GNL - Earnings call transcript Q4 2018

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Operator

Good day and welcome to the Global Net Lease, Fourth Quarter Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Louisa Quarto, Executive Vice President. ahead. go Please

Louisa Quarto

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

refer metrics the forward-looking by materially and call on the financial and Act Officer information are, are of today Executive discuss of risks accompanying subject are those the Chris safe both will of and for of to parent, year lease implied They historical investment more grade for with implied term whether these The we assumptions, The nature has investment read discussion to on Also not following regardless can Masterson, The the the expressed guarantor XX, tenant the looking grade filings, discussion not which GNL's analytical lease. company Any actual include to or actual following of use investment include rating. be December risk ended call, statements, differ call Joining Implied grade which and are of compares date only from Jim filed our the tenant actual obligation the materialize, include quarter's filings company made GNL's forward grade this statements of Nelson rating. risk which the that being after me are to today Officer. Implied February Moody's all is XXXX. certain uncertainties. rating, ratings uncertainties Chief and a The in you results December harbor Chief an are proprietary investment Private the or of statements these and tool, ratings determined detailed guaranteed to results with facts. parent of with XXXX, the will the that during XX-K all The or using this pursuant provided those contains and XXXX, Securities or grade SEC filed statements. date the of as statements. ratings could the a investment may XX, discussion risks including of in also provisions should of differences. the other tenant's Litigation forward-looking made the analysis as its the ratings Reform call. XXXX. includes during information Form the one XX, SEC can under conference more which factors ratings the cause conjunction the forward-looking We non-rated or Financial of

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

Jim Nelson

CEO marketplace us we've in will estate the growth of and It and proud a us achievements Louisa build our positive this portfolio. in these everyone real GNL's that global XXXX It achieved on on and continue distinguish to in we momentum is beyond. and very I'm the today's joining for been again became year-and-a-half since to progress and tremendous I you, Thank call. thanks has

drivers Net Our team Lease. the relies key guide of operation Global which on six in management

end the high includes is quality owning over properties portfolio. on of XXXX, the grown X.X in focus billion, has a a XXX up operating and made that European located properties critical portfolio million. This to portfolio. of there additional GNL's purchase quality overall six Western These First, countries. At mission and contract portfolio to of diversified GNL properties the and for purchased U.S. provide price diversification XXX XX a GNL's in combined XXXX,

tenants. weighted focus an its Second, represents the long-term end these grade provide types has XX.X% by investment strategy which is lease GNL's and grade rental of durable grade part important durations X.X and demonstrated leases backed tenant and portfolio. and implied overall the properties, GNL's base investment source acquire of to average was that ability duration to of safe with At it's long on are Company and of income. credit-worthy XXXX, The years investment

The Third, proactive asset management both to of exposure. Company with balance we with maintains Western a European U.S. U.S. Western Fourth, GNL and U.S. strategy pursues a European long-term XX.X% utilized good a and value. XX.X% international mix. and portfolio properties differentiated drive

million GNL at to, the million European the of company's rate. on capital to €XX.X York Newport the including the of Sixth, GNL capitalize focus team. U.S. X.XX% Over As credit by across has as generate markets The proceeds for industrial financing also to different million ability debt Fifth, different U.S. and demonstrate agreed the knowledge a in global enhanced of interest and order XXX Company's risk assets experienced both an the into multiple and segments will with management between New Company, for Charlotte, example, including upsizing and average are The access management. gain differences capabilities Europe returns. facility $XXX to robust professionals of debt portfolio. property reinvestment sources with the and an improved through properties. on and refinancing the past acquisitions, London, optimally benefits million Company to year, superior and this Company on European U.S. legal several closed and rate and These Company U.S. acquisitions with acquired has we from adjusted financing three in GNL specialists The distribution Group's a a deliver this the in talent. opportunistically Luxembourg, £XXX finance, available in sell UK believe and accounting, global breadth And Europe. an cap recently finance of an based

has I to $X.X of that service then Now, GNL detail non-recurring this, during to FFO, European the provider. former into impact Chris We key anticipate with income our more achieved is review will company's performance. of AFFO. financial outstanding a regarding In no and affects connection will go we our a milestones recorded one-time with reserve, XXXX. million but the litigation begin expense settlement which net the

extremely with We anticipated the pleased are resolution.

