GNL - Earnings call transcript Q1 2019

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Operator

Good day, and welcome to the Global Net Lease First Quarter 2019 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 first joining section Investor the for webcast call. website quarter for at being you, in everyone, GNL's XXXX call earnings

discussion results call all on to and are actual forward-looking December all Officer; discuss filings, differ the Masterson, XX, for conference as of on statements and statements, including that information the risks the filings information forward-looking factors risks this contains to one or report of portfolio Chief other provided those cause are a uncertainties. Financial Form annual after which Joining or Jim the materially Any ended XXXX quarter's XXXX Chief differences. subject more call. our XX, Nelson, me or February call could on to these expressed materialize today that these following Should and from of the XX-K are forward-looking the Executive more the date year uncertainties statements. with Chris results of risk SEC SEC filed Officer. may implied during by only date this or We detailed of refer the you made for The

statements stated our portfolio except or forward-looking update information GNL law. SEC revise disclaims filings or any required As these in to intent or obligation as by

www.globalnetlease.com. Form our supplement income can I'll non-GAAP CEO, net now measures call which substitute measures measures, not for a will to at prepared financial the be discuss the to be which we our isolation the financial in call, GAAP. accordance non-GAAP Jim and in with results financial found or of be earnings Company's in should believe over today's A These in we all evaluating During our posted website Nelson. are reconciliation turn useful our considered performance. of as GAAP release XX-Q, can to

Jim Nelson

good today's and everyone. for us all on Louisa Thanks, joining morning, call. you Thank

delivered continues a We rental with $XXX.X to across are report attractive opportunities acquisitions portfolio pleased pipeline identified. year performance to key ample to revenue and as we including in EBITDA. complete capacity great to metrics additional closed and The this adjusted grow with are XXXX strong of million results as transactions start increases

first the million AFFO During the in net we million and late and diluted acquisitions, will XX.X% equity the in at the million, for through this XXXX XXXX. timing primarily respectively. U.S. XX.X% closed time share from up reflect have in from the increase and XXXX of the acquisitions, raised XXX of XXX in was will $XX.X $XX.X XX leased from Western revenue, capital saw the up also Europe, The closed quarter. Western portfolio the natural and XXXX, we also the quarter of far $XX.X gross the primarily results of quarter, of XX.X% to in per rental due our benefit high per million, of pipeline million refinancing of proceeds; these rates. per market the in from first the U.S. so properties $X.XX representing leased, first in acquisitions differences rental the global portfolio we the completed resolve initiatives, strengthened properties count funded net XXXX. $XXX share European in the and GNL first XX.X% same in certain is first share decreased Total GNL's quality property be our the quarter quarter X.X% estate lease AFFO $XX.X those to equity share quarter XXX first figure. we $X.XX increased quarter The are common are of common at issuance full to up $XXX fourth second million European quarter U.K. attractive quarter's the annualized in income real properties and Overall, XXXX. we quarter. in acquisition the current in quarter from the from as and

Our to investment implied to grade earnings or what portfolio. grade make for release implied up grade XX.X% the more we of investment tenants. consider Please about tenants refer be our information investment

lease retail is in mix with London near-term X.X years and distribution, U.S., Europe the conditions and XX% in weighted is X% currently the the average of office, take property has positioned uniquely and Luxembourg. GNL industrial offices no with market and U.S. expirations. remaining Our term a portfolio to advantage XX% of and

to transactions in deal to close long-standing manner. accretive with and and developers access flow us an partnerships evaluate from allows Our and efficient tenants

Our ability the is relationships transactions strengthened to banks by with and both a long-standing set of in Europe. and broad complete our U.S. lenders

balance opportunities to U.S. a have couple healthy and Western for the found best of U.S. in primarily We be and have the of years the European assets past

has see we view also beginning some changed, While investing that well. to as Europe in not opportunities are

European Our only opportunities own strategy leased with and seen has those in intentionally we take to for in properties acquiring focused office on countries this deliberate we've focus where assets. strong to highest advantage sovereign GNL of the assets countries the leveraged our investing ratings. in corporate been Over has debt six industrial European the history, tenants and

in we U.K. the to U.S. invest now portfolio. further expanding the can to the see REITs fact, In bring real European value validation other estate as of

market explore attractive continuing current potential are acquisitions provide the European opportunities. We and believe monitor, to may

