. Compensation income related to the OPP was $4.4 million and compensation expense of $3.4 million and $2.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. Subject to the Advisor’s continued service through each vesting date, one third of any earned LTIP Units will vest on each of the third, fourth and fifth anniversaries of the Effective Date. Until such time as an LTIP Unit is earned in accordance with the provisions of the OPP, the holder of such LTIP

Unit is entitled to distributions on such LTIP Unit equal to 10% of the distributions (other than distributions of sale proceeds) made per OP Unit. If real estate assets are sold and net sales proceeds distributed prior to June 2, 2018, the end of the Three-Year Period, the holders of LTIP Units generally would be entitled to a portion of those net sales proceeds with respect to both the earned and unearned LTIP Units (although the amount per LTIP Unit, which would be determined in accordance with a formula in the limited partnership agreement of the OP, would be less than the amount per OP Unit until the average capital account per LTIP Unit equals the average capital account per OP Unit). We paid $0.6 million in distributions related to LTIP Units during the year ended December 31, 2017, which is included in accumulated deficit in the audited consolidated statement of equity. We accrued $0.4 million in distributions related to LTIP Units during the year ended December 31, 2016. After an LTIP Unit is earned, the holder of such LTIP Unit is entitled to a catch-up distribution and then the same distributions as the holders of an OP Unit. At the time the Advisor’s capital account with respect to an LTIP Unit is economically equivalent to the average capital account balance of an OP Unit, the LTIP Unit has been earned and it has been vested for 30 days, the Advisor, in its sole discretion, will be entitled to convert such LTIP Unit into an OP Unit in accordance with the provisions of the limited partnership agreement of the OP.
On February 25, 2016, the OPP was amended and restated to reflect the merger of two of the companies in the Peer Group.
On February 28, 2017, we completed a reverse stock split of Common Stock, OP Units and LTIP Units, at a ratio of 1-for-3 (seeRSP, please see Note 113 - Organization— Share-Based Compensation to our audited consolidated financial statements included in this Annual Report on Form 10-K for details).10-K.
Other Share-Based Compensation
We may issue Common Stock in lieu of cash to pay fees earned by our directors at each director's election. There are no restrictions on the shares issued since these payments in lieu of cash relate to fees earned for services performed. There were no such shares of Common Stock issued in lieu of cash during the years ended December 31, 2017, 2016 and 2015.
Unregistered Sales of Equity Securities
We did not sell any equity securities that were not registered underOn November 16, 2018, we issued 17,337.3 shares of Common Stock to our Advisor pursuant to the Securities Actterms of 1933,the advisory agreement as amended (the "Securities Act"), duringthe stock portion of the Incentive Compensation earned by the Advisor for the three months ended December 31, 2017. On April 3, 2017, 181,841 OP Units were converted into shares of Common Stock by holders of the OP Units who were individual members and employees of AR Global or entities controlled by one of such individuals.September 30, 2018. The shares were issued directly to the OP Unit holders in reliance upon an exemption from the registration requirements of the Securities Act of 1933 (the "Securities Act"“Securities Act”) under Section4(a) Section 4(a)(2) of the Securities Act. For additional information on the Incentive Compensation, please seeNote 11 — Related Party Transactions to our consolidated financial statements included in this Annual Report on Form 10-K.
Item 6. Selected Financial Data
The following is selected financial data as of December 31, 2017, 2016, 2015, 2014, and 2013, and for the years ended December 31, 2018, 2017, 2016, 2015, 2014, and 2013:2014:
 December 31, December 31,
Balance sheet data (In thousands)
 2017 2016 2015 2014 2013 2018 2017 2016 2015 2014
Total real estate investments, at cost $3,172,677
 $2,931,695
 $2,546,304
 $2,340,039
 $196,908
 $3,420,899
 $3,172,677
 $2,931,695
 $2,546,304
 $2,340,039
Total assets 3,038,595
 2,891,467
 2,540,522
 2,424,825
 213,840
 3,309,478
 3,038,595
 2,891,467
 2,540,522
 2,424,825
Mortgage notes payable, net 984,876
 747,381
 524,262
 277,214
 75,817
 1,129,807
 984,876
 747,381
 524,262
 277,214
Revolving credit facilities 298,909
 616,614
 717,286
 659,268
 
 363,894
 298,909
 616,614
 717,286
 659,268
Term loan, net 229,905
 
 
     278,727
 229,905
 
 
  
Mezzanine facility, net 
 55,383
 
 
 
 
 
 55,383
 
 
Total liabilities 1,624,352
 1,535,486
 1,320,403
 1,008,156
 91,120
 1,880,732
 1,624,352
 1,535,486
 1,320,403
 1,008,156
Total equity 1,414,243
 1,355,981
 1,220,119
 1,416,669
 122,720
 1,428,746
 1,414,243
 1,355,981
 1,220,119
 1,416,669


Operating data (In thousands, except share and per share data)
 Year Ended December 31, Year Ended December 31,
2017 2016 2015 2014 2013 2018 2017 2016 2015 2014
Total revenues $259,295
 $214,174
 $205,332
 $93,383
 $3,951
 $282,207
 $259,295
 $214,174
 $205,332
 $93,383
Operating expenses 173,247
 153,892
 172,123
 136,943
 10,007
 (208,436) (173,247) (153,892) (172,123) (136,943)
(Loss) gain on dispositions of real estate investments (5,751) 1,089
 13,341
 
 
Operating income (loss) 86,048
 60,282
 33,209
 (43,560) (6,056) 68,020
 87,137
 73,623
 33,209
 (43,560)
Total other expenses (59,322) (8,283) (29,335) (11,465) (933) (54,689) (60,411) (21,624) (29,335) (11,465)
Income taxes (expense) benefit (3,140) (4,422) (5,889) 1,431
 
Income tax (expense) benefit (2,434) (3,140) (4,422) (5,889) 1,431
Net income (loss) 23,586
 47,577
 (2,015) (53,594) (6,989) 10,897
 23,586
 47,577
 (2,015) (53,594)
Non-controlling interests (21) (437) (50) 
 
 
 (21) (437) (50) 
Preferred stock dividends (2,834) 
 
 
 
 (9,815) (2,834) 
 
 
Net income (loss) attributable to common stockholders $20,731
 $47,140
 $(2,065) $(53,594) $(6,989) $1,082
 $20,731
 $47,140
 $(2,065) $(53,594)
Other data:                    
Cash flows provided by (used in) operations $130,954
 $114,394
 $102,155
 $(9,693) $(3,647) $144,597
 $130,954
 $114,394
 $102,155
 $(9,693)
Cash flows provided by (used in) investing activities (78,978) 134,147
 (222,279) (1,517,175) (111,500)
Cash flows (used in) provided by financing activities (30,657) (236,700) 121,604
 1,582,907
 124,209
Per share data (1):
          
Dividends declared per common share $2.13
 $2.13
 $2.13
 $2.13
 $2.13
Net income (loss) per common share - basic and diluted $0.30
 $0.82
 $(0.04) $(1.28) $(3.84)
Weighted-average number of common shares outstanding, basic and diluted 66,877,620
 56,720,448
 58,103,298
 42,026,456
 1,817,801
Cash flows (used in) provided by investing activities (457,946) (78,978) 134,147
 (222,279) (1,517,175)
Cash flows provided by (used in) financing activities 312,192
 (30,657) (236,700) 121,604
 1,582,907
Per share data:          
Common stock dividends declared per common share $2.13
 $2.13
 $2.13
 $2.13
 $2.13
Net income (loss) per common share attributable to common stockholders - basic and diluted $0.01
 $0.30
 $0.82
 $(0.04) $(1.28)
Weighted-average number of common shares outstanding:          
Basic 69,411,061
 66,877,620
 56,720,448
 58,103,298
 42,026,456
Diluted 69,663,208
 66,877,620
 56,720,448
 58,103,298
 42,026,456

(1) On February 28, 2017, we completed the Reverse Stock Split. Prior period amounts in the table above have been retroactively adjusted to reflect the Reverse Stock Split.


Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the accompanying financial statements. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. Please see "Forward-Looking Statements" elsewhere in this report for a description of these risks and uncertainties.
Overview
We were incorporated on July 13, 2011 as a Maryland corporation. We acquired our first property and commenced active operations in October 2012 andcorporation that elected and qualified to be taxed as a REIT for U.S. federal income tax purposes beginning with our taxable year ended December 31, 2013. We completed our IPOinitial public offering on June 30, 2014, and, on June 2, 2015 we listed our Common Stock on the NYSE under the symbol "GNL."
We invest in commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties. Substantially all of our business is conducted through the OP. Our properties are managed and leased to third parties by the Property Manager. Pursuant to the advisory agreement, we have retained the Advisor to manage our affairs on a day-to-day basis. The Advisor and the Property Manager are under common control with AR Global, and these related parties receive compensation and fees for various services provided to us.
As of December 31, 2018, we owned 342 properties consisting of 27.5 million rentable square feet, which were 99.2% leased with a weighted-average remaining lease term of 8.3 years. Based on the percentage of annualized rental income on a straight-line basis as of December 31, 2018, 55.7% of our properties are located in the U.S and 44.3% are located in Europe. We may also originate or acquire first mortgage loans, mezzanine loans, preferred equity or securitized loans secured by real estate. As of December 31, 2018, we did not own any first mortgage loans, mezzanine loans, preferred equity or securitized loans.
Following the termination of the Former Service Provider, effective as of March 17, 2018, the Advisor, together with its service providers, assumed full management responsibility of our European real estate portfolio. Prior to the termination of the Former Service Provider, the Former Service Provider provided, subject to the Advisor's oversight and pursuant to the Service Provider Agreement, certain real estate related services, as well as sourcing and structuring of investment opportunities, performance of due diligence, and arranging debt financing and equity investment syndicates, solely with respect to investments in Europe. Since the termination of the Former Service Provider, the Advisor has built a European-focused management team and engaged third-party service providers to assume certain duties previously performed by the Former Service Provider. See Item 3. Legal Proceedings for additional information.
During the year ended December 31, 2018, we acquired 23 properties and sold two properties (see Note 4 — Real Estate Investments, Net to our consolidated financial statements included in this Annual Report on Form 10-K for further discussion).
Merger Transaction
On August 8, 2016, we entered into the Merger Agreement with Global II. On December 22, 2016, pursuant to the Merger Agreement, Global II merged with and into the Merger Sub, at which time the separate existence of Global II ceased and we became the parent of the Merger Sub. In addition, pursuant to the Merger Agreement, Global II OP, merged with our OP, with our OP being the surviving entity. We and Global II each were sponsored, directly or indirectly, by an affiliate of AR Global which, through its affiliates, provide or provided asset management services to us and Global II pursuant to advisory agreements. See Note 3 — Merger Transaction to our audited consolidated financial statements in this Annual Report on Form 10-K.
As of December 31, 2017, we owned 321 properties consisting of 22.9 million rentable square feet, which were 99.5% leased with a weighted-average remaining lease term of 8.8 years. Based on original purchase price or acquisition value with respect to properties acquired in the Merger, 50.6% of our properties are located in the U.S and Puerto Rico and 49.4% are located in Europe. We may also originate or acquire first mortgage loans, mezzanine loans, preferred equity or securitized loans secured by real estate. As of December 31, 2017, we did not own any first mortgage loans, mezzanine loans, preferred equity or securitized loans.
Pursuant to the Advisory Agreement, we retained the Advisor to manage our affairs on a day-to-day basis. Substantially all of our business is conducted through the OP. Our properties are managed and leased by Property Manager. The Advisor, Property Manager, and the Special Limited Partner are under common control with AR Global, the parent of our sponsor, and as a result are related parties. These related parties receive compensation and fees for various services provided to us.
On August 8, 2015, we entered into the Service Provider Agreement with the Advisor and the Service Provider, pursuant to which the Service Provider agreed to provide, subject to the Advisor's oversight, certain real estate-related services, as well as sourcing and structuring of investment opportunities, performance of due diligence, and arranging debt financing and equity investment syndicates, solely with respect to investments in Europe. On January 16, 2018, we notified the Service Provider that it was being terminated effective as of March 17, 2018. Additionally, as a result of our termination of the Service Provider, the property management and leasing agreement among an affiliate of the Advisor and the Service Provider will terminate by its own terms. As required under the Advisory Agreement, the Advisor and its affiliates will continue to manage our affairs on a day to day basis (including management and leasing of our properties) and will remain responsible for managing and providing other services with respect to our European investments. The Advisor may engage one or more third parties to assist with these responsibilities, all subject to the terms of the Advisory Agreement. See Item 3. Legal Proceedings.
During the year ended December 31, 2017, we sold 1 property and acquired 12 properties (see Note 4 — Real Estate Investments, Net to our audited consolidated financial statements in this Annual Report on Form 10-K for further discussion).
Significant Accounting Estimates and Accounting Policies
Set forth below is a summary of the significant accounting estimates and accounting policies that management believes are important to the preparation of our financial statements. Certain of our accounting estimates are particularly important for an understanding of our financial position and results of operations, and require the application of significant judgment by our management. As a result, these estimates are subject to a degree of uncertainty. These significant accounting estimates and accounting policies include:
Revenue Recognition
Our revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease agreement and are reported on a straight-line basis over the initial term of the lease. Since many of our leases provide for rental increases at specified intervals, straight-line basis accounting requires us to record a receivable and include in revenues unbilled rent receivables that we will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. For each new lease after acquisition, the commencement date is the date the tenant takes possession of the space. For a lease modification, the commencement date is the date the lease modification is executed. We defer the revenue related to lease payments received from tenants in advance of their due dates. When we acquire a property, the acquisition date for purposes of this calculation is the commencement date.

As of December 31, 20172018 and 2016,2017, cumulative straight-line rents receivable in our audited consolidated balance sheets were $42.7$47.2 million and $30.5$42.7 million, respectively. For the years ended December 31, 20172018 and 2016,2017, our rental revenue included impacts of unbilled rental revenue of $10.5$6.3 million and $10.6$10.5 million, respectively, to adjust contractual rent to straight-line rent.
We regularly review receivables related to rent and unbilled rent receivables and determine collectability by taking into consideration the tenant's payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the geographic area in which the property is located. In the event that the collectability of a receivable is in doubt, we record an increase in our allowance for uncollectible accounts or record a direct write-off of the receivable in our audited consolidated statements of operations.
Cost recoveries from tenants are included in operating expense reimbursement in the period that the related costs are incurred, as applicable.
Investments in Real Estate
Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred.
We evaluate the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the audited consolidated statements of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.
In both a business combinations,combination and an asset acquisition, we allocate the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities and non-controlling interests based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets or liabilities may include the value of in-place leases, above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values.
In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above- or below-market interest rates. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets. All acquisitions during the years ended December 31, 2018 and 2017 were asset acquisitions.
Disposal of real estate investments representing a strategic shift in operations that will have a major effect on our operations and financial results are required to be presented as discontinued operations in our consolidated statements of operations. No properties were presented as discontinued operations as of December 31, 20172018 and 2016.2017. Properties that are intended to be sold are designated as “held for sale” on our consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale.sale, most significantly that the sale is probable within one year. We evaluate probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. As of December 31, 2018, we had three properties designated as held for sale. As of December 31, 2017, and 2016, we did not have anyhad three properties designated as held for sale (see Note 4 — Real Estate Investments, Net) to our audited consolidated financial statements included in this Annual Report on Form 10-K for further details).
We evaluate acquired leases and new leases on acquired properties based on capital lease criteria. A lease is classified by a tenant as a capital lease if the significant risks and rewards of ownership are considered to reside with the tenant. This situation is generally considered to be met if, among other things, the non-cancelable lease term is more than 75% of the useful life of the asset or if the present value of the minimum lease payments equals 90% or more of the leased property’s fair value at lease inception.
Gain on Dispositions of Real Estate Investments
Gains on sales of rental real estate after January 1, 2018 are not considered sales to customers and will generally recognized pursuant to the provisions included in ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”).
Gain on sales of real estate prior to January 1, 2018 are recognized pursuant to the provisions included in ASC 360-20, Real Estate Sales (“ASC 360-20”). The specific timing of a sale was measured against various criteria in and ASC 360-20 related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the properties. If the sales criteria for the full accrual method are not met, depending on the circumstances, the Company may not record a sale or it may record a sale but may defer some or all of the gain recognition. If the criteria for full accrual are not met, the Company may account for the transaction by applying the finance, leasing, profit sharing, deposit, installment or cost recovery methods, as appropriate, until the sales criteria for the full accrual method are met.   


Purchase Price Allocation
We allocate the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. We utilize various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and fixtures are based on cost segregation studies performed by independent third parties or on our analysis of comparable properties in our portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships, as applicable.
Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, we include real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from 12 to 18 months. We also estimate costs to execute similar leases including leasing commissions, legal and other related expenses.
Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts

to be paid pursuant to each in-place lease, and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time.
The aggregate value of intangible assets related to customer relationship, as applicable, is measured based on our evaluation of the specific characteristics of each tenant’s lease and our overall relationship with the tenant. Characteristics considered by us in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors.
The value of customer relationship intangibles is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.
In making estimates of fair values for purposes of allocating purchase price, we utilize a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. We also consider information obtained about each property as a result of our pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.
As more fully discussed in Note 3 — Merger Transaction to our audited consolidated financial statements included in this Annual Report on Form 10-K, the Merger was accounted for under the acquisition method for business combinations with us as the accounting acquirer.
Depreciation and Amortization
Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.
Capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.
Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.
The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.
Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.

Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, we review the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings.
Goodwill
We evaluate goodwill for possible impairment at least annually or upon the occurrence of a triggering event. A triggering event is an event or circumstance that would more likely than not reduce the fair value of a reporting unit below its carrying amount. We performed a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Based on our assessment we determined that our goodwill is not impaired as of December 31, 20172018 and no further analysis is required.

Derivative Instruments
We may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with our borrowings. Certain of our foreign operations expose us to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of our cash receipts and payments in our functional currency, USD. We enter into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of our functional currency.
We record all derivatives on our audited consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting, and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that is attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain risk, even though hedge accounting does not apply or we elect not to apply hedge accounting.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If we elect not to apply hedge accounting treatment, any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statements of operations. If the derivative is designated and qualifies for hedge accounting treatment the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a change in derivative fair value will be immediately recognized in earnings.
Multi-Year Outperformance AgreementAgreements
Concurrent with the Listing and modifications to the Advisory Agreement,advisory agreement, we entered into the OPPa multi-year outperformance agreement with the OP and the Advisor. We record equity basedAdvisor in June 2015 (the "2015 OPP"). Following the end of the performance period under the 2015 OPP on June 2, 2018, we entered into the 2018 OPP. Under the 2015 OPP, which expired on June 2, 2018, we recorded equity-based compensation expense associated with the awards over the requisite service period of five years on a graded basis. The cumulativeUnder the 2018 OPP, effective June 2, 2018, we record equity-based compensation evenly over the requisite service period of approximately 2.8 years from the grant date, which was July 16, 2018. Prior to January 1, 2019, the equity-based compensation expense isassociated with the 2015 OPP and the 2018 OPP was adjusted each reporting period for changes in the estimated market-related performance. Under new accounting guidance adopted by us on January 1, 2019 that will apply to the 2018 OPP, total equity-based compensation expense calculated as of adoption of the new guidance will be fixed as of that date and will not be remeasured in subsequent periods. For additional information see Note 2 — Summary of Significant Accounting PoliciesRecently Issued Accounting Pronouncements to our consolidated financial statements included in this Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements
See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our audited consolidated financial statements included in this Annual Report on Form 10-K for further discussion.
Results of Operations
Comparison of the Year Ended December 31, 2018 to the Year Ended December 31, 2017
During 2018, we acquired 23 properties by purchase (net 21 after two dispositions), bringing our total portfolio of properties to 342 as of December 31, 2018. The net impact of the acquisitions drove our operating results for the year ended December 31, 2018, which were also impacted by increases during the year ended December 31, 2018 of 3.6% in the average exchange rate for GBP to USD and of 4.5% in the average exchange rate for Euro to USD, when compared to the same period last year and other factors as discussed in more detail below.
Rental Income
Rental income was $265.3 million and $242.5 million for the years ended December 31, 2018 and 2017, respectively. Our rental income increased primarily as a result of incremental income from our net acquisition of 21 properties during the year ended December 31, 2018 and income of $3.0 million relating to a lease termination fee from the sale of the Veolia Water property. Prior to the sale, we agreed to terminate the lease with the existing tenant and, as a result, received the termination fee in accordance with the terms of the lease. The increase was also driven, in part, by increases during the year ended December 31, 2018 in the average exchange rate for GBP to USD of 3.6% and Euro to USD of 4.5%, when compared to the year ended December 31, 2017.
Operating Expense Reimbursements
Operating expense reimbursements from tenants were $16.9 million and $16.8 million for the years ended December 31, 2018 and 2017, respectively. Our lease agreements generally require tenants to pay all property operating expenses, in addition to base rent, however some limited property operating expenses may be absorbed by us. Operating expense reimbursements increased due to the net acquisition of 21 properties during the year ended December 31, 2018 and certain adjustments for real estate taxes for several European properties relating to operations during the year ended December 31, 2017.
Property Operating Expense
Property operating expenses were $28.7 million and $28.9 million for the years ended December 31, 2018 and 2017, respectively. These costs primarily relate to insurance costs and real estate taxes on our properties, which are generally reimbursable by our tenants. The main exceptions are GSA properties for which certain expenses are not reimbursable by tenants. Property operating expense also includes provisions for bad debt expense associated with receivables we believe are doubtful of collection. The decrease in property operating expenses was due to increases during the year ended December 31, 2018 in the average exchange rate for GBP to USD of 3.6% and Euro to USD of 4.5%, when compared to the year ended December 31, 2017, partially offset by the impact of our net acquisition of 21 properties during the year ended December 31, 2018.
During 2018, we recognized bad debt expense of $0.8 million with respect to receivables, which primarily related to three properties in which leases were terminated during the fourth quarter of 2018 (see the "Impairment Charges and Related Lease Intangible Write-offs” section below). During 2017, we recognized bad debt expense of $1.2 million with respect to receivables, which primarily related to one of our tenants that vacated its space and ceased making rental payments.
Operating Fees to Related Parties
Operating fees paid to related parties were $28.2 million and $24.5 million for the years ended December 31, 2018 and 2017, respectively. Operating fees to related parties represent compensation to the Advisor for asset management services as well as property management fees paid to the Advisor and Property Manager, including amounts subsequently paid by the Advisor and the Property Manager to the Former Service Provider for our European investments, prior to the termination of the Former Service Provider, effective in March 2018. Our advisory agreement requires us to pay in cash a Base Management Fee of $18.0 million per annum ($4.5 million per quarter) plus a Variable Base Management Fee based on net proceeds from equity raised by us and, if the applicable hurdles are met, Incentive Compensation, payable in cash and shares (seeNote 11 - Related Party Transactions to our consolidated financial statements included in this Annual Report on Form 10-K for details).
The increase to operating fees between the periods in part results from an increase of $1.9 million in the amount of the payments of the Variable Base Management Fee resulting from additional net proceeds of $171.5 million and $148.3 million during the years ended December 31, 2018 and 2017, respectively, from sales of equity securities in public offerings of Series A Preferred Stock and Common Stock pursuant to our ATM Programs. The Variable Base Management Fee would also increase in connection with other offerings or issuances of equity securities. The increase from the prior-year period was also due to an increase in the property management fees incurred from our net acquisition of 21 properties during the year ended December 31, 2018. With respect to the third quarter of 2018, the Advisor was paid $0.4 million, in a quarterly installment, of Incentive Compensation due to the Advisor having met the applicable hurdles. Because, based on the calculation as of December 31, 2018 the hurdles had not

been met, we recorded reversal of $0.4 million for Incentive Compensation previously recorded in the third quarter of 2018, and as a result, no Incentive Compensation was earned for the year ended December 31, 2018. There was no Incentive Compensation earned during the year ended December 31, 2017.
Our Property Manager is entitled to fees for the management of our properties. Property management fees are calculated as a percentage of our gross revenues generated by the applicable properties. During the years ended December 31, 2018 and 2017, we paid property management fees of $5.0 million and $4.3 million, respectively. The Property Manager elected to waive $1.2 million of the property management fees for the year ended December 31, 2017. No property management fees were forgiven for the year ended December 31, 2018.
Impairment Charges and Related Lease Intangible Write-offs
During the year ended December 31, 2018, certain related entity tenants in six of our properties affiliated by a common guarantor were in financial difficulties. As part of negotiations, we terminated the leases for the tenants of four of the properties. We expect to sell one of the terminated lease properties and evaluated it for impairment and concluded that the carrying amount of the property was in excess of its estimated fair value and recorded an impairment charge of $1.6 million. The three remaining terminated lease properties were leased to other tenants and the Company wrote-off the related lease intangibles of $3.4 million associated with the original tenants. Two of the tenants are continuing to use the remaining two properties and are current on their rent. Based on expected future cash flows, we do not believe the five leased properties are impaired.
Acquisition, Transaction and Other Costs
We recognized $13.9 million of acquisition, transaction and other costs during the year ended December 31, 2018, primarily comprised of expenses incurred in connection with litigation related to the termination of the Former Service Provider totaling $10.3 million, of which $7.4 million relates to a reserve recorded for the anticipated settlement of this litigation and $2.9 million relates to legal costs. In addition, acquisition, transaction and other costs for the year ended December 31, 2018 included $1.6 million in fees associated with the exploration of a potential foreign equity offering, $1.3 million in various legal and professional fees related to financing activities and $0.7 million of other costs.
We recorded $2.0 million of acquisition, transaction and other costs during the year ended December 31, 2017, which consisted of third-party professional fees relating to the Merger, fees related to the novation of our derivative contracts in connection with the refinancing in July 2017 of our prior credit facility pursuant to a credit agreement dated as July 25, 2013 (as amended from time to time thereafter, the "Prior Credit Facility") with the Credit Facility, bridge facility commitment letter fees and legal fees.
Our completed acquisitions in 2018 and 2017, and our dispositions are considered asset acquisitions, therefore any applicable transaction costs were capitalized. In addition, certain costs related to the Mergers, which was accounted for as a business combination, were expensed in 2017 (see Note 3 — Merger Transaction for additional information).
General and Administrative Expense
General and administrative expense was $10.4 million and $8.6 million for the years ended December 31, 2018 and 2017, respectively, primarily consisting of professional fees including audit and taxation related services, board member compensation, and directors’ and officers' liability insurance. The increase for the year ended December 31, 2018, as compared to the year ended December 31, 2017, was primarily due to an increase in professional fees.
Equity Based Compensation
During the years ended December 31, 2018 and 2017, we recognized expense of $2.6 million and a reversal of prior expenses of $3.8 million, respectively, with respect to equity-based compensation related to the 2015 OPP for which the performance period ended on June 2, 2018, and the 2018 OPP, which was entered into in July 2018, as well as amortization of restricted stock units in respect of shares of Common Stock, ("RSUs"), granted to our independent directors.
The 2015 OPP and 2018 OPP were remeasured at fair market value as of each balance sheet date with a cumulative effect adjustment based on the new value each period and vesting. As the value declined, prior accruals were reversed and income was recognized. Ultimately, the 2015 OPP resulted in no LTIP Units being earned upon final measurement at June 2, 2018. During the years ended December 31, 2018 and 2017, we recorded reductions in expense of $1.1 million and $4.4 million, respectively, for the 2015 OPP. During the year ended December 31, 2018, we recorded expense of $3.3 million relating to the 2018 OPP.
Under new accounting guidance adopted by us on January 1, 2019 that will apply to the 2018 OPP in future periods, total equity-based compensation expense calculated as of adoption of the new guidance will be fixed as of that date and will not be remeasured in subsequent periods. For additional information see Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements included in this Annual Report on Form 10-K.
SeeNote 13 - Share-Based Compensation to our consolidated financial statements included in this Annual Report on Form 10-K for details regarding the 2018 OPP and 2015 OPP.

Depreciation and Amortization Expense
Depreciation and amortization expense was $119.6 million and $113.0 million for the years ended December 31, 2018 and 2017, respectively. The increase was primarily due to additional depreciation and amortization expense incurred for the net acquisition of 21 properties during the year ended December 31, 2018. Also, the higher depreciation and amortization expense was impacted by increases during the year ended December 31, 2018 of 3.6% in the average exchange rate for GBP to USD and 4.5% in the average exchange rate for Euro to USD when compared to the same period last year.
Interest Expense
Interest expense was $58.0 million and $48.5 million for the years ended December 31, 2018 and 2017, respectively. The increase was primarily related to an increase in average borrowings and a higher effective interest rate on our debt. The amount of our total debt outstanding increased from $1.5 billion as of December 31, 2017 to $1.8 billion as of December 31, 2018, and the weighted-average effective interest rate of our total debt increased from 2.8% as of December 31, 2017 to 3.1% as of December 31, 2018, which was partially due to an increase in LIBOR rates during 2018. Also, the higher interest expense was impacted by increases during the year ended December 31, 2018 of 3.6% in the average exchange rate for GBP to USD and 4.5% in the average exchange rate for Euro to USD when compared to the same period last year.
We view a mix of secured and unsecured financing sources as an efficient and accretive means to acquire properties and manage working capital. Our interest expense in future periods will vary based on our level of future borrowings, which will depend on our refinancing needs and acquisition activity. In addition, our interest expense will vary based on movements in interest rates, including LIBOR rates which increased through 2018 and may continue to increase in future periods.
Loss on Extinguishment of Debt
During the third quarter of 2018, we entered into a multi-tenant mortgage loan, yielding gross proceeds of £230.0 million secured by all 43 of our properties located in the United Kingdom. At closing, the £209.0 million of net proceeds were used to repay all outstanding mortgage indebtedness encumbering 38 of the 43 properties. As a result of this transaction, we recorded charges of $3.9 million, consisting of the write off $1.5 million of previously recorded deferred financing costs and prepayment penalties paid on early extinguishment of debt of $2.4 million.
(Loss) Gain on Dispositions of Real Estate Investments
During the year ended December 31, 2018 we recorded a loss on dispositions of real estate investments of $5.8 million. The loss related to the disposition of a property in Vandalia, Ohio, which resulted in a loss of $1.9 million, and a property in San Jose, California, which resulted in a loss of $3.8 million. Prior to the sale of the Ohio property, we agreed to terminate the lease with the existing tenant and received a termination fee of $3.0 million in accordance with the terms of the lease, which is recorded in rental income in the accompanying consolidated statements of operations for the year ended December 31, 2018.
Gain on dispositions of real estate investments during the year ended December 31, 2017 of $1.1 million related to the disposition of a property leased to Kulicke & Soffa located in Ft. Washington, Pennsylvania, which resulted in a gain on sale of disposition of $0.4 million, and the reversal of the prior year Gain Fee under the advisory agreement of $0.8 million (see Note 11 —  Related Party Transactions to our consolidated financial statements included in this Annual Report on Form 10-K for further details).
Gain (Loss) on derivative instruments
The gains of $7.6 million and losses of $8.3 million on derivative instruments for the years ended December 31, 2018 and 2017, respectively, reflect the marked-to-market impact from foreign currency and interest rate derivative instruments used to hedge the investment portfolio from currency and interest rate movements, and was mainly driven by rate changes in the GBP and EUR compared to the USD.
Unrealized Gain (Loss) on Undesignated Foreign Currency Advances and Other Hedge Ineffectiveness
During the years ended December 31, 2018 and 2017, we recorded losses on undesignated foreign currency advances and other hedge ineffectiveness of $0.4 million and $3.7 million, respectively. The loss during the year ended December 31, 2017, primarily related to the mark-to-market adjustments on excess foreign currency draws over our net investments in the United Kingdom and Europe which are not designated as hedges. On July 24, 2017, in connection with the refinancing of the Prior Credit Facility, our GBP-denominated borrowings were substantially reduced, and there were no undesignated excess foreign advances in GBP thereafter. Accordingly, we do not expect similar charges/gains on excess amounts in the future.
Changes in the rates of exchange for the Euro and GBP currencies compared to the USD may affect costs and cash flows in our functional currency, the USD. We generally manage foreign currency exchange rate movements by matching our debt service obligation to the lender and the tenant’s rental obligation to us in the same currency. This helps us manage the risk of our overall exposure to currency fluctuations. In addition, we may use currency hedging to further reduce the exposure risk to our net cash flow. We generally are a net receiver of these currencies (we receive more than we pay out), and therefore our results of operations of our foreign properties benefit from a weaker USD, and are adversely affected by a stronger USD, relative to the relevant foreign

currency. During the year ended December 31, 2018, the average exchange rate for GBP to USD increased by 3.6%, and the average exchange rate for Euro to USD increased by 4.5%, when compared to the same period last year.
Income Tax Expense
Although as a REIT we generally do not pay U.S. federal income taxes, we recognize income tax (expense) benefit domestically for state taxes and local income taxes incurred, if any, and also in foreign jurisdictions in which we own properties. In addition, we perform an analysis of potential deferred tax or future tax benefit and expense as a result of book and tax differences and timing differences in taxes across jurisdictions. Our current income tax expense fluctuates from period to period based primarily on the timing of those taxes. Income tax expense was $2.4 million and $3.1 million for the years ended December 31, 2018 and 2017, respectively. During the year ended December 31, 2017, we recognized a deferred tax benefit of $1.0 million.
Comparison of the Year Ended December 31, 2017 to the Year Ended December 31, 2016
During 2017, we acquired 12 properties by purchase (net 11 after one disposition), bringing our total portfolio of properties to 321 as of December 31, 2017. Late in the fourth quarter of 2016, we acquired 15 properties for $565.8 million through Merger, bringing our total portfolio to 310 properties as of December 31, 2016. Our operating results generally reflect our ownership of 318 properties through the end of the fourth quarter of 2017 (three properties acquired late during the fourth quarter of 2017 had little to no impact on 2017 operating results given the timing of the acquisitions). As a result thereof, the results of operations for the year ended December 31, 2017 reflect significant changes in most categories when comparing to the year ended December 31, 2016.
Rental Income
Rental income was $242.5 million and $204.0 million for the years ended December 31, 2017 and 2016, respectively. Our rental income increased $38.5 million compared to 2016, as a result of a full year of rental income for the 15 properties acquired in the Merger, and a partial year of rental income on the 12 properties acquired by purchase during 2017, which, together, resulted in an incremental $48.1 million increase in rental income for the year ended December 31, 2017, and was partially aided by a rise in the value of the GBP and Euro throughout 2017 compared to the USD. This was partially offset by the impact from the sale of one property during 2017 for an aggregate sale price of $13.0 million, the sale of 34 properties during the last two quarters of 2016 for an aggregate sales price of $110.4 million and GBP and Euro currency declines in 2016.

Operating Expense Reimbursements
Operating expense reimbursements were $16.8 million and $10.1 million for the years ended December 31, 2017 and 2016, respectively. Our lease agreements generally require tenants to pay all property operating expenses, in addition to base rent, however some limited property operating expenses may be absorbed by us. Operating expense reimbursements primarily reflect insurance costs and real estate taxes incurred by us and subsequently reimbursed by the tenant. The increase over 2016 is largely driven by a full year of additional operating expense reimbursements related to the 15 properties acquired in the Merger and additional partial year of property operating expense reimbursements for the 12 properties acquired during 2017. This increase was also driven, in part, by a rise in the value of the GBP and Euro throughout 2017 compared to the USD, and was partially offset by the impact of our disposition of one property during the first quarter of 2017 and of 34 properties during the last two quarters of 2016.
Property Operating Expense
Property operating expenses were $28.9 million and $19.0 million for the years ended December 31, 2017 and 2016, respectively. These costs primarily relate to insurance costs and real estate taxes on our properties, which are generally reimbursable by the tenants. The main exceptions are GSA properties for which certain expenses are not reimbursable by tenants. Property operating expense also includes provisions for bad debt expense associated with receivables we believe are doubtful of collection. The increase is primarily driven by a full year of operating expenses recognized on 15 properties acquired in the Merger, most of which are subject to triple net leases, and additional partial year property operating expense reimbursements for the 12 properties acquired during 2017. This increase was also driven, in part, by a rise in the value of the GBP and Euro throughout 2017 compared to the USD, and was partially offset by the impact of our disposition of one property during the first quarter of 2017 and of 34 properties during the last two quarters of 2016, bad debt expense, and GBP and Euro currency declines in 2016.
During 2017, we recognized bad debt expense of $1.0 million with respect to receivables related to one of our tenants that vacated its space and ceased making rental payments. This resulted in a decrease in the portfolio's total occupancy from 100.0% as of December 31, 2016, to 99.5% as of December 31, 2017 based on rentable square feet. Additionally, we incurred non-reimbursable repairs and maintenance expense during the year ended December 31, 2017 of $0.6 million. As a result of these non-recurring charges, when coupled with impact of the acquired properties net of disposed properties, our recovery of property operating expenses increased from 53.2% during the year ended December 31, 2016 to 58.1% during the during the year ended December 31, 2017.
Operating Fees to Related Parties

Operating fees paid to related parties were $24.5 million and $19.8 million for the years ended December 31, 2017 and 2016, respectively. Operating fees to related parties represent compensation to the Advisor for asset management services as well as property management fees paid to the Advisor and Property Manager, including amounts subsequently paid by the Advisor and the Property Manager to the Former Service Provider for our European investments. Our Advisory Agreementadvisory agreement requires us to pay a Base Management Fee of $18.0 million per annum ($4.5 million per quarter) and a Variable Base Management Fee, both payable in cash, and Incentive Compensation, payable in cash and shares, if the applicable hurdles are met (see Note 11 - Related Party Transactions to our audited consolidated financial statements included in this Annual Report on Form 10-K for details). The increase to operating fees in 2017 is driven in part by the payment of the Variable Base Management fee equal to $3.4 million resulting from the issuance of $370.4 million of equity in connection with the Merger, issuances of shares of Common Stock pursuant to the ATM Program and issuances of Series A Preferred Stock. In addition, our operating fees paid to related parties increased due to an increase in the property management fees incurred on the acquisition of 12 properties during 2017, and was partially offset by our disposition of one property during the first quarter of 2017, and the disposition of 34 properties during the last two quarters of 2016. No Incentive Compensation was earned for the two years ended December 31, 2017 and 2016, respectively.
Our Service Provider and Property Manager areis entitled to fees for the management of our properties. Property management fees that we pay our Property Manager, including amounts subsequently paid by the Advisor and the Property Manager to the Former Service Provider and Property Managerfor our European investments, are calculated as a percentage of our gross revenues. During the years ended December 31, 2017 and 2016, property management fees we paid were $4.3 million and $3.8 million, respectively. The Property Manager elected to waiveforgive $1.2 million and $2.3 million of the property management fees for the years ended December 31, 2017 and 2016, respectively.
Acquisition, Transaction and Transaction Related ExpensesOther Costs
We recorded $2.0 million of acquisition, transaction and transaction expensesother costs during the year ended December 31, 2017, which consisted of third-party professional fees relating to the Merger, fees related to the novation of our derivative contracts in connection with the refinancing in July 2017 of our prior credit facility pursuant to a credit agreement dated as July 25, 2013 (as amended from time to time thereafter, the "PriorPrior Credit Facility")Facility with the Credit Facility, bridge facility commitment letter fees and legal fees. Our 2017 acquisitions and dispositions are considered as asset acquisitions and disposal, therefore any applicable transaction costs were capitalized. Acquisition, transaction and transaction related expensesother costs during the year ended December 31, 2016 of $9.8 million were primarily related to the Merger.

General and Administrative Expense
General and administrative expense was $8.6 million and $7.1 million for the years ended December 31, 2017 and 2016, respectively, primarily consisting of professional fees including audit and taxation related services, board member compensation, and directors’ and officers' liability insurance. The increase for the twelve monthsyear ended December 31, 2017 compared to the twelve monthsyear ended December 31, 2016 is primarily due to the increase in directors and officer's liability insurance premiums and professional fees.
Equity Based Compensation
During the years ended December 31, 2017 and 2016, we recognized income of $(4.4) million and expense of $3.4 million, respectively, with respect to equity-based compensation primarily related to changes in the fair value of the OPP offset by the amortization of Restricted Shares and RSUs granted to our independent directors. The decrease in equity based compensation in 2017 is primarily due to a decrease in the OPP valuation, which resulted from the second year of the performance period under the OPP having ended without any LTIP Units having been earned, due to a decrease in our stock price, and our peer groups having generally outperformed us. See Note 13 - Share-Based Compensation to our audited consolidated financial statements included in this Annual Report on Form 10-K for details regarding the OPP.
Depreciation and Amortization Expense
Depreciation and amortization expense was $113.0 million and $94.5 million for the years ended December 31, 2017 and 2016, respectively. The increase in 2017 is due to a full year of depreciation and amortization expense for the 15 properties acquired through the Merger during 2016, coupled with our short-period depreciation and amortization for the 12 properties acquired in 2017, and aided by a rise in the value of the GBP and Euro throughout 2017 compared to the USD. This expense is offset slightly by the absence of depreciation and amortization for the one property disposition in the first quarter of 2017 and for the 34 properties sold during the last two quarters of 2016. Additionally, in connection with the financial difficulties of a tenant, we wrote off the tenant related lease intangibles with a carrying amount of $1.8 million, net of accumulated amortization, during the third quarter of 2017.
Interest Expense
Interest expense was $48.5 million and $39.1 million for the years ended December 31, 2017 and 2016, respectively. The increase was primarily related to $386.1 million of debt assumed in the Merger and borrowings of $720.9 million based on USD equivalent incurred on July 24, 2017 under the Credit Facility. These new borrowings were offset by the full repayment of $56.5 million outstanding under the mezzanine facility assumed in connection with the Merger (the "Mezzanine Facility") on March 30, 2017, the full repayment of $725.7 million outstanding under the Prior Credit Facility on July 24, 2017 and the repayment of $200.0

$200.0 million outstanding under the Credit Facility. We also had additional interest expense in the fourth quarter of 2017 due to our new $187.0 million multi-tenant mortgage loan and repayment of approximately $120.0 million under the Revolving Credit Facility. Overall increase to interest expense was also driven, in part, by a rise in the value of the GBP and Euro throughout 2017 compared to the USD. These increases were partially offset by interest savings due to the paydown of the $21.6 million Encanto mortgage in the second quarter of 2017. After the mortgage was repaid, this property became part of our borrowing base under the Credit Facility. Our total consolidated debt was $1.5 billion and $1.4 billion as of December 31, 2017 and 2016, respectively. The weighted-average effective interest rate of our total consolidated debt decreased from 3.08% as of December 31, 2016 to 2.77% as of December 31, 2017.
We view a mix of secured and unsecured financing sources as an efficient and accretive means to acquire properties and manage working capital. Our interest expense in future periods will vary based on our level of future borrowings, which will depend on our refinancing needs and our acquisition activity.
Gains on Dispositions of Real Estate Investments
Gains on dispositions of real estate investments during the year ended 2017 of $1.1 million related to the disposition of Kulicke & Soffa located in Ft. Washington, Pennsylvania, which resulted in a gain on sale of disposition of $0.4 million, and the reversal of the prior year Gain Fee of $0.8 million. There were gains of $13.3 million on disposition of real estate investments relating to the sale of 34 assets during the year ended December 31, 2016.
Foreign Currency and Interest Rate Impact on Operations
The losses of $8.3 million and gains of $7.4 million on derivative instruments for the years ended December 31, 2017 and 2016, respectively, reflect the negative marked-to-market impact from foreign currency and interest rate derivative instruments used to hedge the investment portfolio from adverse currency and interest rate movements, and was mainly driven by volatility and gains in foreign currencies against the USD in 2017 and losses in 2016, particularly the GBP and Euro.
The losses of $3.7 million and gains of $10.1 million on undesignated foreign currency advances and other hedge ineffectiveness for the years ended December 31, 2017 and 2016, respectively, primarily relate to the marked-to-market adjustments on the excess foreign currency draws over our net investments in the United Kingdom and Europe which are not designated as

hedges, and these were driven in part by a rise in the value of the GBP and Euro throughout 2017 compared to the USD, as well as similar rises in other foreign currencies. Effective on July 24, 2017, in connection with the refinancing of the Prior Credit Facility, our GBP-denominated borrowings were substantially reduced, and there were no undesignated excess foreign advances in GBP thereafter. Accordingly, we do not expect charges/gains on excess amounts in the future.
We had no unrealized gains or (losses) on non-functional foreign currency advances not designated as net investment hedges for year ended December 31, 2017 and 2016.
As a result of our foreign investments in Europe, we are subject to risk from the effects of exchange rate movements in the Euro and GBP currencies, which may affect costs and cash flows in our functional currency, the USD. We generally manage foreign currency exchange rate movements by matching our debt service obligation to the lender and the tenant’s rental obligation to us in the same currency. This reduces our overall exposure to currency fluctuations. In addition, we may use currency hedging to further reduce the exposure to our net cash flow. We are generally a net receiver of these currencies (we receive more cash than we pay out), and therefore our results of operations of our foreign properties benefit from a weaker USD, and are adversely affected by a stronger USD, relative to the foreign currency. During the twelve monthsyear ended December 31, 2017, the average exchange rate for GBP to USD increased by 4.9% and the average exchange rate for Euro to USD increased by 2.1%., when compared to the same period last year. During the twelve monthsyear ended December 31, 2016, the average exchange rate for GBP to USD decreased by 9.3% and the average exchange rate for Euro to USD decreased by 13.9%., when compared to the same period last year.
Income Tax Expense
Although as a REIT we generally do not pay U.S. federal income taxes, we recognize income tax (expense) benefit domestically for state taxes and local income taxes incurred, if any, and also in foreign jurisdictions in which we own properties. In addition, we perform an analysis of potential deferred tax or future tax benefit and expense as a result of book and tax differences and timing differences in taxes across jurisdictions. Our current income tax expense fluctuates from period to period based primarily on the timing of those taxes. Income tax expense was $3.1 million and $4.4 million for the years ended December 31, 2017 and 2016, respectively. During the twelve monthsyear ended December 31, 2017, we recognized a deferred tax benefit of $1.0 million.
Comparison of the Year Ended December 31, 2016 to the Year Ended December 31, 2015
During 2015, we acquired 22 properties, of which 18 were acquired during the third quarter of 2015, bringing our total portfolio to 329 properties as of December 31, 2015. Our operating results reflect the ownership of 329 properties through predominantly the end of the third quarter of 2016, at which time we had disposed of only three U.S. properties. During the fourth quarter of 2016, we disposed of 31 properties, inclusive of one property in the Netherlands, and through the Merger of Global II, we acquired 15 properties as of the Merger Date, bringing our total portfolio to 310 properties. As a result thereof, the results of operations for the year ended December 31, 2016 reflect significant changes in most categories when comparing to the year ended December 31, 2015.
Rental Income
Rental income was $204.0 million and $194.6 million for the years ended December 31, 2016 and 2015, respectively. Our rental income increased compared to 2015, as the result of a full year of rental income for the 22 properties on 295 properties acquired during 2015 and additional rental income for the last 10 days of 2016 for the 15 properties acquired from the Merger. This was partially offset by the impact from the sale of 34 properties during the last two quarters of 2016 for an aggregate sales price of $110.4 million and currency declines.
Operating Expense Reimbursements
Operating expense reimbursements were $10.1 million and $10.7 million for the years ended December 31, 2016 and 2015, respectively. Our lease agreements generally require tenants to pay all property operating expenses, in addition to base rent, however some limited property operating expenses may be absorbed by us. Operating expense reimbursements primarily reflect insurance costs and real estate taxes incurred by us and subsequently reimbursed by the tenant. The decrease over 2015 is largely driven by our dispositions of 34 properties in the second half of 2016 and currency declines, partially offset by additional operating expense reimbursements related to a full year of operating expense reimbursements for the 22 properties acquired during 2015 and additional property operating expense reimbursements for the last ten days of 2016 related to the 15 properties acquired from the Merger.
Property Operating Expense
Property operating expenses were $19.0 million and $18.2 million for the years ended December 31, 2016 and 2015, respectively. These costs primarily relate to insurance costs and real estate taxes on our properties, which are generally reimbursable by the tenants. The main exceptions are GSA properties for which certain expenses are not reimbursable by tenants. The increase is primarily driven by a full year of operating expenses recognized on 22 properties acquired during 2015 and additional property operating expenses incurred for the ten days of 2016 for the 15 properties acquired from the Merger, partially offset by the impact of our disposition of 34 properties during the second half of 2016, and currency declines.

Operating Fees to Related Parties
Operating fees to related parties were $19.8 million and $15.2 million for the years ended December 31, 2016 and 2015, respectively. Operating fees to related parties represent compensation paid to the Advisor for asset management services as well as property management fees paid to the Service Provider for our European investments. Prior to April 1, 2015, we compensated the Advisor by issuing restricted performance based subordinated participation interests in the OP in the form of Class B Units for asset management services. These Class B Units converted to OP Units as of the Listing. During the year ended December 31, 2015, the board of directors approved the issuance of 1,020,580 Class B Units to the Advisor assuming a price of $9.00 per unit, all of which converted to OP Units upon Listing. There was no charge reflected in the financial statements for the issuance of Class B Units, until the Listing Date, at which time they were no longer subject to forfeiture. There were no Class B Units issued during the year ended December 31, 2016. With effect following the Listing Date, our Advisory Agreement requires us to pay Base Management Fee of $18.0 million per annum and variable fee or the Incentive Compensation, both payable in cash (see Note 11 — Related Party Transactions to our audited consolidated financial statements in this Annual Report on Form 10-K for details). Our operating fees have increased in 2016 due to incurring a full year on Base Management Fee of $18.0 million, $0.2 million of Incentive Compensation after new equity issuance during the period following the Listing Date due to Merger compared to 2015.
Our Service Provider and Property Manager are entitled to fees for the management of our properties. Property management fees are calculated as a percentage of gross revenues. During the years ended December 31, 2016 and 2015, property management fees were $3.8 million and $4.0 million, respectively. The Property Manager elected to waive $2.3 million and $2.5 million of the property management fees for the years ended December 31, 2016 and 2015, respectively.
Acquisition and Transaction Related Expenses
We recognized $9.8 million of acquisition and transaction expenses during the year ended December 31, 2016, which consisted of third party financial advisor fees, bridge facility commitment letter fees, auditor consent fees, legal fees and expenses as well as the cost of appraising the Global II properties that were acquired in the Merger. Acquisition and transaction related expenses for the year ended December 31, 2015 of $6.1 million primarily related to the purchase of 22 properties with an aggregate purchase price of $255.0 million.
Listing Fees
We incurred a listing fee in 2015 in connection with our Listing of approximately $18.7 million. The majority of these fees were paid to related parties, see Note 11 — Related Party Transactions to our audited consolidated financial statements in this Annual Report on Form 10-K for details of the breakdown.
Vesting of Class B Units
There was no additional expense realized during the year ended December 31, 2016, relating to the vesting of Class B Units previously issued to the Advisor for prior asset management services. Vesting of Class B Units expense was $14.5 million for the year ended December 31, 2015, relating to the vesting of Class B Units previously issued to the Advisor for prior asset management services. The performance condition related to these Class B Units was satisfied upon completion of the Listing and on June 2, 2015, the Class B Units were converted to OP Units on a one-to-one basis.
General and Administrative Expenses
General and administrative expenses were $7.1 million and $7.2 million for the years ended December 31, 2016 and 2015, respectively, primarily consists of board member compensation, directors' and officers' liability insurance, and professional fees including audit and taxation services.
Equity Based Compensation
During the year ended December 31, 2016 and 2015, we recognized $3.4 million and $2.2 million, respectively, of expense related to equity-based compensation primarily related to the amortization of the OPP and restricted shares granted to our independent directors of $0.4 million and $0.2 million for the year ended December 31, 2016 and 2015, respectively.
Depreciation and Amortization Expense
Depreciation and amortization expense was $94.5 million and $90.1 million for the years ended December 31, 2016 and 2015, respectively. The increase in 2016 is due to our aforementioned full year of depreciation and amortization expense for our 22 property acquisitions during 2015, coupled with our depreciation and amortization expense for the last ten days of 2016 on the 15 properties acquired through the Merger. The increases were partially offset by the lack of depreciation and amortization expense in 2016 for the 34 dispositions during the second half of 2016 and currency declines.
Interest Expense
Interest expense was $39.1 million and $34.9 million for the years ended December 31, 2016 and 2015, respectively. The increase was primarily related to an increase in average borrowings throughout 2016 to fund our 2015 property acquisitions. Additionally, on the Merger Date, we incurred ten days of interest expense associated with our assumption of $107.0 million

Mezzanine Facility obligations, which were subsequently reduced by $52.1 million of repayments and $276.3 million of mortgages, which were subsequently reduced by $12.6 million of repayments in connection with our payoff of the DB Luxembourg secondary mortgage. These increases were partially offset by currency declines.
We view a mix of secured and unsecured financing sources as an efficient and accretive means to acquire properties and manage working capital. Our interest expense in future periods will vary based on our level of future borrowings, which will depend on our refinancing needs and our acquisition activity.
Gains on Dispositions of Real Estate Investments
The gains of $13.3 million on disposition of real estate investments is related to the sale of 34 assets during the year ended December 31, 2016. There were no gains (losses) on dispositions of assets during the year ended December 31, 2015.
Foreign Currency and Interest Rate Impact on Operations
The gains of $7.4 million and $3.9 million on derivative instruments for the years ended December 31, 2016 and 2015, respectively, reflect the positive marked-to-market impact from foreign currency and interest rate derivative instruments used to hedge the investment portfolio from adverse currency and interest rate movements, and was mainly driven by volatility in foreign currencies, particularly GBP and Euro.
The gains of $10.1 million and $5.1 million on undesignated foreign currency advances and other hedge ineffectiveness for the years ended December 31, 2016 and 2015, respectively, primarily relate to the marked-to-market adjustments on the excess foreign currency draws over our net investments in the United Kingdom and Europe which are not designated as hedges.
We had no unrealized gains or (losses) on non-functional foreign currency advances not designated as net investment hedges for year ended December 31, 2016. The unrealized losses on non-functional foreign currency advances that were not designated as net investment hedges for the year ended December 31, 2015 were $3.6 million. Effective May 17, 2015, additional foreign currency advances were designated as net investment hedges.
Income Tax Expense
Although as a REIT we generally do not pay U.S. federal income taxes, we recognize income tax (expense) benefit for state taxes and local income taxes incurred, if any, including foreign jurisdictions in which we own properties. In addition, we perform an analysis of potential deferred tax or future tax benefit as a result of timing differences in taxes across jurisdictions. Our current income tax expense fluctuates from period to period based primarily on the timing of those taxes. The income tax expense was $4.4 million and $5.9 million for the years ended December 31, 2016 and 2015, respectively.
Cash Flows from Operating Activities
During the year ended December 31, 2017,2018, net cash provided by operating activities was $131.0$144.6 million. The level of cash flows provided by operating activities is driven by, among other things, rental income received, operating fees paid to related parties for asset and property management, and interest payments on outstanding borrowings. Cash flows provided by operating activities during the year ended December 31, 2018 reflect net income of $10.9 million, adjusted for non-cash items of $125.3 million (primarily depreciation, amortization of intangibles, amortization of deferred financing costs, amortization of mortgage premium/discount, amortization of above- and below-market lease and ground lease assets and liabilities, bad debt expense, unbilled straight-line rent, and equity-based compensation). In addition, working capital items decreased operating cash flows by $2.3 million.
During the year ended December 31, 2017, net cash provided by operating activities was $131.0 million. Cash flows provided by operating activities during the year ended December 31, 2017 reflect a net income of $23.6 million, adjusted for non-cash items of $107.1 million (primarily depreciation, amortization of intangibles, amortization of deferred financing costs, amortization of mortgage premium/discount, amortization of mezzanine discount, amortization of above- and below-market lease and ground lease assets and liabilities, bad debt expense, unbilled straight-line rent, and equity-based compensation) and working capital items of $10.9 million.
During the year ended December 31, 2016, net cash provided by operating activities was $114.4 million. The level of cash flows provided by operating activities is driven by, among other things, rental income received, operating fees paid to related parties paid for asset and property management and interest payments on outstanding borrowings. Cash flows provided by operating activities during the year ended December 31, 2016 reflect a net income of $47.6 million, adjusted for non-cash items of $94.0 million (primarily depreciation, amortization of intangibles, amortization of deferred financing costs, amortization of mortgage premium/discount, amortization of mezzanine discount, amortization of above/below-market lease and ground lease assets and liabilities, bad debt expense, unbilled straight-line rent, and equity based compensation) and working capital items of $2.7 million.
During the year ended December 31, 2015, net cash provided by operating activities was $102.2 million. The level of cash flows provided by operating activities is driven by the volume of acquisition activity, related rental income received and interest payments on outstanding borrowings. Cash flows provided by operating activities during the year ended December 31, 2015 also reflect $6.1 million of acquisition and transaction related costs.
Cash Flows from Investing Activities
Net cash used in investing activities during the year ended December 31, 2018 of $457.9 million was primarily driven by property acquisitions of $479.6 million and capital expenditures of $1.5 million. These cash uses were partially offset by proceeds from asset dispositions of $23.7 million during the year ended December 31, 2018.
Net cash used in investing activities during the year ended December 31, 2017 of $79.0 million was primarily related to cash paid for investments in real estatedriven by property acquisitions of $98.8 million and capital expenditures of $3.1 million, partially offset by net proceeds from the sale of real estate investments of $12.3 million from the disposition of Kulicke & Soffa and net proceeds from settlement of derivatives of $10.6 million.

