Q4 2023 Global Net Lease Inc Earnings Call

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Operator: Good morning, everyone, and welcome to Global Net Lease Inc.'s Q4 2023 Earnings All participants will be in a listen-only mode. Should you need assistance, please say no to a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. If you are asked a question, you may press star and then 1 on your touch-down phone.

Good morning, everyone and welcome to the Global net lease Inc. Q4, 2023 earnings call.

All participants will be in a listen only mode.

If you need assistance. Please signal a conference specialist by pressing the Starkey followed by zero.

After todays presentation, there will be an opportunity to ask questions.

I ask a question you May press Star and then one on your Touchtone phone to withdraw your question you May press Star and two.

Operator: For all your questions, you may press star and. Please also note today's event is being recorded. Next time, I'd like to turn the floor over to Jordyn Schoenfeld of Global Net Lease. Please go ahead, sir.

Please also note today's event is being recorded at this time I'd like to turn the floor over to Jordan Schoenfeld of global net lease we.

Please go ahead Sir.

Jordyn Schoenfeld: Thank you. Good afternoon, everyone, and thank you for joining us for G&L's fourth quarter 2023 earnings call. Joining me today on the call are Mike Weil and Jim Nelson, G&L's Co-Chief Executive Officers, and Chris Masterson, G&L's Chief Financial Officer. The following information contains forward-looking statements, which are subject to risk and uncertainty. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statement.

Thank you.

Good afternoon, everyone and thank you for joining us for Gnl's fourth quarter 2023 earnings call.

Joining me today on the call are Mike Weil, and Jim Nelson Gnl's co Chief Executive officers, and Chris Masterson, Gnl's Chief Financial Officer.

The following information contains forward looking statements, which are subject to risks and uncertainties.

One or more of these risks or uncertainties materialize actual results may differ materially from those expressed or implied by the forward looking statements. We refer all of you to our SEC filings, including the Form 10-K, and our periodic and current reports filed with the SEC. After that date for a more detailed discussion of the risk factors that could cause these.

Jordyn Schoenfeld: We refer all of you to our SEC filings, including the Form 10-K, and our periodic and current reports filed with the SEC after that date for more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, G&L disclaims any intent or obligation to update or revise these forward-looking statements except as required by law. Any guidance or statements referring to our pipeline or the future value of an investment in G&L, including any adjustments giving effect to the recently completed merger with Necessity Retail REIT, Inc., also known as RTL, and the internalization of both G&L's and RTL's advisory and property management functions, as well as any projections about future success following the merger and internalization, are also forward-looking statements. Also, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating a company's financial performance.

Yes.

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

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

Any guidance or statements, referring to our pipeline, where the future value of an investment in GNL, including any adjustments, giving effect to the recent the completed merger with necessity retail REIT incorporated also known as RTL and the internalization of both Gnl's and RTL advisory and property management functions as well as any projections about future.

Following the merger and internalization are also forward looking statements also during today's call. We will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with.

Jordyn Schoenfeld: These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable gap measure is available in our earnings release and supplement, which are posted to our website. Please note that we do not provide guidance on netting.

Yeah.

A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release and supplement which are posted to our website. Please note that we do not provide guidance on net income we only provide guidance on <unk> per share and our net debt to adjusted EBITDA ratio and do not provide reconciliations of this forward looking.

Michael Weil: We only provide guidance on AFSO per share and our net debt to adjusted EBITDA ratio and do not provide reconciliations of this forward-looking, non-GAAP guidance to net income per share or our debt to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliations as a result of their unknown effect, timing, and potential significance. Examples of such items include impairments of assets, gains and losses from the sale of assets, and depreciation and amortization from new acquisitions and other non-recurring expenses. Please also refer to our earnings release for more information about what we consider to be implied investment rate tenants, a term we will use throughout today's call. I'll now turn the call over to our co-CEO, Mike Weil. Mike?

non-GAAP guidance for net income per share for our debt to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliation as a result of their unknown effect timing and potential significance.

Examples of such items include impairments of assets gains and losses from sale of assets and depreciation and amortization from new acquisitions and other nonrecurring expenses. Please also refer to our earnings release for more information about what we consider to be implied investment grade tenants a term we will use throughout today's call.

I'll now turn the call over to our co CEO, Mike what Mike.

Michael Weil: Thanks Jordyn, good morning, and thank you all for joining us today. G&L is now the third largest publicly traded net lease company with a global presence and features a diversified portfolio of high quality, primarily investment grade tenants. G&L's focus on investment grade tenants as compared to our peers highlights the stability and high quality of our rental income. The largest tenant in the portfolio only accounts for 3.1% of the total straight-line rent, with the top 10 tenants totaling just 21% of the portfolio, effectively mitigating concentration risk within the portfolio.

Thanks, Jordan good morning, and thank you all for joining us today.

<unk> is now the third largest publicly traded net lease REIT with a global presence and features a diversified portfolio of high quality, primarily investment grade tenants.

Gnl's focus on investment grade tenants as compared to our peers highlights the stability and high quality of our rental income.

The largest tenant in the portfolio only accounts for 3.1% of the total straight line rent with the top 10 tenants totaling just 21% of the portfolio effectively mitigating concentration risk within the portfolio.

Michael Weil: We believe our diverse portfolio provides us with the flexibility and capacity to capitalize on numerous market opportunities, maximizing shareholder value over the long term. 2023 was a transformative year for GNL that included the internalization of management and enhanced corporate governance, further aligning E&L with its net lease peers. In addition to the merger and internalization, 2023 also highlighted G&L's strong asset management platform capabilities with continued leasing momentum. As a direct result of the merger, G&L has also recognized significant synergies as outlined in our investor deck, and we're currently on track to achieve our stated $75 million of annualized cost savings by the third quarter of 2024. G&L is implementing a 2024 business plan focused on deleveraging its balance sheet, reducing its exposure to variable rate debt, and driving down its net debt to adjusted EBITDA.

We believe our diverse portfolio provides us with the flexibility and capacity to capitalize on numerous market opportunities maximizing shareholder value over the long term.

2023 was a transformative year for GNL that included the internalization of management and enhanced corporate governance.

They're aligning P&L with its net lease peers. In addition to the merger and Internalization 2023 also highlighted GNL strong asset management platform capabilities with continued leasing momentum as a direct result of the merger GNL has also recognized significant synergies.

Outlined in our Investor deck, and we're currently on track to achieve our stated $75 million of annualized cost savings by the third quarter of 2024.

GNL is implementing a 2024 business plan focused on deleveraging its balance sheet, reducing its exposure to variable rate debt and driving down its net debt to adjusted EBITDA, our near term strategic priority, we will focus on reducing leverage through select dispositions prioritizing noncore asset.

Michael Weil: Our near-term strategic priority will focus on reducing leverage through select dispositions, prioritizing non-core assets, and opportunistic sales. We've strategically reviewed our portfolio and identified assets where we believe there is a beneficial opportunity to divest. This includes assets that are non-core or have near-term debt maturities or near-term lease expiration. We expect a total of $400 million to $600 million of strategic dispositions in 2024. This disposition program will drive long-term shareholder value by generating cash to enhance and de-risk our balance sheet and creating a clear path forward for us to potentially narrow the trading discount compared to our net lease peers. Selling assets at attractive cap rates will also provide proof of value to investors and demonstrate a significant premium compared to where the company is currently trading on an implied cap rate basis.

It's an opportunistic sales.

We strategically reviewed our portfolio and identified assets, where we believe there is beneficial opportunity to divest.

This includes assets that are noncore or have near term debt maturities for near term lease expirations, we expect a total of $400 million to $600 million of strategic dispositions in 2020 for.

This disposition program will drive long term shareholder value by generating cash to enhance and derisk, our balance sheet and create a clear path forward for us to potentially narrow the trading discount compared to our net lease peers.

Selling assets at attractive cap rates will also provide proof of value to investors and demonstrate a significant premium compared to where the company is currently trading on an implied cap rate basis.

