Global Net Lease Inc Aktie

Good morning, and welcome to the Global Net Lease Third Quarter 2026 Earnings Call. [Operator Instructions] Today's call is being recorded. I would now like to turn the call over to Jordyn Schoenfeld. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for GNL's third quarter 2026 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 Securities Litigation Reform Act of 1995. Please review the forward-looking and cautionary statements section at the end of our third quarter 2026 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, 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 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, Jordyn. Good morning, and thank you all for joining us today. Our focus remains on the performance of our portfolio and executing on our stated priorities. We're pleased with the progress we've made through the first 3 quarters of 2026. This quarter alone, we've closed and fully integrated the Modiv Industrial acquisition, made further progress reducing our office exposure and directed capital toward attractive share repurchase opportunities at an approximate 10% AFFO yield. Reflecting this continued execution, we're raising the low end of our full year AFFO per share guidance range. That execution took place against a more challenging macroeconomic backdrop.

Uncertainty around the economic outlook, inflation and monetary policy, together with a sharp rise in the 10-year Treasury yield has placed pressure on valuations and the cost of capital for commercial real estate. In this environment, we remain focused on what we can control, strengthening our portfolio, maintaining financial flexibility and allocating capital with discipline. We believe our investment-grade balance sheet, strong liquidity and significant exposure to investment-grade tenants positions us well to advance our strategy without the need to raise additional debt or common equity, while our portfolio organically generates sufficient free cash flow to fund our dividend. We continue to work diligently on renewals and lease extensions while pursuing opportunistic dispositions within our office segment.

The Modiv acquisition, completed on August 12, marked a very significant step in our portfolio repositioning following an extensive disposition initiative that transformed our business. We've fully integrated the acquired properties into our operating platform, and the portfolio is performing well and contributing positively to our results. We've also achieved the anticipated G&A synergies, absorbing the acquired portfolio without increasing G&A expense in the third quarter through the elimination of duplicative public company personnel and third-party costs. We've identified 3 to 5 noncore assets within the acquired 40-property Modiv portfolio for potential disposition and are evaluating potential opportunities to monetize these assets at attractive valuations. We estimate these potential sales could generate approximately $75 million to $100 million in gross proceeds, supporting our broader capital allocation priorities, including reinvestment in high-quality industrial and retail properties and debt reduction.

Across the broader portfolio, we further advanced our capital recycling strategy through targeted dispositions with a continued focus on reducing office exposure. Through October 30, 2026, our closed and disposition pipeline totaled $391 million, including $167 million of completed sales at a cash cap rate of 7.7% on occupied assets. Office properties continue to represent the majority of our sale activity, accounting for approximately 68% of total closed and pending disposition volume. Upon completion of these pending transactions, we expect total office exposure to decline to approximately 18% of straight-line rent. Our approach to reducing office exposure remains disciplined with pricing and opportunities to maximize value driving the pace of these sales. We tailor our strategy to each asset, including extending lease terms ahead of a sale where feasible to enhance value and selectively selling the few vacant buildings in our portfolio to eliminate carrying costs and negative NOI drag. When possible, we also structure sales to close upon lease expiration, capturing remaining contractual rent while avoiding re-leasing costs, additional capital expenditures and vacancy risk.

Given current share price levels and the limited number of compelling acquisition opportunities we're seeing, issuing common equity is not attractive at this time. Our liquidity and ability to generate disposition proceeds means we don't need to rely on equity issuances anywhere near current price levels. Instead, we can selectively monetize assets and redeploy the net proceeds in an accretive manner. One example is the strong private buyer demand for gas and convenience and car wash assets, supported by the tax benefits of bonus depreciation, which helps sustain attractive sale pricing. We currently have 15 properties in these categories under contract for approximately $70 million at a cash cap rate of 6.5%. Our broader exposure in these categories represents approximately 3% of portfolio straight-line rent. While these assets continue to perform well, they also provide a meaningful potential source of attractively priced capital beyond the transactions currently under contract.

Selective sales would allow us to reinvest in high-quality industrial and retail properties while continuing to improve and reposition our portfolio. We'll continue to make smart strategic decisions that create long-term value for our shareholders. On the acquisition front, we remain disciplined in evaluating opportunities to reinvest in high-quality single-tenant industrial and retail properties. Accretion to AFFO per share is a prerequisite for any acquisition we pursue alongside enhancing portfolio quality and remaining consistent with our leverage objectives. We prioritize creditworthy tenants, embedded contractual rent growth and long-term leases that enhance the durability of our cash flows. Our focus is on established income-producing assets, avoiding the additional uncertainty associated with repositioning properties or undertaking long-term development projects. Higher funding costs have compressed investment spreads, and we have not yet seen acquisition cap rates adjust to levels we believe adequately reflect the current debt financing environment.

During the quarter, we evaluated several acquisition opportunities but chose to pass where the spread between the going-in yield and the cost of debt was insufficient to justify the investment. We believe continued progress on dispositions will generate additional capital to pursue acquisitions that meet our criteria as real estate pricing adjusts with each opportunity evaluated against share repurchases and debt reduction. Since the inception of our share repurchase program through October 30, 2026, we've repurchased 29.7 million shares for approximately $245.8 million at a weighted average price of $8.28 -- representing an attractive AFFO yield of approximately 10% based on the midpoint of our full year guidance. This includes 6.6 million shares for approximately $58.5 million in the third quarter of 2026. We'll continue to evaluate repurchases opportunistically while balancing our priorities of reducing leverage and selectively reinvesting in high-quality industrial and retail assets.

The recent rise in long-term rates has also underscored the value of the financing decisions we made last year. Our investment-grade credit profile enabled us to refinance our revolving credit facility in August of 2025 on improved terms, extending its maturity to August 2030, including extension options and reducing the spread by 35 basis points to its current level of 1.25% -- despite the rise in long-term Treasury yields, our existing borrowing costs have remained essentially unchanged. SOFR, the benchmark underlying our U.S. dollar revolver borrowings, has increased by only 25 basis points and 86% of our debt is fixed or swapped to fixed rates, substantially limiting the impact on our financing costs. We also have no debt maturities until the fourth quarter of 2027, providing additional flexibility as we execute our capital allocation strategy. Reducing leverage remains a core long-term capital allocation priority, and we intend to continue to redirect disposition net proceeds toward debt repayment.

Maintaining our investment-grade balance sheet and financial flexibility remains central to how we balance acquisitions, share repurchases and debt reduction. Turning to our portfolio. At the end of the third quarter of 2026, we owned 835 properties totaling 44 million rentable square feet. Our portfolio occupancy is 96%, while weighted average remaining lease term increased to 6.3 years, up from 6.2 years in the third quarter of 2025 and 5.7 years in the second quarter of 2026. GNL's portfolio features a stable tenant base and high quality of earnings with an industry-leading 63% of tenants carrying an investment-grade or implied investment-grade rating, up from 60% in the third quarter of 2025. Our average annual contractual rental increase is 1.5%, excluding the impact of 17.9% of the portfolio with CPI-linked leases. When we factor in those leases using historical CPI data, the portfolio's annual rental increase is closer to 2%. More than 70% of our CPI-linked leases have uncapped escalations, providing additional rental growth potential in periods of higher inflation.

On the leasing front, we once again delivered strong results across the portfolio, reflecting the quality of our asset management capabilities and tenant relationships. We achieved renewal spreads of approximately 4.9% above expiring rents on more than 840,000 square feet with a weighted average lease term of 5.2 years. Leasing highlights this quarter included a 10-year extension with Refresco at our 170,000 square foot distribution facility in Missouri, converting the tenant's 5-year renewal options into 10 years of committed term with 1.5% annual rent increases and securing approximately $5 million of incremental rent. We also renewed 4 Dollar General locations totaling approximately 37,000 square feet at a renewal spread of approximately 8%. These results reflect our disciplined proactive approach to asset management. By engaging with tenants well in advance of lease expirations, we continue to drive strong retention, preserve high occupancy levels and capture rental growth, all while maintaining our long-term focus on portfolio stability and cash flow durability.

Our continued efforts to limit exposure to high-risk geographies, asset types, tenants and industries reflect our intentional diversification strategy and disciplined credit underwriting. No single tenant accounts for more than 5% of total straight-line rent and our top 10 tenants collectively contribute only 26% of total straight-line rent, with 81% being investment grade. 55% of our portfolio's straight-line rent is derived from publicly traded tenants or is backed by a publicly traded guarantor, providing greater transparency into the financial profile of a substantial portion of our portfolio. We carefully monitor all tenants in our portfolio and their business operations on a regular basis. I encourage everyone to review the details of each segment of our portfolio in our third quarter 2026 investor presentation on our website. I'll now 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 2026, we recorded revenue of $112.9 million and a net loss attributable to common stockholders of $67.1 million. AFFO was $48.3 million or $0.22 per share. Looking at our balance sheet, the gross outstanding debt balance was $2.9 billion at the end of the third quarter of 2026, a reduction of $178 million from the end of the third quarter of 2025, while net debt was $2.7 billion. Our debt is comprised of $1 billion in senior notes, $830 million on the multicurrency revolving credit facility and $1 billion of outstanding gross mortgage debt. As of the end of the third quarter of 2026, 86% of our debt is tied to fixed rates or debt that is swapped to fixed rates.

