Global Net Lease, Inc.

Good afternoon and welcome to the Global Net Lease Second Quarter 2023 Earnings Call. All participants will be in listen-memory mode. Should you need assistance, please signal a conference specialist by pressing the star key, then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Curtis Parker, Senior Vice President. Please go ahead.

Thank you. Good afternoon, everyone, and thank you for joining us for GNL's second quarter 2023 earnings call. This call is being webcast in the investor relations section of GNL's website at www.globalnetlease.com. Joining me today on the call to discuss this quarter's results are Jim Nelson, GNL's Chief Executive Officer, and Chris Masterson, GNL's Chief Financial Officer. Mike Weil, CEO of the Necessity Retailery, Inc., will also be joining us for the question and answer session. The following information contains forward-looking statements which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings, including the Form 10-K for the year ended December 31, 2022, filed on February 23, 2023, and all other filings with the SEC after that date for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, 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 non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures, the most directly comparable GAAP measure, is available in our earnings release and supplement, which are posted to our website. Please also refer to our earnings release for more information about what we consider to be implied investment grade tenants, a term we will use throughout today's call. I will now turn the call over to our CEO, Jim Nelson. Jim?

Thanks, Curtis, and thank you to everyone for joining us on today's call. Before we get into our results, I will provide a brief update on the proposed merger with the Necessity Retail REIT, which was announced in May and is expected to close this September. We believe that the merger with RTL and the simultaneously internalization of GNL's management and operations, paired with numerous governance enhancements, will establish GNL as a sector-leading net lease REIT with a global presence uniquely positioned for long-term growth. We expect that the first full quarter after closing the transactions will be 9% accretive to annualized AFFO per share, relative to the quarter ended March 31, 2023, and will reduce leverage for the combined company driving net debt to adjusted EBITDA to 7.6 times in the fourth quarter. Annual cost savings are expected to be approximately $75 million. The SEC declared the registration statement for the merger effective in July, and we have set a record date of August 8th, 2023 for the special meeting of stockholders to vote on the proposed merger, which will be on September 8th, 2023. Beyond the merger, the G&L team continued to make great progress on our key strategic objectives during the second quarter. We completed 11 lease renewals and one tenant expansion project, resulting in nearly $20.2 million of net new straight-line rent over a weighted average lease term of six years. Occupancy was 98% across the portfolio. Subsequent to quarter end, we signed three additional lease renewals, bringing us to 14 lease renewals since the end of the first quarter. Nearly 60% of our long-term leases are with investment-grade tenants, and industrial and distribution assets comprise 55% of our portfolio as the end of the second quarter, both based on annualized straight-line rent. Among our office property, 68% are mission-critical facilities, which is defined as headquarters, lab, or R&D facilities, and 71% are leased to investment-grade or implied investment-grade tenants. We believe GNL is well positioned for meaningful capital appreciation with our strong portfolio and upcoming corporate enhancements. We continue to be substantially insulated from the rising interest rate environment as we benefit from our predominantly fixed rate debt, which minimizes the impact of rate increases, as well as a sophisticated hedging program designed to minimize negative impact to our cash flow from foreign exchange volatility and a stronger U.S. dollar. In the second quarter, our AFO was 41.4 million, or 40 cents per share, compared to 43 cents in the second quarter of 2022, but an increase from 38 cents per share in the first quarter of 2023. Revenue increased over 1.5 million compared to the first quarter of 2023, which also helped drive adjusted EBITDA and NOI higher quarter over quarter. Our performance was driven by ongoing strong leasing activity, which totaled 1.7 million square feet of lease renewals and expansions through July 20th, 2023. These leases added 64.1 million of net new straight line rent over the new lease terms at a positive 0.7% spread compared to the prior leases. Leases signed during the second quarter included sick leases with XPO Logistics in the US for over 77,000 square feet, a lease with ID Logistics in France for approximately 566,000 square feet, and an 86,000 square foot lease with PFB Canada in Alberta. Thanks to our leasing efforts, our portfolio only has 1% of leases expiring during the balance of this year, with 73% of our leases not expiring until 2028 or later. At quarter end, our $4.6 billion, 317 property portfolio had a weighted average remaining lease term of 7.6 years. Geographically, 236 of our properties are located in the U.S. and Canada, representing 60% of annualized straight-line rent revenue. We own 81 properties in the U.K. and Western Europe, which generate 40% of annualized straight-line rent. Our portfolio is well diversified with 139 tenants and 51 industries, with no single industry representing more than 12% of the entire portfolio and no tenant exceeding 5% of the portfolio based on annual straight line rent. Approximately 95% of our leases feature annual rent increases, which increase the cash rent that is due over time from these leases. Based on straight line rent, approximately 60.1% of our leases feature fixed rate escalations 27.5% have escalations that are based on the consumer price index, and 7.1% have escalations based on other measures. Subsequent to the end of the second quarter, we announced that we had entered into a definitive agreement to sell a vacant property in San Jose, California for $50 million. We bought this property for $52.5 million in 2014 with a long-term lease in place. Negotiating the sale of this vacant property for nearly the same price we paid for it showcases the value of our diligent underwriting standards that favors properties with high reuse potential. Our differentiated investment strategy continues to deliver value and we remain focused on growing our portfolio. Our successful lease renewals speak to the mission critical nature of the properties that we own where the weighted average remaining lease term is nearly eight years. We are well positioned for the future and I look forward to building on our progress through the merger and the many strategic objectives we are pursuing. I'll turn the call over to Chris to walk through the financial results in more detail before I follow up with some closing remarks. Chris?