Michael Weil: Driving down leverage through measured opportunistic dispositions is the proper approach to maximize long-term shareholder value, with proceeds used to lower our net debt to adjusted EBITDA. Our near-term strategic approach also involves a planned reduction of G&L's annual dividend from $1.42 to $1.10 per share, increasing the amount of annualized cash by $74 million to further reduce leverage. This reflects the company's continued commitment to strengthening its balance sheet while maintaining a disciplined dividend policy. Turning to our portfolio, at year-end 2023, we had approximately 1,300 properties spanning nearly 67 million square feet with a gross asset value of $9.2 billion. The diverse composition of our net lease portfolio is unmatched, whether measured by geography, asset type, tenant, or industry, and positions G&L to effectively navigate external macro challenges as we move ahead. The portfolio maintained an occupancy of 96% with a weighted average remaining lease term of 6.8 years. Geographically, 80% of our straight line rent is earned in North America, while 20% comes from Europe.

Moving down leverage through measured opportunistic dispositions is the proper approach to maximize long term shareholder value with proceeds used to lower our net debt to adjusted EBITDA.

Our near term strategic approach also involves a planned reduction of Gnl's annual dividend from $1 42.

The $1.10 per share increasing the amount of annualized cash by $74 million to further reduce leverage. This reflects the company's continued commitment to strengthening its balance sheet, while maintaining a discipline dividend policy.

Turning to our portfolio at year end 2023, we had approximately 1300 properties spanning nearly 67 million square feet with a gross asset value of $9 2 billion.

The diverse composition of our net lease portfolio is unmatched whether measured by geography asset type tenant or industry and positions GNL to effectively navigate external macro challenges as we move ahead.

Portfolio maintained occupancy of 96% with a weighted average remaining lease term of six eight years.

Geographically, 80% of our straight line rent is earned in North America, while 20% comes from Europe.

Michael Weil: The portfolio also features a stable tenant base and a high quality of earnings, with an industry-leading 58% of tenants receiving an investment grade or implied investment grade credit rating. From a growth perspective, the portfolio includes an average annual contractual rental increase of 1.3%. I'm again highlighting the strong asset management capabilities we demonstrated as we continue our leasing and renewal efforts. In particular, our fourth quarter leasing and renewal activities included over 2.1 million square feet across the entire portfolio, with attractive leasing spreads on renewals that were 6% higher than the expiring rent. New leases that were completed in the fourth quarter of 2023 have a weighted average lease term of 9.2 years, while the renewals that were completed in the fourth quarter of 2023 have a weighted average lease term of 6.1 years.

The portfolio also features a stable tenant base and a high quality of earnings with an industry, leading 58% of tenants receiving an investment grade or implied investment grade credit rating.

From a growth perspective, the portfolio includes an average annual contractual rental increase of one 3%.

I'm again, highlighting the strong asset management capabilities, we demonstrated as we continue our leasing and renewal efforts in.

In particular, our fourth quarter leasing and renewal activities included over $2 1 million square feet across the entire portfolio with attractive leasing spreads on renewals that were 6% higher than the expiring rents.

New leases that were completed in the fourth quarter of 2023 have a weighted average lease term of nine two years, while the renewals that were completed in the fourth quarter of 2023 have a weighted average lease term of six one years.

Michael Weil: The largest segment of our portfolio is industrial and distribution, with 219 properties that span over 33.9 million square feet that contributed $235 million to annualized straight line rent. 92% of the leases in this portfolio include rent escalations with an average annual rental increase of 1.5%, positioning the portfolio to benefit from annual rental income while having a 7.7 year weighted average lease term. Our single tenant retail segment is the largest by property count with 878 properties that span over 7.9 million square feet and contributed $154 million to annualized straight line rent. The single tenant retail segment comprises 66% investment grade or implied investment grade rated tenants and features an 8.3 year weighted average lease term. The multi-tenant suburban retail segment consists of 109 properties that span over 16.4 million square feet and contributed $200 million in annualized straight line rent.

The largest segment of our portfolio is industrial and distribution with 219 properties that span over $33 9 million square feet, the contributed $235 million to annualized straight line rent.

92% of the leases in this portfolio include rent Escalations with an average annual rental increase of 1.5% positioning the portfolio to benefit from annual rental income, while having a 7.7 year weighted average lease term.

Our single tenant retail segment is the largest by property count with 878 properties that span over $7 9 million square feet and contributed $154 million to annualized straight line rent.

The single tenant retail segment comprises 66% investment grade or implied investment grade rated tenants and features an $8 three year weighted average lease term.

The multi tenant suburban retail segment consists of 109 properties that span over $16 4 million square feet. They contributed $200 million in annualized straight line rent.

The portfolio has a weighted average remaining lease term of five two years and includes 21% of grocery anchored centers, which are 90% leased.

Michael Weil: The portfolio has a weighted average remaining lease term of 5.2 years and includes 21% of grocery-anchored centers which are 90% leased. This segment is predominantly comprised of triple net leases with incremental lease up potential and an attractive leasing spread. Additionally, 61% of the straight line rent in this portfolio comes from Sunbelt markets, which continue to grow and have favorable demographic tailwinds. Our smallest segment by straight line rent, single-tenant office, includes 90 properties that span 8.6 million square feet and contributed $143 million to annualized straight line rent and has a five-year weighted average lease term.

This segment is predominantly comprised of triple net leases with incremental lease up potential and attractive leasing spreads.

Additionally, 61% of the straight line rent in this portfolio comes from Sun belt markets, which continue to grow and have favorable demographic tailwind.

Our smallest segment by straight line rent single tenant office includes 90 properties that span $8 6 million square feet and contributed $143 million to annualized straight line rent and has a five year weighted average lease term.

One of the metrics that differentiates GNL single tenant office portfolio is that it's comprised of 70% mission critical facilities, which we define as headquarters lab or R&D facilities and feature 68% investment grade or implied investment grade tenants, which we believe provides our portfolio.

Michael Weil: One of the metrics that differentiates G&L's single-tenant office portfolio is that it's comprised of 70% mission-critical facilities, which we define as headquarters, lab, or R&D facilities, and features 68% investment-grade or implied investment-grade tenants, which we believe provides our portfolio with rent stability and a low level of default risk. Given G&L's successful track record of lease renewals, the single-tenant office segment also A fundamental aspect of our comprehensive portfolio strategy involves limiting concentration risk. The combined annual straight line rent from our top ten tenants amounts to only 21% of our overall portfolio, with our largest tenant contributing just 3.1%. Our approach to mitigating concentration risk also extends to every segment of our portfolio, ensuring diversity among the top five tenants within each segment, which we have highlighted in the investor deck. This diversified and investment-grade tenant base not only ensures stability but also offers predictability in rental income, laying a solid foundation for our future growth. The quality and reliability of our tenants underscore the resilience and longevity of our business model.

Leo with rents stability and low level of default risk.

Given GNL successful track record of lease renewals. The single tenant office segment also includes limited near term lease maturities minimizing the risk of vacancy.

A fundamental aspect of our comprehensive portfolio strategy involves limiting concentration risk there.

Combined annual straight line rent from our top 10 tenants amounts to only 21% of our overall portfolio with our largest tenant contributing just three 1%.

Our approach to mitigating concentration risks also extends to every segment of our portfolio ensuring diversity among the top five tenants within each segment.

Which we have highlighted in the investor deck.

This diversified and investment grade tenant base not only ensures stability, but also offers predictability and rental income.

Laying a solid foundation for our future growth.

Quality and reliability of our tenants underscore the resilience and longevity of our business model.

Our leasing results continue to illustrate the quality of our assets driving leasing rates higher even in the current environment.

The single tenant segment completed 16, new leases and renewals and showcase the positive 8% renewal leasing spread demonstrating the strong renewal demand for our mission critical assets, while adding nearly $9 million to net straight line rent.

The multi tenant segment completed 54, new leases and renewals, resulting in a 2% renewal spread.

Michael Weil: Our leasing results continue to illustrate the quality of our assets, driving leasing rates higher even in the current environment. The single tenant segment completed 16 new leases and renewals and showcased a positive 8% renewal leasing spread, demonstrating the strong renewal demand for our mission-critical assets while adding nearly $9 million to net straight-line rent. The multi-tenant segment completed 54 new leases and renewals, resulting in a 2% renewal spread consistent with the high demand we're experiencing at our suburban shopping centers, which increased net straight-line rent by over $10.5 million. New leases that were completed in the fourth quarter of 2023 have a weighted average lease term of 9.2 years, while the renewals that were completed in the fourth quarter of 2023 have a weighted average lease term of 6.1 years.