Our weighted average interest rate stood at 4.1%, down from 4.2% in the third quarter of 2025. Because the Modiv acquisition closed in mid-August, quarter end debt reflects the full transaction, while adjusted EBITDA includes only a partial quarter of earnings from the acquired portfolio, resulting in a temporary increase in reported leverage. Our fourth quarter 2026 results will include a full quarter of Modiv earnings, providing a more representative measure of leverage. Our 2026 net debt to adjusted EBITDA guidance range remains unchanged, consistent with our expectation that the transaction will be leverage neutral. We also continue to realize the benefits of our streamlined operating platform with recurring capital expenditures declining significantly to $5.7 million through 3 quarters of 2026 from $26.2 million in the same period in 2025. This meaningful reduction in capital requirements further strengthens our cash flow profile and financial flexibility.

As of September 30, 2026, we had liquidity of approximately $863 million and $1 billion of capacity on our revolving credit facility. We had approximately 225 million shares of common stock outstanding and approximately 221 million shares outstanding on a weighted average basis for the third quarter of 2026. Since launching our share repurchase program in 2025 and through October 30, 2026, we have repurchased 29.7 million shares for a total of $245.8 million. This includes approximately 6.6 million shares repurchased in the third quarter of 2026 for $58.5 million. Since inception, total repurchases under this program have been executed at a weighted average price of $8.28, representing an AFFO yield of approximately 10% based on the midpoint of our full year guidance. We believe this program has been a highly accretive use of capital and has generated tangible value for our shareholders.

Turning to our outlook for 2026. We are raising the low end of our full year AFFO per share guidance from $0.82 to $0.83, resulting in a revised range of $0.83 to $0.85 and increasing the low end of our gross transaction volume guidance from $700 million to $750 million, resulting in a revised range of $750 million to $800 million. We also reaffirm our net debt to adjusted EBITDA guidance range of 6.5x to 6.9x. I'll now turn the call back to Mike for some closing remarks.

Thanks, Chris. I'll close with some thoughts on the rate environment ahead. We don't control the direction of interest rates, and we will not build our strategy around predicting them. What we can control is how GNL allocates capital effectively across different rate environments. Our liquidity and investment-grade balance sheet gives us the flexibility to remain patient, pursue attractive opportunities and maintain discipline. Together with our ability to generate capital through dispositions, this allows us to execute our strategy without the need to issue common equity in this market.

The third quarter demonstrated that flexibility. When repurchasing our shares offered a better return than the acquisition market, we bought them, repurchasing 6.6 million shares at an AFFO yield of approximately 10%, when office assets could be sold at attractive pricing, we sold them, completing $123 million of office dispositions through September 30, 2026, at a 7.5% cash cap rate on occupied assets and bringing office exposure to 23% of straight-line rent. When acquisition pricing didn't meet our return requirements, we remained patient, preserving capital for more attractive opportunities. And in the middle of all that, we closed and integrated the Modiv acquisition and raised the low end of our full year AFFO per share guidance range.

The work we've done over the past 3 years has given us the flexibility to make these decisions while maintaining financial discipline. Looking ahead, we expect to maintain that approach, a steady reduction in office exposure, selective reinvestment in industrial and retail properties when the returns justify it and a continued focus on bringing leverage down over time. Stepping back, I think it's worth stating plainly what GNL offers today. We have an investment-grade balance sheet, a dividend yield exceeding what the 10-year Treasury can offer, no debt maturities until the fourth quarter of 2027 and a diversified portfolio of more than 800 properties with what we believe is the highest proportion of investment-grade tenants among our net lease peers.

We believe these attributes, together with our disciplined approach to capital allocation, continue to make GNL a compelling investment. We're available to answer any questions you may have after the call. Operator, please open the line for questions.

We will now be conducting a question-and-answer session. Today we will have Ori Kravel joining us during the questions. [Operator Instructions] And our first question today, we will hear from Mitch Germain with Citizens Bank. Please proceed with your question.

Michael, it seems like I'd love to get some color and clarity on your decision to sever ties with Bellevue. I feel like that transaction and the resulting share ownership was somewhat overlooked by the investment community. Can you maybe just kind of walk through some of the decision-making around that and what you think it means going forward?

Yes. Well, thanks, Mitch. And I'm assuming that you mean my personal decision, not the internalization decision of a couple of years ago?

No, no, yes. The decision that was announced, I believe it was in early July, if I'm not mistaken.

So I am very proud of Global Net Lease and the team and the work that we're doing. And I was finding that I needed more and more or all of my time to focus on what we were looking to achieve with Global Net Lease. So that was the driver for me personally. I just wanted to be a -- like everyone else here, a fully dedicated member of the GNL team. I think this company is positioned for great growth and success for our shareholders. And I just wanted to make sure that not only that I had enough time to accomplish that, but that it was clear to the market where I sat. I will be a top 10 shareholder, I believe, or very close to a top 10 shareholder.

So it's an important asset for me and my family. But that's not what led me to the decision. The decision was really just so that I could be without any distraction and that I could be here 100% of the time. The Board has been amazing, very focused on the steps that we're taking. And I just wanted to make sure that everything was as it should be.

Great. I wanted to just ask about some of the asset sales. It seems like the -- so the occupied sales are on that portfolio of C-stores. Is that the way to think about it? And then the vacant is going to be some of your office exposure. Is that how I should consider the pipeline here?

There have been some occupied office as well under contract or executed. But yes, the $70 million of gas and convenience and car wash was something that we just saw as an opportunity that presented itself and our asset management team was able to execute really quickly to get in that mix because the bonus depreciation is a year-end phenomenon. So we wanted to get marketing, get executed. We found buyers, and it's been a really great source of capital that just presented itself.

Is there any other opportunities such as that, that you think could be executed on in a fairly abrupt stub period here in the next 2 months?

We'll continue -- there's more to be done in the gas and convenience and car wash sector. It's 3% of our overall straight-line rent. So these are good assets. But when we can sell in the mid-6% cap range in this market, I think it's long-term advantageous for us to do that. We've also -- not just kind of the momentary point in time type of transactions, we've actually been doing a lot of work. Again, I really appreciate the asset management team, both in the U.S. and abroad, our U.K. team and the work that they're doing. We've been very engaged with tenants on renewals, extensions, and also on potential disposition of some important office assets in the portfolio that I think will really be central to what we're talking about through the end of this year and the first half of next year.

Great. Last one for me. I know you've got that big tranche of debt due end of next year. So you've got about a year to worry about that. How does -- how do you foresee that process playing out? Are you just going to kind of remain patient here? Or if you think that there is an attractive window that opens or are you going to potentially get aggressive and look to refi that early? How restrictive is that capital? And how do you consider this situation playing out?

So I think that it's very important for us to always be prepared to act quickly. So Chris, who's on the call with us, of course, Chris and his team are in a good position to do that. We've had great conversations with a number of our banking relationships about potential. We've even had meetings with bondholders of our existing issuances that are maturing just so that they were familiar with what we've been doing, our focus on the investment grade, the deleveraging, et cetera. So if that window does open, it's important that we're ready to step through it, and I can guarantee you that we will be. But fortunately, and again, Chris and Ori really a year ago or 1.5 years ago when they did the work on recasting our credit facility, we made sure that we had more than enough capacity so that if we're not satisfied with where the market is at that point in time, we would have the ability to simply warehouse that debt and wait for the window to open or to get more attractive.

So it's obviously front of mind for us, but it's not something that I feel we have to worry about because we have a very good plan B, which would be to just warehouse on the credit facility, which right now is about -- our average cost of debt is about 4.1%. Credit facility is a little higher than that. But again, very attractive for where we would need to be.

And next we move to Upal Rana with KeyBanc Capital Markets.

Just wanted to touch on the office dispositions. It seems like it's accelerating post the Modiv integration. And I know you've talked about this in the past and want to be measured on the office sales. But is the incremental office dispositions a result of either higher buyer demand, lease roll timing or maybe you guys just trying to shore up even more capital?

It's really been a factor of work that we've done in the previous 3 to 4 quarters with tenant engagement, renewals, extensions, et cetera. So that -- as I've said before, we will reduce our exposure to office, but we do have good assets. So we want to find value for those assets. And we've taken the steps to do that. It was a very good quarter for closed and pipeline of office dispositions. The fact that we are looking at a pipeline that gets us to 18%, I'm pleased with. It's not where we want to end up, but it was a big step down from, I think, 27% last quarter. So we've told the market that we're going to do this. I think that there's nothing more valuable than management executing on what they say.