million, estate X.X to and service X.X provider. million. to to significant increased clear includes XX.X% Revenue XXXX. company million stockholders than income tenants increased key from AFFO, XXXX debt made increased Real maturity increase. from metrics. to from with a operations portfolio that Adjusted grade which increased grade Net the former attributable progress over X.X% is anticipated XXX.X remaining X.X X.X in million Turning to investment several XX.X% was GNL's European to our years. of increased XXX.X one-time funds less billion. common from Investment settlement billion from X.X% X.X or It or to X.X and implied years

portfolio its and of in Over managing net the on assets, continue disciplined credit-worthy and long-term acquiring Europe. U.S. tenants leased of basis investment to grade the in to high of on course Western a a long-term execute quality XXXX, predominantly GNL and strategy

with combined million. a XX.X existing years. distribution for In rental within facilities term million of XX acquired of million two in annualized the acquired price During XXX.X a their and office six gross sold XX.X leases. financing. properties for one down and a proceeds assets combination million these average term contribute million XX acquired XX.X the were lease term million properties properties for approximately and for weighted first full of XX cash-on-hand, revenue, additional follows: on The year, acquired equity debt purchase acquisitions of based XX straight-line portfolio, are and GNL properties years in-place lease XX a with average industrial property proceeds a XX with of broken contract years will lease XXX.X with for $XXX year acquired of GNL's as weighted

in of Additionally, XX.XX through total acquisitions. ATM with in submitted over a LOIs PSA growth of equity XXXX already million XXX acquisitions the long-term the common company's issuances million during used or close executed in XXX of fourth plus LOI made equity offerings share. to equity the funds potential on million per at XXXX, of two accessed currently capital under common capital during markets XX execute GNL million company price GNL these raising additional has the program To strategy, average for acquisitions on gross XXX quarter. The and an

its through to of new year-end and share. additional equity was corporate ATM As XXX average of the will an XXX an million at to from XX/XX/XXXX, fund GNL continue raise $XX.XX million general to equity in used capital purposes. for be GNL's liquidity subsequent program issuances per Proceeds acquisitions total price and

of contract €XX original million located in to entered three $X price fee. into for gross part disposed lease management sell company million Germany strategy of to a additional termination million, of properties premium is a a of during properties purchase which asset As assets. for of of proceeds the GNL these an price million, two €XXX is contract sale XXXX, which our inclusive The also XX.X

approximately $XX in gain We to of disposition expect result this a recognized million.

the million proceeds Company to after Additionally, to redeploy in into repayment acquisitions. those we generate expect plans accretive €XX.X sale debt and proceeds approximately the net

Now activity. I fourth will discuss quarter GNL's

function a and six tenants on $XXX funded remaining November property X.XX% end years, debt at evenly XX.X% tenants GNL geographic annualized During weighted end for of approximately grade was make metrics. public in up mix at the in served with and X.XX% from offering. average new six investment at several with are weighted includes weighted based the of underlying grade rate six The Company from These fixed sits of XX.X facility. of GNL quarter. its on purchased the of million and cap a strong used which remained XX.X X.XX%, cap mortgage The XX% between transactions quality down and properties investment GNL's remains of of the at for XX Europe. credit rate proceeds the cash-on-hand, the up the average the million. rents implied rate split a of at which a portfolio, industrial buildings quarter, also pay critical properties U.S., the XX.X% portfolio GNL's a XX.X% lease going or term distribution. with entered closed straight-line all in were a to Occupancy XX.X% mortgage average XXXX. interest the of The year loan strong

its Distribution, increase XXXX. its concentration on to we Heading by cash GNL's industrial property continued continue its XXX diversified GNL's portfolio the and company increased net overall of predictable properties into and XX% XX% was leases that provides include and our sector While has will Office, and GNL's of rent exposure Industrial mix and a portfolio to consists robust execute XXXX, in X% consistent and long-term at through as Retail. to total flow strategy global long-term The to grow distribution X% GNL growing portfolio. growth. contractual

