Q1 2025 Global Net Lease Inc Earnings Call
Speaker Change: [music].
Operator: Ladies and gentlemen, greetings and welcome to Global Net Lease Inc first quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please signal the operator by pressing star and zero on your telephone keypad. As a reminder, this conference is being recorded.
Ladies and gentlemen, greetings and welcome to global net lease Inc. First quarter 2025 earnings conference call.
At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please signal the operator by pressing star and zero on your telephone keypad.
As a reminder, this conference is being recorded.
Jordyn Schoenfeld: It is now my pleasure to introduce your host, Jordyn Schoenfeld, Senior Vice President of Investor Relations. Please go ahead. Thank you.
Speaker Change: It is now my pleasure to introduce your host Jordan Schonfeld Senior Vice President of Investor Relations. Please go ahead.
Speaker Change: Thank you good morning, everyone and thank you for joining us for Gnl's first quarter 2025 earnings call. Joining me today on the call is Michael while Gnl's, Chief Executive Officer, and Chris Masterson, Gnl's Chief Financial Officer.
Jordyn Schoenfeld: Good morning, everyone, and thank you for joining us for G&L's first quarter 2025 earnings. Joining me today on the call is Michael Weil, G&L's Chief Executive Officer, and Chris Masterson, G&L's Chief Financial Officer.
Jordyn Schoenfeld: The following information contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please review the forward-looking and cautionary statements section at the end of our first quarter 2025 earnings release for various factors that could cause actual results to differ materially from forward-looking statements made during our call today. 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.
Speaker Change: The following information contains forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Speaker Change: Please review the forward looking and cautionary statements section at the end of our first quarter 2025 earnings release for various factors that could cause actual results to differ materially from forward looking statements made during our call today.
Speaker Change: As stated in our SEC filings GNL disclaims any intent or obligation to update or revise these forward looking statements except as required by law also during today's call. We will discuss certain non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance descriptions of those non-GAAP final.
Jordyn Schoenfeld: Also, during today's call, we will discuss certain non-GAAP financial measures which we believe can be useful in evaluating a company's financial performance. Descriptions of those non-GAAP financial measures that we use, such as AFFO and adjusted EBITDA, and reconciliations of these measures to our results as reported in accordance with GAAP, are detailed in our earnings release and supplemental materials.
Speaker Change: Measures that we use such as <unk> and adjusted EBITDA and reconciliations of these measures to our results as reported in accordance with GAAP are detailed in our earnings release and supplemental materials I'll now turn the call over to our Chief Executive Officer, Michael While Mike.
Michael Weil: I'll now turn the call over to our Chief Executive Officer, Michael Weil. Thanks Jordyn, good morning and thank you all for joining us today. Since completing our merger and internalization in September of 2023, we've made significant strides to elevate G&L across multiple industry benchmarks. On the governance front, we've strengthened oversight by broadening and diversifying our board, enhancing transparency, and putting in place practices that reflect our overall commitment to corporate governance. Operationally and financially, we launched an ambitious and disciplined initiative to materially reduce leverage, driven by our belief that a stronger balance sheet is essential to lowering our cost of capital, positioning the company for sustained growth, and ensuring we have the agility to navigate periods of heightened uncertainty and market volatility.
Michael While: Thanks, Jordan and good morning, and thank you all for joining us today.
Michael While: Since completing our merger and internalization in September of 2023, we've made significant strides to elevate GNL across multiple industry benchmarks.
Michael While: On the governance front, we've strengthened oversight by broadening and diversifying our board enhancing transparency and putting in place practices that reflect our overall commitment to corporate governance.
Michael While: Operationally and financially we launched an ambitious and disciplined initiative to material materially reduce leverage driven by our belief that a stronger balance sheet is essential to lowering our cost of capital positioning the company for sustained growth and ensuring we have the agility to navigate periods of heightened and.
Michael While: Certainty and market volatility.
Michael Weil: We believe these actions reflect a clear strategic vision and a deep commitment to building a more resilient and well-positioned company. We've been closely monitoring the tariffs that have introduced heightened uncertainty and volatility into the market. Our strategy has always revolved around building a net lease portfolio anchored by high credit quality tenants that are generally more resilient in uncertain economic environments. And we've been successful in this regard with 60% of our portfolio comprised of investment grade tenants. We believe our leases, with a weighted average lease term of 6.3 years and 1.5% average annual rent increases, tend to be less impacted by macroeconomic events relative to other asset classes.
Michael While: We believe these actions reflected clear strategic vision and a deep commitment to building a more resilient and well positioned company.
Michael While: We've been closely monitoring the tariffs that have introduced heightened uncertainty and volatility into the market our.
Michael While: Our strategy has always revolved around building a net lease portfolio anchored by high credit quality tenants that are generally more resilient in uncertain economic environments and we've been successful in this regard with 60% of our portfolio comprised of investment grade tenants.
Michael While: We believe our leases with a weighted average lease term of six three years and 1.5% average annual rent increases tend to be less impacted by macroeconomic events relative to other asset classes. We also have a disciplined hedging strategy that addresses both interest rate and foreign currency volatility.
Michael Weil: We also have a disciplined hedging strategy that addresses both interest rate and foreign currency volatility in order to mitigate risk and maintain consistent cash flows.
Michael While: In order to mitigate risk and maintain consistent cash flows.
Michael Weil: Turning to the first quarter of 2025, we achieved a key milestone in G&L's strategic transformation with the signing of a definitive agreement for the sale of our multi-tenant portfolio to RCG Ventures, the first phase of which has now been completed. This phase included 59 unencumbered properties, generating $1.1 billion in gross proceeds, and was completed on schedule, reinforcing our ability to deliver on stated objectives within our long-term strategy. Net proceeds were used to materially reduce leverage through a pay-down of $850 million on G&L's revolving credit facility, further strengthening our balance sheet and enhancing financial flexibility for future initiatives.
Michael While: Turning to the first quarter of 2025, we achieved a key milestone in GNL strategic transformation with the signing of a definitive agreement for the sale of our multi tenant portfolio to <unk> ventures. The first phase of which has now been completed.
Michael While: This phase included 59 unencumbered properties generating $1.1 billion in gross proceeds and was completed on schedule reinforcing our ability to deliver on stated objectives within our long term strategy.
Michael While: Net proceeds were used to materially reduce leverage through a pay down of $850 million on gnl's revolving credit facility further strengthening our balance sheet and enhancing financial flexibility for future initiatives.
Michael Weil: We remain on schedule to complete the sale of the 41 encumbered properties by the end of the second quarter of 2025, which is expected to generate another $700 million of gross proceeds. We believe one of the major benefits of this transaction is that it moves us closer to our goal of securing an investment grade credit rating, a central objective of our strategy to reduce our cost of capital and increase financial stability. were encouraged by the growing recognition of our progress from the rating agencies, with both Fitch and S&P placing G&L on credit watch positive. These upgrades reflect the tangible steps we've taken to reduce leverage, enhance liquidity, and improve overall credit quality.
Michael While: We remain on schedule to complete the sale of the 41 encumbered properties by the end of the second quarter of 2025, which is expected to generate another $700 million of gross proceeds.
Michael While: We believe one of the major benefits of this transaction is that it moves us closer to our goal of securing an investment grade credit rating a central objective of our strategy to reduce our cost of capital and increased financial stability.
Michael While: We're encouraged by the growing recognition of our progress from the rating agencies with both Fitch and S&P, placing GNL on Creditwatch positive.
Michael While: These upgrades reflect the tangible steps, we've taken to reduce leverage enhance liquidity and improve overall credit quality.
Michael Weil: We view this as another critical step in reinforcing financial strength and advancing G&L's strategic objectives.