So this is a clear path. We'll continue to update it. And the thing that is most valuable is we're really coming in at a nice range on a cap rate for dispositions, about 7.6% on a cap rate basis. We've also sold some vacant. And the important thing to remember on the vacant sales, we've reduced NOI drag by about $2 million in disposing of these. So strategic plan with efficient execution is really what I'd like to talk about every quarter going forward.

Okay. Great. That was helpful. And then maybe on the Modiv portfolio, I know you wanted to sell a handful of assets there. Maybe you can give us an update on where that stands today and maybe if anything on pricing has changed over the past few months since the increase in interest rates?

So as I said in my prepared comments, there are roughly 3 to 4 assets that we're looking to dispose of. We think that the total proceeds will be in the $75 million to $100 million range. Again, these are good assets. And we believe that we will find a buyer who values the long-duration lease, the credit of the tenant. And in these 3 or 4 situations, it's just not an asset that we think, although it's a great asset, it's just not a core long-term asset. So it's just another tool that we can execute on. And we believe that we will have updates in the upcoming couple of quarters.

Okay. Great. And then if I can squeeze one more in. I wanted to give you an opportunity to address the stock price here. It's come down a bit over the last few months. You did complete some buybacks during the quarter, and I'm assuming you'll likely do a little more here with the stock trading at $7 I know you've talked about this topic quite a bit over the last few quarters, but maybe you can give us your updated thoughts on the balance between buybacks and leverage.

Okay. So that's a question that I appreciate -- not that I wouldn't appreciate it otherwise, but because I really didn't want to comment on stock price because that's really kind of out of our control. I think that we've positioned the portfolio when the market does turn around, and it always does. And I think we'll see kind of a change from kind of these more tech-focused trades back into what I think of as core earnings, which real estate definitely fits in and is a valuable allocation. As far as how we think about stock buyback and leverage, it's something that we have to look at very closely. Ori, Chris and I spend a lot of time on our model and looking at impact of buyback versus leverage. But we also take into account the ability to dispose of noncore assets to fund that.

So again, I think it's working well. There's not a lot out there for anybody that can generate a 10% AFFO yield. So having the capital on hand, having the buyback in place, I'll never be able to tell you when we will or when we won't buy back. But as you know, we have a Board-authorized buyback. We've been prudent in how we've used it, and we still have capacity under that program, and we'll use it to the advantage of GNL and our shareholders. I do want to point out something that I think is interesting. We bought back about 29 million shares, and that's about the same share count that we issued to the Modiv shareholders.

So it's been important and interesting to see the total shares outstanding really stay where it started. And again, it's a tool. We can buy accretive acquisitions. We can buy back our stock. We continue to delever. We can sell assets. So we've got to stay very nimble and focused. And ultimately, we're very clear on return to shareholders is the priority.

And John Kim with BMO Capital Markets will have our next question.

Michael. On all the sources and uses over the next 12 months, selling assets, different types of assets, share repurchases, acquisitions and debt reduction on the uses side. How realistic or how important is it for you that this will all be done in an earnings neutral or accretive manner?

Well, it's very important. And I think that we've been able to show over the last couple of years, we've reduced our outstanding debt by about $2.5 billion. We've sold assets. We've acquired assets. We've executed on our stock buyback. We were able to raise our AFFO per share guidance to $0.85 on the high end. And we'll continue to focus on that. There are certain things that we have to look at how we can balance and maybe the right time to do something. But what we've laid out is a very clear road map for how we'll continue to operate the business and protecting or growing AFFO per share continues to be a main priority.

And so what would that rough mix be for your -- between share repurchases and paying down debt? I'm assuming on the debt paydown be on your credit facility, which is, as you mentioned before, a pretty low cost of debt.

Well, there is some CMBS that matures next year. So we're out of the penalty window on that, so we could take a look at that. But again, Chris and I look at this on a very strategic basis. I'm not going to be in a position today to tell you what percentage is going to be buyback versus debt paydown, et cetera. But as we are working on our upcoming 2027 plan and guidance announcement, which, of course, we'll have, that will become clearer to everybody. What I'm the most pleased with is that we do have levers. We do have 830 properties in the portfolio. We can identify really great opportunities like selling some car washes and gas stations that a quarter ago really wasn't part of the plan. I think that probably a number of people on the call today are pleased to see a cash cap rate on office dispositions pretty close to 7.5%.

I would wager that, that's probably a lower cap rate than a number of people have modeled for us. So again, there's no substitute for hard work and focus. We've got the team to do it. We know these assets. We know the portfolio. And when we have things that occur on the disposition side, it creates an opportunity for us to make decisions about how we allocate that capital, whether it is stock buyback or whether it is debt payoff. And ultimately, I think everybody would agree with me, we'd love to be in a situation where the stock price -- the market recognizes the value of GNL, recognizes the fact that if risk-free investing is the 10-year, we're an investment-grade balance sheet.

We've got about 62% investment-grade tenants. We've increased our WALT. We've got annual escalators. By no means is any REIT risk-free, but I certainly think that this opportunity with this yield and this portfolio, it certainly gives people reason to be invested with us, and that will continue to give us even more opportunities.

Just a follow-up on the Modiv dispositions. How does that impact your original expectation of 4% AFFO per share accretion?

Well, that's what we underwrote to, and that's where we're seeing it come in. And from a G&A standpoint, from an accretion standpoint, the integration has been flawless.

And we'll move on to Jay Kornreich with Cantor Fitzgerald.

How are you?

Good. I just want to follow up. You mentioned the dividend in the previous earlier comments. So just given some of the recent asset sales and upcoming potential sales from the non-core Modiv assets, I guess, do you see any upcoming adjustments to the dividend? Or does that feel solid and intact as it is going forward?

So I think I was pretty clear in my prepared statements, Jay, that the portfolio is doing what is required to continue to fund and pay this dividend. I can never speak on behalf of the Board in any forward-looking manner. But I think that over the many quarters, I have stressed to people that I am a believer in where this dividend is I don't think that -- well, let me say it differently. I think that the equity is mispriced, not the dividend. And I'd like to see the stock price find a natural place, obviously, well above where it's trading today. But I am comfortable and confident in our ability to continue at this dividend level.

Okay. I appreciate that. And then just going back to the 3 to 5 assets of noncore assets from the Modiv portfolio. Is there any potential timing for when you would look to sell those? Is that an end of the year event? Or are we looking at some point in 2027 for that?

I would expect that it would be between now and the middle of next year.

Okay. And then maybe just last, just to double-click on the capital allocation and thinking about the share buybacks. The asset recycling strategy has been focused on, as you know, the office to industrial. But just given the double-digit AFFO yield on the stock, do you think about making more of the switch to office to just pure-play share buybacks? Or does it still make sense to continue with strategy as it is in building the industrial asset pool of the portfolio?

I think I understand your question, Jay. So if I don't, you can redirect me. But I think that the -- there's a consensus among management and shareholders that reduction of office exposure is a real long-term positive for GNL. So we will continue to focus on that. The proceeds from those types of dispositions gives us the ability to continue to delever and also have the option for stock buyback. That all being said, there is a point in time where we'd like to be much more focused on accretive growth. And when that occurs in the future, it will probably transition from stock buyback to acquisitions. I'm by no means giving you a time frame of that, but it is something that we will continue to look at while we continue to lower our leverage. So it's 3 important goals, and we're working on all of them simultaneously.

And Rob Stevenson with Huntington will have our next question.

Just a couple of housekeeping items. Mike, when you sell the $70 million of car wash gas and convenience assets, how big is your residual portfolio in that sector?

We'll be about 2%, I would say, Rob, of straight-line rent.

Okay. That's helpful.

Yes. Okay.

And then do you expect those sales to close by year-end? Or are those going to push into '27 at this point?

No, they will close by year-end.

Okay. And then what about the office sales that take you from 23% to 18%. Are those also year-end? Or are some of those going to push into '27?

Some of those will definitely push into '27. Some of them are structured to push into '27 because one of the things that we've been able to do in certain situations is have a buyer complete due diligence, go hard on their deposit but not close until lease expiration, so we're able to get the balance of the rental income on that property. So the office dispositions will continue in '27.

Okay. That's helpful. And then I guess the other question I have is to what extent are you guys looking -- like I think you talked earlier in the call about signing some lease extensions on some dollar stores and things like that, that those assets are probably most valuable when they have the most remaining WALT of monetizing those similar to what you're doing with the Car Wash gas convenience holdings. How are you guys thinking about selectively doing that as well across the portfolio?