Net cash provided by investing activities during the year ended December 31, 2016 of $134.1 million primarily related to proceeds from sale of real estate investments of $107.8 million on dispositions of 34 properties, cash acquired in Merger transaction of $19.0 million and restricted cash acquired in Merger transaction of $7.6 million.
Cash Flows from Financing Activities
Net cash used in investingprovided by financing activities of $312.2 million during the year ended December 31, 2015 of $222.3 million2018 primarily related to net borrowings on our acquisitionRevolving Credit Facility of 22 properties with an aggregate base purchase price$69.6 million, proceeds from mortgage notes payable of $255.0$494.7 million, whichnet proceeds from issuance of Common Stock of $171.8 million and proceeds from our Term Loan of $60.4 million. These cash inflows were partially funded with borrowings under our Credit Facility andoffset by payments on mortgage notes payable.
Cash Flows from Financing Activitiespayable of $313.2 million, dividends paid to common stockholders of $147.4 million, dividends paid to preferred stockholders of $9.8 million and payments of financing costs of $10.6 million.
Net cash used in financing activities of $30.7 million during the year ended December 31, 2017 related to repayments on the Prior Credit Facility and the Credit Facility of $1.0 billion, dividends to common stockholders of $142.7 million, repayment of the Mezzanine Facility of $56.5 million and repayments of mortgage notes payable of $21.9 million. These cash outflows were partially offset by borrowings from the Revolving Credit Facilities of $647.4 million, proceeds from the Term FacilityLoan of $225.0 million, proceeds from mortgage notes payable of $187.0 million and proceeds from the issuance of Series A Preferred Stock of $130.4 million.
Net cash used in financing activities of $236.7 million during the year ended December 31, 2016 related to borrowings on the Credit Facility of $62.7 million and net advances from related parties of $2.2 million, offset by repayments on Credit Facility of $113.9 million, Mezzanine Facility of $51.8 million and mortgage notes payable of $13.4 million. Other payments included dividends to stockholders of $120.4 million and distributions to non-controlling interest holders of $2.0 million.
Net cash provided by financing activities of $118.8 million during the year ended December 31, 2015 related to proceeds, net of receivables, from the issuance of Common Stock of $0.4 million, borrowings under Credit Facility of $476.2 million, proceeds from mortgage notes payable of $245.5 million and net advances from related parties of $0.4 million, partially offset by Common Stock repurchases of $127.3 million and repayments on the Credit Facility of $373.2 million. Other payments included dividends to stockholders of $97.7 million and distributions to non-controlling interest holders of $0.6 million.

Liquidity and Capital Resources
As of December 31, 2017,2018, we had cash and cash equivalents of $102.4 million and restricted cash of $5.3$100.3 million. Principal future demands on cash and cash equivalents will include the purchase of additional properties or other investments in accordance with our investment strategy, payment of related acquisition costs, improvement costs, the payment of our operating and administrative expenses, continuing debt service obligations and dividends to holders of our Common Stock and Series A Preferred Stock, as well as any future class or series of preferred stock we may issue. Management expects that operating income from our existing properties and properties we expect to acquire should cover operating expenses and the payment of our monthly dividend to our common stockholders and the quarterly dividend payable to holders of our Series A Preferred Stock, but in certainprior periods we may needhave needed to fund these amounts from cash on hand generated from other sources.sources and we may also need to do so in future periods.
During the year ended December 31, 2017,2018, cash used to pay our dividends was generated mainly from funds received from cash flows provided by operations and cash on hand generated from our other sources of capital. These other sources of capital, which we expect to continue to use for dividends and other capital needs, include proceeds received from our ATM Program and Preferred Stock ATM Program (or any similar future program), proceeds from our Revolving Credit Facility, proceeds from secured or unsecured financings from banks or other lenders, proceeds from future offerings of debt or equity securities (including preferred equity securities), proceeds from the sale of properties and undistributed funds from operations, if any.
Acquisitions and Dispositions
Acquisitions
We are in the business of acquiring real estate properties and leasing the properties to tenants. Our goal is to grow through acquiring additional properties. We have signed two non-binding letters of intent and one definitive purchase and sale agreement to acquire $500.0a total of three net lease properties, all of which are located in the United States, for an aggregate purchase price of $42.0 million. The two letters of intent may not lead to definitive agreements and the one definitive agreement is subject to conditions. There can be no assurance we will complete any of these acquisitions on their contemplated terms, or at all. Additionally, we have signed definitive agreements that will increase the annual rent at four of our properties, that are leased to a single tenant, in exchange for our funding of $11.4 million of properties duringin capital expenditures to expand and remodel the properties. During the year endingended December 31, 2018.2018, we acquired 23 properties for $479.6 million, including capitalized acquisition costs. Generally, we fund our acquisitions through a combination of cash and cash equivalents and mortgage or other debt, but we also may acquire assets free and clear of permanent mortgage or other indebtedness (see Note 5 - Mortgage Notes Payable, Net and Note 6 — Credit Facilitiesto our audited consolidated financial statements included in this Annual Report on Form 10-K for further discussion). We may alsofunded our 2018 acquisitions, including closing costs, primarily through a combination of an increase in mortgage debt of $181.5 million, net of mortgage repayments, additional borrowings of approximately $69.6 million, net of repayments under our Revolving Credit Facility, additional borrowings on our Term Loan of approximately $60.4 million and net proceeds from the issuance of Common Stock of $171.8 million.
We expect to fund acquisitions in the short term primarily with the net proceeds of $151.2 million from sales under the ATM Program during January 2019 or borrowings under the Revolving Credit Facility following repayments of amounts outstanding thereunder with those net proceeds. We intend to use proceeds from potential future offerings of equity securities (including preferred equity securities), borrowings under our Revolving Credit Facility, and proceeds from any dispositions of real estate investments to fund future acquisitions.
Dispositions
During 2017,June 2018, we acquired 12 properties for an aggregate purchase price of $98.8 million and disposed ofsold one property for $13.0 million.
On September 12, 2017, we completed the initial issuance and sale of 4,000,000 shares of Series A Preferred Stock, which generated gross proceeds of $100.0$20.3 million, and net proceeds of $96.3 million, after deducting underwriting discounts and offering costs paid by us. On October 11, 2017, the underwriters exercised an option to purchase additional shares of Series A Preferred Stock, and we sold an additional 259,650 shares of Series A Preferred Stock, which generated gross proceeds of $6.5 million after adjusting for the amount of dividends declared per share for the period from September 12, 2017 to September 30, 2017 and payable to holders of record as of October 6, 2017, and resulted in net proceeds of $6.3$1.3 million after deducting underwriting discounts and offering costs paid by us.
On December 19, 2017,repayment of mortgage debt. In addition, during July 2018, we completedsold one real estate asset for a total contract sales price of $5.0 million. Prior to the sale, we agreed to terminate the lease with the existing tenant and received a termination fee of 1,150,000 additional$3.0 million in accordance with the terms of the lease. At closing, we paid approximately $3.0 million in excess of proceeds received for the repayment of mortgage debt and recorded a loss of $1.9 million.
We have signed non-binding letters of intent to dispose of two net lease properties, one of which is located in the United States, while the other is located in the United Kingdom. The United States disposition is for a contract sales price of $13.0 million, and there is no debt associated with the property. The United Kingdom disposition is for a contract sales price of £7.2 million, and it is expected to generate £3.0 million in net proceeds after repayment of associated debt. There can be no assurance these letters of intent will lead to definitive agreements or completed dispositions on the contemplated terms, or at all. Additionally, we entered into definitive purchase and sale agreements to sell two properties in the United States and three properties in Germany. The two United States dispositions are for a total contract sales price of $11.4 million, and there is no debt associated with these properties. The Germany dispositions are for a contract sales price of €135.0 million and are expected to generate €72.5 million after repayment of associated debt. These pending dispositions are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all.


Common Stock Offerings
ATM Program — Common Stock
We have the ATM Program, an “at the market” equity offering program, pursuant to which we may sell shares of Series A PreferredCommon Stock in an underwritten public offering at an offering price of $25.00 per share, which generated gross proceeds of $28.8 million and net proceeds of $27.8 million. These additional shares of shares of Series A Preferred Stock have been consolidatedfrom time to form a single series, and are fully fungible with the outstanding Series A Preferred Stock. We reserve the right to further reopen this series and issue additional shares of Series A Preferred Stock eithertime through public or privateour sales at any time.

agents. During the year ended December 31, 2017, we sold 820,988 shares of Common Stock through the ATM Program and collected netfor gross sales proceeds of $18.3$18.7 million, afterbefore issuance costs of $0.4 million. During the year ended December 31, 2018, we sold 164,927 shares of Common Stock through the ATM program for gross proceeds of $3.5 million, before commissions paid of $35,140 and additional issuance costs of $0.3 million. These fees were charged tocosts are recorded in additional paid-in capital on the accompanying audited consolidated balance sheet duringsheets.
During January 2019, we sold 7,759,322 shares of Common Stock through the ATM Program for gross proceeds of $152.8 million, before commissions of $1.5 million and additional issuance costs of $2,000. Following these sales, we had raised all $175.0 million contemplated by our existing equity distribution agreement related to the ATM Program, and in February 2019, we terminated our existing equity distribution agreement and entered into a new equity distribution agreement with substantially the same sales agents on substantially the same terms. The new equity distribution agreement provides for the continuation of our ATM Program to raise additional aggregate sales proceeds of up to $250.0 million. See Note 16 — Subsequent Events to our consolidated financial statements included in this Annual Report on Form 10-K and “Item 9B. Other Information” for further information.
Underwritten Offerings — Common Stock
On August 20, 2018, we completed the issuance and sale of 4,600,000 shares of Common Stock (including 600,000 shares issued and sold pursuant to the underwriters' exercise of their option to purchase additional shares in full) in an underwritten public offering at a price per share of $20.65. The gross proceeds from this offering were $95.0 million before deducting the underwriting discount of $3.8 million and additional offering expenses of $0.3 million.
On November 28, 2018, we completed the issuance and sale of 4,000,000 shares of Common Stock in an underwritten public offering at a price per share of $20.20. The gross proceeds from this offering were $80.8 million before deducting the underwriting discount of $3.2 million and additional offering expenses of $0.1 million.
Preferred Stock Offerings
ATM Program — Series A Preferred Stock
In March 2018, we established the Preferred Stock ATM Program, an “at the market” equity offering program for our Series A Preferred Stock pursuant to which we may raise aggregate sales proceeds of $200.0 million through sales of shares of Series A Preferred Stock from time to time through our sales agents. During the year ended December 31, 2018, we sold 7,240 shares of Series A Preferred Stock through the Preferred Stock ATM Program for gross proceeds of $0.2 million, before commissions paid of $2,724 and additional issuance costs of $0.4 million.
Underwritten Offerings — Series A Preferred Stock
On September 12, 2017, we completed the issuance and sale of 4,000,000 shares of the Series A Preferred Stock in an underwritten public offering at a public offering price equal to the liquidation preference of $25.00 per share, and on October 11, 2017, we issued and sold an additional 259,650 shares of Series A Preferred Stock pursuant to the underwriters’ partial exercise of their option to purchase additional shares in accordance with terms of the underwriting agreement. The gross proceeds from this offering were $106.5 million before deducting the underwriting discount of $3.4 million and additional offering expenses of $0.5 million.
On December 19, 2017, we completed the issuance and sale of 1,150,000 shares of the Series A Preferred Stock (including 150,000 shares pursuant to the underwriter’s full exercise of its option to purchase additional shares) in an underwritten public offering at a public offering price equal to the liquidation preference of $25.00 per share. The gross proceeds from this offering were $28.8 million before deducting the underwriting discount of $0.8 million and additional offering expenses of $0.2 million.
Borrowings
As of December 31, 2018, we had total debt outstanding of $1.8 billion with a weighted average interest rate per annum equal to 3.1%, representing secured mortgage notes payable of $1.1 billion, net of mortgage discounts and deferred financing costs and outstanding advances under the Credit Facility of $642.6 million, net of deferred financing costs. As of December 31, 2018, 79.9% of our total debt outstanding either bore interest at fixed rates, or was swapped to a fixed rate, which bore interest at a weighted average interest rate of 3.0% per annum. As of December 31, 2018, 20.1% of our total debt outstanding was variable-rate debt, which bore interest at a weighted average interest rate of 3.4% per annum. The total gross carrying value of unencumbered assets as of December 31, 2017. There were no shares sold2018 is $1.3 billion, of which approximately $1.2 billion of this amount was included in the fourth quarter of 2017.
The Priorunencumbered asset pool comprising the borrowing base under the Revolving Credit Facility providedand therefore is not available to serve as collateral for borrowingsfuture borrowings.

Our debt leverage ratio was 49.3% (total debt as a percentage of up to $740.0 million (subject to borrowing base availability), and we had $616.6 million (including £177.2 million and €258.9 million) and $722.1 million (including £160.2 million and €255.7 million) outstanding undertotal purchase price of real estate investments, based on the Prior Credit Facilityexchange rate at the time of purchase) as of December 31, 20162018. SeeNote 7 — Fair Value of Financial Instruments to our consolidated financial statements included in this Annual Report on Form 10-K for fair value of such debt as of December 31, 2018. As of December 31, 2018 the weighted-average maturity of our indebtedness was 4.2 years. We believe we have the ability to service our obligations as they come due.
Mortgage Notes Payable
On January 26, 2018, we entered into a multi-tenant mortgage loan, yielding gross proceeds of $32.8 million with a fixed interest rate of 4.3%, and June 30, 2017. On July 24, 2017, we terminated the Priorwith a 10-year maturity. The multi-tenant mortgage loan is secured by eight properties in six states totaling approximately 627,500 square feet. Proceeds were used to pay down approximately $30.0 million of outstanding indebtedness under our Revolving Credit Facility, and repaidwhile the outstanding balanceremainder was used for general corporate purposes.
On August 16, 2018, we entered into a multi-tenant mortgage loan, yielding gross proceeds of $725.8 million (including €255.7 million, £160.2£230.0 million and $221.6 million)bearing interest at a rate of which $720.91.975% plus 3-month GBP LIBOR, maturing in August 2023. With respect to the interest, 80.0% of the principal amount is fixed by a swap agreement, while the remaining 20.0% of the principal remains variable. The loan is secured by all 43 of our properties located in the United Kingdom. At closing, £209.0 million of the net proceeds were used to repay all outstanding mortgage indebtedness encumbering 38 of the 43 properties, while the remainder was repaidused for general corporate purposes. The other five properties were unencumbered prior to the loan.
On November 9, 2018, we entered into a multi-tenant mortgage loan, yielding gross proceeds of $98.5 million with a fixed interest rate of approximately 4.9% and a 10-year maturity in December 2028. The multi-tenant mortgage loan is secured by seven properties in six states, totaling approximately 651,313 square feet. Proceeds were used to pay down $90.0 million of outstanding indebtedness under the Revolving Credit Facility.
On November 14, 2018, we entered into a mortgage loan, yielding gross proceeds fromof approximately $70.0 million with a fixed rate of 4.6% and a 10-year maturity. Proceeds were used to fund a portion of the Credit Facility and $4.9$126.6 million purchase price to acquire a cold storage facility located in Romulus, Michigan. The remainder was funded from cash on hand, consisting of proceeds from borrowings.
For the year ending December 31, 2019, we have future scheduled principal payments on our mortgage notes of $235.0 million, with a weighted average interest rate of 2.3%.
In January 2019, we paid off two maturing mortgages totaling approximately $17.3 million using cash on hand.
On February 6, 2019, we borrowed an aggregate of €74.0 million ($84.2 million based on the prevailing exchange rate on that date) secured by mortgages of our five properties in Finland. The maturity date of the loan is February 1, 2024, and it bears interest at a rate of 3-month Euribor plus 1.4%, with the interest rate for approximately €59.2 million ($67.4 million based on the prevailing exchange rate on that date), representing 80% of the principal amount of the loan, fixed at 1.8% by an interest rate swap agreement. The loan is interest-only with the principal due at maturity. At the closing of the loan, €57.4 million ($65.3 million based on the prevailing exchange rate on that date) was used to repay all outstanding indebtedness encumbering the five properties, with the remaining proceeds, after costs and fees related to the loan, available for working capital and general corporate purposes.
Credit Facility
On July 24, 2017, we, through the OP, entered into the Credit Facility, providing for a $500.0 million Revolving Credit Facility and a €194.6 million ($225.0 millioncredit agreement with KeyBank. Based on USD equivalentequivalents at closing) Term Facility. Theclosing, the aggregate total commitments under the Credit Facility arewere $725.0 million. On July 2, 2018, upon our request, the lenders under the Credit Facility increased the aggregate total commitments from $722.2 million to $914.4 million, based on USD equivalents.the prevailing exchange rate on that date, with approximately $132.0 million of the increase allocated to the Revolving Credit Facility and approximately $60.2 million allocated to the Term Loan. We used all the proceeds from the increased borrowings under the Term Loan to repay amounts outstanding under the Revolving Credit Facility. Upon our request, subject in all respects to the consent of the lenders in their sole discretion, thesethe aggregate total commitments under the Credit Facility may be increased up to an aggregate additional amount of $225.0$35.6 million, allocated to either or among both portions of the Credit Facility, with total commitments under the Credit Facility not to exceed $950.0 million.
At the closing of the Credit Facility, we borrowed, based on USD equivalent at closing, $495.9 million under the Revolving Credit Facility. On September 18, 2017, we repaid $80.0 million denominated in USD outstanding under the Revolving Credit Facility using proceeds from the issuance of Series A Preferred Stock. As of December 31, 2017, we had $298.92018, based on the prevailing exchange rate on that date, approximately $363.9 million borrowedwas outstanding under theour Revolving Credit Facility ($209.0and approximately $278.7 million £40.0 million and €30.0 million) and $229.9 million (€194.6 million), net of discount,was outstanding under theour Term Loan.

The Credit Facility withconsists of two components, a weighted-average effective interest rate per annum of 2.7%.
Revolving Credit Facility and a Term Loan. The Revolving Credit Facility is interest-only and matures on July 24, 2021, subject to one one-year extension at our option. The Term Loan portion of the Credit Facility is interest-only and matures on July 24, 2022. Borrowings under the Credit Facility bear interest at a variable rate per annum based on an applicable margin that varies based on the ratio of our consolidated total indebtedness to our consolidated total asset value plus either (i) LIBOR, as applicable to the currency being borrowed, or (ii) a “base rate” equal to the greatest of (a) KeyBank’s “prime rate,” (b) 0.5% above the Federal Funds Effective Rate or (c) 1.0% above one-month LIBOR. The range of applicable interest rate margins is from 0.60% to 1.20% per annum with respect to base rate borrowings and 1.60% to 2.20% per annum with respect to LIBOR borrowings. As of December 31, 2018, the Credit Facility had a weighted average effective interest rate of 2.9%, after giving effect to interest rate swaps in place.
The Credit Facility requires us to pay an unused fee per annum of 0.25% of the unused balance of the Revolving Credit Facility if the unused balance exceeds or is equal to 50% of the total commitment or a fee per annum of 0.15% of the unused balance of the Revolving Credit Facility if the unused balance is less than 50% of the total commitment. From and after the time we obtain an investment grade credit rating, the unused fee will be replaced with a facility fee based on the total commitment under the Revolving Credit Facility multiplied by 0.30%, decreasing as our credit rating increases.
The availability of borrowings under the Revolving Credit Facility is based on the value of a pool of eligible unencumbered real estate assets owned by us and compliance with various ratios related to those assets. As of December 31, 2017, $65.12018, approximately $42.2 million was available for future borrowings under the Revolving Credit Facility. Any future borrowings may, at our option, be denominated in USD, EUR, Canadian Dollars, GBP or Swiss Francs. Amounts borrowed may not, however, be converted to, or repaid in, another currency once borrowed.
In connection withWe may reduce the replacement of the Prior Credit Facility with the Credit Facility, and the change in borrowings by currency resulting therefrom, we terminated £160.3 million notional GBP-LIBOR interest rate swap and entered into a new $150.0 million notional five year USD-LIBOR interest rate swap. Additionally, we novated our existing €224.4 million notional Euribor interest rate swap from our existing counterparty to a new counterparty.
On March 30, 2017, we repaid in full the outstanding balance under the Mezzanine Facility of $56.5 million or €52.7 million (seeNote 6 — Credit Facilities to our audited consolidated financial statements in this Annual Report on Form 10-K for further discussion of the terms and conditions of the facilities).
On October 27, 2017, 12 wholly owned subsidiaries (the “Borrowers”) of the OP entered into a loan agreement (the “Loan Agreement”) with Column Financial, Inc. and Citi Real Estate Funding Inc. (collectively, the “Lenders”). The Loan Agreement provides for a $187.0 million loan (the “Loan”) with a fixed interest rate of 4.369% and a maturity date of November 6, 2027. The Loan requires monthly interest-only payments, with the principal balance due on the maturity date. The Loan is secured by, among other things, the Borrowers’ interests in 12 single tenant net leased office and industrial properties in nine states totaling approximately 2.6 million square feet (the “Mortgaged Properties”). At the closing of the Loan, the net proceeds after accrued interest and closing costs (including $2.2 million in taxes and other charges and expenses related to the Mortgaged Properties) were used to repay approximately $120.0 million of indebtedness that was outstandingamount committed under the Revolving Credit Facility with the balance available to us to be used for general corporate purposes, including to make future acquisitions.
As of December 31, 2017 we had total debtand repay outstanding of $1.5 billion with a weighted average interest rate per annum equal to 2.9% representing secured gross mortgage notes payable net of mortgage discount of $984.9 million and outstanding advancesborrowings under the Credit Facility, in whole or in part, at any time without premium or penalty, other than customary “breakage” costs payable on LIBOR borrowings. In the event of $528.8 million. Oura default, the lender has the right to terminate its obligations under the Credit Facility agreement and to accelerate the payment on any unpaid principal amount of all outstanding loans. The Credit Facility also imposes certain affirmative and negative covenants on us including restrictive covenants with respect to, among other things, liens, indebtedness, investments, distributions, mergers and asset sales, as well as financial covenants requiring the OP to maintain, among other things, ratios related to leverage, secured leverage, fixed charge coverage and unencumbered debt leverage ratio was 47.6% (total debtservices, as well as a percentage of total purchase price of real estate investments, based on the exchange rate at the time of purchase) as of December 31, 2017. SeeNote 7 — Fair Value of Financial Instruments to our auditedminimum consolidated financial statements in this Annual Report on Form 10-K for fair value of such debt as of December 31, 2017.tangible net worth.
As of December 31, 2017 the weighted-average maturity of our indebtedness was 3.9 years. We have approximately $134.8 million of mortgage debt that matures between December 31, 2017 and December 31, 2018.
On January 26, 2018, we entered into a multi-tenant mortgage loan, yielding gross proceeds of $32.8 million with a fixed interest rate of 4.32% and a 10-year maturity in February 2028. Proceeds were used to pay down approximately $30.0 million of outstanding indebtedness under the Revolving Credit Facility, with the balance available for general corporate purposes and future

acquisitions. In February 2018, we closed an $18.6 million acquisition of a distribution property and borrowed $40.0 million under the Revolving Credit Facility. In addition, we signed six definitive agreements to acquire $274.0 million of primarily net lease industrial and distribution properties, all located in the United States. These transactions are expected to close in stages in the coming quarters and should be fully closed by October 2018. We anticipate using available cash on hand, proceeds from our Revolving Credit Facility and other sources of capital, discussed above, to pay the consideration required to complete any future acquisitions. These agreements are subject to conditions, and there can be no assurance they will be completed on their current terms, or at all.
Management believes it has the ability to service its obligations as they come due.
Loan Obligations
Our loan obligations generally require us to pay principal and interest on a monthly or quarterly basis with all unpaid principal and interest due at maturity. Our loan agreements (including the Credit Facility) stipulate compliance with specific reporting covenants. Our mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of December 31, 2017, we were in breach of a loan-to-vacant possession financial covenant on one mortgage note payable agreement, which had an outstanding principal balance of $37.9 million (£28.1 million) as of December 31, 2017. During the fourth quarter of 2017, we repaid £0.8 million and in January 2018, we repaid €0.1 million of principal on two mortgage note payable agreements in order to cure loan to value financial covenant breaches which did not result in events of default. We were in compliance with the remaining covenants under our mortgage notes payable agreements as of December 30, 2017. As of December 31, 2016, we were in compliance with the covenants under our Credit Facility and mortgage notes payable agreements.
Non-GAAP Financial Measures
This section includes non-GAAP financial measures, including Funds from Operations ("FFO"), Core Funds from Operations ("Core FFO") and Adjusted Funds from Operations ("AFFO"). A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income, is provided below.
Caution on Use of Non-GAAP Measures
FFO, Core FFO, and AFFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO, Core FFO and AFFO measures. Other REITs may not define FFO in accordance with the current NAREIT definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate Core FFO or AFFO differently than we do. Consequently, our presentation of FFO, Core FFO and AFFO may not be comparable to other similarly-titled measures presented by other REITs.
We consider FFO, Core FFO and AFFO useful indicators of our performance. Because FFO, Core FFO and AFFO calculations exclude such factors as depreciation and amortization of real estate assets and gain or loss from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO, Core FFO and AFFO presentations facilitate comparisons of operating performance between periods and between other REITs.
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 operating performance including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO, Core FFO and AFFO are not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Investors are cautioned that FFO, Core FFO and AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations
Funds Fromfrom Operations
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 FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.
We define FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper on FFO approved by the Board of Governors of NAREIT as revisedeffective in February 2004December 2018 (the "White Paper"). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding gains or losses from sales of property but including asset impairment write-downs, plus depreciation and amortization related to real estate, gains and after adjustments for unconsolidated partnershipslosses from the sale of certain real estate assets, gains and joint ventures. Adjustments for unconsolidated partnershipslosses from change in control and joint ventures are calculatedimpairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to reflect FFO.decreases in the value of depreciable real estate held by the entity. Our FFO calculation complies with NAREIT's definition.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time, especially if not adequately maintained or repaired and renovated as required by relevant circumstances or as requested or required by lessees for operational purposes in order to maintain the value disclosed. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Core Funds Fromfrom Operations
In calculating Core FFO, iswe start with FFO, excludingthen we exclude certain non-core items such as acquisition, transaction and transaction relatedother costs, as well as certain other costs that are considered to be non-core, such as debt extinguishment costs, fire loss and other costs related to damages at our properties. The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of our core business plan to generate operational income and cash flows in order to make dividend payments to stockholders. In evaluating investments in real estate, we differentiate the costs to acquire the investment from the operations derived from the investment. We also add back non-cash write-offs of deferred financing costs and prepayment penalties incurred with the early extinguishment of debt which are included in net income but are considered financing cash flows when paid in the statement of cash flows. We consider these write-offs and prepayment penalties to be capital transactions and not indicative of operations. By excluding expensed acquisition, transaction and transaction related

other costs as well as non-core costs, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management's analysis of the investing and operating performance of our properties.
Adjusted Funds Fromfrom Operations
In calculating AFFO, we start with Core FFO, then we exclude certain income or expense items from AFFO that we consider more reflective of investing activities, other non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our business plan. These items include early extinguishment of debt (adjustment included in Core FFO) and unrealized gainsgain and losses,loss, which may not ultimately be realized, such as gainsgain or lossesloss on derivative instruments, gains and lossesgain or loss on foreign currency transactions, and gains and lossesgain or loss on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market leases intangibles, amortization of deferred financing costs, straight-line rent and equity-based compensation from AFFO, we believe we provide useful information regarding income and expense items which have a direct impact on our ongoing operating performance. We also include the realized gainsgain or lossesloss on foreign currency exchange contracts for AFFO as such items are part of our ongoing operations and affect theour current operating performance of the Company.performance. By providing AFFO, we believe we are presenting useful information that can be used to better assess the sustainability of our ongoing operating performance without the impacts of transactions that are not related to the ongoing profitability of our portfolio of properties. We also believeAFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO is a recognized measure of sustainable operating performance by the REIT industry. Further, we believe AFFO is useful in comparing the sustainability of our operating performance with the sustainability of the operating performance of other real estate companies.differently.
In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income. All paid and accrued merger, acquisition, transaction and transaction related feesother costs (including prepayment penalties for debt extinguishments) and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired will also have negative effects on returns to investors, but are not reflective of our on-going

performance. AFFO that excludes such costs and expenses would only be comparable to companies that did not have such activities. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income. In addition, as discussed above, we view gainsgain and lossesloss from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management's analysis of theour operating performance of the Company.performance. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gainsgain or losses,loss, we believe AFFO provides useful supplemental information.
Caution on Use We believe that in order to facilitate a clear understanding of Non-GAAP Measures
FFO, Core FFO, andour operating results, AFFO should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. AFFO should not be construedconsidered as an alternative to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed(loss) as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO, Core FFO and AFFO measures and the adjustments to GAAP in calculating FFO, Core FFO and AFFO. Other REITs may not define FFO in accordance with the current NAREIT definition (as we do) or may interpret the current NAREIT definition differently than we do or calculate Core FFO or AFFO differently than we do. Consequently, our presentation of FFO, Core FFO and AFFO may not be comparable to other similarly titled measures presented by other REITs.
We consider FFO, Core FFO and AFFO useful indicators of our performance. Because FFO calculations exclude such factors as depreciation and amortization of real estate assets and gains or losses from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO facilitates comparisons of operating performance between periods and between other REITs in our peer group.
As a result, we believe that the use of FFO, Core FFO and AFFO, together with the required GAAP presentations, provide a more complete understandingan indication of our performance including relativeor to cash flows as a measure of our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO, Core FFO and AFFO are not indicative of cash available to fund ongoing cash needs, including theliquidity or ability to make cash distributions. Investors are cautioned that FFO, Core FFO and AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.

The table below reflects the items deducted from or added to net income attributable to common stockholders in our calculation of FFO, Core FFO and AFFO for the periods indicated. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect the proportionate share of adjustments for non-controlling interest to arrive at FFO, Core FFO and AFFO, as applicable.
 Year Ended Year Ended December 31,
(In thousands) December 31, 2017 December 31, 2016 2018 2017 2016
Net income attributable to common stockholders (in accordance with GAAP) $20,731
 $47,140
 $1,082
 $20,731
 $47,140
Impairment charges and related lease intangible write-offs 5,000
 
 
Depreciation and amortization 113,048
 94,455
 119,582
 113,048
 94,455
Gains on dispositions of real estate investments (1)
 (1,089) (11,841)
Loss (gain) on dispositions of real estate investments (1)
 5,751
 (1,089) (11,841)
Proportionate share of adjustments for non-controlling interest to arrive at FFO (78) (669) 
 (78) (669)
FFO (as defined by NAREIT) attributable to common stockholders 132,612
 129,085
 131,415
 132,612
 129,085
Acquisition and transaction fees (2)
 1,979
 9,792
Fire loss 45
 
Acquisition, transaction and other costs (2)
 13,850
 1,979
 9,792
Loss on extinguishment of debt (3)
 3,897
 
 
Fire (recovery) loss (50) 45
 
Proportionate share of adjustments for non-controlling interest to arrive at Core FFO (1) (79) 
 (1) (79)
Core FFO attributable to common stockholders 134,635
 138,798
 149,112
 134,635
 138,798
Non-cash equity based compensation (3,787) 3,748
Non-cash equity-based compensation 2,649
 (3,787) 3,748
Non-cash portion of interest expense 4,420
 6,698
 5,193
 4,420
 6,698
Amortization of above- and below- market leases and ground lease assets and liabilities, net 2,130
 1,930
 (41)
Straight-line rent (10,537) (10,613) (6,310) (10,537) (10,613)
Amortization of above- and below- market leases and ground lease assets and liabilities, net 1,930
 (41)
Eliminate unrealized losses (gains) on foreign currency transactions (3)
 10,182
 (1,072)
Unrealized losses (gains) on undesignated foreign currency advances and other hedge ineffectiveness 3,679
 (10,109)
Amortization of mortgage premium (discount), net and mezzanine discount 827
 (437)
Unrealized loss (gain) on undesignated foreign currency advances and other hedge ineffectiveness 434
 3,679
 (10,109)
Eliminate unrealized (gain) loss on foreign currency transactions (4)
 (7,127) 10,182
 (1,072)
Amortization of mortgage discounts and premiums, net and mezzanine discount 1,249
 827
 (437)
Deferred tax benefit (693) 
 
 (693) 
Proportionate share of adjustments for non-controlling interest to arrive at AFFO (4) 89
 
 (4) 89
AFFO attributable to common stockholders $140,652
 $127,061
AFFO attributable to common stockholders (5)
 $147,330
 $140,652
 $127,061
          
Summary          
FFO (as defined by NAREIT) attributable to common stockholders $132,612
 $129,085
 $131,415
 $132,612
 $129,085
Core FFO attributable to common stockholders $134,635
 $138,798
 $149,112
 $134,635
 $138,798
AFFO attributable to common stockholders $140,652
 $127,061
 $147,330
 $140,652
 $127,061
_______________________
(1) 
Gains on dispositions of real estate investments for the year ended December 31, 2016 is net of $1.5 million of tax recognized on the sale of Hotel Winston, The Netherlands property.

(2) 
For the year ended December 31, 2018, acquisition, transaction and other costs are comprised of expenses incurred in connection with litigation related to the termination of the Former Service Provider totaling $10.3 million, of which $7.4 million relates to a reserve recorded for the anticipated settlement of this litigation and $2.9 million relates to legal costs. In addition, includes $1.6 million in fees associated with the exploration of a potential foreign equity offering, $1.3 million various legal and professional fees related to financing activities and $0.7 million of other costs. For the year ended December 31, 2017, acquisition, transaction and transactionother costs are primarily comprised of approximately $0.8 million of merger and deal related costs and also include approximately $0.9 million in derivative novation costs in connection with the replacement of related counterparties, which are non-recurring costs and are considered to be non-core. For the year ended December 31, 2016, acquisition, transaction and transaction feesother costs represent merger related costs of approximately $9.8 million.
(3) 
For AFFO purposes, we add backthe year ended December 31, 2018, includes non-cash write-off of deferred financing costs of $1.5 million and prepayment penalties paid on early extinguishment of debt of $2.4 million. Prepayment penalties paid on early extinguishment of debt of $1.3 million that occurred during the three months ended June 30, 2018 were classified as acquisition and transaction fees in our Quarterly Report on Form 10-Q for the three months ended June 30, 2018 and were reclassified as loss on extinguishment of debt in our Quarterly Report on Form 10-Q for the three months ended September 30, 2018.
(4)
For the year ended December 31, 2018, gains on derivative instruments were $7.6 million which were comprised of unrealized losses (gains).gains of $7.1 million and realized gains of $0.5 million. For the year ended December 31, 2017, losses on derivative instruments were $8.3 million which were comprised of unrealized losses of $10.2 million and realized gains of $1.9 million. For the year ended December 31, 2016, gains on derivative instruments were $7.4 million which were comprised of unrealized gains of $1.1 million and realized gains of $6.3 million.
(5)
AFFO for the year ended December 31, 2018 includes income from a lease termination fee of $3.0 million, which is recorded in rental income in the unaudited consolidated statements of operations, related to a real estate asset sold during the third quarter of 2018.
Dividends
We generally pay dividends on our Common Stock on the 15th day of each month (or, if not a business day, the next succeeding business day) to Common Stock holders of record on the applicable record date during the month at an annualized rate of $2.13 per share, or $0.1775 per share on a monthly basis. Prior to July 2018, the record date for our regular monthly dividend was generally the 8th day of the applicable month. The amount of dividends payable to our common stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, our financial condition, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT.
Dividends on our Series A Preferred Stock accrue in an amount equal to $0.453125 per share per quarter to Series A Preferred Stock holders, which is equivalent to 7.25% of the $25.00 liquidation preference per share of Series A Preferred Stock per annum. Dividends on the Series A Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day) to holders of record on the close of business on the record date set by our board of directors, which must be not more than 30 nor fewer than 10 days prior to the applicable payment date. Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock become part of the liquidation preference thereof.
Dividend payments are dependent on the availability of funds. Our board of directors may alter the amount of dividends paid or suspend dividend payments at any time and therefore dividend payments are not assured. There is no assurance that we will continue to declare and pay dividends at the current rates. Provisions in our Credit Facility restrict our ability to pay distributions, including cash dividends or other distributions payable with respect to Series A Preferred Stock and Common Stock.
Pursuant to our Credit Facility, we may not pay distributions, including cash dividends payable with respect to Common Stock, Series A Preferred Stock, or any other classes or series of preferred stock we may issue in a future offering, or redeem or otherwise repurchase shares of our capital stock, Common Stock, Series A Preferred Stock, or any other classes or series of preferred stock we may issue in a future offering, that exceed 95% of our Adjusted FFO as defined in our Credit Facility (which is different from AFFO as discussed and analyzed in this Annual Report on Form 10-K) for any period of four consecutive fiscal quarters, except in limited circumstances, including that for one fiscal quarter in each calendar year, we may pay cash distributions, make redemptions and make repurchases in an aggregate amount equal to no more than 100% of our Adjusted FFO. We used this exception to pay dividends that were between 95% of Adjusted FFO to 100% of Adjusted FFO during the quarter ended on June 30, 2018. On November 19, 2018, the lenders under our Credit Facility consented to an increase in the maximum amount we may use to pay cash distributions, make redemptions and make repurchases from 95% of Adjusted FFO to 100% of Adjusted FFO solely for the quarter ended December 31, 2018, and, during that quarter, we paid dividends that were between 95% of Adjusted FFO to 100% of Adjusted FFO. There can be no assurance that our lenders will consent to any additional modifications to the restrictions in our Credit Facility on our ability to pay dividends necessary to maintain our compliance thereunder if we pay dividends that exceed 95% of Adjusted FFO in more than one fiscal quarter during 2019 or any future calendar year. In addition, the agreements governing our future debt agreements may also include additional restrictions on our ability to pay dividends.
Our ability to maintain compliance with the restrictions on the payment of distributions in our Credit Facility depends on our ability, and the time needed, to invest the approximately $151.2 million of net proceeds we received from the sale of approximately 7.8 million shares of Common Stock pursuant to our ATM Program during January 2019 in new acquisitions. There can be no assurance we will complete acquisitions on a timely basis or on acceptable terms and conditions, if at all. If we fail to do so (and we are not otherwise able to increase the amount of cash we have available to pay dividends and distributions), our ability to comply with the restrictions on the payment of distributions in our Credit Facility may be adversely affected. Moreover, we could be subject to similar considerations in connection with any other offering of Common Stock or other equity securities we may

conduct in the future. If we are not able to generate sufficient cash from operations or otherwise maintain compliance with our Credit Facility, we may have to reduce the amount of dividends we pay or identify other financing sources to fund the payment of dividends at their current levels. See “Item 1A. Risk Factors - If we are not able to increase the amount of cash we have available to pay dividends, including through additional cash flows we expect to generate from completing acquisitions, we may have to reduce dividend payments or identify other financing sources to fund the payment of dividends at their current levels.”
During the year ended December 31, 2017,2018, we paid total dividends of $157.8 million, including dividends paid to holders of Common Stock were $143.9of $147.4 million, inclusive of $0.7 million of distributions paid for OP Units and LTIP Units holders, and dividends paid to holders of Series A Preferred Stock were $0.4of $9.8 million and distributions paid to holders of LTIP Units of $0.6 million. During the year ended December 31, 2017,2018, cash used to pay dividends was generated from cash flows from operations and cash available on hand.

hand, consisting of proceeds from borrowings.
The following table shows the sources for the payment of dividends to holders of Common Stock and and Series A Preferred Stock for the periods indicated:
 Three Months Ended Year Ended Three Months Ended Year Ended
 March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 December 31, 2017 March 31, 2018 June 30, 2018 September 30, 2018 December 31, 2018 December 31, 2018
(In thousands)   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends
Dividends:                                        
Dividends to holders of Common Stock $35,293
   $35,466
   $35,834
   $36,146
   $142,739
   $35,834
   $35,836
   $36,682
   $39,092
   $147,444
  
Dividends to holders of Series A Preferred Stock 
   
   
   383
   383
   2,451
   2,453
   2,453
   2,455
   9,812
  
Other (1)
 255
   160
   159
   165
   739
   158
   111
   179
   137
   585
  
Total dividends $35,548
   $35,626
   $35,993
   $36,694
   $143,861
   $38,443
   $38,400
   $39,314
   $41,684
   $157,841
  
                                        
Source of dividend coverage:                                        
Cash flows provided by operations $32,728
 

 $36,188
 

 $33,584
 

 $28,454
 

 $130,954
 91.0% $40,677
   $29,011
   $33,709
   $41,200
   $144,597
  
Dividends paid to preferred stockholders 
 

 
 

 
 

 (383) 

 (383) 

 (2,451)   (2,453)   (2,453)   (2,455)   (9,812)  
Cash flows provided by operations - after payment of Series A Preferred Stock dividends 32,728
 92.1% 36,188
 101.6 % 33,584
 93.3% 28,071
 76.5% $130,571
 90.8% 38,226
 99.4% 26,558
 69.2% 31,256
 79.5% 38,745
 92.9% $134,785
 85.4%
Proceeds from sale of real estate investments 
 % 2,258
 6.3 % 
 % 
 % 2,258
 1.6%
Available cash on hand 2,820
 7.9% (2,820) (7.9)% 2,409
 6.7% 8,623
 23.5% 11,032
 7.7% 217
 0.6% 11,842
 30.8% 8,058
 20.5% 2,939
 7.1% 23,056
 14.6%
Total sources of dividend coverage $35,548
 100.0% $35,626
 100.0 % $35,993
 100.0% $36,694
 100.0% $143,861
 100.0% $38,443
 100.0% $38,400
 100.0% $39,314
 100.0% $41,684
 100.0% $157,841
 100.0%
                                        
Cash flows provided by operations (GAAP basis) (2)
 $32,728
   $36,188
   $33,584
   $28,454
   $130,954
  
Cash flows provided by operations (GAAP basis) (1)
 $40,677
   $29,011
   $33,709
   $41,200
   $144,597
  
     

   

   

                          
Net income attributable to common stockholders (in accordance with GAAP) $7,429
   $5,200
   $2,104
   $5,998
   $20,731
  
Net income (loss) attributable to common stockholders (in accordance with GAAP) $2,361
   $5,288
   $177
   $(6,744)   $1,082
  

(1) Cash flows provided by operations for the year ended December 31, 2018 include acquisition, transaction and other costs of $13.9 million.
Includes distributions paid of $97,000 for the OP Units and $0.6 million to the participating LTIP Units during the year ended December 31, 2017.
(2)
Cash flows provided by operations for the year ended December 31, 2017 reflect acquisition and transaction related expenses of $2.0 million.
Foreign Currency Translation
Our reporting currency is the USD. The functional currency of our foreign investments is the applicable local currency for each foreign location in which we invest. Assets and liabilities in these foreign locations (including intercompany balances for which settlement is not anticipated in the foreseeable future) are translated at the spot rate in effect at the applicable reporting date. The amounts reported in the audited consolidated statements of operations are translated at the average exchange rates in effect during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive income (loss) in the audited consolidated statements of equity. We are exposed to fluctuations in foreign currency exchange rates on property investments in foreign countries which pay rental income, incur property related expenses and hold debt instruments in currencies other than our functional currency, the USD. We use foreign currency derivatives including foreign currency put options, foreign currency forward contracts and cross-currency swap agreements to manage our exposure to fluctuations in foreign currency exchange rates, such as the GBP-USD and EUR-USD exchange rates (seeNote 8 — Derivatives and Hedging Activities to our consolidated financial statements included in this Annual Report on Form 10-K for further discussion).


Contractual Obligations
The following table presents our estimated future payments under contractual obligations at December 31, 20172018 and the effect these obligations are expected to have on our liquidity and cash flow in the specified future periods:
(In thousands) Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years Total Less than 1 Year 1-3 Years 3-5 Years More than 5 Years
Principal on mortgage notes payable $992,344
 $135,180
 $626,219
 $43,945
 $187,000
 $1,140,113
 $235,026
 $238,802
 $278,035
 $388,250
Interest on mortgage notes payable (1)
 209,920
 29,302
 40,117
 17,451
 123,050
 325,194
 38,739
 58,852
 51,062
 176,541
Principal on term loan 233,165
 
 
 233,165
 
Interest on term loan (1)
 20,502
 4,492
 8,996
 7,014
 
Principal on revolving credit facility 298,909
 
 
 298,909
 
Interest on revolving credit facility (1)
 33,012
 9,262
 18,548
 5,202
 
Principal on Revolving Credit Facility 363,894
 
 363,894
 
 
Interest on Revolving Credit Facility 34,894
 13,965
 20,929
 
 
Principal on Term Loan 282,069
 
 
 282,069
 
Interest on Term Loan (1)
 19,011
 5,434
 10,882
 2,695
 
Operating ground lease rental payments due (2)
 51,006
 1,415
 2,830
 2,830
 43,931
 47,374
 1,371
 2,742
 2,742
 40,519
Total (3) (4)
 $1,838,858
 $179,651
 $696,710
 $608,516
 $353,981
 $2,212,549
 $294,535
 $696,101
 $616,603
 $605,310
_________________________
(1) 
Based on exchange rates of £1.00 to $1.35$1.27 for GBP and €1.00 to $1.20$1.14 for EURO as of December 31, 2017.2018.
(2) 
Ground lease rental payments due for our ING Amsterdam lease are not included in the table above as the Company'sour ground for this property is prepaid through 2050.
(3) 
Amounts in the table above that relate to our foreign operations are based on the exchange rate of the local currencies at December 31, 2017,2018, which consisted primarily of the Euro and the GBP. At December 31, 2017,2018, we had no material capital lease obligations for which we were the lessee, either individually or in the aggregate.
(4) 
Derivative payments are not included in this table due to the uncertainty of the timing and amounts of payments. Additionally, as derivatives can be settled at any point in time, they are generally not considered long-term in nature.
Election as a REIT 
We qualifiedelected to be taxed as a REIT for U.S. federal income tax purposes under Sectionssections 856 through 860 of the Code, commencing with our taxable year ended December 31, 2013. Commencing with such taxable year, we were organized and operate in such a manner as to qualify for taxation as a REIT under the Code.Code and we believe we have so qualified. We intend to continue to operate in such a manner to qualify for taxation as a REIT, but no assurance can be given that we will operate in a manner so as to remain qualified as a REIT for U.S. federal income tax purposes.REIT. In order to continue to qualify for taxation as a REIT, we must, among other things, distribute annually at least 90% of our REIT taxable income. REITs are subject to a number of other organizational and operational requirements. Even if we continue to qualify for taxation as a REIT, we may be subject to certain federal, state, local and foreign taxes on our income and assets, including alternative minimum taxes, taxes on any undistributed income and state, local or foreign income, franchise, property and transfer taxes. Any of these taxes decrease our earnings and our available cash.
In addition, our international assets and operations, including those designated asowned through direct or indirect qualified REIT subsidiaries or otherthat are disregarded entities of a REIT,for U.S. federal income tax purposes, continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.
Inflation
We may be adversely impacted by inflation on any leases that do not contain an indexed escalation provision. In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation.
Related-Party Transactions and Agreements
Please see Note 11 - Related Party Transactions to our audited consolidated financial statements included in this Annual reportReport on Form 10-K.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements as of December 31, 20172018 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors other than our future obligations under noncancelable operating ground leases (see Note 10 — Commitments and Contingencies and Contractual Obligations to our audited consolidated financial statements included in this Annual Report on Form 10-K for details).

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
Market Risk
Market risk is the exposure to loss resulting from changes in interest rates, foreign currency exchange rates, and equity prices. The primary risks to which we are exposed are interest rate risk and foreign currency exchange risk, and we are also exposed to further market risk as a result of concentrations of tenants in certain industries and/or geographic regions. Adverse market factors can affect the ability of tenants in a particular industry/region to meet their respective lease obligations. In order to manage this risk, we view our collective tenant roster as a portfolio, and in our investment decisions we attempt to diversify our portfolio so that we are not overexposed to a particular industry or geographic region.
Generally, we do not use derivative instruments to hedge credit risks or for speculative purposes. However, from time to time, we have entered and may continue to enter into foreign currency forward contracts to hedge our foreign currency cash flow exposures.
Interest Rate Risk
The values of our real estate and related fixed-rate debt obligations are subject to fluctuations based on changes in interest rates. The value of our real estate is also subject to fluctuations based on local and regional economic conditions and changes in the creditworthiness of lessees, all of which may affect our ability to refinance property-level mortgage debt when balloon payments are scheduled, if we do not choose to repay the debt when due. Interest rates are highly sensitive to many factors, including governmental monetary and tax policies, domestic and international economic and political conditions, and other factors beyond our control. An increase in interest rates would likely cause the fair value of our owned and managed assets to decrease, which would create lower revenues from managedthese assets and lower investment performance for the Managed REITs.performance. Increases in interest rates may also have an impact on the credit profile of certain tenants.
We are exposed to the impact of interest rate changes primarily through our borrowing activities. We have obtained, and may in the future obtain, variable-rate, non-recourse mortgage loans, and as a result, we have entered into, and may continue to enter into, interest rate swap agreements or interest rate cap agreements with lenders. Interest rate swap agreements effectively convert the variable-rate debt service obligations of the loan to a fixed rate, while interest rate cap agreements limit the underlying interest rate from exceeding a specified strike rate. Interest rate swaps are agreements in which one party exchanges a stream of interest payments for a counterparty’s stream of cash flows over a specific period, and interest rate caps limit the effective borrowing rate of variable-rate debt obligations while allowing participants to share in downward shifts in interest rates. These interest rate swaps and caps are derivative instruments designated as cash flow hedges on the forecasted interest payments on the debt obligation. The face amount on which the swaps or caps are based is not exchanged. Our objective in using these derivatives is to limit our exposure to interest rate movements. At December 31, 2017,2018, we estimated that the total fair value of our interest rate swaps, which are included in Derivatives, at fair value in the audited consolidated financial statements, was in a net liabilityasset position of $13.6$4.8 million (see Note 8 — Derivatives and Hedging Activities to our audited consolidated financial statements included in this Annual Report on Form 10-K).
As of December 31, 2017,2018, our total consolidated debt, includedwhich includes borrowings under the Credit Facility and secured mortgage financings, withhad a total carrying value of $1.5$1.8 billion, and a totalan estimated fair value of $1.5$1.8 billion and a weighted average effective interest rate per annum of 2.9%3.1%. At December 31, 2017,2018, a significant portion (approximately 87.0%79.9%) of our long-term debt either bore interest at fixed rates, or was swapped to a fixed rate. The annual interest rates on our fixed-rate debt mortgage debt at December 31, 20172018 ranged from 1.0% to 5.2%4.9% and had a weighted average interest rate of 3.0%. The contractual annual interest rates on our variable-rate debt at December 31, 20172018 ranged from 2.3%1.9% to 3.5%4.4% and had a weighted average interest rate of 3.4%. Our interest expense in future periods will vary based on our level of future borrowings, which will depend on our refinancing needs and acquisition activity. In addition, our interest expense will vary based on movements in interest rates, including LIBOR rates which increased through 2018 and may continue to increase in future periods. Our debt obligations are more fully described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations-Contractual Obligations above.

The following table presents future principal cash flows based upon expected maturity dates of our debt obligations outstanding at December 31, 2017:2018:
(In thousands) 
Fixed-rate debt (1) (2)
 
Variable-rate debt (1)
 Total Debt 
Fixed-rate debt (1) (2)
 
Variable-rate debt (1)
 Total Debt
2018
(2) 
$82,043
(2) 
$111,800
 $193,843
2019 293,145
 
 293,145

$182,226
 $52,800
 $235,026
2020 298,798
 33,550
 332,348
 175,819
 34,054
 209,873
2021 220,671
 53,970
 274,641
 176,462
 216,361
 392,823
2022 233,165
 
 233,165
 297,351
 3,820
 301,171
2023 207,146
 51,787
 258,933
Thereafter 197,267
 
 197,267
 388,250
 
 388,250
Total $1,325,089
 $199,320
 $1,524,409
 $1,427,254
 $358,822
 $1,786,076
_________________________________________
(1) 
Assumes exchange rates of £1.00 to $1.35$1.27 for GBP and €1.00 to $1.20$1.14 for EUR as of December 31, 2017,2018, for illustrative purposes, as applicable.