Our some continues to I an with to and ability lease I'll results long-term apart set up GNL then call eye sector. the what with transactions detail is operating underwrite to follow more remarks. demonstrated walk through turn net will value Chris toward to Chris? the With the over closing that, in in

Chris Masterson

year. quarterly saw XXXX prior annual Thanks, QX both and to financial Jim. improved results the results for in comparison GNL

the XXX.X XXXX accrual. million XXX.X to common a year, Core X.X the with our to which includes anticipated FFO GNL's former decreased $X.X million, net X.X% with X.X% one-time to X.X European settlement FFO provider. For million, service of increased income revenue stockholders XXX.X includes FFO million common million, also million increased AFFO XXX.X up up company existing million Revenues to XX.X% XXXX, stock to rent million income leases. rental dividends XXXX. investors XXX.X embedded from primarily The in of due increased acquisitions and from X.X% in paid escalators to to in was and million. XXX.X attributable

XX.X operations to equity of the stock XX.X common million year-over-year be million. the that GAAP half $XX decreased the XX% all FFO would and November In always, dividends of million six in were can found November increased one-time purchased quarter, during our million, XXth or on non-GAAP note to million purchased increased raise anticipated the paid acquisitions basis. the fourth I Company's with to settlement to the XXX XX.X These were AFFO, net X.X% the increased four acquisitions conjunction which in with service to of reconciliation income earnings XX.X of measures included late and from second XXXX. our and in or As million. of after release. financed to European provider funds December. X.X% GNL's like million company were quarter, GNL's acquisitions revenue in on XX.X the core our FFO a X.X% a adjusted

income full impact million step We of or per on a million XXXX XXXX. share X.X in company will expect a $X.XX the up from the as about basis in in of acquired rental acquisitions the XXX QX benefit QX,

fourth is quarter million include debt, On outstanding years equivalents floating the the balance was from mortgage of and robust at fourth term on of XXXX with of is average The sheet, in-place the ratio debt which XX.X% of approximately weighted cash quarter rate GNL's debt billion interest the the $X.X swaps. the GNL interest years, rate, cash which of facility, debt has This a was which X.X components X.X is billion of of XXX.X end inclusive fixed revolving debt with multi-currency ended XXXX at average rate net X.X GNL's on XXX.X X.X debt. Company weighted X.X%. at of and loan The the gross fourth close maturity times. coverage less the interest rate million a quarter. improvement of credit

interest and unsecured UK of €XX.X On syndicated XX of on United loan to XXXX, of enterprise properties would all facility approximately credit billion the Series a availability from refinancing XX.X% XX, facility. was which facility to was million GNL's cost million by $XX.XX closing rate teams. loan refinanced credit of X, our December improve XXXX maturity was the owned refinancing XXX on significantly facilities of X, February an of XX, debt amount active X.X% its €XX rate £XXX X.X%. net shares. three per the on loan preferred entered based price and the the interest X.X% million, of of loan value five is to million, by if portion. value The was unsecured $XXX XXX.X that the Kingdom. borrowing facilities loan the closed share XX% costs facility million eight based $XX for to X.X%. agreement and of a This existing bears €XX closed facility The plus million with activity by debt amount for is net common the comprises million for Euribor investment XXX.X at agreement. credit secured senior three-month XX.X share closing at on the properties of to of an preferred swap lowered was closed CMBS the upsized million. December X.X%. of in approximately is million finance X.X liquidity the in million, properties prices the GNL facility finished of XXXX, loan investment lowers the borrowings XXnd debt and across from an As GNL's XX.X% and for assets $XX.XX an secured all value enterprise equal for X.X% to the February shares. XXXX into multi-currency $XX.XX from under currencies our enterprise revolving Financing shares by The GNL. GNL which calculation on to shares of term an amount per A $XX.XX date million. amount cash-on-hand and principal of and successfully portion closed year common fixed in-place February included, Also agreement, This it new loan £XXX upsizing accounting the an in XXXX, syndicated