strategy, Stanley an division we which a foot raised A headquarter Stanley acquired grade commercial respectively. from designs, and January hand, Fortune sales approximately the quarter has are rate single capital These guarantor, electronic annual of respective increased we Convergent transactions & the assets leased at-the-market wholly-owned And supplies Decker, GNL weighted but rating to Fishers million expand design tenant, S&P The respectively. a leased million. manufacture and during square with is in program facility, and weighted our specializes at Black S&P overall quarter Black that leases Wyoming investment of credit a parent leased remaining a these years. and office average automotive exchange our square the long-term investment two $XX.X acquired leased services. which of BaaX a and credit with like on and remodel the lease types XXX,XXX assets with rent of Stanley Security funded and for XXX includes security to provides tenant property the The and proceeds and property a During properties. cash which a located X.X leased are from of are of approximately XX,XXX rating expenditures average subsidiary an foot office term serve acquired related quarter a portfolio. our electronic Gillette, XX,XXX Moody's in the Indiana, the in contractual security consistent four & under AX not in we assets with during A+ properties Inc. is function at growth net Cummins Decker, grade that X.X% and systems critical installs are of the $XX.X to capitalization located and contract underlying engines totaling for feet price square property embedded property the Moody's an industrial Solutions, of in and for has funded company in that equipment form of to tenants, we is

pipeline, also a $XX.X closed Subsequent during of We to price proceeds at a property gross $X.X quarter the with million we sold properties three GNL of identified one of a years. rate quarter a weighted investment term for for year-to-date. end, million. weighted sales on contract X.X%, million closed capitalization has average or X.X of remaining $XXX.X lease our $XXX.X million of average opportunities Including

funding reflects acquisition X.X% growth, of lease lease also for at our XX.X expand term with average eight The rate rent Houston, property an in properties in Our $XXX.X aggregate $XX.X exchange pipeline to and a weighted industrial and capital increases for average in acquired price of annual plus to an net located million distribution X.X% the annual per of weighted cap contain million of schedule industrial embedded a increased average properties Texas, of $XX.X be year. anticipated years, rent. pipeline contractual purchase remaining rent of in million expenditures the

provide will continuing provide attractive ability I'll refinance quick at a on European detail, our GNL's update Chris debt to more rates. While

million During million with proceeds and €XX the an quarter, Bank cost on we to Energy Earlier Nordea was refinancing to bank. estate on corporate this refinanced XX the Essen used outstanding with a were costs indebtedness for five shortly including the the after Tower properties the expect X.X% purposes, at pursuant which properties loan all in general aggregate hell we of in available a month interest these real the definitive by German balance own to complete million repay a our basis a of additional €XX.X with our exception acquisitions. we of Abp Finland assets, borrowing entered we of into the for points. €XX.X all agreement, assets lowering rate,

And the Chris? to of more the to will call French properties turn operating I financing up Luxembourg some European with We that, detail. follow Netherlands, are working Chris With the in complete I'll then remarks. to and balance the remaining. results our walk closing with over through

Chris Masterson

million, up XX.X%; up $XX.X quarter $XX.X over morning first core FFO XX.X%; of of XXXX This first announced XX.X% we figure; Jim. XX.X%. up AFFO of up of the million, and revenue Thanks, million, $XX.X quarter million, $XX.X FFO

During we common million. paid quarter the $XX.X of dividends stock

which fourth average Jim quarter our acquisitions per of results equivalents, and our towards with rate billion first the $XXX the annum. net As strong X% of of we $X.X is the full of mentioned, the million quarter a cash weighted a of from debt, at we balance results closed reflect the first sheet debt ended effect in less end On quarter. interest cash quarter

average of mortgage years debt multi-currency of the quarter, The the rate X.X close million revolving was $X.X place at debt. the from XX.X% quarter. maturity with to on gross An XX.X% rate, components was GNL's debt credit lengthened XXXX XXXX improvement XXst quarter of at ended approximately December the swaps. which $XXX.X floating over loan, debt billion interest fixed million weighted the This has is an rate of on end X.X the debt was term $XXX.X and first include in years improvement of outstanding facility, Our fixed. inclusive first

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

to XXst value price and comprises was $XX.XX enterprise of $XXX.X closing XXXX XXXX, March GNL's net availability debt XX.X%, of credit which of on $XX.XX share hand shares. on the liquidity March XX, preferred the $X.X for for of $XX.X value the an Series facility. A with based approximately under common $XXX.X billion stock cash was million As of and enterprise million million,

million. sold During the our ATM stock quarter, we X,XXX,XXX of for common $XXX.X through proceeds gross shares Program of

available amounts to initial to aggregate distribution Program continue sales stock sale final we the represented of proceeds additional agreement ATM up which any Program distribution raise new shares $XXX to for under into sales, quarter our these the new common Following We entered the not ATM did sell million. under the agreement a for agreement. the during equity

an from fixed the entered capital and side if LIBOR or XXXX loan due significantly turn general loan is hell rate with of principal facility the February European rate maturity. at loan The million balance all XX% properties after with with The German date assets complete finished of including our million rate loan proceeds energy syndicated X, month refinancing a of X.X% at X.X% lowered an outstanding interest borrowed X.X% now to the corporate borrowing to outstanding in of principal to aggregate we the bank. the all the The real This interest by purposes purposes. to loan of million fees €XX.X Essen cost for available maturity year with after X.X% to power amount per and the This is the for the proceeds also EURXX.X interest-only repay indebtedness exception closing owned me to repay a Bank all of indebtedness loan by the capital three general the our will of by additional of cost investment swap with the and February, the related encumbering and and annum. Later agreement. into will be loan expect GNL. there estate In used the was loan be properties used cost refinancing a At all corporate properties €XX.X Abp million. an interest is plus Let is Nordea with working secured of five for May, acquisitions. on remaining GNL structure. an of €XX available the in agreement