<unk> with the high demand, we're experiencing at our suburban shopping centers, which increased net straight line rent by over $10 $5 million.

New leases that were completed in the fourth quarter of 2023 have a weighted average lease term of 9.2 years, while the renewals that were completed in the fourth quarter of 2023 have a weighted average lease term of six one years.

Our executed leases at the end of the fourth quarter twenty-three combined with our leasing pipeline as of February 15, 2024 will bring occupancy in our multi tenant portfolio from 88% to 91%.

To put that in perspective, the multi tenant portfolio represents only 27% of total straight line rent in our portfolio and Gnl's overall portfolio occupancy stands at 96%.

Michael Weil: Our executed leases at the end of the fourth quarter 23 combined with our leasing pipeline as of February 15, 2024, will bring occupancy in our multi-tenant portfolio from 88% to 91%. To put that in perspective, the multi-tenant portfolio represents only 27% of total straight line rent in our portfolio, and G&L's overall portfolio occupancy stands at 96%. The fourth quarter of 2023 highlighted our commitment to expanding relationships with existing tenants, including new leases and renewals with Burlington, HEB Grocery, and Dick's Sporting Goods. Looking ahead, we remain committed to executing on our systematic and prudent approach to achieving our financial objectives, which revolve around reducing net debt to adjust to DBDA, while organically enhancing NOI through lease-up initiatives and contractual rent growth. A pivotal component of this strategy involves non-core dispositions and opportunistic sales, which should provide us with capital to deleverage our balance sheet. We believe this strategy will pave the way to reducing the valuation gap with our net lease peers. I'll turn the call over to Chris to walk through the financial results in more detail. Thanks, Mike.

The fourth quarter, 2023 highlighted our commitment to expanding relationships with existing tenants, including new leases and renewals with Burlington, HEB grocery and Dick's sporting goods.

Looking ahead, we remain committed to executing on our systematic and prudent approach to achieving our financial objectives, which revolve around reducing net debt to adjusted EBITDA, while organically enhancing NOI through lease up initiatives and contractual rent growth.

Pivotal component of this strategy involves non core dispositions and opportunistic sales, which should provide us with capital to deleverage our balance sheet.

We believe this strategy will pave the way to reducing the valuation gap with our net lease peers.

I'll turn the call over to Chris to walk through the financial results in more detail.

Thanks, Mike typically we wouldnt provide year over year financial comparisons however that would not be meaningful at this time, given the recent merger and internalization.

Going forward, we will begin comparing to prior quarters until Q4 2024, when we'll have a full year of emerge and internalized GNL.

For the fourth quarter 2023, we recorded revenue of $206 7 million and a net loss attributable to common stockholders of $59 5 million.

<unk> was $48 3 million or 21 cents per share.

File was $71 7 million or 31 cents per share.

Christopher J. Masterson: Typically, we would provide year over year financial comparisons. However, that would not be meaningful at this time, given the recent merger and internal changes. Going forward, we'll begin comparing to prior quarters until Q4 2024, when we will have a full year of emerged and internalized GNR. For the fourth quarter 2023, we recorded revenue of $206.7 million and a net loss attributable to common stockholders of $59.5. Core FFO was $48.3 million, or $0.21 per share, and AFFO was $71.7 million, or $0.31 per share. In Q4 2023, we incurred an elevated $5.5 million European income tax expense in the quarter, and $2.3 million one-time write-offs, primarily related to We have completed a European tax restructure that we expect will reduce the company's income tax expense beginning in Q1 2020. As always, a reconciliation of gap net income to the non-gap measures can be found in our earnings release, which is posted on our website.

In Q4 of 2023, we incurred an elevated $5 5 million dollar European income tax expense in the quarter and $2 3 million one time write offs primarily related to reimbursements.

We have completed a European tax restructuring that we expect will reduce the company's income tax expense beginning in Q1 2024.

As always a reconciliation of GAAP net income to the non-GAAP measures can be found in our earnings release, which is posted on our website.

Looking at our balance sheet, it's worth noting that while only 20% of our debt is subject to variable rates. The current sustained high interest rate environment does have a temporary effect on the portion of our debt that is fixed or swapped.

To mitigate this we seek to reduce our exposure to variable rate debt as we move through the year.

As part of our strategy to address 2024 debt maturities and subsequent to the fourth quarter, we completed an $80 million refinancing agreement with Nordea bank secured by multiple properties in Finland that extended debt maturities of these assets to 2029 out of four 6% interest rate.

She now has a plan to address the remaining 2024 debt maturities through dispositions refinancings and availability on the credit facility.

We will continue to drive 2025, and charities and anticipate that the second half of 'twenty 'twenty four will present, a more favorable environment forget maturities beyond 2024, but we remain confident in our ability to refinance these assets.

Our net debt to adjusted EBITDA ratio was eight four times.

We ended the quarter with net debt of $5 3 billion at a weighted average interest rate of four 8% and had liquidity of approximately $135 7 million and $206 million of capacity on the tax line.

Christopher J. Masterson: Looking at our balance sheet, it's worth noting that while only 20% of our debt is subject to variable rates, the current sustained high interest rate environment does have a temporary effect on the portion of our debt that isn't fixed or square. To mitigate this, we seek to reduce our exposure to variable rate debt as we move through the year. As part of our strategy to address 2024 debt maturities, and subsequent to the fourth quarter, we completed an $80 million refinancing agreement with Nordea Bank, secured by multiple properties in Finland that extended debt maturities of these assets to 2029 at a 4.6% interest rate. G&L has a plan to address the remaining 2024 debt maturities through disposition, refinancing, and availability on the credit card.

The weighted average maturity at the end of the fourth quarter 2023.

<unk> 3.2 years with minimal debt maturity due in 2024.

Our that comprises 1 billion in senior notes $1 7 billion on the multi currency revolving credit facility and $2 7 billion of outstanding gross mortgage debt.

Our debt was 80% fixed rate, which includes floating rate debt with in place interest rate swaps and.

And our interest coverage ratio was two four times.

As of December 31, 2023, we had approximately $230 9 million common shares outstanding.

On a weighted average basis, there are approximately $230 3 million shares outstanding during the fourth quarter of 2023.

Lastly, it is our objective to provide investors with enhanced transparency regarding our financial goals and projections and therefore, we would like to introduce initial 2024 guidance today with an <unk> per share guidance range of $1 $32 40 times and a net debt to adjusted EBITDA range of $7 four.

Christopher J. Masterson: We will continue to address the 2025 maturities and anticipate that the second half of 2024 will present a more favorable environment for debt maturities beyond 2024, but we remain confident in our ability to refinance these assets. Our net sales to adjusted EBITDA ratio was 8.5. We ended the quarter with net debt of $5.3 billion at a weighted average interest rate of $4.8 billion, and we have liquidity of approximately $135.7 million and $206 million of capacity. The weighted average maturity at the end of the fourth quarter 2023 was 3.2 years with minimal debt maturity due in 2020. Our debt comprises $1 billion in senior notes, $1.7 billion on the multi-currency revolving credit facility, and $2.7 billion of outstanding gross mortgage. Our debt is 80% fixed rate, which includes floating rate debt with in place interest rate swaps, and our interest coverage ratio was 2.4. As of December 31, 2023, we had approximately 230.9 million common shares outstanding. On a weighted average basis, there were approximately 230.3 million shares outstanding during the fourth quarter of 2020.

Times to seven eight times.

The initial guidance reflects our assumption mentioned earlier that our projected 2024 dispositions will be in the range of $400 million to $600 million.

A majority of these dispositions will come from occupied opportunistic sales, where we anticipate achieving a cash cap rate between 7% any per cent.

I'll now turn the call back to Mike for some closing remarks.

Thanks, Chris.

Before I conclude I'd like to express my gratitude to Jim Nelson, President and co CEO of GNL for all of his hard work and contributions during his time at the company is a great friend and partner and on behalf of the entire company, we extend our best wishes for a well deserved an enjoyable retirement.

We take great pride in our achievements that GNL throughout 2023.

With the merger and internalization behind US we remain focused on positioning ourselves as an industry leader with a global diversified and investment grade portfolio.