Michael While: We view this as another critical step in reinforcing financial strength and advancing GNL strategic objectives.
Michael Weil: We're also making continued progress on a robust pipeline of non-core dispositions beyond the multi-tenant portfolio sale, which will also contribute to our deleveraging and further reduce net debt to adjusted EBITDA. As of May 1st, we have a closed plus disposition pipeline totaling $2.1 billion. Combined with the full multi tenant portfolio sale and our 2024 dispositions of non-core and vacant properties, we expect total asset sales to reach nearly $3 billion by the end of 2025. Assuming the successful completion of all pipeline dispositions on the expected terms, of which there can be no assurance, the streamlined portfolio would simplify and strengthen G&L, with notable improvements in key metrics such as investment grade tenancy, weighted average remaining lease term, and occupancy.
Michael While: We're also making continued progress on our robust pipeline of noncore dispositions beyond the multi tenant portfolio sale, which will also contribute to our deleveraging and further reduce net debt to adjusted EBITDA.
Michael While: As of May 1st we have a closed plus disposition pipeline totaling $2 $1 billion.
Michael While: Combined with the full multi tenant portfolio sale and our 'twenty 'twenty four dispositions of noncore and vacant properties. We expect total asset sales to reach nearly $3 billion by the end of 2025.
Michael While: Assuming the successful completion of all pipeline dispositions on the expected terms of which there can be no assurance the streamlined portfolio would simplify and strengthen GNL with notable improvements in key metrics such as investment grade tenancy weighted average remaining lease term and occupancy.
Michael Weil: Following these sales, G&L would own a high-quality portfolio of net lease properties valued at approximately $5.5 billion, providing meaningful scale and operating efficiency with a sharp and pure play focus before the end of the second quarter of 2025.
Michael While: Following these sales GNL would own a high quality portfolio of net lease properties valued at approximately $5 $5 billion, providing meaningful scale and operating efficiency with a sharp pure play focus before the end of the second quarter of 2025.
Michael Weil: At the same time, we continue to take other deliberate steps to further strengthen our capital structure and mitigate risk. We've reduced our 2025 debt maturity balance from approximately $715 million at original issuance to $459 million as of the end of the first quarter 2025. We intend to pay off the maturing debt in the second quarter of 2025 and warehouse the balance on our revolving credit facility, which now offers significantly greater availability and flexibility following the substantial paydown we recently completed. We believe these actions position G&L to effectively navigate upcoming maturities from a position of strength while maintaining ample liquidity for strategic initiatives.
Michael While: At the same time, we continued to take other deliberate steps to further strengthen our capital structure and mitigate risk.
Michael While: We've reduced our 2025 debt maturity balance from approximately $715 million at original issuance to $459 million as of the end of the first quarter of 2025.
Michael While: We intend to pay off the maturing debt in the second quarter of 2025 and warehouse the balance on our revolving credit facility, which now offer a significantly greater availability and flexibility following the substantial pay down we recently completed.
Michael While: We believe these actions position GNL to effectively navigate upcoming maturities from a position of strength, while maintaining ample liquidity for strategic initiatives.
Michael Weil: Along with our multi-tenant portfolio sale, we announced that the board approved a $300 million share repurchase program, allowing the company to accretively buy back its outstanding common stock. Through May 2, 2025, we've repurchased 7.9 million shares at a weighted average price of $7.50, totaling $59 million of share repurchases. Repurchasing shares at a significant discount to NAV reflects our strategic approach to capitalize on the opportunity presented by our undervalued stock price in an accretive way. We intend to continue share repurchases, taking advantage of the compelling opportunity to buy back shares at an AFFO yield of approximately 12%.
Michael While: Along with our multi tenant portfolio sale, we announced that the board approved a $300 million share repurchase program, allowing the company to Accretively buy back its outstanding common stock.
Michael While: Through may 2nd 2025, we've repurchased seven 9 million shares at a weighted average price of $7.50 totaling $59 billion of share repurchases.
Michael While: Repurchasing shares at a significant discount to NAV.
Michael While: It reflects our strategic approach to capitalize on the opportunity presented by our undervalued stock price in an accretive way.
Michael While: We intend to continue share repurchases, taking advantage of the compelling opportunity to buy back shares at an a F F O yield of approximately 12%.
Michael Weil: At the same time, we're continuing our disciplined approach to non-core asset sales and overall leverage reduction as we further strengthen our balance sheet. Turning to our portfolio, at the end of the first quarter, we owned over 1,000 properties spanning over 51 million rentable square feet. The portfolio's occupancy currently stands at 95%, with a weighted average remaining lease term of 6.3 years. Occupancy was temporarily impacted by the vacancy of Contractor Steel, a privately owned and operated full-service steel supplier that occupied nearly 1.4 million square feet. Despite the sizable footprint, this tenant represented just 1% of total straight-line rent.
Michael While: At the same time, we continue we're continuing our disciplined approach to noncore asset sales and overall leverage reduction as we further strengthen our balance sheet.
Michael While: Turning to our portfolio at the end of the first quarter, we owned over 1000 properties spanning over 51 million rentable square feet.
Michael While: The portfolio's occupancy currently stands at 95%.
Michael While: With a weighted average remaining lease term of six three years.
Michael While: Occupancy was temporarily impacted by the vacancy of contractor steel are privately owned and operated at full service steel supplier that occupied nearly 1.4 million square feet disc.
Michael While: Despite the sizeable for foot.
Michael While: This tenant represented just 1% of total straight line rent.
Michael Weil: Contractor Steele encountered financial difficulties and vacated in the first quarter of 2025. Following their departure and subsequent to Q1 2025, we sold all five vacant properties for a combined $60 million, having proactively marketed the assets early upon learning of their financial distress, which helped minimize vacancy downtime. including the sale of these properties, our pro forma first quarter of 2025 occupancy would be 98%. We view this as a favorable outcome, as it immediately reduced vacancy with minimal impact on the broader portfolio. Geographically, 76% of our straight-line rent is earned in North America, and 24% in Europe.
Michael While: Contractor steel encountered financial difficulties and vacated in the first quarter of 2025.
Michael While: Following their departure and subsequent to Q1 2025, we sold all five vacant properties for a combined $60 million having.
Michael While: Having proactively marketing the assets early upon learning of their financial distress, which helped minimize vacancy downtime.
Michael While: Including the sale of these properties are pro forma first quarter of 2025 occupancy would be 98%.
Michael While: We view this as a favorable outcome as it immediately reduced vacancy with minimal impact on the broader portfolio.
Michael While: Geographically, 76% of our straight line rent is earned in North America and 24% in Europe.
Michael Weil: Unlike many net lease peers, our exposure to Europe differentiates us by providing diversification across economic cycles and the ability to capitalize on unique market opportunities not typically available in the U.S. The portfolio features a stable tenant base and a high quality of earnings, with an industry-leading 60% of tenants receiving an investment-grade or implied investment-grade rating. The portfolio features an average annual contractual rental increase of 1.5%, which excludes the impact of 18.7% of the portfolio with CTI-linked leases that have historically experienced significantly higher rental increases. On the leasing front, we achieved positive leasing spreads encompassing over 826,000 square feet with attractive renewal spreads that were 8.2% higher than expiring rent.
Michael While: Unlike many net lease peers, our exposure to Europe differentiates us by providing diversification across economic cycles, and the ability to capitalize on unique market opportunities not typically available in the U S.
Michael While: The portfolio features a stable tenant base and a high quality of earnings with an industry, leading 60% of tenants receiving an investment grade or implied investment grade rating.
Michael While: The portfolio features an average annual contractual rental increase of one 5%, which excludes the impact of 18, 7% of the portfolio with CPI linked leases that have historically experienced significantly higher rental increases.
