GNL - Earnings call transcript Q1 2018

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Operator

Good morning, and welcome to the Global Net Lease First Quarter Earnings Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, today’s event is being recorded. I would now like to turn the conference over to Louisa Quarto, Executive Vice President. Please go ahead, ma’am.

Louisa Quarto

operator. you, Thank and first everyone, for us joining Good XXXX thank earnings GNL’s quarter call. for morning, you This call is of being webcast in the at GNL’s Investor www.globalnetlease.com. website Relations section

Also has or of Ratings call of date of rating, obligation rating. tenant which investment-grade tenant of not during this also actual provided company cause these to non-rated Private Securities actual are the to Joining made of SEC to XXXX. of are investment-grade statements this metrics statements. historical is could forward-looking differ Chris the and facts. Safe for which the filings risk are in certain tool, Implied includes Chief risk the the call. discussion forward-looking assumptions the the Litigation with Any statements of today The both to only XXXX. as GNL’s the Reform detailed those GNL’s March these nature call risk our could that an of XX, are lease parent factors tenant’s They Officer. ratings that ratings a statements being the These are and We will determined whether a me quarter’s Executive more using are during use on Act refer Implied analytical as Masterson, forward-looking proprietary cause conference factors the will made result differences. or provisions and compares not regardless forward-looking today investment-grade the of James Financial ratings the Officer certain results company from of of Moody’s GNL’s and Nelson, all actual Chief which information subject discussion guarantor. of the to investment-grade pursuant investment-grade includes discuss materially guaranteed term Harbor ratings. are implied include the to parent, numerous we call under assumptions or the you lease

As be these evaluating or non-GAAP disclaims filings, or our a results prepared CEO, during performance. be call I required accordance will for the our any is not company’s measures or update our we the reconciliation over substitute most to considered earnings GAAP. financial revise statements the stated our isolation GAAP available measures recent discuss of comparable forward-looking as we in as These turn Also A directly which should financial SEC to in measures, expressly intent can in in Nelson. believe with in will call, these measure law. useful GNL now Jim financial except today’s obligation to by release.

James Nelson

X% we and will acquisitions joining performance. performance you, Louisa, million thanks report and the to year-over-year to net financial the call. by demonstrated provide approximately first happy to execution us portfolio. I a some brief detail and X.X% that regarding our quarter go on color and will again I’m on recap everyone first more to growing into of for our $XX.X start results first quarter our Thank today’s and results solid Chris lease increased million. shortly $XX.X for across providing closed, AFFO increased Revenue quarter steady our

and XX% industrial U.S. to and based Implied XXXX, XXXX XX.X% constant increased acquisitions more roughly towards geographic and QX U.S. Occupancy at mix shifted first result our our XX%. the at during straight in QX office, property quarter-end to annualized Europe, rent has while retail. tenants X% XX% XX% Also and was quarter and XX% as the line distribution XXXX. at property of our slightly the mix on in of investment-grade AFFO of remained percentage In our a in quarter or improved fact, the investment-grade

our a full and lengthens Lamination the during on our and the Chicago earlier These believe BaaX. this remaining and strength about you tenant provides to division we contract worth services we Steel Midwestern the forefront the investment-great are metal processing also million flat ability of closed and property corresponding six precise where great a leased new under computer tenants quarter. controlled of for with of of this term, located average Analytics advanced LSI has as footprint expands supply the value utilizing the to lease of Illinois America to square that implied have products, for net automated feet, overall property across high Moody’s and noting to attractive are apart the processing year. to GAAP the of facilities combined adds three Now in tell was net steel light average clients leased sector. of I’d what credit designed acquisitions lines, XX-year X.XX%, gauge a in LSI remaining will in term Mississippi type, focused, This and million represent years. and of like term, technology announced critical $XXX to rating properties the to and years Corp, are ten XXXX at We rolled an our of significance manufacturing These investment-grade is provide in owning of At which an cap acquisition of are of supports Processing objective assets, a LSI current industrial $XX The advantageous Specialties an and which Illinois, the a our to long-term operations. on Steel assets properties strategy owners. storage. weighted GNL fully eye examples rate towards coiled net steel Processing, operations GAAP assets Michigan, rates their continue credit-worthy our tenant. is distribution weighted underwrite cap these the is clients is in X.XX%. to financial addition lease rate lease of long-term and on meet demonstrated to is set its specifications. founded industrial each portfolio as of standards average our XX The transactions These property industrial property terms of located us distribution role each and in of It significant assets, cap tenants. measure XXX,XXX