We want to reiterate that we strongly believe that the best path forward for GNL is reducing leverage through noncore and strategic dispositions to enhance our balance sheet as we aim to lower our cost of capital to position the company for future growth.

Our planned dividend reduction is expected to increase the amount of annualized cash by $74 million to further reduce leverage. Additionally.

Additionally, disposing of assets at a premium to our current assumed implied cap rate will provide investors with proof of value of our leading investment grade worthy portfolio.

Christopher J. Masterson: Lastly, it is our objective to provide investors with enhanced transparency regarding our financial goals and projections. And therefore, we would like to introduce initial 2024 guidance today with an AFFO per share guidance range of $1.30 to $1.40, and NetGap to adjust the EBITDA range of 7.4x to 7.8x. The initial guidance reflects our assumption, mentioned earlier, that our projected 2024 dispositions will be in the range of $400 million to $600 million. The majority of these positions will come from occupied opportunistic sales, where we anticipate achieving a cash cap rate between 7% and 8%. I'll now turn the call back to Mike for some closing. Thanks, Chris.

As we've taken a conservative approach or strategy for deleveraging is designed to be earnings neutral with the expectation that our net debt to adjusted EBITDA will decrease by approximately one full turn.

Applying a reasonable and achievable 10 times <unk> multiple to our per share guidance, the implied stock price exceeds $13 per share $20 per share range. If we trade to the high end of the sector at a 15 times <unk> multiple.

This outlook aligns with our goal of narrowing the trading discount and we believe these strategic initiatives will position GNL for future success that maximizes shareholder value as always we're available to answer any questions. You may have on this quarter after the call.

Michael Weil: Before I conclude, I'd like to express my gratitude to Jim Nelson, the President and Co-CEO of G&L, for all of his hard work and contributions during his time at the company. He's a great friend and partner, and on behalf of the entire company, we extend our best wishes for a well-deserved and enjoyable retirement. We take great pride in our achievements at G&L throughout 2023. With the merger and internalization behind us, we remain focused on positioning ourselves as an industry leader with a global diversified and investment grade portfolio. We want to reiterate that we strongly believe that the best path forward for G&L is reducing leverage through non-core and strategic dispositions to enhance our balance sheet as we aim to lower our cost of capital to position the company for future growth. Our planned dividend reduction is expected to increase the amount of annualized cash by $74 million to further reduce leverage.

Operator, please open the line for questions.

Ladies and gentlemen at this time, we'll begin the question and answer session.

To ask a question you May press Star and then one on your Touchtone telephone. If you are using a speaker phone. We do ask that you. Please pick up your handset prior to pressing the keys.

So like draw. Your question you May press Star two.

Once again that is star and then one to join the question queue.

Pause momentarily to assemble the roster.

Okay.

And our first question today comes from John Kim from BMO Capital markets. Please go ahead with your question.

Thank you and good morning.

Wanted to ask about the guidance for this year.

Realize theres a lot of moving parts and dispositions.

As well as some one time items, but I thought it would have been higher if you included some of the G&A synergies that you expect to realize this year.

Occupancy for a multi tenant retail portfolio and potentially lower interest rates. So just wanted to see what other parts of our offsetting that potential right.

Right.

Yeah, well thanks John.

The $1 30 to $1 40 is.

The guidance range that based on what we know today based on the dispositions that we talked about the occupancy et cetera, all of the things that you've talked about.

Operator: Additionally, disposing of assets at a premium to our current assumed implied cap rate will provide investors with proof of value for our leading investment grade worthy portfolio. As we've taken a conservative approach, our strategy for deleveraging is designed to be earnings-neutral, with the expectation that our net debt to adjusted EBITDA will decrease by approximately one full turn. By applying a reasonable and achievable 10 times AFFO multiple to our per share guidance, the implied stock price exceeds $13 per share. The $20 per share range if we trade to the high end of the sector at a 15 times AFFO multiplier. This outlook aligns with our goal of narrowing the trading discount, and we believe these strategic initiatives will position G&L for future success that maximizes shareholder value.

We've taken a.

What I believe is now.

Kind of common view, but a conservative view regarding interest rate reduction I think in the end of the year 'twenty three there was a lot more anticipation of many deeper cuts.

And I'm not sure when they will be coming.

What the size and frequency of them will be and we didn't want to build.

A expectation around the unknown.

This guidance is.

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We are very clear on being able to execute on and if environmental or economic environment does change to the positive with interest rates.

Later in the year, if it requires us to revise our guidance, we can but we're a first time issuer of guidance and we think that it's important we're not overly conservative but we believe were very accurate and this is where we will execute.

Operator: As always, we're available to answer any questions you may have about this quarter after the call. Operator, please open the line for questions. Ladies and gentlemen, at this time, we'll begin the question and answer session. To ask a question, you may press star and then one on your touch-tone telephone. If you are using a speakerphone, we do ask that you please pick up your handset prior to pressing the key.

In 2004.

Okay, and then maybe specifically on the dispositions how much mortgage debt is associated.

Associated with those assets and if you could provide a like a blended.

John P. Kim: To withdraw your questions, you may press Stand and then one to join the question queue. We'll pause momentarily to assemble the roster. And our first question today comes from John Kim from BMO Capital Markets. Please go ahead with your question. Thank you. Good morning.

Cap rate on dispositions, including the non income producing assets.

Well the non income producing assets. This portfolio has always had a small portion of.

Assets that we look to dispose of whether it's because of a non renewal or or whatever the case may be hard to put a cap rate on those is as they don't generate NOI again thats a small part of what we're looking at on dispositions, the the $400 million to $600 million.

Unknown Executive: I want to ask about ASO guidance for this year. I realize there are a lot of moving parts and dispositions, as well as some one-time items. But I thought it would have been higher if you included some of the G&A synergies that you expect to realize this year, higher occupancy from your multi-tenant retail portfolio, and, you know, potential lower interest rates. So just wanted to see what other parts are offsetting that potential growth. Well, thanks, John.

Our typical leverage in the portfolio on these assets is kind of in the 50% to 60% range so that will be the.

The leverage pay down.

As we achieve these dispositions.

Okay and my final question is on.

On your use of proceeds I realize you want to most likely reduce debt near term.

Unknown Executive: The $1.30 to $1.40 is, the guidance range that, based on what we know today, based on the dispositions that we talked about, the occupancy, etc., all the things that you've talked about, we've taken a view, which I believe is now in a kind of common view, but a conservative view regarding interest rate reduction. I think at the end of year 23, there was a lot more anticipation of many deeper cuts And I'm not sure when they will be coming, what their size and frequency will be, and we didn't want to build an expectation around the unknown.

Your leverage down.

But you do have a share repurchase program. Your stock is trading north of 10% implied cap rate where does.

Sure it's fit in as far as a potential use of proceeds.

Yes, as we've released 2024 initial guidance that we have not.

Included a stock buyback announcement in that guidance. It is something that is available to us.

Unknown Executive: This guidance is what we are very clear on being able to execute on. And if the economic or environmental environment does change to the positive with interest rates later in the year, if it requires us to revise our guidance, we can. But we're a first time issuer of guidance, and we think that it's important. We're not overly conservative, but we believe we're very accurate.

And something that the board can take into consideration.

But our 2024 initial guidance is as we've talked about.

We think.

Based on dispositions and cap rates is a.

A great opportunity for the company to bring down net debt to EBITDA.

And hit these <unk> per share guidance range.

Okay, great. Thank you.

Unknown Executive: And this is where we will execute in 24 hours. Okay, then maybe specifically on the dispositions, how much mortgage debt is associated with those assets? And if you could provide a like a blended Cap Rate on Dispositions, including the Non-Income Producing Assets. Well, this portfolio has always had a small portion of assets that we look to dispose of, whether it's because of a non-renewal or whatever the case may be. It is hard to put a cap rate on those as they don't generate NOI.

Alright, Thanks John.

Our next question comes from Bryan Mayer from B Riley. Please go ahead with your question.

Great Thanks, and good morning.

Just a couple from me.

Turning on the guidance for leverage getting down to seven 4% to seven eight times is that just kind of a year end 2024 initial goal.

Or is that where youre going to be comfortable staying longer term and if not where do you ultimately want to get too.