(2) 
Fixed-rate debt includes variable debt that bearbears interest at margin plus a floating rate which is mostly fixed through our interest rate swap agreementsagreements.
The estimated fair value of our fixed-rate debt and our variable-rate debt that currently bears interest at fixed rates or has effectively been converted to a fixed rate through the use of interest rate swaps is affected by changes in interest rates. A decrease or increase in interest rates of 1% would change the estimated fair value of this debt at December 31, 20172018 by an aggregate increase of $42.9 million or an aggregate decrease of $14.9 million or an aggregate increase of $19.3$32.5 million, respectively.
Annual interest expense on our unhedged variable-rate debt that does not bear interest at fixed rates at December 31, 20172018 would increase by $13.9$1.4 million and decrease by $3.6$0.6 million, respectively for each respective 1% change in annual interest rates.
Foreign Currency Exchange Rate Risk
We own foreign investments, primarily in Europe and as a result are subject to risk from the effects of exchange rate movements in various foreign currencies, primarily the Euro and the GBP which may affect future costs and cash flows, in our functional currency.currency, the USD. We generally manage foreign currency exchange rate movements by matching our debt service obligation to the lender and the tenant’s rental obligation to us in the same currency. This reduces our overall exposure to currency fluctuations. In addition, we have used and may continue to use currency hedging to further reduce the exposure to our net cash flow. We are generally a net receiver of these currenciesthe Euro and the GBP (we receive more cash than we pay out), and therefore our results of operations of our foreign properties benefit from a weaker USD, and are adversely affected by a stronger USD, relative to the foreign currency.
We have designated all current foreign currency draws under the Credit Facility as net investment hedges to the extent of our net investment in foreign subsidiaries. To the extent foreign draws in each currency exceed the net investment, we reflect the effects of changes in currency on such excess in earnings. As of December 31, 2017,2018, we did not have any draws in excess of our net investments (see Note 8 — Derivatives and Hedging Activities to our audited consolidated financial statements included in this Annual Report on Form 10-K).
We enter into foreign currency forward contracts and put options to hedge certain of our foreign currency cash flow exposures. A foreign currency forward contract is a commitment to deliver a certain amount of foreign currency at a certain price on a specific date in the future. By entering into forward contracts and holding them to maturity, we are locked into a future currency exchange rate for the term of the contract. A foreign currency put option contract consists of a right, but not the obligation, to sell a specified amount of foreign currency for a specified amount of another currency at a specific date. If the exchange rate of the currency fluctuates favorably beyond the put options’ strike rate of the put at maturity, the option would be considered in-the-money"in-the-money" and exercised accordingly. The total estimated fair value of our foreign currency forward contracts and put options, which are included in derivatives, at fair value in the audited consolidated balance sheets, was in a net liabilityasset position of $2.7$5.5 million at December 31, 20172018 (see Note 7 — Fair Value of Financial Instruments to our audited consolidated financial statements included in this Annual Report on Form 10-K). We have obtained, and may in the future obtain, non-recourse mortgage financing in the locala foreign currency. To the extent that currency fluctuations increase or decrease rental revenues as translated to USD, the change in debt service, as translated to USD, will partially offset the effect of fluctuations in revenue and, to some extent, mitigate the risk from changes in foreign currency exchange rates.
Scheduled future minimum rents, exclusive of renewals, under non-cancelable operating leases, for our foreign operations as of December 31, 2017,2018, during each of the next five calendar years and thereafter, are as follows:

 Future Minimum Base Rent Payments (1) Future Minimum Base Rent Payments (1)
(In thousands) EUR GBP Total EUR GBP Total
2018 $72,669
 $53,620
 $126,289
2019 73,005
 54,853
 127,858
 $70,303
 $51,771
 $122,074
2020 73,376
 56,316
 129,692
 70,789
 53,151
 123,940
2021 73,742
 56,993
 130,735
 71,140
 53,790
 124,930
2022 74,124
 56,386
 130,510
 71,505
 53,217
 124,722
2023 70,498
 50,472
 120,970
Thereafter 205,056
 312,271
 517,327
 126,472
 244,253
 370,725
Total $571,972
 $590,439
 $1,162,411
 $480,707
 $506,654
 $987,361
_______________________
(1) 
Assumes exchange rates of £1.00 to $1.35$1.27 for GBP and €1.00 to $1.20$1.14 for EUR as of December 31, 20172018 for illustrative purposes, as applicable.

Scheduled debt service payments (principal and interest) for mortgage notes payable for our foreign operations as of December 31, 2017,2018, during each of the next five calendar years and thereafter, are as follows (in thousands):
 
Future Debt Service Payments (1)(2)
 
Future Debt Service Payments (1) (2)
 Mortgage Notes Payable Mortgage Notes Payable
(In thousands) EUR GBP Total EUR GBP Total
2018 $
 $82,043
 $82,043
2019 190,906
 102,240
 293,146
 $188,816
 $11,229
 $200,045
2020 181,939
 116,859
 298,798
 176,575
 11,914
 188,489
2021 17,370
 
 17,370
 16,738
 21,525
 38,263
2022 
 
 
 
 27,844
 27,844
2023 
 265,552
 265,552
Thereafter 
 
 
 
 
 
Total $390,215
 $301,142
 $691,357
 $382,129
 $338,064
 $720,193
 
Future Debt Service Payments (1) (2)
 
Future Debt Service Payments (1) (2)
 Credit Facility (Term Loan Portion) Credit Facility (Term Loan Portion)
(In thousands) EUR GBP Total EUR GBP Total
2018 $
 $
 $
2019 
 
 
 $5,434
 $
 $5,434
2020 
 
 
 5,449
 
 5,449
2021 
 
 
 5,433
 
 5,433
2022 233,165
 
 233,165
 284,764
 
 284,764
2023 
 
 
Thereafter 
 
 
 
 
 
Total $233,165
 $
 $233,165
 $301,080
 $
 $301,080
_______________________
(1) 
Assumes exchange rates of £1.00 to $1.35$1.27 for GBP and €1.00 to $1.20$1.14 for EUR as of December 31, 20172018 for illustrative purposes, as applicable. Contractual rents and debt obligations are denominated in the functional currency of the country of each property.
(2) 
Interest on variable-rate debt not fixed through our interest rate swap agreements was calculated using the applicable annual interest rates and balances outstanding at December 31, 2017.2018.
We currently anticipate that, by their respective due dates, we will have repaid or refinanced certain of these loans, or extended it, but there can be no assurance that we will be able to refinance these loans on favorable terms, if at all. If refinancing has not occurred, we would expect to use our cash resources, including unused capacity on our Credit Facility, to make these payments, if necessary.
Concentration of Credit Risk
Concentrations of credit risk arise when a number of tenants are engaged in similar business activities or have similar economic risks or conditions that could cause them to default on their lease obligations to us. We regularly monitor our portfolio to assess

potential concentrations of credit risk. While we believe our portfolio is reasonably well diversified, it does contain concentrations in excess of 10%, based on the percentage of our annualized rental income as of December 31, 2017,2018, in certain areas. See SeeItem 2. Properties in this Annual Report on Form 10-K for further discussion on distribution across countries and industries.
Based on original purchase price or acquisition value for the properties acquired through Merger, the majority of our properties are located in the U.S. including Commonwealth of Puerto Rico (50.6%) and the remainder are in Europe (49.4%). Based on our annualized rental income, the majority of our directly owned real estate properties and related loans are located in the U.S. and the Commonwealth of Puerto Rico (48.9%(55.7%) and the remaining are in Finland (6.2%(5.4%), France (5.2%(4.4%), Germany (8.5%(7.4%), Luxembourg (2.1%(2.0%), The Netherlands (7.0%(6.1%) and the United Kingdom (22.1%(19.0%). No individual tenant accounted for more than 10% of our annualized rental income at December 31, 2017.2018. Based on annualized rental income, at December 31, 2017,2018, our directly owned real estate properties contain significant concentrations in the following asset types: office (58.8%(53%), industrial/distribution (31.6%(39%), and retail (9.6%(8%).
Item 8. Financial Statements and Supplementary Data.
The information required by this Item 8 is hereby incorporated by reference to our audited Consolidated Financial Statementsconsolidated financial statements beginning on page F-1 of this Annual Report ofon Form 10-K.

Item 9. Changes in and Disagreements Withwith Accountants on Accounting and Financial Disclosure.
None.

Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Exchange Act, we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of December 31, 2017,2018, the end of such period, that our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, within the time periods specified in the SEC rules and forms, information required to be disclosed by us in our reports that we file or submit under the Exchange Act, and in such information being accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure.
Management's Annual Reporting on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2017.2018. In making that assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control-Integrated Framework (2013).
Based on its assessment, our management concluded that, as of December 31, 2017,2018, our internal control over financial reporting was effective.
The effectiveness of our internal control over financial reporting as of December 31, 20172018 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated on their report, which is included on page F-2 in this Annual Report on Form 10-K.
Changes in Internal Control Over Financial Reporting
During the year ended December 31, 2017,2018, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.
None.New Equity Distribution Agreement
We have the ATM Program, an “at the market” equity offering program pursuant to which we may sell shares of Common Stock, from time to time through our sales agents. During January 2019, we sold 7,759,322 shares of Common Stock through the ATM Program for gross proceeds of $152.8 million, before commissions of $1.5 million and additional issuance costs of $2,000. Following these sales, we had raised all $175.0 million contemplated by our existing equity distribution agreement related to the ATM Program.
On February 27, 2019, we terminated our existing equity distribution agreement, and on February 28, 2019, we entered into a new equity distribution agreement on substantially the same terms with the sales agents under our existing equity distribution agreement, UBS Securities LLC, Robert W. Baird & Co. Incorporated, Capital One Securities, Inc., Mizuho Securities USA LLC, B. Riley FBR, Inc., KeyBanc Capital Markets Inc., and BMO Capital Markets Corp., as well as three new sales agents, BBVA

Securities Inc., SMBC Nikko Securities America, Inc. and Stifel, Nicolaus & Company, Incorporated (collectively, the “Agents”). The new equity distribution agreement provides for the continuation of the ATM Program to raise additional aggregate sales proceeds of up to $250.0 million.
Subject to the terms and conditions of the new equity distribution agreement, the Agents will use their commercially reasonable efforts to sell, on our behalf, shares of Common Stock offered by us under and in accordance with the new equity distribution agreement. The sales, if any, of shares of Common Stock, made under the new equity distribution agreement will be made by means of ordinary brokers’ transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. Actual sales will depend on a variety of factors to be determined by us from time to time.
We intend to continue to use any net proceeds from the ATM Program for general corporate purposes, including funding investment activity, repaying outstanding indebtedness (including borrowings under the Revolving Credit Facility), and for working capital.
The ATM Program is registered under the Securities Act of 1933, as amended, pursuant to our shelf registration statement on Form S-3 (Registration No. 333-214579). Following the filing of this Annual Report on Form 10-K, we will file a prospectus supplement with the Securities and Exchange Commission in connection with the offer and sale of shares of Common Stock pursuant to the new equity distribution agreement. Copies of the opinions of Venable LLP and Proskauer Rose LLP relating to the ATM Program are attached to this Annual Report on Form 10-K as Exhibits 5.1 and 8.1, respectively.
The new equity distribution agreement contains customary representations, warranties, and agreements of both parties, indemnification rights and termination provisions.
Certain of the Agents or their affiliates are or have been lenders to us under the Credit Facility and other loans, agents under the Preferred Stock ATM Program or counterparties with respect to certain of our derivative contracts.
The foregoing description of the material terms of the new equity distribution agreement in this Item 9B does not purport to be complete and is qualified in its entirety by reference to the full text of the new equity distribution agreement, which is filed as an exhibit to this Annual Report on Form 10-K and incorporated herein by reference.
Charter Amendment
On February 27, 2019, we filed an amendment to our charter with the State Department of Assessments and Taxation of Maryland, which became effective upon filing. Pursuant to this amendment, we increased the number of shares of stock our charter authorizes us to issue from up to 116,670,000 shares of stock, consisting of 100,000,000 shares of common stock and 16,670,000 shares of preferred stock, to up to 166,670,000 shares of stock, consisting of 150,000,000 shares of common stock and 16,670,000 shares of preferred stock.
The foregoing description of the material terms of this charter amendment in this Item 9B does not purport to be complete and is qualified in its entirety by reference to the full text of this charter amendment, which is filed as an exhibit to this Annual Report on Form 10-K and incorporated herein by reference.
Property Management and Leasing Agreement Amendment
On February 27, 2019, we entered into an amendment to our primary property management and leasing agreement with the Property Manager (the "Primary PMLA"), pursuant to which the Property Manager provides property management and leasing services for almost all our properties. For more information about the terms of the Primary PMLA see Note 11 — Related Party Transactions to our consolidated financial statements included in this Annual Report on Form 10-K.
Following this amendment, the Primary PMLA continues to have a one-year term that is automatically extended for an unlimited number of successive one-year terms unless terminated by either party upon notice. Under the Primary PMLA prior to this amendment, either we or the Property Manager could terminate upon 60 days’ written notice prior to end of the applicable term. Following this amendment, either we or the Property Manager may terminate the Primary PMLA at any time upon at least 12 months’ prior written notice.
The foregoing description of the material terms of this amendment in this Item 9B does not purport to be complete and is qualified in its entirety by reference to the full text of this amendment, which is filed as an exhibit to this Annual Report on Form 10-K and incorporated herein by reference.





PART III
Item 10. Directors, Executive Officers and Corporate Governance.
We have adopted a Code of Business Conduct and Ethics that applies to all of our executive officers and directors, including but not limited to, our principal executive officer and principal financial officer. A copy of our Code of Business Conduct and Ethics may be obtained, free of charge, by sending a written request to our executive office – 405 Park Avenue – 4th3rd Floor, New York, NY 10022, attention Chief Financial Officer. Our Code of Business Conduct and Ethics is also available on our website, www.globalnetlease.com.
The information required by this Item will be set forth in our definitive proxy statement with respect to our 20182019 annual meeting of shareholders to be filed on or before April 30, 2018,2019, and is incorporated herein by reference.
Item 11. Executive Compensation.
The information required by this Item will be set forth in our definitive proxy statement with respect to our 20182019 annual meeting of shareholders to be filed on or before April 30, 2018,2019, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this Item will be set forth in our definitive proxy statement with respect to our 20182019 annual meeting of shareholders to be filed on or before April 30, 2018,2019, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this Item will be set forth in our definitive proxy statement with respect to our 20182019 annual meeting of shareholders to be filed on or before April 30, 2018,2019, and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services.
The information required by this Item will be set forth in our definitive proxy statement with respect to our 20182019 annual meeting of shareholders to be filed on or before April 30, 2018,2019, and is incorporated herein by reference.

PART IV
Item 15. Exhibits and Financial Statement Schedules.
(a)    Financial Statement Schedules
See the Index to audited consolidated financial statements at page F-1 of this report.
The following financial statement schedule is included herein at page F-52 of this report:
Schedule III – Real Estate and Accumulated Depreciation as of December 31, 20172018 and for the years ended December 31, 2017. 20162018 and 2015.2017.
(b)    Exhibits
EXHIBITS INDEX
The following exhibits are included, or incorporated by reference, in this Annual Report on Form 10-K for the year ended December 31, 20172018 (and are numbered in accordance with Item 601 of Regulation S-K).

Exhibit No.  Description
1.1 (1)
 Equity Distribution Agreement dated December 12, 2016.
1.2 (2)
 Amendment No. 1 to Equity Distribution Agreement, by and among the Company,Global Net Lease, Inc., UBS Securities LLC, Robert W. Baird & Co, Inc., Capital One Securities, Inc., Mizuho Securities USA LLC, FBR Capital Markets & Co., and KeyBanc Capital Markets Inc., dated as of May 19, 2017.
1.3 (3)
 UnderwritingEquity Distribution Agreement, dated as of September 7, 2017,March 23, 2018, by and among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P. and the Underwriters listed on Schedule I attached thereto, for whomLadenburg Thalmann & Co., BMO Capital Markets Corp. and Stifel, Nicolaus & Company, Incorporated acted as representatives.B. Riley FBR, Inc.
1.4 (4)
 Underwriting Agreement, dated as of December 14, 2017,August 16, 2018 by and among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P., BMO Capital Markets Corp. and UBS Securities LLC
1.5(5)
Amendment No. 2 to Equity Distribution Agreement, by and among Global Net Lease, Inc., UBS Securities LLC, Robert W. Baird & Co, Inc., Capital One Securities, Inc., Mizuho Securities USA LLC, B. Riley FBR, Inc., KeyBanc Capital Markets Inc., and BMO Capital Markets Corp., dated as of October 4, 2018.
1.6(6)
Underwriting Agreement, dated November 28, 2018, by and among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P., BMO Capital Markets Corp. and UBS Securities LLC as representatives of the underwriters listed on Schedule I thereto.
1.7 *
Equity Distribution Agreement, dated February 28, 2019, by and among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P., UBS Securities LLC, Robert W. Baird & Co. Incorporated, Capital One Securities, Inc., Mizuho Securities USA LLC, B. Riley FBR, Inc., KeyBanc Capital Markets Inc., BMO Capital Markets Corp., BBVA Securities, Inc., SMBC Nikko Securities America, Inc. and Stifel, Nicolaus & Company, Incorporated.
2.1 (5)(7)
 Agreement and Plan of Merger, dated as of August 8, 2016, among Global Net Lease, Inc., American Realty Capital Global Trust II, Inc., Mayflower Acquisition, LLC, Global Net Lease Operating Partnership, L.P., and American Realty Capital Global Trust II Operating Partnership, L.P.
3.1 *(8)
 Articles of Restatement of Global Net Lease, Inc., effective February 26, 2018.
3.2 (6)(9)
 Amended and Restated Bylaws of Global Net Lease, Inc.
3.3(3)
Articles Supplementary classifying additional shares of 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share filed on March 23, 2018.
3.4 *
Articles of Amendment filed on February 27, 2019
4.1 (7)(10)
 Second Amended and Restated Agreement of Limited Partnership of Global Net Lease Operating Partnership, L.P., dated June 2, 2015, between Global Net Lease, Inc. and Global Net Lease Special Limited Partner, LLC.
5.1 *
Opinion of Venable LLP
8.1 *
Opinion of Proskauer Rose LLP
10.1 (7)(10)
 Fourth Amended and Restated Advisory Agreement, dated as of June 2, 2015, among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P. and Global Net Lease Advisors, LLC.


Exhibit No.Description
10.2 (8)(11)
 Property Management and Leasing Agreement, dated as of April 20, 2012, among Global Net Lease, Inc. (f/k/a American Realty Capital Global Trust, Inc.), Global Net Lease Operating Partnership, L.P. (f/k/a American Realty Capital Global Operating Partnership, L.P.) and Global Net Lease Properties, LLC) (f/k/a American Realty Capital Global Properties, LLC).
10.3 (9)(12)
 Amended and Restated Incentive Restricted Share Plan of Global Net Lease, Inc. (f/k/a American Realty Capital Global Trust, Inc.).
10.4 (8)(11)
 Global Net Lease, Inc. (f/k/a American Realty Capital Global Daily Net Asset Trust, Inc.) 2012 Stock Option Plan.
10.5 (10)(13)

 Credit Agreement, dated as of July 25, 2013, by and among American Realty Capital Global Partnership, L.P., JPMorgan Chase Bank, N.A., and the lenders and agents party thereto.
10.6 (11)(14)
 Third Amendment to Credit Agreement, dated as of June 24, 2014, among American Realty Capital Global Operating Partnership, the Company,Global Net Lease, Inc., ARC Global Holdco, LLC, JPMorgan Chase Bank, N.A. and the other parties named thereto.
10.7 (12)(15)
 Fourth Amendment to Credit Agreement, dated as of July 29, 2014, among American Realty Capital Global Operating Partnership, the Company,Global Net Lease, Inc., ARC Global Holdco, LLC, JPMorgan Chase Bank, N.A. and the other parties named thereto.
10.8 (12)(15)
 Fifth Amendment to Credit Agreement, dated as of October 16, 2014, among American Realty Capital Global Operating Partnership, the Company,Global Net Lease, Inc., ARC Global Holdco, LLC, JPMorgan Chase Bank, N.A. and the other parties named thereto.


Exhibit No.Description
10.9 (12)(15)
 Sixth Amendment to Credit Agreement, dated as of December 16, 2014, among American Realty Capital Global Trust, Operating Partnership, the Company,Global Net Lease, Inc., ARC Holdco. LLC, JPMorgan Chase Bank, N.A. and the other parties named thereto.
10.11 (7)(10)
 Seventh Amendment to Credit Agreement, dated as of June 1, 2015, among Global Net Lease Operating Partnership, L.P., Global Net Lease, Inc., ARC Global Holdco, LLC, the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders.
10.12 (12)(15)
 Second Amended and Restated 2015 Advisor Multi-Year Outperformance Agreement, dated as of February 25, 2016, among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P. and Global Net Lease Advisors, LLC.
10.13 (13)(16)

 Indemnification Agreement, dated as of June 2, 2015, among Global Net Lease, Inc., Scott J. Bowman, Peter M. Budko, Patrick J. Goulding, William M. Kahane, P. Sue Perrotty, Nicholas Radesca, Edward G. Rendell, Nicholas S. Schorsch, Abby M. Wenzel, Andrew Winer, Edward M. Weil, Jr., Global Net Lease Advisors, LLC, AR Capital, LLC and RCS Capital Corporation.
10.14 (14)(17)
 Eighth Amendment to Credit Agreement, dated as of August 24, 2015, among Global Net Lease Operating Partnership, L.P., Global Net Lease, Inc., ARC Global Holdco, LLC, the guarantors party thereto, the lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders.
10.15 (12)(15)
 Indemnification Agreement between the CompanyGlobal Net Lease, Inc. and Timothy Salvemini, dated as of December 22, 2015.
10.16 (15)(18)
 Indemnification Agreement between the CompanyGlobal Net Lease, Inc. and Edward M. Weil, Jr., dated as of January 3, 2017.
10.17 (15)(18)
 Indemnification Agreement between the CompanyGlobal Net Lease, Inc. and Nicholas Radesca, dated as of January 6, 2017.
10.18 (15)(18)
 Letter Agreement, dated as of December 16, 2016, by and among American Realty Capital Global Trust II, Inc., American Realty Capital Global II Advisors, LLC and AR Global Investments, LLC.
10.19 (16)(19)

 Credit Agreement, dated as of July 24, 2017, by and among Global Net Lease Operating Partnership, L.P., as borrower, the lenders party thereto and KeyBank National as agent.
10.20 (16)(19)

 Unconditional Guaranty of Payment and Performance, dated as of July 24, 2017, by the Company,Global Net Lease, Inc., ARC Global Holdco, LLC, Global II Holdco, LLC and the other subsidiary parties thereto for the benefit of KeyBank National Association and the other lender parties thereto.
10.21 (16)(19)
 Contribution Agreement, dated as of July 24, 2017, by and among the Company,Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P., ARC Global Holdco, LLC, ARC Global II Holdco, LLC, and the other subsidiary parties thereto.
10.22 (3)(20)
 Second Amendment, dated as of September 11, 2017, to the Second Amended and Restated Agreement of Limited Partnership of Global Net Lease Operating Partnership, L.P., dated June 2, 2015.
10.23 (17)(21)
 Loan Agreement, dated as of October 27, 2017, by and among the wholly owned subsidiaries of Global Net Lease Operating Partnership, L.P. listed on Schedule I attached thereto, as borrower, and Column Financial, Inc. and Citi Real Estate Funding, Inc., as lender.


Exhibit No.Description
10.24 (17)(21)
 Guaranty Agreement, dated as of October 27, 2017, by Global Net Lease Operating Partnership, L.P. for the benefit of Column Financial, Inc. and Citi Real Estate Funding, Inc.
10.25 (17)(21)
 Environmental Indemnity Agreement, dated as of October 27, 2017, by Global Net Lease Operating Partnership, L.P. and the wholly owned subsidiaries of Global Net Lease Operating Partnership, L.P. listed on Schedule I attached thereto, in favor of Column Financial, Inc. and Citi Real Estate Funding, Inc.
10.26 (17)(21)
 Property Management and Leasing Agreement, dated as of October 27, 2017, among the entities listed on Exhibit A attached thereto and Global Net Lease Properties, LLC.
10.27 (17)(21)
 First Amendment, dated as of October 27, 2017, to the Property Management and Leasing Agreement, dated as of April 20, 2012, among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P. and Global Net Lease Properties, LLC.
10.28 (17)(21)
 Indemnification Agreement between Global Net Lease, Inc. and Christopher J. Masterson, dated as of November 2, 2017.
10.29 (4)(22)
 
Third Amendment, dated as of December 15, 2017, to the Second Amended and Restated Agreement of Limited Partnership of Global Net Lease Operating Partnership, L.P., dated June 2, 2015.

10.30 *(8)
 Second Amendment, dated as of February 27, 2018, to the Property Management and Leasing Agreement, dated as of April 20, 2012, among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P. and Global Net Lease Properties, LLC.
Fourth Amendment, dated as of March 23, 2018, to the Second Amended and Restated Agreement of Limited Partnership of Global Net Lease Operating Partnership, L.P., dated June 2, 2015.
10.32(26)
First Amendment to Credit Agreement, dated as of March 29, 2018 by and among Global Net Lease Operating Partnership, L.P., as borrower, Global Net Lease, Inc. as the REIT and guarantor, the lenders party thereto. and KeyBank National Association as agent.
10.33(23)
Fifth Amendment, dated as of July 19, 2018, to the Second Amended and Restated Agreement of Limited Partnership of Global Net Lease Operating Partnership, L.P., dated June 2, 2015.
10.34(23)
2018 Advisor Multi-Year Outperformance Award Agreement, dated as of July 19, 2018, between Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P. and Global Net Lease Advisors, LLC.
10.35 (24)
First Amendment to the Fourth Amended And Restated Advisory Agreement, dated as of August 14, 2018, by and among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P., and Global Net Lease Advisors, LLC.
10.36(26)
Second Amendment to the Fourth Amended And Restated Advisory Agreement, dated as of November 6, 2018, by and among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P., and Global Net Lease Advisors, LLC.
10.37(25)
Investment Facility Agreement, dated as August 13, 2018, among the borrower and guarantor entities thereto and Lloyds Bank PLC.
 CalculationForm of RatiosRestricted Stock Unit Award Agreement.
Letter Agreement, dated as of EarningsNovember 19, 2018, regarding Credit Agreement, dated as of July 24, 2017, by and among Global Net Lease Operating Partnership, L.P., as borrower, the lenders party thereto and KeyBank National as agent.
First Amendment, dated as of February 27, 2019, to Fixed Charges2018 Advisor Multi-Year Outperformance Award Agreement, dated as of July 19, 2018, between Global Net Lease, Inc., Global Net Lease Operating Partnership, and Preferred Stock DividendsGlobal Net Lease Advisors, LLC.
Third Amendment, dated as of February 27, 2019, to the Property Management and Leasing Agreement, dated as of April 20, 2012, among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P. and Global Net Lease Properties, LLC.

99.1 *
Material U.S. Federal Income Tax Considerations.
 List of Subsidiaries.
 Consent of PricewaterhouseCoopers LLP.


Exhibit No.23.2 DescriptionConsent of Venable LLP (included in Exhibit 5.1 hereto).
23.3Consent of Proskauer Rose LLP (included in Exhibit 8.1 hereto).
31.1 *
 Certification of the Principal Executive Officer of the CompanyGlobal Net Lease, Inc. pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2 *
 Certification of the Principal Financial Officer of the CompanyGlobal Net Lease, Inc. pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.


Exhibit No.Description
32 *
 Written statements of the Principal Executive Officer and Principal Financial Officer of the CompanyGlobal Net Lease, Inc. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.1 * XBRL (eXtensible Business Reporting Language). The following materials from Global Net Lease, Inc.'s Annual Report on Form 10-K for the year ended December 31, 20172018 formatted in XBRL: (i) the Consolidated Balance Sheets at December 31, 20172018 and 2016,2017, (ii) the Consolidated Statements of Operations for the years ended December 31, 2018, 2017, 2016, and 2015,2016, (iii) the Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2018, 2017, 2016, and 2015,2016, (iv) the Consolidated Statements of Equity for the years ended December 31, 2018, 2017, 2016, and 2015,2016, (v) the Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017, 2016, and 2015,2016, (vi) the Notes to the Consolidated Financial Statements, and (vii) Schedule III — Real Estate and Accumulated Depreciation.

*Filed herewith

(1)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 13, 2016.
(2)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on May 19, 2017.
(3)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on September 11, 2017.March 23, 2018.
(4)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 18, 2017.August 17, 2018.
(5)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on October 4, 2018.
(6)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on November 28, 2018.
(7)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 8, 2016.
(6)(8)Filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 28, 2018.
(9)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on June 3, 2015.
(7)(10)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on June 2, 2015.
(8)(11)Filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 11, 2013.
(9)(12)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on April 9, 2015.
(10)(13)Filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 filed with the SEC on August 13, 2013.
(11)(14)Filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 filed with the SEC on August 11, 2014.
(12)(15)Filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC on February 29, 2016.
(13)(16)Filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2015 filed with the SEC on August 10, 2015.
(14)(17)Filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 filed with the SEC on November 10, 2015.
(15)(18)Filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017.
(16)(19)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 25, 2017.
(17)(20)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on September 11, 2017.
(21)Filed as an exhibit to our Quarterly Report on Form 10-Q for the quarter ended September 30, 2017 filed with the SEC on November 7, 2017.
(22)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on December 18, 2017.
(23)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 23, 2018.
(24)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 14, 2018.
(25)Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 16, 2018.
(26)Filed as an exhibit to our Current Report on Form 10-Q for the quarter ended September 30, 2018 filed with the SEC on November 7, 2018.
Item 16. Form 10-K Summary.
None.

SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized this 28th day of February, 2018.2019.
 GLOBAL NET LEASE, INC.
 By:/s/ James L. Nelson
  James L. Nelson
  CHIEF EXECUTIVE OFFICER AND PRESIDENT
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Annual Report on Form 10-K has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name Capacity Date
     
/s/ P. Sue Perrotty Non-Executive Chair of the Board of Directors, Audit Committee Chair and Nominating and Corporate Governance Committee Chair February 28, 20182019
P. Sue Perrotty    
     
/s/ Edward M. Weil, Jr. Director February 28, 20182019
Edward M. Weil, Jr.    
     
/s/ James L. Nelson 
Chief Executive Officer, President and Director
(Principal Executive Officer)
 February 28, 20182019
James L. Nelson   
     
/s/ Christopher J. Masterson 
Chief Financial Officer, Treasurer and Secretary
(Principal Financial Officer and Principal Accounting Officer)
 February 28, 20182019
Christopher J. Masterson   
     
/s/ Lee M. Elman Independent Director February 28, 20182019
Lee M. Elman    
     
/s/ Edward G. Rendell Independent Director, Compensation Committee Chair February 28, 20182019
Edward G. Rendell    
     
/s/ Abby M. Wenzel Independent Director February 28, 20182019
Abby M. Wenzel    

7176

GLOBAL NET LEASE, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


 Page
  
  
  
  
  
  
  
Financial Statement Schedule: 

Financial statement schedules other than those listed above are omitted because the required information is given in the financial statements, including the notes thereto, or because the conditions requiring their filing do not exist.

F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Global Net Lease, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated financialbalance sheets Global Net Lease, Inc. and its subsidiaries(the “Company”) as of December 31, 2018and 2017,and the related consolidated statements of operations, comprehensive income, equity and cash flowsfor each of the three years in the period endedDecember 31, 2018,including the related notes and financial statement schedule of Global Net Lease, Inc. and its subsidiaries as listed in the accompanying index (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2017,2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 20172018 and 20162017, and the results of their itsoperations and their itscash flows for each of the three years in the period ended December 31, 20172018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017,2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’sManagement's Annual Reporting on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidatedfinancial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB")(PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidatedfinancial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidatedfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
New York, New York
February 28, 20182019

We have served as the Company’s auditor since 2015.  

F-2

GLOBAL NET LEASE, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)

 December 31, December 31,
 2017 2016 2018 2017
ASSETS        
Real estate investments, at cost (Note 4):
        
Land $402,318
 $376,704
 $398,911
 $402,318
Buildings, fixtures and improvements 2,138,405
 1,967,930
 2,345,202
 2,138,405
Construction in progress 2,328
 
 1,235
 2,328
Acquired intangible lease assets 629,626
 587,061
 675,551
 629,626
Total real estate investments, at cost 3,172,677
 2,931,695
 3,420,899
 3,172,677
Less accumulated depreciation and amortization (339,931) (216,055) (437,974) (339,931)
Total real estate investments, net 2,832,746
 2,715,640
 2,982,925
 2,832,746
Assets held for sale 112,902
 
Cash and cash equivalents 102,425
 69,831
 100,324
 102,425
Restricted cash 5,302
 7,497
 3,369
 5,302
Derivative assets, at fair value (Note 8)
 2,176
 28,700
 8,730
 2,176
Unbilled straight-line rent 42,739
 30,459
 47,183
 42,739
Prepaid expenses and other assets 22,617
 17,577
 22,245
 22,617
Related party notes receivable acquired in Merger (Note 3)
 
 5,138
Due from related parties 16
 16
 16
 16
Deferred tax assets 1,029
 1,586
 3,293
 1,029
Goodwill and other intangible assets, net 22,771
 13,931
 22,180
 22,771
Deferred financing costs, net 6,774
 1,092
 6,311
 6,774
Total assets $3,038,595
 $2,891,467
Total Assets $3,309,478
 $3,038,595
        
LIABILITIES AND EQUITY        
Mortgage notes payable, net (Note 5)
 $984,876
 $747,381
 $1,129,807
 $984,876
Revolving credit facilities (Note 6)
 298,909
 616,614
Revolving credit facility (Note 6)
 363,894
 298,909
Term loan, net (Note 6)
 229,905
 
 278,727
 229,905
Mezzanine facility, net (Note 6)
 
 55,383
Acquired intangible lease liabilities, net 31,388
 33,041
 35,757
 31,388
Derivative liabilities, at fair value (Note 8)
 15,791
 15,457
 3,886
 15,791
Due to related parties 829
 2,162
 790
 829
Accounts payable and accrued expenses 23,227
 22,861
 31,529
 23,227
Prepaid rent 18,535
 18,429
 16,223
 18,535
Deferred tax liability 15,861
 15,065
 15,227
 15,861
Taxes payable 2,475
 9,059
 2,228
 2,475
Dividends payable 2,556
 34
 2,664
 2,556
Total liabilities 1,624,352
 1,535,486
Total Liabilities 1,880,732
 1,624,352
Commitments and contingencies (Note 10)
 
 
 
 
Stockholders' Equity (Note 9):
        
Preferred stock, $0.01 par value, 16,670,000 shares authorized 
 
7.25% Series A cumulative redeemable preferred shares, $0.01 par value, liquidation preference $25.00 per share, 5,409,650 authorized, issued and outstanding as of December 31, 2017 and no shares issued and outstanding as of December 31, 2016


 54
 
Common stock, $0.01 par value, 100,000,000 shares authorized, 67,287,231 and 66,258,559 shares issued and outstanding at December 31, 2017 and 2016, respectively 2,003
 1,990
7.25% Series A cumulative redeemable preferred shares, $0.01 par value, liquidation preference $25.00 per share, 13,409,650 and 5,409,650 authorized, 5,416,890 and 5,409,650 issued and outstanding as of December 31, 2018 and 2017, respectively 54
 54
Common stock, $0.01 par value, 100,000,000 shares authorized, 76,080,625 and 67,287,231 shares issued and outstanding at December 31, 2018 and 2017, respectively 2,091
 2,003
Additional paid-in capital 1,860,058
 1,708,541
 2,031,981
 1,860,058
Accumulated other comprehensive income (loss) 19,447
 (16,695)
Accumulated other comprehensive income 6,810
 19,447
Accumulated deficit (468,396) (346,058) (615,448) (468,396)
Total stockholders' equity 1,413,166
 1,347,778
Total Stockholders' Equity 1,425,488
 1,413,166
Non-controlling interest 1,077
 8,203
 3,258
 1,077
Total equity 1,414,243
 1,355,981
Total liabilities and equity $3,038,595
 $2,891,467
Total Equity 1,428,746
 1,414,243
Total Liabilities and Equity $3,309,478
 $3,038,595
The accompanying notes are an integral part of these consolidated financial statements.

F-3

GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)

 Year Ended December 31, Year Ended December 31,
 2017 2016 2015 2018 2017 2016
Revenues:            
Rental income $242,532
 $204,049
 $194,620
 $265,298
 $242,532
 $204,049
Operating expense reimbursements 16,763
 10,125
 10,712
 16,909
 16,763
 10,125
Total revenues 259,295
 214,174
 205,332
 282,207
 259,295
 214,174
            
Expenses (income):            
Property operating 28,857
 19,038
 18,180
 28,732
 28,857
 19,038
Fire loss 45
 
 
Fire (recovery) loss (50) 45
 
Operating fees to related parties 24,457
 19,751
 15,167
 28,234
 24,457
 19,751
Acquisition and transaction related 1,979
 9,792
 6,053
Listing fees 
 
 18,653
Vesting of Class B Units 
 
 14,480
Impairment charges and related lease intangible write-offs 5,000
 
 
Acquisition, transaction and other costs (Note 10)
 13,850
 1,979
 9,792
General and administrative 8,648
 7,108
 7,175
 10,439
 8,648
 7,108
Equity based compensation (3,787) 3,748
 2,345
Equity-based compensation 2,649
 (3,787) 3,748
Depreciation and amortization 113,048
 94,455
 90,070
 119,582
 113,048
 94,455
Total expenses 173,247
 153,892
 172,123
 208,436
 173,247
 153,892
Operating income before (loss) gain on dispositions of real estate investments 73,771
 86,048
 60,282
(Loss) gain on dispositions of real estate investments (5,751) 1,089
 13,341
Operating income 86,048
 60,282
 33,209
 68,020
 87,137
 73,623
Other income (expense):            
Interest expense (48,450) (39,121) (34,864) (57,973) (48,450) (39,121)
Income from investments 
 
 15
Realized losses on investment securities 
 
 (66)
Gains on dispositions of real estate investments 1,089
 13,341
 
(Losses) gains on derivative instruments (8,304) 7,368
 3,935
Unrealized (losses) gains on undesignated foreign currency advances and other hedge ineffectiveness (3,679) 10,109
 5,124
Unrealized losses on non-functional foreign currency advances not designated as net investment hedges 
 
 (3,558)
Other income 22
 20
 79
Loss on extinguishment of debt (3,897) 
 
Gain (loss) on derivative instruments 7,638
 (8,304) 7,368
Unrealized (loss) gain on undesignated foreign currency advances and other hedge ineffectiveness (434) (3,679) 10,109
Other (loss) income (23) 22
 20
Total other expense, net (59,322) (8,283) (29,335) (54,689) (60,411) (21,624)
Net income before income tax 26,726
 51,999
 3,874
 13,331
 26,726
 51,999
Income tax expense (3,140) (4,422) (5,889) (2,434) (3,140) (4,422)
Net income (loss) 23,586
 47,577
 (2,015)
Net (income) loss attributable to non-controlling interest (21) (437) (50)
Net income 10,897
 23,586
 47,577
Net income attributable to non-controlling interest 
 (21) (437)
Preferred stock dividends (2,834) 
 
 (9,815) (2,834) 
Net income (loss) attributable to common stockholders $20,731
 $47,140
 $(2,065)
Net income attributable to common stockholders $1,082
 $20,731
 $47,140
            
Basic and Diluted Earnings Per Common Share:            
Basic and diluted net income (loss) per share attributable to common stockholders $0.30
 $0.82
 $(0.04)
Basic and diluted weighted average common shares outstanding 66,877,620
 56,720,448
 58,103,298
Basic and diluted net income per share attributable to common stockholders $0.01
 $0.30
 $0.82
Weighted average common shares outstanding:      
Basic 69,411,061
 66,877,620
 56,720,448
Diluted 69,663,208
 66,877,620
 56,720,448

The accompanying notes are an integral part of these consolidated financial statements.

F-4

GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)


 Year Ended December 31, Year Ended December 31,
 2017 2016 2015 2018 2017 2016
Net income (loss) $23,586
 $47,577
 $(2,015)
Net income $10,897
 $23,586
 $47,577
            
Other comprehensive income (loss)            
Cumulative translation adjustment 27,954
 (6,447) 1,257
 (17,555) 27,954
 (6,447)
Designated derivatives, fair value adjustments 8,163
 (6,705) 556
 4,918
 8,163
 (6,705)
Other comprehensive income (loss) 36,117
 (13,152) 1,813
Other comprehensive (loss) income (12,637) 36,117
 (13,152)
            
Comprehensive income (loss) 59,703
 34,425
 (202)
Comprehensive (loss) income (1,740) 59,703
 34,425
Amounts attributable to non-controlling interest            
Net income (21) (437) (50) 
 (21) (437)
Cumulative translation adjustment 2
 52
 197
 
 2
 52
Designated derivatives, fair value adjustments 23
 54
 (70) 
 23
 54
Comprehensive loss (income) attributable to non-controlling interest 4
 (331) 77
 
 4
 (331)
            
Preferred stock dividends (2,834) 
 
 (9,815) (2,834) 
            
Comprehensive income (loss) attributable to common stockholders $56,873
 $34,094
 $(125)
Comprehensive (loss) income attributable to common stockholders $(11,555) $56,873
 $34,094

The accompanying notes are an integral part of these consolidated financial statements.


F-5

GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF EQUITY
Years Ended December 31, 2018, 2017 2016 and 20152016
(In thousands, except share data)

 Preferred Stock Common Stock             Preferred Stock Common Stock            
 Number of
Shares
 Par Value 
Number of
Shares
 Par Value 
Additional Paid-in
Capital
 Accumulated Other Comprehensive Income (Loss) Accumulated Deficit Total Stockholders' Equity Non-controlling interest Total Equity Number of
Shares
 Par Value 
Number of
Shares
 Par Value 
Additional Paid-in
Capital
 Accumulated Other Comprehensive Income Accumulated Deficit Total Stockholders' Equity Non-controlling interest Total Equity
Balance, December 31, 2014 
 $
 59,311,059
 $1,782
 $1,575,592
 $(5,589) $(155,116) $1,416,669
 $
 $1,416,669
Issuance of common stock, net 
 
 12,469
 
 469
 
 
 469
 
 469
Common stock repurchases, inclusive of fees 
 
 (4,013,296) (120) (126,202) 
 
 (126,322) 
 (126,322)
Common stock issued through dividend reinvestment plan 
 
 1,001,979
 30
 28,548
 
 
 28,578
 
 28,578
Dividends declared 
 
 
 
 
 
 (115,631) (115,631) 
 (115,631)
Issuance of operating partnership units 
 
 
 
 
 
 
 
 750
 750
Vesting of Class B Units 
 
 
 
 
 
 
 
 14,480
 14,480
Equity-based compensation 
 
 
 
 181
 
 
 181
 2,164
 2,345
Distributions to non-controlling interest holders 
 
 
 
 
 
 
 
 (1,017) (1,017)
Net loss 
 
 
 
 
 
 (2,065) (2,065) 50
 (2,015)
Cumulative translation adjustment 
 
 
 
 
 1,454
 
 1,454
 (197) 1,257
Designated derivatives, fair value adjustments 
 
 
 
 
 486
 
 486
 70
 556
Rebalancing of ownership percentage 
 
 
 
 1,574
 
 
 1,574
 (1,574) 
Balance, December 31, 2015 
 
 56,312,211
 1,692
 1,480,162
 (3,649) (272,812) 1,205,393
 14,726
 1,220,119
 
 $
 56,312,211
 $1,692
 $1,480,162
 $(3,649) $(272,812) $1,205,393
 $14,726
 $1,220,119
Issuance of common stock, net 
 
 9,561,388
 287
 220,581
 
 
 220,868
 
 220,868
 
 
 9,561,388
 287
 220,581
 
 
 220,868
 
 220,868
Related party fees acquired in Merger (Note 3) 
 
 (50,200) (2) (1,158) 
 
 (1,160) 
 (1,160) 
 
 (50,200) (2) (1,158) 
 
 (1,160) 
 (1,160)
Conversion of OP Units to common stock (Note 1)
 
 
 421,383
 13
 9,264
 
 
 9,277
 (9,277) 
Conversion of OP Units to common stock 
 
 421,383
 13
 9,264
 
 
 9,277
 (9,277) 
Dividends declared 
 
 
 
 
 
 (120,386) (120,386) 
 (120,386) 
 
 
 
 
 
 (120,386) (120,386) 
 (120,386)
Equity-based compensation 
 
 13,777
 
 386
 
 
 386
 3,362
 3,748
 
 
 13,777
 
 386
 
 
 386
 3,362
 3,748
Distributions to non-controlling interest holders 
 
 
 
 
 
 
 
 (1,633) (1,633) 
 
 
 
 
 
 
 
 (1,633) (1,633)
Net Income 
 
 
 
 
 
 47,140
 47,140
 437
 47,577
 
 
 
 
 
 
 47,140
 47,140
 437
 47,577
Cumulative translation adjustment 
 
 
 
 
 (6,395) 
 (6,395) (52) (6,447) 
 
 
 
 
 (6,395) 
 (6,395) (52) (6,447)
Designated derivatives, fair value adjustments 
 
 
 
 
 (6,651) 
 (6,651) (54) (6,705) 
 
 
 
 
 (6,651) 
 (6,651) (54) (6,705)
Rebalancing of ownership percentage 
 
 
 
 (694) 
 
 (694) 694
 
 
 
 
 
 (694) 
 
 (694) 694
 
Balance, December 31, 2016 
 
 66,258,559
 1,990
 1,708,541
 (16,695) (346,058) 1,347,778
 8,203
 1,355,981
 
 
 66,258,559
 1,990
 1,708,541
 (16,695) (346,058) 1,347,778
 8,203
 1,355,981
Issuance of common stock, net 
 
 820,988
 8
 18,287
 
 
 18,295
 
 18,295
 
 
 820,988
 8
 18,287
 
 
 18,295
 
 18,295
Conversion of OP Units to common stock (Note 1)
 
 
 181,841
 5
 2,624
 
 
 2,629
 (2,629) 
Conversion of OP Units to common stock 
 
 181,841
 5
 2,624
 
 
 2,629
 (2,629) 
Issuance of preferred shares, net 5,409,650
 54
 
 
 129,997
 
 
 130,051
 
 130,051
 5,409,650
 54
 
 
 129,997
 
 
 130,051
 
 130,051
Common dividends declared 
 
 
 
 
 
 (142,427) (142,427) 
 (142,427) 
 
 
 
 
 
 (142,427) (142,427) 
 (142,427)
Preferred dividends declared 
 
 
 
 
 
 (2,834) (2,834) 
 (2,834) 
 
 
 
 
 
 (2,834) (2,834) 
 (2,834)
Equity-based compensation 
 
 25,843
 
 662
 
 
 662
 (4,449) (3,787) 
 
 25,843
 
 662
 
 
 662
 (4,449) (3,787)
Distributions to non-controlling interest holders 
 
 
 
 
 
 (642) (642) (97) (739) 
 
 
 
 
 
 (642) (642) (97) (739)
Net income 
 
 
 
 
 
 23,565
 23,565
 21
 23,586
 
 
 
 
 
 
 23,565
 23,565
 21
 23,586
Cumulative translation adjustment 
 
 
 
 
 27,956
 
 27,956
 (2) 27,954
 
 
 
 
 
 27,956
 
 27,956
 (2) 27,954
Designated derivatives, fair value adjustments 
 
 
 
 
 8,186
 
 8,186
 (23) 8,163
 
 
 
 
 
 8,186
 
 8,186
 (23) 8,163
Rebalancing of ownership percentage 
 
 
 
 (53) 
 
 (53) 53
 
 
 
 
 
 (53) 
 
 (53) 53
 
Balance, December 31, 2017 5,409,650
 $54
 67,287,231
 $2,003
 $1,860,058
 $19,447
 $(468,396) $1,413,166
 $1,077
 $1,414,243
 5,409,650
 $54
 67,287,231
 2,003
 1,860,058
 19,447
 (468,396) 1,413,166
 1,077
 1,414,243
Issuance of Common Stock, net 
 
 8,793,394
 88
 171,682
 
 
 171,770
 
 171,770
Issuance of Preferred Stock, net 7,240
 
 
 
 (227) 
 
 (227) 
 (227)
Common Stock dividends declared 
 
 
 
 
 
 (147,549) (147,549) 
 (147,549)
Preferred Stock dividends declared 
 
 
 
 
 
 (9,815) (9,815) 
 (9,815)
Equity-based compensation 
 
 
 
 468
 
 
 468
 2,181
 2,649
Distributions to non-controlling interest holders 
 
 
 
 
 
 (585) (585) 
 (585)
Net Income 
 
 
 
 
 
 10,897
 10,897
 
 10,897
Cumulative translation adjustment 
 
 
 
 
 (17,555) 
 (17,555) 
 (17,555)
Designated derivatives, fair value adjustments 
 
 
 
 
 4,918
 
 4,918
 
 4,918
Balance, December 31, 2018 5,416,890
 $54
 76,080,625
 $2,091
 $2,031,981
 $6,810
 $(615,448) $1,425,488
 $3,258
 $1,428,746
The accompanying notes are an integral part of these consolidated financial statements.

F-6

GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 Year Ended December 31, Year Ended December 31,
 2017 2016 2015 2018 2017 2016
Cash flows from operating activities:            
Net income (loss) $23,586
 $47,577
 $(2,015)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:      
Net income $10,897
 $23,586
 $47,577
Adjustments to reconcile net income to net cash provided by (used in) operating activities:      
Depreciation 59,385
 50,333
 47,649
 64,849
 59,385
 50,333
Amortization of intangibles 53,663
 44,122
 42,421
 54,733
 53,663
 44,122
Amortization of deferred financing costs 4,420
 6,698
 8,527
 5,193
 4,420
 6,698
Amortization of mortgage discounts and premiums, net 810
 (446) (489) 1,249
 810
 (446)
Amortization of mezzanine discount 17
 9
 
 
 17
 9
Amortization of below-market lease liabilities (3,364) (2,559) (2,134) (3,463) (3,364) (2,559)
Amortization of above-market lease assets 4,346
 2,335
 2,315
 4,614
 4,346
 2,335
Amortization of above- and below- market ground lease assets 948
 183
 71
 979
 948
 183
Bad debt expense 1,185
 236
 
 835
 1,185
 236
Unbilled straight-line rent (10,537) (10,613) (14,809) (6,310) (10,537) (10,613)
Vesting of Class B Units 
 
 14,480
Equity based compensation (3,787) 3,748
 2,345
 2,649
 (3,787) 3,748
Unrealized losses (gains) on foreign currency transactions, derivatives, and other 10,182
 (1,072) (7,337)
Unrealized (gains) losses on foreign currency transactions, derivatives, and other (7,127) 10,182
 (1,072)
Unrealized losses (gains) on undesignated foreign currency advances and other hedge ineffectiveness 3,679
 (10,109) (5,124) 434
 3,679
 (10,109)
Payments for settlement of derivatives (1,547) 
 
 (1,926) (1,547) 
Unrealized losses on non-functional foreign currency advances not designated as net investment hedges 
 
 3,558
Gains on dispositions of real estate investments (1,089) (13,341) 
Appreciation of investment in securities 
 
 66
Loss on extinguishment of debt 3,897
 
 
Loss (gain) on dispositions of real estate investments 5,751
 (1,089) (13,341)
Impairment charges 5,000
 
 
Changes in operating assets and liabilities, net:            
Prepaid expenses and other assets (6,225) (1,151) 31
 (463) (6,225) (1,151)
Deferred tax assets 549
 1,342
 (450) (2,264) 549
 1,342
Accounts payable and accrued expenses (593) (3,010) 4,859
 8,263
 (593) (3,010)
Prepaid rent 106
 (3,063) 3,239
 (2,312) 106
 (3,063)
Deferred tax liability 1,804
 978
 (249) (634) 1,804
 978
Taxes payable (6,584) 2,197
 5,201
 (247) (6,584) 2,197
Net cash provided by operating activities 130,954
 114,394
 102,155
 144,597
 130,954
 114,394
Cash flows from investing activities:            
Investment in real estate and real estate related assets (98,777) 
 (223,075) (479,648) (98,777) 
Capital expenditures (3,118) (200) (10,495) (1,454) (3,118) (200)
Proceeds from dispositions of real estate investments 12,292
 107,789
 
 23,717
 12,292
 107,789
Proceeds from settlement of derivatives 10,625
 
 
Deposits for real estate acquisitions 
 
 773
Proceeds from the partial termination of derivatives 
 
 10,055
Proceeds from redemption of investment securities 
 
 463
(Payments for) proceeds from settlement of derivatives (561) 10,625
 
Cash acquired in merger transaction 
 18,983
 
 
 
 18,983
Restricted cash acquired in merger transaction 
 7,575
 
 
 
 7,575
Net cash (used in) provided by investing activities (78,978) 134,147
 (222,279) (457,946) (78,978) 134,147
Cash flows from financing activities:            
Borrowings under revolving credit facilities 647,353
 62,682
 476,208
 247,000
 647,353
 62,682
Repayments on revolving credit facilities (1,006,949) (113,868) (373,167) (177,375) (1,006,949) (113,868)
Repayment of mezzanine facility (56,537) (51,803) 
 
 (56,537) (51,803)
Proceeds from mortgage notes payable 187,000
 
 245,483
 494,689
 187,000
 
Payments on mortgage notes payable (21,918) (13,377) (721) (313,225) (21,918) (13,377)
Payments on early extinguishment of debt charges (2,398) 
 
Proceeds from issuance of common stock, net 18,295
 
 469
 171,770
 18,295
 
Proceeds from issuance of preferred stock, net 130,434
 
 
 (227) 130,434
 
Proceeds from term loan 225,000
 
 
 60,400
 225,000
 
Payments of financing costs (14,612) (126) (4,881) (10,601) (14,612) (126)
Dividends paid on common stock (142,739) (120,386) (97,730) (147,444) (142,739) (120,386)
Dividends paid on preferred stock (383) 
 
 (9,812) (383) 
Distributions to non-controlling interest holders (739) (2,008) (642) (585) (739) (2,008)
Payments received on related party notes receivable acquired in Merger 5,138
 
 
 
 5,138
 
Payments on common stock repurchases, inclusive of fees 
 
 (2,313)
Payments on share repurchases related to Tender Offer 
 
 (125,000)
Proceeds from issuance of operating partnership units 
 
 750
Advances from related parties, net 
 2,186
 363
 
 
 2,186
Net cash (used in) provided by financing activities (30,657) (236,700) 118,819
Net cash provided by (used in) financing activities 312,192
 (30,657) (236,700)
Net change in cash, cash equivalents and restricted cash 21,319
 11,841
 (1,305) (1,157) 21,319
 11,841
Effect of exchange rate changes on cash 9,080
 (7,770) 3,774
 (2,877) 9,080
 (7,770)
Cash, cash equivalents, and restricted cash at beginning of period 77,328
 73,257
 70,788
 107,727
 77,328
 73,257
Cash, cash equivalents and restricted cash at end of period $107,727
 $77,328
 $73,257
 $103,693
 $107,727
 $77,328

F-7

GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 Year Ended December 31, Year Ended December 31,
 2017 2016 2015 2018 2017 2016
Supplemental Disclosures:            
Cash paid for interest $43,555
 $36,195
 $24,625
 $49,113
 $43,555
 $36,195
Cash paid for income taxes 9,437
 3,778
 1,589
 4,350
 9,437
 3,778
Non-Cash Investing and Financing Activities: (1)
            
Mortgage notes payable assumed or used to acquire investments in real estate $
 $
 $31,933
Conversion of OP Units to common stock (Note 1)
 2,629
 9,277
 
Conversion of OP Units to common stock $
 $2,629
 $9,277
Related party fees acquired in Merger (Note 3)
 
 (1,054) 
 
 
 (1,054)
Common stock issued through dividend reinvestment plan 
 
 28,578
(1) 
Excludes non-cash activity in connection with the Merger transaction (see Note 3 — Merger Transaction).

The accompanying notes are an integral part of these consolidated financial statements.

