GNL - Earnings call transcript Q1 2021

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Operator

Good afternoon and welcome to the Global Net Lease First Quarter 2021 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Louisa Quarto. Please go ahead.

Louisa Quarto

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

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

call substitute or with a company’s we These accordance measures performance. about information to as financial Nelson. to our implied a should prepared intent what now Jim? in today’s release CEO, law. tenants, I will grade call, can the our these filings, term SEC considered stated use to detailed earnings at is which evaluating believe the be GAAP disclaims to obligation www.globalnetlease.com. Please discuss in are posted non-GAAP throughout call. in required A GNL for measures will revise to comparable we As we update to isolation useful these be we turn financial over website Also, measure be of will which available release or forward-looking GAAP. earnings any in our our not the as our supplement, directly and except in today’s refer more statements, our for investment or reconciliation by during Jim measures, most financial results consider

Jim Nelson

Louisa GNL to ongoing the excellent everyone by XX.X% McLaren including per joining an call. for quarter, acquisition again that AFFO to pleased XX, growth report and I Group’s a a which $XX.X April today’s share, on that announced and you, pipeline, and am had million, of we of of forward the of robust Thank XXXX. highlighted the acquisition us NOI weeks thanks Headquarters cash to ago closed few $X.XX construction on

all from including For we cash top underscoring quality the of substantially cash our quarter, collected rent that our of rent portfolio. our resilience of the and of cash existing which represents payable almost payable, the half tenants, the total annual XX original rent, XXX% was

quality, emphasis American the a North UK, that on selection a asset to perform of due rent continues our all XXX% Our geographic credit diligence portfolio European On GNL historic collected and of basis, from assets. and underwriting, helps payable cash shape well.

price costs. purchase be what average and below forward exceed we leaseback XXX,XXX $XXX office believe million. at closed well which sale term a cap years. addition acquisitions Our $XXX with some Global the the is properties, total XXXX assets McLaren and to these XX, opportunities price on of replacement £XXX Headquarters, acquisitions in three industrial The million, which and Group our components. acquisitions is located illustrates primarily and of square half GNL’s are in This large of U.S. and or acquisitions The an England half scale consist are contract pipeline global almost X contract feet. April a purchase XX.X of of R&D of a at weighted excellent largest portfolio and ability source to X.X% property to year-to-date, of at closed The pipeline lease going-in million rate remaining

We property pleased acquired team able at of cap the rate to a been going-in effect not the work being management the collaborate an annual to McLaren base The with is and If rate from company by conditions The cap expect minus or we and to this Moody’s no are have under year transaction. incurred to these loan refinances Holdings rent and so contingent not acquire a McLaren is refinancing the of this are the campus very will Company adjustment Group occur. December of in be upon one Limited the to during XXXX S&P, first credit if do only to or of of to X.X% occurs not the do is which and May enhancement obligation corporate XX.X%. XXXX. to complete rating lease. Fitch a debt by a average met, one-time equivalent the subject adjustment,

acquisition net floor the this a with ceiling marketplace. architect, Additional Foster, sale the X.X% annual exemplifies regarding carbon competitive new of portfolio. global and to in renowned CPI, lease The have presence decade. strength provide information ability our averaged triple in XX-Q escalations, last transaction leaseback when global complement as believe available of based The buildings Norman rent attractive our to a will XX-year Trust our will our continue net presence We accretive by it’s opportunities over features. of execute a numerous opportunities obtained and annually best-in-class recognition designed for a standard lease that X% state-of-the-art their awards includes REIT the won acquisition filed. has environmentally and on be which leading from Carbon X.XX% conscious GNL’s The were

with property the weighted representing quarter. in XXX term the end properties XX.X% X.X a and fully revenue remaining of of occupied lease XX XXX of Canada of annualized Western the leased, and nearly are XX% our at and years and rent at the is in portfolio average UK Geographically, U.S. Europe, billion $X.X XX% are Our respectively.