Thanks, Brian.

Yes that is a year end target $704 <unk> in the 2024 guidance as you as you point out that is not ultimately where we intend to drive net debt to adjusted EBITDA.

Unknown Executive: Again, that's a small part of what we're looking at on dispositions. The $400 million to $600 million, you know; our typical leverage in the portfolio on these assets is kind of in the 50% to 60% range. So that will be the leverage paydown as we achieve these dispositions. My final question is on... [inaudible] I want to most likely reduce that in the near term, get your leverage down. But you do have a share repurchase program, and your stock is trading north of 10% implied cap rate. Where does buying back shares sit as far as potential use of proceeds?

As I've said before.

Little bit of a longer process, but we wanted to make it very clear that the initial path of doing that through dispositions and.

<unk> in the past about thinking the ultimate net debt to EBITDA should be in the six times six five times range.

Yeah.

And when we look at the payout ratio on the new dividend I think youre at above 10, let's take the midpoint of your guidance 135. So that's about an 81% payout ratio is that where the board wants to kind of hang out or is that just an initial saw though and you want to go a little bit lower than that or should we just think about it.

Unknown Executive: Yeah, as we've released our 2024 initial guidance, we have not included a stock buyback announcement in that guidance. It is something that is available to us and something that the board can take into consideration. But our 2024 initial guidance, as we've talked about, we think, based on dispositions and cap rates, is a great opportunity for the company to bring down that debt to EBITDA and hit these AFFO per share guidance ranges. Okay, great.

80 give or take five.

I don't think there is any reason to expect.

Another announcement in 2024.

<unk> announcement of the $1 10 is where we believe.

This portfolio will trade at this level.

At $80 to 85% payout ratio.

Especially if you remember this portfolio was 58% investment grade.

So our quality of earnings is quite high and higher than others in the sector. So we are very comfortable we are at nearly 100% rent collection.

Unknown Executive: Thank you. All right, thanks, John. Our next question comes from Bryan Maher from B Reilly. Please go ahead with your question. That's great, thanks, and good morning. Just a couple for me this morning.

The portfolio is really performing well so.

You know the 80% to 85% range does feel like.

Bryan Anthony Maher: On the guidance for leverage getting down to 7.4 to 7.8 times, is that just kind of the year-end 2024 initial goal? Or is that where you're going to be comfortable staying longer term? And if not, where do you ultimately want to get?

Like where we intend to be.

Okay, and just last for me.

GNL is a bit unique with its exposure to Europe, and I know that that's dropped meaningfully with the merger down to about 20% or so but given its uniqueness and given that most of US on this call. You know don't really track European Real estate, you know day in day out can you give us any type of you know.

Unknown Executive: Thanks, Bryan. Yes, that is a year-end target, 7-4 to 7-8 in the 2024 guidance, as you point out. That is not ultimately where we intend to drive net debt-to-adjusted EBITDA. As I've said before, it's a little bit of a longer process, but we wanted to make it very clear that the initial path of doing that through dispositions. I've spoken in the past about thinking that ultimate net debt-to-EBITDA should be in the 6-6.5 times range. And then when we look at the payout ratio on the new dividend, I think you're at $1.10. Let's take the midpoint of your guidance, $1.35, so it's about an 81% payout ratio. Is that where the board wants to kind of hang out, or is that just an initial solvo, and you want to go a little bit lower than that? Or should we just think about it, you know, 80, give or take 5? I don't think there is any reason to expect it.

Broad strokes, what's going on over there have cap rates, you know increased over the past two to three quarters.

Outlook for dispositions in that market, just just a little bit more color on what's going on in Europe. Thank you.

Yeah, So obviously Europe.

Can't be painted in a single single brush.

So there the the part of Europe that we have always focused on has been a stable European market typically western Europe.

And tends to have similar traits to the to the U S market.

Especially when you think about the tenant.

Tenant names that consist of the 20% European exposure.

So yeah.

Some of our disposition targets are in Europe, and we are very active and getting strong indications, it's a little bit early to discuss in detail.

Unknown Executive: Another announcement in 2024. Today's announcement of the dollar 10 is where we believe this portfolio will trade at this level. And that 80 to 85% payout ratio is especially if you remember that this portfolio is 58% investment grade. So, our quality of earnings is quite high and higher than others in the sector. So, we are very comfortable. We are at nearly 100% rent collection. The portfolio is really performing well, so, you know, the 80 to 85% range does feel like where we intend to be. Okay, and just last for me.

But the buying market in Europe remains strong.

Cost of debt in parts of Europe is actually a little bit more attractive still then in the U S.

And our focus for 'twenty four I just want to reiterate is on the dispositions not on the acquisitions. So.

We have engaged local brokers that we have long relationships with on a few assets that we think meet the disclosed criteria as non core dispositions.

Unknown Executive: You know, GNL is a bit unique with its exposure to Europe, and I know that that's dropped meaningfully with the merger down to about 20% or so, but given its uniqueness and given that most of us on this call, you know, don't really track European real estate, day in, day out. Can you give us, you know, any type of, you know, broad strokes on what's going on over there, have cap rates, you know, increased over the past two to three quarters, outlook for dispositions in that market, just a little bit more color on what's going on in Europe. Thank you. Yeah, so obviously, Europe can't be painted with a single single brush.

And.

Our $400 million to $600 million really does focus on the retail and office.

<unk>.

And any maybe nearer term non strategic assets and some of them are in Europe and the market is active.

Okay. Thank you.

Thanks, Brian.

Our next question comes from Todd Thomas from Keybanc Capital markets. Please go ahead with your question.

Hi, Thank you.

Wanted to circle back to the <unk> guidance of $1 30 to $1 40.

It's about five to six cents per quarter lower than it seemed like you were anticipating when the merger was was initially announced can.

Unknown Executive: So the part of Europe that we have always focused on has been a stable European market, typically Western Europe, and tends to have similar traits to the US market, especially when you think about the tenant names that consist of the 20% European exposure. So, yeah. Some of our disposition targets are in Europe, and we are very active and getting strong indications. It's a little bit early to discuss in detail, but the buying market in Europe remains strong. The cost of debt in parts of Europe is actually a little bit more attractive still than in the US.

Can you provide a bridge and just help us understand some of the moving pieces.

To help us understand that.

The current quarterly <unk> run rate just relative to what was loosely discussed a couple.

A quarter ago.

Yeah. Thank you Todd.

The biggest.

Change from when the merger was announced to now is interest expense and it's up about $6 million per quarter.

Unknown Executive: And our focus for 24, I just wanna reiterate, is on the dispositions, not on the acquisitions. So we have engaged local brokers that we have long relationships with on a few assets that we think meet the disclosed criteria as non-core dispositions. Our 400 to 600 million really focus on retail and office, and maybe some near-term non-strategic assets, and some of them are in Europe, and the market is active. Okay, thank you.

<unk>.

We have calculated that in figured it in.

One of the goals of the guidance and disposition strategy is that we will be able to pay down some of that debt and drive those.

Drive that benefit into earnings.

As we have talked about are also there was.

Unknown Executive: Thanks, Bryan. Our next question comes from Todd Thomas from KeyBank Capital Markets. Please go ahead with your question. Hi, thank you.

Some movement in the European tax structure.

As far as the year end.

Charge.

Todd Michael Thomas: I wanted to circle back to the AFFO guidance of $1.30 to $1.40. You know, it's about five to six cents per quarter lower than it seemed like you were anticipating when the merger was initially announced. Can you provide a bridge and just help us understand some of the things we discussed a couple of quarters ago? Yeah, thank you, Todd.

And Chris and team and Chris can talk about this in a little bit more detail, but Chris and team have addressed that with a European tax restructuring that.

It was completed in the fourth quarter, and we will have immediate benefit.

In the first quarter.

So those are those are two of the biggest items. There was also an.

As far as in the fourth quarter.

Unknown Executive: You know, the biggest change from when the merger was announced to now is interest expense, and it's up about $6 million per quarter. We have calculated that in figured it in. One of the goals of the guidance and disposition strategy is that we will be able to pay down some of that debt and drive that benefit into earnings, as we have talked about. Also, there was some movement in the European tax structure.

The completion of some merger activity and what I'll call cleanup.

