GNL - Earnings call transcript Q2 2019

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Operator

Good morning, and welcome to the Global Net Lease Second Quarter 2019 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Louisa Quarto, Executive Vice President. Please go ahead.

Louisa Quarto

Operator. you, Thank and Second 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

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

statements information made this provided only conference are date call the of as portfolio forward-looking call. or during this Any of

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

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

to our Nelson. the turn CEO, Jim now I'll call over

James Nelson

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

quarter combined our and and very primary increased another acquisitions, decreased our retail in $XXX our which, portfolio and exposure. We EBITDA AFFO. quarter the to revenue, increases with industrial active office of retail industrial, properties had We are distribution distribution a allocation rental to adjusted report including of pleased million disposition, and

much refinanced XX of an X.X the our more debt and credit at years the successfully quarter facility billion. last rates, subsequent over primary weighted $X.X also from We European end, years to expansion of extending of to average in the months, our X.X maturity debt advantageous our to completed

million from quarter million, Total million and from $XX.X second in recent XXXX, revenue on also AFFO the prior year in of $XX.X a the AFFO was up strength quarter. million share the for $XX of On the quarter was $XX.X second quarter prior in increased to X.X% basis, $X.XX. our million from up $XX.X per acquisitions.

of XX% revenue. the Overall, respectively. the XXX XX.X% Europe, leased, annualized Western of saw occupied million representing end which XXXX and in back majority our are U.K. of in rents $X.X million XXX property portfolio located and at full of XX is only of of quarter closed contributed in the they about quarter the second $X the quarter estimated acquisitions million the U.S. our to the and revenue, nearly rental second Thus are quarter. XX% Our $XXX fully

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

weighted and no years Our average retail. X% expirations. portfolio X XX% with XX% remaining and property is currently of distribution lease mix near-term industrial term office, The a has

properties, acquisitions are three term building million. of and five leased in all approximately million United comprising $XXX contract X the quarter, These sales price feet leased X.X During square capitalization XX.X we industrial of at an weighted for included These weighted rate with the and located an a States. of lease X.XX%, facilities average distribution remaining years. are assets acquired a attractive assets average net of office

assets are long-term pleased improve to portfolio. believe acquiring mix cap that these very of favorable believe assets our rates the and at We we what in leases are be

I'd The Heatcraf & years. feet office a in like Alabama, BaaX States square-foot for totaling located for services XX minute rating a We Rico of we approximately to take Platt, the leased its is of XXX,XXX a price the contract The postacute property Health, of the which these tenant to just acquired million. and property ComDoc, Puerto over is XXX,XXX through to $XX quarter in during distribution headquarters lease acquired XX.X office of and from review states providers a in one Encompass the some highlights Hanes/Leggett credit Birmingham, continues network. largest facilities square leased total United sales acquisitions. has to healthcare

top-quality a and is brands. equipment. the X refrigeration than ComDoc climate and They and XX Xerox in a is commercial by is cases other refrigeration, to Heatcraft of market-leading distributor printing under condensers, merchandise providing solutions world leading of display evaporators, copying products countries. owned customers more control in produce leader

aerospace logistic across hydrocarbon a Inc, for technology distributor Companies variety Union fastest-growing engaged to EQT one is in a diverse Europe. of Corporation Union The and Metal EQT strategic Partners, aviation companies. converter Chicago-based is is acquired and division solutions Platt companies. multiple Nevada Hanes and a and Sierra -- America industrial transport. leased exploration services are in The operator Technologies. Corporation, & and creates of Sierra North markets we Leggett a supplier, pipeline of products Nevada and of and is Corporation America's users properties Partners of and metals Corporation transfer

acquired strategy, each long-term a feet Finally, a Consistent for function critical assets for and metal tenants XXX,XXX with a of they're these our contract and is underlying industrial total $XX.X the These Metal Technologies price overarching to casting million. premier company. of total sales assets serve subject were approximately square leases.