Michael While: On the leasing front, we achieved positive leasing spreads encompassing over 826000 square feet with attractive renewal spreads they were eight 2% higher than expiring rents.
Michael Weil: New leases that were completed in the first quarter of 2025 have a weighted average lease term of five years, while renewals that were completed during this period have a weighted average lease term of 6.6 years.
Michael While: New leases that were completed in the first quarter of 2025 have a weighted average lease term of five years, while renewals that were completed during this period have a weighted average lease term of six six years.
Michael Weil: We have some additional updates regarding our portfolio. In April, we received written notice from the General Services Administration revoking its previous intent to exercise termination rights related to its lease at our Class A office building in Franklin, Tennessee. As a result, the existing lease agreement with the GSA remains in full force and effect, and we look forward to continuing our strong relationship with the GSA for many years to come.
Michael While: We have some additional updates regarding our portfolio in April we received written notice from the General services administration revoking its previous intent to exercise termination rights related to its lease at our class a office building in Franklin, Tennessee.
Michael While: As a result, the existing lease agreement with the GSA remains in full force and effect and we look forward to continuing our strong relationship with the GSA for many years to come.
Michael Weil: In addition, we've taken proactive steps to reduce our exposure to the gas and convenience store sector, an industry undergoing structural shifts in consumer behavior, fuel demand, and evolving transportation trends. As part of this effort, we started to strategically scale back our concentration to certain tenants within the segment. This decision reflects our disciplined approach to portfolio management and our ongoing focus on reallocating capital toward higher growth sectors that better align with our long-term strategic vision. Our continued ability to limit exposure to high-risk geography, asset types, tenants, and industries is a testament to our portfolio's impressive diversification and credit underwriting.
Michael While: In addition, we've taken proactive steps to reduce our exposure to the gas and convenience store sector and industry undergoing structural shifts in consumer behavior fuel demand and devolving transportation trends.
Michael While: As part of this effort, we started to strategically scale back our concentration to certain tenants within this segment.
Michael While: This decision reflects our disciplined approach to portfolio management, and our ongoing focus on reallocating capital toward higher growth sectors that better align with our long term strategic vision.
Michael While: Our continued ability to limit exposure to high risk geography asset types tenants and industries is a testament to our portfolio's impressive with diversification and credit underwriting.
Michael Weil: No single tenant accounts for more than 4.3% of total straight-line rent, and our top ten tenants collectively contribute only 26% of total straight-line rent. We carefully monitor all tenants in our portfolio and their business operations on a regular basis.
Michael While: No single tenant accounts for more than four 3% of total straight line rent and our top 10 tenants collectively contribute only 26% of total straight line rent.
Michael While: We carefully monitor all tenants in our portfolio and their business operations on a regular basis I encourage everyone to look at the details of each segment of our portfolio, which can be found in our Q1 2025 investor presentation on our website.
Michael Weil: I encourage everyone to look at the details of each segment of our portfolio, which can be found in our Q1 2025 investor presentation on our website.
Michael Weil: We're encouraged by the meaningful progress made on the sale of our multi-tenant portfolio, which is a pivotal step in G&L's strategic transformation. We believe this transaction unlocks key levers to support long-term growth while allowing us to sharpen our focus as a pure play net lease REIT. We also believe the considerable uncertainty in the current market environment makes this a particularly opportune moment to bolster our liquidity position. With incremental cash on hand and enhanced capacity on our revolving credit facility, we'll remain disciplined and deliberate as we navigate the current market.
Michael While: We're encouraged by the meaningful progress made on the sale of our multi tenant portfolio, which is a pivotal step in GNL strategic transformation.
Michael While: We believe this transaction unlocks key levers to support long term growth, while allowing us to sharpen our focus as a pure play net lease REIT.
Michael While: We also believe the considerable uncertainty in the current market environment makes this a particularly opportune moment to bolster our liquidity position with incremental cash on hand, and then hance capacity on our revolving credit facility will remain disciplined and deliberate as we navigate the current market.
Christopher Masterson: I'll turn the call over to Chris to walk through the financial results and balance sheet matters in more detail. Thanks, Mike. Please note that, as always, a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release, which is posted on our website. We also want to emphasize that first quarter 2025 earnings and leverage metrics reflect the full benefit of NOI from the unencumbered assets sold as part of the multi-tenant portfolio sales. consistent with what we anticipated when establishing the full year guide. For the first quarter of 2025, we recorded revenue of $132.4 million and a net loss attributable to common stockholders of $200.3 million, which we anticipate will significantly improve upon closing the remainder of the multi-tenant portfolio sale.
Michael While: I'll turn the call over to Chris to walk through the financial results and balance sheet matters in more detail Chris.
Chris Masterson: Thanks, Mike. Please note that as always a reconciliation of GAAP net income to non-GAAP measures can be found in our earnings release, which is posted on our website.
Chris Masterson: We also want to emphasize that first quarter 2025 earnings and leverage metrics reflect the full benefit of NOI from the unencumbered asset sold as part of the multi tenant portfolio sale.
Chris Masterson: <unk> with what we anticipated when establishing full year guidance.
Chris Masterson: For the first quarter of 2025, we recorded revenue of $132 4 million and a net loss attributable to common stockholders of $203 million, which we anticipate will significantly improve upon closing the remainder of the multi tenant portfolio.
Christopher Masterson: AFFO was $66.2 million, or $0.29 per share. Looking at our balance sheet, the growth outstanding debt balance was $3.9 billion at the end of the first quarter of 2025, down by $1.5 billion from the end of the first quarter of 2025. Our debt is comprised of $1 billion in senior notes, $547 million on the multi-currency revolving credit. and $2.3 billion of outstanding gross. As of the end of the first quarter of 2025, 91% of our debt is fixed, reflecting debt tied to fixed rates or debt that is swapped. Our weighted average interest rate stood at 4.4% and our interest coverage ratio was 2.5%.
Chris Masterson: <unk> was $66 2 million or <unk> 29 per share.
Chris Masterson: Looking at our balance sheet the growth outstanding debt balance was $3 9 billion at the end of the first quarter of 2025 down by $1 5 billion from the end of the first quarter of 2024.
Chris Masterson: Our debt is comprised of $1 billion in senior notes $547 million on the multi currency revolving credit facility and $2 3 billion of outstanding gross mortgage debt.
Chris Masterson: As of the end of the first quarter of 2025, 91% of our debt is fixed reflecting debt tied to fixed rates or that debt is swapped to fixed rates.
Chris Masterson: Our weighted average interest rate stood at four 4% and our interest coverage ratio was two five times.
Christopher Masterson: At the end of the first quarter of 2025, our net debt to adjusted EBITDA ratio was 6.7 times based on net debt of $3.7 billion. As a reminder, our net debt to adjusted EBITDA was 8.4 times at the end of the first quarter of 2020. As of March 31st, 2025, we have liquidity of approximately $499 million and $1.4 billion of capacity on our revolving credit. Additionally, we had approximately 229 million shares of common stock output. and approximately 230 million shares outstanding on a weighted average basis for the first quarter of 2020.
Chris Masterson: At the end of the first quarter of 2025, our net debt to adjusted EBITDA ratio was six seven times based on net debt of $3 7 billion.
Chris Masterson: As a reminder, our net debt to adjusted EBITDA was eight four times at the end of the first quarter of 2024.
Chris Masterson: Yeah.
Chris Masterson: As of March 31, 2025, we have liquidity of approximately $499 million and $1 4 billion of capacity on our revolving credit facility.
Chris Masterson: Additionally, we had approximately 229 million shares of common stock outstanding.
Chris Masterson: And approximately 230 million shares outstanding on a weighted average basis for the first quarter of 2025.
