Q3 2025 Global Net Lease Inc Earnings Call
Good afternoon and welcome to global net lease. Inks, third quarter 2025 earnings call.
At this time, all participants and the lesson on mode, a brief question and answer session will follow the formal presentation.
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As a reminder, this conference is being recorded.
I would now like to turn the call over to Jordan. Shanfeld assistant vice president at global net lease. Please go ahead.
Thank you. Good morning everyone. And thank you for joining us for gian's, third quarter, 2025 earnings call. Joining me today on the call is Michael wild, gnl chief executive officer and Chris Masters in gnl Chief Financial Officer.
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 third 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. 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 financial measures that we use such as afo and adjusted IBA and reconciliations of these measures to our results. As reported in accordance with gaap. Our details in our earnings release and supplemental materials. I'll now turn the call over to our chief executive officer. Michael while Mike
Thanks Jordan. Good morning, and thank you all for joining us today.
It has now been approximately 2 years since G&L is internalization and we're very proud of what we've accomplished thus far and enthusiastic about what lies ahead.
Since the internalization we have said, ambitious and transformative strategic goals to streamline our portfolio, reduce leverage and lower our cost of capital.
Measurable benefits reflected in the stable operations, improved credit profile, and enhanced financial flexibility.
Culminating in our recent of earning, an investment grade corporate credit rating from fit rings.
The main driver of our strategic agenda has been a prudent disposition program focused on selling non-core assets.
With proceeds directed toward reducing leverage and improving portfolio quality.
The highlight of our successful implementation of this effort was the approximately 1.8 billion sales of our multi-tenant retail portfolio. Completed in June of 2025,
which accelerated our debt reduction initiatives and firmly positioned G&L, as a Pure Play, Single tenant, net lease rate while maintaining our industry-leading proportion of investment grade tenants,
since the implementation of this disposition program, we have sold approximately 3 billion dollars of dispositions including the sale of non-core short duration single tenant assets at a 7.7% cash cap rate while reducing our net debt by approximately 2 billion dollars since the third quarter of 2024
These results, particularly the 7.7% cash cap rate achieved on our non-core single tenant asset sales, provide tangible proof of the quality and value of our primarily investment grade portfolio. While underscoring, the meaningful discount in our implied cap rate relative to our Pure Play Single tenant portfolio of assets.
Building on the progress we've made on our disposition program which is meaningfully reduced. Our leverage. We capitalize on an attractive opportunity to further. Lower our cost of capital by refinancing our revolving credit facility, including new institutional lenders attracted by gnl strength and balance sheet.
In August of 2025, we completed that refinancing extending the maturity from October of 2026, to August of 2030, inclusive of 2 additional 6-month extension options.
This refinancing delivered, an immediate 35 basis point reduction in our interest rate spread reflecting improved pricing and enhanced liquidity. While also reducing near-term debt. As there are no significant maturities until 2027
these strategic actions significantly contributed to Fitch ratings, recent upgrades of G&L corporate credit rating to investment grade Triple B minus from double V plus
We believe this milestone is a direct result of the decisive steps we've taken to strengthen our balance sheet, enhance our credit profile, improve portfolio quality, and demonstrate our ability to deliver on our strategic objectives.
Our ongoing disposition program has generated significant liquidity. Giving us incremental flexibility to acrely repurchase shares, which we believe enhances long-term shareholder value.
Through October 31st 2025, we have repurchased 12.1 million shares at a weighted average, price of $759, totaling 91.7 million capitalizing, on the opportunity to buy back shares at an afo yield of approximately 12%.
We believe buying back shares at this AFO yield offers a more compelling use of capital than alternatives, such as acquisitions, which we have not found attractive in this current environment.
We've been disciplined in managing, share repurchase, alongside debt reduction, ensuring that capital is deployed in a way that we believe maximizes long-term value.
Looking ahead, we plan to continue to evaluate additional initiatives, including Acquisitions that, we expect to strategically enhance shareholder returns while maintaining the financial strength and flexibility that underpins G&L growth.
In addition to our specific achievements, We Believe broader Market developments are created additional opportunities to strengthen our financial position.