the annual our concentrations quarter our facility, revolving reducing of the retail industrial in We our rent to mortgage ATM each. portfolio funded distribution debt transactions proceeds programs. with the last by net acquisitions Our over X% credit and from segment our allocable increased by straight-line year, office X% and

to capital. continue opportunities to recycle we addition, look for In

stores During at of where for reducing Prior reducing gain X.XX% based sold portfolio the were XX five stores, recent from of Directors to sold including still retail determined with made. payments parent announcements rate, owned the to a Dollar's concentration. the the best Dollar quarter, Dollar portfolio which retail being rent current XX we Management sale, company for XX cap Dollar that along properties stores, be a Board exposure including we Family Dollar GNL's dark Family Tree. Family would we on Family GNL's

cap the assets redeploy confident assets the to demonstrate management to our continue demonstrate attractive to We attractive We rates at we believe into and selling disciplined Dollar are originate our and portfolio transactions. acquire strength continue strategic to company. enhances Family and our asset of proceeds ability continues and will

As ownership while continue are properties. our of refine mix, retail office limiting to primarily industrial we select we on focused and some our asset distribution properties, grow acquiring and

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

of During completed of €XX.X million assets. German refinancing the we our X quarter, a

of also the that by on matures €XXX secured bears previous rate loan X.XX%. The Luxembourg in borrowed was million XXXX. the a in We fixed rate on mortgages at X and Netherlands interest X.XX% properties and

Benelux. interest terms the maturity the quarter in rates extended addition XXXX the second of to to XXXX debt decreasing the of Germany of loan, newly In in the the negotiated and

$XXX-plus to to Simultaneously, the end quarter completed of of with KeyBank, lower extend to of to facility facility option the additional commitments subsequent our interest portion extended to the XXXX. the We an expansion million XXXX an expiration also revolving we add credit at rates. of with

as expansion leverage the we extend with pleased our are of We timing favorable the maturity existing facility. to

such closing this the and opportunities acquisitions. objectives to follow results to continue the remarks. one and over of growth With through to balance call supports Chris turn I as our substantive see in operating with and then walk make more will on Chris? any up to pursue provide that, GNL's will detail, to opportunities that portfolio accretive We I'll sheet capitalize we and the some

Christopher Masterson

Jim. Thanks,

XXXX $XX.X first over And AFFO Second quarter the up $XX.X quarter million, over million, up revenue figure. was was X.X% first quarter. the X.X%

and due the was average X.X% of quarter million, Moving share an the AFFO on, X.X% slightly in the $XX.X shares quarter. to the first $XX.X weighted quarter. up over million, per number was down AFFO in over FFO outstanding quarter-over-quarter prior increase core to grew

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

with billion at $X.X sheet, On the which debt, of ended interest a and of balance our quarter is X% second net weighted rate annum. debt we equivalents average less cash cash per

debt. maturity is facility, of the close credit results matures lengthened quarter $X.X filings. weighted revolving approximately on second of loan X.X to in our average XXXX where components debt This over billion debt on gross be interest outstanding March improvement addressing, has of X.X was XX.X% of $XXX multicurrency Our are actively an inclusive rate $XXX.X include ended This second fixed. The quarter, the that future XXXX, in-place million at million end years debt million fixed XX.X% XX, mortgage of of the announced term which rate, with rate which swaps, includes improvement will and quarter. at debt we the XXXX, the an was which the debt of floating in the from years $XXX.X

year improved with EBITDA ratio X.Xx last interest from of X.Xx X.Xx. adjusted annualized to a to debt strong net Our coverage

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

per will our Let February agreement subject annum bear €XX.X extended a at XXXX. me on forward at side rate which Hessen-Thüringen loan X, loan May, will maturity, per of option at interest-only Euribor in X-month we with be The properties annum, XX, initially bore Landesbank interest be June of the to with of an The going secured be the beginning on The will plus property, date In may X.XX% at borrowed to company's replacement XXXX. a on into X.X% and Girozentrale by to X following mortgages October maturity the Germany. now due interest XX, capital Euribor structure. easement million turn loan of European plus the conditions. rate principal entered one but, a loan XXXX,

net repaid to proceeds of swap entered were that a X.XX%. properties bore also the loan. XX% We The rate into previously all of secured from indebtedness average loan amount. for in the interest outstanding used the mortgage principal The weighted fix €XX.X indebtedness encumbered repay rate of to that mortgage million the the a X interest at