F-8

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018


Note 1 — Organization
Global Net Lease, Inc. (the "Company"), formerly known as American Realty Capital Global Trust, Inc., incorporated on July 13, 2011, is a Maryland corporation that elected and qualified to be taxed as a real estate investment trust ("REIT") for the United States ("U.S.") federal income tax purposes beginning with the taxable year ended December 31, 2013. TheOn June 30, 2014, the Company operated as a non-traded REIT through June 1, 2015. Oncompleted its initial public offering, and on June 2, 2015 (the "Listing Date"), the Company listed its Common Stock (the "Listing") on the New York Stock Exchange ("NYSE") under the symbol "GNL."
The Company invests in commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties. Substantially all of the Company's business is conducted through the Global Net Lease Operating Partnership, L.P. (the "OP"), a Delaware limited partnership. The Company has retained Global Net Lease Advisors, LLC (the "Advisor") to manage the Company's affairs on a day-to-day basis. The Company's properties are managed and leased to third parties by Global Net Lease Properties, LLC (the "Property Manager"). The Advisor and the Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital LLC, "AR Global"), and these related parties receive compensation and fees for various services provided to the Company.
As of December 31, 2017,2018, the Company owned 321342 properties (all references to number of properties and square footage are unaudited) consisting of 22.927.5 million rentable square feet, which were 99.5%99.2% leased, with a weighted average remaining lease term of 8.88.3 years. Based on original purchase price or acquisition value with respect to properties acquired in the Merger (as defined below), 50.6%percentage of ourannualized rental income on a straight-line basis as of December 31, 2018, 55.7% of the Company's properties are located in the U.S. and Puerto Rico and 49.4% are44.3% in Western Europe. The Company may also originate or acquire first mortgage loans, securedpreferred equity or securitized loans (secured by real estate.estate). As of December 31, 2017,2018, the Company hasdid not invested inown any first mortgage loans, mezzanine loans, mezzanine loans, preferred equity or securitized loans.
On June 30, 2014,Following the Company completed its initial public offering ("IPO") after selling 57.4 million sharestermination of its common stock, $0.01 par value per share ("Common Stock"), at a price of $30.00 per share, subject to certain volume and other discounts. In addition, the Company issued an additional 0.4 million shares pursuant to its dividend reinvestment plan (the "DRIP"). On April 7, 2015, in anticipation of the Listing, the Company announced the suspension of the DRIP. On May 7, 2015, the Company filed a post-effective amendment to its Registration statement on Form S-11 (File No. 001-37390) (as amended, the "Registration Statement") to deregister the unsold shares registered under the Registration Statement. The Company’s DRIP was terminated effective December 19, 2016.
In connection with the Listing, the Company offered to purchase up to 4.0 million shares of its Common Stock at a price of $31.50 per share (the “Tender Offer”). As a result of the Tender Offer, on July 6, 2015, the Company purchased approximately 4.0 million shares of its Common Stock at a price of $31.50 per share, for an aggregate amount of $125.0 million, excluding fees and expenses relating to the Tender Offer, and including fractional shares repurchased thereafter.
Pursuant to the Fourth Amended and Restated Advisory Agreement, dated June 2, 2015, among Global Net Lease, Inc., Global Net Lease Operating Partnership, L.P. and Global Net Lease Advisors, LLC. (the "Advisory Agreement"), the Company retained the Advisor to manage the Company's affairs on a day-to-day basis. The properties are managed and leased by Global Net Lease Properties, LLC (the "Property Manager"). The Advisor, Property Manager and Special Limited Partner are under common control with the parent of AR Capital Global Holdings, LLC (the "Sponsor"), as a result of which they are related parties. These related parties receive compensation and fees for various services provided to the Company.
On August 8, 2015, the Company entered into the Second Amended and Restated Service Provider Agreement (the “Service Provider Agreement”) with the Advisor and Moor Park Capital Partners LLP (the "Service"Former Service Provider") pursuant, effective as of March 17, 2018, the Advisor, together with its service providers, assumed full management responsibility of the Company’s European real estate portfolio. Prior to which the termination of the Former Service Provider, provides,the Former Service Provider provided, subject to the Advisor's oversight and the Company's oversight,pursuant to a service provider agreement (the “Service Provider Agreement”), certain real estate-relatedestate related services, as well as sourcing and structuring of investment opportunities, performance of due diligence, and arranging debt financing and equity investment syndicates, solely with respect to investments in Europe. On January 16, 2018,Since the Company notified the Service Provider that it was being terminated effective as of March 17, 2018. Additionally, as a result of the Company’s termination of the Former Service Provider, the propertyAdvisor has built a European-focused management team and leasing agreement among an affiliate ofengaged third-party service providers to assume certain duties previously performed by the AdvisorFormer Service Provider. See Note 10 — Commitments and the Service Provider will terminate by its own terms. As required under its existing Advisory Agreement with the Company, the Advisor and its affiliates will continue to manage the Company’s affairsContingencies for further details.
For additional information on a day to day basis (including management and leasing of the Company’s properties) and will remain responsible for managing and providing other services with respect to the Company’s European investments. The Advisor may engage one or more thirdtransactions between related parties, to assist with these responsibilities, all subject to the terms of the Advisory Agreement.see Note 11 — Related Party Transactions.
Merger Transaction
The Company and American Realty Capital Global Trust II, Inc. ("Global II"), an entity formerly sponsored by an affiliate of the Sponsor, entered into an agreement and plan of merger on August 8, 2016 ("the Merger Agreement"). On December 22, 2016, pursuant to the Merger Agreement, Global II merged with and into Mayflower Acquisition LLC (the "Merger Sub"), a Maryland limited liability company and wholly owned subsidiary of the Company, at which time the separate existence of Global II ceased and the Company became the parent of the Merger Sub (the "Merger").

F-9

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

In addition, pursuant to the Merger Agreement, American Realty Capital Global II Operating Partnership, L.P., a Delaware limited partnership and the operating partnership of Global II (the "Global II OP"), merged with the OP, with the OP being the surviving entity (the "Partnership Merger" and together with the Merger, the "Mergers"). As a result of the Mergers, the Company acquired the business of Global II, which immediately prior to the effective time of the Merger, owned a portfolio of commercial properties, including single tenant net-leased commercial properties, two of which were located in the U.S., three of which were located in the United Kingdom and 10 of which were located in continental Europe (seeNote 3 — Merger Transaction).Europe.
The Company and Global II each were sponsored, directly or indirectly, by the Sponsor. The Sponsor and its affiliates provide or provided asset management services to the Company and Global II pursuant to written advisory agreements. In connection with the Merger Agreement, the Sponsor and its affiliates had the vesting of certain of their restricted interests in Global II and the Global II OP accelerated.
Substantially all ofFor additional information on the Company's business is conducted through Global Net Lease Operating Partnership, L.P. (the "OP"), a Delaware limited partnership. At the Listing, the OP had issued 603,226 units of limited partner interests in the OP ("OP Units") to limited partners other than the Company, of which 487,252 OP Units were issued to Global Net Lease Advisors, LLC (the "Advisor"), 115,967 OP Units were issued to the Service Provider, and 7 OP Units were issued to Global Net Lease Special Limited Partner, LLC (the "Special Limited Partner"). SeeMerger Transaction, seeNote 113Related Party TransactionsMerger Transaction. In accordance with the limited partnership agreement of the OP, a holder of OP Units has the right to convert OP Units, at the Company's option, for a corresponding number of shares of the Company's Common Stock or the cash value of those corresponding shares. The remaining rights of the limited partner interests are limited and do not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets. Subsequent to the Listing, all OP Units issued to the Advisor were transferred to individual investors. On September 2, 2016, 421,383 of the OP Units were converted into Common Stock, of which 305,411 were issued to individual members and employees of AR Global, 115,967 were issued to the Service Provider, and 5 were issued to the Special Limited Partner. During the year ended December 31, 2017, the remaining 181,841 OP Units were converted into Common Stock. As of December 31, 2017, represents the cumulative expense recognized under the OPP (see Note 13 — Share-Based Compensation for additional information).
On February 28, 2017, the Company completed a reverse stock split of Common Stock, OP Units and LTIP Units, at a ratio of 1-for-3 (the “Reverse Stock Split”). No OP Units were issued in connection with the Reverse Stock Split, and the Company repurchased any fractional shares of Common Stock resulting from the Reverse Stock Split for cash. No payments were made in respect of any fractional OP Units. The Reverse Stock Split was applied to all of the outstanding shares of Common Stock and therefore did not affect any stockholder’s relative ownership percentage. As a result of the Reverse Stock Split, the number of outstanding shares of Common Stock was reduced from 198.8 million to 66.3 million. All references made to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retroactively adjusted to reflect this Reverse Stock Split.
Effective May 24, 2017, following approval by the Company's board of directors, the Company filed an amendment to the Company's charter with the Maryland State Department of Assessments and Taxation, to decrease the total number of shares that the Company has authority to issue from 350.0 million to 116.7 million shares, of which (i) 100.0 million is designated as Common Stock, $0.01 par value per share; and (ii) 16.7 million is designated as preferred stock, $0.01 par value per share.
On September 7, 2017, the Company and the OP entered into an underwriting agreement (the “Underwriting Agreement”) with BMO Capital Markets Corporation and Stifel, Nicolaus & Company, Incorporated, as representatives of the underwriters listed on Schedule I thereto, pursuant to which the Company agreed to issue and sell 4,000,000 shares of the Company’s new class of 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share, (the “Series A Preferred Stock”), in an underwritten public offering at a public offering price equal to the liquidation preference of $25.00 per share. Pursuant to the Underwriting Agreement, the Company also granted the underwriters a 30-day option to purchase up to an additional 600,000 shares of Series A Preferred Stock. On September 12, 2017, the Company completed the initial issuance and sale of 4,000,000 shares of Series A Preferred Stock, which generated gross proceeds of $100.0 million and net proceeds of $96.3 million, after deducting underwriting discounts and offering costs paid by the Company.
On October 11, 2017, the underwriters exercised an option to purchase additional shares of Series A Preferred Stock, and the Company sold an additional 259,650 shares of Series A Preferred Stock, which generated gross proceeds of $6.5 million after adjusting for the amount of dividends declared per share for the period from September 12, 2017 to September 30, 2017 and payable to holders of record as of October 6, 2017, and resulted in net proceeds of $6.3 million, after deducting underwriting discounts and offering costs paid by the Company.

F-10

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

On December 19, 2017, the Company completed the sale of 1,150,000 additional shares of Series A Preferred Stock in an underwritten public offering at an offering price of $25.00 per share, which generated gross proceeds of $28.8 million and net proceeds of $27.8 million. These additional shares of shares of Series A Preferred Stock have been consolidated to form a single series, and are fully fungible with the outstanding Series A Preferred Stock. The Series A Preferred Stock is listed on the New York Stock Exchange, under the symbol "GNL PR A."
Note 2 — Summary of Significant Accounting Policies
Basis of Accounting
The accompanying consolidated financial statements of the Company are prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

F-9

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Principles of Consolidation
The consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity ("VIE") for which the Company is the primary beneficiary.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, real estate taxes, income taxes, derivative financial instruments, hedging activities, equity-based compensation expenses related to a Multi-Year Outperformance Agreementmulti-year outperformance agreements entered into with the Advisor in 2015 (the “OPP”“2015 OPP”) and 2018 (the "2018 OPP") and fair value measurements, as applicable.
Revenue Recognition
The Company's revenues, which are derived primarily from rental income, include rents that each tenant pays in accordance with the terms of each lease agreement and are reported on a straight-line basis over the initial term of the lease. Since many of the Company's leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable, and include in revenues, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. For new leases after acquisition, the commencement date is considered to be the date the lease is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation.
As of December 31, 20172018 and 2016,2017, the Company's cumulative straight-line rents receivable in the consolidated balance sheets were $42.7was $47.2 million and $30.5$42.7 million, respectively. For the years ended December 31, 2018, 2017 and 2016, the Company’s rental revenue included impacts of unbilled rental revenue of $6.3 million, $10.5 million and $10.6 million, respectively, to adjust contractual rent to straight-line rent.
The Company reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. In the event that the collectability of a receivable is in doubt, the Company records an increase in the Company's allowance for uncollectible accounts or records a direct write-off of the receivable in the Company's consolidated statements of operations.
Cost recoveries from tenants are included in operating expense reimbursement in the period the related costs are incurred, as applicable.
Investments in Real Estate
Investments in real estate are recorded at cost. Improvements and replacements are capitalized when they extend the useful life of the asset. Costs of repairs and maintenance are expensed as incurred.

F-11

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

The Company evaluates the inputs, processes and outputs of each asset acquired to determine if the transaction is a business combination or an asset acquisition. If an acquisition qualifies as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.
In both a business combination and an asset acquisition, the Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements. Intangible assets or liabilities may include the value of in-place leases, above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values. In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above or below-market interest rates. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. In an asset acquisition, the difference

F-10

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets. All acquisitions during the yearyears ended December 31, 2018 and 2017 were asset acquisitions.
Disposal of real estate investments that represent a strategic shift in operations that will have a major effect on the Company's operations and financial results are required to be presented as discontinued operations in the consolidated statements of operations. No properties were presented as discontinued operations as of December 31, 20172018 and 2016.2017. Properties that are intended to be sold are to be designated as “held for sale” on the consolidated balance sheets at the lesser of carrying amount or fair value less estimated selling costs when they meet specific criteria to be presented as held for sale.sale, most significantly that the sale is probable within one year. The Company evaluates probability of sale based on specific facts including whether a sales agreement is in place and the buyer has made significant non-refundable deposits. Properties are no longer depreciated when they are classified as held for sale. As of December 31, 2018, we had three properties classified as held for sale (see Note 4 — Real Estate Investments, Net for additional information). As of December 31, 2017, and 2016, we did not have any properties designated as held for sale.
The Company evaluates acquired leases and new leases on acquired properties based on capital lease criteria. A lease is classified by a tenant as a capital lease if the significant risks and rewards of ownership reside with the tenant. This situation is met if, among other things, the non-cancelable lease term is more than 75% of the useful life of the asset or if the present value of the minimum lease payments equals 90% or more of the leased property’s fair value at lease inception.
Gain on Dispositions of Real Estate Investments
Gains on sales of rental real estate after January 1, 2018 are not considered sales to customers and will generally recognized pursuant to the provisions included in ASC 610-20, Gains and Losses from the Derecognition of Nonfinancial Assets (“ASC 610-20”).
Gain on sales of real estate prior to January 1, 2018 are recognized pursuant to the provisions included in ASC 360-20, Real Estate Sales (“ASC 360-20”). The specific timing of a sale was measured against various criteria in and ASC 360-20 related to the terms of the transaction and any continuing involvement in the form of management or financial assistance associated with the properties. If the sales criteria for the full accrual method are not met, depending on the circumstances, the Company may not record a sale or it may record a sale but may defer some or all of the gain recognition. If the criteria for full accrual are not met, the Company may account for the transaction by applying the finance, leasing, profit sharing, deposit, installment or cost recovery methods, as appropriate, until the sales criteria for the full accrual method are met.   
Purchase Price Allocation
The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired, including those acquired in the Merger, based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and fixtures are based on cost segregation studies performed by independent third parties or on the Company's analysis of comparable properties in the Company's portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships, as applicable.
Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from 12 to 18 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.
Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-place lease, and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured over a period equal to the remaining term of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time.

F-12F-11

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

The aggregate value of intangible assets related to customer relationship, as applicable, is measured based on the Company's evaluation of the specific characteristics of each tenant’s lease and the Company's overall relationship with the tenant. Characteristics considered by the Company in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors.
The value of customer relationship intangibles is amortized to expense over the initial term and any renewal periods in the respective leases, but in no event does the amortization period for intangible assets exceed the remaining depreciable life of the building. If a tenant terminates its lease, the unamortized portion of the in-place lease value and customer relationship intangibles is charged to expense.
In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company also considers information obtained about each property as a result of the Company's pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.
Depreciation and Amortization
Depreciation is computed using the straight-line method over the estimated useful lives of up to 40 years for buildings, 15 years for land improvements, five years for fixtures and improvements and the shorter of the useful life or the remaining lease term for tenant improvements and leasehold interests.
Capitalized above-market lease values are amortized as a reduction of rental income over the remaining terms of the respective leases. Capitalized below-market lease values are amortized as an increase to rental income over the remaining terms of the respective leases and expected below-market renewal option periods.
Capitalized above-market ground lease values are amortized as a reduction of property operating expense over the remaining terms of the respective leases. Capitalized below-market ground lease values are amortized as an increase to property operating expense over the remaining terms of the respective leases and expected below-market renewal option periods.
The value of in-place leases, exclusive of the value of above-market and below-market in-place leases, is amortized to expense over the remaining periods of the respective leases.
Assumed mortgage premiums or discounts are amortized as an increase or reduction to interest expense over the remaining terms of the respective mortgages.
Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings.
Goodwill
The Company evaluates goodwill for impairment at least annually or upon the occurrence of a triggering event. A triggering event is an event or circumstance that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company performed a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Based on our assessment we determined that the goodwill is not impaired as of December 31, 2017.2018.

F-13

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

Cash and Cash Equivalents
Cash and cash equivalents include cash in bank accounts as well as investments in highly-liquid money market funds with original maturities of three months or less. The Company deposits cash with high quality financial institutions. Deposits in the U.S. and other countries where we have deposits are guaranteed by the Federal Deposit Insurance Company ("FDIC") in the U.S., Financial Services Compensation Scheme ("FSCS") in the United Kingdom, Duchy Deposit Guarantee Scheme ("DDGS") in Luxembourg and by similar agencies in the other countries, up to insurance limits. The Company had deposits in the U.S., United Kingdom, Luxembourg, Germany, Finland, France and The Netherlands totaling $102.4$100.3 million at December 31, 2017,2018, of which $48.8

F-12

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

$14.3 million, $18.5$35.4 million and $25.8$41.8 million are currently in excess of amounts insured by the FDIC, FSCS and European equivalent deposit insurance companies including DDGS, respectively. At December 31, 2016,2017, the Company had deposits in the U.S., United Kingdom, Luxembourg, Germany, Finland and The Netherlands totaling $69.8$102.4 million, of which $11.5$48.8 million, $12.9$18.5 million and $43.4$25.8 million were in excess of the amounts insured by the FDIC, FSCS and European equivalent deposit insurance companies including DDGS, respectively. Although the Company bears risk to amounts in excess of those insured, losses are not anticipated.
Restricted Cash
Restricted cash primarily consists of debt service and real estate tax reserves. The Company had restricted cash of $5.3$3.4 million and $7.5$5.3 million as of December 31, 20172018 and 2016,2017, respectively.
Deferred Financing Costs, Net
Deferred financing costs, net are nettedcosts associated with Mortgage notes payable, net and Term loan, net on the Company's consolidated balance sheetsRevolving Credit Facility (as defined in Note 6 — Credit Facilities) and represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or paid down before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.
Share Repurchase Program
Prior to April 7, 2015, the Company had in place a Share Repurchase Program ("SRP"), providing for limited repurchases of the Company's Common Stock. On April 7, 2015, the Company's board of directors approved the termination of the Company’s SRP.
The Company accounts for the purchase of capital stock under a method that is consistent with Maryland law (the state of Company's domicile), which does not contemplate treasury stock. Any capital stock reacquired for any purpose is recorded as a reduction of Common Stock (at $0.01 par value per share) and an increase in accumulated deficit.
Dividend Reinvestment Plan
Prior to April 7, 2015, the Company had in place a DRIP, providing for reinvestment of dividends in the Company's Common Stock. Shares issued under the DRIP were recorded to equity in the accompanying consolidated balance sheets in the period dividends were declared. On April 7, 2015, the Company announced the suspension of the DRIP. The DRIP was subsequently terminated effective December 19, 2016.
Derivative Instruments
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the Company's foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of the Company's cash receipts and payments in the Company's functional currency, the U.S. dollar ("USD"). The Company enters into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of its functional currency.
The Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of

F-14

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment (or for derivatives that do not qualify as hedges), any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statements of operations. If a derivative is designated and qualifies for cash flow hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss) to the extent that it is effective. Any ineffective portion of a change in derivative fair value is immediately recorded in earnings.
Share-Based Compensation
The Company has a stock-based incentive award plan for its directors, which are accounted for under the guidance for employee share based payments. The cost of services received in exchange for a stock award is measured at the grant date fair value of the award and the expense for such awards is included in equity based compensation on consolidated statements of operations and is recognized over the vesting period or when the requirements for exercise of the award have been met (see Note 13 — Share-Based Compensation).
Multi-Year Outperformance AgreementAgreements
Concurrent with the Listing and modifications to the Fourth Amended and Restated Advisory Agreement (the "Advisory Agreement") by and among the Company, the OP and the Advisor, the Company entered into a Multi-Year Outperformance Agreement (the “OPP”)the 2015 OPP with the OP andAdvisor. Also,

F-13

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

in July 2018, the Company entered into the 2018 OPP, a new multi-year outperformance agreement with the Advisor (seeNote 13Share-Based Compensation). Share-Based Compensation). The Company records equity basedUnder the 2015 OPP, which expired on June 2, 2018, we recorded equity-based compensation expense associated with the awards over the requisite service period on a graded basis. Under the 2018 OPP, effective June 2, 2018, we record equity-based compensation evenly over the requisite service period of five years.approximately 2.8 years from the grant date. The cumulative equity-based compensation expense is adjusted each reporting period for changes in the estimated market-related performance. Under new accounting guidance adopted by the Company on January 1, 2019 total equity-based compensation expense calculated as of adoption of the new guidance will be fixed as of that date and will not be remeasured in subsequent periods. For additional information see Recently Issued Accounting Pronouncements section below.
Income Taxes
The Company qualifiedelected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the "Code"), beginning with the taxable year ended December 31, 2013. Commencing with such taxable year, the Company was organized to operate in such a manner as to qualify for taxation as a REIT under the Code.Code and believes it has so qualified. The Company intends to continue to operate in such a manner to continue to qualify for taxation as a REIT, but no assurance can be given that it will operate in a manner so as to remain qualified as a REIT. As a REIT, the Company generally will not be subject to U.S. federal corporate income tax to the extent it distributes annually all of its REIT taxable income. REIT's are subject to a number of other organizational and operational requirements. On December 22, 2017, the Tax Cuts and Jobs Act was signed into law by the U.S. President. We are not aware of any provision in the final tax reform legislation or any pending tax legislation that would adversely affect our ability to operate as a REIT or to qualify as a REIT for U.S. federal income tax purposes. However, new legislation, as well as new regulations, administrative interpretations, or court decisions may be introduced, enacted, or promulgated from time to time, that could change the tax laws or interpretations of the tax laws regarding qualification as a REIT, or the federal income tax consequences of that qualification, in a manner that is adverse to our qualification as a REIT.
In addition, the Tax Cuts and Jobs Act makes substantial changes to the Code. Among those changes are a significant permanent reduction in the generally applicable corporate tax rate, changes in the taxation of individuals and other non-corporate taxpayers that generally but not universally reduce their taxes on a temporary basis subject to “sunset” provisions, the elimination or modification of various currently allowed deductions (including additional limitations on the deductibility of business interest), and preferential taxation of income (including REIT dividends) derived by non-corporate taxpayers from “pass-through” entities. The Tax Cuts and Jobs Act also imposes certain additional limitations on the deduction of net operating losses, which may in the future cause us to make distributions that will be taxable to our stockholders to the extent of our current or accumulated earnings and profits in order to comply with the annual REIT distribution requirements. Finally, the Tax Cuts and Jobs Act also makes significant changes in the international tax rules, which do not apply to us since our foreign entities are already in a flow-through structure, and we have always included those earnings in our U.S. taxable income  The effect of these, and the many other, changes made in the Tax Cuts and Jobs Act is highly uncertain, both in terms of their direct effect on the taxation of an investment in our Common and Preferred Stock and their indirect effect on the value of our assets. Furthermore, many of the provisions of the Tax Cuts and Jobs Act will require guidance through the issuance of U.S. Treasury regulations in order to assess their effect. There may be a substantial delay before such regulations are promulgated, increasing the uncertainty as to the ultimate effect of the

F-15

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

statutory amendments on us. It is also likely that there will be technical corrections legislation proposed with respect to the Tax Cuts and Jobs Act, the timing and effect of which cannot be predicted and may be adverse to us or our stockholders.
The Company conducts business in various states and municipalities within the U.S. and Puerto Rico, the United Kingdom and Western Europe and, as a result, the Company or one of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and certain foreign jurisdictions. As a result, the Company may be subject to certain federal, state, local and foreign taxes on its income and assets, including alternative minimum taxes, taxes on any undistributed income and state, local or foreign income, franchise, property and transfer taxes. Any of these taxes decrease Company's earnings and available cash.
In addition, the Company's international assets and operations, including those designated asowned through direct or indirect qualified REIT subsidiaries or otherthat are disregarded entities of a REIT,for U.S. federal income tax purposes, continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted. During the period from July 13, 2011 (date of inception) to December 31, 2012, the Company elected to be taxed as a corporation, pursuant to which income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recorded for the future tax consequences attributable to differences between the financial statement carrying amounts and income tax basis of assets and liabilities and the expected benefits of utilizing net operating loss and tax credit carryforwards, using expected tax rates in effect for each taxing jurisdiction in which the Company operates for the year in which those temporary differences are expected to be recovered or settled. The Company recognizes the financial statement effects of a tax position when it is more-likely-than-not, based on technical merits, that the position will be sustained upon examination. Because, the Company elected and qualified to be taxed as a REIT commencing with the taxable year ended December 31, 2013, it does not anticipate that any applicable deferred tax assets or liabilities will be realized.
Significant judgment is required in determining the Company's tax provision and in evaluating its tax positions. The Company establishes tax reserves based on a benefit recognition model, which the Company believes could result in a greater amount of benefit (and a lower amount of reserve) being initially recognized in certain circumstances. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement. The Company derecognizes the tax position when the likelihood of the tax position being sustained is no longer more likely than not.
The Company recognizes deferred income taxes in certain of its subsidiaries taxable in the U.S. or in foreign jurisdictions. Deferred income taxes are generally the result of temporary differences (items that are treated differently for tax purposes than for GAAP purposes). In addition, deferred tax assets arise from unutilized tax net operating losses, generated in prior years. The Company provides a valuation allowance against its deferred income tax assets when it believes that it is more likely than not that all or some portion of the deferred income tax asset may not be realized. Whenever a change in circumstances causes a change in the estimated realizability of the related deferred income tax asset, the resulting increase or decrease in the valuation allowance is included in deferred income tax expense (benefit).
The Company derives most of its REIT taxable income from its real estate operations in the U.S. and has historically distributed all of its REIT taxable income to its shareholders. As such, the Company's real estate operations are generally not subject to federal tax, and accordingly, no provision has been made for U.S. federal income taxes in the consolidated financial statements for these operations. These operations may be subject to certain state, local, and foreign taxes, as applicable.
The Company's deferred tax assets and liabilities are primarily the result of temporary differences related to the following:

F-14

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Basis differences between tax and GAAP for certain international real estate investments. For income tax purposes, in certain acquisitions, the Company assumes the seller’s basis, or the carry-over basis, in the acquired assets. The carry-over basis is typically lower than the purchase price, or the GAAP basis, resulting in a deferred tax liability with an offsetting increase to goodwill or the acquired tangible or intangible assets;
Timing differences generated by differences in the GAAP basis and the tax basis of assets such as those related to capitalized acquisition costs and depreciation expense; and
Tax net operating losses in certain subsidiaries, including those domiciled in foreign jurisdictions that may be realized in future periods if the respective subsidiary generates sufficient taxable income.
The Company’s current income tax provision for the years ended December 31, 2018, 2017 and 2016 and 2015 was $2.4 million, $2.1 million, $2.5 million, and $5.1$2.5 million, respectively. The Company’s deferred income tax provision (benefit) for the years ended December 31, 2018, 2017, and 2016 and 2015 was $3.3 million, $1.0 million, $1.9 million, and $0.8$1.9 million, respectively. Deferred tax assets are net of a valuation allowance in the amounts of $7.2$3.0 million and $2.4$7.2 million as of December 31, 20172018 and 2016,2017, respectively.
The Company recognizes current income tax expense for state and local income taxes and taxes incurred in its foreign jurisdictions. The Company's current income tax expense fluctuates from period to period based primarily on the timing of its

F-16

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

taxable income. For the years ended December 31, 2018, 2017 2016 and 20152016 the Company recognized an income tax expense of $2.4 million, $3.1 million $4.4 million and $5.9$4.4 million, respectively. Deferred income tax (expense) benefit is generally a function of the period’s temporary differences and the utilization of net operating losses generated in prior years that had been previously recognized as deferred income tax assets from state and local taxes in the U.S. or in foreign jurisdictions.
The amount of dividends payable to the Company's stockholders is determined by the board of directors and is dependent on a number of factors, including funds available for distributions, financial condition, capital expenditure requirements, as applicable, and annual dividend requirements needed to qualify and maintain the Company's status as a REIT under the Code.
Foreign Currency Translation
The Company's reporting currency is the USD. The functional currency of the Company's foreign operations is the applicable local currency for each foreign subsidiary. Assets and liabilities of foreign subsidiaries (including intercompany balances for which settlement is not anticipated in the foreseeable future) are translated at the spot rate in effect at the applicable reporting date. The amounts reported in the consolidated statements of operations are translated at the average exchange rates in effect during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive income (loss)("AOCI") in the consolidated statements of equity.
Per Share Data
The Company calculates basic earnings per share of Common Stock by dividing net income (loss) for the period by weighted-average shares of its Common Stock outstanding for a respective period. Diluted income per share takes into account the effect of dilutive instruments such as unvested restricted stock units in respect of shares of Common Stock ("RSUs"), long term incentive plan units of limited partner interest in the OP ("LTIP"LTIP Units") and ordinary units andof limited partner interest in the OP units,("OP Units"), based on the average share price for the period in determining the number of incremental shares that are to be added to the weighted-average number of shares outstanding (see Note 14 — Earnings Per Share).
Reportable Segments
The Company determined that it has one reportable segment, with activities related to investing in real estate. The Company’s investments in real estate generate rental revenue and other income through the leasing of properties, which comprise 100% of total consolidated revenues. Management evaluates the operating performance of the Company’s investments in real estate on an individual property level.
The Company owns and invests in commercial properties, principally in the U.S., United Kingdom, and continental Europe, that are then leased to companies, primarily on a triple-net lease basis. The Company earns lease revenues from its wholly-owned real estate investments. The Company’s portfolio was comprised of full ownership interests in 321342 properties, substantially all of which were net leased to 100111 tenants, with an occupancy rate of 99.5%99.2%, and totaled approximately 22.9 million27.5 square feet.
The Company evaluates its results from operations in one reportable segment by its local currency. Other than the U.S. and United Kingdom, no country or tenant individually comprised more than 10% of the Company’s total lease revenues, or total long lived-assets at December 31, 2017.2018.
The following tables present the geographic information for Revenues and Investments in Real Estate:
  Year Ended December 31,
(In thousands) 2017 2016 2015
Revenues:      
United States $133,060
 $133,315
 $130,598
United Kingdom 52,567
 37,263
 40,830
Europe (Finland, France, Germany, Luxembourg, and the Netherlands) 73,668
 43,596
 33,904
Total $259,295
 $214,174
 $205,332

F-17F-15

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

 As of December 31, Year Ended December 31,
(In thousands) 2017 2016 2018 2017 2016
Investments in Real Estate:    
Revenues:      
United States $1,625,472
 $1,542,958
 $148,588
 $133,060
 $133,315
United Kingdom 621,776
 571,246
 54,025
 52,567
 37,263
Europe (Finland, France, Germany, Luxembourg, and the Netherlands) 925,429
 817,491
 79,594
 73,668
 43,596
Total $3,172,677
 $2,931,695
 $282,207
 $259,295
 $214,174
  As of December 31,
(In thousands) 2018 2017
Investments in Real Estate:    
United States $2,073,022
 $1,625,472
United Kingdom 586,836
 621,776
Europe (Finland, France, Germany, Luxembourg, and the Netherlands) 761,041
 925,429
Total $3,420,899
 $3,172,677
Reclassifications
Reclassifications have been made to the 20162017 and 20152016 consolidated financial statements to conform to the current period presentation.
Out-of-Period Adjustments
During the twelve monthsyear ended December 31, 2017, the Company recorded $0.5 million of additional rental income and unbilled straight-line rent due to an error in the calculation of straight-line rent for one of the Company's properties acquired during 2014. The Company concluded that this adjustment was not material to the financial position or results of operations for the current period or any prior period.
Also, during the year ended December 31, 2017, the Company identified certain historical errors in its current taxes payable as well as its statement of comprehensive income (loss), consolidated statement of changes in equity, and statement of cash flows since 2013 which impacted the quarterly financial statements and annual periods previously issued. Specifically, when recording its annual provision, the Company had adjusted its current taxes payable to the cumulative amount of taxes payable without consideration for cumulative payments. This adjustment was made with an offsetting amount in cumulative translation adjustments within other comprehensive income ("OCI") and accumulated other comprehensive income ("AOCI").AOCI. As of December 31, 2016, income taxes payable were overstated and AOCI was understated by $4.7 million. OCI was understated by $2.9 million, $1.9 million and overstated by $0.1 million for the years endended December 31, 2016, 2015 and Pre-2015, respectively. We concluded that the errors noted above were not material to the current period or any historical periods presented and have adjusted the amounts on a cumulative basis in the year ended December 31, 2017.
Recently Issued Accounting Pronouncements
Adopted as of December 31, 2017
In March 2016, the Financial Accounting Standards Board ("FASB") issued an Accounting Standards Updated ("ASU") ASU 2016-05, Derivatives and Hedging (Topic 815):Effect of Derivative Contract Novations on Existing Hedge Accounting Relationships. Under the new guidance, the novation of a derivative contract in a hedge accounting relationship does not, in and of itself, require dedesignation of that hedge accounting relationship. The hedge accounting relationship could continue uninterrupted if all of the other hedge accounting criteria are met, including the expectation that the hedge will be highly effective when the creditworthiness of the new counterparty to the derivative contract is considered. The guidance is effective for fiscal years beginning after December 15, 2016, and interim periods therein. The Company has adopted the provisions of this guidance effective January 1, 2017, and has applied the provisions prospectively. The adoption of this guidance has not had a material impact on the Company's consolidated financial position, results of operations or cash flows.
In March 2016, the FASB issued an update on ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The guidance changes the accounting for certain aspects of share-based compensation. Among other things, the revised guidance allows companies to make an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures when they occur. The revised guidance is effective for reporting periods beginning after December 15, 2016. The Company has adopted the provisions of this guidance effective January 1, 2017, and has applied the provisions prospectively. The adoption of this guidance has not had a material impact on the Company's consolidated financial position, results of operations or cash flows.

F-18

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

In October 2016, the FASB issued ASU 2016-17, Consolidation (Topic 810): Interest Held through Related Parties that Are under Common Control guidance where a reporting entity will need to evaluate if it should consolidate a VIE. The amendments change the evaluation of whether a reporting entity is the primary beneficiary of a VIE by changing how a single decision maker of a VIE treats indirect interests in the entity held through related parties that are under common control with the reporting entity. The revised guidance is effective for reporting periods beginning after December 15, 2016. The Company has adopted the provisions of this guidance effective January 1, 2017, and has applied the provisions prospectively. The adoption of this guidance has not had a material impact on the Company's consolidated financial position, results of operations or cash flows.
In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force), which provides guidance on the classification of restricted cash in the statement of cash flows. The amendment requires restricted cash to be included in the beginning-of-period and end-of-period total cash amounts. Therefore, transfers between cash and restricted cash will no longer be shown on the statement of cash flows. The amendments are effective for fiscal years beginning after December 15, 2017, with early adoption permitted, including adoption in an interim period. The Company adopted this guidance effective December 31, 2017, using a retrospective transition method. As a result, the Company adjusted it statements of cash flows for the years ended December 31, 2016 and 2015 to include $3.3 million and $6.1 million of restricted cash, respectively, in the beginning and ending cash balances and remove transfers of $4.2 million and $2.8 million, respectively, between cash and restricted cash from financing activities.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which revises the definition of a business. Amongst other things, this new guidance is applicable when evaluating whether an acquisition (disposal) should be treated as either a business acquisition (disposal) or an asset acquisition (disposal). Under the revised guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset or group of similar assets, the assets acquired would not be considered a business. The revised guidance is effective for reporting periods beginning after December 15, 2017, and the amendments will be applied prospectively. The Company has adopted the provisions of this guidance effective January 1, 2017. While the Company's acquisitions have historically been classified as either business combinations or asset acquisitions, certain acquisitions that were classified as business combinations by the Company likely would have been considered asset acquisitions under the new standard. As a result, future transaction costs are more likely to be capitalized since the Company expects most of its future acquisitions to be classified as asset acquisitions under this new standard. All twelve of the Company's acquisitions during 2017 have been classified as asset acquisitions.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which provides guidance on simplifying subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test. The amendments in this update modify the concept of impairment from the condition that exists to when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. The revised guidance is effective for reporting periods beginning after December 15, 2019, and the amendments will be applied prospectively. Early application is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company early adopted the new guidance effective January 1, 2017 and the adoption had no impact on the Company's consolidated financial statements.
Pending Adoption as of December 31, 20172018
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), and has since issued several additional amendments thereto (collectively referred to herein as "ASC 606"). ASC 606 establishes a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. Under ASC 606, an entity is required to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASC 606 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. A reporting entity may apply the amendments in ASC 606 using either a modified retrospective approach, by recording a cumulative-effect adjustment to equity as of the beginning of the fiscal year of adoption or a full retrospective approach. The Company adopted this guidance effective January 1, 2018, for all future financial statements issued, under the modified retrospective approach and it did not have an impact on the Company's consolidated financial statements.
ASU 2016-02, Leases (Topic 842) ("ASC 842") originally stated that companies would be required to bifurcate certain lease revenues between lease and non-lease components, however,In January 2016, the FASB issued an exposure draftASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. Also, in JanuaryFebruary 2018, (2018 Exposure Draft) which, if adopted as written, would allow lessors a practical expedient by class of underlying assets to account for lease and non-lease components as a single lease component if certain criteria are met. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies.FASB issued ASU 2016-02 originally2018-03, Technical

F-19F-16

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

required a modified retrospective method of adoption, however, the 2018 Exposure Draft indicates that companies may be permittedCorrections and Improvements to recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The pronouncement allows some optional practical expedients. The Company does not expect this guidance to impact its existing lessor revenue recognition pattern. The Company expects to adopt this new guidance on January 1, 2019 and will continue to evaluate the impact of this guidance until it becomes effective.
The Company is a lessee for some properties in which it has ground leases as of December 31, 2017. For these leases, the Company will be required to record a right-of-use asset and lease liability equal to the present value of the remaining lease payments upon adoption of this update. The new standard requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today.
In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities.Liabilities, which updated guidance previously issued by ASU 2016-01. The revised guidance in ASU 2016-01 and 2018-01 amends the recognition and measurement of financial instruments. The new guidance significantly revises an entity’s accounting related to equity investments and the presentation of certain fair value changes for financial liabilities measured at fair value. Among other things, it also amends the presentation and disclosure requirements associated with the fair value of financial instruments. The Company adopted this guidanceASU 2016-01 and ASU 2018-03 effective January 1, 2018, using the modified retrospective transition method, and there was no material impact to the Company's consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. Early adoption is permitted for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance.
In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which provides guidance on how certain transactions should be classified and presented in the statement of cash flows as either operating, investing or financing activities. Among other things, the update provides specific guidance on where to classify debt prepayment and extinguishment costs, payments for contingent consideration made after a business combination and distributions received from equity method investments. The Company will applyadopted the new guidance beginning in the first quarter of 2018, with reclassification of prior period amounts, where applicable, and it doesdid not expect the provisions to have a significant impact on its statement of cash flows.
In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which revises the definition of a business. Amongst other things, this new guidance is applicable when evaluating whether an acquisition (disposal) should be treated as either a business acquisition (disposal) or an asset acquisition (disposal). Under the revised guidance, when substantially all of the fair value of gross assets acquired is concentrated in a single asset or group of similar assets, the assets acquired would not be considered a business. The revised guidance is effective for reporting periods beginning after December 15, 2017, and the amendments will be applied prospectively. The Company early adopted the provisions of this guidance effective January 1, 2017. While the Company's acquisitions have historically been classified as either business combinations or asset acquisitions, certain acquisitions that were classified as business combinations by the Company likely would have been considered asset acquisitions under the new standard. As a result, future transaction costs are more likely to be capitalized since the Company expects most of its future acquisitions to be classified as asset acquisitions under this new standard. All of the Company's acquisitions during 2018 and 2017 have been classified as asset acquisitions.
In February 2017, the FASB issued ASU 2017-05, Other Income - Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20): Clarifying the Scope of Assets Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets, which provides guidance related to partial sales of non-financial assets, eliminates rules specifically addressing the sales of real estate, clarifies the definition of in substance non-financial assets, removes exception to the financial asset derecognition model and clarifies the accounting for contributions of non-financial assets to joint ventures. The Company adopted this guidance effective January 1, 2018 using the modified transition method. The Company expects that any future sales of real estate in which the Company retains a non-controlling interest in the property would result in the full gain amount being recognized at the time of the partial sale. Historically, the Company has not retained any interest in properties it has sold.
In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting, which provides guidance that clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The update states that modification accounting should be used unless the fair value of the award, the vesting terms of the award, and the classification of the award as either equity or liability, all do not change as a result of the modification. The Company adopted this guidance effective January 1, 2018 using the modified retrospective transition method. The Company expects that any future modifications to the Company's issued share-based awards will be accounted for using modification accounting, unless the modification meets all of the exception criteria noted above. As a result, the modification would be treated as an exchange of the original award for a new award, with any incremental fair value being treated as additional compensation cost.
Pending Adoption as of December 31, 2018
ASU No. 2016-02 Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02"). The most significant changes in ASU 2016-02 is recognition of right-of-use ("ROU") assets and lease liabilities by lessees for those leases classified as operating leases, with less significant changes for lessors. Also, beginning in the first quarter of 2019, the new guidance requires additional disclosures that help enable users of the financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. The Company elected the practical expedient package that allows the Company: (a) to not reassess whether any expired or existing contracts entered into prior to January 1, 2019 are or contain leases; (b) to not reassess the lease classification for any expired or existing leases entered into prior to January 1, 2019; and (c) to not reassess initial direct costs for any expired or existing leases entered into prior to January 1, 2019. In addition, the Company elected to not record on its consolidated balance sheets

F-20F-17

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

leases whose term is less than 12 months at lease inception. ASU 2016-02 originally required a modified retrospective method of adoption, however, ASU No. 2018-11, Leases (Topic 842): Targeted Improvements ("ASU 2018-11"), provides companies with an additional transition option that would permit the application of ASU 2016-02 as of the adoption date rather than to all periods presented. The Company assessed the impact of adoption from both a lessor and lessee perspective, which is discussed in more detail below, and adopted the new guidance prospectively on January 1, 2019, as allowed under ASU 2018-11.
Lessor Accounting
ASU 2016-02 originally stated that companies would be required to bifurcate certain lease revenues between lease and non-lease components, however, ASU 2018-11 allows lessors a practical expedient, which we have elected, by class of underlying assets to account for lease and non-lease components as a single lease component if certain criteria are met. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies.
Upon adoption, the new guidance did not impact the Company's revenue recognition pattern or have any other impacts on its leases in place as of January 1, 2019 in which it is the lessor.
Lessee Accounting
Under ASU 2016-02, companies are required to record a ROU asset and a lease liability for all leases with a term greater than 12 months equal to the present value of the remaining lease payments as of the adoption date of the new standard. Since our leases do not provide an implicit rate, we will use our incremental borrowing rate in determining the present value of lease payments. The new standard also requires lessees to apply a dual lease classification approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively, as well as the balance sheet classification of the ROU asset. Leases with a term of 12 months or less will be accounted for similar to previous guidance for operating leases.
The Company is a lessee for a several properties in which it has ground leases as of December 31, 2018. Since the Company has elected the practical expedients described above, it determined that its current ground leases will continue to be classified as operating leases under the new standard. As a result, the Company recorded a ROU asset and lease liability of approximately $20.0 million, which is equal to the present value of the remaining lease payments as of January 1, 2019. Future lease expense after adoption will continue to be recorded on a straight-line basis as required for operating leases.
Other Recently Issued Accounting Pronouncements
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. Early adoption is permitted for reporting periods beginning after December 15, 2018. The Company is currently evaluating the impact of this new guidance.
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-Controlling Interests with a Scope Exception guidance that changes the method to determine the classification of certain financial instruments with a down round feature as liabilities or equity instruments and clarify existing disclosure requirements for equity-classified instruments. A down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability, rather, an entity that presents earnings per share is required to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features. The revised guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2018. Early adoption is permitted, including adoption inThe revised guidance became effective for the Company effective January 1, 2019 and it did not have an interim period. Adoption should be applied retrospectively to outstandingimpact on the Company's consolidated financial instruments with a down round feature with a cumulative-effect adjustment to the statement of financial position. The Company is currently evaluating the impact of this new guidance.statements.

F-18

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities("ASU 2017-12"). The purpose of this updated guidance is to better align a company’s financial reporting for hedging activities with the economic objectives of those activities. The transition guidance provides companies with the option of early adopting the new standard using a modified retrospective transition method in any interim period after issuance of the update, or alternatively requires adoptionASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018. This adoptionThe Company adopted ASU 2017-12 on January 1, 2019 using a modified retrospective transition method, will require the Company to recognizeas required, and recognized the cumulative effect of initially applying the ASUchange on the opening balance of each affected component of equity as anof the date of adoption. The opening balance sheet adjustment specifically related to the elimination of the requirement for separate measurement of hedge ineffectiveness and resulted in a credit to accumulated deficit of $0.3 million, with a corresponding debit, or decrease, to accumulated other comprehensive income.
In February 2018, the FASB issued ASU 2018-02, Income Statement- Reporting Comprehensive Income(Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The new guidance addresses the impact of Tax Cuts and Jobs Act signed into law on December 22, 2017, (“Tax Cuts and Jobs Act”) on items within AOCI which do not reflect the appropriate tax rate. ASU 2018-02 allows the Company to retrospectively reclassify the income with a corresponding adjustmenttax effects on items in AOCI to the opening balance of retained earnings asfor all periods in which the effect of the beginningchange in the U.S. federal corporate income tax rate was recognized. In addition, all companies are required to disclose whether the company has elected to reclassify the income tax effects of the Tax Cuts and Jobs Act to retained earnings and disclose information about any other income tax effects that are reclassified from AOCI by the Company. The amendments are effective for fiscal year thatyears beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Companies are required to apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The revised guidance became effective for the Company adopts the update. While the Company continues to assess all potential impacts of the standard, the Company currently expects adoption toeffective January 1, 2019 and it did not have an immaterial impact on the Company's consolidated financial statements.
In July 2018, the FASB issued ASU 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting ("ASU 2018-07") as an amendment and update expanding the scope of Topic 718. The amendment specifies that Topic 718 now applies to all share-based payment transactions, even non-employee awards, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Under the new guidance, awards to nonemployees are measured on the grant date, rather than on the earlier of the performance commitment date or the date at which the nonemployee’s performance is complete. Also, the awards would be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. In addition, entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis. The new guidance is effective for the Company in annual periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted. The Company adopted the new guidance on January 1, 2019 and will apply the new rules to its non-employee award made to the Advisor pursuant to the 2018 OPP. As a result, total equity-based compensation expense calculated as of adoption of the new guidance will be fixed as of that date and will not be remeasured in subsequent periods. In addition, the expense will be recorded over the requisite service period of approximately 2.8 years from the grant date. See Note 12 — Share-Based Compensation for additional information on the awards to the Advisor pursuant to the 2018 OPP and the 2015 OPP.
Note 3 — Merger Transaction
Pursuant to the Merger Agreement, each outstanding share of Global II's common stock, including restricted shares of common stock, par value $0.01 per share ("Global II Common Stock"), other than shares owned by the Company, any subsidiary of the Company or any wholly owned subsidiary of Global II, was converted into the right to receive 2.27 shares of Common Stock (such consideration, the “Stock Merger Consideration”), and each outstanding unit of limited partnership interest and Class B units of limited partnership interest of the Global II's OP ("Global II Class B Units" and, together with the outstanding ordinary units of limited partnership interest of Global II's OP, (collectively, “Global II OP Units”) was converted into the right to receive 2.27 shares of Company Common Stock (the “Partnership Merger Consideration” and, together(together with the Stock Merger Consideration, the “Merger Consideration”), in each case with cash paid in lieu of fractional shares.
In addition, as provided in the Merger Agreement, all outstanding restricted stockshares of Global II Common Stock became fully vested and entitled to receive the Merger Consideration.
The Company issued 9.6 million shares of Common Stock as consideration in the Merger. Based upon the closing price of the shares of Common Stock of $23.10 on December 21, 2016, as reported on the NYSE, and the number of shares of Global II Common Stock outstanding, including unvested restricted shares and Global II OP Units, net of any fractional shares on December 21, 2016, the aggregate fair value of the Merger Consideration paid to former holders of Global II Common Stock and former holders of units of Global II OP Units was $220.9 million.

F-19

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

On December 22, 2016 (the "Merger Date"), pursuant to the Merger Agreement, Global II merged with and into the Merger Sub. In addition, Global II OP, merged with the OP (see Note 1 — Organization for details). The fair value of the consideration transferred for the Mergers totaled $220.9 million and consisted of the following:
  As of Mergers Date
Fair Value of Consideration Transferred:  
Cash $
Common Stock 220,868
Total Consideration Transferred $220,868

F-21

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

Accounting Treatment of the Mergers
The Mergers are accounted for under the acquisition method for business combinations pursuant to GAAP, with GNLthe Company as the accounting acquirer of Global II. The consideration to be transferred by GNLthe Company to acquire Global II establishes a new accounting basis for the assets acquired, liabilities assumed and any non-controlling interests, measured at their respective fair value as of the Merger Date. To the extent fair value of the Merger Consideration exceedsexceeded fair value of net assets acquired, any such excess representsrepresented goodwill. Alternatively, if fair value of net assets acquired exceeds fair value of the Merger Consideration, the transaction could result in a bargain purchase gain that is recognized immediately in earnings and attributable to GNL common stockholders.holders of Common Stock. Adjustments to estimated fair value of identifiable assets and liabilities of Global II, as well as adjustments to the Merger Consideration may change the determination and amount of goodwill and/or bargain purchase gain and may impact depreciation, amortization and accretion based on revised fair value of assets acquired and liabilities assumed. The actual value of the Merger Consideration is based upon the market price of the Company's Common Stock at the time of closing of the Merger.

F-22

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

Allocation of Consideration
The consideration transferred pursuant to the Merger was allocated to the assets acquired and liabilities assumed for Global II, based upon their estimated fair values as of the Merger Date. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed, including all measurement period adjustments, at the Merger Date.

F-20

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

(Dollar amounts in thousands) Global II
Total Consideration:  
Fair value of Company's shares of Common Stock issued, net of fractional shares $220,868
Assets Acquired at Fair Value  
Land 70,176
Buildings, fixtures and improvements 384,428
Acquired intangible lease assets 111,097
Total real estate investments, at fair value 565,701
Restricted cash 7,575
Derivatives, at fair value 21,808
Prepaid expenses and other assets 1,317
Related party notes receivable acquired in Merger 5,138
Due from related parties 1,463
Deferred tax assets 368
Goodwill and other intangible assets, net 18,204
Total Assets Acquired at Fair Value 621,574
Liabilities Assumed at Fair Value  
Mortgage notes payable 279,032
Mortgage (discount) premium, net (2,724)
Mezzanine facility 107,047
Mezzanine discount, net (26)
Acquired intangible lease liabilities, net 8,510
Derivatives, at fair value 3,911
Accounts payable and accrued expenses 7,212
Prepaid rent 6,001
Deferred tax liability 9,063
Taxes payable 1,661
Dividend payable 2
Total Liabilities Assumed at Fair Value 419,689
Net assets acquired excluding cash 201,885
Cash acquired on acquisition $18,983
The allocations in the table above from land, buildings and fixtures and improvements, acquired intangible lease assets and liabilities, have been provisionally assigned to each class of assets and liabilities, pending final confirmation from the third-party specialist for the Merger acquisitions acquired on the Merger Date.
Acquired Related Party Receivable
On December 16, 2016, Global II entered into a letter agreement (the “Letter Agreement”) with American Realty Capital Global II Advisors, LLC (“Global II Advisor”), and AR Global, the parent of the Global II Advisor, pursuant to which the Global II Advisor agreed to reimburse Global II $6.3 million in organization and offering costs incurred by Global II in its IPO (the “Global II IPO”) that exceeded 2.0% of gross offering proceeds in the Global II IPO (the “Excess Amount”). Global II's IPO was suspended in November 2015 and lapsed in accordance with its terms in August 2016. The Letter Agreement was negotiated on behalf of Global II, and approved, by the independent directors of Global II.

F-23

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

The Letter Agreement provided for reimbursement of the Excess Amount to Global II through (1) the tender of 66,344 Class B Units of limited partnership interest of Global II’s OP ("Global II Class B Units"),Units, previously issued to the Global II Advisor as payment in lieu of cash for its provision of asset management services, and (2) the payment of the balance of the Excess Amount in equal cash installments over an eight-month period. The value of the Excess Amount was determined using a valuation for each Global II Class B Unit based on 2.27 times the 30-day volume weighted-average price of each share of of Common Stock on the Merger Date.
Upon consummation of the Merger, Class B Units were tendered to the Company and the balance of the excess amount of $5.1 million is payable in eight equal monthly installments beginning on January 15, 2017. Such receivable was acquired by the companyCompany in the Merger. As of December 31, 2017, the Company had received the full amount of $5.1 million in payments with respect to the excess organization and offering costs incurred by Global II.