Christopher Masterson: As of May 2, 2025, we've repurchased 7.9 million shares at a weighted average price of $7.50 per share under our share repurchase program, resulting in approximately 223 million shares out As Mike mentioned, given the potential for additional turbulence in the market, we've continued to take proactive steps to strengthen G&L's balance sheet and overall financial For more information visit www.globalnetlease.com which we believe is the most prudent action. In addition, we continue to implement our hedging strategy using FX forwards to lock in foreign exchange rates for three to four years. This approach is designed to mitigate risk and reduce cash flow uncertainty during periods of market volatility.
Chris Masterson: As of May 2025, we repurchased seven 9 million shares at a weighted average price of $7 50 per share under our share repurchase program, resulting in approximately 223 million shares outstanding.
Speaker Change: As Mike mentioned, given the potential for additional turbulence in the market. We've continued to take proactive steps to strengthen <unk> balance sheet and overall financial position.
Chris Masterson: We believe it's the most prudent action we can take.
Chris Masterson: In addition, we continue to implement our hedging strategy using FX forward to lock in foreign exchange rates for three to four years out.
Chris Masterson: This approach is designed to mitigate risk and reduce cash flow uncertainty during periods of market volatility.
Christopher Masterson: We remain focused on enhancing liquidity and maintaining financial flexibility, leaving us well-positioned to navigate any market.
Chris Masterson: We remain focused on enhancing liquidity and maintaining financial flexibility, leaving us well positioned to navigate any market conditions.
Christopher Masterson: Turning to our outlook for the remainder of 2025, based on progress to date, we are reaffirming our AFFO per share guidance range of 90 cents to 96 cents, and our net debt to adjusted EBITDA range of 6.5 times to 7.1.
Chris Masterson: Turning to our outlook for the remainder of 2025 based on progress to date, we are reaffirming our <unk> per share guidance range of 90 to.
Chris Masterson: 96% and our net debt to adjusted EBITDA range of six five times to seven one times.
Michael Weil: I'll now turn the call back to Mike for some closing. Thanks, Chris. Looking ahead, we're encouraged by the meaningful progress we've made in executing on our strategic priorities. The first quarter of 2025 was a significant turning point as we took deliberate steps to simplify our portfolio, strengthen our balance sheet, and enhance financial flexibility. We have a clear focus on creating long-term value reflected by the successful execution of the first phase of the multi-tenant portfolio sale, combined with our additional disposition pipeline and proactive debt reduction efforts. We remain on track to close the other two tranches of the multi-tenant portfolio sale in the second quarter of 2025, marking another important milestone in our transformation.
Mike: I'll now turn the call back to Mike for some closing remarks.
Chris Masterson: Yeah.
Chris Masterson: Thanks, Chris.
Chris Masterson: Looking ahead, we're encouraged by the meaningful progress we've made in executing on our strategic priorities. The first quarter of 2025 was a significant turning point as we took deliberate steps to simplify our portfolio strengthen our balance sheet and enhanced financial flexibility, we have a clear focus on creating long term Val.
Chris Masterson: <unk> reflected by the successful execution of the first phase of the multi tenant portfolio sale combined with our additional disposition pipeline and proactive debt reduction efforts.
Chris Masterson: We remain on track to close the other two tranches of the multi tenant portfolio sale in the second quarter of 2025, marking another important milestone in our transformation.
Michael Weil: With a simplified asset base, reduced leverage, and increased liquidity, we believe G&L is better positioned to operate efficiently and pursue opportunities that align with our strategic vision. We believe the actions we've taken have significantly improved our ability to navigate today's market environment while setting the stage for durable growth. Disciplined execution and the strategic deployment of capital towards initiatives that enhance long-term value remain at the core of our approach. These are foundational decisions designed not just to improve short-term metrics, but to drive long-term resilience and performance.
With a simplified asset base reduce leverage and increase liquidity. We believe GNL is better positioned to operate efficiently and pursue opportunities that are that align with our strategic vision.
Chris Masterson: We believe the actions we've taken have significantly improved our ability to navigate todays market environment, while setting the stage for durable growth.
Chris Masterson: Disciplined execution and the strategic strategic deployment of capital towards initiatives that enhance long term value remains at the core of our approach.
Chris Masterson: These are foundational decisions designed not just to improve short term metrics, but to drive long term resilience and performance. We're excited about the future and confident in our path forward.
Michael Weil: We're excited about the future and confident in our path forward.
Michael Weil: We're available to answer any questions you may have after the call.
Chris Masterson: We're available to answer any questions you may have after the call operator, please open the line for questions.
Operator: Operator, please open the line for questions. Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. Ladies and gentlemen, we will wait for a moment while we poll for questions.
Chris Masterson: Thank you.
Chris Masterson: Ladies and gentlemen, we will now begin the question and answer session.
Chris Masterson: If you would like to ask a question. Please press star and one on your telephone keypad, a confirmation tone will indicate your line is in the question queue you.
Chris Masterson: You May press star two if you'd like to remove your question from the queue.
Chris Masterson: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star Keith.
Speaker Change: Ladies and gentlemen, we will wait for a moment, while we poll for questions.
John Kim: The first question comes from the line of John Kim from BMO Capital Markets. Please go ahead.
Speaker Change: The first question comes from the line of John Kim from BMO Capital markets. Please go ahead.
John Kim: Good morning, John. Good morning.
Speaker Change: Good morning, John.
Michael Weil: On the disposition pipeline of $2.1 billion, can you break down the remaining $300 million that's not part of the multi-tenant portfolio sale by either sector or geography? in our filed materials and pipeline report. We have done that. A lot of that is disposition pipeline that has been underway since the end of 24 into 25. It's more of what you saw in 2024 of what we have identified in the portfolio as non-core. And it's just a continuing part of how we're looking at the further deleveraging.
Speaker Change: <unk>.
Speaker Change: On the disposition pipeline of $2 1 billion can you breakdown the remaining $300 million, that's not part of the multi tenant.
Speaker Change: Portfolio sale by either sector or geography.
Speaker Change: Uh huh.
Speaker Change: In our <unk>.
Speaker Change: Filed materials and pipeline report, we have done that a lot of that is.
Speaker Change: Disposition pipeline that has.
Speaker Change: Been underway since the end of 'twenty four into 25, it's more of what you saw in 2024 of what we have identified in the portfolio as noncore.
Speaker Change: And it's just.
Speaker Change: Continuing part of how we're looking at the further deleveraging.
Michael Weil: And Michael, you alluded to the volatility in the financial markets since the tariffs were introduced. How much do you think that will impact your ability to sell or pricing that you're looking to achieve? I think we're going to continue to see opportunity to sell the assets in market. typically to either local, private buyer, or 1031 buyer, for the most part. We've also seen opportunities and have taken advantage of certain markets where repositioning of an asset through a developer sale has continued to be strong. So, we're not seeing a big change from what we experienced in 2024 as it relates to the disposition strategy.
Speaker Change: And Michael you alluded to the volatility in financial markets since our since.
Speaker Change: Since the tariffs were introduced how much do you think that will impact your ability to sell or pricing. Thank.
Speaker Change: Thank you are looking to achieve.
Speaker Change: I think we're going to continue to see opportunity to sell the assets.
Speaker Change: In market.
Speaker Change: Particularly to either local private buyer or 10 31 buyer for the most part we.
Speaker Change: We've also seen opportunities and have taken advantage of certain markets where.
Speaker Change: Repositioning of an asset through developer sale has has continued to be strong.
Speaker Change: So we're not seeing a big change from what we experienced in 2024 as it relates to the disposition strategy.
Michael Weil: Again, it's, I think, really enhanced by the relationships that we have with the brokers in community.
