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NEW YORK CITY—Global Net Lease is a New York-based, small-cap real estate investment trust, focused on acquiring and managing single-tenant net lease commercial properties.
In SEC filings, GNL describes risks to investors. In its 10-K filed on Dec. 31, 2017, it sets forth as a risk potential inability to obtain debt financing or raise equity required to meet their goal of acquiring $500 million of properties during the year ending Dec. 31, 2018. In its 10-Q filed on June 30, 2018, GNL lists risks regarding uncertainties in raising capital and refinancing such that results could differ from its forward-looking statements.
Earlier this month, the REIT took actions with financing and debt.
UK Multi-Property Financing
GNL closed a new, five-year, $293 million, multi-property financing. It encumbers GNL’s 43 assets located in the UK. A syndicated loan led by Lloyds Bank closed on Aug. 16, 2018. It replaces the individual property loans on 38 of the properties. CBRE brokered the financing.
The net proceeds from the financing were used to repay approximately $269 million of fixed-rate mortgage debt encumbering 38 of the 43 properties. The principal amount of fixed-rate mortgage debt with respect to the remaining five properties had been repaid earlier this year.
“The refinancing of our UK assets has been a priority for us this year,” says James Nelson, GNL’s CEO. The financing terms with Lloyds extended the debt maturity on the UK assets to five years from what was a remaining term of one year for the encumbered properties. The financing also lengthened GNL’s overall portfolio debt maturity to 3.9 years from 3.3 years, he explains.
”The new financing provides us with a balance of fixed and floating rate debt and lowers our cost of debt on the UK assets to an estimated 3.20% all-in weighted average interest rate,” Nelson says.
The maturity date of the financing is Aug. 13, 2023. It bears an interest rate of 1.975% + three-month GBP LIBOR, with the interest rate for 80% of the loan amount fixed by a swap agreement to 3.299%.
Lloyds was the exclusive arranger for the refinancing of the entire UK portfolio. The transaction repaid facilities previously provided by a number of lenders, according to Klaus Betz-Vais, the head of CRE institutional clients at Lloyds.
Common Stock Offering
GNL raised $94.99 million in gross proceeds with 4.6 million shares of common stock. The public offering of four million shares of common stock at $20.65 per share closed on Aug. 20, 2018. The underwriters exercised their 30-day option to purchase an additional 600,000 shares.
After deducting the underwriting discount, the net proceeds of $91.2 million will fund GNL’s acquisitions. This includes paying for a portion of the $135.9 million price tag for two net lease distribution properties that will be leased to FedEx Freight and a leading global supply chain and logistics services company. The transactions are expected to close in September and October. The joint book-running managers were BMO Capital Markets and UBS Investment Bank.
According to its 2017 10-K, GNL’s revenue was $259.3 million, up from $214.2 million in 2016 and up from $205.3 million the year before. In 2017, its adjusted funds from operations (“AFFO”) attributable to common stockholders was $140.7 million, an increase from $127.1 million from the prior year. Last year, GNL raised $130.4 million net proceeds through issuance of 5.41 million shares of 7.25% Series A redeemable preferred stock.
Betsy Kim is the bureau chief, East Coast, and New York City reporter for Real Estate Forum and GlobeSt.com. As a lawyer and journalist, Betsy has worked as the director of editorial and content for LexisNexis Lawyers.com, a TV/multi-media journalist for NBC and CBS affiliated TV stations in the Midwest, and an associate producer at Court TV.
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