X.XX% than two credit term, years Holdings, estimated The this Michigan closed XX.X acquisitions first we of cap for net a acquisition BX. it an with to to many located Steel produces of Moody’s Established tenant overall in of the rating our provides industries, is portfolio. Using At to and the industrial rolled automotive, customers. rolled a Lee facility broad Steel delivers including it of XX global absolute at steel, more lengthens and others, yield, flat rate, and Rapids, Grand construction agricultural, Lee appliances, Lee leased near and of rolled variety great an GAAP years a services lease hot defense, XXXX, remaining term, cold our furniture exposed average state-of-the-art sectors. adds equipment, base also products a steel, Midwestern coated among a steel and weighted including Steel

carries U.S. X.X north rating a to be The Automobiles credit second is facility Michigan Chrysler for Fiat built of years tenant BaaX. of Moody’s investment-grade a Detroit, leased asset The newly industrial

new of adding center distribution to of warehouse as support newly the acquisitions as trim leased cap of Chemours leased the built for we and X.X Orleans titanium Group. a truck, and The yield the Moody’s. This provides components. including important the first cap Fiat facility Chrysler’s part product, in closed Ram other best the of over good is Dodge bed-liners, packages, Chrysler sixth other built southwest. by XXX installation plant, for DeLisle the The N.V. northeast estimated within the with selling FC. facility strategically Fiat GAAP world’s rate At makers. is automotive rated this final to serves operation guarantor Chemours now add auto the quarter is our New newly of plants to the GL lease Company X.XX% in one storage pleased location a and X.XX% to at this facility portfolio assembly GAAP to Notably, asset largest our while rate, facility We’re a nearby serves a an portfolio to this years Automobiles BaX

Formerly XXX thousand $X through generated a division Chemours XXXX DuPont, revenue, over in in in several has of worldwide and presence countries. customers Company billion

built We this newly to distribution are center. own excited

meaningful $XXX a other a early contract, to any provide acquisitions we of are acquisitions, in of closing number evaluating under million specifics. is too Beyond portion it the potential but

asset also made and with staff We the progress advisor management operational a service opening further bringing our strengthens front on This dedicated a in significant provider. our rather with a into by advisor Europe London-based office. our presence London than adding

reflect. overall property this Europe. us through and said, identify shift property contract management as turn results walk that, the will asset With have tenants our to some follow-up additional being I’ll continue With and will over dedicated relationships in our Chris? of closing expect more closer we call we still assets recent towards our effort, management the U.S. with That to Then the addition greater to to detail. remarks. acquisitions Chris opportunity under I with more will acquisitions in operating mix and

Chris Masterson

$XX.X reported first $X.X funds acquisitions. first we operations revenues increased million rental increase QX due reported compared XXXX Rental represents million, of and XXXX revenue Thanks, was adjusted period, the primarily $XX.X of which million quarter Jim. We from up quarter of from XXXX. of X.X% which to an to

our can balance cash be of the found of we X.X%. sheet, billion ended debt reconciliation with and a debt, the weighted interest a to On equivalents $X.X in average always, our net As GAAP of which measures release. cash less net is at quarter earnings rate income non-GAAP

years fixed $XXX is XXXX. multi-currency rate has the the billion X.X the gross XXXX revolving maturity of of consisted of end, which first include and outstanding average weighted of loan of components $X million our at of debt. The years the interest $XXX Our on our on end million a debt quarter X.X quarter approximately basis on quarter’s rate year-over-year debt facility, with rate, At in-place close the from our extended first XX% swaps. mortgage credit floating at debt inclusive term to

net strong adjusted X.X times with X.X to coverage EBITDA at Our annualized interest of ratio a debt times.

for $XXX.X was an of common million and of $X.X comprised liquidity on million The value credit $XX.XX $XX.X XX, enterprise March net of March price and company’s to facility. billion for closing shares, of availability value on XX.X%, As cash XXXX, $XX.XX preferred shares. of $XXX.X hand, is the the of based with XX, enterprise million share under debt approximately

based closing would However, the of for $XX.XX preferred share if May net calculation to shares, $XX.XX and from common XX.X% X value for prices enterprise the to decrease debt was on shares.

Let continue discuss expect we have have We our in individual to simplify year. total our capital the side objective European of the loans Europe for what next UK currently million the U.S. to our a outstanding $XXX me mortgage XX we maturities and structure. to across refinance of Similar now our debt, over these loans to we as optimize is structure. and done capital extend and with

British call second contracts hedging XXXX. As both European our against closing currencies. These strategy to quick and we update an disciplined first to cash currencies to our way are of in currencies to over XXXX to an movements with layering I’ll British a the quarters Jim forward cash through for quarter the contracts EURX.X The continued future back GBPX.X quarter new to of of offset upcoming program, our contracts from strategy to our a quarter for of to as million the the additional pound. XXXX. some interest hedge the placed euro The quarter flows have remarks. exposure our rates flows two hedging we and second XXXX local Recently, manage euro consistent our also of portfolio. the hedges of to hedge the of million exposure hedge first additional turn use from pound hedges

James Nelson

certainly made appointed Thanks, just nine progress being months first excited by have Chris. since I in the the by we am CEO.