F-21

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Note 4 — Real Estate Investments, Net
Property Acquisitions
The following table presents the allocation of the assets acquired and liabilities assumed during the year ended December 31, 2018 and 2017 based on contract purchase price, excluding acquisition related costs, based on the applicable exchange rate at the time of purchase. Other than
  Year Ended December 31,
(Dollar amounts in thousands) 2018 2017
Real estate investments, at cost:    
Land $34,291
 $18,410
Buildings, fixtures and improvements 384,603
 66,704
Total tangible assets 418,894
 85,114
Acquired intangible lease assets:    
In-place leases 70,414
 15,365
Above-market lease assets 48
 235
Below-market lease liabilities (9,708) (1,937)
Cash paid for acquired real estate investments $479,648
 $98,777
Number of properties purchased 23
 12
Acquired Intangible Lease Assets
We allocate a portion of the 15 propertiesfair value of real estate acquired to identified intangible assets and liabilities, consisting of the value of origination costs (tenant improvements, leasing commissions, and legal and marketing costs), the value of above-market and below-market leases, and the value of tenant relationships, if applicable, based in each case on their relative fair values. The Company periodically assesses whether there are any indicators that the Merger, there were no other properties acquired duringvalue of the intangible assets may be impaired by performing a net present value analysis of future cash flows, discounted for the inherent risk associated with each investment. During the year ended December 31, 20162018, we wrote off certain lease intangibles related to terminated leases (seeNote 3 — Merger Transaction the "Impairment Charges and Related Lease Intangible Write-offs" section below). We did not record any impairment charges for the allocation of these acquisitions).
  Year Ended December 31,
(Dollar amounts in thousands) 2017
Real estate investments, at cost:  
Land $18,410
Buildings, fixtures and improvements 66,704
Total tangible assets 85,114
Intangibles acquired:  
In-place leases 15,365
Above market lease assets 235
Below market lease liabilities (1,937)
Total assets acquired, net 98,777
Cash paid for acquired real estate investments $98,777
Number of properties purchased 12

F-24

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017


Dispositions
As ofintangible assets associated with our real estate investments during the years ended December 31, 2017 and 2016,2016.
Dispositions
When the Company did not havesells a property, any gains or losses from the sale are reflected within (Loss) gain on dispositions of real estate investments in the consolidated statements of operations.
During the year ended December 31, 2018 the Company sold two properties that were classified as assets held for sale. a total contract sales price of $25.3 million. At closing, the Company paid approximately $1.7 million, net, in excess of proceeds received from the sales for the repayment of mortgage debt and a recorded a loss of $5.8 million, net. Prior to the sale of one of the properties, the Company agreed to terminate the lease with the existing tenant and received a termination fee of $3.0 million in accordance with the terms of the lease. This amount is recorded in Rental income in the consolidated statements of operations for the year ended December 31, 2018.
During the year ended December 31, 2017, the Company sold its property located in Fort Washington, Pennsylvania for net proceeds of $12.3 million, resulting in a net gain of $1.1 million, comprised of a $0.4 million and during the year ended December 31, 2016, the Company sold 34 properties pursuant to the Company's asset recycling plan for net proceeds of $107.8 million and gainsgain on sale of $14.3 million. Such gains are reflected within Gains on dispositions of real estate investments in the consolidated statements of operations. Also included in Gains on dispositions of real estate investments isand a reduction of approximately $0.8 million in the Gain Fee payable to the Advisor and a Gain Fee payable to the Advisor of approximately $1.0 million for the years ended December 31, 2017 and 2016, respectively (see Note 11 —  Related Party Transactions for details). There were no properties sold during
During the year ended December 31, 2015. The following table summarizes2016, the aforementionedCompany sold 34 properties sold:for net proceeds of $107.8 million, resulting in a net gain of $13.3 million, comprised of a $14.3 million gain on sale and the recording of a Gain Fee payable to the Advisor of approximately $1.0 million (see
Portfolio State Disposition Date Number of Properties Square Feet
Properties Sold in 2017:        
Kulicke & Soffa Pennsylvania February 17, 2017 1 88,000
         
Properties Sold in 2016:        
Fresenius II Georgia September 2, 2016 1 6,192
Garden Ridge North Carolina September 29, 2016 1 119,258
Dollar General Ohio September 29, 2016 1 9,026
Dollar General - Choctaw Oklahoma October 13, 2016 1 9,100
Dollar Tree - 8-Pack Florida October 13, 2016 8 63,510
Dollar General - Allentown Pennsylvania October 25, 2016 1 9,026
Dollar General - Uniontown Pennsylvania October 27, 2016 1 9,014
Dollar General - 15-Pack (1) October 28, 2016 15 145,938
Fresenius I South Carolina November 2, 2016 1 10,155
Garden Ridge Texas November 21, 2016 1 140,381
Hotel Winston The Netherlands December 15, 2016 1 24,283
Garden Ridge Arizona December 20, 2016 1 143,271
Garden Ridge Kentucky December 20, 2016 1 162,000
      34 851,154
Note 11(1) —  Related Party Transactions Consists of properties sold in Pennsylvania, Ohio and Oklahoma.for details).


F-25
F-22

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

The following table summarizes the aforementioned properties sold:
Portfolio State Disposition Date Number of Properties Square Feet
Properties Sold in 2018:        
Western Digital California June 8, 2018 1 286,330
Veolia Water Ohio July 31, 2018 1 70,000
      2 356,330
Properties Sold in 2017:        
Kulicke & Soffa Pennsylvania February 17, 2017 1 88,000
         
Properties Sold in 2016:        
Fresenius II Georgia September 2, 2016 1 6,192
Garden Ridge North Carolina September 29, 2016 1 119,258
Dollar General Ohio September 29, 2016 1 9,026
Dollar General - Choctaw Oklahoma October 13, 2016 1 9,100
Dollar Tree - 8-Pack Florida October 13, 2016 8 63,510
Dollar General - Allentown Pennsylvania October 25, 2016 1 9,026
Dollar General - Uniontown Pennsylvania October 27, 2016 1 9,014
Dollar General - 15-Pack 
Various(1)
 October 28, 2016 15 145,938
Fresenius I South Carolina November 2, 2016 1 10,155
Garden Ridge Texas November 21, 2016 1 140,381
Hotel Winston The Netherlands December 15, 2016 1 24,283
Garden Ridge Arizona December 20, 2016 1 143,271
Garden Ridge Kentucky December 20, 2016 1 162,000
      34 851,154

(1) Consists of properties sold in Pennsylvania, Ohio and Oklahoma.
Impairment Charges and Related Lease Intangible Write-offs
During the year ended December 31, 2018, certain related entity tenants in six of the Company's properties affiliated by a common guarantor were in financial difficulties. As part of negotiations, the Company terminated the leases for the tenants of four of the properties, while the tenants of the remaining two properties continue to operate under their existing lease terms. Of these four properties with lease terminations, two were re-leased to other tenants and two are in the process of being sold. Based on expected future cash flows, the Company concluded that the carrying amount was in excess of the estimated fair value of one of the properties being sold, resulting in an impairment charge of $1.6 million. Due to the four lease terminations, the Company wrote-off related lease intangibles of $3.4 million associated with the original tenants.
Assets Held for Sale
When assets are identified by management as held for sale, the Company stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. If the carrying amount of the assets classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company’s estimate of the net sales price of the assets.
As of December 31, 2018, the Company had three properties classified as held for sale. As of December 31, 2017, the Company did not have any properties that were classified as assets held for sale. During the year ended December 31, 2018, these three properties were the only properties classified as held for sale. Accordingly, the operating results of these properties remain classified within continuing operations for all periods presented.




F-23

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

The following table details the major classes of assets associated with the properties that have been reclassified as held for sale as of December 31, 2018. There were no assets classified as held for sale as of December 31, 2017.
(Dollar amounts in thousands) December 31, 2018
Real estate investments held for sale, at cost:  
Land $19,250
Buildings, fixtures and improvements 104,221
Total real estate assets held for sale, at cost 123,471
Less accumulated depreciation and amortization (10,569)
Total real estate investments held for sale, net $112,902
Intangible Lease Assets and Lease Liabilities
Acquired intangible lease assets and lease liabilities consist of the following:
 December 31, 2017 December 31, 2016 December 31, 2018 December 31, 2017
(In thousands) Gross Carrying Amount Accumulated Amortization Net Carrying amount Gross Carrying Amount Accumulated Amortization Net Carrying amount Gross Carrying Amount Accumulated Amortization Net Carrying amount Gross Carrying Amount Accumulated Amortization Net Carrying amount
Intangible assets:                        
In-place leases $552,458
 $153,846
 $398,612
 $518,827
 $99,355
 $419,472
 $602,631
 $201,344
 $401,287
 $552,458
 $153,846
 $398,612
Above-market leases 43,838
 10,203
 33,635
 38,813
 5,040
 33,773
 41,049
 14,020
 27,029
 43,838
 10,203
 33,635
Below-market ground leases 33,330
 1,427
 31,903
 29,421
 339
 29,082
 31,871
 2,384
 29,487
 33,330
 1,427
 31,903
Total acquired intangible lease assets $629,626
 $165,476
 $464,150
 $587,061
 $104,734
 $482,327
 $675,551
 $217,748
 $457,803
 $629,626
 $165,476
 $464,150
Intangible liabilities:  
  
          
  
        
Below-market leases $37,406
 $8,079
 $29,327
 $36,796
 $5,621
 $31,175
 $43,708
 $9,857
 $33,851
 $37,406
 $8,079
 $29,327
Above-market ground lease 2,207
 146
 2,061
 1,938
 72
 1,866
 2,108
 202
 1,906
 2,207
 146
 2,061
Total acquired intangible lease liabilities $39,613
 $8,225
 $31,388
 $38,734
 $5,693
 $33,041
 $45,816
 $10,059
 $35,757
 $39,613
 $8,225
 $31,388
Projected Amortization for intangible lease assets and liabilities
The following table provides the weighted-average amortization periods as of December 31, 20172018 for intangible assets and liabilities and the projected amortization expense and adjustments to revenues and property operating expense for the next five calendar years:
(In thousands) 
 Weighted-Average Amortization
Years
 2018 2019 2020 2021 2022 
 Weighted-Average Amortization
Years
 2019 2020 2021 2022 2023
In-place leases 8.1 $53,897
 $53,897
 $53,738
 $52,535
 $49,039
 7.6 $56,892
 $56,791
 $56,236
 $52,754
 $45,564
Total to be included in depreciation and amortization $53,897
 $53,897
 $53,738
 $52,535
 $49,039
Total to be included as an increase to depreciation and amortization $56,892
 $56,791
 $56,236
 $52,754
 $45,564
                    
Above-market lease assets 7.7 $4,664
 $4,664
 $4,664
 $4,664
 $4,626
 6.5 $4,398
 $4,398
 $4,398
 $4,363
 $4,187
Below-market lease liabilities 9.6 (3,538) (3,538) (3,513) (3,237) (3,144) 9.4 (4,050) (4,050) (4,050) (3,956) (3,931)
Total to be included in rental income $1,126
 $1,126
 $1,151
 $1,427
 $1,482
Total to be included as a decrease to rental income $348
 $348
 $348
 $407
 $256
                    
Below-market ground lease assets 31.9 $1,055
 $1,055
 $1,055
 $1,055
 $1,055
 30.8 $1,010
 $1,010
 $1,010
 $1,010
 $1,010
Above-market ground lease liabilities 31.7 (65) (65) (65) (65) (65) 30.7 (62) (62) (62) (62) (62)
Total to be included in property operating expense   $990
 $990
 $990
 $990
 $990
Total to be included as an increase to property operating expense   $948
 $948
 $948
 $948
 $948

F-26F-24

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

Future Minimum Rents
The following presents future minimum base rental cash payments due to the Company duringover the next five calendar years and thereafter as of December 31, 2017.2018. These amounts exclude contingent rent payments, as applicable, that may be collected from certain tenants based on provisions related to sales thresholds and increases in annual rent based on exceeding certain economic indicesindexes among other items.
(In thousands) 
Future Minimum
Base Rent Payments
(1)
 
Future Minimum
Base Rent Payments
(1)
2018 $249,495
2019 252,541
 $275,118
2020 255,589
 278,651
2021 253,689
 279,630
2022 244,151
 270,569
2023 247,237
Thereafter 893,992
 856,838
Total $2,149,457
 $2,208,043

(1) 
Assumes exchange rates of £1.00 to $1.35$1.27 for GBP and €1.00 to $1.20$1.14 for EUR as of December 31, 20172018 for illustrative purposes, as applicable.
There were no tenants whose annualized rental income on a straight-line basis represented 10% or greater of consolidated annualized rental income on a straight-line basis for all properties as of December 31, 2018, 2017 2016 and 2015.2016. The termination, delinquency or non-renewal of leases by any major tenant may have a material adverse effect on revenues.
Geographic Concentration
The following table lists the countries and states where the Company has concentrations of properties where annualized rental income on a straight-line basis represented greater than 10% of consolidated annualized rental income on a straight-line basis as of December 31, 2018, 2017 2016 and 2015.2016.
 December 31, December 31,
Country / U.S. State 2017 2016 2015 2018 2017 2016
United States 55.7% 48.9% 51.0%
Michigan 13.7% * *
United Kingdom 22.1% 21.9% 19.2% 19.0% 22.1% 21.9%
United States and Puerto Rico: 
Texas * * 11.5%

*Annualized rental income on a straight-line basis was not greater than 10% of total annualized rental income as of the period specified.
Note 5 — Mortgage Notes Payable, Net
Mortgage notes payable as of December 31, 20172018 and 20162017 consisted of the following:
 Encumbered Properties 
Outstanding Loan Amount (1)
 Effective Interest Rate Interest Rate   Encumbered Properties 
Outstanding Loan Amount (1)
 Effective Interest Rate Interest Rate 
CountryPortfolio December 31, 2017 December 31, 2016 MaturityPortfolio December 31, 2018 December 31, 2017 Maturity
   (In thousands) (In thousands)       (In thousands) (In thousands) 
Finland:Finnair 4 $34,022
 $29,878
 2.2%
(2) 
Fixed Sep. 2020
Finnair (8)
 4 $32,501
 $34,022
 2.2%
(2) 
Fixed Sep. 2020
Tokmanni 1 34,711
 30,483
 2.4%
(2) 
Fixed Oct. 2020
Tokmanni (8)
 1 33,159
 34,711
 2.4%
(2) 
Fixed Oct. 2020
             
France:
Auchan (5)
 1 9,943
 8,732
 1.7%
(2) 
Fixed Dec. 2019Auchan 1 9,498
 9,943
 1.7%
(2) 
Fixed Dec. 2019
Pole Emploi (5)
 1 6,948
 6,102
 1.7%
(2) 
Fixed Dec. 2019Pole Emploi 1 6,637
 6,948
 1.7%
(2) 
Fixed Dec. 2019
Sagemcom (5)
 1 43,006
 37,768
 1.7%
(2) 
Fixed Dec. 2019Sagemcom 1 41,083
 43,006
 1.7%
(2) 
Fixed Dec. 2019
Worldline (5)
 1 5,990
 5,260
 1.9%
(2) 
Fixed Jul. 2020Worldline 1 5,722
 5,990
 1.9%
(2) 
Fixed Jul. 2020
DCNS (5)
 1 11,381
 9,994
 1.5%
(2) 
Fixed Dec. 2020DCNS 1 10,872
 11,381
 1.5%
(2) 
Fixed Dec. 2020
ID Logistics II (5)
 2 12,578
 11,046
 1.3% Fixed Jun. 2021ID Logistics II 2 12,016
 12,578
 1.3% Fixed Jun. 2021
     
Germany
Rheinmetall (9)
 1 12,130
 12,698
 2.6%
(2) 
Fixed Jan. 2019
OBI DIY (9)
 1 5,150
 5,391
 2.4% Fixed Jan. 2019

F-27F-25

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

GermanyRheinmetall 1 12,698
 11,152
 2.6%
(2) 
Fixed Jan. 2019
 OBI DIY 1 5,391
 4,734
 2.4% Fixed Jan. 2019
 RWE AG 3 74,872
 65,753
 1.6%
(2) 
Fixed Oct. 2019
 Rexam 1 6,301
 5,534
 1.8%
(2) 
Fixed Oct. 2019
 Metro Tonic 1 31,746
 27,879
 1.7%
(2) 
Fixed Dec. 2019
 
ID Logistics I (5)
 1 4,792
 4,208
 1.0% Fixed Oct. 2021
              
Luxembourg:
DB Luxembourg (5)
 1 43,126
 37,873
 1.4%
(2) 
Fixed May 2020
The Netherlands:
ING Amsterdam (5)
 1 52,710
 46,290
 1.7%
(2) 
Fixed Jun. 2020
 Total EUR denominated 22 390,215
 342,686
      
              
United Kingdom:McDonald's 1 1,025
 938
 4.1%
(2) 
Fixed Feb. 2018
 Wickes Building Supplies I 1 2,226
 2,402
 3.7%
(2) 
Fixed May 2018
 Everything Everywhere 1 5,397
 4,936
 4.0%
(2) 
Fixed Jun. 2018
 Thames Water 1 8,096
 7,405
 4.1%
(2) 
Fixed Jul. 2018
 Wickes Building Supplies II 1 2,626
 2,036
 4.2%
(2) 
Fixed Jul. 2018
 Northern Rock 2 7,084
 6,479
 4.4%
(2) 
Fixed Sep. 2018
 Wickes Building Supplies III 1 2,564
 2,345
 4.3%
(2) 
Fixed Nov. 2018
 Provident Financial 1 17,203
 15,735
 4.1%
(2) 
Fixed Feb. 2019
 Crown Crest 1 25,973
 23,757
 4.2%
(2) 
Fixed Feb. 2019
 Aviva 1 21,183
 19,376
 3.8%
(2) 
Fixed Mar. 2019
 Bradford & Bingley 1 10,200
 9,330
 3.5%
(2) 
Fixed May 2020
 Intier Automotive Interiors 1 6,375
 5,831
 3.5%
(2) 
Fixed May 2020
 Capgemini 1 6,381
 6,788
 3.2%
(2) 
Fixed Jun. 2020
 Fujitsu 3 33,435
 30,581
 3.2%
(2) 
Fixed Jun. 2020
 Amcor Packaging 7 4,218
 3,858
 3.5%
(2) 
Fixed Jul. 2020
 Fife Council 1 2,474
 2,263
 3.5%
(2) 
Fixed Jul. 2020
 Malthrust 3 4,318
 3,949
 3.5%
(2) 
Fixed Jul. 2020
 Talk Talk 1 5,161
 4,721
 3.5%
(2) 
Fixed Jul. 2020
 HBOS 3 7,272
 6,652
 3.5%
(2) 
Fixed Jul. 2020
 DFS Trading 5 13,680
 12,513
 3.4%
(2) 
Fixed Aug. 2020
 DFS Trading 2 3,203
 2,930
 3.4%
(2) 
Fixed Aug. 2020
 HP Enterprise Services 1 12,531
 11,461
 3.4%
(2) 
Fixed Aug. 2020
 
Foster Wheeler (5)
 1 53,026
 48,501
 2.6%
(2) 
Fixed Oct. 2018
 
Harper Collins (5)
 1 37,880
 34,648
 3.4%
(2) 
Fixed Oct. 2019
 
NCR Dundee (5)
 1 7,610
 6,960
 2.9%
(2) 
Fixed Apr. 2020
 Total GBP denominated 43 301,141
 276,395
      
              
United States:Quest Diagnostics 1 52,800
 52,800
 2.8%
(3) 
Variable Sep. 2018
 Western Digital 1 17,363
 17,682
 5.3% Fixed Jul. 2021
 AT&T Services 1 33,550
 33,550
 2.9%
(4) 
Variable Dec. 2020
 
FedEx Freight (5)
 1 6,165
 6,165
 4.5% Fixed Jun. 2021
 
Veolia Water (5)
 1 4,110
 4,110
 5.2% Fixed Jun. 2021
 Multi-Tenant Mortgage Loan 12 187,000
 
 4.4% Fixed Nov. 2027
Puerto Rico:
Encanto Restaurants (6)
  
 21,599
 —% 
 
 Total USD denominated 17 300,988
 135,906
      
 Gross mortgage notes payable 82 992,344
 754,987
 3.0%    
 Mortgage discount  (1,927) (2,503)     
 Deferred financing costs, net of accumulated amortization  (5,541) (5,103)     
 Mortgage notes payable, net of deferred financing costs 82 $984,876
 $747,381
 3.0%    
_________________________
 RWE AG 3 71,524
 74,872
 1.6%
(2) 
Fixed Oct. 2019
 Rexam 1 5,876
 6,301
 1.8%
(2) 
Fixed Oct. 2019
 Metro Tonic 1 30,326
 31,746
 1.7%
(2) 
Fixed Dec. 2019
 ID Logistics I 1 4,578
 4,792
 1.0% Fixed Oct. 2021
              
Luxembourg:DB Luxembourg 1 41,198
 43,126
 1.4%
(2) 
Fixed May 2020
              
The Netherlands:ING Amsterdam 1 50,353
 52,710
 1.7%
(2) 
Fixed Jun. 2020
 Total EUR denominated 22 372,623
 390,215
      
              
United Kingdom:McDonald's  
 1,025
 —%  
 Wickes Building Supplies I  
 2,226
 —%  
 Everything Everywhere  
 5,397
 —%  
 Thames Water  
 8,096
 —%  
 Wickes Building Supplies II  
 2,626
 —%  
 Northern Rock  
 7,084
 —%  
 Wickes Building Supplies III  
 2,564
 —%  
 Provident Financial  
 17,203
 —%  
 Crown Crest  
 25,973
 —%  
 Aviva  
 21,183
 —%  
 Bradford & Bingley  
 10,200
 —%  
 Intier Automotive Interiors  
 6,375
 —%  
 Capgemini  
 6,381
 —%  
 Fujitsu  
 33,435
 —%  
 Amcor Packaging  
 4,218
 —%  
 Fife Council  
 2,474
 —%  
 Malthrust  
 4,318
 —%  
 Talk Talk  
 5,161
 —%  
 HBOS  
 7,272
 —%  
 DFS Trading  
 13,680
 —%  
 DFS Trading  
 3,203
 —%  
 HP Enterprise Services  
 12,531
 —%  
 Foster Wheeler  
 53,026
 —%  
 Harper Collins  
 37,880
 —%  
 NCR Dundee  
 7,610
 —%  
 UK Multi-Property Cross Collateralized Loan 43 292,890
 
 3.2%
(3) 
Fixed Aug. 2023
 Total GBP denominated 43 292,890
 301,141
      
              
United States:Quest Diagnostics 1 52,800
 52,800
 4.4%
(4) 
Variable Sep. 2019
 Western Digital  
 17,363
 —%
(5) 
 
 AT&T Services 1 33,550
 33,550
 2.0%
(6) 
Variable Dec. 2020
 FedEx Freight  
 6,165
 —%  
 Veolia Water  
 4,110
 —%  
 Penske Logistics 1 70,000
 
 4.7% Fixed Nov. 2028
 U.S. Multi-Tenant Mortgage Loan I 12 187,000
 187,000
 4.4% Fixed Nov. 2027
 U.S Multi-Tenant Mortgage Loan II 8 32,750
 
 4.4% Fixed Feb. 2028
 U.S. Multi-Tenant Mortgage Loan III 7 98,500
 
 4.9% Fixed Dec. 2028
 Total USD denominated 30 474,600
 300,988
      
 Gross mortgage notes payable 95 1,140,113
 992,344
 3.2%    
 Mortgage discount   (569) (1,927)     
 
Deferred financing costs, net of accumulated amortization (7)
   (9,737) (5,541)     
 Mortgage notes payable, net of deferred financing costs 95 $1,129,807
 $984,876
 3.2%    

F-28F-26

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

_________________________
(1) 
Amounts borrowed in local currency and translated at the spot rate as ofin effect at the periods presented.applicable reporting date.
(2) 
Fixed as a result of an interest rate swap agreement.
(3) 
The80% fixed as a result of an interest rate swap agreement and 20% variable. Variable portion is approximately 2.0% plus 1-month3-month GBP LIBOR. LIBOR rate in effect is as of December 31, 2018.
(4)
The interest rate is 2.0% plus 1-month LIBOR. LIBOR rate in effect is as of December 31, 2018.
(5)
The debt prepayment costs associated with the sale of Western Digital were $1.3 million.
(6) 
The interest rate is 2.0% plus 1- month Adjusted LIBOR as defined in the mortgage agreement. LIBOR rate in effect is as of December 31, 2018.
(5)(7) 
New mortgages acquired as partDeferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the Merger onrespective financing agreements using the Merger Date.effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or paid down before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.
(6)(8) 
The effective interest rateCompany's two outstanding mortgage loans encumbering all five properties the Company owns in Finland were refinanced in February 2019. See Note 16 — Subsequent Events for additional information.
(9)
These loans were repaid in full upon their maturity in January 2019.
The following table presents future scheduled aggregate principal payments on the mortgage notes payable over the next five calendar years and thereafter as of December 31, 2018:
(In thousands) 
Future Principal Payments (1)
2019 $235,026
2020 209,873
2021 28,929
2022 19,102
2023 258,933
Thereafter 388,250
Total $1,140,113
_________________________
(1)
Assumes exchange rates of 6.3%£1.00 to $1.27 for GBP and 18 properties is not included in the calculation of weighted average effective interest rate and encumbered properties total€1.00 to $1.14 for EUR as of December 31, 2017, respectively,2018 for illustrative purposes, as the loan was paid off as of June 30, 2017.applicable.
In connection with the Merger, the OP assumed the outstanding gross mortgage notes payable with an estimated aggregate fair value of $279.0 million at the Merger Date.
The Company's mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of December 31, 2018, the Company was in compliance with all financial covenants under its mortgage notes payable agreements. As of December 31, 2017, the Company was in breach of a loan-to-vacant possession financial covenant on one mortgage note payable agreement, which had an outstanding principal balance of $37.9 million (£28.1 million) as of December 31, 2017. During the fourth quarter of 2017, the Company repaid £0.8 million and in January 2018 the Company repaid €0.1 million of principal on two separate mortgage note payable agreements in order to cure loan to value financial covenant breaches which did not result in events of default. The Company was in compliance with the remaining covenants under its mortgage notes payable agreements as of December 31, 2017. As
The total gross carrying value of unencumbered assets as of December 31, 2016,2018 is $1.3 billion, of which approximately $1.2 billion of this amount was included in the unencumbered asset pool comprising the borrowing base under the Revolving Credit Facility (as defined in Note 6Credit Facilities) and therefore is not available to serve as collateral for future borrowings.
U.K. Multi-Property Loan
On August 13, 2018, the Company wasentered into a multi-tenant mortgage loan, yielding gross proceeds of £230.0 million and bearing interest at a rate of approximately 2.0% plus 3-month GBP LIBOR, maturing in complianceAugust 2023. With respect to the interest, 80% of the principal amount is fixed by a swap agreement, while the remaining 20.0% of the principal remains variable. The loan is interest-only for the first two years, followed by scheduled principal amortization of £37.9 million in the final three years of the loan, with the covenants under itsremaining principal balance due on maturity. The loan is secured by all 43 of the Company's properties located in the United Kingdom. At closing, £209.0 million of the net proceeds were used to repay all outstanding mortgage notes payable agreements.indebtedness encumbering 38 of the 43 properties. The other five properties were unencumbered prior to the loan.
Penske Logistics
On November 14, 2018, we entered into a mortgage loan, yielding gross proceeds of approximately $70.0 million with a fixed rate of 4.6% and a 10-year maturity. Proceeds were used to fund a portion of the $126.6 million purchase price to acquire a cold storage facility located in Romulus, Michigan. The borrower's (a wholly owned subsidiary of ours) financial statements are included

F-27

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

within the Company’s consolidated financial statements, however, the borrowers’ assets and credit are only available to pay the debts of the borrowers and their liabilities constitute obligations of the borrowers.
U.S. Multi-Tenant Mortgage LoansLoan I
On October 27, 2017, 12 wholly owned subsidiaries (the “Borrowers”) of the OP closed on a loan agreement (the “Loan Agreement”) with Column Financial, Inc. and Citi Real Estate Funding Inc. (collectively, the “Lenders”). The Company received gross proceeds of $187.0 million (the “Multi-Tenant Mortgage Loan”) with a fixed interest rate of 4.369%4.4% and a maturity date of November 6, 2027. The Multi-Tenant Mortgage Loan requires monthlyThis multi-tenant mortgage loan is interest-only payments, with the principal balance due on the maturity, date and it is secured by among other things, the Borrowers’ interests in 12 single tenant net leased office and industrial properties in nine states totaling approximately 2.6 million square feet (the “Mortgaged Properties”).feet. The Borrowers’borrowers’ (wholly owned subsidiaries of ours) financial statements are included within the Company’s consolidated financial statements, however, the Borrowers’borrowers’ assets and credit are only available to pay the debts of the Borrowersborrowers and their liabilities constitute obligations of the Borrowers.borrowers.   
At the closing of the Multi-Tenant Mortgage Loan,this multi-tenant mortgage loan, the net proceeds after accrued interest and closing costs (including $2.2 million in expenses related to the Mortgaged Properties)mortgaged properties) were used to repay approximately $120.0 million of indebtedness that was outstanding under the Revolving Credit Facility, (as defined in Note 6 -Credit Facilities), withwhile the remaining balance available towas used by the Company to be used for general corporate purposes, including to make future acquisitions.
In addition,U.S. Multi-Tenant Mortgage Loan II
On January 26, 2018, the Company entered into anothera multi-tenant mortgage loan, on January 26, 2018 yielding gross proceeds of $32.8 million (seewith a fixed interest rate of 4.3% and a 10-year maturity in February 2028. This multi-tenant mortgage loan is interest-only with a principal balance due on maturity, and it is secured by eight properties in six states, totaling approximately 627,500 square feet. Proceeds were used to pay down approximately $30.0 million of outstanding indebtedness under the Revolving Credit Facility and for general corporate purposes and acquisitions.
U.S. Multi-Tenant Mortgage Loan III
On November 9, 2018, the Company entered into a multi-tenant mortgage loan, yielding gross proceeds of $98.5 million with a fixed interest rate of 4.9% and 10-year maturity in December 2028. This multi-tenant mortgage loan is interest-only with a principal balance due on maturity, and it is secured by seven properties in six states, totaling approximately 651,313 square feet. Proceeds were used to pay down $90.0 million of outstanding indebtedness under the Revolving Credit Facility.
Note 16 - Subsequent Events for additional information).6 — Credit Facilities
Unencumbered Assets
The total gross carrying value of unencumbered assetstable below details the outstanding balances as of December 31, 2018 and December 31, 2017 is $1.6 billion, including $1.0 billionunder the credit agreement with KeyBank National Association (“KeyBank”), as agent, and the other lender parties thereto, which provides for a $632.0 million senior unsecured multi-currency revolving credit facility (the “Revolving Credit Facility”) and a €246.5 million ($282.1 million U.S. Dollar ("USD") based on the Credit Facility (as defined in Note 6 -Credit Facilities) borrowing base.
Maturity Schedule
The following table presents future scheduled aggregate principal payments on the mortgage notes payable over the next five calendar years and thereafterprevailing exchange rate as of December 31, 2017:2018) senior unsecured term loan facility (the “Term Loan” and, together with the Revolving Credit Facility, the “Credit Facility”).
(In thousands) Future Principal Payments (1)
2018 $135,180
2019 293,500
2020 332,719
2021 43,945
2022 
Thereafter 187,000
Total $992,344
_________________________
  December 31, 2018 December 31, 2017
(In thousands) 
TOTAL USD (1)
  USD GBP EUR 
TOTAL USD (2)
  USD GBP EUR
Revolving Credit Facility $363,894
  $278,625
 £40,000
 30,000
 $298,909
  $209,000
 £40,000
 30,000
                   
Term Loan 282,069
  
 
 246,481
 233,165
  
 
 194,637
Deferred financing costs (3,342)  
 
 
 (3,260)  
 
 
Term Loan, Net 278,727
  
 
 246,481
 229,905
  
 
 194,637
Total Credit Facility $642,621
  $278,625
 £40,000
 276,481
 $528,814
  $209,000
 £40,000
 224,637
(1)
Assumes exchange rates of £1.00 to $1.27 for GBP and €1.00 to $1.14 for EUR as of December 31, 2018 for illustrative purposes, as applicable.
(2) 
Assumes exchange rates of £1.00 to $1.35 for GBP and €1.00 to $1.20 for EUR as of December 31, 2017 for illustrative purposes, as applicable.


F-29

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

Note 6 — Credit Facilities
Revolving Credit Facilities and Term Loan, Net
On July 24, 2017, the Company, through the OP, entered into a credit agreement with KeyBank National Association (“KeyBank”), as agent, and the other lender parties thereto, that provides for a $500.0 million senior unsecured multi-currency revolving credit facility (the “Revolving Credit Facility”) and a €194.6 million ($225.0 million USD equivalent at closing) senior unsecured term loan facility (the “Term Facility” and, together with the Revolving Credit Facility, the “Credit Facility”).
As of December 31, 2017 and 2016, amounts borrowed under the Revolving Credit Facility portion of the Credit Facility and the Prior Credit Facility (see definition below) are included in Revolving credit facilities on the Company's consolidated balance sheets and totaled $298.9 million and $616.6 million, respectively. Amounts borrowed under the Term Facility portion of the Credit Facility totaled $229.9 million (net of a discount of $3.3 million) and are included in Term loan, net on the Company's consolidated balance sheet as of December 31, 2017. Additional details related to the Credit Facility and Prior Credit Facility follow below.
Credit Facility - Terms
TheOn July 24, 2017, the Company, through the OP, entered into a credit agreement with KeyBank. Based on USD equivalents at closing, the aggregate total commitments under the Credit Facility arewere $725.0 million. On July 2, 2018, upon the Company's request, the lenders under the Credit Facility increased the aggregate total commitments from $722.2 million to $914.4 million, based on USD equivalents at closing. Upon requestthe prevailing exchange rate on that date, with approximately $132.0 million of the increase allocated to the Revolving

F-28

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Credit Facility and approximately €51.8 million ($60.2 million based on the prevailing exchange rate on that date) allocated to the Term Loan. The Company used all the proceeds from the increased borrowings under the Term Loan to repay amounts outstanding under the Revolving Credit Facility. Upon the Company's request, subject in all respects to the consent of the lenders in their sole discretion, thesethe aggregate total commitments under the Credit Facility may be increased up to an aggregate additional amount of $225.0$35.6 million, allocated to either or among both portions of the Credit Facility, with total commitments under the Credit Facility not to exceed $950.0 million.
At the closing of theThe Credit Facility the Company, based on USD equivalent at closing, and through the OP, borrowed $495.9 million under the revolving credit facility portionconsists of the Credit facility ($409.0 million, £40.0 million and €30.0 million) and $225.0 million under the Term Facility portion of the Credit Facility (€194.6 million). On September 18, 2017, the Company repaid $80.0 million denominated in USD outstanding under thetwo components, a Revolving Credit Facility using proceeds from the issuance of Series A Preferred Stock. In addition, on October 27, 2017, the Company repaid an additional $120.0 million denominated in USD outstanding under the Revolving Credit Facility using proceeds fromand a new loan. SeeNote 5 — Mortgage Notes Payable, Net for additional details.
Term Loan. The Revolving Credit Facility is interest-only and matures on July 24, 2021, subject to one one-year extension at the Company’s option. The Term FacilityLoan portion of the Credit Agreement is interest-only and matures on July 24, 2022. Borrowings under the Credit Facility bear interest at a variable rate per annum based on an applicable margin that varies based on the ratio of consolidated total indebtedness and the consolidated total asset value of the Company and its subsidiaries plus either (i) LIBOR, as applicable to the currency being borrowed, or (ii) a “base rate” equal to the greatest of (a) KeyBank’s “prime rate,” (b) 0.5% above the Federal Funds Effective Rate or (c) 1.0% above one-month LIBOR. The range of applicable interest rate margin will initially be determined based on a rangemargins is from 0.60% to 1.20% per annum with respect to base rate borrowings and 1.60% to 2.20% per annum with respect to LIBOR borrowings. As of December 31, 2017,2018, the Credit Facility had a weighted average effective interest rate of 2.7%2.9% after giving effect to interest rate swaps in place.
The Credit Facility requires the Company through the OP to pay an unused fee per annum of 0.25% of the unused balance of the Revolving Credit Facility if the unused balance exceeds or is equal to 50% of the total commitment or a fee per annum of 0.15% of the unused balance of the Revolving Credit Facility if the unused balance is less than 50% of the total commitment. From and after the time the Company obtains an investment grade credit rating, the unused fee will be replaced with a facility fee based on the total commitment under the Revolving Credit Facility multiplied by 0.30%, decreasing as the Company’s credit rating increases.
The availability of borrowings under the Revolving Credit Facility is based on the value of a pool of eligible unencumbered real estate assets owned by the Company and compliance with various ratios related to those assets. As of December 31, 2017,2018, approximately $65.1$42.2 million was available for future borrowings under the Revolving Credit Facility. Any future borrowings may, at the option of the Company, be denominated in USD, EUR, Canadian Dollars, British Pounds Sterling ("GBP") or Swiss Francs. Amounts borrowed may not, however, be converted to, or repaid in, another currency once borrowed.
The Company, through the OP, may reduce the amount committed under the Revolving Credit Facility and repay outstanding borrowings under the Credit Facility, in whole or in part, at any time without premium or penalty, other than customary “breakage” costs payable on LIBOR borrowings. In the event of a default, the lender has the right to terminate its obligations under the Credit Facility agreement and to accelerate the payment on any unpaid principal amount of all outstanding loans. The Credit Facility also imposes certain affirmative and negative covenants on the OP, the Company and certain of its subsidiaries including restrictive covenants with respect to, among other things, liens, indebtedness, investments, distributions (see additional information below), mergers and asset sales, as well as financial covenants requiring the OP to maintain, among other things, ratios related to leverage, secured leverage, fixed charge coverage and unencumbered debt services, as well as a minimum consolidated tangible net worth.
Under the terms of the Credit Facility, the Company may not pay distributions, including cash dividends payable with respect to Common Stock, Series A Preferred Stock, or any other classes or series of preferred stock that the Company may issue in a future offering, or redeem or otherwise repurchase shares of the Company's capital stock, Common Stock, Series A Preferred Stock, or any other classes or series of preferred stock the Company may issue in a future offering, that exceed 95% of the Company's Adjusted FFO as defined in the Credit Facility for any period of four consecutive fiscal quarters, except in limited circumstances, including that for one fiscal quarter in each calendar year, the Company may pay cash distributions, make redemptions and make repurchases in an aggregate amount equal to no more than 100% of its Adjusted FFO. The Company used the exception to pay dividends that were between 95% of Adjusted FFO to 100% of Adjusted FFO during the quarter ended on June 30, 2018. On November 19, 2018, the lenders under the Credit Facility consented to an increase in the maximum amount the Company may use to pay cash distributions, make redemptions and make repurchases from 95% of Adjusted FFO to 100% of Adjusted FFO solely for the quarter ended December 31, 2018, and, during that quarter, the Company paid dividends that were between 95% of Adjusted FFO to 100% of Adjusted FFO. There can be no assurance that the Company's lenders will consent to any additional modifications to the restrictions in the Credit Facility on the Company's ability to pay dividends necessary to maintain its compliance thereunder if the Company pays dividends that exceed 95% of Adjusted FFO in more than one fiscal quarter during 2019 or any future calendar year. In addition, if the Company is not able to generate sufficient cash from operations, including through additional cash flows the Company expects to generate from completing acquisitions, or otherwise maintain compliance with the Credit Facility, the Company may have to reduce the amount of dividends it pays or identify other sources to fund the payment of dividends at their current levels. There can be no assurance the Company will complete acquisitions on a timely basis or on acceptable terms and conditions, if at all. Alternatively, the Company could elect to pay a portion of its dividends in shares if approved by the Company's board of directors.

F-30F-29

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

The Company and certain of its subsidiaries have guaranteed the OP's obligations under the Credit Facility pursuant to a guarantee and a related contribution agreement which governs contribution rights of the guarantors in the event any amounts become payable under the guaranty.
In connection with the Company’s replacement of its Prior Credit Facility (see definition below) with its Credit Facility, and the change in borrowings by currency resulting therefrom, the Company terminated its existing £160.3 million notional GBP-LIBOR interest rate swap and entered into a new $150.0£150.0 million notional five year USD-LIBOR interest rate swap. Additionally, the Company novated its existing €224.4£224.4 million notional Euribor interest rate swap from its existing counterparty to a new counterparty.
Prior Credit Facility- TermsFacility
On July 25, 2013,24, 2017, the Company through the OP, entered intoterminated a credit facility (as amended from time to time, thereafter, the "Prior Credit Facility") thatand repaid the outstanding balance of $725.8 million (including €255.7 million, £160.2 million and $221.6 million) of which $720.9 million was repaid with proceeds from the Credit Facility (as described below) and $4.9 million from cash on hand.
The Prior Credit Facility, which was entered into in July 25, 2013, provided for borrowings of up to $740.0 million (subject to borrowing base availability). The Company had $616.6 million (including £177.2 million and €258.9 million) outstanding underUnder the Prior Credit Facility, as of December 31, 2016. Thethe Company had the option based upon its consolidated leverage ratio, to have draws under the Prior Credit Facility priced at either the Alternate Base Rate (as described below) plus, depending upon the Company's consolidated leverage ratio, 0.60% to 1.20% or at Adjusted LIBOR (as described below) plus, depending upon the Company's consolidated leverage ratio, 1.60% to 2.20%. The Alternate Base Rate was defined in the Prior Credit Facility as a rate per annum equal to the greatest of (a) the fluctuating annual rate of interest announced from time to time by the lender as its “prime rate” in effect on such day, (b) the federal funds effective rate in effect on such day plus half of 1%, and (c) the Adjusted LIBOR for a one-month interest period on such day plus 1%. Adjusted LIBOR was defined as LIBOR multiplied by the statutory reserve rate, as determined by the Federal Reserve System of the United States. The Prior Credit Facility agreement required the Company to pay an unused fee per annum of 0.25% if the unused balance of the Prior Credit Facility exceeded or was equal to 50% of the available facility or a fee per annum of 0.15% if the unused balance of the Prior Credit Facility iswas less than 50% of the available facility. The unused borrowing capacity under the Credit facility as of December 31, 2016 was $113.0 million.
On July 24, 2017, the Company terminated the Prior Credit Facility and repaid the outstanding balance of $725.8 million (including €255.7 million, £160.2 million and $221.6 million) of which $720.9 million was repaid with proceeds from the Credit Facility (as described below) and $4.9 million from cash on hand.
Bridge Loan Facility
On August 8, 2016, in connection with the execution of the Merger Agreement, the OP entered into a bridge loan commitment letter, pursuant to which UBS Securities LLC and UBS AG (Stamford, CT Branch) agreed to provide a $150.0 million senior secured bridge loan facility (the "Bridge Loan Facility") for a term of 364 days from date of the merger transaction. The Bridge Loan Facility required a 1.50% fee of the commitment amount upon execution. Upon closing of the Merger, the Company did not exercise its rights under the bridge loan commitment letter and as a result thereof the bridge loan commitment was automatically terminated at the Merger.
Mezzanine Facility
In connection with the Merger, the Company assumed the mezzanine loan agreement (the "Mezzanine Facility") with an estimated aggregate fair value of $107.0 million and which provided for aggregate borrowings up to €128.0 million subject to certain conditions. The Mezzanine Facility bore interest at 8.25% per annum, payable quarterly, and was scheduled to mature on August 13, 2017.
On March 30, 2017, the Company terminated the Mezzanine Facility agreement and repaid in full the outstanding balance of $56.5 million (or €52.7 million). The gross outstanding balance of the Mezzanine Facility was $55.4 million (or €52.7 million) as of December 31, 2016.
Note 7 — Fair Value of Financial Instruments
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:

F-31

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability and those inputs are significant.
Level 3 — Unobservable inputs that reflect the entity's own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter, however,quarter. However, the Company expects that changes in classifications between levels will be rare.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. As of December 31, 20172018 and 2016,2017, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company's derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company's potential nonperformance risk and the performance risk of the counterparties.
Financial Instruments Measured at Fair Value on a Recurring Basis
The following table presents information about the Company's assets and liabilities (including derivatives that are presented net) measured at fair value on a recurring basis as of December 31, 20172018 and 20162017, aggregated by the level in the fair value hierarchy level within which those instruments fall.
(In thousands) Quoted Prices in Active Markets
Level 1
 Significant Other Observable Inputs
Level 2
 Significant Unobservable Inputs
Level 3
 Total Quoted Prices in Active Markets
Level 1
 Significant Other Observable Inputs
Level 2
 Significant Unobservable Inputs
Level 3
 Total
December 31, 2018        
Foreign currency forwards, net (GBP & EUR) $
 $5,472
 $
 $5,472
Interest rate swaps, net (GBP & EUR) $
 $(628) $
 $(628)
2018 OPP (1)
 $
 $
 $(18,804) $(18,804)
December 31, 2017                
Cross currency swaps, net (GBP & EUR) $
 $(4,511) $
 $(4,511) $
 $(4,511) $
 $(4,511)
Foreign currency forwards, net (GBP & EUR) $
 $(2,737) $
 $(2,737) $
 $(2,737) $
 $(2,737)
Interest rate swaps, net (GBP & EUR) $
 $(6,450) $
 $(6,450) $
 $(6,450) $
 $(6,450)
Put options (GBP & EUR) $
 $63
 $
 $63
 $
 $63
 $
 $63
OPP (see Note 13)
 $
 $
 $(1,600) $(1,600)
December 31, 2016        
Cross currency swaps, net (GBP & EUR) $
 $21,179
 $
 $21,179
Foreign currency forwards, net (GBP & EUR) $
 $6,998
 $
 $6,998
Interest rate swaps, net (GBP & EUR) $
 $(15,457) $
 $(15,457)
Put options (GBP & EUR)

 $
 $523
 $
 $523
OPP (see Note 13)
 $
 $
 $(13,400) $(13,400)
2015 OPP (see Note 13)
 $
 $
 $(1,600) $(1,600)

F-32

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

(1) Effective with the adoption of ASU 2018-07 on January 1, 2019, the 2018 OPP will no longer be measured at fair market value on a recurring basis (see Note 2 — Summary of Significant Accounting PoliciesRecently Issued Accounting Pronouncements and seeNote 13 — Share-Based Compensation for additional information).
The valuation of the 2018 OPP isand 2015 OPP were determined using a Monte Carlo simulation. This analysis reflectsreflected the contractual terms of the 2018 OPP and 2015 OPP, including the performance periods and total return hurdles, as well as observable market-based inputs, including interest rate curves, and unobservable inputs, such as expected volatility. As a result, the Company has determined that itsthe 2018 OPP valuationand 2015 OPP valuations in its entirety isentireties were classified in Level 3 of the fair value hierarchy.
A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the years ended December 31, 20172018 or 2016.2017.

F-30

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Level 3 Valuations
The following is a reconciliation of the beginning and ending balance for the changes in instruments with Level 3 inputs in the fair value hierarchy for the year ended December 31, 2017:2018:
(In thousands) OPP 2018 OPP 2015 OPP
Beginning Balance as of December 31, 2016 $13,400
Beginning Value as of December 31, 2017 $
 $1,600
Initial value 27,600
 
Fair value adjustment (11,800) (8,796) (1,600)
Ending balance as of December 31, 2017 $1,600
Ending Value as of December 31, 2018 $18,804
 $
The following table provides quantitative information about the significant Level 3 inputs used (in thousands):
Financial Instrument Fair Value at December 31, 2017 Principal Valuation Technique Unobservable Inputs Input Value Fair Value at December 31, 2018 Principal Valuation Technique Unobservable Inputs Input Value
 (In thousands)   (In thousands)  
OPP $1,600
 Monte Carlo Simulation Expected volatility 20.0%
2018 OPP $18,804
 Monte Carlo Simulation Expected volatility 23.0%
The following discussion provides a description of the impact on a fair value measurement of a change in each unobservable input in isolation. For the relationship described below, the inverse relationship would also generally apply.
Expected volatility is a measure of the variability in possible returns for an instrument, parameter or market index given how much the particular instrument, parameter or index changes in value over time. Generally, the higher the expected volatility of the underlying instrument, parameter or market index, the wider the range of potential future returns. An increase in expected volatility, in isolation, would generally result in an increase in the fair value measurement of an instrument.
Financial Instruments Notnot Measured at Fair Value on a Recurring Basis
The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value. The fair value of short-term financial instruments such as cash and cash equivalents, due to/from affiliates, accounts payable and dividends payable approximates their carrying value on the consolidated balance sheets due to their short-term nature. The fair values of the Company's remaining financial instruments that are not reported at fair value on the audited consolidated balance sheets are reported below.
    Carrying Amount Fair Value Carrying Amount Fair Value
(In thousands) Level December 31,
2017
 December 31,
2017
 December 31,
2016
 December 31,
2016
Mortgage notes payable (1) (2)
 3 $988,490
 $963,751
 $752,484
 $747,870
Revolving credit facilities (3) (4)
 3 $298,909
 $297,890
 $616,614
 $616,614
Term facility (3)
 3 $229,905
 $233,916
 $
 $
Mezzanine facility (5)
 3 $
 $
 $55,383
 $55,400
    December 31, 2018 December 31, 2017
(In thousands) Level Carrying Amount Fair Value Carrying Amount Fair Value
Mortgage notes payable (1) (2)
 3 $1,129,807
 $1,157,710
 $984,876
 $963,751
Revolving Credit Facility (3)
 3 $363,894
 $365,591
 $298,909
 $297,890
Term Loan (3) (4)
 3 $278,727
 $283,558
 $229,905
 $233,916

______________
F-33

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Carrying value includes $1,140.1 million gross mortgage notes payable less $0.6 million of mortgage discounts and $9.7 million of deferred financing costs as of December 31, 2017
2018.

(2) Carrying value includes $992.3 million gross mortgage notes payable less $1.9 million of mortgage discounts and $5.5 million of deferred financing costs as of December 31, 2017.
_____________________________(3) Both the Revolving Credit Facility and Term Loan are part of the Credit Facility (see Note 6 - Credit Facilities for more information).
(1)
(4) Carrying value includes $282.1 million and $233.2 million gross Term Loan payable less $3.3 million and $3.3 million of deferred financing costs as of December 31, 2018 and 2017, respectively.
Carrying value includes $990.4 million gross mortgage notes payable and $1.9 million mortgage discounts, net as of December 31, 2017.
(2)
Carrying value includes $755.0 million gross mortgage notes payable and $2.5 million mortgage discounts, net as of December 31, 2016.
(3)
As of December 31, 2017, both facilities are part of the Company's Credit Facility (see Note 6 - Credit Facilities for more information).
(4)
Amounts as of December 31, 2016 were under the Prior Credit Facility.
(5)
Carrying value includes $55.4 million Mezzanine Facility and $17,000 mezzanine discounts, net as of December 31, 2016.
The fair value of the gross mortgage notes payable, the revolving credit facility as of December 31, 2017Revolving Credit Facility and the term facility isTerm Loan are estimated using a discounted cash flow analysis, based on the Advisor's experience with similar types of borrowing arrangements. Advances under the Prior Credit Facility were considered to be reported at fair value due to the short-term nature of the maturity. The Mezzanine Facility required the Company to pay interest based on a fixed rate and as such the advances were considered to approximate fair value.
Note 8 — Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the Company's foreign investmentsoperations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency. The Company enters into

F-31

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

derivative financial instruments to help protect the value or fix the amount of certain obligations in terms of its functional currency, the USD.
The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company's operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate and currency risk management. The use of derivative financial instruments carries certain risks, including the risk that the counterpartiesany counterparty to thesea contractual arrangements arearrangement may not able to perform under the agreements.agreement. To mitigate this risk, the Company only enters into a derivative financial instrumentsinstrument with counterpartiesa counterparty with a high credit ratings andrating with a major financial institutions withinstitution which the Company and its affiliates may also have other financial relationships.relationships with. The Company does not anticipate that any such counterpartiescounterparty will fail to meet theirits obligations.

F-34

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

The table below presents the fair value of the Company's derivative financial instruments as well as their classification on the audited consolidated balance sheets as of December 31, 20172018 and 2016:2017:
    December 31,
(In thousands) Balance Sheet Location 2017 2016
Derivatives designated as hedging instruments:    
Foreign currency forwards (EUR-USD) Derivative liabilities/assets, at fair value $(304) $972
Cross currency swaps (EUR) Derivative liabilities/assets, at fair value (3,328) 3,003
Cross currency swaps (GBP) Derivative liabilities/assets, at fair value (1,183) 16,868
Interest rate swaps (USD) Derivative assets, at fair value 2,093
 
Interest rate swaps (GBP) Derivative liabilities, at fair value (3,713) (8,595)
Interest rate swaps (EUR) Derivative liabilities, at fair value (2,446) (4,262)
Total   $(8,881) $7,986
Derivatives not designated as hedging instruments:    
Foreign currency forwards (GBP-USD) Derivative assets, at fair value $20
 $3,918
Foreign currency forwards (GBP-USD) Derivative liabilities, at fair value (1,175) 
Foreign currency forwards (EUR-USD) Derivative liabilities/assets, at fair value (1,258) 2,108
Put options (GBP) Derivative assets, at fair value 
 131
Put options (EUR) Derivative assets, at fair value 63
 392
Interest rate swaps (EUR) Derivative liabilities, at fair value (2,384) (2,600)
Cross currency swaps (GBP) Derivative assets, at fair value 
 477
Cross currency swaps (EUR) Derivative assets, at fair value 
 831
Total   $(4,734) $5,257
Amounts reported in accumulated other comprehensive income (loss) related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During the next 12 months, the Company estimates that an additional $3.9 million will be reclassified from other comprehensive income (loss) as an increase to interest expense.
    December 31,
(In thousands) Balance Sheet Location 2018 2017
Derivatives designated as hedging instruments:    
Foreign currency forwards (EUR-USD) Derivative liabilities, at fair value $
 $(304)
Cross currency swaps (EUR) Derivative liabilities, at fair value 
 (3,328)
Cross currency swaps (GBP) Derivative liabilities, at fair value 
 (1,183)
Interest rate swaps (USD) Derivative assets, at fair value 3,258
 2,093
Interest rate swaps (GBP) Derivative liabilities, at fair value (1,157) (3,713)
Interest rate swaps (EUR) Derivative liabilities, at fair value (1,443) (2,446)
Total   $658
 $(8,881)
Derivatives not designated as hedging instruments:    
Foreign currency forwards (GBP-USD) Derivative assets, at fair value $3,247
 $20
Foreign currency forwards (GBP-USD) Derivative liabilities, at fair value 
 (1,175)
Foreign currency forwards (EUR-USD) Derivative assets, at fair value 2,225
 
Foreign currency forwards (EUR-USD) Derivative liabilities, at fair value 
 (1,258)
Put options (GBP) Derivative assets, at fair value 
 63
Interest rate swaps (EUR) Derivative liabilities, at fair value (1,286) (2,384)
Total   $4,186
 $(4,734)
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income (loss)AOCI and is subsequently reclassified into earnings in the period that the hedged forecasted transaction impacts earnings. During 2017,2018, such derivatives were used to hedge the variable cash flows associated with variable-rate debt. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. During the years ended December 31, 2018, 2017 2016 and 2015,2016, the Company recorded a loss of $0.4 million, and gains of $0.2 million and $0.1 million and $0.4 millionof ineffectiveness in earnings, respectively. Additionally, during the twelve monthsyear ended December 31, 2018 and 2017, the Company accelerated the reclassification of amounts in other comprehensive income to earnings as a result of the hedged forecasted transactions becoming probable not to occur. The accelerated amounts were a losslosses of $0.1 million and $1.1 million.million for the years ended December 31, 2018 and 2017, respectively.
Amounts reported in AOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company's variable-rate debt. During the next 12 months, the Company estimates that an additional $1.2 million will be reclassified from other comprehensive income as an increase to interest expense.