Yes. Right now, we think of a franchise like Dollar General as a core retail holding that we -- it is not a priority for us to reduce our exposure. We're really continuing to focus on some -- every once in a while, an opportunistic sale where a buyer is willing to pay a price for something that you just can't say no to. But for the most part, continuing to reduce the office exposure. Again, our ultimate job here is to grow GNL. So we're very focused on what is core long term to GNL to what we can continue to renew or extend and create value through the roughly 2% annual escalators in the portfolio that will continue to drive the earnings that we continue to be very pleased with. So not everything is necessarily being marketed by any means. Ultimately, we want to reposition GNL into a primarily industrial with single-tenant retail. That's it.

[Operator Instructions] Next, we'll move to Michael Gorman with U.S. Bancorp.

Just wanted to follow up on the vacant office sales here. Can you just give us a sense for kind of what the buyer pool looks like for these assets? Are these redevelopment plays? Or is this somebody else stepping in that is more willing to underwrite leasing capital or backfill the assets? Or kind of what's the flavor of who's on the other side of these sales?

A number of the buyers are redevelopment specialists. What we've found is a number of these are -- they're strong suburban markets and the developers are seeing opportunity for kind of mixed-use resi retail. And of course, it's not something that we want to be involved in. I've never thought development fit in a net lease structure. I think we're really much more interested in immediate income and projectability of that income without delay. So they've been an interesting buyer pool. We've also experienced some high net worth local buyers that love their town, love the asset, see it as an opportunity to continue to let that city or town thrive. So those are kind of the 2 most common pools of buyers.

Okay. That's helpful. And then if I just look at it from a back of the envelope perspective, and maybe I'm doing it wrong, but the reduction in office exposure versus the pipeline of sales implies kind of a 15-ish percent yield or loss of straight-line rent versus the proceeds. So how should we think about that as we start to think about 2027 in terms of a headwind? And then when we think about '27, are there any additional kind of expected move-outs that aren't in the for-sale pipeline yet?

So I appreciate the question. I'm not going to answer it. So Yes, exactly. It will come in much more detail with the '27 guidance that we provide. But no, I do think you're looking at it wrong, and it might be best if maybe you and Chris and Ori can spend some time. We'll dive into your model a little bit and make sure we're all thinking about it the right way. But no, we are not forecasting or expecting to forecast, let me say it that way, significant headwinds. So we're -- we will continue to be in this type of position as we talk about '27 next year.

And Craig Kucera with Lucid Capital Markets will have our next question.

You mentioned that 86% of your debt is fixed or swapped to fixed. Can you give us a little more granularity on what amount is actually swapped? And can you give us a sense of when those swaps are expiring between now and 2027?

Chris, is that something that you can do quickly or we can just set up a call with Craig after and go into that detail?

Yes. I mean we can do further detail on a separate call, but the swaps are almost entirely on the credit facility. Most of the other debt that we have is fixed.

Right. Okay. I guess we'll follow up then. And just given the increase in revolver utilization, are you looking to maybe term that out or swap even more of that, the remaining 14%? Or is that more of a capital allocation decision where you might sell additional assets and pay down debt?

No, we have plenty of capacity on the line that's unused. So I would say neither. And Chris, if there's anything you want to add?

Yes. I would just say that we always evaluate whether to add additional stock swaps. So I've been monitoring that market. If that's likely something that we'll do, but I just want the pricing to be something that is efficient for us.

Okay. Changing gears, there's been a lot of discussion about share repurchases and capital allocation. I think you have a little more than $50 million left on your existing $300 million authorization. I also think you have a covenant on your revolver that limits buybacks to $300 million. So I guess as you continue to maybe purchase more stock given where the stock price is at now or first half of next year, would you look to potentially expand the authorization and maybe look for some covenant relief? Or would you likely be done repurchasing stock once you reach $300 million?

Well, we'll take it under consideration and evaluate it as we need. Right now, the fact that we have $55 million of capacity under the Board-approved credit or stock buyback, we'll take that into account for when we want to use it. I think when we announced the $300 million stock buyback 1.5 years ago, I know that there have been times where others have announced. I think there have been fewer times where people have actually used it. So the $250 million, roughly, $245 million that we have bought back has been very accretive, very valuable for the company. We'll continue to look at it that way and think about it. And I think it's fair to say, as different opportunities and decisions come up, we're prepared to work with our banking group as necessary. It's never been a problem. It's a great group. And we'll be able to accomplish the things that we need to accomplish. So we'll continue to execute on the plan as it's laid out. And I don't see anything in the -- in front of us that we can't address and accomplish.

Okay. Just one more for me. Just on the impairment charges this quarter, which were up considerably from the prior couple of quarters. Were those primarily affiliated with the office properties that are going dark...

Yes.

In the fourth quarter that you plan to sell? Okay. I just wanted to...

Yes.

And there are no further questions at this time. I would now like to turn the floor back to Michael Weil for closing remarks.

Great. Well, I always like to thank everyone for making the time to join us and for the coverage that we get from our analyst community. The questions today were really great, and it just makes for a better call. So thanks, everybody, for spending the time being prepared. We're going to, of course, continue to have conversations. We look forward to talking to as many of our shareholders that want to talk. This is an exciting time for GNL. The portfolio and the company, we really are well positioned -- and I think we're coming through a bit of a transition as a sector, the REIT sector itself. And as things normalize, I truly expect GNL to really take its place among the companies that people are comfortable with, understand and want to be invested in. So thank you all for your time. We look forward to catching up, and have a great day.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may now disconnect your lines at this time.

Good morning, and welcome to the Global Net Lease Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Jordyn Schoenfeld, Vice President at Global Net Lease. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for GNL's Second Quarter 2026 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 Securities Litigation Reform Act of 1995. Please review the forward-looking and cautionary statement section at the end of our second quarter 2026 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, 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 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, Jordyn. Good morning, and thank you all for joining us today. Over the past several years, we've been clear about the strategy we're executing, and, more importantly, our commitment to delivering on it. Our second quarter results reflect another period of disciplined execution with meaningful progress across the initiatives to continue to strengthen GNL and position the company for its next stage of evolution. Perhaps the best example of that progress is the proposed acquisition of Modiv. Modiv shareholder voting is currently underway, and we anticipate closing the Modiv transaction in mid-August 2026, shortly after their special meeting and shareholder vote on August 10, 2026.

We believe the strategic rationale for the transaction remains as compelling today as when it was first announced. Modiv's high-quality industrial portfolio features a weighted average remaining lease term of 15 years and benefits from 2.4% annual contractual rent escalations, supported by a diversified credit-worthy tenant base that aligns well with GNL's investment strategy. Upon closing, the transaction is expected to extend our portfolio weighted average lease term to 6.6 years and increase our industrial exposure to account for approximately 50% of total straight-line rent, further improving the overall quality and resilience of our real estate portfolio. We also expect the transaction to be approximately 4% accretive to AFFO per share, while remaining leverage-neutral, allowing us to improve earnings, strengthen the durability of our cash flows, and maintain the strength and flexibility of our balance sheet.

While the proposed acquisition of Modiv has been an important focus, it has been by no means our only priority. During the second quarter of 2026, our disciplined capital recycling strategy gained further momentum as we selectively monetized non-core assets, demonstrating the value of our office assets while continuing to reduce office exposure and strengthen the overall composition of our portfolio. Through July 31, 2026, we have closed and pending disposition pipelines totaling $263 million, including $145 million of credit for closed dispositions at a weighted average cash cap rate of 7.6% on occupied assets, with approximately 78% of the total disposition volume consisting of office assets.

One transaction illustrates the thoughtful approach we're taking to reduce our office exposure. As previously disclosed, we remain under contract to sell our 133,000-square-foot KPN office property in the Netherlands for approximately $18 million. The property is under a signed purchase and, sale agreement with closing scheduled to coincide with the lease expiration in December of 2026. We've received a non-refundable deposit from the proposed buyer and expect to continue collecting the full contractual rental income until closing. We also have additional office assets under advanced negotiations to sell with transactions following a similar strategy and closing expected to occur upon lease expirations, allowing us to realize the remaining contractual rental cash flows while avoiding the leasing cost, capital expenditures, and occupancy risk associated with taking back vacant office assets. We look forward to providing updates as those transactions advance.

In addition to these transactions, we've completed the sale of our 33,000-square-foot office property leased to the U.S. General Services Administration for $13 million, and our 369,000-square-foot office property leased to GE Aviation for $48 million, both at a 7.2% cash cap rate following 20-year and 10-year lease extensions, respectively. Collectively, these transactions reflect our ability to proactively monetize office assets at attractive valuations while continuing to reduce our office exposure and improve the overall quality of our portfolio. We remain encouraged by the level of demand we're seeing and believe we're well positioned to execute on our remaining planned office dispositions. Upon completion of these planned dispositions, we expect office to represent approximately 21% of straight-line rent, marking another meaningful step in repositioning the portfolio.

