Global Net Lease, Inc.

Good afternoon, and welcome to the Global Net Lease, Inc.' 's fourth quarter and full year 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 press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to Jordan Schoenfeld, Vice President at Global Net Lease. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for GNL's fourth quarter and full year 2025 earnings call. Joining me today on the call is Michael Weil, GNL's Chief Executive Officer, and Chris Masterson, GNL's Chief Financial Officer. The following information contains forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. Please review the forward-looking and cautionary statement section at the end of our fourth 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 filing, 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 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. I'll now turn the call over to our Chief Executive Officer, Michael Weil. Mike?

Thanks, Jordan. Good morning, and thank you all for joining us today. 2025 was a transformational year for GNL as we executed a series of deliberate and highly impactful actions that materially reshaped our financial and operational profile, strengthened the quality and focus of our portfolio, and established a more durable foundation for our company's long-term growth. The centerpiece of our transformation in 2025 was the successful execution of our $1.8 billion multi-tenant retail portfolio sale, which accelerated our deleveraging strategy, materially strengthened our balance sheet, and completed our evolution into a pure-play, single-tenant net lease REIT. This portfolio simplification improved the overall efficiency of the company by driving meaningful reductions in operational complexity, which allowed us to lower both G&A and capital expenditures. The multi-tenant retail portfolio sale was a significant milestone in our disposition program launched in 2024, through which we have completed approximately $3.4 billion of asset sales to date. The disposition program included $995 million of occupied single-tenant non-core assets at a 7.6% cash cap rate. and $2 billion of occupied multi-tenant assets at an 8.2% cash cap rate, and concluded in December 2025 with the sale of the McLaren Campus for 250 million pounds, or approximately $336 million, at a 7.4% cash cap rate. The McLaren sale generated approximately 80 million pounds or $108 million of value above its original acquisition price and further enhanced the quality and focus of our portfolio as it increased the proportion of investment grade tenants among our top 10 tenants to 80% in the fourth quarter of 2025 from 73% in the third quarter of 2025 while also reducing our exposure to the automotive industry. The net proceeds from these non-core asset sales under our disposition program were deployed with clear priorities. We applied capital directly to deleverage our balance sheet, reducing outstanding debt by more than $2.8 billion since the fourth quarter of 2023 and improving net debt to adjusted EBITDA from 8.4 times to 6.7 times over the same period. This improvement meaningfully enhanced our financial flexibility and positioned us to act from a position of strength in the debt capital markets. This enabled us to further de-risk our balance sheet by executing a $1.8 billion refinancing of our revolving credit facility, which secured improved pricing, enhanced liquidity, and extended the maturity from October of 2026 to August of 2030, including two additional six-month extension options. Our decisive actions were recognized by the credit rating agencies, with Fitch upgrading G&L's corporate credit rating to investment grade BBB- from BBB+, and S&P Global lifting our corporate rating to BBB+, while upgrading our budgets to investment grade. These upgrades marked a major milestone for the company and validate the progress we've made in reducing leverage, improving portfolio quality, and strengthening our overall credit profile. Finally, as our disposition program continued to generate incremental proceeds, it provided additional flexibility to pursue other value-enhancing initiatives. Beginning in 2025, this included the opportunistic repurchase of 17.2 million shares through February 20, 2026, at a weighted average price of $7.88. representing total repurchases of $135.9 million and an implied AFFO yield of approximately 12%. We've been disciplined in deploying capital in a manner we believe supports long-term shareholder value, balancing accretive share repurchases with continued deleveraging. Our outperformance in 2025 was driven by disciplined execution of our corporate strategy, which translated into meaningful shareholder value creation, reflected by GNL's total return delivering 32% in 2025, compared to a 6% return for the net lease sector. We've begun to close the valuation gap with our peers through disciplined execution in 2025. And while we're pleased with the results achieved so far, we also believe there is a clear path to continued growth by the execution of our 2026 corporate objectives. We're evolving from a strategy centered primarily on deleveraging and dispositions to one focused on the accretive recycling of capital. This includes remaining selective and opportunistic with asset sales, particularly those that materially reduce our office exposure, and redeploying proceeds accretively into single-tenant industrial and retail acquisitions on a leverage-neutral basis. Importantly, we continue to actively evaluate our office portfolio and are currently marketing the sale of several assets, and we'll provide additional details as the transactions progress. At the same time, we're evaluating multiple redeployment opportunities that can be funded within our existing capital framework, executed on a leverage-neutral basis, and meaningfully contribute to earnings growth, preserving the balance sheet quality we've worked to establish. Turning to our portfolio, at the end of the fourth quarter of 2025, we owned 820 properties spanning nearly 41 million rentable square feet. Our portfolio's occupancy stands at 97% with a weighted average remaining lease term of 6.1 years. G&L's portfolio features a stable tenant base and a high quality of earnings with an industry leading 66% of tenants with an investment grade or implied investment grade rating. It is an average annual contractual rental increase of 1.4%, which excludes the impact of 19.6% of the portfolio with CPI-linked leases that have historically experienced significantly higher rental increases. On the leasing front, we delivered strong results across the portfolio, reflecting the depth of our asset management capabilities and the quality of our tenant relationships, as we executed leases on more than 3.7 million square feet during 2025 and achieved renewal spreads of approximately 12% above expiring rents. During the year, we completed multiple lease extensions with high-quality tenants, including Home Depot, GXO, and FedEx. Notably, we executed a GE aviation extension at an office asset, releasing the space at a 37% renewal spread, demonstrating our ability to drive incremental value within our office portfolio and position assets for potential sale. New leases executed in 2025 carried a weighted average lease term of approximately 5.2 years, and renewals completed during the period had a weighted average lease term of approximately 6.5 years, further supporting cash flow visibility and the durability of earnings. We remain focused on engaging with tenants well in advance of lease expirations to drive occupancy, retention, and rental growth, while maintaining a long-term perspective on portfolio stability. Our continued efforts and results in limiting exposure to high-risk geography, asset types, tenants, and industries are a testament to our intentional diversification strategy and credit underwriting. No single tenant accounts for more than 6% of total straight-line rent, and our top 10 tenants collectively contribute 29% of total straight-line rent, with 80% 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 Q4 2025 investor presentation on our website.