As employs a some layering quick update currency both two for currencies over In in have as against to local to quarters we offset rates company European interest strategy the our portfolio. to disciplined continued to movements a a hedging exposure hedging program, to currencies. and GNL's currencies way to the our manage use hedging, regard hedges upcoming of some strategy

closing Finally, the to call April equating at This policy per share with we in $X.XX annualized be dividends Jim or of previously the aligning Xth the paid no month to the with remarks. dividend respect that that with on to change XX.XX closely to dividend rate more GNL's Subsequent will in end some affected our dividend, on the per in of quarterly common of the peers With for way start common back and second we share March. end declaration to turn announced a respect quarter. announced I'll dividend stock quarter quarter. we our dividend paying the cents

Jim Nelson

Chris. Thanks. well all continues on to GNL perform fronts.

delivered results provides FFO, FFO as This adjusted and to across grow. income core continue metrics rental important quarter and revenue, we such it the The strong portfolio EBITDA, AFFO.

We $XXX.X of identified have already million identified. well-positioned with as transactions to opportunities close ample complete additional are capital and powder acquisitions dry on are to available upcoming

transactions, proven shareholders. better ability what improved terms opportunities We and demonstrate than and available, our the off landlords developers at more company by rates for identify are continue direct a allowing market with we leveraging generating favorable source market than to are to results achieve believe to to generally capitalization us investment relationships

just meaningfully the during contributes Finally GNL's first as in quarter negotiate financing local to favorable the to ability bottom markets line. discussed, Chris

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

comes it international remain when adding also to opportunistic will selectively footprint. our We to

for value steady and long the deliver We can enhance will to continue questions. our we our open growth With line operator efforts shareholders. term for that

Operator

Thank comes you. Riley question Maher go Bryan Please first with ahead. B. [Operator from Instruction] Our FBR.

Bryan Maher

more you in And then the a question morning. tell for the Good Chris. fees related maybe in operating increase parties prompted the is this us quarter? what Can

Chris Masterson

Sure.

would reversal the related of driver in is the I incentive the largest that actually quarter. to the say fourth So fee

the the analysis. reversed not met our QX in we went amount hurdle So fourth quarter quarter quarterly $XXX,XXX for and $XXX,XXX. did then booked as part was analysis, of for out we quarterly third that through And had was the our in as so

to only So by actually at if XQ. were just $XXX,XXX management and in quarter-over-quarter you looked that your would the asset fees property management increase driven increased equate fees shares which the sold they

Bryan Maher

And items in onetime there G&A any the were Okay. line? then

Chris Masterson

returns, all really first audit also activity G&A tax quarter during the took and the returns, of the the by in between audit. of our lot line, quarter the the completion that a internal So that's additional place filing of during bad of proxy, some tax driven work

the really over fourth that's the quarter. So driver

Bryan Maher

run G&A the roughly? year for is you the think do the what rate of And balance

Chris Masterson

I number is say just the year, both that want of higher But the of the would quarter. quarters I probably exact volume during that, any a to balance don't I the place this given forecast. took one and give have don't activity For the

Bryan Maher

going potential this acquisitions? your the or on trade U.S. your Okay. do as may maybe you upon China, going bigger in seem of your war relates on think industrial trucking companies services make a appetite business about possible week. Jim. logistic question How it overdramatic or think pause and And with some what's to this what's and a moves week you facilities would for in then We're given take going its seeing in what's on appetite picture a you acquisition that trucking it Do with impact for based on companies assets,

Jim Nelson

long talk Good question, of tenants, can it's buy to this quality duration investment tenants. for percentage buy as We know watch again to very thanks We and the We grade properties. Bryan. carefully. call best high joining the And -- quality you. a always good large you we

confident So we're decide what when carefully We're ultimately we to in very the buying. acquisitions and we buy. we very underwrite look things

asset you -- and the trade raised careful from continue and acquisition from those business will during very, outcomes war the political China. We our But know, equity pipeline grow our proceeds we this the but and appropriate. very watching as funded -- we is as and to year being with selective to continue program continue we the very will will be

Bryan Maher

Jim. Thanks,

Jim Nelson

Thank you, Bryan.