Equally important, these dispositions support our long-term objective of continuing to reduce leverage while creating additional capacity to reinvest in high-quality single-tenant industrial and retail assets. While reducing our office exposure remains a key priority, our capital recycling strategy extends beyond that. We plan to continue to opportunistically monetize non-core assets where pricing is attractive and thoughtfully allocate that capital between reducing leverage and investing in opportunities that further enhance the quality of our portfolio and the long-term durability of our earnings. Consistent with that approach, we completed the acquisition of an approximately 100,000-square-foot single-tenant industrial property in Mississippi, leased to Federal Express for approximately $14 million and an 8.2% going-in cash cap rate. The property is leased through 2031 and we're already engaged in discussions with FedEx regarding a long-term lease extension.

The attractive spread between the cap rates we're achieving on dispositions and those available on acquisitions, such as FedEx, highlights the value creation potential of our capital recycling strategy. Going forward, we intend to remain focused on selectively investing in high-quality single-tenant industrial and retail assets that further strengthen our portfolio. We also believe the investment backdrop for publicly traded REITs continues to improve. Recent research and commentary from firms including Morgan Stanley, UBS, JPMorgan, BlackRock, PIMCO, and Heitman point to a common set of themes: improving capital markets liquidity, recovering transaction activity, attractive relative valuations, and growing opportunities for well-capitalized REITs with disciplined capital allocation. We believe the progress we've made strengthening our portfolio, improving our credit profile, establishing an investment-grade balance sheet, and actively recycling capital into higher-quality assets positions GNL well to take advantage of this environment.

In addition to our capital recycling strategy, we continue to evaluate the most effective uses of our disposition proceeds, including opportunistic share repurchases. Since the beginning of our share repurchase program through July 31, 2026, we've repurchased 20.9 million shares at a weighted average price of $8.11, totaling $169.7 million. While the pending Modiv transaction has limited our ability to repurchase shares this quarter, our view on the value of opportunistic buybacks has not changed and we remain disciplined in balancing share repurchases with our priorities of reducing leverage and reinvesting in higher-quality assets.

Turning to our portfolio, at the end of the second quarter of 2026, we own 798 properties totaling 40 million rentable square feet. Our portfolio occupancy remains steady at 97% with a weighted average remaining lease term of 5.7 years. Specifically, our office occupancy increased to 99% from 95% in the second quarter of '25, primarily driven by the disposition of a $45 million vacant office property during the first quarter of 2026, which also eliminated over $1 million of annualized negative NOI drag. Our office portfolio continues to perform well, supported by 100% rent collection and the highest proportion of investment-grade tenants within our portfolio. GNL's portfolio features a stable tenant base and high quality of earnings, with an industry-leading 63% of tenants carrying an investment-grade or implied investment-grade rating, up from 60% in the second quarter of 2025. Our average annual contractual rental increase is 1.4%, excluding the impact of 20.3% of the portfolio with CPI-linked leases that have historically experienced significantly higher rental increases.

On the leasing front, we once again delivered strong leasing results across the portfolio, reflecting the quality of our asset management capabilities and tenant relationships. We achieved renewal spreads of approximately 5.6% above expiring rents on more than 357,000 square feet, with a weighted average lease term of 8.4 years. Highlights from this quarter included nearly 76,000 square feet of renewals with Dollar General at a 7.4% renewal spread, over 147,000 square feet with FedEx Freight at a 4.6% renewal spread, and over 100,000 square feet with FedEx at a 9.1% renewal spread. These results reflect our disciplined, proactive approach to lease management. By engaging with tenants well in advance of lease expirations, we continue to drive strong retention, preserve high occupancy levels, and capture rental growth, all while maintaining our long-term focus on portfolio stability and cash flow durability.

Our continued efforts to limit exposure to high-risk geographies, asset types, tenants, and industries reflect our intentional diversification strategy and disciplined credit underwriting. No single tenant accounts for more than 6% of total straight-line rent, and our top ten tenants collectively contribute only 29% of total straight-line rent, with 80% being investment grade. 48% of our portfolio straight-line rent is derived from publicly traded tenants or is backed by a publicly traded guarantor, providing greater transparency into the financial profile of a substantial portion of our portfolio. We carefully monitor all tenants in our portfolio and their business operations on a regular basis. I encourage everyone to review the details of each segment of our portfolio in our second quarter 2026 investor presentation on our website.

Before concluding, I'd like to briefly address my separation from Bellevue Capital Partnership, which was publicly disclosed last month. As part of that separation, I'll receive 2.2 million GNL shares from Bellevue, increasing my ownership to approximately 2.9 million shares. This significant ownership position underscores my confidence in GNL's future, the quality of the platform we've built, and the strategy we're executing. I remain fully committed to building on that momentum and creating long-term value for our shareholders.

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 second quarter of 2026, we recorded revenue of $112.5 million and a net loss attributable to common stockholders of $7.5 million. AFFO was $45.7 million, or $0.22 per share. It increased from $0.21 in the first quarter of 2026.

Looking at our balance sheet, the gross outstanding debt balance was $2.5 billion at the end of the second quarter of 2026, a reduction of $621 million from the end of the second quarter of 2025. Our debt is comprised of $1 billion in senior notes, $473 million on the multi-currency revolving credit facility, and $1 billion of outstanding gross mortgage debt. As of the end of the second quarter of 2026, 92% of our debt is tied to fixed rates or debt that is swapped to fixed rates. Our weighted average interest rate stood at 4.1%, down from 4.3% in the second quarter of 2025, and our interest coverage ratio was 3.2 times. At the end of the second quarter of 2026, our net debt to adjusted EBITDA ratio improved to 6.6x based on net debt of $2.3 billion compared to 7.2x at the end of the first quarter of 2026.

We also continue to realize the benefits of our streamlined operating platform, with recurring capital expenditures declining significantly to $3.4 million in the first half of 2026 from $19.6 million in the first half of 2025. This meaningful reduction in capital requirements further strengthens our cash flow profile and financial flexibility. As of June 30, 2026, we have liquidity of approximately $919 million and $1.3 billion capacity on our revolving credit facility, compared to $790 million and $1.2 billion, respectively, as of the end of the second quarter of 2025. We had approximately 211 million shares of common stock outstanding and approximately 211 million shares outstanding on a weighted average basis for the second quarter of 2026.

Since launching our share repurchase program in 2025 and through July 31, 2026, we have repurchased 20.9 million shares for a total of $169.7 million. This includes approximately 1.2 million shares repurchased in the second quarter of 2026 for $11.1 million at a weighted average price of $9.10. Since inception, total repurchases under this program have been executed at a weighted average price of $8.11, a meaningful discount to the current share price. We believe this program has been a highly accretive use of capital and has generated tangible value for our shareholders.

Turning to our outlook for 2026, we are raising our full-year AFFO per share guidance from $0.80 to $0.84 to a new range of $0.82 to $0.85, and increasing our gross transaction volume guidance from $250 million to $350 million to a new range of $700 million to $800 million. We also reaffirm our stated net debt to adjusted EBITDA range of 6.5x to 6.9x. Our updated guidance reflects the anticipated acquisition of Modiv based on our high degree of confidence that the transaction will close in mid-August 2026. It is important to note that this revised guidance includes only approximately one and a half quarters of expected contribution from the accretive Modiv acquisition during 2026. Our reaffirmed leverage guidance reflects the transaction's expected leverage-neutral structure, which remains fully consistent with our disciplined balance sheet strategy.

I'll now turn the call back to Mike for some closing remarks.

Thanks, Chris. As we approach the third anniversary of our internalization, it's clear how much GNL has evolved. Our objective has been to build a stronger, more resilient company capable of delivering reliable, durable returns for shareholders. And I believe the progress we've made speaks for itself. Over that time, we've simplified our portfolio, materially reduced leverage, strengthened liquidity, improved our credit profile, and established an investment-grade balance sheet. The expected acquisition of Modiv is a natural extension of that strategy, further strengthening our portfolio and enhancing the durability of our earnings.

Today, we're proud to offer shareholders an attractive dividend supported by high-quality earnings from a predominantly investment-grade tenant roster. We believe the repositioning of our portfolio over the past two years has created a meaningfully stronger GNL. As we enter this next chapter, we remain committed to building on that foundation and delivering 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. [Operator Instructions] Our first question comes from the line of Mitch Germain with Citizens JMP.

Congrats on the quarter. I really like the progress you're making in reducing office. I think you said it will be around 20% by year-end. I'm curious, can you continue to sell assets there, or are future sales really going to be more aligned with some of the lease expirations?

It's going to continue to be both, Mitch. We see some great opportunities. A lot of the assets that we have on the longer-term sale structure, where we're going to receive 100% of the rent that is due to us, those assets are typically going to be acquired by developers for redevelopment opportunity. So it makes sense for them and it makes great sense for us. It maximizes our revenue, as you clearly understand. So we have a group like that, that we'll continue to focus on in that same structure.