XX, June entered is and The Luxembourg. and rate secured loan at lenders bank Girozentrale on average In we fixed repaid into a The bore borrowed due with to mortgages interest interest closing the approximately agreement beared of Landesbank €XX.X outstanding the a matures at indebtedness Hessen-Thüringen by €XXX encumbering a weighted indebtedness of Netherlands XXXX. mortgage interest-only in rate the was At million loan X X.XX% and properties. June, loan loan, all principal on million X.XX%. with X the properties at of used maturity. The repay other

discussed, the X completed $XXX The previously of term a last corporate $XXX loan revolver to The deployed. and components amount XX sliding rate actual pricing X basis of basis lower The facility X-year each term prior received points years facility. billion, a than prior interest options recast scale pricing $X.X credit are that total of with facility, Jim on the leverage we prior lower XX extension than facility the months There of of a the revolver a As plus million a week, for based X is term is KeyBank. with is recast million a the the for the X-year facility. commitments X our points the facility has from loan. for and increase

this We line extended and of lower with a very interest pleased the are rate time facility.

dividend, to we the dividends per $X.XXXX to Finally, with share paid common quarter. the for equating respect

which modified of dividend we As per announced pay end annualized the on did an and $X.XX quarterly of closely quarter. dividends, on the rate align at the still which X, paying policy more not rate is second April change dividend with our started a we at common We stock. share the peers to our

With I'll the back to turn call Jim some that, for closing remarks.

James Nelson

quarter second a to from portfolio of perspective, the excellent and We believe generated we Chris. grow. strong by rental The place have an had income portfolio put continue the in the estate and we real half the record pieces a year. Thanks, to

improve on our portfolio use close opportunity leased pipeline to capital available to provides to proceeds with primarily long-term positioned well are assets. the million We of asset of the net asset $XXX illustrates the disciplined management industrial Selling Family our mix. our and strategy acquisitions Dollar

distribution We we'll industrial net fully quarter to anticipate be second of leased office, the assets. growth in the long-term proceeds continue from and net portfolio acquire high-quality, are a our when redeployed dispositions and

markets Finally, contributes corporate as bottom our we negotiate and financings to to at the ability favorable line. our local have in discussed, meaningfully level

we operator, the line for that, open With can questions.

Operator

our And person first of today Germain will Securities. Instructions]. JMP come [Operator from Mitch

Mitchell Germain

looks stores Dollar like Is that you it for have So sort sale this the batch well. own? you Family as another of last

James Nelson

batch it's that we Correct. the last Mitch, yes, own.

Mitchell Germain

pricing Ann is comparable? the

James Nelson

very Pricing comparable, is yes.

Mitchell Germain

that cap X.XX%? Could missed it? What it, rate. I was you said that And be

James Nelson

No.

think I a X%, over X%, it X.XX%, correct. I'm little was if

Mitchell Germain

retail this to So that entirely retail the even that, is safe say your after now X% down is eliminate further. -- going it Is at goal that obviously, to point?

James Nelson

is can also you important. and as selective very Well, see, timing we're

be will Family any say I very of to the further all in the beyond selective we but wouldn't goal is Dollar. So reductions eliminate it,

Mitchell Germain

-- then And Okay. okay.

acquisition in of of Just the some activity. terms

In still that goal? continue is to that at of of the Or you toward Does an increased what is have to looking guys the it mix looking skew industrial. of office? terms at maybe be are pipeline kind heavyweighted future, in that the you're

James Nelson

No. an Definitely increased towards office. not skew

-- one only focus. primarily But you building properties. That's far year. will we continue stated we before purchased to focus primary and our so we office is industrial as As we've on saw, and distribution this

Mitchell Germain

about Okay. Is under you was that announced the that longer it know in Last is no pending? fall Or one the consideration? think me. I still from I disposition Europe. probably

James Nelson

It's still No. definitely pending.

Mitchell Germain

have. in on to, million the part correct? It's not addition of $XXX That's guys But Germany. that's in what you not

James Nelson

No, $XXX and one in sale million held is Germany The Germany will for close building relatively no. in soon. that's

Operator

will Bryan B. question next FBR. from come Riley Our Maher of

Bryan Maher

to you the quarter context sale last Jim, opportunities Mitch any Europe right more really you're on I -- in the can little just you comments or But, on you give see got the can for Family bit thoughts you the with a if couple my U.K. now the year? Brexit? to so more question good. and Dollar, over European it on was strategy elaborate the And that's relative of starting continent the and U.K. forget on your us now? that But here