Operator

Germain ahead. from comes Mitch go next Securities. Please Our question JMP with

Mitch Germain

you? are Hi. How

Jim Nelson

we're you? are Mitch How Hey, good.

Mitch Germain

I'm asking. great. Thanks for

So it what that in And based that of capital. assets is thoughts you you've allocating is how curious seems like a not segment. the fit I'm been retail your on hold exactly

Jim Nelson

I that good assets. very good our also another tenants. very we it's -- place continually in portfolio. We with solid. performing hold They're They're assets think assets The leases the good Well, monitor question. long-term are

the As the have grows, portfolio percentage you down X% we're now is see overall portfolio. we to of the assets of retail declining as

So retail we're the buying and know, what have. I do have watch well. And with you assets very retail And assets comfortable comfortable but any they're very we performing new as all not we we're we're it that pretty with well we carefully. think

Mitch Germain

capital, about the the pricing curious has change you're I'm prospective made what's last And comment you favorable dynamic XX to been capital that what spurring identify the Got or have you've been some more a U.S. become environment allocate the deals is months you. Obviously in most to or allocating targeted I competitive change? over been that guess the -- of there the Europe. so starting has in to

Jim Nelson

factors. a it's number of Again

incredible as And strong out really of long acquisition as our this bring us our done One on strong, excellent And been quality I'd a bringing high give certainly at us team, acquisitions in to like I've own ground to very very we have they being acquisitions. And an the -- now. just factors acquisitions. because point uncovering very team they continue kudos been job that they've potential to the potential some have here. very, London

So Europe seems while a but that Europe? what slowing it good we're seems do be a some Again be finding bit are better. little to abating finding was opportunities. down for starting to We Europe to in and

follow comfortable and think to we're Europe in disciplined Europe. in U.S. little more I have that. will continue all-in-all, we But approach a So assets our both acquisitions to and the we in buying

Mitch Germain

believe -- seems -- But quarter. Great. And deal the of sector. continue obviously you I in comes industrial more building obviously identifying you -- deals, competitive on just potentially be we capital most could very be industrial the like acquired still when segment this going curious it it office there, I'm allocating you particularly to a to the office out see forward? I to mean focused

Jim Nelson

office we're But to and property last to what ability a the industrial distribution that's occasional compelling there you've the the in potentially as year -- industrial no distribution be There's that. plan do and facilities. we've on Primarily, have a execute on half. seen our primarily And certainly is we occasional focus buy. distribution buying the from But bought will -- it.

Mitch Germain

Thank you.

Jim Nelson

Thank you.

Operator

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

John Massocca

morning. Good

Jim Nelson

Hey John morning. good

John Massocca

I is equity to have of equity like for you and kind in a that runway in just closed that current XQ of in about way acquisitions. I $XXX of I million mean more kind in you hand. have equity… XQ -- roughly seems under And mean pipeline look with I that just runway closed it the $XXX the it think might kind amount of calculated will. have the you if do is listed the you beyond million you've think -- So on of you the fair given additional you stuff it think pipeline a that at then have you I beyond raised or maybe XQ

Jim Nelson

to I dry I'm very the great look has very and look I to a team We don't bringing No as properties powder at. that's interrupt just -- sorry a in do acquisition us mean said way But really call last been lot our of that's a at to John. have it. you. fair

John Massocca

maybe essentially have. the lower level a raised in amount you leverage operate to not an you effort XQ But traditionally at than is

Jim Nelson

It focus. wasn't an initial

John Massocca

Okay.

Jim Nelson

quarter Really the acquiring additional capital was raise first properties. during the for purpose of

John Massocca

interest with or existing sheet on relatively should balance debt Okay. still expect we be on And then the maybe understanding the debt and again, might side the negotiating potential rate or refinancing of versus But to a regards kind this same higher? this. mortgages you the German lower

Jim Nelson

It's going X.X% to relatively or same. be right They'll around be X%.

John Massocca

you Thank very Okay. That's it for me. much.

Jim Nelson

Great in. for calling John. Thanks

Operator

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

Jim Nelson

I'd very delivering pleased dialing you this for We GNL moving intend We delivering. to the in thank morning. like continue with results forward. Yes. to certainly results all outstanding that are is

to what slow buy. high very and just careful to we're be that to a intend you And I'll fortunate talk lot a we'll long on have this point quarter. focus buy to able been tenants next with all of durations. know At for as and this good to dialing We and you. growing quality And we we in. approach assets you lease Thank steady all we've you say program. We company with continue very very thank

Operator

presentation. concluded. for conference has The Thank today's attending now you

You may disconnect. now

Global Net Lease (GNL) 9 May 192019 Q1 Earnings call transcript