based industries, XX XX% tenants on with line in XXX representing straight no with rent. portfolio well-diversified single the was more than whole industry portfolio Our of

mix distribution, X% and XX% Our it’s and currently retail retail ago. XX% our XX% a distribution, evolve year office office our continues X% property and XX% industrial and Contributing industrial focus to industrial Across compared to to over grade and rent is on portfolio, XX% implied investment years. grade the straight tenants. and success comes credit, over from investment acquisitions the line or retail several last of dispositions tenant

properties said, extend that Our leases Intent [ph] agreement Letter long-term renewals focused lease BaaX tenant are to expiration. for being on in and Development, group a non-binding is triple Letter implied France with tenant have on or tenant single Naples, lease a extension lease these executed tenants Intent with lease portfolio extend was net of of X Bordeaux, under of with would square Shaw minimal the That we signed XXXX XX feet X by over have we XXX,XXX Florida for X lease in and for years. BaaX Included years in this years. signed on Ocean a an have

cash discuss work contributed the of first XXXX, of frequently is portfolio adjusted first million and need the we execution a NOI Superior and this to Cash our management, asset team full services million of from success, of accounting keeps team including in to NOI EBITDA that legal capable $XX.X increased size, that the leasing everything and operate, continuing up of $XX Although it and our acquisition less extensive manage by scope quarter should running quarter to growth of noted report visible be our quarter-over-quarter grow AFFO. our for XXXX. strength the smoothly. and the portfolio

quarter quarter follow-up shareholders call the per dividends the first remarks. share. million detail with the the in some we to was closing through to or $X.XX AFFO over $X.XX per For Chris? share Chris With reported quarter, that, share company The per the I $X.XX of common in operating distributed I will $XX.X to equal share turn XXXX. per to before walk in more results the in

Chris Masterson

Thanks, Jim.

$XX.X adjusted million, quarter quarter the XXXX, million from XXXX. the up in recorded of For first we $XX.X first of EBITDA

We $XX.X to also and compared per and for $XXX,XXX. net paid FFO common for $XX.X per AFFO $XX.X the $X.XX of increase dividends revenue company share share of to $X.XX The attributable or and per or million, in $X.XX million quarter XXXX. to were stockholders common million loss XX.X% stock first the and respectively $X.XX first quarter quarter. from share $X.XX the reported of million with million a $XX.X $XX.X in

As to GAAP the income non measures release. reconciliation earnings our of the GAAP net in can always, be found

ended sheet, quarter X.X%. net balance $X a the weighted the we of at rate with interest On billion debt of average

rate, fixed debt of the on end debt debt to of interest debt. the debt the approximately the includes first EBITDA the which net $XXX.X revolving term quarter the floating Components end credit X.X senior multi-currency Company well notes, XXXX of of at This our mortgage $XXX X.Xx years. debt inclusive quarter. at interest Our swaps. million facility, X.Xx. was weighted outstanding adjusted The in cushioned gross with million loan, of of billion has maturity was ratio XX% ratio average coverage $XXX.X on $X.X is a in-place rate million rate and was

of XX, approximately As $XXX XXXX, March million. liquidity was

enterprise to and to XX, for closing $X billion an Our net preferred Series closing turn $XX.XX back the preferred with the $XX.XX A value I Series B value common $XX.XX for XXXX was will of remarks. on With of XX.X%, some price shares, for Jim March debt based enterprise share for shares. that, shares, call

Jim Nelson

closed on the X.XX% mission-critical fourth carefully low very senior portfolio. issuances. quarter a in our by the in environment our We structure Thank notes building a potential we experience construction rates provided of enhanced for historically a The of best-in-class in the the end interest at Chris. rate future quarter you, unsecured had good first coupon valuable strength constructed of capital locking and

weighted $XXX for and duration and will a the million trajectory pending that waited they rate these completed GNL’s a ensure assets pipeline long lease our long cap forward average at will XX.X% growth Our period time. enhance of portfolio of continue acquisitions of average

and compared proud cash the We true and remains at and state-of-the-art facility. are quarter XXX% the collection to partner year. first in superior a last McLaren acquisition of McLaren adjusted Headquarters nearly Rent about we the reported NOI EBITDA have excited as to

best-in-class to and continue our to open we of growth to that accretive can in line pursue additional for continue contribute acquisitions portfolio that, will will quarterly outstanding operator, believe future results. performance We the our questions. With global the

Operator

from Riley Please Securities. go Thank first from comes Our B. Maher ahead. question you. Bryan [Operator Instructions]

Bryan Maher

Good and Jim of for thanks afternoon, me. Couple for all quick Chris color. ones that and

quarter. fallout what pipeline of something the behind the that? and the you I was the first maybe that color had in Is think case

Jim Nelson

details don’t Bryan. fallout, did potential acquisition right, you offhand, I are one remember the but