Speaker Change: It's I think really enhanced by the relationships that we have with the brokers in community. We've never set out to just have.
Michael Weil: You know, we've never set out to just have one large national brokerage firm handle all dispositions and the the relationship with brokers I'm always grateful for how well they know their markets how hard they work and you know their their interests are aligned with ours we want to sell the property they want to earn a commission so they do great work for us On the share repurchases, you mentioned you achieved a 12% ASO yield. Is that the hurdle rate that you're looking for on future buybacks? You know, we are certainly very pleased with where we've been executing on the buyback.
Speaker Change: One large national.
Speaker Change: Brokerage firm handle all dispositions.
Speaker Change: And the relationship with brokers I'm always.
Speaker Change: Grateful for how well they know their markets how hard they work and.
Speaker Change: There their interests are aligned with ours, we want to sell the property they want to earn a commission.
Speaker Change: So they do great work for us.
Speaker Change: On the share repurchases you mentioned you achieved a 12% <unk> yield is that the hurdle rate that youre looking for.
Speaker Change: Future future buybacks.
Speaker Change: We.
Speaker Change: We are certainly very pleased with where we've been executing on the buyback.
Speaker Change: <unk>.
Michael Weil: It is very opportunistic for us to be at this level. It's kind of a blessing and a curse, John. There's nothing I'd like more than, you know, to be approaching double-digit stock price. But while this work that we're doing is taking hold, and, you know, we've talked about, you know, the improved liquidity, the lower leverage, the great leasing that we had in the quarter, the continued dispositions, it's very rewarding for us to see the opportunity to buy back shares to the long-term benefit, the accretion. There's no real estate that a company could buy right now that's equal to the value of what we're doing.
Speaker Change: It is very opportunistic for us to be at this level, it's kind of a blessing and a curse John there's nothing I'd like more than to be approaching double digit stock price.
Speaker Change: While this work that we're doing is taking hold.
Speaker Change: And we've talked about the improved liquidity the lower leverage the great leasing that we had in the quarter that continued dispositions.
Speaker Change: It's very rewarding for us to see the opportunity to buy back shares to the long term benefit the accretion.
Speaker Change: There is no real estate that a company can buy right now that's equal to the value of what we're doing not only are we reducing the outstanding share count as you know.
Michael Weil: Not only are we reducing the outstanding share count, as you know, but we're buying shares that we feel are materially undervalued and trading at too big of a discount. to NAV.
Speaker Change: But we're buying shares that we feel are materially undervalued and trading it too big of a discount.
Speaker Change: Yeah.
Michael Weil: So I was very pleased when the board approved our buyback and we were able to announce it. And to buy back nearly $60 million of stock this quickly was probably faster than I had anticipated. But the opportunity being what it was, we jumped in. We'll continue to monitor the AFFO accretion, the hurdle, as you put it. We still think there's opportunity here, but again, I'd like nothing more than to see this be the combination of the results of the second quarter. What really gets this stock moving and closes that gap that we see to value.
Speaker Change: So I was very pleased when the board approved our buyback and we were able to announce it.
Speaker Change: And two to buyback nearly $60 million of stock. This quickly was probably faster than I had anticipated.
Speaker Change: But the opportunity being what it was we jumped in and we will continue to monitor the SFO accrue.
Speaker Change: Accretion the hurdle is as you put it.
Speaker Change: <unk>.
Speaker Change: We still think theres opportunity here, but again I would like nothing more than to see this be.
Speaker Change: The combination of the results of the second quarter, what really gets the stock moving and closes that gap that we see to value.
Michael Weil: So it's a great way to add to what we're doing.
Speaker Change: So it's a great way to add to what we're doing.
John Kim: Great, thank you. Thanks, John. Thank you.
Speaker Change: Great. Thank you.
Speaker Change: Thanks, Sean.
Speaker Change: Thank you we take the next question from the line of Opel Rana from Keybanc capital markets. Please go ahead.
Upal Rana: We take the next question from the line of Upal Rana from KeyBank Capital Markets. Please go ahead. Hi, Upal. Great, thanks. Hey, good morning out there.
Speaker Change: Hi, great. Thanks, Hey.
Michael Weil: So, you know, just on the on the buyback, you know, I was wondering if you'd share your your strategy on the capital allocation and this pecking order where you see, you know, buying more shares or paying down more debt or, you know, potentially buying assets again in the future? Well, we would love to have the market come to us in a way that makes buying assets accretive and interesting. But we're not there right now, and we don't see the market being very interesting as well. What is coming to market, I don't really see as interesting or long-term valuable.
Speaker Change: Good morning out there.
Speaker Change: So just on the on the buyback I was wondering if you could share your strategy on the capital allocation in the pecking order, where you see buying more shares or paying down more debt or.
Speaker Change: Once you're buying assets again in the future.
Speaker Change: Yeah.
Speaker Change: Uh huh.
Speaker Change: Well, we would love to have the market come to us in a way that makes buying assets accretive and interesting, but we're not there right now and we don't see the market being very interesting as well what is coming to market I don't I don't really see as.
Speaker Change: Interesting our long term valuable we're very focused as you know on reduction of leverage and opportunistic buyback of shares.
Michael Weil: We're very focused, as you know, on reduction of leverage and opportunistic buyback of shares. It is something that we talk about internally, look at with the board, and as we confirmed in our earlier comments, we are reaffirming guidance, and in our 2025 guidance, we gave our leverage metrics of 6.5 to 7.1 times. They're just the ongoing execution of the business model, which includes dispositions, it includes leasing. So leverage and buyback are not the only two levers that will have a direct impact on our overall net debt to EBITDA. We're mindful, we're very mindful of leverage because we think the continued lowering of leverage is going to have a meaningful impact on our cost of capital and it's going to open some doors for the company.
Speaker Change: It is something that we talk about internally looked at with the board.
Speaker Change: And as we confirmed in our earlier comments, we are reaffirming guidance and in our 2025 guidance, we gave our leverage metrics of six 5% to seven one times.
Speaker Change: They're just the ongoing execution of the business model, which includes dispositions it includes leasing.
Speaker Change: So leverage and buyback are not the only two levers that we will have a direct impact on our overall net debt to EBITDA. So.
Speaker Change: We're mindful, we're very mindful of leverage because we think.
Speaker Change: The continued lowering of leverage is going to have a meaningful impact on our cost of capital.
Speaker Change: And it's going to open some doors for the company, we've talked about our one of our mid to I will call. It a mid term goal is achieving investment grade rating, we know that that's going to occur.
Michael Weil: We've talked about one of our mid-term goal is achieving investment grade rating. We know that that's going to occur. through the continued execution of our plan to lower leverage. So I'm actually really proud of the work we're doing because we're addressing a number of important things. It's a lot of focus. It's a lot of great execution, you know, between the asset management teams and the dispositions, the overall capital desk and how we're handling the stock buyback. of great work. Chris and his team managing the credit facility and just the increased liquidity that the company has at the end of the first quarter is really meaningful.
Speaker Change: Through the continued execution of our plan to lower leverage.
Speaker Change: So I am actually really proud of work, we're doing because we're addressing a number of important things.
Speaker Change: It's a lot of focus it's a lot of great execution between the the asset management teams and the dispositions.
The overall.
Speaker Change: Capital desk, and how we're handling.
Speaker Change: The stock buyback.
Speaker Change: So great work, Chris and his team managing the credit facility and just the increased liquidity that the company has at the end of the first quarter.
Speaker Change: Is really meaningful so.