F-35F-32

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

As of December 31, 20172018 and 2016,2017, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
 December 31, 2017 December 31, 2016 December 31, 2018 December 31, 2017
Derivatives 
Number of
Instruments
 Notional Amount 
Number of
Instruments
 Notional Amount 
Number of
Instruments
 Notional Amount 
Number of
Instruments
 Notional Amount
 (In thousands) (In thousands) (In thousands) (In thousands)
Interest rate swaps (GBP) 19 $301,155
 21 $474,161
 48 $234,312
 19 $301,155
Interest rate swaps (EUR) 13 222,190
 14 431,213
 13 212,255
 13 222,190
Interest rate swaps (USD) 3 150,000
  
 3 150,000
 3 150,000
Total 35 $673,345
 35 $905,374
 64 $596,567
 35 $673,345
In connection with a multi-property loan which refinanced all of the Company's mortgage notes payable denominated in GBP (see Note 5 — Mortgage Notes Payable) the Company terminated 15 interest rate swaps with an aggregate notional amount of £208.8 million and one floor with a notional amount of £28.1 million. Following these terminations, the amount relating to GBP borrowings still outstanding of approximately $1.2 million will remain in AOCI and be recorded as an adjustment to interest expense over the term of the related GBP borrowings. Of the amount recorded in AOCI following these terminations, $0.4 million was recorded as an increase to interest expense for the year ended December 31, 2018, resulting in $0.8 million remaining in AOCI as of December 31, 2018.
In connection with the July 24, 2017 refinancing of the Prior Credit Facility, the Company terminated an interest rate swap with notional amount of £160.0 million for a payment of $2.6$1.5 million. This swap was designated as a cash flow hedge on the Company's GBP borrowings which were partially paid off. As a result of the termination, the Company accelerated the reclassification of amounts in other comprehensive income to earnings as a result of the hedged forecasted transactions becoming probable not to occur. The portion of the termination payment relating to the GBP borrowings that were paid off resulted in a charge to earnings of $1.1 million, included in losses on derivative instruments for the year ended December 31, 2017. The remaining amount relating to GBP borrowings still outstanding will remainremained in AOCI and bewas recorded as an adjustment to interest expense over the term of the related GBP borrowings.
During the remainder of 2017 and the year ended December 31, 2015, the Company terminated/partially terminated two2018, $0.2 million and $0.2 million was recorded as an increase to interest expense and there was no remaining amount in AOCI as of its interest rate swaps and accelerated the reclassification of amounts in other comprehensive income (loss) to net income (loss) as a result of the hedged forecasted transactions becoming probable not to occur. The accelerated amounts were a loss of $38,000.December 31, 2018.
As a result of negative interest rates, specifically the Euro LIBOR, two interest rate swap positions fell out of designation during the quarter ended June 30, 2016 due to the fact that they were no longer highly effective. These positions did not have a zero percent interest rate floor embedded into the positions to mirror the interest rate floors on the underlying debt.
In connection with the July 24, 2017 refinancing of the Prior Credit Facility, the Company novated an interest rate swap with a notional amount of €224.0 million. Subsequent to the novation, the swap no longer qualified for hedge accounting. The interest swap liability of $0.7 million at that date will staywas recorded in AOCI and bewas recorded as an adjustment to interest expense over the term of the related LIBOR borrowings. During the remainder of 2017 and the year ended December 31, 2018, $0.3 million and $0.4 million was recorded as an increase to interest expense and there was no remaining amount in AOCI as of December 31, 2018. Subsequent changes in the value of the swap will bewere reflected in earnings.
The table below details the location in the consolidated financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the years ended December 31, 2018, 2017 2016 and 2015:2016:
  Year Ended December 31,
(In thousands) 2017 2016 2015
Amount of (loss) gain recognized in accumulated other comprehensive income (loss) from derivatives (effective portion) $(12,893) $(12,634) $8,800
Amount of loss reclassified from accumulated other comprehensive income (loss) into income as interest expense (effective portion) $(6,029) $(5,318) $(4,166)
Amount of loss recognized in income on derivative instruments (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing) $(931) $(99) $(371)
  Year Ended December 31,
(In thousands) 2018 2017 2016
Amount of gain (loss) recognized in AOCI from derivatives (effective portion) $2,739
 $(12,893) $(12,634)
Amount of loss reclassified from AOCI into income as interest expense (effective portion) $(3,746) $(6,029) $(5,318)
Amount of loss recognized on derivative instruments (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing) $(559) $(931) $(99)

F-33

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Net Investment Hedges
The Company is exposed to fluctuations in foreign currency exchange rates on property investments in foreign countries which pay rental income, incur property related expenses and hold debt instruments in currencies other than its functional currency, the USD. TheDuring the year ended December 31, 2017 and through the third quarter of 2018, the Company usesused foreign currency derivatives including cross currency swaps to hedge its exposure to changes in foreign exchange rates on certain of its foreign investments. Cross currency swaps involve fixing the applicable exchange rate for delivery of a specified amount of foreign currency on specified dates.
For derivatives designated as net investment hedges, the effective portion of changes in the fair value of the derivatives are reported in Accumulated Other Comprehensive IncomeAOCI (outside of earnings) as part of the cumulative translation adjustment. The

F-36

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts are reclassified out of accumulated other comprehensive incomeAOCI into earnings when the hedged net investment is either sold or substantially liquidated.
As of December 31, 2018 the Company did not have foreign currency derivatives that were designated as net investment hedges used to hedge its net investments in foreign operation. As of December 31, 2017, the Company had the following outstanding foreign currency derivatives that were designated as net investment hedges used to hedge its net investments in foreign operations:
 December 31, 2017 December 31, 2017
Derivatives Number of
Instruments
 Notional Amount 
Number of
Instruments
 Notional Amount
 (In thousands) (In thousands)
Cross currency swaps (EUR-USD) 3 $43,222
 3 $43,222
Cross currency swaps (GBP-USD) 1 66,282
 1 66,282
Foreign currency forwards (EUR-USD) 1 12,099
 1 12,099
Total 5 $121,603
 5 $121,603
Foreign Denominated Debt Designated as Net Investment Hedges
Effective May 17, 2015, all foreign currency draws under the Prior Credit Facility were designated as net investment hedges. As such, the effective portion of changes in value due to currency fluctuations are reported in accumulated other comprehensive income (loss)AOCI (outside of earnings) as part of the cumulative translation adjustment. The undesignated portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts are reclassified out of accumulated other comprehensive income (loss)AOCI into earnings when the hedged net investment is either sold or substantially liquidated, or if the Company should no longer possess a controlling interest.
As of December 31, 2017, total foreign currency advances under the Credit Facility were approximately $323.1 million, which reflects advances of £40.0 million ($54.0 million based upon an exchange rate of £1.00 to $1.35 as of December 31, 2017) and advances of €224.6 million ($269.1 million based upon an exchange rate of €1.00 to $1.20, as of December 31, 2017).
The Company designates its net investment hedge position on the first day of each quarterly period. As of October 1, 2017, foreign currency draws under the Credit Facility were £40.0 million ($54.0 million based on the aforementioned exchange rate as of December 31, 2017) and €224.6 million ($269.1 million based on the aforementioned exchange rate as of December 31, 2017) were designated as net investment hedges of the total foreign currency draws outstanding on the Credit Facility of $323.1 million. As of October 1, 2017, total net investments in real estate denominated in foreign currency were £103.5 million ($139.6 million based on the aforementioned exchange rate as of December 31, 2017) and €371.9 million ($445.6 million based on the aforementioned exchange rate as of December 31, 2017), none of which resulted in an undesignated excess position. The Company records adjustments to earnings for currency impact on thisimpacts related to undesignated excess position. Effective on July 24, 2017, in connection with the refinancing of the Prior Credit Facility, the GBP borrowingspositions, if any. There were substantially reduced, and there was no undesignated excess foreign advances in GBP thereafter. As of July 1, 2017,positions at any time during the Company’s Euro ("EUR") designated net investment hedges did not result in an excess position.year ended December 31, 2018. The Company recorded losses of $3.7 million, and gains of $10.1 million and $5.1 million for the years ended December 31, 2017 2016 and 2015,2016, respectively, due to currency changes on the undesignated excess foreign currency advances over the related net investments. For the portion of foreign draws now designated as net investment hedges, there were no additional remeasurement gains (losses) for the year ended December 31, 2017.
Additionally, in connection with the July 24, 2017 refinancing of the Prior Credit Facility, the Company terminated a cross-currency swap with a notional amount of £49.1 million for a payment of $10.6 million. This swap was designated as a net investment hedge on the Company's EUR investments, and this swap is still outstanding. The termination payment amount will remain in AOCI until the hedgehedged item is liquidated.
Prior to May 16, 2015, foreign currency advances which were comprised of $92.1 million of GBP draws (based upon an exchange rate of $1.58 to £1.00, as of May 16, 2015) and $126.0 million of EUR draws (based upon an exchange rate of $1.14 to €1.00, as of May 16, 2015) were not designated as net investment hedges and, accordingly, the changes in value through May 16, 2015 due to currency fluctuations were reflected in earnings. As a result, the Company recorded remeasurement losses on the foreign denominated draws of $3.6 million for the year ended December 31, 2015.Non-Designated Derivatives
Cross Currency Swaps Previously Designated as Net Investment Hedges

F-37

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

On February 4, 2015, the Company restructured its cross currency swaps and replaced its initial USD equity funding in certain foreign real estate investments with foreign currency debt. As part of the restructuring, foreign currency advances of €110.5 million and £68.5 million were drawn under the Company’s Credit Facility which created a natural hedge against the original equity invested in the real estate investments, thus removing the need for the final equity notional component of the cross currency swaps. The cross currency swaps had been designated as net investment hedges through the date of restructure. For derivatives designated as net investment hedges, the effective portion of changes in the fair value of the derivatives are reported in accumulated other comprehensive income (loss) (outside of earnings) as part of the cumulative translation adjustment. The ineffective portion of the change in fair value of the derivatives is recognized directly in earnings. Amounts are reclassified out of accumulated other comprehensive income (loss) into earnings when the hedged net investment is either sold or substantially liquidated. The restructuring and settlement of the cross currency swaps resulted in a gain of approximately $19.0 million, with $10.1 million in proceeds received and $8.9 million retained by the bank as a reduction of outstanding Credit Facility balance as of December 31, 2015. The gain will remain in the cumulative translation adjustment ("CTA") until such time as the net investments are sold or substantially liquidated in accordance with ASC 830. Following the restructuring noted above, these cross currency swaps no longer qualified for net investment hedge accounting treatment and as such, subsequent to February 5, 2015, all changes in fair value are recognized in earnings.
Non-Designated Hedges
The Company is exposed to fluctuations in the exchange rates of its functional currency, the USD, against the GBP and the EUR. The Company uses foreign currency derivatives including options, currency forward and cross currency swap agreements to manage its exposure to fluctuations in GBP-USD and EUR-USD exchange rates. While these derivatives are economically hedging the fluctuations in foreign currencies, they do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of derivatives not designated as hedges under qualifying hedging relationships are recorded directly in net income (loss). During the year ended December 31, 2015, the Company identified errors in accounting for the cross currency derivatives that were no longer designated as hedges subsequent to their restructuring on February 4, 2015 which resulted in the Company recording additional gain on derivative investments of $0.5 million (seeNote 2 — Summary of Significant Accounting Policies). The Company recorded a gain of $7.8 million, a loss of $7.1 million and gainsa gain of $7.4 million and $3.9 million on the non-designated hedges for the years ended December 31, 2018, 2017 and 2016, and 2015, respectively.

F-34

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

As of December 31, 20172018 and 2016,2017, the Company had the following outstanding derivatives that were not designated as hedges under qualifying hedging relationships:
  December 31, 2017 December 31, 2016
Derivatives 
Number of
Instruments
 Notional Amount 
Number of
Instruments
 Notional Amount
    (In thousands)   (In thousands)
Foreign currency forwards (GBP - USD) 24 $32,116
 21 $18,058
Foreign currency forwards (EUR - USD) 22 35,712
 20 28,424
Cross currency swaps (GBP - USD)  
 3 43,457
Cross currency swaps (EUR - USD)  
 3 30,604
Interest rate swaps (EUR) 6 414,093
 5 127,570
Options (GBP-USD) 1 675
 5 3,375
Options (EUR-USD) 5 9,250
 5 6,250
Total 58 $491,846
 62 $257,738

F-38

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

  December 31, 2018 December 31, 2017
Derivatives 
Number of
Instruments
 Notional Amount 
Number of
Instruments
 Notional Amount
    (In thousands)   (In thousands)
Foreign currency forwards (GBP - USD) 50 $43,000
 24 $32,116
Foreign currency forwards (EUR - USD) 38 39,500
 22 35,712
Interest rate swaps (EUR) 5 138,625
 6 414,093
Options (GBP-USD)  
 1 675
Options (EUR-USD)  
 5 9,250
Total 93 $221,125
 58 $491,846
Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company's derivatives as of December 31, 20172018 and 2016.2017. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying audited consolidated balance sheets.
         Gross Amounts Not Offset on the Balance Sheet           Gross Amounts Not Offset on the Balance Sheet  
(In thousands) Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset on the Balance Sheet Net Amounts of Assets (Liabilities) presented on the Balance Sheet Financial Instruments Cash Collateral Received (Posted) Net Amount Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset on the Balance Sheet Net Amounts of Assets (Liabilities) presented on the Balance Sheet Financial Instruments Cash Collateral Received (Posted) Net Amount
December 31, 2018 $8,730
 $(3,886) $
 $4,844
 $
 $
 $4,844
December 31, 2017 $2,176
 $(15,791) $
 $(13,615) $
 $
 $(13,615) $2,176
 $(15,791) $
 $(13,615) $
 $
 $(13,615)
December 31, 2016 $28,700
 $(15,457) $
 $13,243
 $
 $
 $13,243
In addition to the above derivative arrangements, the Company also uses non-derivative financial instruments to hedge its exposure to foreign currency exchange rate fluctuations as part of its risk management program, including foreign denominated debt issued and outstanding with third parties to protect the value of its net investments in foreign subsidiaries against exchange rate fluctuations. The Company has drawn, under its Prior Credit Facility, and expects to continue to draw, foreign currency advances under itsthe Prior Credit Facility and the Credit Facility to fund certain investments in the respective local currency which creates a natural hedge against the original equity invested in the real estate investments, removing the need for the final cross currency swaps (seeNote 5 — Mortgage Notes Payable, Net). As further discussed below, in conjunction with the restructuring of the cross currency swaps on February 4, 2015, foreign currency advances of €110.5 million and £68.5 million were drawn under the Company’s Prior Credit Facility. The Company separately designated each foreign currency draw as a net investment hedge under ASC 815. Effective May 17, 2015, the Company modified the hedging relationship and designated all foreign currency draws as net investment hedges.swaps.
Credit-Risk-Related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
As of December 31, 2017,2018, the fair value of derivatives in net liability position including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $17.4$4.8 million. As of December 31, 2017,2018, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value.
Note 9 — Stockholders' Equity
Common Stock
On February 28, 2017, the Company completed a Reverse Stock Split of Common Stock, OP Units and LTIP Units, at a ratio of 1-for-3 (see Note 1 — Organization for details).
As of December 31, 20172018 and 2016,2017, the Company had 67.3 million76,080,625 and 66.3 million67,287,231, respectively, shares of Common Stock outstanding, respectively, excluding unvested restricted shares of Common Stock ("restricted shares"), the limited partnership units in the OP ("OP Units") issued to limited partners other than the Company or long-term incentive plan units in the OP ("RSUs and LTIP Units")Units issued in accordance with the 2018 OPP which are currently, or 2015 OPP. LTIP Units may be in the future, convertible into shares of Common Stock.
The Company listed its Common Stock on the NYSE under the symbol "GNL" on June 2, 2015. As of December 31, 2017 and 2016, the Company had 67,287,231 and 66,258,559, respectively, shares of Common Stock outstanding, including shares issued under the DRIP, but not including unvested restricted shares, the OP Units issued to limited partners other than the Company or long-term incentive units issued in accordance with the OPP which are currently, or may be in the future, convertible into shares of Common Stock. future.
On September 2, 2016, 421,383 OP Units were converted to Common Stock, of which 305,411 were issued to individual members and employees of AR Global, 115,967 were issued to the Former Service Provider, and 5five were issued to theGlobal Net Lease Special Limited Partner.Partner, LLC (the "Special Limited Partner"), an affiliate of AR Global that directly owns the Advisor and the Property Manager. During the first half of 2017, the remaining 181,841 OP Units, which were held by individual members and employees of AR Global, were converted into Common Stock. There were no OP Units held by anyone other than the Company outstanding as of December 31, 2018 and 2017.
In addition, in connection with the Merger Agreement, each outstanding share of Global II Common Stock, including restricted shares, other than shares owned by the Company or any wholly owned subsidiary of Global II, was converted into the right to receive 2.27 shares of Common Stock in connection with the Merger. Additionally, all outstanding Global II OP Units were converted into the right to receive 2.27 shares of Common Stock.
In 2016, the Company issued 9.6 million of shares of Common Stock as consideration in the Merger. Based on the closing price of the shares of Common Stock on December 22, 2016, as reported on the NYSE, the aggregate value of the Merger Consideration paid or payable to former holders of Global II Common Stock and former holders of units of Global II OP Units was approximately $220.9 million.
Equity Distribution AgreementATM Program — Common Stock
The Company has entered into an Equity Distribution Agreement with UBS Securities LLC, Robert W. Baird & Co. Incorporated, Capital One Securities, Inc., Mizuho Securities USA Inc., FBR Capital Markets & Co. and KeyBanc Capital Markets Inc. to sell shares of Common Stock, to raise aggregate sales proceeds of $175.0 million, from time to time, pursuant to an “at the market” equity offering program (the “ATM Program”). pursuant to which the Company may sell shares of Common Stock, from time to time through its sales agents. During the twelve monthsyear ended December 31, 2017, the Company sold 820,988 shares of Common Stock through the ATM Program for netgross sales proceeds of $18.3$18.7 million, afterbefore issuance costs of $0.4 million. During the year ended December 31, 2018, the Company sold 164,927 shares of Common Stock through the ATM program for gross proceeds of $3.5 million, before commissions paid of $35,140 and additional issuance costs of $0.3 million. These fees were charged tocosts are recorded in additional paid-in capital on the accompanying audited consolidated balance sheet duringsheets.
In January 2019, the ATM ProgramCompany sold additional shares of common stock and in February 2019, the Company terminated its existing equity distribution agreement and entered into a new equity distribution agreement with substantially the same sales agents on substantially the same terms. For additional information, see Note 16 — Subsequent Events.
Underwritten Offerings — Common Stock
On August 20, 2018, the Company completed the issuance and sale of 4,600,000 shares of Common Stock (including 600,000 shares issued and sold pursuant to the underwriters' exercise of their option to purchase additional shares in full) in an underwritten public offering at a price per share of $20.65. The gross proceeds from this offering were $95.0 million before deducting the underwriting discount of $3.8 million and additional offering expenses of $0.3 million.
On November 28, 2018, the Company completed the issuance and sale of 4,000,000 shares of Common Stock in an underwritten public offering at a price per share of $20.20. The gross proceeds from this offering were $80.8 million before deducting the underwriting discount of $3.2 million and additional offering expenses of $0.1 million.
Preferred Stock
The Company is authorized to issue up to 16,670,000 shares of Preferred Stock, of which it has classified and designated 13,409,650 and 5,409,650 as authorized shares of its 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share ("Series A Preferred Stock"), as of December 31, 2017.
Series A Preferred Stock
As of2018 and December 31, 2017, and 2016, therespectively. The Company had 5,416,890 and 5,409,650 shares of Series A Preferred Stock outstanding. There were noissued and outstanding, as of December 31, 2018 and December 31, 2017, respectively.
ATM Program — Series A Preferred Stock
In March 2018, the Company established an “at the market” equity offering program for its Series A Preferred Stock (the "Preferred Stock ATM Program") pursuant to which the Company may raise aggregate sales proceeds of $200.0 million through sales of shares of Series A Preferred Stock outstanding as offrom time to time through its sales agents. During the year ended December 31, 2016.2018, the Company sold 7,240 shares of Series A Preferred Stock through the Preferred Stock ATM Program for gross proceeds of $0.2 million, before commissions paid of $2,724 and additional issuance costs of $0.4 million.
Underwritten Offerings — Series A Preferred Stock
On September 12,7, 2017, the Company completed the initial issuance and sale of 4,000,000 shares of the Series A Preferred Stock which generated gross proceedsin an underwritten public offering at a public offering price equal to the liquidation preference of $100.0 million$25.00 per share, and, net proceeds of $96.3 million, after deducting underwriting discounts and offering costs paid by the Company. Onon October 11, 2017, the underwriters exercised an option to purchase additional shares of Series A Preferred Stock,Company issued and the Company sold an additional 259,650 shares of Series A Preferred Stock which generatedpursuant to the underwriters’ partial exercise of their option to purchase additional shares in accordance with terms of the underwriting agreement. The gross proceeds from this offering were $106.5 million before deducting the underwriting discount of $6.5$3.4 million after adjusting for the amountand additional offering expenses of dividends declared per share for the period from September 12, 2017 to September 30, 2017 and payable to holders of record as of October 6, 2017, and resulted in net proceeds of $6.3 million, after deducting underwriting discounts and offering costs paid by the Company.$0.5 million.
On December 19,14, 2017, the Company completed the issuance and sale of 1,150,000 additional shares of the Series A Preferred Stock (including 150,000 shares pursuant to the underwriter’s exercise of its option to purchase additional shares in full) in an underwritten public offering which generatedat a public offering price equal to the liquidation preference of $25.00 per share. The gross proceeds offrom this offering were $28.8 million before deducting the underwriting discount of $0.8 million and net proceedsadditional offering expenses of $27.8$0.2 million. These additional shares of shares of
Series A Preferred Stock have been consolidated, form a single series, and are fully fungible with the outstanding Series A Preferred Stock.- Terms
Holders of Series A Preferred Stock are entitled to cumulative dividends in an amount equal to $1.8125 per share each year, which is equivalent to the rate of 7.25% of the $25.00 liquidation preference per share per annum. The Series A Preferred Stock has no stated maturity and will remain outstanding indefinitely unless redeemed or otherwise repurchased. On and after September 12, 2022, at any time and from time to time, the Series A Preferred Stock will be redeemable in whole or in part, at the Company's option, at a cash redemption price of $25.00 per share plus an amount equal to all dividends accrued and unpaid (whether or not declared), if any, to, but not including, the redemption date. In addition, upon the occurrence of a Delisting Event or a Change of Control (each as defined in the articles supplementary governing the terms of the Series A Preferred Stock (the "Articles Supplementary"), the Company may, subject to certain conditions, at its option, redeem the Series A Preferred Stock, in whole but not in part, within 90 days after the first date on which the Delisting Event occurred or within 120 days after the first date on which the Change of Control occurred, as applicable, by paying the liquidation preference of $25.00 per share, plus an amount equal to all dividends accrued and unpaid (whether or not declared), if any, to, but not including, the redemption date. If the Company does not exercise these redemption rights upon the occurrence of a Delisting Event or a Change of Control, the holders of Series A Preferred Stock will have certain rights to convert Series A Preferred Stock into shares of Common Stock based on a defined formula subject to a cap whereby the holders of Series A Preferred Stock may receive a maximum of 2.301 shares of Common Stock (as adjusted for any stock splits) per share of Series A Preferred Stock. The necessary conditions to convert the Series A Preferred Stock into Common Stock have not been met as of December 31, 2017.2018. Therefore, Series A Preferred Stock will not impact Company's earnings per share calculations.
The Series A Preferred Stock ranks senior to the Common Stock, with respect to dividend rights and rights upon the Company's voluntary or involuntary liquidation, dissolution or winding up.
Voting rights for holders of Series A Preferred Stock exist primarily with respect to the ability to elect two additional directors to the Company’s board of directors if six or more quarterly dividends (whether or not consecutive) payable on the Series A Preferred Stock are in arrears, and with respect to voting on amendments to the Company’s charter (which includes the Articles Supplementary) that materially and adversely affect the rights of the Series A Preferred Stock or create additional classes or series of shares of the Company’s capital stock that are senior to the Series A Preferred Stock. Other than the limited circumstances described above and in the Articles Supplementary, holders of Series A Preferred Stock do not have any voting rights.
Monthly Dividends and Change to Payment Dates
The Company generally pays dividends on its Common Stock on the 15th day of each month (or, if not a business day, the next succeeding business day) to Common Stock holders of record on the applicable record date during the month at aan annualized rate of $2.13 per share or $0.1775 per share on a monthly basis. Prior to stockholders ofJuly 2018, the record as of close of business ondate for the Company’s regular dividend was generally the 8th day of suchthe applicable month. The Company's board of directors may alter the amounts of dividends paid or suspend dividend payments at any time and therefore dividend payments are not assured. For purposes of the presentation of information herein, the Company may refer to distributions by the OP on OP Units and LTIP Units (as defined inIn addition, see Note 136Share-Based CompensationCredit Facilities f) as dividends.or additional information on the restrictions on the payment of dividends and other distributions imposed by our Credit Facility.
Dividends on Series A Preferred Stock accrue in an amount equal to $0.453125 per share per quarter to Series A Preferred Stock holders, which is equivalent to 7.25% of the $25.00 liquidation preference per share of Series A Preferred Stock per annum. Dividends on the Series A Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day) to holders of record at the close of business on the record date set by the Company's board of directors, which must be not more than 30 nor fewer than 10 days prior to the applicable payment date. All dividends paid on the Series A Preferred Stock were considered 100% ordinary dividend income.
The following table details from a tax perspective, the portion of a common stock dividends classified as return of capital and ordinary dividend income, per share per annum:
 Year Ended December 31, Year Ended December 31,
(In thousands) 2017 2016 2015 2018 2017 2016
Return of capital 18.3% $0.39
 62.0% $1.32
 63.4% $1.35
 $1.57
 73.7% $0.39
 18.3% $1.32
 62.0%
Ordinary dividend income 81.7% 1.74
 38.0% 0.81
 36.6% 0.78
 0.56
 26.3% 1.74
 81.7% 0.81
 38.0%
Total 100.0% $2.13
 100.0% $2.13
 100.0% $2.13
 $2.13
 100.0% $2.13
 100.0% $2.13
 100.0%
Note 10 — Commitments and Contingencies
Operating Ground Leases
Certain properties are subject to ground leases, which are accounted for as operating leases. The ground leases have varying ending dates, renewal options, and rental rate escalations, with the latest leases extending to April 2105. Future minimum rental payments to be made by the Company under these non-cancelable ground leases, excluding increases resulting from increases in the consumer price index, are as follows:
(In thousands) Future Ground Lease Payments 
Future Ground Lease Payments (1)
2018 $1,434
2019 1,434
 $1,371
2020 1,434
 1,371
2021 1,434
 1,371
2022 1,434
 1,371
2023 1,434
 1,371
Thereafter 42,402
 40,519
Total (1)
 $51,006
Total (2)
 $47,374
(1) Ground lease rental payments due for ING Amsterdam are not included in the table above as the Company's ground for this property is prepaid through 2050.
(1)
Assumes exchange rates of £1.00 to $1.27 for GBP and €1.00 to $1.14 for EUR as of December 31, 2018 for illustrative purposes, as applicable.
(2)
Ground lease rental payments due for the Company's ING Amsterdam lease are not included in the table above as the Company's ground for this property is prepaid through 2050.
The Company incurred rent expense on ground leases of $1.3 million during the years ended December 31, 2018, 2017 and 2016.

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GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

Litigation and Regulatory Matters
In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There wereare no material legal or regulatory proceedings pending or known to be contemplated against the Company, however on onCompany.
At a hearing on March 15, 2018, the New York Supreme Court issued a ruling (i) denying the Former Service Provider’s request for a preliminary injunction preventing defendants from terminating the Former Service Provider, (ii) dismissing the Former Service Provider’s claim for a declaratory judgment that the termination is void and of no force and effect, and (iii) allowing the Former Service Provider’s remaining claims to proceed.  On April 16, - Subsequent Events 2018, the defendants filed answers and counterclaims against the Former Service Provider alleging damages resulting from the Former Service Provider’s underperformance of its duties, as well as damages related to the Former Service Provider’s retention of approximately $91,000 in pre-paid fees for additional information).the post-termination period. The New York Supreme Court held a preliminary conference on April 17, 2018 at which it set a discovery schedule, and the parties are currently engaged in discovery. As with any litigation, the dispute and resulting litigation may divert management’s

F-35

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

attention from the day-to-day operations of our business and result in substantial cost to the Company, including amounts that may become payable to reimburse AR Global, the Advisor and their affiliates for their legal costs in defending themselves against the Former Service Provider’s lawsuit pursuant to the Company's indemnification obligations to them. During the year ended December 31, 2018, the Company incurred $2.9 million of litigation costs relating to the matter and recorded a reserve of $7.4 million related to the anticipated settlement of this litigation. The settlement reserve was recorded in the fourth quarter of 2018 as a result of settlement discussions with the Former Service Provider through February of 2019. Based on the progression of these discussions, the Company was able to reasonably estimate an amount to reserve, however the actual settlement, if any, may differ from the amount reserved. These costs are included in acquisition, transaction and other costs in our consolidated statement of operations.
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of December 31, 2017,2018, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.
Hurricane Damage
During the year ended December 31, 2017, properties owned by the Company in the U.S. with carrying amounts of $167.2 million (including $32.0 million of properties located in Puerto Rico) were located in areas impacted by Hurricanes Irma, Harvey and Maria.  The hurricanes have not significantly impacted the ability of the tenants in these properties to operate their respective businesses, and the tenants continue to fully and timely pay rent, with no indication that this will not continue throughout the remainder of their respective lease terms.  In addition, the Puerto Rico properties are covered by insurance for both property damage and business interruption, subject to normal deductibles.  Accordingly, the Company does not believe that its exposure to loss on its property or operations will be significant.
Note 11 — Related Party Transactions
As of December 31, 20172018 and 2016, the Sponsor, the Former Parent of the Sponsor,2017, AR Global the Special Limited Partner and a subsidiary of the Service Providercertain affiliates owned, in the aggregate, 39,90435,900 and 81,48139,904 shares of the Company's outstanding Common Stock, respectively. The Advisor, which is an affiliate of AR Global, and its affiliates currently may, and, the Former Service Provider and their affiliates maypreviously could incur costs and fees on behalf of the Company. As of December 31, 20172018 and 2016,2017, the Company had $16,000 and $5.2 million of receivables from affiliated entities and $0.8 million and $2.2 million of payables to their affiliates, respectively.
As of December 31, 2017,2018, AR Global indirectly owned 95% of the membership interests in the Advisor and Scott J. Bowman, the Company's former chief executive officer and president, directly owned the other 5% of the membership interests in the Advisor. Prior to his resignation as chief executive officer and president of the Company, Mr. Bowman owned 10% of the membership interests in the Advisor and AR Global indirectly owned the other 90% of the membership interests in the Advisor. James L. Nelson, the Company’s chief executive officer and president, holds a non-controlling profit interest in the Advisor and Property Manager. Mr. Nelson was appointed the Company's chief executive officer and president, effective as of August 8, 2017.
The Company is the sole general partner of the OP. At Listing, the Advisor held a total of 487,252 OP Units, the Service Provider held a total of 115,967 OP Units, and the Special Limited Partner held 7 OP Units. Subsequent to the Listing all OP Units issued to the Advisor were transferred to individual investors. On September 2, 2016, 421,383 of the OP Units were converted into Common Stock, of which 305,411 were issued to individual members and employees of AR Global, 115,967 were issued to the Former Service Provider and 5five were issued to the Special Limited Partner. On April 1,During the first half of 2017, the remaining 181,841 OP Units, were converted into Common Stock which were held by individual members and employees of AR Global.
On June 2, 2015, the Advisor and the Service Provider exchanged 575,438 previously-issued Class B Units for 575,438Global, were converted into Common Stock. There were no OP Units pursuant to the OP Agreement. These OP Units are redeemable for shares of Common Stock ofheld by anyone other than the Company on a one-for-one basis, or the cash valueoutstanding as of shares of Common Stock (at the option of the Company), 12 months from the Listing Date, subject to the terms of the limited partnership agreement of the OP. The AdvisorDecember 31, 2018 and the OP also entered into a Contribution and Exchange Agreement pursuant to which the Advisor contributed $0.8 million in cash to the OP in exchange for 27,776 OP Units.2017. The OP made distributions to partnersholders of the OP Units other than the Company of $0.1 million $1.0 million, and 0.6$1.0 million during the years ended December 31, 2017 2016 and 2015,2016, respectively.
In addition, in connection with the OPP, the Company paid $0.6 million in distributions related to the Advisor as the sole holder of LTIP Units (as defined in Note 13 — Share-Based Compensation) during the yearyears ended December 31, 2018 and 2017, which are included in accumulated deficit in the audited consolidated statements of equity. As of December 31, 20172018 and 2016,2017, the Company had no unpaid distributions relating toon the LTIP distributions.
Holders of OP Units (other than the Company) had the right to convert OP Units for a corresponding number of shares of the Company's Common Stock, or the cash value equivalent of those corresponding shares, at the Company's option, in accordance with the limited partnership agreement of the OP. The rights of the holders of OP Units were limited, however, and did not include the ability to replace the general partner or to approve the sale, purchase or refinancing of the OP's assets.

F-40

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

Realty Capital Securities, LLC (the "Former Dealer Manager") served as the dealer manager of the Company's initial public offering, which was ongoing from October 2012 to June 2014 and, together with its affiliates, continued to provide the Company with various services through December 31, 2015. RCS Capital Corporation ("RCAP"), the parent company of the Former Dealer Manager, and certain of its affiliates that provided services to the Company, filed for Chapter 11 bankruptcy protection in January 2016, prior to which it was also under common control with AR Global, the parent of the Sponsor. In May 2016, RCAP and its affiliated debtors emerged from bankruptcy under the new name of Aretec Group, Inc. On March 8, 2017, the creditor trust established in connection with the RCAP bankruptcy filed suit against AR Global, the Advisor, advisors of other entities sponsored by AR Global, and AR Global's principals. The suit alleges, among other things, certain breaches of duties to RCAP. The Company is not named in the suit, nor are there any allegations related to the services the Advisor provides to the Company. On May 26, 2017, the defendants moved to dismiss. On November 30, 2017, the Court issued an opinion partially granting the defendants’ motion. The Advisor has informed the Company that it believes that the suit is without merit and intends to defend against it vigorously.
Acquired Related Party Receivable
As more fully described in Note 3 — Merger Transaction, the Company acquired a $5.1 million receivable from an affiliate of the Advisor which is payable in equal monthly installments beginning on January 15, 2017. As of December 31, 2017, there is no balance remaining on this receivable.Units.
Fees Paid in Connection Withwith the Operations of the Company
Until the Listing Date, the Advisor was paid an acquisition fee of 1.0% of the contract purchase price of each acquired property and 1.0% of the amount advanced for a loan or other investment and a finance fee equal to 0.75% of the amount available and/or outstanding under such financing, subject to certain limitations. Solely with respect to investment activities in Europe, the Advisor paid the Service Provider the acquisition fees and financing coordination fees. Until the Listing Date, the Advisor was also reimbursed for expenses incurred in the process of acquiring properties, which were limited to 0.5% of the contract purchase price and 0.5% of the amount advanced for a loan or other investment. Additionally, the Company paid third-party acquisition expenses.
In addition, until the Listing Date, the Company compensated the Advisor for its asset management services in an amount equal to 0.75% per annum of the total of: the cost of the Company's assets (cost includes the purchase price, acquisition expenses, capital expenditures and other customarily capitalized costs, but excluding acquisition fees), plus costs and expenses incurred by the Advisor in providing asset management services, less the excess, if any, of dividends over FFO, plus acquisition fees expenses and restricted share grant amortization. Until April 1, 2015, as compensation for this arrangement, the Company caused the OP to issue (subject to periodic approval by the board of directors) performance-based restricted partnership units of the OP ("Class B Units") to the Advisor and Service Provider. An aggregate of 575,438 Class B Units were issued to the Advisor and the Service Provider in connection with this arrangement, all of which vested on the Listing Date at a cost of $14.5 million. Concurrently, the Class B Units were converted to OP Units on a one-to-one basis. The vested value was calculated based, in part, on the closing price of Company's Common Stock onOn June 2, 2015, less an estimated discount forconcurrent with its listing on the one year lock-out period of transferability or liquidity of the OP Units. The Advisor and the Service Provider received cash distributions on unvested Class B Units equal to the dividend rate paid on Common Stock. The Company records OP Unit distributions in the audited consolidated statement of changes in equity. Since April 1, 2015, the Advisor has been paid for its asset management services in cash. The performance condition related to these Class B Units was satisfied upon completion of the Listing, and the Class B Units vested.
On the Listing Date,NYSE, the Company entered into the Advisory Agreement. UnderAgreement, which was subsequently amended on August 14, 2018 (the "August Amendment") and November 6, 2018 (the "November Amendment"). These amendments only revise the termsprovisions regarding the effective annual thresholds of Core AFFO Per Share (as defined in the Advisory Agreement) that the Company must satisfy for the Advisor to be paid Incentive Compensation (as defined in the Advisory Agreement).
Under the Advisory Agreement, the Company pays the Advisor:Advisor the following fees in cash:
(i)a base fee of $18.0 million per annum payable in cash monthly in advance (“Minimum Base Management Fee”); and
(ii)plus a variable fee, payable monthly in advance in cash, equal to 1.25% of the cumulative net proceeds realized by the Company from the issuance of any common equity, including any common equity issued in exchange for or conversion of preferred stock or exchangeable notes, as well as, from any other issuances of common, preferred, or other forms of equity of the Company, including units of any operating partnership (“Variable Base Management Fee”); and
(iii)
an incentive fee (“Incentive Compensation”), 50% payable in cash and 50% payable in shares of the Company’s Common Stock (which shares are subject to certain lock up restrictions), equal to: (a) 15% of the Company’s Core AFFO (as defined in the Advisory Agreement) per weighted-average share of Common Stock outstanding for the applicable period (“Core AFFO Per Share”)(1) in excess of an incentive hurdle based on an annualized Core AFFO Per Share of $2.37, plus (b) 10% of the Core AFFO Per Share in excess of an incentive hurdle of an annualized Core AFFO Per Share of $3.08. The $2.37 and $3.08 incentive hurdles are subject to annual increases of 1% to 3%. The Base Management Fee and the Incentive Compensation are each subject to annual adjustment.

F-41F-36

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

Additionally, the Company pays the Advisor the Incentive Compensation, an amount earned each quarter, 50% payable in cash and 50% payable in shares of Common Stock (subject to certain lock up restrictions). The Incentive Compensation is calculated on an annual basis at the end of the Company’s fiscal year but is payable throughout the course of a year, in quarterly installments, subject to a final year-end adjustment. At the end of each fiscal year, the difference, if any, between the amount of the Incentive Compensation actually paid to the Advisor in the preceding year under the quarterly installments and the actual amount payable for the fiscal year is either repaid by or paid to the Advisor as applicable. Shares of Common Stock that were issued as a portion of any quarterly installment payment are retained and, for purposes of any repayment required to be made by the Advisor, have the value they had at the time of issuance and are adjusted in respect of any dividend or other distribution received prior to the time of repayment but not subsequent dividends or other distributions.
Under the Advisory Agreement, prior to the August Amendment, the Incentive Compensation was equal to: (a) 15% of the Company’s Core AFFO (as defined in the Advisory Agreement) per weighted-average share of Common Stock outstanding for the applicable period (“Core AFFO Per Share”)(1) in excess of an incentive hurdle based on an annualized Core AFFO Per Share of $2.37, plus (b) 10% of the Core AFFO Per Share in excess of an incentive hurdle of an annualized Core AFFO Per Share of $3.08. The $2.37 and $3.08 incentive hurdles were subject to annual increases of 1% to 3%.
Under the Advisory Agreement, as amended by the August Amendment, the Incentive Fee Lower Hurdle (as defined in the Advisory Agreement) was decreased from $2.37 to (a) $2.15 for the 12 months ending June 30, 2019, and (b) $2.25 for the 12 months ending June 30, 2020, and the Incentive Fee Upper Hurdle (as defined in the Advisory Agreement) was decreased from $3.08 to (a) $2.79 for the 12 months ending June 30, 2019, and (b) $2.92 for the 12 months ending June 30, 2020. With respect to the third quarter of 2018, the hurdles were met and the Advisor was paid $0.4 million in a quarterly installment of Incentive Compensation. Because, based on the calculation as of December 31, 2018 the hurdles had not been met, the Company recorded a reversal of $0.4 million for Incentive Compensation previously recorded in the third quarter of 2018, and as a result, no Incentive Compensation was earned for the year ended December 31, 2018. During the years ended December 31, 2017 and 2016, no Incentive Compensation was earned.
In addition, the August Amendment revised the provisions in the Advisory Agreement governing adjustments to these annual thresholds. The annual thresholds may, beginning with effect from July 1, 2020, be increased each year in the sole discretion of a majority of the Company’s independent directors (in their good faith reasonable judgment, after consultation with the Advisor), by a percentage equal to between 0% and 3% instead of 1% and 3%. In addition, in August 2023 and every five years thereafter, the Advisor will have a right to request that the Company’s independent directors reduce the then current Incentive Fee Lower Hurdle and Incentive Fee Upper Hurdle and make a determination whether any reduction in the annual thresholds is warranted.
The annual aggregate amount of the Minimum Base Management Fee and Variable Base Management Fee (collectively, the “Base Management Fee”) that may be paid under the Advisory Agreement are subject to varying caps based on assets under management (“AUM”)(2), as defined in the Advisory Agreement. The amount of the Base Management Fee to be paid under the Advisory Agreement is capped at the AUM for the preceding year multiplied by (a) 0.75% if equal to or less than $3.0 billion; (b) 0.75% less (i) a fraction, (x) the numerator of which is the AUM for such specified period less $3.0 billion and (y) the denominator of which is $11.7 billion multiplied by 0.35% if AUM is greater than $3.0 billion but less than $14.6 billion; or (c) 0.4% if equal to or greater than $14.7 billion.

(1) 
For purposes of the Advisory Agreement, as amended by the November Amendment, Core AFFO per share means (i) net income adjusted for the following items (to the extent they are included in net income): (a) real estate related depreciation and amortization; (b) net income from unconsolidated partnerships and joint ventures; (c) one-time costs that the Advisor deems to be non-recurring; (d) non-cash equity compensation (other than any Restricted Share Payments (as defined in the Advisory Agreement)); (e) other non-cash income and expense items; (f) non-cash dividends related to the Class B Units of the OP and certain non-cash interest expenses related to securities that are convertible to Common Stock; (g) gainsgain (or losses)loss) from the sale of investments; (h) impairment lossesloss on real estate; (i) acquisition and transactions related costs (now known as acquisition, transaction related costs;and other costs on the face of the Company's income statement); (j) straight-line rent; (k) amortization of above and below market leases assets and liabilities; (l) amortization of deferred financing costs; (m) accretion of discounts and amortization of premiums on debt investments; (n) marked-to-market adjustments included in net income; (o) unrealized gains or lossesgain (loss) resulting from consolidation from, or deconsolidation to, equity accounting, and (p) consolidated and unconsolidated partnerships and joint ventures.ventures and (q) Incentive Compensation, (ii) divided by the weighted-average outstanding shares of Common Stock on a fully-diluted basis for such period.
(2) 
For purposes of the Advisory Agreement, "AUM"AUM means, for a specified period, an amount equal to (A) (i) the aggregate costs of the Company's investments (including acquisition fees and expenses) at the beginning of such period (before reserves for depreciation of bad debts, or similar non-cash reserves) plus (ii) the aggregate cost of the Company's investment at the end of such period (before reserves from depreciation or bad debts, or similar non-cash reserves) divided by (B) two (2).
Specifically,
F-37

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

In addition, the per annum aggregate amount of the Base Management Fee and the Incentive Compensation to be paid under the Advisory Agreement is capped at (a) 1.25% of the AUM for the previous year if AUM is less than or equal to $5.0 billion; (b) 0.95% if the AUM is equal to or exceeds $15.0 billion; or (c) a percentage equal to: (A) 1.25% less (B) (i) a fraction, (x) the numerator of which is the AUM for such specified period less $5.0 billion and (y) the denominator of which is $10.0 billion multiplied by (ii) 0.30% if AUM is greater than $5.0 billion but less than $15.0 billion. The Variable Base Management Fee is also subject to reduction if there is a sale or sales of one or more Investments in a single or series of related transactions exceeding $200.0 million and a special dividend(s) related thereto is paid to stockholders.
Property Management Fees
The Property Manager provides property management and leasing services for properties owned by the Company, for which the Company pays fees equal to: (i) with respect to stand-alone, single-tenant net leased properties which are not part of a shopping center, 2.0% of gross revenues from the properties managed and (ii) with respect to all other types of properties, 4.0% of gross revenues from the properties managed.
For services related to overseeing property management and leasing services provided by any person or entity that is not an affiliate of the Property Manager, the Company pays the Property Manager an oversight fee equal to 1.0% of gross revenues of the property managed. This oversight fee is no longer applicable to 12 of the Company's properties which became subject to a separate property management and leasing agreement with the Property Manager in October 2017 (the "12-Property PMLA") on otherwise identical terms to the existingour then effective primary property and management leasing agreement (the "Primary PMLA"), which remained applicable to all other properties.
In February 2019, the Company entered into an amendment to the Primary PMLA, following which it continues to have a one-year term that is automatically extended for an unlimited number of successive one-year terms unless terminated by either party upon notice. Under the Primary PMLA prior to this amendment, either the Company or the Property Manager could terminate upon 60 days’ written notice prior to end of the applicable term. Following this amendment, either the Company or the Property Manager may terminate the Primary PMLA at any time upon at least 12 months’ prior written notice. The 12-Property PMLA was not similarly amended. For more information, see Note 16 — Subsequent Events.
Solely with respect to the Company's investments in properties located in Europe, prior to the effectiveness of the termination of the Former Service Provider hadin March 2018, the Former Service Provider received, from the Property Manager, a portion of the fees payable to the AdvisorProperty Manager equal to: (i) with respect to single-tenant net leased properties which are not part of a shopping center, 1.75% of the gross revenues from such properties and (ii) with respect to all other types of properties, 3.5% of the gross revenues from such properties. The Property Manager iswas paid 0.25% of the gross revenues from European single-tenant net leased properties which are not part of a shopping center and 0.5% of the gross revenues from all other types of properties, reflecting a split of the oversight fee with the Former Service Provider. On January 16, 2018,Following the Company notifiedtermination of the Former Service Provider, that it was being terminated effective as of March 17, 2018.the Former Service Provider no longer receives any amounts from the Advisor. For additional information, seeNote 1 - Organization— Organization.
Professional Fees and Note 16 - Subsequent Events.Other Reimbursements

F-42

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

The following table reflects related party fees incurred, forgiven and contractually due as of and for the periods presented:
  Year Ended December 31,   
  2017 2016 2015 (Receivable) Payable as of December 31,
(In thousands) Incurred Forgiven Incurred Forgiven Incurred Forgiven 2017 2016 
One-time fees and reimbursements:                 
Related party notes receivable acquired in Merger (1)
 $
 $
 $
 $
 $
 $
 $
 $(5,138) 
Acquisition fees and related cost reimbursements (2)
 
 
 
 
 735
 
 
 
 
Fees on gain from sale of investments 
 875
 923
 
 
 
 49
(6) 
923
(6) 
Financing coordination fees (3)
 
 
 16
 
 1,159
 
 

(6) 
16
(6) 
Ongoing fees:                
(6) 
Asset management fees (4)
 21,353
 
 18,230
 
 13,501
 
 240
(6) 
447
(6) 
Property management and leasing fees (5)
 4,281
 1,177
 3,802
 2,281
 3,982
 2,507
 59
(6) (9) 
252
(6) (9) 
Total related party operational fees and reimbursements $25,634
 $2,052
(8) 
$22,971
 $2,281
 $19,377
 $2,507
 $348
(7) 
$(3,500)
(10) 

(1)
Balance included within related party notes receivable acquired in the Merger on the audited consolidated balance sheets as of December 31, 2016. In addition, the $16,000 due from related parties as of December 31, 2017 and 2016 relating to RCS Advisory (as defined below) is not included in the table above.
(2)
These related party fees are recorded within acquisition and transaction related costs on the consolidated statements of operations.
(3)
These related party fees are recorded as deferred financing costs and amortized over the term of the respective financing arrangement.
(4)
The Advisor, in accordance with the Advisory Agreement, received asset management fees in cash equal to one quarter of the annual Minimum Base Management Fee for the year ended December 31, 2017, and, the Variable Base Management Fee of $3.4 million and $0.2 million for the years ended December 31, 2017 and 2016, respectively. There was no Variable Base Management Fee for the year ended December 31, 2015. No Incentive Compensation was earned for the years ended December 30, 2017, 2016 and 2015.
(5)
For all periods through the six months ended June 30, 2017, the Advisor waived 100% of fees from U.S. assets and its allocated portion of fees from European assets.
(6)
Balance included within due to related parties on the audited consolidated balance sheets as of December 31, 2017.
(7)
In addition, as of December 31, 2017, due to related parties include $0.3 million of costs accrued for Global II Advisor and transfer agent fees which were assumed through the Merger, $0.1 million of costs accrued for transfer agent fees and $0.1 million of costs relating to RCS Advisory (as defined below), all accrued in 2016 and are not reflected in the table above.
(8)
The Company incurred general and administrative costs and other expense reimbursements of approximately $0.1 million for the year ended December 31, 2017 which are recorded within general and administrative expenses on the audited consolidated statements of operations and are not reflected in the table above.
(9)
Prepaid property management fees of $0.2 million and $0.1 million as of December 31, 2017 and 2016 are not included in the table above and are included in the prepaid expenses and other assets on the consolidated balance sheets.
(10)
In addition, as of December 31, 2016 due to related parties includes $0.5 million of accruals, of which $0.2 million of costs accrued for transfer agent and personnel services received from the Company's related parties including ANST and $0.3 million to Advisor and RCS.
The Company reimburses the Advisor's costs of providing administrative services, subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company's operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income.income, unless the excess amount is otherwise approved by the Company's board of directors. Additionally, the Company reimburses the Advisor for expenses of the Advisor and its affiliates incurred on behalf of the Company, except for those expenses that are specifically the responsibility of the Advisor under the Advisory Agreement, such as fees and compensation paid to the Former Service Provider prior to its termination and the Advisor's overhead expenses, rent and travel expenses, professional services fees incurred with respect to the Advisor for the operation of its business, insurance expenses (other than with respect to the Company's directors and officers) and information technology expenses. No reimbursement was incurred from the Advisor for providing services during the years ended December 31, 2018, 2017 2016 and 2015.
In order to improve operating cash flows and the ability to pay dividends from operating cash flows, the Advisor may waive certain fees including asset management and property management fees. Because the Advisor may waive certain fees, cash flow from operations that would have been paid to the Advisor may be available to pay dividends to stockholders. The fees that may be forgiven are not deferrals and accordingly, will not be paid to the Advisor at any point in the future.2016.
In certain instances, to improve the Company's working capital, the Advisor may elect to absorb a portion of the Company's general and administrative costs or property operating expenses. These absorbed costs are presented net in the accompanying

F-43

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

audited consolidated statements of operations. During the year ended December 31, 2018, there were no property operating and general administrative expenses absorbed by the Advisor. During the year ended December 31, 2017, the Advisor elected to forgive $1.2 million of property management fees, and $4.2 million of property management fees were incurred. During the year ended December 31, 2016, the Property Manager elected to forgive $2.3 million of property management fees and $3.8 million of property management fees, respectively, were incurred.
The predecessor to the parent of the Sponsor was party to a services agreement with RCS Advisory Services, LLC, a subsidiary of the parent company of the Former Dealer Manager ("RCS Advisory"), pursuant to which RCS Advisory and its affiliates provided the Company and certain other companies sponsored by the Sponsor with services (including, without limitation, transaction management, compliance, due diligence, event coordination and marketing services, among others) on a time and expenses incurred basis or at a flat rate based on services performed. The predecessor to the parent of the Sponsor instructed RCS Advisory to stop providing such services in November 2015 and no services have since been provided by RCS Advisory.
F-38

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

The Company was also party to a transfer agency agreement with American National Stock Transfer, LLC ("ANST"), a subsidiary of the parent company of the Former Dealer Manager, pursuant to which ANST provided the Company with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services), and supervisory services overseeing the transfer agency services performed by DST Systems, Inc. ("DST"), a third-party transfer agent. The Sponsor received written notice from ANST on February 10, 2016 that it would wind down operations by the end of the month and would withdraw as the transfer agent effective February 29, 2016. On February 26, 2016, the Company entered into a definitive agreement with DST to provide the Company directly with transfer agency services (including broker and stockholder servicing, transaction processing, year-end IRS reporting and other services). On April 22, 2016, the Company terminated its agreement with DST and entered into a definitive agreement American Stock Transfer and Trust Company, LLC ("AST") appointing AST as the Company's transfer agent and registrar.
During the yearsyear ended December 31, 2016, and 2015, the Company incurred approximately $0.2 million and $8.0 million, respectively, of recurring transfer agent services fees to ANST which were included in general and administrative expenses in the audited consolidated statements of operations.
The Company has also agreed under the Advisory Agreement to reimburse, indemnify and hold harmless each of the Advisor and its affiliates, and the directors, officers, employees, partners, members, stockholders, other equity holders, agents and representatives of the Advisor and its affiliates (each, a “Advisor Indemnified Party”), of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including reasonable attorneys’ fees) in respect of or arising from any acts or omissions of the Advisor Indemnified Party performed in good faith under the Advisory Agreement and not constituting bad faith, willful misconduct, gross negligence, or reckless disregard of duties on the part of the Advisor Indemnified Party. In addition, the Company has agreed to advance funds to an Advisor Indemnified Party for reasonable legal fees and other reasonable costs and expenses incurred as a result of any claim, suit, action or proceeding for which indemnification is being sought, subject to repayment if the Advisor Indemnified Party is later found pursuant to a final and non-appealable order or judgment to not be entitled to indemnification.