But the 2020 for full year guidance I think the.

The way, we're viewing interest expense.

<unk> is probably the biggest change.

Okay.

You know maybe maybe for Chris just you know.

Further discuss the guidance a little bit I mean, you seem to be on track for the G&A.

Unknown Executive: As far as the year-end Charge, and Chris and the team can talk about this in a little bit more detail, but Chris and the team have addressed that with a European tax restructuring that was completed in the fourth quarter and will have an immediate benefit in the first quarter. So those are two of the biggest items. There was also, as far as the fourth quarter is concerned, just the completion of some merger activity and what I'll call cleanup, but the 2024 full-year guidance, I think the way we're viewing interest expense is probably the biggest change. Okay, I guess, you know, maybe for Chris just to, you know, further discuss the guidance a little bit. I mean, you know, you seem to be on track for the GNA, you know, with the synergies that you've previously discussed, but. Transcripts provided by Transcription Outsourcing, LLC.

With the synergies that you've previously discussed but.

It sounds like interest expense is up I mean are you able to provide any additional ranges around either.

Straight line rent or or sort of cash NOI at yearend or is the cash interest expense that's embedded in the guidance.

I'm sure I guess, just the person star in terms of the synergies as you mentioned.

Fully on target to reach the $75 million.

Exceed that in terms of the overall synergies.

Our cash NOI.

I do want to mention it in the fourth quarter as Mike said, there was about $2 million.

Yep.

Type items coming only from negatively impacting the fourth quarter.

Christopher J. Masterson: Cash Interest Expense that's embedded in, I'm sure I guess just the person star in terms of the synergy, as you mentioned, we're fully on target to reach the $75 million and even exceed that in terms of the overall synergies. For Cash NLY, I do want to mention in the fourth quarter, as Mike said, there was about $2 million of sort of cleanup. [inaudible] first quarter, and then just in terms of the overall go forward, we obviously expect to be leasing up the multi-tenant properties and that. Pushy, you know.

The first quarter.

And then just in terms of the overall going forward.

We obviously expect to be leasing up at the multi tenant properties.

Pushy NOI.

Yeah.

Okay.

Alright, and then just curious with the.

Obviously the focus here is on dispositions, but I'm curious if investments are at all a consideration I you know in the past you've you've found deals at high single digit low double digit going in yields.

Unknown Executive: Okay. All right, and then just curious about the, you know, obviously, the focus here is on dispositions. But, you know, I'm curious if investments are at all a consideration. In the past, we found deals at Heisinger. Is there any consideration to either recycling proceeds from dispositions at all or not?

Any consideration to either recycling proceeds from dispositions at all or some of the additional retained earnings from the dividend reduction and the new investments at all in 'twenty four.

Todd I think the most important thing that we will do in 2024.

Todd Michael Thomas: Additional retained earnings from Todd, I think the most important thing that we will do in 2024 is lower net debt to EBITDA. And that is the focus of the company. And I think that as we drive our cost of capital to a more reasonable place, then we could look at potential acquisitions, but 2024 is really focused on dispositions and lowering net debt to EBITDA, and improving our cost of capital, and improving our trading multiples so that we have the ability to really take advantage of those types of acquisitions that we've always been able to generate. And we look forward to the future when we can do that. But right now, we understand and are committed to this plan and its results.

Is lower net debt to EBITDA and that is the focus of the company.

And I think the.

As we drive our cost of capital.

To a more reasonable place.

Then we could look at potential acquisitions, but 2024 is really focused on dispositions and lowering <unk>.

Net debt to EBITDA cost of capital and improving our trading multiple so that we have the ability to really take advantage of.

Those types of acquisitions that we've always been able to generate.

And we look forward to the future of where we can do that but.

But right now we understand and are committed to.

This plan and the results of it.

Todd Michael Thomas: Okay, just lastly, if I could, on the dividend reduction, can you just talk a little bit about the board's decision to, you know, reset the payout, you know, to that sort of 80% range and talk about the decision to reset at $1.10? You know, I'm just curious whether there was any consideration to reduce it further, you know, retain even more capital, which could, you know, help further leverage and improve your cost of capital. Who is that at all?

Okay, and just lastly, if I could on the on the dividend reduction can.

Can you just talk a little bit about the board's decision to reset the pay out.

To that sort of 80% range in and talk about the decision to reset at $1 10.

Just curious whether there was any consideration to reduce it further retain even more capital which could help further reduce.

Leverage and improve your cost of capital was was that at all a consideration.

Unknown Executive: Well, I can't really disclose too much about, you know, board discussions, as I know you can understand, but I won't restart that. Dividend policy is a top priority, and we understand the importance and the tough decision around making an announcement of a dividend cut. I think this low 80% payout ratio, as I said, based on the quality of the portfolio, the investment grade percentage, et cetera, is justified.

Well I can't really disclose too much about board.

Discussion as I know you can understand but.

Nobody.

Let me restart that.

Dividend policy is a top priority and we.

We understand.

<unk> and the tough decision around making an announcement of a dividend cut.

I think this low 80% payout ratio as I said based on the quality of the portfolio. The investment grade percentage et cetera is justified and it's an important aspect as you know of running a REIT and we appreciate the.

Unknown Executive: And it's an important aspect, as you know, of running a REIT. And we appreciate the really deep conversation and analysis that we undertook with the board. And we think that this is a good place to come out.

Really deep conversation and analysis that we undertook with the board and we think that this is a.

Good place to come out.

Unknown Executive: And for 2024, this gives us the ability to pay down debt. It's about $75 million of additional retained earnings, which is meaningful. And we think that it is something that existing shareholders can appreciate. Again, nobody looks for a dividend cut.

And for 2024 this gives us the ability to pay down debt, it's about $75 million of additional retained earnings.

Which is meaningful.

And we think that it is something that the existing shareholders.

Can appreciate again, nobody looks for a dividend cut I understand that but it's also a great entry point for <unk>.

Unknown Executive: I understand that, but it's also a great entry point for new shareholders as they look at this 2024 plan. Okay, thank you.

New shareholders as they look at this 2024 plan.

Okay. Thank you thanks.

Unknown Executive: Thanks, Todd. Our next question comes from Michael Gorman from BTIG. Please go ahead with your question. Yeah, thanks. Good morning.

Thanks Pat.

Our next question comes from Michael Gorman from BTG. Please go ahead with your question.

Yeah. Thanks, Good morning, if I could go back to kind of parse initial question could you just talk a little bit more about the expectations for some of the baseline portfolio in the 2020 for guidance and the NOI run rate.

Michael Patrick Gorman: If I could go back to kind of Todd's initial question, can you just talk a little bit more about the expectations for some of the baseline portfolio in the 2024 guidance and the NOI runway? Just looking through the presentations, it looks like there was about 240 basis points down in occupancy in the multi-tenant portfolio quarter over quarter. Maybe kind of what drove that? And then, how do you see that NOI trending over the course of 2020? Like what's baked into that number? So, first of all, hi Michael.

Just looking through the presentations it looks like there was about a 240 basis point tick.

Ticked down in occupancy in the multi tenant portfolio quarter over quarter, maybe kind of what drove that and then how do you see that NOI trending over the course of 'twenty.

What's baked into that number.

So first of all hi, Michael Thanks for the question.

Michael Weil: Thanks for the question. The biggest driver of that multi-tenant was just timing. And what I mean by that, in the third quarter, we had an uptick in short term, as we do every year, and as most retail operators do, from seasonal, short term leasing. Some of the backfill leasing that we are involved in is just a little bit of timing, whether it's the fourth quarter or the first quarter. So I don't see it as any indication of any trend.

The biggest driver of that.

Multi tenant was just timing and what I mean by that in third in the third quarter.

Had an uptick of short term as we do every year and is as most retail operators do.

From <unk>.

Seasonal short term leasing.

Some of the backfill leasing that we are involved in it's just a little bit of a timing, whether it's fourth quarter or first quarter. So I don't see it as any indication of any trend.

Michael Weil: The pipeline activity has been strong. Our relationships with our national anchor tenants are expanding. The occupancy at the centers is very stable and increasing, which drives the more regional backfill or inline tenants in the portfolio.

The pipeline activity has been strong relationships with.

Our national anchor tenant is expanding.