Michael Weil: So, you know, a lot of really good things to focus on for G&L. And, you know, I think that we're starting to get some recognition for the direction that we're taking the company. And, you know, I always like to talk about sticking to your knitting. I feel like we're really sticking to our knitting and we're not getting distracted. And we're just doing the things that are going to create long-term value. You know, it's funny, in one quarter, it's almost like, you know, the announcement of the sale of the multi-tenant portfolio was a huge announcement because of what it does long-term for G&L, simplifying the story.
A lot of really good things to focus on for GNL.
Speaker Change: And I think that.
Speaker Change: We're starting to get some recognition for the direction that were taking the company and I.
Speaker Change: I always like to talk about sticking to your knitting.
Speaker Change: Feel like we're really sticking to our knitting and we're not getting distracted.
Speaker Change: And we're just doing the things that are going to create long term value. It's funny in one quarter. It's almost like the announcement of the sale of the multi tenant portfolio was a huge announcement because of what it does long term for GNL simplifying the story, we close that big first tranche.
Michael Weil: We closed that big first tranche. We're on track to execute in the second quarter the remaining pieces of that transaction. So, you know, I The word transformative gets used. Too often, I feel, but I think the first half of 2025 has really been transformative for us.
Speaker Change: We're on track to execute in the second quarter, the remaining pieces of that transaction.
So.
Speaker Change: The word transformative gets used.
Speaker Change: Too often I feel but I think the first half of 2025 has really been transformative for us and we're looking forward to second quarter results and moving on from here.
Michael Weil: And we're looking forward to second quarter results and moving on from here.
Upal Rana: Okay, great. That was helpful.
Speaker Change: Okay, Great that was helpful. And then just on the credit rating upgrade maybe you can share some of the conversations you've had with some of the credit agencies.
Michael Weil: And then, you know, just on the credit rating upgrade, maybe you can share some of the conversations you've had with some of the credit agencies and potential timing there. And maybe you can share, if you were to get an upgrade, what this potential savings could look like. Yeah, I'm going to be a little close to the chest on that one because the conversations of course are confidential between the agencies and the company, but you saw from their announcement that we were credit watch positive, that they are following the company and they see the value in lowering leverage and what it does for us.
Potential timing, there and maybe you can share.
Speaker Change: If you were to get an upgrade what the potential savings could look like.
Speaker Change: Yeah, I'm going to be a little close to the chest on that one because the conversations of course are confidential between the agencies and the company.
Speaker Change: But you saw from their announcement that we were credit watch positive that they are.
Speaker Change: Following the company and they see the value in lowering leverage and what it does for us.
Speaker Change: I think.
Michael Weil: from our longer term eventually being able to access. what I'll just call investment grade debt opportunities. You know the value of that for the company, and right now we've given 2025 guidance, we've got AFFO guidance of 90 to 96 cents per share. That takes into account how we're thinking of everything inclusive of debt costs in 2025.
Speaker Change: From our longer term.
Speaker Change: View.
Speaker Change: Eventually being able to access.
Speaker Change: What I'll just call investment grade debt opportunities.
Speaker Change: <unk>.
Speaker Change: You know the value of that for the company and right now we've given 2025 guidance, we have Scott <unk> guidance of 90% to 96 cents per share.
Speaker Change: That takes into account, how we're thinking of everything inclusive of debt costs in 2025.
Upal Rana: So I think that that would probably be something that we're more looking at from a guidance standpoint for 2026. Okay. All right. Thank you.
Speaker Change: So I think that that would probably be something that we're more looking at from a guidance standpoint for 2026.
Speaker Change: Okay Alright. Thank you and then just last one from me just on the strategy of the kinds of disposition you are targeting.
Michael Weil: And then just last one for me, you know, just on the strategy of, you know, the kinds of disposition you're targeting moving forward, you know, with the multi-senate portfolio, obviously it's a big announcement, but just, you know, given that it's mostly out of the way, and you have mentioned in the past, you know, the office portfolio will likely be sort of one-off. You know, what else is there to do in your portfolio to recycle? Well, we're looking at some of the retail opportunities in the portfolio from a disposition standpoint. We are, as you mentioned, there are opportunities for dispositions in the office as well.
Speaker Change: Targeting moving forward.
Speaker Change: With the multi tenant portfolio also has a big announcement, but just given thats, mostly out of the way.
Speaker Change: You have mentioned in the past the office portfolio will likely be sort of one off.
Speaker Change: <unk>.
Speaker Change: What else is there.
Speaker Change: To do in your portfolio to recycle.
Speaker Change: Well, we're looking at some of the retail opportunities in the portfolio from a disposition standpoint.
Speaker Change: We are as you mentioned there are opportunities for dispositions in the office as well.
Michael Weil: We're a large portfolio. After the multi-tenant disposition, we'll be just over 1,000 properties. So we can really take a very granular review of the portfolio and kind of look at our long-term goals, and I spoke about that last quarter. Obviously, we see continued value in single-tenant industrial and retail for long-term growth. We've got good value and a lot of investment-grade in our office portfolio, but it's not something that I'd like to see grow. So we will opportunistically sell at value from that portfolio. But as I said earlier, we're pleased to see the level of buyers.
Speaker Change: We're a large portfolio.
Speaker Change: After the multi tenant disposition will be just over 1000 properties.
Speaker Change: So we can really take a very granular review of the portfolio.
Speaker Change: And tend to look at our long term goals.
Speaker Change: You spoke about that last quarter, obviously, we see continued value in single tenant industrial and retail for long term growth. We've got good value and a lot of investment grade tenants in our office portfolio, but it's not something that I would like to see grow.
Speaker Change: We will opportunistically sell at value.
From that portfolio.
Speaker Change: But.
Speaker Change: As I said earlier, we're pleased to see the level of buyers.
Michael Weil: We've been able to continue our velocity of dispositions, and it'll help us achieve the goals that we've already stated.
Speaker Change: Been able to continue our velocity of dispositions.
Speaker Change: And.
Speaker Change: It will it will help us achieve the goals that we've already stated.
Speaker Change: Okay.
Upal Rana: Okay, great.
Upal Rana: Thank you.
Speaker Change: Okay, great. Thank you.
Speaker Change: Thank you.
Mitch Germain: The next question comes from the line of Mitch Germain from Citizens JMP. Please go ahead. Hey, good morning. Congrats on the quarter. Thank you.
Speaker Change: The next question comes from the line of Mitch Germain from citizens JMP. Please go ahead.
Speaker Change: I missed.
Speaker Change: Hey, good morning, congrats on the quarter.
Speaker Change: Yes.
Mitch Germain: When looking at the, I can just look at the amount, obviously I don't have a lot of the details of your disposition pipeline, but if I look at that amount, what was either agreed under contract or closed from last quarter to this quarter, it seems fairly static. Again, some of the assets might have gone in and out. I'm just, I'm curious, though, like... You've got a pretty big amount of sales planned for this, it looks like this upcoming quarter. What's next? I mean, will you continue to remain aggressive from an asset sale perspective as long as there is something to do with those proceeds?
Speaker Change: When looking at the I can just look at the amount obviously I don't have a lot of the details of your disposition pipeline, but if I look at that amount what was either agreed under contract or close from some last quarter to this quarter since fairly static and again some of the assets might have gone in and out but I'm just.
Speaker Change: I'm curious, though like.
Speaker Change: You've got a pretty big amount of sales plan for this it looks like this upcoming quarter. Whats next I mean will you continue to remain aggressive from an asset sale perspective as long as there is.
Speaker Change: Something to do with those proceeds.
Speaker Change: Yeah.
Michael Weil: So Mitch, you always ask good questions that have a, you know, it's a tough direct answer to give because there's a balance in how we look at dispositions. Obviously we want to see dispositions and use of proceeds related to leverage, which we've done and will continue to do. But at the same time, you know, it's very important to us to monitor and understand our NOI and earnings side of the business as well. So it's not just an absolute open the door, sell it all down, because we think what we're doing is intentional and will create the type of value that we're looking for.