Last week, the Federal Reserve announced a second 25 basis point reduction in the target range for federal funds rates and will monitor the newly constituted Federal Reserve in the spring of 2026. As we anticipate a dovish stance towards the economy, this should further lower our cost of capital.
Additionally, dividend income from REITs tends to become increasingly attractive in a rate, cutting environment as they can offer a more attractive return relative to US Treasury Securities. Creating a potential pathway for favorable market performance by the net lease rate industry.
Turning to our portfolio. At the end of the third quarter of 2025, we owned over 850 properties, spanning nearly 43 million, rentable, square feet.
Our portfolio's occupancy stands at 97%, with a weighted average remaining lease term of 6.2 years.
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.
It has an a average annual contractual rental increase of 1.4%, which excludes the impact of 23.1% of the portfolio. With CPI linked leases that have historically. Experienced significantly higher rental increases,
On the leasing front during the third quarter of 2025, we leased over 1 million square feet, achieving renewal spreads that were 26% higher than expiring rents, largely driven by lease renewals with GE Aviation and GSO Logistics.
New leases that were completed in third quarter of 2025 have a weighted average lease term of 5 years. While renewals that were completed during this period have a weighted average lease term of 7.3 years.
I'd like to highlight the strength and resilience of our office portfolio which continues to deliver strong performance.
In July, we completed a 10-year lease, renewal with GE Aviation, for a 369,000 square foot. High-quality office asset with a strong credit tenant at an implied, A3 rating, achieving an attractive 37%, renewal spread
In addition, we secured a 20-year lease renewal with the United States General Services Administration and its Lakewood Colorado, location reinforcing the mission critical nature of our portfolio that we believe continues to be undervalued by the market.
Since the start of 2024, we've executed 10 office lease, renewals at an average, renewal spread of 6.7%.
Reflecting both the quality of our tenants and the Strategic execution of our asset management team.
Our office. Portfolio continues to provide strongly with 100% rent collection across all tenants. The highest proportion of investment grade, Tenney at 77% and minimal lease rollover annual expirations represent 2, and 1.5% or less of total square footage through 2029.
Our continued efforts and results in limiting exposure, to high-risk geography, asset types, tenants and industries, is a testament to our intentional diversification strategy and credit underwriting.
No, single tenant accounts for more than 5% of total straight line rent. And our top 10, tenants collectively, contribute only 29% of total straight line rent with 73%, being investment grade.
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 Q3 2025 investor presentation on our website.
With that I'll turn the call over to Chris to walk through the financial results and balance sheet matters in more detail. Chris.
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.
For the third quarter of 2025, we recorded revenue of 121 million and a net loss attributable, to Common stockholders of 71.1 million.
AFL was $53.2 million, or 24 cents per share.
Looking at our balance sheet, the growth outstanding debt balance was 3 billion. At the end of the third quarter of 2025, a reduction of 2 billion from the end of the third quarter of 2024,
Our debt is comprised of $1 billion in senior notes, $666 million on the multicurrency revolving credit facility, and $1.4 billion of outstanding gross mortgage debt.
As of the end of the third quarter of 2025, 87% of our debt is fixed reflecting debt, tied to fixed rates or debt. That is swapped to fix rates.
2.9 times.
At the end of the third quarter of 2025, our net debt to adjusted EBITDA ratio was 7.2 times, based on net debt of $2.9 billion, significantly down from 8 times at the end of the third quarter of 2024.
While the ratio was slightly higher this quarter due to timing of certain dispositions. Our robust disposition pipeline gives us confidence. That we we will remain within our stated, net debt to adjusted, Evita 2025 guidance range of 6.5 times to 7.1 times.
As of September 30th 2025, we had liquidity of approximately, 1.1 billion and 1.2 billion of capacity on our revolving credit facility compared to 253 million and 366 million respectively. As of the end of the third quarter of 2024,
additionally, we had approximately 220 million shares of common stock outstanding, and approximately 221 million shares outstanding on a weighted average basis for the third quarter of 2025,
Through October 31st 2025, we have repurchased 12.1 million shares at a weighted average price of $759 per share under our share repurchase program.
According to our outlook for the remainder of 2025, we are confident in our in our performance, and our raising, our afo per share guidance for 2025, to a new range of 95 cents to 97 cents.