The occupancy at the centers is very stable and increasing which drives the <unk>.

More regional backfill or in line tenants in the portfolio.

Michael Weil: So things are very positive on the multi-tenant front, and you'll continue to see that fill and grow. And what I'd like to just keep in mind is that multi-tenant is only about 22% of the overall portfolio. The overall portfolio is 96%, very stable. You saw the renewal spreads averaged 6%.

So things are very positive on the multi tenant front and you'll continue to see that Phil and grow.

And what I'd like to just keep in mind is multi tenant is only about 22% of the overall portfolio.

The overall portfolio at 96%.

Stable you.

You saw the renewal spreads.

Average 6%.

Michael Weil: So again, real estate is desirable, and tenants are paying to stay, and paying to renew, which is always a very positive sign. And we will continue to expect to see those results as well. Okay, so you're seeing positive momentum above and beyond kind of the at least plus pipeline number that's in the presentation for the multi-tenant. Yeah, as the multi-tenant portfolio is structured, we have four regional asset managers that are completely engaged, you know, there are about 110 properties in the multi-tenant portfolio. So, you know, they all have roughly 30 properties that they're responsible for, talking about renewals, typically 18 to 24 months early; they're in the market, they're expanding their national relationships with, you know, great companies like Burlington, TJ Maxx, Dick's Sporting Goods, etc.

So again, the real estate is desirable and tenants are.

Paying two to stay paying to renew which is always a very positive sign.

And we will continue to expect to see those results as well.

Okay, So youre, saying youre seeing positive momentum above and beyond kind of at least plus pipeline number that's in the presentation.

For the multi tenant.

Yes, as the multi tenant portfolio is structured we have four regional asset managers that are.

Engaged completely.

About 110 properties in the multi tenant portfolio. So they all have roughly 30 properties that they are responsible for they are talking about renewals typically 18 months to 24 months early there in the market there, they're expanding their national relationships with <unk>.

Companies like Burlington T J Maxx, Dicks sporting goods et cetera.

Michael Weil: Now, what we've published in our pipeline are deals that are pretty far along, but not yet executed. So there's a, you know, pretty much a fully negotiated term sheet, and it's moved to LOI. So we're very comfortable putting it in our pipeline numbers. But yes, there are more leases behind that. And we will continue to drive that 22% slice of the portfolio and the overall 96% higher. Okay, that's helpful.

Now what we've published in our pipeline.

Is are deals that are pretty far along but not yet executed so there's a.

Pretty much a fully negotiated term sheet and it's moved to LOI. So we're very comfortable putting it in our pipeline numbers, but yes, there are more leases behind that and we will continue to drive that 22% slice of the portfolio.

The overall 96.

Higher.

Okay. That's helpful. Thanks, and then obviously a lot of focus on the asset sales can.

Michael Weil: Thanks. And then, obviously, a lot of focus on asset sales. Can you give a little bit more color on maybe kind of the non-core that you went through the analysis and kind of how that breaks down among the different property types and maybe how the management team thought about it. Obviously, the shorter lease term makes sense, or maybe some debt maturities make sense. Was there any consideration for certain asset types in the portfolio where you think there's a meaningful disconnect between how the public is valuing them and where you think you could And then that 400 to 600, is that all of the non-core, or would there be potential additional proceeds above and beyond? Well, first, Michael.

Can you give a little bit more color on maybe kind of the non core that you went through the analysis and kind of how that breaks down among the different property types and maybe how the.

The management team thought about it obviously the shorter lease term makes sense or maybe some mortgage debt maturities makes sense was there any consideration for certain asset types in the portfolio, where you think there is a meaningful disconnect between how the public is valuing it and where you think you could sell those assets.

And then that 400 to 600 is that is that all of the noncore or would there be potential additional proceeds above and beyond.

Well first Michael.

Michael Weil: I want to respect the fact that this is the first time that we've given full year guidance, and in that full year guidance, we identified $400 to $600 million of dispositions. So I don't want to, on day one, start talking about, oh, and there's more.

Yeah.

Aye.

Want to respect the fact that this is the first time that we've given full year guidance.

And in that full year guidance, we've identified $400 million to $600 million of dispositions. So I don't want to if they want to start talking about <unk> and there's more.

Right, because we're going to execute on this plan, we're going to we're going to achieve what we said we're going to achieve we're going to drive the <unk> full year et cetera.

Michael Weil: But this is a big company, and there's life beyond 2024, and we will always continue to evaluate the portfolio and take advantage of the buy-sell arbitrage that's in our favor. One thing that I'll point out, you know, it's relatively small, but it's meaningful. So far, in this 2024 disposition strategy, we've sold $35 million of Truist Bank branches from the portfolio. And we've sold them at an average 6.5% cash cap rate. Those are the types of things that, The buyers are typically individuals, local buyers; we've got local brokers working these assets for us.

<unk>.

But this is a big company and Theres life beyond 2024, and we will always continue to evaluate the portfolio and.

And take advantage of.

The buy sell arbitrage thats in our benefit.

One thing that I'll point out.

Relatively small, but it's meaningful.

So far in this 2020 for disposition strategy.

Sold $35 million of Truest bank branches from the portfolio and.

And we sold them at an average six 5% cash cap rate.

Those are the types of things that.

The buyers are typically.

Individuals local buyers, we've got local brokers working these assets for us.

Michael Weil: We are taking advantage of the desire that individuals have to own that type of real estate in their local market. And that's how we're going to really take advantage of those spreads. I think, you know, 6.5% cap rates on an average remaining lease term that's about six years really speak to the value of those bank branches.

We are taking advantage of that desire that individuals have to own that type of real estate in their local market.

And that's how we're going to really take advantage of those spreads I think.

Six 5% cap rates on an average remaining lease term that's about six years.

Really speaks to the value of those bank branches. There are other things that we're not quite ready to talk about yet.

Michael Weil: There are other things that we're not quite ready to talk about yet, but we're very excited about what we're anticipating to be disposition cap rates on certain assets. And we will continue to disclose, but we don't want to over-disclose now because it just makes it harder to dispose of in the market if we put out too much public information.

But we're very excited about what we're anticipating to be disposition cap rates on certain assets.

And we will continue to disclose but we don't want to we don't want to over disclose now because of.

It just makes it harder to do.

Dispose of in the market, if we've put out too much public information.

Christopher J. Masterson: My last point is, you know, we've been very focused on disposing of the retail and primarily office part of the portfolio; the industrial continues to really be a bellwether. But we did also look at some assets where we may have had early conversations with a tenant about their long-term plans for the asset and made decisions that this is a good time to dispose of such assets. And then maybe last one, Chris, and just a mechanical one, I guess maybe I'm, So you sold about $75 million in assets in the quarter, in the fourth quarter, but when I look through this, it looks like net debt went up by about $80 million in aggregate, and I'm just kind of curious, like, what the puts and takes are there with the asset sales, but ultimately with the debt moving higher? So in the fourth quarter, with the sales, we did pay down a portion of outstanding CMBS debt. There was also a draw early in the period for some funding purposes, and I think that's really probably the key, increased the net debt during the course.

My last point is we've been very focused on.

It.

Disposing from the retail and primarily office.

<unk> of the portfolio.

The industrial continues to really be a bellwether.

But we did also look at some assets that.

We may have had early conversations with tenants.

About their long term plans for the asset and made decisions that this is a good time to dispose of such assets.

Yeah.

Okay. Thank you and then maybe last one Chris just a mechanical one I guess, maybe I'm just curious so.

Told about $75 million in assets in the quarter and the fourth quarter, but when I look through the Sop. It looks like net debt went up by about $80 million in aggregate and I'm just kind of curious like what the puts and takes are there with the asset sales, but ultimately with the debt moving higher.

So in the fourth quarter with the.

Sales you did pay down a portion of outstanding MBS that was also draw early in the period for some funding purposes.

That's really key airports increase the net debt during the quarter.

Christopher J. Masterson: Okay, yeah. Maybe we can follow up with that offline because I'm just still not quite understanding it. Okay, thanks very much, guys. Thanks, Michael. And ladies and gentlemen, our final question today comes from Mitch Germain from Citizens JMP. Please go ahead with your question.

Okay, Yes.