So Mitch you always ask.
Speaker Change: Good question.
Speaker Change: It's a tough direct answer to give because there is a balance in how we look at dispositions.
Speaker Change: Obviously, we want to see.
Speaker Change: Dispositions and use of proceeds related to leverage which we've done and we will continue to do but at the same time it's.
Speaker Change: It's very important to us to monitor and understand our.
Speaker Change: NOI and earnings side of the business as well so it's not just an absolute open the door or sell it all down.
Speaker Change: Because we think what we're doing is intentional and will create the type of value that we're looking for.
Michael Weil: We think that it will be what closes the gap, the trading gap to share price to NAV. We also have, you know, the benefit, as you know, of the buyback in doing that. So we're regularly evaluating where we are. regularly evaluating leverage and also, you know, what the market opportunity is for disposition. I, you know, between calendar year 24 and calendar year 25, will have sold a pretty material amount of assets out of Meaningful price. So, I believe what we projected for 2025 in our guidance, A, will achieve and B, will move us to achieve the goals that we've stated.
Speaker Change: We think that it will be what closes the gap the trading gap.
Speaker Change: <unk> share price to NAV.
Speaker Change:
Speaker Change: We also have the benefit as you know of the buyback in doing that so.
Speaker Change: We're <unk>.
Speaker Change: Regularly evaluating where we are.
Speaker Change: Regularly evaluating leverage.
Speaker Change: And also what the what the market opportunity is for disposition.
Speaker Change: Hi.
Speaker Change: Between calendar year 'twenty four in calendar year 'twenty five.
Speaker Change: We will have sold a pretty material amount of of assets out of.
Speaker Change: Meaningful price.
Speaker Change: So I believe what we projected for 2025 and our guidance.
Speaker Change: A we will achieve and B will move us.
Speaker Change: To achieve the goals that we've stated.
Mitch Germain: Okay.
Speaker Change: Okay at 3 billion by the way is what youre, selling which is pretty impressive.
Mitch Germain: $3 billion, by the way, is what you're selling, which is pretty impressive. Yeah.
Speaker Change: Yeah, Yeah, how should I think about some of your commentary regarding C stores I mean.
Michael Weil: How should I think about some of your commentary regarding C-stores? I mean, are some of those properties in your, you know, disposition slide in your presentation? Or is that something that could be considered going forward as potential sale candidates, as you mentioned retail, in addition to office? Well, it was one of our larger sectors in the portfolio. So yes, we did think, as we've looked at different things, global, the macro view on. Well, the refiners are under some pressure. The convenience store, with labor rates going up, are under pressure. So we try to take a longer, earlier view of what is changing, or sometimes it's changing for good, sometimes it gives us concern.
Speaker Change: Or are some of those properties in.
Speaker Change: Your.
Speaker Change: Slot disposition slide in your presentation or is that something that could be considered going forward.
Speaker Change: As potential sale candidates as you mentioned retail in addition to office.
Speaker Change: Well it was one of our larger sector.
Speaker Change: Sectors in the portfolio.
Speaker Change: Yes, we did think as we've looked at different things.
Speaker Change: <unk>.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Globally the macro.
Speaker Change: View on.
Speaker Change: Fuel prices are are.
Speaker Change: Well the refiners are under some pressure.
Speaker Change: The convenience store with labor rates going up are under pressure. So we try to take a longer earlier view of what is changing or sometimes it's changing for good sometimes it it gives us concern.
Michael Weil: So we have been lightening our exposure to gas inconvenience, and that, I expect you'll see, will continue. Gotcha.
Speaker Change: So we have been lightening, our exposure to gas and convenience and that I expect you will see will continue.
Speaker Change: Gotcha.
Mitch Germain: Last, from me. I guess you had that, you talked about a situation with a tenant, Contractor Steel, sorry. Yes. I hate asking about watch lists, but you talked about C-Store and trying to get ahead of potential headwinds there. Rather than say what's happening with your watch list, is there anything that you're looking in your sector that might be a candidate for sale just because looking out how the trends or your view on a sector trends are materializing, you know, may create an opportunity to get ahead of headwinds. Is that kind of anything that comes to mind other than C-Stores?
Speaker Change: Last for me.
Speaker Change: Yeah.
Speaker Change: I guess you had that you talked about the.
Speaker Change: This situation.
Speaker Change: With a tenant.
Speaker Change: Contracts are steel sorry, yes, I hate asking about watch list, but.
Speaker Change: You talked about C store and trying to get ahead of potential headwinds there.
Speaker Change: Rather than say, what's happening with your watch list is there anything that youre looking in your sector that might.
Speaker Change: Be a candidate for sale, just because looking out how the trends or your view on the sector trends are materializing.
Speaker Change:
Speaker Change: May create an opportunity to get ahead of headwinds does that kind of anything that comes to mind other than C stores, yes, im going to be a little bit coy, because sometimes as we're looking to dispose of things.
Michael Weil: Yes.
Michael Weil: I'm going to be a little bit coy because sometimes as we're looking to dispose of things, that's not the type of commentary we'd like out in the market, but yes, it is absolutely part of the strategic review that Uri and his team do on a regular basis. You know, sometimes it's easier to talk about it after the sale and I can explain our logic of how we were looking at a certain sector, etc., but, you know, first of all, the real estate. It's well located. Whether it's going to continue its existing tenant and operation, or whether because it's located at a main and main location somewhere in a market in America where people live and work, there's a lot that can be done with these types of properties.
Speaker Change: That's not the type of commentary, we'd like out in the market.
Speaker Change: But yes. It is it is absolutely part of the strategic review that worry and his team do on a regular basis.
Speaker Change: Sometimes it's easier to talk about it after the sale and I can explain our logic of how we're looking at a certain sector et cetera.
Speaker Change: But.
Speaker Change: First of all the real estate is really good real estate, it's well located.
Speaker Change: Sure.
Speaker Change: Whether it's going to continue.
Speaker Change: Existing tenant and operation or whether because it's located at a main and main location somewhere.
Speaker Change: Market in America, where people live and work.
Speaker Change: There is a lot that can be done with these types of properties. It's always what we've liked about single tenant net lease.
Michael Weil: It's always what we've liked about single-tenant net lease. So I think the important thing to really focus on is The watch list is important, but the asset management review that we're constantly doing We know the opportunities. Sometimes it's because a developer reaches out to us and all of a sudden is very interested in a property. We're able to get out to that market, see what's going on, figure out what the highest and best use is. Sometimes a great offer isn't great enough, and other times You kind of start to see that, okay, things are long-term, a little bit different than when we bought the property five or six years ago, so we want to get ahead of it.
Speaker Change: So.
Speaker Change: I think the important thing to really focus on is.
Speaker Change: The the watch list is important but the asset management review that we're constantly doing.
Speaker Change: Yeah.
Speaker Change: We know the opportunities.
Speaker Change: Sometimes it's because the developer reaches out to us and all of a sudden is very interested in the property.
Speaker Change: We're able to get out to that market see whats going on.
Speaker Change: Figure out what the highest and best uses.
Speaker Change: You know, sometimes a great offer isn't great enough and other times.
Speaker Change: You kind of start to see that okay things are long term little bit different than when we bought the property five or six years ago. So we want to we want to get ahead of it.
Michael Weil: But it all goes hand-in-hand, great real estate, understanding the financials, understanding the sector, and then making decisions, hopefully, while there's still great value in the property.
Speaker Change: But it all goes hand in hand, great real estate understanding the financials understanding the sector and then making decisions.
Speaker Change: Hopefully.
