Global Net Lease, Inc.

Good morning, everyone, and welcome to the Global Net Lease Inc. Q4 2023 earnings call. All participants will be in a listen-only mode. Should you need assistance, please say no to a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touch-tone phones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Jordan Schoenfeld of Global Net Lease. Please go ahead, sir.

Thank you. Good afternoon, everyone, and thank you for joining us for G&L's fourth quarter 2023 earnings call. Joining me today on the call are Mike Weil and Jim Nelson, G&L's co-chief executive officers, and Chris Masterson, G&L's chief financial officer. The following information contains forward-looking statements which are subject to 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 and our periodic and current reports filed with the SEC after that date for more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, G&L disclaims any intent or obligation to update or revise these forward-looking statements except as required by law. Any guidance or statements referring to our pipeline or the future value of an investment in G&L, including any adjustments giving effect to the recently completed merger with Necessity Retail Incorporated, also known as RTL, and the internalization of both GNL's and RTL's advisory and property management functions, as well as any projections about future success following the merger and internalization, are also forward-looking statements. Also, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating 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 to the most directly comparable GAAP measure is available in our earnings release and supplement, which are posted to our website. Please note that we do not provide guidance on net income. We only provide guidance on AFFO per share and our net debt to adjusted EBITDA ratio and do not provide reconciliations of this forward-looking non-GAAP guidance to net income per share or our debt to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliation as a result of their unknown effect, timing, and potential significance. Examples of such items include impairments of assets, gains and losses from sale of assets, and depreciation and amortization from new acquisitions and other non-recurring expenses. Please also refer to our earnings release for more information about what we consider to be implied investment rate tenants, a term we will use throughout today's call. I'll now turn the call over to our co-CEO, Mike Weil. Mike? Thanks, Jordan.