to Company to of the to European to a hedges both two turn remarks. quarters call hedging, to have our use manage hedging and hedging layering currencies. GNL's rates employs currencies the to interest that, As to as regards closing With some continued for movements disciplined in for In Jim against strategy way I'll some over program, exposure currencies upcoming strategy the back local portfolio. a update our offset we quick currency

Jim Nelson

properties XX.X% measurable respectively. results across of no and XX.X% average great high-quality portfolio a properties XXX and and XXXX the to Chris. portfolio and in as XX.X% with X.X revenue the focus expirations. in Thanks leased rental XX weighted Europe near-term GNL's XX following. In was Western in continues the representing deliberate is and our been several with drive improvement UK including steady segments the shape, Overall, in GNL acquired years execution on an for XXX There acquisitions for rate and has strong a XXXX, U.S. properties acquired of include the with XXXX the properties X.XX% in company million of X.XX%. at XX XX acquired going XXXX, cap in and embedded, CAP XX% million; in contractual average nearly rate of annual of improved has average X.X% per of average attractive weighted-average weighted and in-place based with lease along X.X remaining an debt on cost to years. at existing leases. year rent XXXX, an X.X% growth term GNL yearend stable while

now intentional portfolio building portfolio XXX activity with its strength of distribution property, type up this high distribution represents Our XXXX XX% on of diversification end investment a property GNL's in focus focus or guaranteed leased level increased demonstrated to by properties. XXXX, on of an nearly XXXX. an mix and grade portfolio tenants. at GNL's The XX% and million industrial of GNL's to led of year-end, implied of as by are of is grade industrial acquisition that concentration leases increased or from is the at investment portfolio

GNL company market to New yearend and company had Exchange. ability improved execution up proven more allows XXXX. increased results favorable at to are investment to continues than December year off We Stock of from The XX.X%, achieve leveraging identify source to GNL that better As opportunities that the market available. the a the for listed believe direct terms that demonstrate York XX, XXXX, cap XX.X% figure its by relationships at generates shareholders. with generally This landlords transactions. and to rates developers this on

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

for international to also forward continue and we for we it and opportunistic With fulfilling, remain shareholders. to can to adding open steady slow line will X.X questions. have when we our enhance footprint. the future, drive toward will as growth years value selectively move We and exciting operator, long-term last the to comes been that My

Operator

today comes Securities. [Operator question with Instructions] first Mitch go The ahead. from Please JMP Germain

Mitch Germain

-- I annualized not, think on times, saw quarter what I X.X based or was look the to at those that a of leverage and full would that that's of if quarter look does the Chris, looked I as if assume leverage but of at if acquisitions if the day one acquisitions? XQ full-year was like I include I

Chris Masterson

Right.

leverage reflected be. as if what of third not that actual number were the on of the as include is The in income day acquisitions total a So, the they than less actually is rental that that does one. books would

So, more quarter. were $X.X first in of which place through, flowing it's actually be if the of they rental million would as day the income,

from would too definitely lower much the drop X.X it So, number in the Xs.