And then we also have some office -- look, we've been hearing for the last couple of years from people like you and others that it would be beneficial to GNL to continue to reduce office exposure. So I don't want to look for the, we'll call it the perfect exit -- we want to look for the most efficient and beneficial exit. And I think moving down to 20% this quickly is clear proof of concept that we're committed to it, that we're going to do it. So you'll see both structures come into play.

Great. Last one for me. What's the long-term plan for some of the non-industrial assets that you're acquiring from Modiv? Could there be some potential sale candidates? And can you -- is there any restrictions on your ability to sell those properties?

There are no restrictions in our ability to sell assets. The industrial portfolio that we're acquiring from Modiv is the majority of their asset pool, so we're very excited to bring that into GNL on a long-term basis. There are a few assets that we feel are opportunistic sale candidates that I don't want to get into too much detail on right now, but like we've done in the past, we are going to continue to sharpen this portfolio so that it is predominantly industrial assets, net lease single-tenant. And the pieces that don't fit the puzzle, although they may be great assets, to us that's just an opportunity, like we did with McLaren to achieve a tremendous disposition price and then have the opportunity to evaluate whether we want to pay down debt, whether we want to redeploy into industrial assets. But it is an opportunity that we will continue to work forward on.

Our next question comes from the line of Upal Rana with KeyBanc Capital Markets.

Congrats on the quarter, guys. Michael, you completed one acquisition subsequent to quarter-end. Maybe could you comment on what you're seeing out there in the transaction market, including pricing, size, quality, industries, maybe how many deals you've gone through or underwritten? Any color would be helpful. I guess I'm trying to understand if the company is interested in doing smaller acquisitions? Or would you be more focused on being patient for larger type deals like a Modiv?

Yes, so I've always believed that one-off acquisitions are an important aspect of building a great portfolio. They are in the market, you have to evaluate them. There are a number of deals that we see that any number of reasons we are not interested in it. We may not like the guarantee structure, we may not like the asking cap rate, we may not like the geographic market, or we may not like the industry. But there are a lot of deals that we see that we do like. We were very active in the second quarter bidding. But we're bidding where we want to own, not necessarily where the seller or the broker wants to see the property transact. And that's okay.

We felt that we had a great portfolio of Modiv assets coming into the company in the next, I would say, estimate about a week or so. So we didn't have to chase. We're buying those Modiv assets at about an 8% cap. We bought the FedEx in that same kind of range. So no benefit in chasing price. And what makes a great portfolio, besides the fact that we're 64% investment grade, we really focus on a lot of things other than just starting cap rate. We want to know that we've got a high-quality portfolio with the quality of earnings being top of mind for us. If it's a 15-year lease, we want that tenant in there for 15 years. We want them doing well and being happy to renew. It's one of the things that we're excited about.

If you look back over the last couple of years, our renewal spreads have been consistently in the 5% and higher range. Because we've got great tenants, they value the properties, it's where they run their business from, and they don't want to have to relocate, and we certainly don't want them to relocate. So, you know, it all goes into how we look at the day one acquisition. And the most important thing I can tell you is there are a lot of properties out there that are available. We run what we think of as a funnel. You know, if we put 100 properties through the funnel, we may come out after underwriting and due diligence with three to 10 that we want to move forward on. And if we do that on a consistent basis, this portfolio is just going to continue to get stronger and bigger, and you're going to see the weighted average lease term extend. And that's the kind of company that everyone here at GNL is proud to be building.

Great, that was helpful. This kind of goes hand in hand, but just on your transaction guidance, you increase it to $700 to $800 million. When you combine the closed plus dispositions and your acquisitions, that kind of gets you to the midpoint, I think you've identified $64 million is going to be closing in '27. So just maybe you can comment on the transaction guidance and how we should be thinking about that.

Upal, I really think that Modiv was an unexpected opportunity for us in 2026 that we're really excited about. So I think the revised range is really how you should be thinking about it. We're going to continue to grind through some upcoming opportunities. But again, we want to be really selective. We want to be buying at the right price. We're starting to see our cost of capital coming in to a much better place. But we don't want to get ahead of that. And I think one of our themes over the last three years has been discipline of execution, and we're going to continue with that.

[Operator Instructions] Our next question comes from the line of Jay Kornreich with Cantor Fitzgerald.

I wanted to follow up about the asset recycling, with dispositions year to date coming in at that 7.6% cap rate number while the acquisition has been at 8.2%. So I guess, do you anticipate that accretive asset recycling to continue? And then just as you think about how to recycle capital from dispositions, what is your preference in terms of new acquisitions versus reducing leverage or share repurchases at this point?

First part of your question, yes, I think we can continue to operate in that range. We fight very hard for achieving greatest possible sale price and we fight very hard to show that we're a qualified buyer and we negotiate the best possible price. So no sense in buying a lot of things that don't move the needle. So we'll continue with that as an underlying principle moving forward.

The second part of your question is one of my favorite questions because it really comes back to strategy of how are we going to operate this company. Obviously, we continue to believe that one of the most important things we can do is execute on the continued deleveraging of the company. So that will be top of mind as we move forward. We also want to be in a position to grow earnings and to grow earnings and extend WALT, we need that disciplined underwriting on the acquisition front. And Modiv really kind of filled that gap for 2026.

The stock buyback program, I'm very proud of our team as we've executed our stock buyback through 2026. I think that we have really been on point in how we've approached the strategy of the buyback. It's a great tool. We still have capacity under the buyback. We will, where we see necessary, continue to execute on the buyback. But I will tell you that I'd be even happier if the stock continues to move up on its own as new investors find this an interesting opportunity and move into the stock. We may not have to be active in the buyback, which is great. But it is a very valuable tool. It's one of the three levers, as you pointed out. We will continue to reduce leverage. We will be very focused in how we look at potential acquisitions. And when we need to, we have the ability to be active in a stock buyback.

Appreciate all that color, that's helpful. And then just one follow-up for me, just going back to the office exposure, reducing it to, I think you said 21% in the near term. Is it too early to put, kind of, goalposts around a timeline as to what you'd like to get that exposure down to? Or just how you're thinking about reducing that going forward?

I hate to put those types of dates on things because it just sends the wrong message to the market as far as the real estate market. By no means do I want to fire-sale the office assets, but we are very active in taking properties to market, working with very qualified brokers in regional markets and we will continue to do that. You know, I don't see this as an initiative that necessarily is over in calendar year '26. But by no means do we want it to drag on for extended periods of time.

We have reached the end of the question-and-answer session. Mr. Weil, I'd like to turn the floor back over to you for closing comments.

Great, thank you. Yes, I just would like to close with a thank you to everybody that's on the call. We appreciate the time that you dedicate to GNL and, you know, we've had a lot of shareholders that have been with us since the internalization. We've had new shareholders join, and that really excites us, and thank you for that. We continue to be available and look forward to answering any questions you may have. Please reach out to our IR team, and we'll get time scheduled to talk. But I also want to thank the analysts that cover us and spend time and really dig in. It's very helpful, and it's really brought us to the point where we are.

I think that this is an exciting point for us. We're looking forward, as we said, the Modiv shareholder vote is next Monday, and we believe that we'll be in a position to close shortly after. And we'll just keep doing the things that you've identified and pointed out to us that are part of our go-forward strategy. So thank you all for the time, the commitment, and we look forward to talking to you soon.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Greetings, and welcome to the Global Net Lease, Inc. Q1 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jordyn Schoenfeld, Vice President of Corporate Strategy. Thank you. You may begin.

Thank you. Good morning, everyone, and thank you for joining us for GNL's First Quarter 2026 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 Securities Litigation Reform Act of 1995.

Please review the forward-looking and cautionary statements section at the end of our first quarter 2026 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, 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 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, Jordyn. Good morning, and thank you all for joining us today. Before we review our first quarter 2026 results, I'd like to discuss our planned strategic acquisition of Modiv Industrial, which we announced earlier this week. This transaction is a direct reflection of the strategy we outlined on our last earnings call and the tangible progress we've already made towards implementing it.

Following a transformational year for GNL in 2025, when we took deliberate actions to significantly reduce leverage, strengthen our credit profile and improve the overall quality of our portfolio, we are now positioned to focus on the disciplined recycling of capital into high-quality industrial and retail assets. This includes pursuing selective and opportunistic asset sales, particularly those that reduce our office exposure while redeploying proceeds accretively into single-tenant industrial and retail investments.

The Modiv transaction would do just that as we believe the closing of the transaction will advance the durability and quality of our earnings profile by adding a high-quality portfolio of industrial net lease assets across the United States, supported by long-duration leases and creditworthy tenants that align well with our investment criteria.