So maybe we can follow up with that offline because I'm still not quite there yet but.

The puts and takes okay. Thanks very much guys.

Thanks, Michael.

Ladies and gentlemen, our final question today comes from Mitch Germain from citizens JMP. Please go ahead with your question.

Mitchell Bradley Germain: Thank you. Michael, it seems like... some really good progress that you're planning to make on deleveraging this year, but you're still well off your goal.

Thank you Michael It seems like you know some really good progress that youre planning to make on on deleveraging this year, but.

But you're still well off your goals so.

Michael Weil: So, do we consider this the start of what will be like a multi-year plan? Is that the way we should think about this? I think that's fair.

Do we consider this the start of what will be like a multi year plan is that kind of the way we should think about this.

I think Thats fair.

Michael Weil: So, um, as you go through the portfolio, identify assets to sell, you know, is this going to be, um, you know, kind of, something you'll consider doing next year, or are there other methods to do some more organic deleveraging that you're, you know, kind of going to consider as you approach 2025? Well, Mitch, it's a great question, and I appreciate it. As you know, at the end of February 2024, I'm not quite ready to talk about, obviously, our thoughts on 2025. We've got really good work ahead with what we've put out for guidance and dispositions and the lowering of net debt to EBITDA. As you know, there are several levers that can drive a lowering of net debt to EBITDA, and we hope and expect that more than dispositions will be available to us before the end of 2024 based on our execution. Organic food is great.

So as you go through the portfolio identified assets to sell.

Just going to be you know kind of.

You know something you'll consider to do next year or are there method methods to do some more organic deleveraging that you're kind of going to going to consider as you approach 2025.

Okay.

Well, Mitch it's a great question and I appreciate it.

Yeah.

As you know at the end of February of 2024, I'm not quite ready to talk about obviously our thoughts on 2025, we've got really good work ahead with what we've put out for guidance in dispositions.

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The lowering of net debt to EBITDA as you know there are several.

Levers that can drive lowering net debt to EBITDA.

And we hope and expect that more than dispositions is available to us before the end of 2024 based on our execution.

Organic is great dispositions is great and.

Christopher J. Masterson: Dispositions is great. And, you know, we will continue to watch the performance and execute on what we've disclosed for our guidance. And, you know, one of our goals is to have a better cost of capital going into 2025. And, you know, that's what we're really excited about. Okay, that's super helpful. On the credit facility, is there any... Swaps or hedges that could, you know, how could prevent you from redeeming some of that debt are, you know, Chris, is there anything there that can't be touched right now, or it's too expensive to redeem?

We will continue to watch the performance and execute on what we've disclosed for our guidance and that one of our goals is to have a better cost of capital.

Going into 2025.

And that's what we're really excited about.

Okay, that's super helpful.

On the credit facility is there any.

Swaps or.

Hedges that could.

Could prevent you from redeeming some of that debt as you know Chris is there anything there that you.

You know that can't be touched right now or it's too expensive to redeem is that.

Christopher J. Masterson: Is that, you know, just a small portion of it? Is it a large portion of it? How should I think about that? There's no portion of it that's restricted from, Okay, great. And then, I guess the last question for me, I'm just curious in terms of your, appreciate the color that you guys have been giving on the sector by sector. And in multi-tenant, I'm curious about the conversion percentage that you've got in your leasing pipeline. I know you've got a good portion of that that's still under consideration or in some sort of state of discussion. What have you guys been seeing in terms of, I guess it's 289,000 square feet today. What have you guys been seeing in terms of the ability to convert that over the last couple of quarters?

Just a small portion of it is it a large portion of it how should we think about that.

There is no a portion of it thats restricted come up at this point.

Okay great.

And then I guess last question for me I'm just curious in terms of your I. Appreciate the color that you guys have been giving on the sector by sector and then multi tenant I'm curious about the conversion percentage that.

That you've got on your leasing pipeline I know you've got a good portion of that that's still under consideration or in some sort of a state of discussion what have you guys been seeing in terms of I guess, there's 289000 square feet today, what what is you guys have been seen in terms of the ability to convert that over the last couple of quarters.

Christopher J. Masterson: And Mitch, just so I understand your question, you're asking, when it's in our pipeline, what is our conversion percentage of going to execute it? Yeah, so I'm looking at your slide on the multi-tenant, you know, obviously, some of that has already been completed, some of that you're calling expected, and then some of that is in your pipeline. So I guess between your expected and your pipeline, I'm just trying to understand kind of how you have been witnessing conversion of that over the last couple quarters. All right, well, thank you. That's a great question.

And then just so I make sure I understand your question you're asking when it's in our pipeline what is our what is our conversion percentage of Eagle's actually you've got.

Yeah. So I'm looking at your slide on the multi tenant you know obviously some of that has already been completed some of that you are calling expected and then some of that is your pipeline. So I guess between your expected in your pipeline I'm just trying to understand kind of how how have you been witnessing conversion of that over the last couple of quarters.

Alright, well. Thank you that's a great question.

We have.

For many quarters being at or near 100%.

Michael Weil: We have, for many quarters, been at or near 100%. [inaudible] As I said earlier, those are lease negotiations that are very far along, that maybe are not yet at a negotiated lease form, but there is an executed LOI, and there is a tenant that is fully engaged and moving forward. So those numbers are very important.

When we put it in public disclosure as pipeline.

As I said earlier those are lease negotiations that are very far along that maybe are not yet at a.

Negotiated lease form, but there is a an executed LOI.

There is a.

Tenant that is fully engaged and moving forward so.

Michael Weil: We're very confident. Thank you. All right, Mitch, thank you. And ladies and gentlemen, with that, we'll be concluding today's question and answer session. I'd like to turn the floor back over to management for any closing remarks.

Those numbers are very.

We're very confident there.

Thank you.

Alright, thank you.

And ladies and gentlemen, with that we'll be concluding today's question and answer session I'd like to turn the floor back over to management for any closing remarks.

Great well.

Michael Weil: Well, Jim, before I end with a couple of closing remarks, is there anything that you'd like to say? And yeah, yeah, I just want to thank everybody for joining us on this call. I mean, it's been my pleasure to interact with you all for the last almost seven years. And we want to thank you for your continued support of the company. It's been a great seven years. I'm very pleased to be leaving the firm in very capable hands with Mike and Chris and the rest of the team. It's a great team.

Jim before I end with a couple of closing remarks is there is there anything that you'd like to add.

Yeah, Yeah, I just wanted to thank everybody for joining us on this call I mean, it's been my pleasure.

Interfacing with you all for the last almost seven years and we want to thank you for your continued support of the company.

And it's been a great seven years I am very pleased to be leaving with the firm and very capable hands with Mike and Chris and the rest of the team. It's a great team and I think theres a lot of great things to come so thank you.

James Larry Nelson: And I think there are a lot of great things to come. So thank you. Speaking on behalf of everybody here, we appreciate you, and I want to wrap this up. I hope everybody had a chance to see the press release that came out this morning.

Well thank you Jim.

Speaking on behalf of everybody here.

We appreciate you and I want to wrap this up.

I hope everybody had a chance to see the press release that came out this morning.

Michael Weil: The Global Net Lease Board has been expanded by one very qualified director. The board has been doing its work, and we were pleased to be able to get this announcement out today. Paul Monahan, a vice chairman at C.B.

The global net lease board has been expanded by one very qualified director.

The board has been doing their work and we were pleased to be able to get this announcement out today, Michael Monahan, Vice Chairman at CB, Richard Ellis joined the board with.

Michael Weil: Richard Ellis joins the board with a very successful and long career in commercial real estate and is just a great enhancement to an already very strong and capable board. We thank you all for your time, and we look forward to hearing any follow-up questions that you may have. Please reach out, and we are always happy to discuss further. Thank you all very much. Ladies and gentlemen, with that, we'll conclude today's conference call-in presentation. We thank you for joining us. You may now disconnect your...

With a very successful and long career in commercial real estate.

And it is just a great enhancement to an already very strong and capable board. So.

We thank you all for your time and we look forward to hearing any follow up questions that you may have please reach out and we are always happy to discuss further so thank you all very much.

Ladies and gentlemen, with that we'll conclude today's conference call and presentation. We thank you for joining you may now disconnect your lines.