Bryan Maher

R&D? on it’s which realized a little on of is is I acquisition, asset? was And and a can Is company-specific in and us office Okay. then and it a was McLaren what color how lease rate million high What as type in space? the is involved you long-term that, that really to exactly that? little that built everybody something? by $XXX McLaren, exactly the give cap Is the office interesting a like knows surprised but is it

Jim Nelson

manufacturing X business facility, they some buildings, R&D, – Well, quite office in big then the the in also space. manufacturing, the and have a is the race is and property team have racing is there also there they is

property, large a it’s XXX,XXX So, square it’s what, feet.

a consists three itself. types campus, sectors those property it’s of campus the different but So, in the of

Bryan Maher

I was yield, and and surprised at know my office, you for rates and are deal out And cap attractive ferret And to out you chasing things equity looking companies little these a how others other I a the is sourced? there industrial I about. cover that because that of there money continue private asked for lot looking both

that deal you how like outside does you’ve of pipeline kind already So, disclosed? source what what look and of your did

Jim Nelson

McLaren still pipeline, we hard and at for work on knew pipeline to identifying we had the continue management to came to the looking us team new management who Well, The McLaren through at with them. deal robust very buy. properties some very of members and relationships a are year this actually

buyer property, were the beginning headquarter And process. a year, this of they quite worked got end we So, bid the interest and long were expressed year. last a our it. we when it that heard the It on while, of was We on ultimately, successful obviously, we and property. selling of for this this

Bryan Maher

just… then And

Jim Nelson

of And a an If part property. There property campus. location. amazing is mean, It’s great just a – much it, and beautiful amazing it’s for this ever or so it’s Brian, I to we needed a potential re-rent really an campus. it’s all

Bryan Maher

a in be year. and sometime campus that Investor Analyst forthcoming think I there to Day Well, that the upcoming will great

Jim Nelson

will Yes, that to but it cars. to analysts be like have race drive

see. will we So

go. to wants who see will We

Bryan Maher

to that slug to And your over have of then How looking just lastly you pocket on quarters, that think raising a) couple capital was to price, say the and at heard I about relative you your stock spent a the that. it relative are I the about the think guys what but liquidity, you you $XXX of million of quarter, just do acquire? next end in back you b)

Chris Masterson

I a this terms have guess comfortable really that in start material transaction. only quarter I would Sure, still dividend that. the will the are I from McLaren the to we And take items and of liquidity position on say $XXX a payments perspective in equity the been million, then after

amount time. up the So, needs we we looks and capital appropriate and still a and liquidity. make an see and going really pipeline raising, being And the be have looking That like of of it I to our as we what sure then kind the see of strong just build at do right really do mean as kind said, that’s basis. forward market

Bryan Maher

level? guys can of borrow attractive And seeing you that any kind you are at where to changes not

Chris Masterson

It’s borrowing been a perspective. from consistent pretty

Bryan Maher

for Great. Thanks. That’s all me.

Jim Nelson

Thanks, Bryan.

Operator

Gorman comes go Please The ahead. BTIG. Michael next question from from

Michael Gorman

Good afternoon. Thanks.

Jim Nelson

afternoon good Gorman, you. to Mr.

Michael Gorman

seemed industrial potential some where of If I is a be assets of acquisitions? aggressive there spread embedded were curious you and like quite FedEx? recycling, the top the you when internal of given could in would looked for talked and the rates, at the there especially the base, kind can to are trade of like point, saw internally? I maybe with you at there this days stick value cap being your as tenant discussions guys your market kind we what current raise some to couple rate just with of source kind potential new acquisitions pretty some a having, given way of in tenant you if that do pretty the It obviously, seems a significant recycling, those you taking am cap a capital Have space capital equity? of be just Have to past about bit

Jim Nelson

that we to always all look Well, are at available different of opportunities us. the

very, a very We have well portfolio. performing

collecting you it. need we we and source rents, XXX% as occupied, our know, of the to have ability XX.X% As do capital

at we So, appropriately. do we the look respond opportunities and

I So, that or the happy are very It want properties sell we well. but have. say to we with we we very, don’t portfolio won’t, performs will

owning We are dividends properties that I in And of and our we paying think the very business do to very, shareholders. well.