The transaction is expected to be immediately accretive with approximately 4% accretion to AFFO per share, including meaningful cost synergies through the elimination of duplicative G&A. Importantly, the transaction is structured as an all-stock acquisition with a fixed exchange ratio of 1.975 to lock in the 4% accretion, making it leverage neutral and requiring no new external capital.

We believe this structure will preserve the balance sheet strength we've established while allowing us to maintain meaningful flexibility to pursue future strategic growth opportunities. Modiv's long-duration leases have a weighted average lease term of 15 years, include 2.4% annual rent escalations and are supported by a well-recognized tenant base of leading global brands, with approximately 45% of annual base rent derived from investment-grade or implied investment-grade tenants.

On a pro forma basis, the acquisition is expected to extend our weighted average lease term from 5.9 to 6.7 years, increase our industrial exposure from 47% to 50% and reduce our office concentration from 26% to 24%, which will collectively strengthen our portfolio mix, expanding our geographic reach across key U.S. industrial markets and enhancing the overall stability of our combined platform.

We're very excited about this transaction, which we expect to close in the third quarter of this year. In addition to the Modiv transaction, we're actively engaged in other transaction activity consistent with our corporate strategy.

Reflecting the mission-critical nature of our office portfolio, we're under contract to sell a 33,000 square foot office building leased to the General Services Administration for $13 million at a 7.2% cash cap rate, with closing expected in the second quarter of 2026. Beyond this transaction, we currently have additional office properties in our portfolio that we believe may present a similar disposition opportunity going forward as we continue to focus on lowering our office exposure.

At the same time, we're under contract to acquire an approximate 100,000 square foot single-tenant industrial asset occupied by a Fortune 50 investment-grade tenant for $14 million at an 8.2% cash cap rate, which would further demonstrate our ability to prudently execute our accretive recycling strategy into higher-quality assets that we believe will generate more compelling risk-adjusted returns.

The asset features a 2031 lease maturity, and we believe our long-standing relationship with the tenant will be advantageous as we're already in simultaneous discussions regarding an early long-term lease extension. We're actively negotiating the sale of additional office assets and look forward to providing updates as transactions advance.

Our pipeline of redeployment opportunities continues to grow, and we believe we're well positioned to execute on a leverage-neutral basis in a way that drives earnings growth while preserving the balance sheet quality we've established.

Our acquisition approach remains disciplined and highly selective, focused on high-quality income-generating assets that align with our long-term strategy. In addition to our capital recycling strategy, we continue to evaluate the most effective uses of our disposition proceeds, including opportunistic share repurchases.

Since the beginning of our share repurchase program through May 1, 2026, we've repurchased 19.7 million shares at a weighted average price of $8.05, totaling $158.2 million. We've been deliberate and opportunistic in how we've executed this program, and we remain disciplined in balancing these repurchases with our continued focus on leverage reduction and the redeployment of capital into higher-quality assets.

Turning to our portfolio. At the end of the first quarter of 2026, we owned 809 properties totaling 40 million rentable square feet. Our portfolio was 97% occupied an increase from 95% in the first quarter of 2025 with a weighted average remaining lease term of 5.9 years. Specifically, our office occupancy increased to 99% from 95% in the first quarter of 2025, primarily driven by the disposition of a $45 million vacant office property, which also eliminates over $1 million of annualized negative NOI drag.

Our office portfolio continues to perform well, supported by 100% rent collection and the highest proportion of investment-grade tenants within our portfolio. GNL's portfolio features a stable tenant base and high quality of earnings with an industry-leading 64% of tenants carrying an investment-grade or implied investment-grade rating, up from 60% in the first quarter of 2025.

Our average annual contractual rental increase is 1.5%, excluding the impact of 20.1% 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 during the first quarter, reflecting the quality of our asset management capabilities and tenant relationships. We executed leases on more than 141,000 square feet and achieved renewal spreads of approximately 5.1% above expiring rents.

Notable activity included several renewals with nationally recognized retail tenants such as Dollar General and Tractor Supply as well as the renewal of a 58,000 square foot FedEx distribution facility at an approximate 9% renewal spread. We continue to engage with tenants well in advance of lease expirations to drive occupancy, retention and rental growth while maintaining a long-term focus on portfolio stability.

As we continue advancing our approach to asset management, we have meaningfully enhanced our data and technology capabilities, improving how we engage with tenants and evaluate opportunities and ultimately, the outcomes we deliver across the portfolio. We've been leveraging artificial intelligence to enhance our decision-making on both the leasing and transaction front.

Specifically, we're now able to rapidly analyze foot traffic patterns and performance analytics for our tenants, intelligence that directly informs our renewal negotiations and strengthens our underwriting when evaluating prospective transactions. This data-driven approach allows us to engage tenants from a more informed position, and we believe it's an increasingly meaningful contributor to our ability to drive favorable lease economics across the portfolio and secure advantageous terms on transactions.

Perhaps most importantly, we believe it will also give us the ability to seamlessly absorb the Modiv portfolio and its approximately $535 million of new assets without any increase in headcount. Our continued efforts to limit exposure to high-risk geographies, asset types, tenants and industries reflect our intentional diversification strategy and disciplined credit underwriting. No single tenant accounts for more than 6% of total straight-line rent and our top 10 tenants collectively contribute only 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 review the details of each segment of our portfolio and our first quarter of 2026 investor presentation on our website. 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 first quarter of 2026, we recorded revenue of $109.3 million and a net loss attributable to common stockholders of $16 million. AFFO was $43.9 million or $0.21 per share.

Following the successful repositioning of our portfolio over the past several quarters, including the $1.8 billion multi-tenant retail portfolio sale, we have reduced annualized G&A expense by 25% year-over-year to $49 million from $65 million in the first quarter of 2025, driven by operational efficiencies.

Additionally, capital expenditures declined to $1.6 million from $9.8 million in the first quarter of 2025, supporting improved cash flow through a more streamlined portfolio. Looking at our balance sheet, the gross outstanding debt balance was $2.6 billion at the end of the first quarter of 2026. a reduction of $1.3 billion from the end of the first quarter of 2025. Our debt is comprised of $1 billion in senior notes, $290 million on the multicurrency revolving credit facility and $1.3 billion of outstanding gross mortgage debt.

As of the end of the first quarter of 2026, 99% of our debt is tied to fixed rates or debt that is swapped to fixed rates. Our weighted average interest rate stood at 4.1%, down from 4.2% in the first quarter of 2025, and our interest coverage ratio was 3x. At the end of the first quarter of 2026, our net debt to adjusted EBITDA ratio was 7.2x based on net debt of $2.4 billion compared to 6.7x at the end of the first quarter of 2025.

While the ratio this quarter was higher than the end of the first quarter of 2025 due to timing of dispositions, we are confident that we will remain within our stated net debt to adjusted EBITDA 2026 guidance range of 6.5x to 6.9x. As of March 31, 2026, we have liquidity of approximately $911 million and $1.5 billion of capacity on our revolving credit facility compared to $499 million and $1.4 billion, respectively, as of the end of the first quarter of 2025.

Additionally, we had approximately 212 million shares of common stock outstanding and approximately 214 million shares outstanding on a weighted average basis for the first quarter of 2026. Since launching our share repurchase program in 2025 and through May 1, 2026, we have repurchased 19.7 million shares for a total of $158.2 million. This includes approximately 4.2 million shares repurchased in the first quarter of 2026 for $38.4 million at a weighted average price of $9.07.

Since inception, total repurchases under this program have been executed at a weighted average price of $8.05, a meaningful discount to the current share price, which has appreciated approximately 18% since those purchases were made. We believe this program has been a highly accretive use of capital and has generated tangible value for our shareholders.

Turning to our outlook for 2026. We are confident in our performance and reaffirm our full year AFFO per share guidance of $0.80 to $0.84. We also reaffirm our stated net debt to adjusted EBITDA range of 6.5x to 6.9x. This guidance excludes the anticipated benefit from the Modiv transaction, which we plan to address and update upon closing.

Although we believe it is worth emphasizing that the acquisition is structured to be leverage neutral with our 2026 net debt to adjusted EBITDA guidance range of 6.5x to 6.9x. I'll now turn the call back to Mike for some closing remarks.

Thanks, Chris. As we begin this next phase of GNL's evolution, we do so from a position of strength, focused on strategically reducing our office exposure while redeploying capital into higher quality, higher-yielding assets. The foundation we built in 2025, a stronger balance sheet and improved credit profile and a more focused portfolio gives us flexibility and confidence to execute this strategy on our own terms, remaining patient and selective as we identify the right opportunities.

We won't rush to deploy capital for the sake of it. We'll be thorough, diligent and highly selective, pursuing only those opportunities that we believe genuinely enhance the quality and earnings of our portfolio. We expect this capital recycling activity to be a meaningful contributor to earnings growth over the course of 2026 and beyond.