F-39

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

The following table reflects related party fees, as described above, incurred, forgiven and contractually due as of and for the periods presented:
  Year Ended December 31,   
  2018 2017 2016 (Receivable) Payable as of December 31,
(In thousands) Incurred Forgiven Incurred Forgiven Incurred Forgiven 2018 2017 
One-time fees and reimbursements:                 
Fees on gain from sale of investments $
 $
 $
 $875
 $923
 $
 $49
(4) 
$49
(4) 
Financing coordination fees (1)
 
 
 
 
 16
 
 
 
 
Ongoing fees (7)(8):
                 
Asset management fees (2)
 23,212
 
 21,353
 
 18,230
 
 
 240
(4) 
Property management fees (3)
 5,022
 
 4,281
 1,177
 3,802
 2,281
 
 59
(4) (5) 
Total related party operational fees and reimbursements $28,234
 $
 $25,634
 $2,052
 $22,971
 $2,281
 $49
 $348
(6) 

(1)
These related party fees are recorded as deferred financing costs and amortized over the term of the respective financing arrangement.
(2)
The Advisor, in accordance with the Advisory Agreement, received asset management fees in cash equal to the annual Minimum Base Management Fee of $18.0 million and the Variable Base Management Fee. The Variable Base Management Fee was $5.2 million, $3.4 million and $0.2 million for the years ended December 31, 2018, 2017 and 2016, respectively.
(3)
For all periods through the six months ended June 30, 2017, the Advisor waived 100% of fees from U.S. assets and its allocated portion of fees from European assets.
(4)
Balance included within due to related parties on the audited consolidated balance sheets as of December 31, 2018 and 2017.
(5)
Prepaid property management fees of $0.2 million as of December 31, 2017 are not included in the table above and are included in the prepaid expenses and other assets on the consolidated balance sheet.
(6)
In addition, as of December 31, 2017, due to related parties include $0.3 million of costs accrued for Global II Advisor and transfer agent fees which were assumed through the Merger, $0.1 million of costs accrued for transfer agent fees and $0.1 million of costs relating to RCS Advisory Services, LLC, all of which are not reflected in the table above.
(7)
The Company incurred general and administrative costs and other expense reimbursements of approximately $1.1 million, $0.1 million and $0.2 million for the years ended December 31, 2018, 2017 and 2016, respectively, which are recorded within general and administrative expenses on the audited consolidated statements of operations and are not reflected in the table above.
(8)
In order to improve operating cash flows and the ability to pay dividends from operating cash flows, the Advisor or the Property Manager may forgive certain fees including asset management and property management fees. Because the Advisor or the Property Manager may forgive certain fees, cash flow from operations that would have been paid to the Advisor or the Property Manager may be available to pay dividends to stockholders. The fees that may be forgiven are not deferrals and accordingly, will not be paid to the Advisor or the Property Manager at any point in the future.
Fees Paid in Connection with the Liquidation or Listing of the Company's Real Estate Assets
In connection with the Listing and the Advisory Agreement, the Company terminated the subordinated termination fee that would be due to the Advisor in the event of termination of the Advisory Agreement.
In connection with theany sale ofor similar transaction involving any investment, subject to the terms in section 6(i) of the Advisory Agreement, the Company will pay to the Advisor a fee in connection with net gain recognized by the Company in connection suchwith the sale or transaction (the "Gain Fee") unless the proceeds of such transaction or series of transactions are reinvested in one or more investments within 180 days thereafter. The Gain Fee shall be calculated at the end of each month and paid, to the extent due, with the next installment of the Base Management Fee. The Gain Fee is calculated by aggregating all of the Gainsgains and Losseslosses from the preceding month. During the year ended December 31, 2017, the Company reinvested proceeds of $30.3 million and sold one property which resulted in a reduction to the Gain Fee of $0.8 million. As of December 31, 20172018 and 2016,2017, the Gain Fee due to the Advisor was approximately $49,000 and $0.9 million, respectively.
On$49,000. There was no Gain Fee for the year ended December 31, 2014,2018.
Acquired Related Party Receivable
As more fully described in Note 3 — Merger Transaction, the Company entered intoacquired a $5.1 million receivable from an agreement with RCS Capital, the investment banking and capital markets divisionaffiliate of the Former Dealer Manager, for strategic and financial advice and assistance in connection with (i) a possible sale transaction involving the Company, (ii) the possible listing of the Company’s securities on a national securities exchange, and (iii) a possible acquisition transaction involving the Company.Advisor. The Company also retained Barclays Capital Inc. as a strategic advisor. Both RCS Capital and Barclays Capital Inc., were each entitled to receive a transaction fee equal to 0.23% of the transaction value in connection with a possible sale transaction, listing or acquisition, if any. In connection with Listing, the Company incurred approximately $18.7 million of listing related feesreceived payment during the year ended December 31, 2015 of which $6.0 million was paid to RCS Capital and $6.1 million to Barclays Capital Inc., including out of pocket expense in connection with these agreements. The Company did not incur any additional listing fees during the years ended December 31, 2017 and 2016. In addition, the Company incurred and paid to RCS Capital $2.5 million for personnel and support services in connection with the Listing. The Company also incurred $0.6 million of transfer agent fees to ANST in relation to the Listing. In connection with the Listing and the Advisory Agreement, the Company terminated the subordinated termination fee that would be due to the Advisor in the event of termination of the Advisory Agreement. All costs noted above were included in listing fees in the audited consolidated statements of operations under listing fees for the year ended December 31, 2015.there is no balance remaining on this receivable.
Note 12 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor, and the Service Provider, to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and

F-44

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

disposition decisions, the
sale of shares of the Company's Common Stock available for issue, transfer agency services, as well as other administrative responsibilities for the Company including accounting services and investor relations.
As a result of these relationships, the Company is dependent upon the Advisor and its affiliates and the Service Provider.affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.

F-40

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Note 13 — Share-Based Compensation
Stock Option Plan
 The Company has a stock option plan (the "Plan") which authorizes the grant of nonqualified Common Stock options to the Company's independent directors, officers, advisors, consultants and other personnel of the Company, the Advisor and the Property Manager and their affiliates, subject to the absolute discretion of the board of directors and the applicable limitations of the Plan. The exercise price for all stock options granted under the Plan will be equal to the fair market valueclosing price of a share of Common Stock on the last businesstrading day preceding the annual meetingdate of stockholders.grant. A total of 0.5 million shares have been authorized and reserved for issuance under the Plan. As of December 31, 2018, 2017 2016 and 2015,2016, no stock options were issued under the Plan.
Restricted Share Plan
The Company's employee and director incentive restricted share plan ("RSP") provides the Company with the ability to grant awards of restricted shares of Common Stock and restricted stock units ("RSUs"Restricted Shares") and together with the restricted shares, "restricted stock")RSUs to the Company's directors, officers and employees, employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.
Prior to being amended in April 8, 2015, the RSP provided for the automatic grant of 1,000 shares of restricted stock to each of the independent directors, without any further action by the Company's board of directors or the stockholders, on the date of initial election to the board of directors and on the date of each annual stockholders' meeting. Shares of restricted stock issued to independent directors vest over a five-year period beginning on the first anniversary of the date of grant in increments of 20% per annum. On April 8, 2015, pursuant to this amendment and restatement, RSUs were added as a permitted form of award and the fixed amount of shares of restricted stock that are automatically granted to the independent directors and the fixed vesting period of five-years were removed. Under the RSP, the annual amount of shares of restricted stock granted to the independent directors is determined by the Company's board of directors.
Effective upon the Listing Date, the Company’s board of directors approved the following changes toWe pay independent director compensation:compensation as follows: (i) increasing the annual retainer payable to all independent directors tois $100,000 per year, (ii) increasing the annual retainer for the non-executive chair tois $105,000, (iii) increasing the annual retainer for independent directors serving on the audit committee, compensation committee or nominating and corporate governance committee tois $30,000. All annual retainers are payable 50% in the form of cash and 50% in the form of RSUs which vest over a three-year period. In addition, the directors have the option to elect to receive the cash component in the form of RSUs which would vest over a three-year period.
Under the RSP, RSUsthe number of shares of Common Stock available for awards is equal to 10.0% of the Company's outstanding shares of Common Stock on a fully diluted basis at any time. If any awards granted under the RSP are forfeited for any reason, the number of forfeited shares is again available for purposes of granting awards under the RSP. Restricted Share awards entitle the recipient to receive shares of Common Stock from the Companyus under terms that provide for vesting over a specified period of time or upon attainment of pre-established performance objectives. Such awards would typically be forfeited with respect to the unvested shares upon the termination of the recipient's employment or other relationship with the Company.
time. Restricted stockShares may not, in general, be sold or otherwise transferred until restrictions are removed and the restricted stock hasshares have vested. Holders of restricted stockRestricted Shares may receive cash dividends prior to the time that the restrictions on the restricted stockRestricted Shares have lapsed. Any dividends to holders of Restricted Shares payable in shares of Common Stock shall beare subject to the same restrictions as the underlying restricted stock.Restricted Shares.
RSUs represent a contingent right to receive shares of Common Stock at a future settlement date, subject to satisfaction of applicable vesting conditions or other restrictions, as set forth in the RSP and an award agreement evidencing the grant of RSUs. RSUs may not, in general, be sold or otherwise transferred until restrictions are removed and the rights to the shares of Common Stock have vested. Holders of RSUs do not have or receive any voting rights with respect to the RSUs or any shares underlying any award of RSUs, but such holders are generally credited with dividend or other distribution equivalents which are subject to the same vesting conditions or other restrictions as the underlying RSUs and only paid at the time such RSUs are settled in shares of Common Stock. RSU award agreements generally provide for accelerated vesting of all unvested RSUs in connection with a termination without cause from the Company’s board of directors or a change of control and accelerated vesting of the portion of the unvested RSUs scheduled to vest in the year of the recipient’s voluntary resignation from or failure to be re-elected to the Company’s board of directors.

F-45F-41

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

The following table reflects restricted share awardRSU activity for the years ended December 31, 20172018, 20162017 and 2015.2016.
Number of
Restricted Shares
 Weighted-Average Issue Price
Number of
Restricted Shares
 Weighted-Average Issue Price
Unvested, December 31, 20144,800
 $27.00
Granted prior to Listing Date (1)
1,000
 27.00
One-time Listing Grant53,333
 25.56
Granted (2)
9,313
 26.52
Vested (3)
(5,800) 27.00
Unvested, December 31, 201562,646
 25.70
62,646
 $25.70
Granted12,211
 22.59
12,211
 22.59
Vested(13,758) 25.77
(13,758) 25.77
Unvested, December 31, 201661,099
 25.07
61,099
 25.07
Granted13,861
 22.54
13,861
 22.54
Vested(25,848) 25.25
(25,848) 25.25
Unvested, December 31, 201749,112
 $24.29
49,112
 24.29
Granted17,039
 18.34
Vested(19,799) 24.40
Unvested, December 31, 201846,352
 22.04
____________________________
(1)
Based on the original RSP in place prior to April 8, 2015.
(2)
Based on the Amended RSP which provides an annual retainer to: (i) all independent directors; (ii) independent directors serving on the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee; and (iii) the non-executive chair.
(3)
RSUs granted prior to April 8, 2015 vested immediately prior to the Listing.
The fair value of the restricted sharesRSUs granted prior to the Listing Date iswas based on the per share price in the IPO and the fair value of the restricted sharesRSUs granted on or after the Listing Date is based on the market price of Common Stock as of the grant date, and is expensed over the vesting period. Compensation expense related to restricted stockRSUs was approximately $0.5 million, $0.7 million $0.4 million and $0.2$0.4 million during the years ended December 31, 2018, 2017 2016 and 2015,2016, respectively, and is recorded as equity basedin Equity-based compensation in the accompanying audited consolidated statements of operations. As of December 31, 2017,2018, the Company had $0.6$0.7 million of unrecognized compensation cost related to unvested restricted share awardsRSUs granted under the Company’s RSP. That cost is expected to be recognized over a weighted average period of 2.31.8 years.
Multi-Year Outperformance Agreement
On July 16, 2018, the Company's compensation committee approved the 2018 OPP, which was subsequently entered into by the Company and the OP with the Advisor on July 19, 2018. The 2018 OPP was entered into in connection with the conclusion of the performance period under the 2015 OPP on June 2, 2018. Because no performance goals under the 2015 OPP were achieved during the performance period, no LTIP Units issued under the 2015 OPP were earned and all LTIP Units issued under the 2015 OPP were automatically forfeited without the payment of any consideration by the Company or the OP effective as of June 2, 2018.
The Company recorded equity-based compensation expense associated with the awards pursuant to the 2015 OPP over the requisite service period on a graded vesting basis. Under the 2018 OPP, total equity-based compensation expense was valued and will be recorded evenly over the requisite service period of approximately 2.8 years from the grant date. Through December 31, 2018, the equity-based compensation expense was adjusted each reporting period for changes in the estimated market-related performance. Under new accounting rules adopted by the Company on January 1, 2019 that will apply to the 2018 OPP in future periods, total equity-based compensation expense calculated as of adoption of the new guidance will be fixed as of that date and will not be remeasured in subsequent periods (see Note 2 - Summary of Significant Accounting Policies for a description of new accounting rules related to non-employee equity awards).
During the years ended December 31, 2018 and 2017, the Company recorded reductions in expense of $1.1 million and $4.4 million, respectively, for the 2015 OPP. During the year ended December 31, 2018, the Company recorded expense of $3.3 million relating to the 2018 OPP.
LTIP Units/Distributions/Redemption
The rights of the Advisor as the holder of the LTIP Units (whether issued pursuant to the 2015 OPP or the 2018 OPP) are governed by the terms of the LTIP Units contained in the agreement of limited partnership of the OP. Until an LTIP Unit is earned in accordance with the provisions of the applicable outperformance award agreement, the holder of the LTIP Unit will be entitled to distributions on the LTIP Unit equal to 10% of the distributions (other than distributions of sale proceeds) made on an OP Unit. The Company paid $0.6 million in distributions related to LTIP Units during the years ended December 31, 2018 and 2017, which is included in accumulated deficit in the consolidated statements of changes in equity. Distributions paid with respect to an LTIP Unit will not be subject to forfeiture, even if the LTIP Unit is ultimately forfeited because it is not earned in accordance with the terms of the agreement under which it was issued. After an LTIP Unit is earned, the holder will be entitled to a priority catch-up distribution per earned LTIP Unit equal to the accrued distributions on OP Units during the applicable performance period, less distributions already paid on the LTIP Unit during the performance period. As of the valuation date on the final day of the applicable

F-42

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

performance period, the earned LTIP Units will become entitled to the same distributions as OP Units. At the time the Advisor’s capital account with respect to an LTIP Unit is economically equivalent to the average capital account balance of an OP Unit, the LTIP Unit has been earned and it has been vested for 30 days, the Advisor, in its sole discretion, will be entitled to convert the LTIP Unit into an OP Unit in accordance with the limited partnership agreement of the OP. In accordance with, and subject to the terms of, the limited partnership agreement of the OP, OP Units may be redeemed on a one-for-one basis for, at the Company’s election, shares of Common Stock or the cash equivalent thereof.
2018 OPP
Based on a maximum award value of $50.0 million and $19.57 (the “Initial Share Price”), the closing price of Common Stock on June 1, 2018, the trading day prior to the effective date of the 2018 OPP, the Advisor was issued a total of 2,554,930 LTIP Units (the “Award LTIP Units”) pursuant to the 2018 OPP. The Award LTIP Units represent the maximum number of LTIP Units that could be earned by the Advisor based on the Company’s total shareholder return (“TSR”), including both share price appreciation and Common Stock dividends, against the Initial Share Price over a performance period (the “Performance Period”), commencing on June 2, 2018 and ending on the earliest of (i) June 2, 2021, (ii) the effective date of any Change of Control (as defined in the 2018 OPP) and (iii) the effective date of any termination of the Advisor’s service as advisor of the Company.
Half of the Award LTIP Units (the “Absolute TSR LTIP Units”) will be eligible to be earned as of the last day of the Performance Period (the “Valuation Date”) if the Company achieves an absolute TSR with respect to threshold, target and maximum performance goals for the Performance Period as follows:
Performance Level (% of Absolute TSR LTIP Units Earned)    Absolute TSR   Number of Absolute TSR LTIP Units Earned
Below Threshold%  Less than24%  
Threshold25%  24%  319,366
Target50%  30%  638,733
Maximum100%  36%or higher 1,277,465
If the Company’s absolute TSR is more than 24% but less than 30%, or more than 30% but less than 36%, the percentage of the Absolute TSR LTIP Units earned will be determined using linear interpolation as between those tiers, respectively.
Half of the Award LTIP Units (the “Relative TSR LTIP Units”) will be eligible to be earned as of the Valuation Date if the amount, expressed in terms of basis points (bps), whether positive or negative, by which the Company’s absolute TSR on the Valuation Date exceeds the average TSR of a peer group consisting of Lexington Realty Trust, W.P. Carey Inc. and (following an amendment to the 2018 OPP in February 2019 in light of the effectiveness of a merger of two members of the peer group, Government Properties Income Trust and Select Income REIT, with Government Properties Income Trust surviving the merger renamed as Office Properties Income Trust) Office Properties Income Trust as of the Valuation Date as follows:
Performance Level (% of Relative TSR LTIP Units Earned)    Relative TSR Excess   Number of Absolute TSR LTIP Units Earned
Below Threshold%  Less than-600
basis points 
Threshold25%  -600
basis points 319,366
Target50%  
basis points 638,733
Maximum100%  +600
basis points 1,277,465
If the relative TSR excess is more than -600 basis points but less than 0 basis points, or more than 0 basis points but less than +600 bps, the percentage of the Relative TSR LTIP Units earned will be determined using linear interpolation as between those tiers, respectively.
If the Valuation Date is the effective date of a Change of Control or a termination of the Advisor for any reason (i.e., with or without cause), then calculations relating to the number of Award LTIP Units earned pursuant to the 2018 OPP will be performed based on actual performance as of (and including) the effective date of the Change of Control or termination (as applicable) based on the performance through the last trading day prior to the effective date of the Change of Control or termination (as applicable), with the hurdles for calculating absolute TSR pro-rated to reflect that the Performance Period lasted less than three years but without pro-rating the number of Absolute TSR LTIP Units or Relative TSR LTIP Units the Advisor would be eligible to earn to reflect the shortened period.

F-43

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

The award of LTIP Units under the 2018 OPP is administered by the compensation committee of the Company’s board of directors, provided that any of the compensation committee’s powers can be exercised instead by the board if the board so elects. Following the Valuation Date, the compensation committee is responsible for determining the number of Absolute TSR LTIP Units and Relative TSR LTIP Units earned, as calculated by an independent consultant engaged by the compensation committee and as approved by the compensation committee in its reasonable and good faith discretion. The compensation committee also must approve the transfer of any Absolute TSR LTIP Units and Relative TSR LTIP Units (or OP Units into which they may be converted in accordance with the terms of the agreement of limited partnership of the OP).
LTIP Units earned as of the Valuation Date will also become vested as of the Valuation Date. Any LTIP Units that are not earned and vested after the Compensation Committee makes the required determination will automatically and without notice be forfeited without the payment of any consideration by the Company or the OP, effective as of the Valuation Date.
The rights of the Advisor as the holder of the LTIP Units are governed by the terms of the LTIP Units contained in the agreement of limited partnership of the OP. The agreement of limited partnership of the OP was amended in July 2018 in connection with the execution of the 2018 OPP to reflect the issuance of LTIP Units thereunder and to make certain clarifying and ministerial revisions, but these amendments did not alter the terms of the LTIP Units established in connection with the Company’s entry into the 2015 OPP in June 2015.
During the third quarter of 2018, the OP made a distribution to the Advisor totaling approximately $0.1 million, representing the amount that would have been paid with respect to the Award LTIP Units after the June 2, 2018, the effective date of the 2018 OPP, but prior to July 19, 2018.
2015 OPP
In connection with the Listing, the Company entered into the 2015 OPP with the OP and the Advisor. Under the OPP, the Advisor was issued 3,013,933 long term incentive plan units ("LTIP Units")Units in the OP with a maximum award value on the issuance date equal to 5.00% of the Company’s market capitalization (the “OPP Cap”). TheBecause no performance goals under the 2015 OPP were achieved, no LTIP Units are structuredissued under the 2015 OPP were earned and all LTIP Units issued under the 2015 OPP were automatically forfeited without the payment of any consideration by the Company or the OP, effective as profits interests inof June 2, 2018.
Under the OP.
The2015 OPP, the Advisor will bewas eligible to earn a number of LTIP Units with a value equal to a portion of the OPP Cap upon the first, second and third anniversaries of the Effective Date, which is the Listing Date, June 2, 2015, based on the Company’s achievement of certain levels of total return to its stockholders (“Total Return”), including both share price appreciationabsolute TSR and Common Stock dividends, as measured againstthe amount by which the Company's absolute TSR exceeded the average TSR of a peer group of companies, as set forth below, for the three-year performance period commencing on the Effective DateJune 2, 2015 (the “Three-Year Period”); each 12-month period during the Three-Year Period (the “One-Year Periods”); and the initial 24-month period of the Three-Year Period (the “Two-Year Period”), as follows:

F-46

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

    Performance Period Annual Period Interim Period
Absolute Component: 4% of any excess Total Return attained above an absolute hurdle measured from the beginning of such period: 21% 7% 14%
Relative Component: 4% of any excess Total Return attained above the Total Return for the performance period of the Peer Group*, subject to a ratable sliding scale factor as follows based on achievement of cumulative Total Return measured from the beginning of such period:      
 100% will be earned if cumulative Total Return achieved is at least: 18% 6% 12%
 50% will be earned if cumulative Total Return achieved is: —% —% —%
 0% will be earned if cumulative Total Return achieved is less than: —% —% —%
 a percentage from 50% to 100% calculated by linear interpolation will be earned if the cumulative Total Return achieved is between: 0% - 18% 0% - 6% 0% - 12%

*The “Peer Group” iswas comprised of Gramercy Property Trust Inc., Lexington Realty Trust, Select Income REIT, and W.P. Carey Inc.
The potential outperformance award iswas calculated at the end of each One-Year Period, the Two-Year Period and the Three-Year Period. The award earned for the Three-Year Period iswas based on the formula in the table above less any awards earned for the Two-Year Period and One-Year Periods, but not less than zero; the award earned for the Two-Year Period is based on the formula in the table above less any award earned for the first and second One-Year Period, but not less than zero. Any LTIP Units that are unearned at the end of the Performance Period will be forfeited.
Subject
F-44

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

One third of any earned LTIP Units were to vest, subject to the Advisor’sAdvisor's continued service through each vesting date, one third of any earned LTIP Units will vest on each of the third, fourth and fifth anniversaries of the Effective Date.June 2, 2015. Any earned and vested LTIP Units may bewould have been converted into OP Units in accordance with the terms and conditions of the limited partnership agreement of the OP. The 2015 OPP providesprovided for early calculation of LTIP Units earned and for the accelerated vesting of any earned LTIP Units in the event the Advisor iswas terminated or in the event the Company incursincurred a change in control, in either case prior to the end of the Three-Year Period. As of June 2, 2017 (end of the Two-Year Period) and June 2, 2016 (end of the first One-Year Period), and June 2, 2018 (end of the Three-Year Period), no LTIP units were earned by the Advisor under the terms of the OPP with the Three-Year Period remaining during which the2015 OPP. Accordingly, all LTIP Units may be earned.
The Company records equity-based compensation expense or income associated withthat had been issued under the awards over2015 OPP were automatically forfeited without the requisite service period of five years on a graded vesting basis. Equity-based compensation expense is adjusted each reporting period for changes in the estimated market-related performance. The Company recorded compensation income of $4.4 million and compensation expense of $3.4 million and $2.2 million related to the OPP for the years ended December 31, 2017, 2016 and 2015, respectively. The cumulative expense recognized as of December 31, 2017 was $1.1 million, which will continue to be adjusted for changes in value through the final measurement date of June 2, 2018 and for vesting over the service period.
Subject to the Advisor’s continued service through each vesting date, one-thirdpayment of any earned LTIP Units will vest on eachconsideration by the Company or the OP as of the third, fourth and fifth anniversaries of the Effective Date. Until such time as an LTIP Unit is earned in accordance with the provisions of the OPP, the holder of such LTIP Unit is entitled to distributions on such LTIP Unit equal to 10% of the distributions (other than distributions of sale proceeds) made per OP Unit. If real estate assets are sold and net sales proceeds distributed prior to June 2, 2018, the end of the Three-Year Period, the holders of LTIP Units generally would be entitled to a portion of those net sales proceeds with respect to both the earned and unearned LTIP Units (although the amount per LTIP Unit, which would be determined in accordance with a formula in the limited partnership agreement of the OP, would be less than the amount per OP Unit until the average capital account per LTIP Unit equals the average capital account per OP Unit). The Company has paid $0.6 million in distributions related to LTIP Units during the year ended December 31, 2017, which is included in accumulated deficit in the audited consolidated statements of equity. After an LTIP Unit is earned, the holder of such LTIP Unit is entitled to a catch-up distribution, and then the same distributions as the holders of an OP Unit. At the time the Advisor’s capital account with respect to an LTIP Unit is economically equivalent to the average capital account balance of an OP Unit, the LTIP Unit has been earned and it has been vested for 30 days, the Advisor, in its sole discretion, will be entitled to convert such LTIP Unit into an OP Unit in accordance with the provisions of the limited partnership agreement of the OP. The OPP provides for early calculation of LTIP Units earned and for the accelerated vesting of any earned LTIP Units in the event Advisor is terminated by the Company, or in the event the Company incurs a change in control, in either case prior to the end of the Three-Year Period.
On February 25, 2016, the OPP was amended and restated to reflect the merger of two of the companies in the Peer Group.
On February 28, 2017, the Company completed a Reverse Stock Split of Common Stock, OP Units and LTIP Units, at a ratio of 1-for-3 (seeNote 1- Organization for details).

F-47

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

Other Share-Based Compensation
The Company may issue shares of Common Stock in lieu of cash to pay fees earned by the Company's directors at each director's election. There are no restrictions on the shares issued since these payments in lieu of cash relate to fees earned for services performed. There were no such shares of Common Stock issued in lieu of cash during the years ended December 31, 2018, 2017 2016 and 2015.2016.
Note 14 — Earnings Per Share
The following is a summary of the basic and diluted net income (loss) per share computation for the years ended December 31, 2018, 2017 2016 and 2015:2016:
 Year Ended December 31, Year Ended December 31,
(In thousands, except share and per share data) 2017 2016 2015 2018 2017 2016
Net income (loss) attributable to common stockholders $20,731
 $47,140
 $(2,065)
Net income attributable to common stockholders $1,082
 $20,731
 $47,140
Adjustments to net income attributable to common stockholders for common share equivalents (742) (773) (442) (689) (742) (773)
Adjusted net income attributable to common stockholders $19,989
 $46,367
 $(2,507) $393
 $19,989
 $46,367
            
Basic and diluted net income (loss) per share attributable to common stockholders $0.30
 $0.82
 $(0.04)
Basic and diluted weighted average common shares outstanding 66,877,620
 56,720,448
 58,103,298
Basic and diluted net income per share attributable to common stockholders $0.01
 $0.30
 $0.82
Basic weighted average common shares outstanding 69,411,061
 66,877,620
 56,720,448
Diluted weighted average common shares outstanding 69,663,208
 66,877,620
 56,720,448
Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company's unvested RSUs and LTIPsLTIP Units contain rights to receive non-forfeitable distributions and therefore the Company applies the two-class method of computing earnings per share. The calculation of earnings per share below excludes the non-forfeitable distributions to the unvested RSUs and LTIPsLTIP Units from the numerator.
Diluted net income (loss) per share assumes the conversion of all Common StocksStock share equivalents into an equivalent number of common shares of Common Stock, unless the effect is anti-dilutive. The Company considers unvested restricted stock, OPRSUs, LTIP Units, and LTIPOP Units to be common share equivalents. For the years ended December 31, 2018, 2017 2016 and 2015,2016, the following common share equivalents on a weighted average basis were excluded from the calculation of diluted earnings per share:
 December 31, December 31,
 2017 2016 2015 2018 2017 2016
Unvested restricted stock 49,112
 61,099
 62,646
Unvested RSUs 46,352
 49,112
 61,099
OP Units (1)
 
 181,841
 603,226
 
 
 181,841
OPP (LTIP Units) 3,013,933
 3,013,933
 3,013,933
LTIP Units (2)
 970,173
 3,013,933
 3,013,933
Total anti-dilutive common share equivalents 3,063,045
 3,256,873
 3,679,805
 1,016,525
 3,063,045
 3,256,873
(1) 
As of December 31, 2015, OP Units included 575,438 converted Class B Units, 27,776 OP Units issued to the Advisor, and 7 OP Units issued to the Special Limited Partner. Subsequent to the Listing all OP Units issued to the Advisor were transferred to individual investors. On September 2, 2016, 421,378 of OP Units were converted into shares of Common Stock, of which 305,411 and 115,967 is owned by individual members and employees of AR Global and the Service Provider. On April 3, 2017, theall remaining 181,841 of OP Units which were outstanding as of December 31, 2016, were converted into Common Stock.
(2) Weighted-average number of LTIP Units outstanding. There were 2,554,930 LTIP Units issued and outstanding under the 2018 OPP as of December 31, 2018. The 3,013,933 LTIP Units issued under the 2015 OPP were forfeited as of June 2, 2018 since no LTIP Units were earned under the 2015 OPP. See Note 13 — Share Based Compensation for additional information on the 2018 OPP and 2015 OPP.
Conditionally issuable shares relating to the 2018 OPP award (see Note 13 — Share-Based Compensation) would beare included in the computation of fully diluted EPS (if dilutive)on a weighted average basis for the year ended December 31, 2018 based on shares that would be issued if the balance sheet date were the end of the measurement period. No LTIP Unit share equivalents were included in the computation for the yearyears ended December 31, 2017 and 2016 because no units or sharesLTIP Units would have been issuedearned based on the stock price at December 31, 2017 and 2016.

F-48

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2017

Note 15 — Quarterly Results (Unaudited)
Presented below is a summary of the unaudited quarterly financial information for years ended December 31, 20172018 and 2016:2017:
(In thousands, except share and per share data) Quarters Ended
2018 March 31, June 30, September 30, 
December 31, (1)
Total revenue $68,086
 $70,971
 $71,924
 $71,226
Net income (loss) attributable to common stockholders $2,361
 $5,288
 $177
 $(6,744)
Adjustments to net income (loss) attributable to common stockholders for common share equivalents (184) (26) (316) (163)
Adjusted net income (loss) attributable to common stockholders $2,177
 $5,262
 $(139) $(6,907)
Basic weighted average shares outstanding 67,287,231
 67,292,021
 69,441,639
 73,554,137
Diluted weighted average shares outstanding 67,287,231
 67,292,021
 69,441,639
 74,001,250
Basic and diluted net income (loss) per share attributable to common stockholders $0.03
 $0.08
 $
 $(0.09)
        
(In thousands, except share and per share data) Quarters Ended Quarters Ended
2017 March 31, 
June 30, (1)
 September 30, December 31, March 31, 
June 30, (2)
 September 30, December 31,
Total revenue $62,837
 $64,986
 $64,870
 $66,602
 $62,837
 $64,986
 $64,870
 $66,602
Net income attributable to common stockholders $7,429
 $5,200
 $2,104
 $5,998
 $7,429
 $5,200
 $2,104
 $5,998
Adjustments to net income attributable to common stockholders for common share equivalents (185) (185) (186) (186) (185) (185) (186) (186)
Adjusted net income attributable to common stockholders $7,244
 $5,015
 $1,918
 $5,812
 $7,244
 $5,015
 $1,918
 $5,812
Basic and diluted weighted average shares outstanding 66,271,008
 66,652,221
 67,286,615
 67,286,822
 66,271,008
 66,652,221
 67,286,615
 67,286,822
Basic and diluted net income (loss) per share attributable to common stockholders $0.11
 $0.08
 $0.03
 $0.09
        
(In thousands, except share and per share data) Quarters Ended
2016 March 31, June 30, September 30, December 31,
Total revenue $54,954
 $53,196
 $53,251
 $52,773
Net income attributable to common stockholders $6,488
 $15,763
 $8,943
 $15,946
Adjustments to net income attributable to common stockholders for common share equivalents (195) (193) (190) (195)
Adjusted net income (loss) attributable to common stockholders $6,293
 $15,570

$8,753

$15,751
Basic and diluted weighted average shares outstanding 56,312,211
 56,316,157
 56,463,396
 57,781,196
Basic and diluted net income per share attributable to common stockholders $0.11
 $0.28
 $0.16
 $0.27
 $0.11
 $0.08
 $0.03
 $0.09
_______________________
(1)
During the three months ended December 31, 2018, the Company recorded (i) impairment charges and related lease intangible write-offs of lease intangibles of $5.0 million which are more fully discussed in Note 4 — Real Estate Investments, Net and (ii) a litigation reserve of $7.4 million related to the anticipated settlement of the litigation with the Former Service Provider, which is more fully discussed inNote 10 — Commitments and Contingencies.
(2) 
As discussed in Note 2 — Summary of Significant Accounting Policies, the Company reflected an out-of-period adjustment $0.5 million in the three months ended June 30, 2017 for additional rental income and unbilled straight-line rent.
Note 16 — Subsequent Events
The Company has evaluated subsequent events through the filing of this Annual Report on Form 10-K, and determined that there have not been any events that have occurred that would require adjustments to, or disclosures in the consolidated financial statements, except for as previously disclosed or disclosed below.
Termination of Service Provider Agreement
On January 16, 2018, acting pursuant to provisions contained in agreements among the Company, the Advisor and the Service Provider, the Company, pursuant to authorization by the independent directors of the board of directors, notified the Service Provider that it was being terminated as a service provider effective as of March 17, 2018. Additionally, as a result of the Company’s termination of the Service Provider, the property management and leasing agreement among an affiliate of the Advisor and the Service Provider will terminate by its own terms. As required under its existing Advisory Agreement with the Company, the Advisor and its affiliates will continue to manage the Company’s affairs on a day-to-day basis (including management and leasing of the Company’s properties) and will remain responsible for managing and providing other services with respect to the Company’s European investments. The Advisor may engage one or more third parties to assist with these responsibilities, all subject to the terms of the Advisory Agreement.
Service Provider Complaint
On January 25, 2018, the Service Provider filed a complaint against the Company, the Property Manager, the Special Limited Partner, the OP, the Advisor, referred to collectively as the “GNL Defendants,” AR Capital Global Holdings, LLC, and AR Global, referred to collectively as the “AR Global Defendants,” in the Supreme Court of the State of New York, County of New York. The complaint alleges that the notice sent to the Service Provider by the Company on January 15, 2018, terminating the Service Provider Agreement, as well as two other letters sent terminating other agreements with the Service Provider (collectively, the “Termination Letters”), were a pretext to enable the AR Global Defendants to seize the Service Provider's business with the Company. The

F-49F-45

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 20172018

complaint further alleges breachFinnish Refinancing
On February 6, 2019, the Company borrowed an aggregate of contract against the GNL Defendants, and tortious interference against the AR Global Defendants. The complaint seeks: (i) monetary damages against the defendants, (ii) to enjoin the GNL Defendants from terminating the Service Provider Agreement€74.0 million ($84.2 million based on the Termination Letters, and (iii) judgment declaring the Termination Letters to be void.prevailing exchange rate on that date) secured by mortgages of its five properties in Finland (the "Loan"). The defendants believe the allegations in the complaint are without merit, and intend to defend against them vigorously. On January 26, 2018, the Service Provider made a motion seeking to preliminarily enjoin the defendants from terminating the Service Provider Agreement pending resolutionmaturity date of the lawsuit.Loan is February 1, 2024, and it bears interest at a rate of 3-month Euribor plus 1.4%, with the interest rate for approximately €59.2 million ($67.4 million based on the prevailing exchange rate on that date), representing 80% of the principal amount of the Loan, fixed at 1.8% by an interest rate swap agreement. The Loan is interest-only with the principal due at maturity. At the closing of the Loan, €57.4 million ($65.3 million based on the prevailing exchange rate on that date) was used to repay all outstanding indebtedness encumbering the five properties, with the remaining proceeds, after costs and fees related to the Loan, available for working capital and general corporate purposes.
New Equity Distribution Agreement
The Company has the ATM Program, an “at the market” equity offering program pursuant to which the Company may sell shares of Common Stock, from time to time through our sales agents. During January 2019, the Company sold 7,759,322 shares of Common Stock through the ATM Program for gross proceeds of $152.8 million, before commissions of $1.5 million and additional issuance costs of $2,000. Following these sales, the Company had raised all $175.0 million contemplated by its existing equity distribution agreement related to the ATM Program. On February 13, 2018,27, 2019, the defendants respondedCompany terminated its existing equity distribution agreement, and moved to dismiss. Both motions remain pending.
Multi-Tenant Mortgage Loan
On January 26, 2018,on February 28, 2019, the Company entered into a multi-tenant mortgage loan, yielding grossnew equity distribution agreement on substantially the same terms with the sales agents under its existing equity distribution agreement, UBS Securities LLC, Robert W. Baird & Co. Incorporated, Capital One Securities, Inc., Mizuho Securities USA, LLC, B. Riley FBR, Inc., KeyBanc Capital Markets Inc., and BMO Capital Markets Corp., as well as three new sales agents, BBVA Securities Inc., SMBC Nikko Securities America, Inc. and Stifel, Nicolaus & Company, Incorporated (collectively, the “Agents”). The new equity distribution agreement provides for the continuation of the ATM Program to raise additional aggregate sales proceeds of $32.8 millionup to $250.0 million.
Subject to the terms and conditions of the new equity distribution agreement, the Agents will use their commercially reasonable efforts to sell, on the Company’s behalf, shares of Common Stock offered by the Company under and in accordance with the new equity distribution agreement. The sales, if any, of shares of Common Stock, made under the new equity distribution agreement will be made by means of ordinary brokers’ transactions or otherwise at market prices prevailing at the time of sale, at prices related to prevailing market prices or at negotiated prices. Actual sales will depend on a fixed interest ratevariety of 4.32% and a 10-year maturity in February 2028. Proceeds are availablefactors to be determined by the Company from time to time.
The Company intends to continue to use any net proceeds from the ATM Program for general corporate purposes, and future acquisitions. The multi-tenant mortgage loan is secured by 8 properties in 6 states totaling approximately 627,500 square feet. Proceeds were used to pay down approximately $30.0 million ofincluding funding investment activity, repaying outstanding indebtedness (including borrowings under the Revolving Credit FacilityFacility), and for general corporate purposesworking capital.
The ATM Program is registered under the Securities Act of 1933, as amended, pursuant to the Company’s shelf registration statement on Form S-3 (Registration No. 333-214579). Following the filing of this Annual Report on Form 10-K, the Company will file a prospectus supplement with the Securities and future acquisitions.Exchange Commission in connection with the offer and sale of shares of Common Stock pursuant to the new equity distribution agreement.
The new equity distribution agreement contains customary representations, warranties, and agreements of both parties, indemnification rights and termination provisions.
Charter Amendment
On February 27, 2019, the Company filed an amendment to its charter with the State Department of Assessments and Taxation of Maryland, which became effective upon filing. Pursuant to this amendment, the Company increased the number of shares of stock the Company’s charter authorizes the Company to issue from up to 116,670,000 shares of stock, consisting of 100,000,000 shares of common stock and 16,670,000 shares of preferred stock, to up to 166,670,000 shares of stock, consisting of 150,000,000 shares of common stock and 16,670,000 shares of preferred stock.
Property Management and Leasing Agreement Amendment
On February 27, 2018, in connection with2019, the Company’s termination of the Service Provider previously authorized by the independent directors of the board of directors, the Company and the OP entered into an amendment to the Company's agreementPrimary PMLA with the Property Manager, solelypursuant to reflect thatwhich the AdvisorProperty Manager provides property management and its affiliates will remain responsibleleasing services for managing and providing other services with respect toalmost all of the Company’s European investments.properties. For more information about the terms of the Primary PMLA, see Note 11 — Related Party Transactions.
Following this amendment, the Primary PMLA continues to have a one-year term that is automatically extended for an unlimited number of successive one-year terms unless terminated by either party upon notice. Under the Primary PMLA prior to this amendment, either the Company or the Property Manager could terminate upon 60 days’ written notice prior to end of the applicable term. Following this amendment, either the Company or the Property Manager may terminate the Primary PMLA at any time upon at least 12 months’ prior written notice.

F-46

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2018

Acquisitions
In February 2018,The Company has signed two non-binding letters of intent and one definitive purchase and sale agreement to acquire a total of three net lease properties, all of which are located in the Company closedUnited States, for an $18.6 million acquisitionaggregate purchase price of a distribution property$42.0 million. The two letters of intent may not lead to definitive agreements and borrowed $40.0 million under the Revolving Credit Facility. In addition,one definitive agreement is subject to conditions. There can be no assurance we will complete any of these acquisitions on their contemplated terms, or at all. Additionally, the Company has signed six definitive agreements that will increase the annual rent at four of the Company's properties, that are leased to acquire $274.0a single tenant, in exchange for the Company funding $11.4 million in capital expenditures to expand and remodel the properties.
Dispositions
The Company has signed non-binding letters of primarily investment gradeintent to dispose of two net lease distribution/industrialproperties, one of which is located in the United States, while the other is located in the United Kingdom. The United States disposition is for a contract sales price of $13.0 million, and there is no debt associated with the property. The United Kingdom disposition is for a contract sales price of £7.2 million, and it is expected to generate £3.0 million in net proceeds after repayment of associated debt. There can be no assurance these letters of intent will lead to definitive agreements or completed dispositions on the contemplated terms, or at all. Additionally, the Company entered into definitive purchase and sale agreements to sell two properties in North America which comprisethe United States and three properties in Germany. The two United States dispositions are for a total 3.5 million square feet. Threecontract sales price of the properties represent 84% of the purchase price or $229$11.4 million, and $2.7there is no debt associated with these properties. The three Germany dispositions are for a contract sales price of €135.0 million of the property acquisitions under definitive agreements. The transactionsand are expected to close in stages in the coming quartersgenerate €72.5 million after repayment of associated debt. These pending dispositions are subject to conditions, and shouldthere can be fully closed by October 2018.



no assurance they will be completed on their current terms, or at all.



F-50F-47

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 20172018
(dollar amounts in thousands)

       Initial Costs Costs Capitalized Subsequent to Acquisition          Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 
Encumbrances at December 31, 2017 (1)
 Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2017(2)(3)
 
Accumulated
Depreciation (4)(5)
 City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
McDonalds Corporation Carlisle UK Oct. 2012 $1,025
 $433
 $1,011
 $
 $
 $1,444
 $295
 Carlisle United Kingdom Oct. 2012 $
(6) 
$409
 $954
 $
 $
 $1,363
 $298
Wickes Blackpool UK May. 2013 2,626
 1,821
 1,956
 
 
 3,777
 439
 Blackpool United Kingdom May 2013 
(6) 
1,719
 1,846
 
 
 3,565
 486
Everything Everywhere Merthyr Tydfil UK Jun. 2013 5,397
 3,710
 2,361
 
 
 6,071
 522
 Merthyr Tydfil United Kingdom Jun. 2013 
(6) 
3,502
 2,229
 
 
 5,731
 577
Thames Water Swindon UK Jul. 2013 8,096
 3,710
 4,385
 
 
 8,095
 934
 Swindon United Kingdom Jul. 2013 
(6) 
3,502
 4,139
 
 
 7,641
 1,051
Wickes Tunstall UK Jul. 2013 2,226
 944
 2,159
 
 
 3,103
 458
 Tunstall United Kingdom Jul. 2013 
(6) 
891
 2,037
 
 
 2,928
 519
PPD Global Labs Highland Heights KY Aug. 2013 
 2,001
 6,002
 
 
 8,003
 1,407
 Highland Heights KY Aug. 2013 
(9) 
2,001
 6,002
 
 
 8,003
 1,675
Northern Rock Sunderland UK Sep. 2013 7,084
 1,349
 4,722
 
 
 6,071
 987
 Sunderland United Kingdom Sep. 2013 
(6) 
1,273
 4,457
 
 
 5,730
 1,120
Wickes Clifton UK Nov. 2013 2,564
 1,349
 1,889
 
 
 3,238
 378
 Clifton United Kingdom Nov. 2013 
(6) 
1,273
 1,783
 
 
 3,056
 439
Con-Way Freight, Inc. Aurora NE Nov. 2013 
 295
 1,670
 
 
 1,965
 416
 Aurora NE Nov. 2013 
 295
 1,670
 
 
 1,965
 515
Con-Way Freight, Inc. Grand Rapids MI Nov. 2013 
 945
 1,417
 
 
 2,362
 353
 Grand Rapids MI Nov. 2013 
 945
 1,417
 
 
 2,362
 437
Con-Way Freight, Inc. Riverton IL Nov. 2013 
 344
 804
 
 
 1,148
 200
 Riverton IL Nov. 2013 
 344
 804
 
 
 1,148
 248
Con-Way Freight, Inc. Salina KS Nov. 2013 
 461
 1,843
 
 
 2,304
 459
 Salina KS Nov. 2013 
 461
 1,843
 
 
 2,304
 568
Con-Way Freight, Inc. Uhrichsville OH Nov. 2013 
 380
 886
 
 
 1,266
 221
 Uhrichsville OH Nov. 2013 
 380
 886
 
 
 1,266
 273
Con-Way Freight, Inc. Vincennes IN Nov. 2013 
 220
 712
 
 
 932
 175
 Vincennes IN Nov. 2013 
 220
 712
 
 
 932
 218
Con-Way Freight, Inc. Waite Park MN Nov. 2013 
 366
 681
 
 
 1,047
 170
 Waite Park MN Nov. 2013 
 366
 782
 
 
 1,148
 215
Wolverine Howard City MI Dec. 2013 
 719
 13,667
 
 
 14,386
 3,335
 Howard City MI Dec. 2013 
 719
 13,667
 
 
 14,386
 4,168
Western Digital San Jose CA Dec. 2013 17,363
 9,021
 16,729
 
 
 25,750
 3,231
Encanto Restaurants Baymon PR Dec. 2013 
 1,150
 1,724
 
 
 2,874
 382
 Baymon PR Dec. 2013 
 1,150
 1,724
 
 
 2,874
 478
Encanto Restaurants Caguas PR Dec. 2013 
 
 2,481
 
 
 2,481
 550
 Caguas PR Dec. 2013 
 
 2,481
 
 
 2,481
 688
Encanto Restaurants Carolina PR Dec. 2013 
 615
 751
 
 
 1,366
 167
 Carolina PR Dec. 2013 
 615
 751
 
 
 1,366
 208
Encanto Restaurants Carolina PR Dec. 2013 
 1,840
 2,761
 
 
 4,601
 612
 Carolina PR Dec. 2013 
 1,840
 2,761
 
 
 4,601
 765
Encanto Restaurants Guayama PR Dec. 2013 
 673
 822
 
 
 1,495
 182
 Guayama PR Dec. 2013 
 673
 822
 
 
 1,495
 228
Encanto Restaurants Mayaguez PR Dec. 2013 
 410
 957
 
 
 1,367
 212
 Mayaguez PR Dec. 2013 
 410
 957
 
 
 1,367
 265
Encanto Restaurants Ponce PR Dec. 2013 
 600
 1,399
 
 
 1,999
 321
 Ponce PR Dec. 2013 
 600
 1,399
 
 
 1,999
 401
Encanto Restaurants Ponce PR Dec. 2013 
 655
 1,528
 
 
 2,183
 339
 Ponce PR Dec. 2013 
 655
 1,528
 
 
 2,183
 423
Encanto Restaurants Puerto Neuvo PR Dec. 2013 
 
 782
 
 
 782
 173
 Puerto Neuvo PR Dec. 2013 
 
 782
 
 
 782
 217
Encanto Restaurants Quebrada Arena PR Dec. 2013 
 843
 1,566
 
 
 2,409
 347
 Quebrada Arena PR Dec. 2013 
 843
 1,566
 
 
 2,409
 434
Encanto Restaurants Rio Piedras PR Dec. 2013 
 505
 1,179
 
 
 1,684
 261
 Rio Piedras PR Dec. 2013 
 963
 1,788
 
 
 2,751
 495
Encanto Restaurants Rio Piedras PR Dec. 2013 
 963
 1,788
 
 
 2,751
 396
 Rio Piedras PR Dec. 2013 
 505
 1,179
 
 
 1,684
 327
Encanto Restaurants San German PR Dec. 2013 
 391
 726
 
 
 1,117
 166
 San German PR Dec. 2013 
 391
 726
 
 
 1,117
 208
Encanto Restaurants San Juan PR Dec. 2013 
 1,235
 1,509
 
 
 2,744
 335
 San Juan PR Dec. 2013 
 153
 612
 
 
 765
 170
Encanto Restaurants San Juan PR Dec. 2013 
 389
 1,168
 
 
 1,557
 259
 San Juan PR Dec. 2013 
 1,235
 1,509
 
 
 2,744
 418
Encanto Restaurants San Juan PR Dec. 2013 
 153
 612
 
 
 765
 136
 San Juan PR Dec. 2013 
 389
 1,168
 
 
 1,557
 324
Encanto Restaurants Toa Baja PR Dec. 2013 
 68
 616
 
 
 684
 141
 Toa Baja PR Dec. 2013 
 68
 616
 
 
 684
 177
Encanto Restaurants Vega Baja PR Dec. 2013 
 822
 1,527
 
 
 2,349
 338
 Vega Baja PR Dec. 2013 
 822
 1,527
 
 
 2,349
 423
Rheinmetall Neuss Germany Jan. 2014 12,130
 5,884
 16,521
 
 74
 22,479
 2,249

F-48

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 2018
(dollar amounts in thousands)

           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
GE Aviation Grand Rapids MI Jan. 2014 
(7) 
3,174
 27,076
 
 
 30,250
 3,606
Provident Financial Bradford United Kingdom Feb. 2014 
(6) 
1,284
 23,829
 
 
 25,113
 2,986
Crown Crest Leicester United Kingdom Feb. 2014 
(6) 
7,318
 30,221
 
 
 37,539
 4,315
Trane Davenport IA Feb. 2014 
 291
 1,968
 
 
 2,259
 311
Aviva Sheffield United Kingdom Mar. 2014 
(6) 
2,767
 31,352
 
 
 34,119
 3,988
DFS Trading Brigg United Kingdom Mar. 2014 
(6) 
1,292
 3,665
 
 
 4,957
 522
DFS Trading Carcroft United Kingdom Mar. 2014 
(6) 
1,087
 4,304
 
 
 5,391
 567
DFS Trading Carcroft United Kingdom Mar. 2014 
(6) 
295
 2,118
 
 
 2,413
 317
DFS Trading Darley Dale United Kingdom Mar. 2014 
(6) 
1,272
 3,264
 
 
 4,536
 475
DFS Trading Somercotes United Kingdom Mar. 2014 
(6) 
747
 2,668
 
 
 3,415
 457
Government Services Administration (GSA) Fanklin TN Mar. 2014 
 4,160
 30,083
 
 
 34,243
 3,800
National Oilwell Williston ND Mar. 2014 
 211
 3,513
 
 
 3,724
 599
Talk Talk Manchester United Kingdom Apr. 2014 
(6) 
747
 8,879
 
 
 9,626
 1,170
Government Services Administration (GSA) Dover DE Apr. 2014 
 1,097
 1,715
 
 
 2,812
 240
Government Services Administration (GSA) Germantown PA Apr. 2014 
 1,097
 3,573
 
 
 4,670
 448
OBI DIY Mayen Germany Apr. 2014 5,150
 1,282
 7,654
 
 
 8,936
 1,088
DFS Trading South Yorkshire United Kingdom Apr. 2014 
(6) 

 1,331
 
 
 1,331
 251
DFS Trading Yorkshire United Kingdom Apr. 2014 
(6) 

 1,735
 
 
 1,735
 220
Government Services Administration (GSA) Dallas TX Apr. 2014 
 484
 2,934
 
 
 3,418
 367
Government Services Administration (GSA) Mission TX Apr. 2014 
 618
 3,145
 
 
 3,763
 416
Government Services Administration (GSA) International Falls MN May 2014 
(7) 
350
 11,182
 
 63
 11,595
 1,437
Indiana Department of Revenue Indianapolis IN May 2014 
 891
 7,677
 
 
 8,568
 1,012
National Oilwell Pleasanton TX May 2014 
 202
 1,643
 
 
 1,845
 262
Nissan Murfreesboro TN May 2014 
(7) 
966
 19,573
 
 
 20,539
 2,353
Government Services Administration (GSA) Lakewood CO Jun. 2014 
 1,220
 7,928
 
 
 9,148
 955
Lippert Components South Bend IN Jun. 2014 
(7) 
3,195
 6,883
 
 
 10,078
 848
Axon Energy Products Conroe TX Jun. 2014 
 826
 6,132
 
 
 6,958
 714
Axon Energy Products Houston TX Jun. 2014 
 294
 2,310
 
 
 2,604
 300
Axon Energy Products Houston TX Jun. 2014 
 416
 5,186
 
 
 5,602
 653
Bell Supply Co Carrizo Springs TX Jun. 2014 
 260
 1,445
 
 
 1,705
 216
Bell Supply Co Cleburne TX Jun. 2014 
 301
 323
 
 
 624
 54
Bell Supply Co Frierson LA Jun. 2014 
 260
 1,054
 
 
 1,314
 218

F-49

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 2018
(dollar amounts in thousands)

           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
Bell Supply Co Gainesville TX Jun. 2014 
 131
 1,420
 
 
 1,551
 179
Bell Supply Co Killdeer ND Jun. 2014 
 307
 1,250
 
 
 1,557
 182
Bell Supply Co Williston ND Jun. 2014 
 162
 2,323
 
 
 2,485
 305
GE Oil & Gas Canton OH Jun. 2014 
 437
 3,039
 
 300
 3,776
 397
GE Oil & Gas Odessa TX Jun. 2014 
 1,611
 3,322
 
 
 4,933
 781
Lhoist Irving TX Jun. 2014 
 173
 2,154
 
 
 2,327
 329
Select Energy Services DeBerry TX Jun. 2014 
 533
 7,551
 
 
 8,084
 1,512
Select Energy Services Gainesville TX Jun. 2014 
 519
 7,482
 
 
 8,001
 888
Select Energy Services Victoria TX Jun. 2014 
 354
 1,698
 
 
 2,052
 264
Bell Supply Co Jacksboro TX Jun. 2014 
 51
 657
 
 
 708
 135
Bell Supply Co Kenedy TX Jun. 2014 
 190
 1,669
 
 
 1,859
 271
Select Energy Services Alice TX Jun. 2014 
 518
 1,331
 
 
 1,849
 186
Select Energy Services Dilley TX Jun. 2014 
 429
 1,777
 
 
 2,206
 292
Select Energy Services Kenedy TX Jun. 2014 
 815
 8,355
 
 
 9,170
 1,177
Select Energy Services Laredo TX Jun. 2014 
 2,472
 944
 
 
 3,416
 197
Superior Energy Services Gainesville TX Jun. 2014 
 322
 480
 
 
 802
 61
Superior Energy Services Jacksboro TX Jun. 2014 
 408
 312
 
 
 720
 55
Amcor Packaging Workington United Kingdom Jun. 2014 
(6) 
1,108
 6,535
 
 
 7,643
 950
Government Services Administration (GSA) Raton NM Jun. 2014 
 93
 875
 
 
 968
 116
Nimble Storage San Jose CA Jun. 2014 
(9) 
30,227
 10,795
 
 180
 41,202
 1,336
FedEx Amarillo TX Jul. 2014 
 889
 6,446
 
 
 7,335
 941
FedEx Chicopee MA Jul. 2014 
 1,030
 7,022
 
 
 8,052
 1,074
FedEx San Antonio TX Jul. 2014 
 3,283
 17,756
 
 
 21,039
 2,156
Sandoz Princeton NJ Jul. 2014 
(7) 
7,766
 31,994
 
 11,558
 51,318
 7,666
Wyndham Branson MO Jul. 2014 
 881
 3,307
 
 
 4,188
 425
Valassis Livonia MI Jul. 2014 
 1,735
 8,119
 
 
 9,854
 957
Government Services Administration (GSA) Fort Fairfield ME Jul. 2014 
 26
 9,315
 
 
 9,341
 1,050
AT&T Services, Inc. San Antonio TX Jul. 2014 33,550
 5,312
 41,201
 
 
 46,513
 4,596
PNC Bank Erie PA Jul. 2014 
(9) 
242
 6,195
 
 
 6,437
 706
PNC Bank Scranton PA Jul. 2014 
(7) 
1,324
 3,004
 
 
 4,328
 351
Achmea Leusden The Netherlands Jul. 2014 
 2,913
 22,704
 
 99
 25,716
 2,557
Continental Tire Fort Mill SC Jul. 2014 
 780
 14,259
 
 
 15,039
 1,620
Fujitsu Office Properties Manchester United Kingdom Jul. 2014 
(6) 
3,596
 38,927
 
 
 42,523
 4,491
BP Oil Wootton Bassett United Kingdom Aug. 2014 
(6) 
583
 2,521
 
 
 3,104
 309

F-50

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 2018
(dollar amounts in thousands)

           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
HBOS Derby United Kingdom Aug. 2014 
(6) 
585
 5,896
 