Mitch Germain

apologize, to we on to prepared acquisitions? further I regards on And your your execute ability do liquidity Where now missed stand some of I comments. with

Chris Masterson

Sure.

in $XX year-end, in $XXX million actually So, of January, of on we a actually we million as our facility. raised position had ATM. in the Then we're credit cash, $XXX availability on very strong million

XXX we can on then down that, which million needed. revolver, draw with as the So paid we

our borrowing properties about revolver base, $XX increased capacity our additional some which to added also We million. by

Mitch Germain

a then of size the say? way is the availability, and better to that total the what's total capacity today? revolver what's the What's So

Chris Masterson

the total roughly with to So size up million is about fluctuate could FX. XXX the which

XXX back In of we terms -- we have envelop the are over million. with where now -- of capacity

Mitch Germain

that. even whole guys the volumes -- increased success I directive but acquisition year, think the some you four the times, change Jim, of so almost activity? did guys good in what real fourth in what What changed? more sort probably the than you created an mean, what sort of year I had before quarter, you're

Jim Nelson

and as building the Well, are looking bigger Company, at we company. doing a the accretive stronger, for better, acquisitions a business, strategy growing

all we did still on so were So, we've everything to a ahead found eight just of well executing and the all and acquisition We way worked the lot are moving last we great guys stuff. raise year. money, things cylinders able started considered,

Mitch Germain

planned again, on apologize stand? And the believe is Germany, Last office I one for target? in that building I sale where in The XXXX, and me. still for the that delay those if that missed it. I there asset What was created does of

Jim Nelson

The us our to was way to the to we time capital. the acquisitions have sale hand structured give in replace

So, at work money the year acquisitions the that to the closing that and middle will give us we a to time quickly. toward put have look number very back of of to

Mitch Germain

that do for or just follow-up IRR on that, ever a guys? And rate the investment you disclosed guys you cap on the

Jim Nelson

haven't We yet.

Operator

from The Maher B. next go FBR. Riley question ahead. Please comes Bryan with

Bryan Maher

will you're If partially, if be you of to focus your best continues remarks as closing really one the me be it in opportunities, where answered to seeing XXXX? seem the U.S. questions, I'm industrial. my where that but in wrong, Is to and correct

Jim Nelson

our be, will bit looking we yes. we of quite part focus of portfolio. primary of the properties, where mean one I but Europe grow is still underwrite of to of lot our that is, types in that different a is a focus, are and That

Bryan Maher

but And in for terms? I'm the to acquisition it, size XXXX any missed give you would did what if sorry I estimate dollar be as

Jim Nelson

year We back look we give that robust don't take I can vein. a you in guidance, intend at to which think and we in what very usually but was continue a XXXX, same did

Bryan Maher

could high EBITDA in and you kind continue in And figure interested is range so trying the in and on trades partially XXs to low trading look from made look out in the I'm U.S. stock me, it multiple on low how industrial you European times teens when but U.S. at just REITs question? the kind EBITDA. your But in in case times the how mid-teens, issue of kind think I When I your mid where valuation to then to and rationalize high of under XX then 'XXs? stock, at of with think Is you, just REITs mid we you you low a you this. office a and the to to guess for high trading trading the the about hearing in XXs lastly and we XXs I'm really that frustrating equity be the issue my in stock office

Jim Nelson

Well, get we like out of it to but now that's the stock, was where the people stock the trading, by to certainly issued great that covering analysts the where story that's we more aware having new company. intend you because the more people, and are

the think people I better, the hear should stock story. trade more

I for you agree So, we you. the following thank want and to company do with

Operator

Instructions] from John The Ladenburg Massocca with comes Please ahead. Thalmann. [Operator question go next

John Massocca

is -- potentially lower that you've of leverage I is of is XXXX, for LOIs or just a mean creep potential essentially ago. of the couple significantly also on? kind down on a the quarters Company even to your prefunding a really But and January of given all in to little you the proceeds, you're get sale mean think that was trying issuance fairly German leverage touched where of statement going to XQ versus your I some the maybe intent acquisition pipeline in happened should the creating of bit. maybe submitted up this kind equity at things of the a coming asset. closed potentially as on and this it Just I successfully run from of leverage kind