Michael Gorman

a add, set of if and but back your a No, you could pretty a monetize value was new over for that’s put I more I sure. it thinking X, XX FedEx point. take into acquisition at good

lot Second office, question the is on there go the other side of on well. business, we have seen a as

talking front and net seeing minute got a about dispose front have in on competitors other to looking acquisition are You income office portfolios, their you’ve office what maybe pure-play, spend realty spinning office on well? on off REIT, you a competitive of lease of another to maybe environment couple just got product the a a as

Jim Nelson

with cities, very at look carefully continuous that good are Well, them something a we position in we own, a markets, which with again asking look being you this fortunately, the secondary bodes do or if And us very that properties the people out moving we in have we available basis. some is get we in very if on at that office inbound and buildings – for available. cases, well space calls of

anything reduce people our they or a markets, from looking going office, of Secondly, offices to is lot – home any work, strongly COVID everybody in haven’t going to is drive particularly are away. of that mostly really we tenants and going the they space. And back buildings really we people the the that are not where go type to don’t own, risk we stay to secondary the feel to heard hardly office

up, lot we we it have all own with and wrap what for very concerns are we a going forward to of portfolio. comfortable our don’t office So, particular

Michael Gorman

Great. That’s it. appreciate Jim. I helpful,

Operator

Ladenburg [Operator question Massocca Instructions] Next go from comes ahead. Please from John Thalmann.

John Massocca

afternoon. Good

Jim Nelson

Hey, John.

Chris Masterson

John. Hey,

John Massocca

what you you just remarks, sorry refinancing I around can I In language was? the some prepared that transaction. of mentioned clarify you McLaren most missed am that

Chris Masterson

Sure.

annually X the that within a refinance down. credit current step we and debt will our McLaren rating, first achieves will transaction, rents the then pay years if So McLaren also the of higher

John Massocca

that guess, I And is what down? step

Chris Masterson

effectively, will So step down. it

return. X% So on we have cash almost an still approximately cash

John Massocca

If there step because so it’s just – a is the….

Chris Masterson

Correct.

John Massocca

Okay, okay.

Chris Masterson

Yes, okay.

John Massocca

No, you ahead. go

wanted to interrupted – I I you. if if Sorry

Jim Nelson

No, ahead. well. ahead. no, it go covered Go Chris

John Massocca

think are I market office little out your having normal, playing broadly geography? pre-pandemic utilization, is where a you terms maybe conversations of mentioned to on your your kind have speaking some but view people in if in bigger you a of mean, office, return And kind I that are of of mean, Okay. you you maybe a with portfolio assets that seeing that’s tenants bit terms picture I quicker just particularly in of are back what seen UK in in of there,

Jim Nelson

Well, pretty couple have they last UK. They really is a performing quarterly, COVID, long. the we year properties have much paying where of a rather than portfolio deferrals of a monthly, And types year different wasn’t problem And extremely in well. of performed paid in extremely the during which well did lot UK they us. we XXX% for paying all our

John Massocca

Okay. you Shaw the the contract you two two Hawkins I mentioned? these mentioned the where LOI. under I leasing [ph] mispronounced are mean, potential sorry or the re-leasings re-leasing some the under of if Development And as lease transactions, then and some trending this, that’s are expansion portfolio, extension the rents and am I within these with ones

Jim Nelson

the lease look We we two these have renewals. look there is look when Well, to at time. increases at things that at you over

X% makes to up years, or free another slight it XX of it or then have X% couple difference. the X certainly months you for and the this a of going year anywhere them give bump you a if rent front at So, got up a

picture. we look at So, the big

improvements. to bit of do little tenant have we Sometimes a will

of in a overall have the transactions ask couple in favorable Sometimes for long-term. been for free they rent, months general, will us but the

John Massocca

Okay. properties And or reminder? two assets a the as industrial are those you mentioned office

Jim Nelson

you what Shaw What, know, offhand is? Chris,

Chris Masterson

believe I Shaw is industrial.

Jim Nelson

also. And is I [ph] think industrial Ocean

John Massocca

Ocean, did mispronounce sorry, I horribly that.

Jim Nelson

okay. It’s

John Massocca

That very is it both you for much. me. Thank

Jim Nelson

Alright. Thanks, John.

Chris Masterson

John. Thanks,

Operator

would to Nelson more concludes are the turn over questions question-and-answer I queue. like in any conference remarks. There session. James This no closing for our the back to

Jim Nelson

you, for participation we we to your the And today do Thank GNL. everybody with that operator, with joining thank would close can us call. operator. again continued appreciate I Thank like you. and

Operator

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

disconnect. now may You

Global Net Lease (GNL) 6 May 212021 Q1 Earnings call transcript