 
 6,481
 747
HBOS St. Helens United Kingdom Aug. 2014 
(6) 
222
 3,341
 
 
 3,563
 427
HBOS Warrington United Kingdom Aug. 2014 
(6) 
423
 1,996
 
 
 2,419
 275
Malthurst Shiptonthorpe United Kingdom Aug. 2014 
(6) 
268
 1,908
 
 
 2,176
 258
Malthurst Yorkshire United Kingdom Aug. 2014 
(6) 
476
 1,249
 
 
 1,725
 221
Stanley Black & Decker Westerville OH Aug. 2014 
 958
 6,933
 
 
 7,891
 816
Thermo Fisher Kalamazoo MI Aug. 2014 
 1,176
 10,179
 
 
 11,355
 1,138
Capgemini Birmingham United Kingdom Aug. 2014 
(6) 
1,585
 15,028
 
 
 16,613
 1,816
Merck Madison NJ Aug. 2014 
(7) 
10,290
 32,530
 
 
 42,820
 3,595
Family Dollar Abbeville AL Aug. 2014 
 115
 635
 
 
 750
 90
Family Dollar Aiken SC Aug. 2014 
 439
 505
 
 
 944
 77
Family Dollar Alapaha GA Aug. 2014 
 200
 492
 
 
 692
 79
Family Dollar Anniston AL Aug. 2014 
 176
 618
 
 
 794
 86
Family Dollar Atlanta GA Aug. 2014 
 234
 1,181
 
 
 1,415
 146
Family Dollar Bossier City LA Aug. 2014 
 291
 520
 
 
 811
 71
Family Dollar Brandenburg KY Aug. 2014 
 178
 748
 
 
 926
 102
Family Dollar Brownfield TX Aug. 2014 
 31
 664
 
 
 695
 81
Family Dollar Brownsville TX Aug. 2014 
 83
 803
 
 
 886
 99
Family Dollar Caledonia MS Aug. 2014 
 415
 162
 
 
 577
 38
Family Dollar Camden SC Aug. 2014 
 187
 608
 
 
 795
 88
Family Dollar Camp Wood TX Aug. 2014 
 96
 593
 
 
 689
 84
Family Dollar Church Point LA Aug. 2014 
 247
 563
 
 
 810
 78
Family Dollar Columbia SC Aug. 2014 
 363
 487
 
 
 850
 77
Family Dollar Columbus MS Aug. 2014 
 305
 85
 
 
 390
 18
Family Dollar Danville VA Aug. 2014 
 124
 660
 
 
 784
 86
Family Dollar Detroit MI Aug. 2014 
 107
 711
 
 
 818
 80
Family Dollar Diamond Head MS Aug. 2014 
 104
 834
 
 
 938
 105
Family Dollar Falfurrias TX Aug. 2014 
 52
 745
 
 
 797
 84
Family Dollar Fayetteville NC Aug. 2014 
 99
 438
 
 
 537
 52
Family Dollar Fort Davis TX Aug. 2014 
 114
 698
 
 
 812
 100
Family Dollar Fort Madison IA Aug. 2014 
 188
 226
 
 
 414
 36
Family Dollar Greenwood SC Aug. 2014 
 629
 546
 
 
 1,175
 70
Family Dollar Grenada MS Aug. 2014 
 346
 335
 
 
 681
 57
Family Dollar Griffin GA Aug. 2014 
 369
 715
 
 
 1,084
 100
Family Dollar Hallsville TX Aug. 2014 
 96
 225
 
 
 321
 27

F-51

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 20172018
(dollar amounts in thousands)

           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 
Encumbrances at December 31, 2017 (1)
 Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2017(2)(3)
 
Accumulated
Depreciation (4)(5)
Rheinmetall Neuss Germany Jan. 2014 12,698
 6,160
 17,294
 
 77
 23,531
 1,880
GE Aviation Grand Rapids MI Jan. 2014 24,050
 3,174
 27,076
 
 
 30,250
 2,885
Provident Financial Bradford UK Feb. 2014 17,203
 1,361
 25,248
 
 
 26,609
 2,521
Crown Crest Leicester UK Feb. 2014 25,973
 7,754
 32,020
 
 
 39,774
 3,642
Trane Davenport IA Feb. 2014 
 291
 1,968
 
 
 2,259
 247
Aviva Sheffield UK Mar. 2014 21,183
 2,931
 33,219
 
 
 36,150
 3,351
DFS Trading Brigg UK Mar. 2014 2,858
 1,369
 3,883
 
 
 5,252
 437
DFS Trading Carcroft UK Mar. 2014 3,409
 1,151
 4,560
 
 
 5,711
 475
DFS Trading Carcroft UK Mar. 2014 1,583
 312
 2,244
 
 
 2,556
 266
DFS Trading Darley Dale UK Mar. 2014 3,565
 1,347
 3,458
 
 
 4,805
 397
DFS Trading Somercotes UK Mar. 2014 2,265
 792
 2,826
 
 
 3,618
 382
Government Services Administration Fanklin TN Mar. 2014 
 4,160
 30,083
 
 
 34,243
 3,000
National Oilwell Williston ND Mar. 2014 
 211
 3,513
 
 
 3,724
 473
Talk Talk Manchester UK Apr. 2014 5,161
 791
 9,408
 
 
 10,199
 979
Government Services Administration Dover DE Apr. 2014 
 1,097
 1,715
 
 
 2,812
 188
Government Services Administration Germantown PA Apr. 2014 
 1,097
 3,573
 
 
 4,670
 352
OBI DIY Mayen Germany Apr. 2014 5,391
 1,342
 8,012
 
 
 9,354
 895
DFS Trading South Yorkshire UK Apr. 2014 1,210
 
 1,410
 
 
 1,410
 209
DFS Trading Yorkshire UK Apr. 2014 1,992
 
 1,838
 
 
 1,838
 183
Government Services Administration Dallas TX Apr. 2014 
 484
 2,934
 
 
 3,418
 288
Government Services Administration Mission TX Apr. 2014 
 618
 3,145
 
 
 3,763
 327
Government Services Administration International Falls MN May. 2014 7,095
 350
 11,182
 
 63
 11,595
 1,126
Indiana Department of Revenue Indianapolis IN May. 2014 
 891
 7,677
 
 
 8,568
 795
National Oilwell Pleasanton TX May. 2014 
 202
 1,643
 
 
 1,845
 206
Nissan Murfreesboro TN May. 2014 17,030
 966
 19,573
 
 
 20,539
 1,839
Government Services Administration Lakewood CO Jun. 2014 
 1,220
 7,928
 
 
 9,148
 747
Lippert Components South Bend IN Jun. 2014 9,040
 3,195
 6,883
 
 
 10,078
 663
Axon Energy Products Conroe TX Jun. 2014 
 826
 6,132
 
 
 6,958
 558
Axon Energy Products Houston TX Jun. 2014 
 294
 2,310
 
 
 2,604
 235
Axon Energy Products Houston TX Jun. 2014 
 416
 5,186
 
 
 5,602
 511
Bell Supply Co Carrizo Springs TX Jun. 2014 
 260
 1,445
 
 
 1,705
 169
Bell Supply Co Cleburne TX Jun. 2014 
 301
 323
 
 ���
 624
 42
Bell Supply Co Frierson LA Jun. 2014 
 260
 1,054
 
 
 1,314
 171
Bell Supply Co Gainesville TX Jun. 2014 
 131
 1,420
 
 
 1,551
 140
Bell Supply Co Killdeer ND Jun. 2014 
 307
 1,250
 
 
 1,557
 143
           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
Family Dollar Hardeeville SC Aug. 2014 
 83
 663
 
 
 746
 90
Family Dollar Hastings NE Aug. 2014 
 260
 515
 
 
 775
 64
Family Dollar Haw River NC Aug. 2014 
 310
 554
 
 
 864
 96
Family Dollar Kansas City MO Aug. 2014 
 52
 986
 
 
 1,038
 109
Family Dollar Knoxville TN Aug. 2014 
 82
 714
 
 
 796
 96
Family Dollar La Feria TX Aug. 2014 
 124
 956
 
 
 1,080
 113
Family Dollar Lancaster SC Aug. 2014 
 229
 721
 
 
 950
 106
Family Dollar Lillian AL Aug. 2014 
 410
 508
 
 
 918
 72
Family Dollar Louisville KY Aug. 2014 
 511
 503
 
 
 1,014
 74
Family Dollar Louisville MS Aug. 2014 
 235
 410
 
 
 645
 64
Family Dollar Madisonville KY Aug. 2014 
 389
 576
 
 
 965
 83
Family Dollar Memphis TN Aug. 2014 
 356
 507
 
 
 863
 75
Family Dollar Memphis TN Aug. 2014 
 79
 342
 
 
 421
 52
Family Dollar Memphis TN Aug. 2014 
 158
 301
 
 
 459
 49
Family Dollar Mendenhall MS Aug. 2014 
 61
 720
 
 
 781
 92
Family Dollar Mobile AL Aug. 2014 
 258
 682
 
 
 940
 87
Family Dollar Mohave Valley AZ Aug. 2014 
 284
 575
 
 
 859
 97
Family Dollar N Platte NE Aug. 2014 
 117
 255
 
 
 372
 28
Family Dollar Nampa ID Aug. 2014 
 133
 1,126
 
 
 1,259
 139
Family Dollar Newberry MI Aug. 2014 
 172
 1,562
 
 
 1,734
 191
Family Dollar North Charleston SC Aug. 2014 
 458
 593
 
 
 1,051
 92
Family Dollar North Charleston SC Aug. 2014 
 376
 588
 
 
 964
 85
Family Dollar Oklahoma City OK Aug. 2014 
 144
 1,211
 
 
 1,355
 134
Family Dollar Paulden AZ Aug. 2014 
 468
 306
 
 
 774
 62
Family Dollar Poteet TX Aug. 2014 
 141
 169
 
 
 310
 36
Family Dollar Rockford IL Aug. 2014 
 183
 1,179
 
 
 1,362
 141
Family Dollar Roebuck SC Aug. 2014 
 306
 508
 
 
 814
 87
Family Dollar San Angelo TX Aug. 2014 
 96
 342
 
 
 438
 50
Family Dollar St Louis MO Aug. 2014 
 226
 1,325
 
 
 1,551
 157
Family Dollar Tyler TX Aug. 2014 
 217
 682
 
 
 899
 83
Family Dollar Union MS Aug. 2014 
 52
 622
 
 
 674
 82
Family Dollar Williamston SC Aug. 2014 
 211
 558
 
 
 769
 81
Government Services Administration (GSA) Rangeley ME Aug. 2014 
 1,377
 4,746
 
 262
 6,385
 583
Hewlett-Packard Newcastle United Kingdom Sep. 2014 
(6) 
1,095
 18,230
 
 
 19,325
 2,055
Intier Automotive Redditch United Kingdom Sep. 2014 
(6) 
1,131
 8,952
 
 
 10,083
 1,122

F-52

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 20172018
(dollar amounts in thousands)

           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 
Encumbrances at December 31, 2017 (1)
 Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2017(2)(3)
 
Accumulated
Depreciation (4)(5)
Bell Supply Co Williston ND Jun. 2014 
 162
 2,323
 
 
 2,485
 239
GE Oil & Gas Canton OH Jun. 2014 
 437
 3,039
 
 300
 3,776
 310
GE Oil & Gas Odessa TX Jun. 2014 
 1,611
 3,322
 
 
 4,933
 610
Lhoist Irving TX Jun. 2014 
 173
 2,154
 
 
 2,327
 257
Select Energy Services DeBerry TX Jun. 2014 
 533
 7,551
 
 
 8,084
 1,182
Select Energy Services Gainesville TX Jun. 2014 
 519
 7,482
 
 
 8,001
 694
Select Energy Services Victoria TX Jun. 2014 
 354
 1,698
 
 
 2,052
 206
Bell Supply Co Jacksboro TX Jun. 2014 
 51
 657
 
 
 708
 105
Bell Supply Co Kenedy TX Jun. 2014 
 190
 1,669
 
 
 1,859
 211
Select Energy Services Alice TX Jun. 2014 
 518
 1,331
 
 
 1,849
 144
Select Energy Services Dilley TX Jun. 2014 
 429
 1,777
 
 
 2,206
 227
Select Energy Services Kenedy TX Jun. 2014 
 815
 8,355
 
 
 9,170
 915
Select Energy Services Laredo TX Jun. 2014 
 2,472
 944
 
 
 3,416
 153
Superior Energy Services Gainesville TX Jun. 2014 
 322
 480
 
 
 802
 48
Superior Energy Services Jacksboro TX Jun. 2014 
 408
 312
 
 
 720
 42
Amcor Packaging Workington UK Jun. 2014 4,218
 1,174
 6,924
 
 
 8,098
 783
Government Services Administration Raton NM Jun. 2014 
 93
 875
 
 
 968
 90
Nimble Storage San Jose CA Jun. 2014 
 30,227
 10,795
 
 180
 41,202
 1,035
FedEx Amarillo TX Jul. 2014 
 889
 6,446
 
 
 7,335
 731
FedEx Chicopee MA Jul. 2014 
 1,030
 7,022
 
 
 8,052
 835
FedEx San Antonio TX Jul. 2014 
 3,283
 17,729
 
 
 21,012
 1,676
Sandoz Princeton NJ Jul. 2014 34,880
 7,766
 31,994
 
 11,558
 51,318
 5,852
Wyndham Branson MO Jul. 2014 
 881
 3,307
 
 
 4,188
 331
Valassis Livonia MI Jul. 2014 
 1,735
 8,119
 
 
 9,854
 744
Government Services Administration Fort Fairfield ME Jul. 2014 
 26
 9,315
 
 
 9,341
 812
AT&T Services, Inc. San Antonio TX Jul. 2014 33,550
 5,312
 41,201
 
 
 46,513
 3,555
PNC Bank Erie PA Jul. 2014 
 242
 6,195
 
 
 6,437
 546
PNC Bank Scranton PA Jul. 2014 4,940
 1,324
 3,004
 
 
 4,328
 271
Achmea Leusden The Netherlands Jul. 2014 
 3,049
 23,767
 
 103
 26,919
 2,067
Continental Tire Fort Mill SC Jul. 2014 
 780
 14,259
 
 
 15,039
 1,253
Fujitsu Office Properties Manchester UK Jul. 2014 33,435
 3,810
 41,244
 
 
 45,054
 3,681
BP Oil Wootton Bassett UK Aug. 2014 1,968
 618
 2,671
 
 
 3,289
 254
HBOS Derby UK Aug. 2014 3,913
 620
 6,247
 
 
 6,867
 612
HBOS St. Helens UK Aug. 2014 1,999
 235
 3,540
 
 
 3,775
 350
HBOS Warrington UK Aug. 2014 1,361
 448
 2,115
 
 
 2,563
 225
           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
Waste Management Winston-Salem NC Sep. 2014 
 494
 3,235
 
 
 3,729
 373
FedEx Winona MN Sep. 2014 
 83
 1,785
 
 
 1,868
 236
Dollar General Allen OK Sep. 2014 
 99
 793
 
 
 892
 96
Dollar General Cherokee KS Sep. 2014 
 27
 769
 
 
 796
 94
Dollar General Clearwater KS Sep. 2014 
 90
 785
 
 
 875
 96
Dollar General Dexter NM Sep. 2014 
 329
 585
 
 
 914
 71
Dollar General Elmore City OK Sep. 2014 
 21
 742
 
 
 763
 92
Dollar General Eunice NM Sep. 2014 
 269
 569
 
 
 838
 70
Dollar General Gore OK Sep. 2014 
 143
 813
 
 
 956
 99
Dollar General Kingston OK Sep. 2014 
 81
 778
 
 
 859
 96
Dollar General Lordsburg NM Sep. 2014 
 212
 719
 
 
 931
 87
Dollar General Lyons KS Sep. 2014 
 120
 970
 
 
 1,090
 117
Dollar General Mansfield LA Sep. 2014 
 169
 812
 
 
 981
 99
Dollar General Neligh NE Sep. 2014 
 83
 1,045
 
 
 1,128
 123
Dollar General Norman OK Sep. 2014 
 40
 913
 
 
 953
 111
Dollar General Peggs OK Sep. 2014 
 72
 879
 
 
 951
 106
Dollar General Santa Rosa NM Sep. 2014 
 324
 575
 
 
 899
 70
Dollar General Sapulpa OK Sep. 2014 
 143
 745
 
 
 888
 93
Dollar General Schuyler NE Sep. 2014 
 144
 905
 
 
 1,049
 108
Dollar General Tahlequah OK Sep. 2014 
 132
 925
 
 
 1,057
 111
Dollar General Townville PA Sep. 2014 
 78
 882
 
 
 960
 113
Dollar General Valley Falls KS Sep. 2014 
 51
 922
 
 
 973
 109
Dollar General Wymore NE Sep. 2014 
 21
 872
 
 
 893
 105
FedEx Bohemia NY Sep. 2014 
(7) 
4,838
 19,596
 
 
 24,434
 2,400
FedEx Watertown NY Sep. 2014 
 561
 4,757
 
 
 5,318
 614
Shaw Aero Naples FL Sep. 2014 
 998
 22,332
 
 
 23,330
 2,469
Mallinckrodt St. Louis MO Sep. 2014 
(9) 
1,499
 16,828
 
 
 18,327
 1,880
Kuka Warehouse Sterling Heights MI Sep. 2014 
 1,227
 10,790
 
 
 12,017
 1,205
Trinity Health Livonia MI Sep. 2014 
 4,680
 11,568
 
 1,583
 17,831
 1,734
Trinity Health Livonia MI Sep. 2014 
 4,273
 16,574
 
 2,093
 22,940
 2,098
FedEx Hebron KY Sep. 2014 
 1,106
 7,750
 
 109
 8,965
 926
FedEx Lexington KY Sep. 2014 
 1,118
 7,961
 
 
 9,079
 927
GE Aviation Cincinnati OH Sep. 2014 
 1,393
 10,490
 
 
 11,883
 1,174
Bradford & Bingley Bingley United Kingdom Oct. 2014 
(6) 
4,247
 10,663
 
 
 14,910
 1,291
DNV GL Dublin OH Oct. 2014 
 2,509
 3,140
 
 126
 5,775
 377

F-53

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 20172018
(dollar amounts in thousands)

       Initial Costs Costs Capitalized Subsequent to Acquisition          Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 
Encumbrances at December 31, 2017 (1)
 Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2017(2)(3)
 
Accumulated
Depreciation (4)(5)
 City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
Malthurst Shiptonthorpe UK Aug. 2014 1,312
 284
 2,021
 
 
 2,305
 211
Malthurst Yorkshire UK Aug. 2014 1,038
 504
 1,323
 
 
 1,827
 181
Stanley Black & Decker Westerville OH Aug. 2014 
 958
 6,933
 
 
 7,891
 631
Thermo Fisher Kalamazoo MI Aug. 2014 
 1,176
 10,179
 
 
 11,355
 880
Capgemini Birmingham UK Aug. 2014 6,382
 1,679
 15,923
 
 
 17,602
 1,480
Merck Madison NJ Aug. 2014 26,950
 10,290
 32,530
 
 
 42,820
 2,766
Rexam Reckinghausen Germany Oct. 2014 5,876
 807
 11,358
 
 
 12,165
 1,258
C&J Energy Houston TX Oct. 2014 
(7) 
3,865
 9,457
 
 
 13,322
 1,106
FedEx Lake Charles LA Oct. 2014 
 255
 7,485
 
 
 7,740
 980
Family Dollar Abbeville AL Aug. 2014 
 115
 635
 
 
 750
 69
 Big Sandy TN Oct. 2014 
 62
 739
 
 
 801
 94
Family Dollar Aiken SC Aug. 2014 
 439
 505
 
 
 944
 59
 Boling TX Oct. 2014 
 80
 781
 
 
 861
 95
Family Dollar Alapaha GA Aug. 2014 
 200
 492
 
 
 692
 60
 Bonifay FL Oct. 2014 
 103
 673
 
 
 776
 102
Family Dollar Anniston AL Aug. 2014 
 176
 618
 
 
 794
 66
 Brownsville TN Oct. 2014 
 155
 776
 
 
 931
 107
Family Dollar Atlanta GA Aug. 2014 
 234
 1,181
 
 
 1,415
 112
 Brundidge AL Oct. 2014 
 89
 749
 
 
 838
 119
Family Dollar Bossier City LA Aug. 2014 
 291
 520
 
 
 811
 55
 Buena Vista GA Oct. 2014 
 246
 757
 
 
 1,003
 143
Family Dollar Brandenburg KY Aug. 2014 
 178
 748
 
 
 926
 79
 Calvert TX Oct. 2014 
 91
 777
 
 
 868
 97
Family Dollar Brownfield TX Aug. 2014 
 31
 664
 
 
 695
 62
 Chocowinty NC Oct. 2014 
 237
 554
 
 
 791
 74
Family Dollar Brownsville TX Aug. 2014 
 83
 803
 
 
 886
 76
 Clarksville TN Oct. 2014 
 370
 1,025
 
 
 1,395
 150
Family Dollar Caledonia MS Aug. 2014 
 415
 162
 
 
 577
 29
 Fort Mill SC Oct. 2014 
 556
 757
 
 
 1,313
 100
Family Dollar Camden SC Aug. 2014 
 187
 608
 
 
 795
 67
 Hillsboro TX Oct. 2014 
 287
 634
 
 
 921
 81
Family Dollar Camp Wood TX Aug. 2014 
 96
 593
 
 
 689
 65
 Lake Charles LA Oct. 2014 
 295
 737
 
 
 1,032
 93
Family Dollar Church Point LA Aug. 2014 
 247
 563
 
 
 810
 60
 Lakeland FL Oct. 2014 
 300
 812
 
 
 1,112
 102
Family Dollar Columbia SC Aug. 2014 
 363
 487
 
 
 850
 59
 Lansing MI Oct. 2014 
 132
 1,040
 
 
 1,172
 151
Family Dollar Columbus MS Aug. 2014 
 305
 85
 
 
 390
 14
 Laurens SC Oct. 2014 
 303
 584
 
 
 887
 98
Family Dollar Danville VA Aug. 2014 
 124
 660
 
 
 784
 66
 Marion MS Oct. 2014 
 183
 747
 
 
 930
 96
Family Dollar Detroit MI Aug. 2014 
 107
 711
 
 
 818
 62
 Marsing ID Oct. 2014 
 188
 786
 
 
 974
 124
Family Dollar Diamond Head MS Aug. 2014 
 104
 834
 
 
 938
 81
 Montgomery AL Oct. 2014 
 122
 821
 
 
 943
 132
Family Dollar Falfurrias TX Aug. 2014 
 52
 745
 
 
 797
 64
 Monticello FL Oct. 2014 
 230
 695
 
 
 925
 97
Family Dollar Fayetteville NC Aug. 2014 
 99
 438
 
 
 537
 40
 Monticello UT Oct. 2014 
 96
 894
 
 
 990
 146
Family Dollar Fort Davis TX Aug. 2014 
 114
 698
 
 
 812
 77
 North Little Rock AR Oct. 2014 
 424
 649
 
 
 1,073
 102
Family Dollar Fort Madison IA Aug. 2014 
 188
 226
 
 
 414
 28
 Oakdale LA Oct. 2014 
 243
 696
 
 
 939
 87
Family Dollar Greenwood SC Aug. 2014 
 629
 546
 
 
 1,175
 54
 Orlando FL Oct. 2014 
 684
 619
 
 
 1,303
 89
Family Dollar Grenada MS Aug. 2014 
 346
 335
 
 
 681
 44
 Port St. Lucie FL Oct. 2014 
 403
 907
 
 
 1,310
 119
Family Dollar Griffin GA Aug. 2014 
 369
 715
 
 
 1,084
 77
 Prattville AL Oct. 2014 
 463
 749
 
 
 1,212
 135
Family Dollar Hallsville TX Aug. 2014 
 96
 225
 
 
 321
 21
 Prichard AL Oct. 2014 
 241
 803
 
 
 1,044
 99
Family Dollar Hardeeville SC Aug. 2014 
 83
 663
 
 
 746
 69
 Quinlan TX Oct. 2014 
 74
 774
 
 
 848
 96
Family Dollar Hastings NE Aug. 2014 
 260
 515
 
 
 775
 50
 Rigeland MS Oct. 2014 
 447
 891
 
 
 1,338
 109
Family Dollar Haw River NC Aug. 2014 
 310
 554
 
 
 864
 74
 Rising Star TX Oct. 2014 
 63
 674
 
 
 737
 84
Family Dollar Southaven MS Oct. 2014 
 409
 1,080
 
 
 1,489
 144
Family Dollar Spout Springs NC Oct. 2014 
 474
 676
 
 
 1,150
 90
Family Dollar St. Petersburg FL Oct. 2014 
 482
 851
 
 
 1,333
 112

F-54

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 20172018
(dollar amounts in thousands)

       Initial Costs Costs Capitalized Subsequent to Acquisition          Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 
Encumbrances at December 31, 2017 (1)
 Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2017(2)(3)
 
Accumulated
Depreciation (4)(5)
 City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
Family Dollar Kansas City MO Aug. 2014 
 52
 986
 
 
 1,038
 84
 Standish ME Oct. 2014 
 411
 646
 
 
 1,057
 113
Family Dollar Knoxville TN Aug. 2014 
 82
 714
 
 
 796
 74
 Swansboro NC Oct. 2014 
 337
 826
 
 
 1,163
 139
Panasonic Hudson NJ Oct. 2014 
 1,312
 7,075
 
 
 8,387
 777
Onguard Havre De Grace MD Oct. 2014 
 2,216
 6,585
 
 
 8,801
 1,030
Axon Energy Products Houston TX Oct. 2014 
 297
 2,432
 
 
 2,729
 264
Metro Tonic Halle Peissen Germany Oct. 2014 30,326
 6,954
 48,721
 
 
 55,675
 5,978
Tokmanni Matsala Finland Nov. 2014 33,159
 1,802
 54,543
 
 
 56,345
 6,305
Fife Council Dunfermline United Kingdom Nov. 2014 
(6) 
335
 4,326
 
 
 4,661
 485
Family Dollar La Feria TX Aug. 2014 
 124
 956
 
 
 1,080
 87
 Doerun GA Nov. 2014 
 236
 717
 
 
 953
 92
Family Dollar Lancaster SC Aug. 2014 
 229
 721
 
 
 950
 82
 Old Hickory TN Nov. 2014 
 548
 781
 
 
 1,329
 108
Family Dollar Lillian AL Aug. 2014 
 410
 508
 
 
 918
 55
Family Dollar Louisville KY Aug. 2014 
 511
 503
 
 
 1,014
 57
Family Dollar Louisville MS Aug. 2014 
 235
 410
 
 
 645
 49
Family Dollar Madisonville KY Aug. 2014 
 389
 576
 
 
 965
 64
Family Dollar Memphis TN Aug. 2014 
 356
 507
 
 
 863
 58
Family Dollar Memphis TN Aug. 2014 
 79
 342
 
 
 421
 40
Family Dollar Memphis TN Aug. 2014 
 158
 301
 
 
 459
 38
Family Dollar Mendenhall MS Aug. 2014 
 61
 720
 
 
 781
 71
Family Dollar Mobile AL Aug. 2014 
 258
 682
 
 
 940
 67
Family Dollar Mohave Valley AZ Aug. 2014 
 284
 575
 
 
 859
 74
Family Dollar N Platte NE Aug. 2014 
 117
 255
 
 
 372
 22
Family Dollar Nampa ID Aug. 2014 
 133
 1,126
 
 
 1,259
 107
Family Dollar Newberry MI Aug. 2014 
 172
 1,562
 
 
 1,734
 147
Family Dollar North Charleston SC Aug. 2014 
 376
 588
 
 
 964
 66
Family Dollar North Charleston SC Aug. 2014 
 458
 593
 
 
 1,051
 71
Family Dollar Oklahoma City OK Aug. 2014 
 144
 1,211
 
 
 1,355
 103
Family Dollar Paulden AZ Aug. 2014 
 468
 306
 
 
 774
 48
Family Dollar Poteet TX Aug. 2014 
 141
 169
 
 
 310
 28
Family Dollar Rockford IL Aug. 2014 
 183
 1,179
 
 
 1,362
 108
Family Dollar Roebuck SC Aug. 2014 
 306
 508
 
 
 814
 67
Family Dollar San Angelo TX Aug. 2014 
 96
 342
 
 
 438
 39
Family Dollar St Louis MO Aug. 2014 
 226
 1,325
 
 
 1,551
 121
Family Dollar Tyler TX Aug. 2014 
 217
 682
 
 
 899
 64
Family Dollar Union MS Aug. 2014 
 52
 622
 
 
 674
 63
Family Dollar Williamston SC Aug. 2014 
 211
 558
 
 
 769
 62
Government Services Administration Rangeley ME Aug. 2014 
 1,377
 4,746
 
 262
 6,385
 444
Hewlett-Packard Newcastle UK Sep. 2014 12,531
 1,160
 19,316
 
 
 20,476
 1,665
Intier Automotive Redditch UK Sep. 2014 6,375
 1,198
 9,485
 
 
 10,683
 909
Waste Management Winston-Salem NC Sep. 2014 
 494
 3,235
 
 
 3,729
 285
Government Services Administration (GSA) Rapid City SD Nov. 2014 
 504
 7,837
 
 
 8,341
 884
KPN BV Houten The Netherlands Nov. 2014 
 1,613
 19,738
 
 
 21,351
 2,088
RWE AG Essen Germany Nov. 2014 29,911
 
 
 
 
 
 
RWE AG Essen Germany Nov. 2014 16,917
 
 
 
 
 
 
RWE AG Essen Germany Nov. 2014 24,696
 
 
 
 
 
 
Follett School McHenry IL Dec. 2014 
 3,423
 15,600
 
 
 19,023
 2,035
Quest Diagnostics, Inc. Santa Clarita CA Dec. 2014 52,800
 10,714
 69,018
 
 
 79,732
 7,168
Diebold North Canton OH Dec. 2014 
 
 9,142
 
 
 9,142
 1,133
Weatherford International Odessa TX Dec. 2014 
(9) 
665
 1,795
 
 
 2,460
 320
AM Castle Wichita KS Dec. 2014 
 426
 6,681
 
 
 7,107
 676
FedEx Winona MN Sep. 2014 
 83
 1,785
 
 
 1,868
 180
 Billerica MA Dec. 2014 
 1,138
 6,674
 
 
 7,812
 830
Dollar General Allen OK Sep. 2014 
 99
 793
 
 
 892
 73
Constellium Auto Wayne MI Dec. 2014 
(7) 
1,180
 13,781
 
 7,875
 22,836
 3,614
C&J Energy Houston TX Mar. 2015 
(7) 
6,196
 21,745
 
 
 27,941
 2,172
FedEx Salina UT Mar. 2015 
 428
 3,447
 
 
 3,875
 487
FedEx Pierre SD Apr. 2015 
 
 3,288
 
 
 3,288
 444
Crowne Group Fraser MI Aug. 2015 
 350
 3,865
 
 
 4,215
 365
Crowne Group Jonesville MI Aug. 2015 
 101
 3,136
 
 
 3,237
 305
Crowne Group Warren MI Aug. 2015 
 166
 1,854
 
 
 2,020
 318
Crowne Group Logansport IN Aug. 2015 
 1,843
 5,430
 
 
 7,273
 592
Crowne Group Madison IN Aug. 2015 
 1,598
 7,513
 
 
 9,111
 692
Crowne Group Marion SC Aug. 2015 
 386
 7,993
 
 
 8,379
 795
JIT Steel Chattanooga TN Sep. 2015 
 582
 3,122
 
 
 3,704
 275
JIT Steel Chattanooga TN Sep. 2015 
 316
 1,986
 
 
 2,302
 171
Mapes & Sprowl Elk Grove Village IL Sep. 2015 
 954
 4,619
 
 
 5,573
 420
Beacon Health South Bend IN Sep. 2015 
 1,636
 8,190
 
 
 9,826
 751

F-55

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 20172018
(dollar amounts in thousands)

           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 
Encumbrances at December 31, 2017 (1)
 Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2017(2)(3)
 
Accumulated
Depreciation (4)(5)
Dollar General Cherokee KS Sep. 2014 
 27
 769
 
 
 796
 72
Dollar General Clearwater KS Sep. 2014 
 90
 785
 
 
 875
 73
Dollar General Dexter NM Sep. 2014 
 329
 585
 
 
 914
 55
Dollar General Elmore City OK Sep. 2014 
 21
 742
 
 
 763
 70
Dollar General Eunice NM Sep. 2014 
 269
 569
 
 
 838
 54
Dollar General Gore OK Sep. 2014 
 143
 813
 
 
 956
 76
Dollar General Kingston OK Sep. 2014 
 81
 778
 
 
 859
 73
Dollar General Lordsburg NM Sep. 2014 
 212
 719
 
 
 931
 67
Dollar General Lyons KS Sep. 2014 
 120
 970
 
 
 1,090
 89
Dollar General Mansfield LA Sep. 2014 
 169
 812
 
 
 981
 76
Dollar General Neligh NE Sep. 2014 
 83
 1,045
 
 
 1,128
 94
Dollar General Norman OK Sep. 2014 
 40
 913
 
 
 953
 85
Dollar General Peggs OK Sep. 2014 
 72
 879
 
 
 951
 81
Dollar General Santa Rosa NM Sep. 2014 
 324
 575
 
 
 899
 54
Dollar General Sapulpa OK Sep. 2014 
 143
 745
 
 
 888
 71
Dollar General Schuyler NE Sep. 2014 
 144
 905
 
 
 1,049
 83
Dollar General Tahlequah OK Sep. 2014 
 132
 925
 
 
 1,057
 85
Dollar General Townville PA Sep. 2014 
 78
 882
 
 
 960
 86
Dollar General Valley Falls KS Sep. 2014 
 51
 922
 
 
 973
 83
Dollar General Wymore NE Sep. 2014 
 21
 872
 
 
 893
 80
FedEx Bohemia NY Sep. 2014 19,375
 4,838
 19,596
 
 
 24,434
 1,836
FedEx Watertown NY Sep. 2014 
 561
 4,757
 
 
 5,318
 469
Shaw Aero Naples FL Sep. 2014 
 998
 22,332
 
 
 23,330
 1,888
Mallinckrodt St. Louis MO Sep. 2014 
 1,499
 16,828
 
 
 18,327
 1,437
Kuka Warehouse Sterling Heights MI Sep. 2014 
 1,227
 10,790
 
 
 12,017
 921
Trinity Health Livonia MI Sep. 2014 
 4,680
 11,568
 
 1,250
 17,498
 1,288
Trinity Health Livonia MI Sep. 2014 
 4,273
 16,574
 
 934
 21,781
 1,575
FedEx Hebron KY Sep. 2014 
 1,106
 7,750
 
 109
 8,965
 704
FedEx Lexington KY Sep. 2014 
 1,118
 7,961
 
 
 9,079
 709
GE Aviation Cincinnati OH Sep. 2014 
 1,393
 10,490
 
 
 11,883
 898
Bradford & Bingley Bingley UK Oct. 2014 10,200
 4,500
 11,298
 
 
 15,798
 1,046
DNV GL Dublin OH Oct. 2014 
 2,509
 3,140
 
 126
 5,775
 282
Rexam Reckinghausen Germany Oct. 2014 6,301
 845
 11,889
 
 
 12,734
 1,001
C&J Energy Houston TX Oct. 2014 6,982
 3,865
 9,457
 
 
 13,322
 840
FedEx Lake Charles LA Oct. 2014 
 255
 7,485
 
 
 7,740
 745
           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
National Oilwell Pleasanton TX Sep. 2015 
 80
 3,372
 
 
 3,452
 320
Office Depot Venlo The Netherlands Sep. 2015 
 3,569
 15,783
 
 
 19,352
 1,554
Finnair Helsinki Finland Sep. 2015 32,501
 2,575
 73,384
 
 
 75,959
 6,481
Hannibal Houston TX Sep. 2015 
 2,090
 11,138
 
 
 13,228
 953
FedEx Mankato MN Sep. 2015 
 472
 6,780
 
 
 7,252
 744
Auchan Beychac-et-Caillau France Dec. 2016 9,498
 4,143
 13,476
 
 
 17,619
 914
DCNS Guipavas France Dec. 2016 10,872
 1,934
 14,669
 
 
 16,603
 820
Deutsche Bank Kirchberg Luxembourg Dec. 2016 41,198
 14,781
 50,276
 
 306
 65,363
 2,609
FedEx Greensboro NC Dec. 2016 
 1,820
 8,252
 
 
 10,072
 580
Foster Wheeler Reading United Kingdom Dec. 2016 
(6) 
26,938
 73,692
 
 
 100,630
 3,816
Harper Collins Glasgow United Kingdom Dec. 2016 
(6) 
10,061
 51,391
 
 
 61,452
 2,880
ID Logistics Landersheim France Dec. 2016 6,294
 1,972
 8,287
 
 
 10,259
 458
ID Logistics Moreuil France Dec. 2016 5,722
 3,044
 6,157
 
 
 9,201
 358
ID Logistics Weilbach Germany Dec. 2016 4,578
 1,362
 9,006
 
 
 10,368
 475
ING Bank Amsterdam Zuidoos The Netherlands Dec. 2016 50,353
 
 74,520
 
 275
 74,795
 3,808
NCR Financial Solutions Group Dundee United Kingdom Dec. 2016 
(6) 
2,560
 8,189
 
 
 10,749
 515
Pole Emploi Marseille France Dec. 2016 6,637
 816
 8,601
 
 
 9,417
 443
Sagemcom Rueil Malmaison   Dec. 2016 41,083
 3,075
 73,867
 
 
 76,942
 3,824
Worldline SA Blois France Dec. 2016 5,722
 1,156
 5,502
 
 
 6,658
 391
Cott Beverages Sikeston MO Feb. 2017 
 456
 8,291
 
 
 8,747
 409
FedEx Great Falls MT Mar. 2017 
(9) 
326
 5,439
 
 
 5,765
 345
FedEx Morgantown WV Mar. 2017 
(7) 
4,661
 8,401
 
 
 13,062
 421
Bridgestone Tire Mt. Olive Township NJ Sep. 2017 
(8) 
916
 5,088
 
 
 6,004
 186
NSA Industries St. Johnsbury VT Oct. 2017 
(8) 
270
 3,858
 
 
 4,128
 134
NSA Industries St. Johnsbury VT Oct. 2017 
(8) 
210
 1,753
 
 
 1,963
 60
NSA Industries St. Johnsbury VT Oct. 2017 
(8) 
300
 3,936
 
 
 4,236
 152
GKN Aerospace Blue Ash OH Oct. 2017 
(8) 
790
 4,079
 
 
 4,869
 137
Tremec Wixom MI Nov. 2017 
(8) 
1,002
 17,376
 
 
 18,378
 588
NSA Industries Groveton NH Dec. 2017 
(8) 
59
 3,517
 
 
 3,576
 90
Cummins Omaha NE Dec. 2017 
(8) 
1,448
 6,469
 
 
 7,917
 203
Government Services Administration (GSA) Gainsville FL Dec. 2017 
 451
 6,016
 
 
 6,467
 158
Chemours Pass Christian MS Feb. 2018 
 382
 16,149
 
 
 16,531
 409
Lee Steel Wyoming MI Mar. 2018 
 504
 7,256
 
 
 7,760
 143
LSI Steel Chicago IL Mar. 2018 
 3,341
 1,181
 
 
 4,522
 23
LSI Steel Chicago IL Mar. 2018 
 1,792
 5,615
 
 
 7,407
 106

F-56

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 20172018
(dollar amounts in thousands)

           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 
Encumbrances at December 31, 2017 (1)
 Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2017(2)(3)
 
Accumulated
Depreciation (4)(5)
Family Dollar Big Sandy TN Oct. 2014 
 62
 739
 
 
 801
 71
Family Dollar Boling TX Oct. 2014 
 80
 781
 
 
 861
 72
Family Dollar Bonifay FL Oct. 2014 
 103
 673
 
 
 776
 77
Family Dollar Brownsville TN Oct. 2014 
 155
 776
 
 
 931
 82
Family Dollar Brundidge AL Oct. 2014 
 89
 749
 
 
 838
 91
Family Dollar Buena Vista GA Oct. 2014 
 246
 757
 
 
 1,003
 108
Family Dollar Calvert TX Oct. 2014 
 91
 777
 
 
 868
 74
Family Dollar Chocowinty NC Oct. 2014 
 237
 554
 
 
 791
 56
Family Dollar Clarksville TN Oct. 2014 
 370
 1,025
 
 
 1,395
 114
Family Dollar Fort Mill SC Oct. 2014 
 556
 757
 
 
 1,313
 76
Family Dollar Hillsboro TX Oct. 2014 
 287
 634
 
 
 921
 61
Family Dollar Lake Charles LA Oct. 2014 
 295
 737
 
 
 1,032
 70
Family Dollar Lakeland FL Oct. 2014 
 300
 812
 
 
 1,112
 77
Family Dollar Lansing MI Oct. 2014 
 132
 1,040
 
 
 1,172
 115
Family Dollar Laurens SC Oct. 2014 
 303
 584
 
 
 887
 74
Family Dollar Marion MS Oct. 2014 
 183
 747
 
 
 930
 73
Family Dollar Marsing ID Oct. 2014 
 188
 786
 
 
 974
 94
Family Dollar Montgomery AL Oct. 2014 
 411
 646
 
 
 1,057
 86
Family Dollar Montgomery AL Oct. 2014 
 122
 821
 
 
 943
 100
Family Dollar Monticello FL Oct. 2014 
 230
 695
 
 
 925
 74
Family Dollar Monticello UT Oct. 2014 
 96
 894
 
 
 990
 111
Family Dollar North Little Rock AR Oct. 2014 
 424
 649
 
 
 1,073
 77
Family Dollar Oakdale LA Oct. 2014 
 243
 696
 
 
 939
 66
Family Dollar Orlando FL Oct. 2014 
 684
 619
 
 
 1,303
 68
Family Dollar Port St. Lucie FL Oct. 2014 
 403
 907
 
 
 1,310
 91
Family Dollar Prattville AL Oct. 2014 
 463
 749
 
 
 1,212
 102
Family Dollar Prichard AL Oct. 2014 
 241
 803
 
 
 1,044
 76
Family Dollar Quinlan TX Oct. 2014 
 74
 774
 
 
 848
 73
Family Dollar Rigeland MS Oct. 2014 
 447
 891
 
 
 1,338
 83
Family Dollar Rising Star TX Oct. 2014 
 63
 674
 
 
 737
 64
Family Dollar Southaven MS Oct. 2014 
 409
 1,080
 
 
 1,489
 109
Family Dollar Spout Springs NC Oct. 2014 
 474
 676
 
 
 1,150
 68
Family Dollar St. Petersburg FL Oct. 2014 
 482
 851
 
 
 1,333
 85
Family Dollar Swansboro NC Oct. 2014 
 337
 826
 
 
 1,163
 105
Panasonic Hudson NJ Oct. 2014 
 1,312
 7,075
 
 
 8,387
 590

F-57

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 2017
(dollar amounts in thousands)

           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 
Encumbrances at December 31, 2017 (1)
 Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2017(2)(3)
 
Accumulated
Depreciation (4)(5)
Onguard Havre De Grace MD Oct. 2014 
 2,216
 6,585
 
 
 8,801
 783
Axon Energy Products Houston TX Oct. 2014 
 297
 2,432
 
 
 2,729
 201
Metro Tonic Halle Peissen Germany Oct. 2014 31,746
 7,280
 51,002
 
 
 58,282
 4,756
Tokmanni Matsala Finland Nov. 2014 34,711
 1,886
 57,096
 
 
 58,982
 5,016
Fife Council Dunfermline UK Nov. 2014 2,474
 355
 4,584
 
 
 4,939
 391
Family Dollar Doerun GA Nov. 2014 
 236
 717
 
 
 953
 70
Family Dollar Old Hickory TN Nov. 2014 
 548
 781
 
 
 1,329
 82
Government Services Administration Rapid City SD Nov. 2014 
 504
 7,837
 
 
 8,341
 671
KPN BV Houten The Netherlands Nov. 2014 
 1,689
 20,662
 
 
 22,351
 1,661
RWE AG Essen Germany Nov. 2014 17,709
 2,034
 25,984
 
 
 28,018
 2,044
RWE AG Essen Germany Nov. 2014 31,311
 12,863
 45,228
 
 
 58,091
 3,556
RWE AG Essen Germany Nov. 2014 25,852
 5,253
 37,362
 
 54
 42,669
 2,927
Follett School McHenry IL Dec. 2014 
 3,423
 15,600
 
 
 19,023
 1,536
Quest Diagnostics, Inc. Santa Clarita CA Dec. 2014 52,800
 10,714
 69,018
 
 
 79,732
 5,412
Diebold North Canton OH Dec. 2014 
 
 9,142
 
 
 9,142
 850
Weatherford International Odessa TX Dec. 2014 
 665
 1,795
 
 
 2,460
 240
AM Castle Wichita KS Dec. 2014 
 426
 6,681
 
 
 7,107
 507
FedEx Billerica MA Dec. 2014 
 1,138
 6,674
 
 
 7,812
 623
Constellium Auto Wayne MI Dec. 2014 15,300
 1,180
 13,781
 
 7,875
 22,836
 2,711
C&J Energy Houston TX Mar. 2015 13,368
 6,196
 21,745
 
 
 27,941
 1,605
FedEx Salina UT Mar. 2015 
 428
 3,447
 
 
 3,875
 358
FedEx Pierre SD Apr. 2015 
 
 3,288
 
 
 3,288
 326
Crowne Group Fraser MI Aug. 2015 
 350
 3,865
 
 
 4,215
 258
Crowne Group Jonesville MI Aug. 2015 
 101
 3,136
 
 
 3,237
 216
Crowne Group Warren MI Aug. 2015 
 297
 3,325
 
 
 3,622
 225
Crowne Group Logansport IN Aug. 2015 
 1,843
 5,430
 
 
 7,273
 414
Crowne Group Madison IN Aug. 2015 
 1,598
 7,513
 
 
 9,111
 484
Crowne Group Marion SC Aug. 2015 
 386
 7,993
 
 
 8,379
 557
JIT Steel Chattanooga TN Sep. 2015 
 582
 3,122
 
 
 3,704
 193
JIT Steel Chattanooga TN Sep. 2015 
 316
 1,986
 
 
 2,302
 120
Mapes & Sprowl Elk Grove Village IL Sep. 2015 
 954
 4,619
 
 
 5,573
 294
Beacon Health South Bend IN Sep. 2015 
 1,636
 8,190
 
 
 9,826
 520
National Oilwell Pleasanton TX Sep. 2015 
 80
 3,372
 
 
 3,452
 221
Office Depot Venlo The Netherlands Sep. 2015 
 3,736
 16,522
 
 
 20,258
 1,126
Finnair Helsinki Finland Sep. 2015 34,022
 2,696
 76,819
 
 
 79,515
 4,697

F-58

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 2017
(dollar amounts in thousands)

           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 
Encumbrances at December 31, 2017 (1)
 Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2017(2)(3)
 
Accumulated
Depreciation (4)(5)
Hannibal Houston TX Sep. 2015 
 2,090
 11,138
 
 
 13,228
 660
FedEx Mankato MN Sep. 2015 
 472
 6,780
 
 
 7,252
 515
Auchan Beychac-et-Caillau France Dec. 2016 9,943
 4,337
 14,106
 
 
 18,443
 485
DCNS Guipavas France Dec. 2016 11,381
 2,024
 15,356
 
 
 17,380
 435
Deutsche Bank Kirchberg Luxembourg Dec. 2016 43,126
 15,473
 52,630
 
 320
 68,423
 1,380
FedEx Greensboro NC Dec. 2016 6,165
 1,820
 8,252
 
 
 10,072
 294
Foster Wheeler Reading UK Dec. 2016 53,026
 28,542
 78,080
 
 
 106,622
 2,049
Harper Collins Glasgow UK Dec. 2016 37,880
 10,660
 54,451
 
 
 65,111
 1,546
ID Logistics Landersheim France Dec. 2016 6,589
 2,064
 8,675
 
 
 10,739
 243
ID Logistics Moreuil France Dec. 2016 5,990
 3,187
 6,445
 
 
 9,632
 190
ID Logistics Weilbach Germany Dec. 2016 4,792
 1,426
 9,427
 
 
 10,853
 252
ING Bank Amsterdam Zuidoos The Netherlands Dec. 2016 52,710
 
 78,008
 
 273
 78,281
 2,019
NCR Financial Solutions Group Dundee UK Dec. 2016 7,610
 2,713
 8,676
 
 
 11,389
 277
Pole Emploi Marseille France Dec. 2016 6,948
 854
 9,003
 
 
 9,857
 235
Sagemcom Rueil Malmaison France Dec. 2016 43,006
 3,219
 77,325
 
 
 80,544
 2,028
Veolia Water Vandalia OH Dec. 2016 4,110
 564
 5,796
 
 
 6,360
 187
Worldline SA Blois France Dec. 2016 5,990
 1,210
 5,759
 
 
 6,969
 207
Cott Beverages Sikeston MO Feb. 2017 
 456
 8,291
 
 
 8,747
 186
FedEx Great Falls MT Mar. 2017 
 326
 5,439
 
 
 5,765
 148
FedEx Morgantown WV Mar. 2017 7,990
 4,661
 8,401
 
 
 13,062
 180
Bridgestone Tire Mt. Olive Township NJ Sep. 2017 
 916
 5,088
 
 
 6,004
 47
NSA Industries St. Johnsbury VT Oct. 2017 
 300
 3,936
 
 
 4,236
 22
NSA Industries St. Johnsbury VT Oct. 2017 
 210
 1,753
 
 
 1,963
 9
NSA Industries St. Johnsbury VT Oct. 2017 
 270
 3,858
 
 
 4,128
 19
GKN Aerospace Blue Ash OH Oct. 2017 
 790
 4,079
 
 
 4,869
 20
Tremec Wixom MI Nov. 2017 
 1,002
 17,376
 
 
 18,378
 84
NSA Industries Groveton NH Dec. 2017 
 59
 3,517
 
 
 3,576
 
Cummins Omaha NE Dec. 2017 
 1,448
 6,469
 
 
 7,917
 
Government Services Administration Gainsville FL Dec. 2017 
 463
 6,018
 
 
 6,481
 
Total       $992,346
 $402,318
 $2,117,250
 $
 $23,484
 $2,543,052
 $174,452
           Initial Costs Costs Capitalized Subsequent to Acquisition   
Portfolio City U.S. State/Territory or Country 
Acquisition
Date
 Encumbrances at December 31, 2018 (1) Land 
Building and
Improvements
 Land 
Building and
Improvements
 
Gross Amount at
December 31,
2018 (2)(3)
 
Accumulated
Depreciation (4)(5)
LSI Steel Chicago IL Mar. 2018 
 2,856
 948
 
 
 3,804
 20
Fiat Chrysler Sterling Heights MI Mar. 2018 
 1,855
 13,623
 
 
 15,478
 308
Contractors Steel Belleville MI May 2018 
 2,862
 25,878
 
 
 28,740
 416
Contractors Steel Hammond IN May 2018 
 1,970
 8,859
 
 
 10,829
 167
Contractors Steel Livonia MI May 2018 
 933
 8,554
 
 
 9,487
 127
Contractors Steel Twinsburg OH May 2018 
 729
 8,707
 
 
 9,436
 132
Contractors Steel Wyoming MI May 2018 
 970
 12,426
 
 
 13,396
 196
FedEx Blackfoot ID Jun. 2018 
 350
 6,882
 
 
 7,232
 183
DuPont Pioneer Spencer IA Jun. 2018 
 273
 6,718
 
 
 6,991
 117
Rubbermaid Akron OH Jul. 2018 
 1,221
 17,145
 
 
 18,366
 184
NetScout Allen TX Aug. 2018 
(9) 
2,115
 41,486
 
 
 43,601
 439
Bush Industries Jamestown NY Sep. 2018 
 1,535
 14,818
 
 
 16,353
 100
FedEx Greenville NC Sep. 2018 
 581
 9,744
 
 
 10,325
 123
Penske Romulus MI Nov. 2018 70,000
 4,701
 105,826
 
 
 110,527
 474
NSA Industries Georgetown MA Nov. 2018 
 1,100
 6,059
 
 
 7,159
 12
LKQ Corp. Cullman AL Dec. 2018 
 61
 3,781
 
 
 3,842
 
Grupo Antolin North America, Inc. Shelby Township MI Dec. 2018 
 1,941
 41,648
 
 
 43,589
 
Walgreens Pittsburgh PA Dec. 2018 
 1,701
 13,718
 
 
 15,419
 
VersaFlex Kansas City KS Dec. 2018 
 526
 7,577
 
 
 8,103
 
                     
Encumberances allocated based on notes below       611,140
            
        $1,140,113
 $398,911
 $2,321,534
 
 $24,903
 $2,745,348
 $220,225
                     

(1) 
These are stated principal amounts at spot rates for those in local currency and exclude $5.5$9.7 million of deferred financing costs and $1.9$0.6 million of mortgage discount,discounts, net.
(2) 
Acquired intangible lease assets allocated to individual properties in the amount of $629.6$675.6 million are not reflected in the table above.
(3) 
The tax basis of aggregate land, buildings and improvements as of December 31, 20172018 is $3.1$3.7 billion. Assets acquired from the Merger, retain the prior tax basis.
(4) 
The accumulated depreciation column excludes approximately $165.5$217.7 million of amortization associated with acquired intangible lease assets.

F-59

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 2017
(dollar amounts in thousands)

(5) 
Each of the properties has a depreciable life of: 40 years for buildings, 15 years for improvements and five years for fixtures.
(6)
These properties collateralize the UK Multi-Property Cross Collateralized Loan of $292.9 million as of December 31, 2018.
(7)
These properties collateralize the U.S. Multi-Property Loan I of $187.0 million as of December 31, 2018.
(8)
These properties collateralize the U.S. Multi-Property Loan II of $32.8 million as of December 31, 2018.
(9)
These properties collateralize the U.S. Multi-Property Loan III of $98.5 million as of December 31, 2018.


.

F-60F-57

Global Net Lease, Inc.

Real Estate and Accumulated Depreciation
Schedule III
December 31, 20172018
(dollar amounts in thousands)

A summary of activity for real estate and accumulated depreciation for the years ended December 31, 20172018, 20162017 and 2015:2016:
 December 31, December 31,
 2017 2016 2015 2018 2017 2016
Real estate investments, at cost:            
Balance at beginning of year $2,344,634
 $2,028,010
 $1,855,960
 $2,543,052
 $2,344,634
 $2,028,010
Additions-Acquisitions 88,231
 463,327
 226,412
 420,529
 88,231
 463,327
Asset remeasurement (8,559) 
 2,318
 
 (8,559) 
Asset Dispositions (15,145) (77,063) 
Asset dispositions (32,110) (15,145) 
Transfer to assets held for sale (123,021) 
 
Impairment charge (1,603) 
 
Currency translation adjustment 133,891
 (69,640) (56,680) (61,499) 133,891
 (69,640)
Balance at end of the year $2,543,052
 $2,344,634
 $2,028,010
 $2,745,348
 $2,543,052
 $2,344,634
  
      
    
Accumulated depreciation:  
      
    
Balance at beginning of year $111,321
 $68,078
 $21,319
 $174,452
 $111,321
 $68,078
Depreciation expense 59,385
 50,333
 47,649
 64,849
 59,385
 50,333
Asset Dispositions (2,122) (3,012) 
Asset dispositions (3,861) (2,122) (3,012)
Transfer to assets held for sale (10,633) 
 
Currency translation adjustment 5,868
 (4,078) (890) (4,582) 5,868
 (4,078)
Balance at end of the year $174,452
 $111,321
 $68,078
 $220,225
 $174,452
 $111,321

F-61F-58