strong created our there the in our leading advisors team foothold bringing under We umbrella. Europe, a have effort

to leased We growth access have assets. capital acquisitions portfolio net our the our accretive of to of diversified support the through

$XXX cash to standpoint, annualized efforts of the properties diversification U.S. roughly rent industrial increase straight we remaining $XXX of our fall XX% up distribution diversification ahead, earnings U.S. of acquisitions. from will These by From a balance the our to of From our the and these upon by closing end we property XXXX. geographic XX% a of year-end flow. will closing of acquisitions, announced XX% XXXX. with to contribute just the anticipate property line acquisitions and shift at will grow closing mix portfolio standpoint, of million from the to XX% million Looking

We We generating developers continue proven better this favorable direct cap and believe the a improved results terms landlords market to for to by achieve are than investment that and and with more to to off generally rates shareholders. demonstrate available ability company market transactions. relationships identify company allows leveraging its source opportunities the

strategy remain We focus identify will and lease U.S. distribution value. to near-term opportunities disciplined to drive a net our acquisition with compelling industrial proactive in facilities to shareholder on and assets acquire

to selectively add will also international our We footprint.

We our improved source presence estate are opportunities, growing European excited market which our and real we network from portfolio, the by our strong opportunities.

We our vision I for that, can open execute for ability to long-term results. line the continuing look we and effort the on deliver continue our enhance forward operator, GNL to lead demonstrate to With value to to to our stockholders. steady questions.

Operator

Thank you.

Riley first from FBR. begin [Operator go Instructions] now question of B. the Please question-and-answer session. Today’s Maher will We ahead. comes Bryan

Bryan Maher

Good and Chris. morning, Jim

do there progress to of exactly guys it? to lot a is Regarding want where and to your you get kind that there what European already, you operations made but need you’ve more there still it be know I of

James Nelson

think management in think CBRE, we’re I now. is in right The the been be transition exactly right and now. we in up place, seamless asset assumed is has position London want office to in was our our Well, place staff everything managers the and are that I property operating, by

Bryan Maher

assets kind there do next net over assets on net at bias given and kind strategy And months? buyer more or a look industrial your of as of acquisition European U.S. towards XX your the seller your you the front,

James Nelson

on compelling, it. opportunity in certainly ability we’re we the execute now think If that relatively I to was found right neutral have Europe. an we

Bryan Maher

shifting focused, get to the to industrial could Okay. office industrial? again about U.S, think environment the Kind about and cap the there have talking being but been how guys you do more you rates relative gears and you of U.S.

James Nelson

we think, on I focus do Well, have industrial/distribution a right now.

very for a have that. pipeline We strong

office if certainly constantly We – ability see we found occasionally at something execute have do we looking the on and it. deals. to again, see We’re compelling, deals,

Bryan Maher

what follow-up that, like-for-like an rate of market would you cap be you when I an to of route compelling, say So, to office attractive guess to that kind industrial the kind an for as of property? kind a were versus need than differential if industrial go property

James Nelson

ability we I again, And look our in execute. so need all at acquisition, we have pretty the properties accretive they properties and think much the we we same. are – accretive portfolio, work that to find with need the to well

Bryan Maher

like looking or properties rate want how type markets for six Jersey, quarter, just you in to get York, of at the the incremental market like a those me. then primary And last about secondary Northern a When New New do first you you’re markets? assets, think versus kind to acquire L.A., the tertiary of or market cap would in need

James Nelson

buy. property any review we when to Well,

acquisition, lease their the quality As the accretive properties credit similar. at you know, Bryan, an in we look of and we we of the the very important how look tenant, all look asset is operations, at and at whether the it’s terms and

Bryan Maher

at look of lastly, all and just holes to And that. now. look where it’s at then we portfolio we when you’re your is right things kind occupancy – at and doing, your hard that punch the really thanks in and strategy for earnings the Okay, the we look

operations? CEO, relates You you portfolio on over think do you X single it most of to do is months as XX the kind to important need about as months to your thing the what next that

James Nelson

good very a That’s you. question, Bryan, thank

that think we’ve we’re just been, need on following doing and what we’ve we just to doing. continue the and as I continue been plan executing

Bryan Maher

thanks. me. All That’s all from right,

James Nelson

Thank much, Bryan. you very

Operator

any to turn the I’d session. [Operator remarks. our back question-and-answer CEO, Instructions] over Jim Nelson, like conference for This closing concludes to

James Nelson

very many be you thank of next we’ll NAREIT look We and joining next Thank to again forward much call month, for seeing very the you, and you Thank at to today. quarter. all talking you operator, you much.

Operator

all you, now presentation. Today’s concluded. you attending conference want thank sir. has I And thank today’s to for

may disconnect have wonderful You a day. and now lines, your

Global Net Lease (GNL) 8 May 182018 Q1 Earnings call transcript