We also reaffirm our stated net, debt, to adjusted ebit range of 6.5 times to 7.1 times.
I'll now turn the call back to Mike for some closing remarks.
Thank you, Chris.
Achieving an investment grade rating from Fitch rating, is a major milestone for G&L and validates. The Strategic plan we set in motion, following the internalization in September 2023.
We've executed on our initiatives with discipline reducing leverage. Strengthening our balance sheet refinancing maturing debt, and optimizing our portfolio. Through targeted dispositions.
From fifty million dollars.
We believe these actions have positioned G&L as a pure-play single tenant net lease company, with enhanced financial flexibility built for sustainable growth.
Looking forward, we believe these achievements position G&L to capitalize on a variety of Market opportunities and continue creating meaningful shareholder value.
We believe our strong balance sheet, discipline, Capital allocation, and proven track record of execution, his position. G&L exceptionally well to deliver consistent performance and execute additional strategic initiatives.
As we look to deploy incremental proceeds from dispositions, we continue to evaluate. The trade-offs between Acquisitions and share repurchases, recognizing the significant value opportunity for shareholders in buying back shares at current levels, while remaining flexible to pursue real estate Acquisitions in the future.
We continue to monitor the real estate market closely, but being a buyer in the current environment isn't particularly compelling to us given higher seller, expectations elevated borrowing, costs and cap rates that remain tight making. It difficult to justify many acquisition opportunities. As compared to the immediate benefit of continuing with the announced share repurchase program.
we plan to continue to execute on our near-term, strategic objectives to position, G&L to continue delivering, consistent results, and long-term value for our shareholders,
We're available to answer any questions. You may have after the call operator, please open the line for questions.
Thank you.
Ladies and gentlemen, we will now begin the question and answer session.
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Ladies and gentlemen, we will wait for a moment while we Poll for questions.
Our first question.
Comes from the line of Opel Rana with Key Bank Capital markets. Please go ahead.
Good morning.
Uh, congrats on the quarter. Uh, Michael you mentioned, uh, Acquisitions, don't look attractive to you, in today's environment, you know, I'm just trying to understand, you know what, what needs to happen for you to become an active buyer again, and and if if so what would be sort of your funding plans for that?
So we would look to finish.
Our disposition program, which we are in the late innings of, and as a part of that strategy, of course, we've continued to actively monitor the acquisition environment.
um, and you know, we just keep seeing
cap rate expectations from sellers that don't match up to cost of capital and in many cases aren't supported by the underlying credit of the tenant. Um, so I think there there are a number of things that, you know, just the discipline of of our acquisition strategy. The reason so much of our portfolio is investment grade. Um, is that
we're not necessarily looking to see a higher cap rate on an acquisition at the sacrifice of the underlying credit of the tenant or the quality of the real estate. Um, so I think a big part of what we're monitoring is the, um, state of, um,
Cost of debt, the the the pricing generated off of the 10-year. Treasury is ETC. Um, and I just don't think we're there right now.
um, I I
Continue to see, uh, the acquisition pace.
In in the industry is slower than what we've seen over the last decade. Um, but again, when we think about it in terms of our our number 1 goal is to continue the completion of the debt reduction program.
Is very impactful. And of course, we we want to grow, we want to be active. Um, but first and foremost we want to drive, uh, the greatest possible benefit for shareholders. Um, and we think that's the combination of finishing, our debt reduction program, um and the opportunistic share repurchase program.
Okay great. That that was helpful. And then um with leverage, you know, it ticked up in the quarter and it looks like it was timing related from your multi-tenant sale. Yep. But it currently stands at the high end of your guidance range and and so and you have some more disposition to close uh, by year end as well. So just trying to understand how you get to the midpoint of your leverage guidance by year end.
Um, Oppo, you're right that some of it is driven by just.
Timing. And um, so we're we're very confident that by completing uh what is already scheduled in our pipeline activity. Um, some things that, um, we anticipate occurring in the fourth quarter, that that we haven't had an opportunity um, to disclose yet.