James Nelson

question. attitude. to a really what's good The are Absolutely, wait-and-see happen. -- thank Good you. way we actually, with mean there, Sure. hard it's things going very going U.K., I have the foretell a to

be our was pull saw very the in and to on compelling, the the fit we're have to extremely unless trigger. that there. think very strategy model. into have We're we exposure and I find enough continent, properties hard U.K. we Whereas we hard properties something -- fit our that would it our acquisition hard working strategy, looking to find

very on We anything we're looking carefully. year, haven't this very, but yet closed

Bryan Maher

Ohio, like is that Are that Chicago, still mostly comes where And regions elsewhere? Middle of seems the over it I is then Great. U.S., quarters, Or It skewing several of was distribution. it here, the Okay. region. to past the Milwaukee when opportunities? it's shifting kind America, understand in there there acquisitions Heartland and industrial and there to the better a maybe the seeing country more opportunities? within Is you're

James Nelson

have a Well, the you're of lot where absolutely been. right. That's acquisitions

We continue relatively the It's across to And good to look a more you're agnostic property we buying when value property. are that U.S. you the assign location.

We've So all we pipeline. across a very got the robust to U.S. look continue

worth million of closed and $XXX properties as know, about -- you we've So year-to-date.

ahead So we're very moving nicely.

Bryan Maher

lastly of just minutia. a then from bit And This me. little

was the property? truly office On Birmingham. a that acquired Was office in you building? that characterize How office building? would an property you it medical Or

James Nelson

Go ahead, Chris.

Christopher Masterson

is this their building. Well, Encompass headquarter Health,

a that it's their nice is the they corporate health building. headquarters. But garage the headquarters. care mean But relatively that's company. a office their really a company is building then headquarters a strictly it's So primarily new I have it's to And office. connected corporate

Bryan Maher

care And I that REITs buying differentiate been as health medical just have between well buildings. -- office wanted and to that as covered

office So make a an it medical I not wanted office building? to that truly just and sure building was

Christopher Masterson

this a medical office headquarters. buy Yes. buy We We primarily don't would buildings. corporate as

a absolutely you. right, Thank was question. it you're great So

Operator

[Operator will question come of John Massocca Instructions]. Thalmann. next from The Ladenburg

John Massocca

debt it financing U.S. And focus shortly primary coming just assume out piece French the to 'XX. left moving are Is of there? I relatively that think the one I'm kind the you debt fair of the in front. I mean to But of refinancing outside have side. kind mortgages On that, of is due

James Nelson

Correct. That's correct.

John Massocca

we couple that? kind something Okay. And the kind would kind the think mortgages today should of I are -- mean about when or on we of that I over the on potential here? debt any of with last level inside there. rate has of in of come expect mean months where

James Nelson

But because say they be hasn't will where and the to to closed. hard were think reason hopefully rates deal better. I within It's the

John Massocca

on Luxembourg. be changes? of I'd of And given pretty imagine you portfolio. in-place the there Any their eddy doesn't in have U.S. anything potentially? Bank of the to impact Okay. the it too on impact Or that building But then some side? own The much now? is lot from seems steady focus operational right is there Deutsche an a

James Nelson

seen of anything. in And a building important It's the in there, I I to is haven't Board And meeting. The the their was still them. for in with building We think for signature important. was last their international office COO Luxembourg. clients, built I good. time It's very Luxembourg very their specifically for is Luxembourg Luxembourg very a them. lot business met

we to don't So we it have seen haven't on effect any and expect it Luxembourg.

John Massocca

on the or under the to of of any additions one. of closed the that European? pipeline in It or have agreement following kind right are some acquisitions? shift European just kind to -- be say might European on new up of Okay. European? there that's purchase looks now kind or you more focus assets Is pipeline to the you last then a Is anything had But LOI. on the have on maybe the there of And that like

James Nelson

as in on Well, in the signed the hard about. previous Europe, question, to now in talk Europe we're we don't but very the And is in said any everything that's have LOIs US. I pipeline right looking

in So have anything we pipeline don't we in really to about the haven't -- yet Europe. talk

Operator

to this remarks. like CEO, our back any conference time, the Ladies and session. I'd question-and-answer At Nelson, turn over for closing this will to gentlemen, conclude Jim

James Nelson

for much. I We your you call. appreciate thank again joining all you really us want thank on participation, and to I today's very

Operator

We concluded. presentation, lines. now The disconnect conference attending now today's you for you your has thank may and

Global Net Lease (GNL) 7 Aug 192019 Q2 Earnings call transcript