Jim Nelson

the Yes, to well, structure. we're always looking balance as capital know, you

ATM. The market surprisingly month common robust was could. when So, we we for raised last the

we think but of took do have fairly we that quickly. and strong a So, that, pipeline we money can advantage we very to put work

John Massocca

million, million, it to XX with or what some the but something into out XX-XX XXX mix, number? focus know been the mean it but I what is, XXX know industrial, industrial that we slipping XXX million XX-XX. million maybe office And of that is primary there to has office is that regards I closer

Jim Nelson

you As last bought we $XX for office an building million. know, year

grade long-term a quality, we main tenant, lease, that deal, can on execute we on we if a So as indicates, it, focus investment Industrial/Distribution. great great is stated, see but our

and I see think that to you'll continue forward. going those We of a lot execute on that

John Massocca

still the any existing is a or UK about the the tenants for concerns their a indicators hard mean, any maybe more I assets obviously curve... but of operations up lot air, there leased to lot portfolio, within existing look Brexit of is different impactful, the risk you, they then as with Brexit need And on indicated in from your if or they Brexit.

Jim Nelson

a a great XX think It's people everybody you attitude. XX get And if on I question. work different other to to responses you different that talked and with, lot talk We we will Brexit. wait-and-see a people, has

Our assets are well. performing

are We happy assets with the that we have.

see is think that and think up I there hard There us, with wait what we'll for what a just wait Brexit. and happens Brexit opportunities and if see So, happens. may be open I we'll wait see. We'll

John Massocca

one And one. last then

would refinance the Is rate expect you you Finland's you the general potential with of basis expect refinancings that may additional mortgages you other the going that in to are something be to with kind you of do of you European that a kind of something Europe? got have, would some look refinancing. benefit on As kind is on you get

Jim Nelson

rates and the some lower countries, about looking are In at various some different are in the the same.

overall, we benefit. I will think

If you we see saw loans, financings put we all a of the UK. the previous the European in together, over benefit will as

John Massocca

country? maybe typical to tell, kind is is much Finland base is of Finland, it from to hard outlier country just so vary I so or too or mean Finland In an

Jim Nelson

we're individual country-specific, to country-specific say, was but going remember from rate, Finland mortgages. roughly mortgages great a

getting So, way. properties better the rates we that bank all together are combining and dealing the with

Operator

with Riley. follow-up Bryan a from go question Maher ahead. B. Please next The is

Bryan Maher

it's XX% around to leverage, mid When goal? see look you a want your at Are Jim and your in process bit the it low out we get the do XXs, or hanging high comfortable it is getting you quick into thought Chris, just is What out there? two better. follow-ups. hanging of kind with been little What the to XXs.

Jim Nelson

long-term tenants think quality at leases, the grade with but tenants, percentages this our about I and of we we the XX% comfortable even have look the we're very of talked before, roughly leverage. and Well, investment may high our

we we'll sort very, what where of are we portfolio, that's and a of see think I are when thumb our happens we very rule future. comfortable look the with at in

Bryan Maher

so, And a that coverage but gravitate then the payout on a ratio, relative to that CAD cover not at look a a is when we to ratio number REITs lease we CAD? you see elevated as question situation, triple like to my other it's of net alarmingly the quick would where other on dividend it's payout

Chris Masterson

over new come think naturally accretive as we add properties it down to time, stream. the will I income Well, these

I So, see down probably it overtime. think come you'll

Bryan Maher

Right, thank you.

Chris Masterson

everybody. you Thank

Operator

This now our to James question-and-answer like for conference I would to any remarks. Nelson, closing over the back concludes turn session.

Jim Nelson

you today's I to Yes, quarter. there forward joining just next on to look year all and to was you some reporting want GNL we with thank this great call, next and us questions in for the

for you in. So thank all dialing

Operator

This you now conference concluded. presentation. is for today's Thank attending

You may disconnect. now

Global Net Lease (GNL) 27 Feb 192018 Q4 Earnings call transcript