Um, that
We are going to be comfortably within our our range on net debt. Um, and um, you know, a coupled that with the fact that we were able to raise our, our afo for share guidance, um, I I think that, you know, we're
We come to work every day, like you would expect us. Um, sometimes we joke about, we we just carry rocks uphill every day, uh because there's not a lot of of Glory here in what we're doing, but it is just consistent dedication and and hard work. Um, so we've been able to really, um, execute on the plan, which at the end of the year will show material reduction of net death to ibida. Um, but just as important, we've been able to, um, grow afo per share and and I think you realize that's not necessarily easy.
Um, and we've we've used all the levers available to us.
Our real estate team has done a really commendable job on dispositions and maximizing the value of non-core assets. You know, the fact that our single-tenant portfolio sale of non-core assets with about, you know, 5 years or less remaining, we've been able to generate a 7.7% cap rate. Um, it just really indicates, you know, the underlying value of the tenants in the portfolio and the real estate.
We'll continue to to maximize that. Um we'll use those proceeds um as we talked about on the call to continue to lower net debt to ibida. Um the hard work of Chris and Ai and and the team with recasting the credit facility which had an immediate and impactful savings on cost of debt as well as extending our uh maturities. Um, you know, these are all things that continue and and what we think is important is to to show the market that
We're we're, we're hitting on all of the important aspects. We're maximizing value. And frankly, we're starting, we're just starting to prepare for the next phase of G&L, which is 1 where we can really maximize value through growth.
Okay great. That was that was helpful and then just 1 1 last 1 for me, would be, you know, based on your revised afo, for sure. Guidance, you know, for Q implies 19 cents of the midpoint. And could you walk us through, how you get from 24 cents and 32 to 19 and 4 q? I don't dispositions, we'll have some kind of impact, but anything else that we should be looking out for for our model?
Yeah, Chris do you want to walk up through some of that?
Sure what I would say there, really it comes down to to get into the the midpoint in the range for the the a temple guidance is is the timing of the dispositions obviously in third quarter, we had the the plan in place. So we we did have some properties that the dispositions closed later in the quarter and and the same thing will happen during the fourth quarter and and we are confident that we will land in in the range that we provided.
Okay, great. Thank you.
Thanks for
Thank you.
Our next question comes from Mitch, join with Citizens Bank. Please go ahead.
Uh, thank you. Hey thank you and congrats on the quarter. Um, thank you.
I,
A little bit of occupancy decline, quarter over quarter. Um, anything specific there that you want to reference that might have driven that? Was it opportunistic? Was it part of the asset recycling? Anything specific? Yes.
It is opportunistic in that, um, we had a, um, a tenant expiration that that we've been, um, very engaged on, um, in the UK portfolio. Um, and it's a timing
Piece for us because we are actively engaged with several tenants, um, on new leasing at that location. It's going to be a, a nice pickup on straight line rent. It's going to be a nice pickup, um, on occupancy. And I would suggest that we will finish the year um, much closer to fully occupied than the 97% that we we reported at the end of the quarter.
Great, that's super helpful. Um, last 1 for me um,
I you know you you've mentioned the word growth, a couple times in this call which obviously is a little bit of a departure for versus kind of the uh we call it, you know, the kind of shrinking of the portfolio and the deleveraging that that's been the key theme. Um, I'm I'm curious though, you know, kind of how you view the Playbook without giving guidance, but how you view the strategy and the Playbook going into 2026 since, you know, is is it seems like
You may be a little bit more open acquisitions.
How much will dispositions remain a steam? Um, maybe just kind of walk me into how we should be thinking about the forward outlook for you guys. Thank you.
Thanks Mitch. Um, you know the way we're thinking about it is really going to be reflected in how we see the uh stock price perform.
um,
if we continue to see a material disconnect between the underlying value of the portfolio, and the any number of multiple or metrics that you might look at to evaluate the stock price. Um,
That's going to determine our course of action. Um, I talked about the potential for restarting growth because it's important; it's something that we want to do. But by no means do we want to acquire real estate for the sake of acquiring real estate to say that we're growing for the sake of growth. We have the impactful opportunity to execute on our stock buyback program, which is easier to see as more accretive than, um,
Acquisitions that I've been seeing in the market. Um, so again, I I don't want to give guidance right now and I appreciate you pointing that out. Um, it is something that we will talk about. Um, but we still feel that we have some some work to do on on reduction of net debt to ibida by no means. Are we saying that we're finished there? Um, but we are seeing opportunities, you know, we had incredible.