Good morning, and thank you all for joining us today. GNL is now the third largest publicly traded net lease REIT with a global presence and features a diversified portfolio of high-quality, primarily investment-grade tenants. GNL's focus on investment-grade tenants, as compared to our peers, highlights the stability and high quality of our rental income. The largest tenant in the portfolio only accounts for 3.1% of the total straight line rent, with the top 10 tenants totaling just 21% of the portfolio, effectively mitigating concentration risk within the portfolio. We believe our diverse portfolio provides us with the flexibility and capacity to capitalize on numerous market opportunities, maximizing shareholder value over the long term. 2023 was a transformative year for GNL that included the internalization of management and enhanced corporate governance, further aligning GNL with its net lease peers. In addition to the merger and internalization, 2023 also highlighted GNL's strong asset management platform capabilities with continued leasing momentum. As a direct result of the merger, GNL has also recognized significant synergies, as outlined in our investor deck, and we're currently on track to achieve our stated $75 million of annualized cost savings by the third quarter of 2024. G&L is implementing a 2024 business plan focused on deleveraging its balance sheet, reducing its exposure to variable rate debt, and driving down its net debt to adjusted EBITDA. Our near-term strategic priority will focus on reducing leverage through select dispositions prioritizing non-core assets and opportunistic sales. We've strategically reviewed our portfolio and identified assets where we believe there is beneficial opportunity to divest. This includes assets that are non-core or have near-term debt maturities or near-term lease expirations. We expect a total of $400 million to $600 million of strategic dispositions in 2024. This disposition program will drive long-term shareholder value by generating cash to enhance and de-risk our balance sheet and create a clear path forward for us to potentially narrow the trading discount compared to our net lease peers. Selling assets at attractive cap rates will also provide proof of value to investors and demonstrate a significant premium compared to where the company is currently trading on an implied cap rate basis. Driving down leverage through measured opportunistic dispositions is the proper approach to maximize long-term shareholder value with proceeds used to lower our net debt to adjusted EBITDA. Our near-term strategic approach also involves a planned reduction of G&L's annual dividend from $1.42 to $1.10 per share, increasing the amount of annualized cash by $74 million to further reduce leverage. This reflects the company's continued commitment to strengthening its balance sheet while maintaining a disciplined dividend policy. Turning to our portfolio, at year end 2023, we had approximately 1,300 properties spanning nearly 67 million square feet with a gross asset value of $9.2 billion. The diverse composition of our net lease portfolio is unmatched whether measured by geography, asset type, tenant, or industry, and positions GNL to effectively navigate external macro challenges as we move ahead. The portfolio maintained occupancy of 96% with a weighted average remaining lease term of 6.8 years. Geographically, 80% of our straight-line rent is earned in North America, while 20% comes from Europe. The portfolio also features a stable tenant base and a high quality of earnings with an industry leading 58% of tenants receiving an investment grade or implied investment grade credit rating. From a growth perspective, the portfolio includes an average annual contractual rental increase of 1.3%. I'm again highlighting the strong asset management capabilities we demonstrated as we continue our leasing and renewal efforts. In particular, our fourth quarter leasing and renewal activities included over 2.1 million square feet across the entire portfolio, with attractive leasing spreads on renewals that were 6% higher than the expiring rents. New leases that were completed in the fourth quarter of 2023 have a weighted average lease term of 9.2 years, while the renewals that were completed in the fourth quarter of 2023 have a weighted average lease term of 6.1 years. The largest segment of our portfolio is industrial and distribution with 219 properties that span over 33.9 million square feet that contributed $235 million to annualized straight line rent. 92% of the leases in this portfolio include rent escalations with an average annual rental increase of 1.5%. Positioning the portfolio to benefit from annual rental income while having a 7.7 year weighted average lease term. Our single tenant retail segment is the largest by property count with 878 properties that span over 7.9 million square feet and contributed $154 million to annualized straight line rent. The single tenant retail segment comprises 66% investment grade or implied investment grade rated tenants and features an 8.3 year weighted average lease term. The multi-tenant suburban retail segment consists of 109 properties that span over 16.4 million square feet that contributed $200 million in annualized straight line rent. The portfolio has a weighted average remaining lease term of 5.2 years and includes 21% of grocery anchored centers, which are 90% leased. This segment is predominantly comprised of triple net leases with incremental lease up potential and attractive leasing spreads. Additionally, 61% of the straight-line rent in this portfolio comes from Sunbelt markets, which continue to grow and have favorable demographic tailwinds. Our smallest segment by straight-line rent, single-tenant office, includes 90 properties that span 8.6 million square feet and contributed $143 million to annualized straight-line rent and has a five-year weighted average lease term. One of the metrics that differentiates GNL's single tenant office portfolio is that it's comprised of 70% mission critical facilities, which we define as headquarters, lab, or R&D facilities, and features 68% investment grade or implied investment grade tenants, which we believe provides our portfolio with rent stability and low level of default risk. Given GNL's successful track record of lease renewals, The single-tenant office segment also includes limited near-term lease maturities, minimizing the risk of vacancy. A fundamental aspect of our comprehensive portfolio strategy involves limiting concentration risk. The combined annual straight-line rent from our top ten tenants amounts to only 21% of our overall portfolio, with our largest tenant contributing just 3.1%. Our approach to mitigating concentration risk also extends to every segment of our portfolio, ensuring diversity among the top five tenants within each segment, which we have highlighted in the investor deck. This diversified and investment-grade tenant base not only ensures stability, but also offers predictability in rental income, laying a solid foundation for our future growth. The quality and reliability of our tenants underscore the resilience and longevity of our business model. Our leasing results continue to illustrate the quality of our assets, driving leasing rates higher even in the current environment. The single tenant segment completed 16 new leases and renewals and showcased a positive 8% renewal leasing spread, demonstrating the strong renewal demand for our mission-critical assets while adding nearly $9 million to net straight line rent. The multi-tenant segment completed 54 new leases and renewals, resulting in a 2% renewal spread, consistent with the high demand we're experiencing at our suburban shopping centers, which increased net straight line rent by over $10.5 million. New leases that were completed in the fourth quarter of 2023 have a weighted average lease term of 9.2 years while the renewals that were completed in the fourth quarter of 2023 have a weighted average lease term of 6.1 years. Our executed leases at the end of the fourth quarter 23, combined with our leasing pipeline as of February 15, 2024, will bring occupancy in our multi-tenant portfolio from 88% to 91%. To put that in perspective, the multi-tenant portfolio represents only 27% of total straight-line rent in our portfolio, and GML's overall portfolio occupancy stands at 96%. The fourth quarter 2023 highlighted our commitment to expanding relationships with existing tenants, including new leases and renewals with Burlington, HEB Grocery, and Dick's Sporting Goods. Looking ahead, we remain committed to executing on our systematic and prudent approach to achieving our financial objectives. which revolve around reducing net debt to adjusted EBITDA while organically enhancing NOI through lease-up initiatives and contractual rent growth. A pivotal component of this strategy involves non-core dispositions and opportunistic sales, which should provide us with capital to deleverage our balance sheet. We believe this strategy will pave the way to reducing the valuation gap with our net lease peers. I'll turn the call over to Chris to walk through the financial results in more detail.