Speaker Change: While there is still great value in the property.
Mitch Germain: Thank you. Thanks, Mitch. Thank you.
Speaker Change: Thank you.
Mitch: Thanks Mitch.
Speaker Change: Thank you.
Michael Gorman: Ladies and gentlemen, if you wish to ask a question, please press star and 1. The next question comes from the line of Michael Gorman from BTG Bachelor. Please go ahead. Hi, Michael. Hi, good morning. Just a quick one. Sorry if I missed it. But the contractors pay any rent in the first quarter? I'm looking at Ori. Sorry, Michael. They did not. Thanks, Chris. They did not. Okay, good. That's helpful. Thank you.
Speaker Change: And gentlemen, if you wish to ask a question. Please press star one.
Michael Gorman: The next question comes from the line of Michael Gorman from B D. T. Backfill. Please go ahead.
Michael Gorman: Hi, Michael.
Michael Gorman: Hi, good morning.
Michael Gorman: Just a quick one sorry, if I missed it but the contractors pay any rent in the first quarter.
Michael Gorman: I am looking at <unk>, sorry, Michael.
They did not.
Michael Gorman: Chris do that Okay. That's helpful. Thank you and then just.
Christopher Masterson: And then just, obviously, appreciate the affirmed guidance. I wonder if you could just help us think through, given the number of moving parts, right? You had the solid first quarter. It implies kind of 21, the mid-point of the guidance implies kind of like 21 cents a share pro rata over the balance of the year. But given the timing of the sale in the second quarter, I doubt it's going to be pro forma.
Speaker Change: Obviously appreciate the affirmed guidance I Wonder if you could just help us think through just given the number of moving parts right you had a solid first quarter.
Speaker Change: It implies kind of 'twenty, one the midpoint of the guidance implies kind of like 21 cents a share pro rata over the balance of the year, but but given the timing of the sale in the second quarter I doubt, it's going to be pro forma. So can you can you help us maybe think through in a little bit more detail kind of what the run rate looks like or maybe just what the.
Christopher Masterson: So can you help us maybe think through in a little bit more detail kind of what the run rate looks like or maybe just what the back half of the year looks like once the second and third tranches of the multi-tenant deal are closed from an AFFO perspective? I guess Mike, I can just quickly jump in because I think I could probably help point something out here. Michael, so if you take a look at the income statement, the way that it's broken out, we have to disclose discontinued operations, which is... The Income Statement itself already strips out the multi-tenant.
Speaker Change: Back half of the year looks like once the second and third tranches of the multi tenant deal are closed.
Speaker Change: From an <unk> perspective.
Speaker Change: Yes.
Mike: I guess, Mike I can just quickly jump in because I think I can probably help point something out here.
Speaker Change: Michael So if you take a look at the income statement the way that it's broken out we had to disclose to discontinued operations, which is.
Speaker Change: Effectively the entire multi tenant portfolio and everything that will be.
Speaker Change: <unk> sold so the income statement itself already strips out the multi tenant.
Christopher Masterson: And then in terms of a go-forward, I just do want to bring up again, which goes at last quarter, that the G&A is expected on an annualized basis to decrease by about $6.4 million a year due to this. That's helpful.
Speaker Change: And then in terms of our go forward too.
Speaker Change: We want to bring up again, we disclosed last quarter.
Speaker Change: That the G&A is expected on an annualized basis to decrease by about.
Speaker Change: $6 4 million a year due to this multi tenant sale.
Speaker Change: Okay.
Speaker Change: Got it that's helpful.
Michael Weil: And then maybe just last one from a transaction perspective. Obviously, I think it makes a lot of sense strategically and from the capital structure to sell down the vacant assets and use that to reduce the debt load and repurchase shares. I'm just curious, between last year and then what's in the pipeline for this year, it's about 140 vacant assets. I'm just curious, Michael, is that basically the preponderance of the vacant assets that are in the portfolio? Is there still a sleeve there that would be potentially a source of future proceeds? Or how should we think about that?
Speaker Change: And then maybe just last one from a transaction perspective.
Speaker Change: Obviously, I think it makes a lot of sense strategically and from a capital structure to sell sell down the vacant assets and and use that to reduce the debt load and repurchase shares I'm just curious kind of between the end between last year and then what's in the pipeline for this year, it's about 140 vacant assets I'm just curious Michael.
Speaker Change: Is that basically the the preponderance of the vacant assets that are in the portfolio is there still asleep there that would be potentially a source of future proceeds or how should we think about that.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change:
Michael Weil: Michael, I'm sorry, I was trying to look through some information. as you were asking the question. Will you ask me that one more time? Sure, of course. So, between last year and kind of what's in the pipeline, it's about 140 vacant assets that are either closed or set to be closed. Is that the bulk of the vacant assets in the portfolio, or are there more potential vacant sales available to you? to be able to pay down additional debt. Thank you. Well, no, because as you saw from our... release. We're going to be about 98% occupied in the second quarter after the completion of the multi-tenant sale.
Michael: Michael I'm, sorry, I was trying to look through some information.
Speaker Change: As you were asking the question.
Michael: Well you asked me that.
Speaker Change: Sure of course.
Speaker Change: Between the last year and kind of what's in the pipeline. It's about 140 vacant assets that are either closed or are set to be closed is that the bulk of the vacant assets in the portfolio or are there more potential vacant sales available to you.
Speaker Change: To be able to pay down additional debt.
Speaker Change: Well no because as you saw from our.
Speaker Change: Release.
Speaker Change: We're going to be about 98% occupied.
Speaker Change: In in the second quarter after the completion of the multi tenant sale.
Michael Weil: We see that going up a little bit from there, just from leasing, etc. So, no, there's not a lot of vacancy left in this portfolio. You're really going to get used to seeing us reporting in what's typical for a single-tenant net lease read. Great.
Speaker Change: We see that going up.
Speaker Change: A bit from there just from leasing et cetera. So no. There's not a lot of vacancy left in this portfolio youre really going to get used to seeing us reporting in what's typical for a single tenant net lease REIT.
Speaker Change: Okay.
Speaker Change: Great. Thanks for the time alright, Thank you Michael.
Michael Gorman: Thanks for the time. All right. Thank you, Michael. Thank you.
Speaker Change: Thank you.
Michael Weil: Ladies and gentlemen, as there are no further questions, I will now hand the conference over to Mike Weil for his closing remarks. Thank you, everybody. We always appreciate you taking the time to catch up with us and to see the progress that G&L is making. As I said a little bit earlier, really proud of this work that we're doing. We're all very focused and starting to see the benefits of these conclusions. Thanks again. If you have any questions, we look forward to following up.
Speaker Change: Ladies and gentlemen.
Speaker Change: No further questions I will now hand, the conference over to Mike <unk> for his closing remarks.
Speaker Change: Great.
Speaker Change: Thank you everybody. We always appreciate you taking the time to catch up with us and to see the progress that gnl's, making as I said a little bit earlier.
Speaker Change: Really proud of this work that we're doing it is.
Speaker Change: We're all very focused and starting to see the benefits of these conclusions. So thanks again, if you have any questions. We look forward to following up we'll talk to everybody soon and I guess, we'll see most of you at NAREIT in a couple of weeks. So talk to talk to everybody then thank you.
Michael Weil: We'll talk to everybody soon, and I guess we'll see most of you at NAIRIT in a couple of weeks. Talk to everybody then. Thank you.
Speaker Change: Thank you.
Operator: Ladies and gentlemen, the conference of Global Net Lease has now concluded. Thank you for your participation. You may now disconnect your lines.
Speaker Change: Ladies and gentlemen, the conference of global net lease has now concluded. Thank you for your participation you may now disconnect your line.
Speaker Change: Hum.
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