An incredible quarter, um, of pickup on.
Renewal spreads.
Which, of course, helps our ibida. Which of course helps our net debt to ibida. So as you know, there are certain there, there are, many different ways to lower net debt to ibida. Um, of course, we can continue to lower our uh, balance sheet debt which we intend to do. Um, but we can also grow ibida. Um, so we're, we're fully engaged. I'm not going to say that. We will absolutely be finished the disposition program because if if we continue to see value in disposition that allows us to execute on different parts, um, we feel that the job here is to realize value for shareholders and and we're going to continue to do that and, and drive this price.
Thank you, operator. Yeah, thank you. Do we have any other questions?
Yes. Uh, ladies and gentlemen, a reminder, to all participants. If you would like to ask a question, please press star and 1 on your telephone keypad. Our next question comes from John Kim, from BMO Capital markets, please go ahead.
Thank you. Um,
this quarter, you had a a good uh renewal leasing spread of 26.4%. Um just wondering how the achievable this is going forward especially on your industrial. Lease expirations,
and also, if you could disclose uh, that figure including new, leases
Uh, that'd be appreciated.
Um, hey John, how are you? Um, so
26% on, um, renewal spreads. Um,
Over the year to date. It's been, um, 18 and a half percent. So I would say 26% is a, um, a terrific quarter. Um, every, you know, every opportunity that we have to to see spreads like that. We're we're very pleased. Um, but spreads have continued to be strong in in the renewal activity. Um,
I,
I think it's a a good quarter when when you know you're you're 5 5 or 6% on renewal spreads. So the fact that we can continue to do that shows um the tenants want to be
In these buildings in their real estate that whether it's industrial retail or office, it's a critical piece of their operating business and they don't want to give that up even as the, the lease expires, um, our asset management team engages. As we've said, many times typically 2 years out before a, a lease expiration, um, so that we can begin the conversations and, um, it, it's what really helps us. Um,
Drive these types of of results.
So, we're very pleased with where we are year-to-date and exceptionally pleased with where we came in this quarter.
Do you typically get a higher spread on renewal than on new leases? I'm just wondering why.
Why that renewal is being taken out.
Um, well, you know, if you think about the kind of the, the way a renewal Works, a tenant, has been in a property, um, for 10 or 15 years and in many net lease, um, structures. You know, there's a, a 1 or a 1 and a half percent annual escalator.
Occasionally, you'll get a 2%. Um, so there are many situations, where after 5, or I'm sorry after 10 or 15 years. Um,
They're under market and the renewal includes the catch up to to get them back to where where they should be to stay in that property. So um,
It's it's just 1 of those things. Um, you know,
Market dictates spreads on new leases versus renewals. Um, and both can add a lot of value to to the overall portfolio.
Okay. Um, kind of an odd question, but if you look at your balance sheet from last year,
Yeah.
Here we go. Okay, go ahead. You have 524 million, uh, of multi-tenant mortgage loans, 5, different charges,
That was in the second quarter. Your 10-Q hasn't come out yet, but I was wondering if that was related to your multi-tenant portfolio that you sold.
And if you still have that on balance sheet today because because your debt didn't move that much uh, this quarter.
Chris, you want to take that?
Yes. So yeah, that what we have from discontinuity operations that would have been related to the mortgage payables that were assumed by rcj as part of the transaction. If you look just strictly at our mortgage payables line on the balance sheet um and 2q we would not have had any of the those assumed mortgages in there. They would have been reclassified out.
So that we can. So it's comparable quarter over quarter.
So you don't have that imbalance sheet today.
Great. Thank you.
Thank you, as there are no further questions, I would now like to hand the conference, over to my wife, for closing comments.
Great. Well, as always, uh, we appreciate you taking time to listen to the update on global net lease. Um, we're excited about what we've accomplished in the third quarter, but by no means, do we feel that? This is the the place we want to be. Um, we still see great opportunity here. Great value. And the team is as committed as it's ever been to executing on the things that are necessary, uh, to unlock this value. So thank you for your, your, your, your involvement, and thank you for your feedback. We look forward to catching up with everybody, um, over the next couple of days and we'll talk soon. Thank you.