The Modiv transaction is a tangible demonstration of that approach. We identified a high-quality portfolio of industrial net lease assets that we believe will enhance the earnings power and long-term durability of our platform. And we structured a transaction that is expected to be immediately accretive, leverage neutral and requires no external capital.

We look forward to building on the strong foundation Modiv has established as part of the combined GNL platform. Before taking your questions, I'd like to note that subsequent to the first quarter, 2 members of our Board, Sue Parati and Governor Rendell announced their intention to retire following the 2026 Annual Meeting of Stockholders.

We thank Sue and the Governor for their years of dedicated service and meaningful contributions to GNL and remain confident that our Board's composition is well calibrated to provide effective oversight and support efficient decision-making. We're available to answer any questions you may have after the call. Operator, please open the line for questions.

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] One moment please while we poll for your questions. Our first question comes from the line of Mitch Germain with Citizens.

Congrats on the Modiv deal. Starting with Modiv, Mike, for the assets, I think about 20 or so percent of them reside outside of the industrial sector. So I'm curious, are there any potential candidates for sale across that portfolio?

First of all, great question. Thank you. Yes, there is. Our primary focus is on retaining the industrial assets. Modiv does have a few very high-quality assets that are outside of what we would consider industrial. And we will, at the right time and working with Modiv, look to dispose of those assets, but very quickly after closing. It won't be many. One of them is on the larger side, so it will have some meaningful impact. And I think that it will also have just an overall value as we evaluate the acquisition as well.

Got you. So lower cap rate versus what you're buying it at. Okay. And then can I just talk a little bit about -- or sorry, dispositions that either were completed or planned to be completed. It seems like activity is somewhat across each sector. We saw a change in number of assets across industrial, retail and office. So maybe just talk about what some of the characteristics were. I think you mentioned it, a vacant office, a GSA leased office. Maybe some of the characteristics of some of the other properties that were sold would be helpful.

Okay. As we talked about last quarter, we were going to be switching to more of a strategic disposition strategy. So where we had opportunity to dispose of some assets that maybe weren't just in the office portfolio, but we did so at very aggressive cap rates. And that's an ongoing part of our strategy. We are intentionally looking at growth and adding the high-quality portfolio of Modiv is a big statement of that. But we will continue to execute opportunistically.

As an 800-plus property portfolio, it's not uncommon for people to call us when they see an asset that we own that they have an interest in. We always take the call. We always negotiate the deal and then we decide do we have an opportunity to redeploy those proceeds in a more accretive way. But we're very, I think, thoughtful in not wanting to sell what is significant and core to the overall portfolio. So I can give you an example.

We sold a bank branch in the quarter at a 6.2% cap rate. The buyer wanted to own it. And at that cap rate, we are a happy seller. So again, those are the type of opportunistic dispositions in addition to what we're going to continue to do, evaluating the opportunities to reduce office. If I can just add one thing to that because we've been talking for a good part of 2025 about an asset that we had under contract to sell.

It was an office property on the West Coast. We completed the sale in the quarter. And we sold it vacant, but we sold it for just about what we paid for it when we initially owned the property. And in addition to that, it does remove about $1 million of NOI carry. So again, we're really looking at everything in a very deep analytical way. And not only do we value getting the proceeds from the disposition, but that NOI -- removing that drag to NOI, of course, is extremely valuable.

Got you. Last one for me. And when you're considering some of these office dispositions in particular, about half of the portfolio resides outside the U.S. I'm curious what sort of demand you're seeing across Europe for office. Obviously, we're seeing improving fundamentals here in the U.S. Lenders are a bit more prone to lend in that sector today than they were previously. Are you seeing sort of similar trends emerging across Europe? And does that give you an opportunity to maybe start calling some of those assets as well?

Yes. So as you probably know, Mitch, we're about a little more than 25% Europe and U.K. and about half of the NOI comes from office. What we've been seeing in the office market overseas is a lot of redevelopment into mixed-use residential as well -- if a tenant is not renewing, there's a lot of redevelopment going on. So the market is very strong. We're very active. And I think as we move through 2026, you'll hear more updates from us on certain assets that will be positive to the portfolio.

Our next question comes from the line of Upal Rana with KeyBanc Capital Markets.

Mike, on the Modiv transaction, maybe you could walk us through the cap rate there relative to the blended cost of capital that you'll be using and then the resulting investment spreads there? And also, you mentioned selling a few of those assets already once you're closed, but any other opportunities within that portfolio that could potentially drive the yield higher?

So I'm not able at this time to talk cap rate specifics. That will come out as we get further along. We're working really closely with Modiv, who's just been a great partner in this transaction. They'll be putting out their proxy and it will have all those details in it, as you'll understand. What I would say is that there are a lot of opportunities, some of which were already in the works on the Modiv side that will transfer to us to continue both from an origination pipeline standpoint, a lease renewal and also some work that they were doing on dispositions.

I think that they were operating their portfolio at a very high level, maximizing the performance of their portfolio, et cetera. So it's going to be very exciting for us to integrate that into our portfolio and continue the work that they've been doing. We've talked about the roughly $6 million of G&A savings. I think that when we close on that, we'll probably be able to squeeze more out of that. I don't know the exact number yet.

We're continuing to evaluate that. But there's just a lot of upside as we've disclosed in our press release. And then the portfolio itself is performing at a very stable level. So there's not a lot of things that we would have to do to achieve these stated goals. It will -- I'm looking forward to closing as early in the year as we can. We're targeting third quarter. If we can do it early in the third quarter, I would -- the earlier, the better so that we can start to see the benefits to the portfolio.

And then we'll disclose our plans for the few assets that we're evaluating for disposition. But I also want to say, just in case we have any Modiv investors on the line listening to the call today, we're very excited to have them join the GNL investor community. They've been great shareholders for Modiv, and we look forward to welcoming them into the GNL family. And it's just a great opportunity for all of us.

Great. And then maybe could you talk about what you're seeing in the market for future acquisitions? You had talked about a bit on your prepared remarks already, but maybe you could walk us through your strategy on selecting which properties or portfolios to acquire and how you're thinking about your leverage and exposure when you make that consideration.

Sure. Thank you. Well, first of all, I think us announcing a roughly $550 million acquisition in the first quarter probably wasn't expected by the market, and it really gets us excited about what we can do in 2026. It was a very opportunistic situation, and it really penciled out well, and it's something that is going to pay dividends for a long time in the GNL portfolio. I can't tell you that there'll be other large portfolio acquisitions in 2026.

Obviously, we take things as they come and we look to how we can best use our capital and how we can grow earnings, et cetera. But I would tell you what we are looking at from -- as we're developing review of the market and a potential pipeline is we really are focusing on the industrial side of the business. We are also seeing some retail type acquisition potential, not as much as we've seen in the past.

I think the markets are a little bit in flux. And we're looking at everything not from just dollars spent acquiring properties, but meaningful opportunity for accretion in the portfolio from an earnings standpoint. As far as your question about debt, we continue to think that, that is one of the most important things that we will continue to work on.

Chris reaffirmed our 2026 guidance of 6.5% to 6.9%. We're very excited that the Modiv transaction is leverage neutral in how we were able to structure it. So the additional opportunity to grow the EBITDA side of the formula is one of the things that I'm very excited about. But nothing has changed from what we have communicated to the market, and we will continue to drive that important metric further down.

Our next question comes from the line of Jay Kornreich with Cantor Fitzgerald.

I guess a little bit following up on the last question, but thinking bigger picture about the MDV merger, I guess I wonder what that could signal for your strategy going forward. You recently completed the robust disposition program. And I'm wondering if this merger signals maybe a more return to growth for the company beyond just recycling out of office assets.

My short answer is yes, it does. I said in our last earnings call that, that was an important goal of ours, that the disposition program was extremely successful. It achieved a lot of our important goals, primarily lowering net debt to EBITDA in a meaningful way and in a relatively quickly way. The fact that we have the opportunity with the Modiv portfolio to move forward in this leverage-neutral way, but still have a positive increase to earnings, I think, does give you some insight into how we're thinking about things.

Again, as I answered in the last question, it's not just about dollars out the door and how much you can buy in a year. It's about what is the impact of those acquisitions long term on the portfolio and on earnings. We're very excited about the fact that the WALT of the Modiv portfolio at 15 years extends the WALT of GNL by almost 1 full year, takes us out to just under 7 years. The 2.5% annual escalator that their portfolio brings to us is also meaningful.

And as that 15-year WALT continues and we see the NOI in that portfolio growing at that 2.5%, it's very meaningful, as we all know. One other thing that we are really focused on is the G&A reduction and how we can better operate this larger portfolio. We decreased G&A expense by 25% year-over-year. We continue to focus on that. That 25% represents a $16 million annual savings. And that's very important, obviously. You want to grow earnings and you want to reduce expenses. That's the formula for the ultimate success, and we look at both sides of that equation.

Appreciate all that commentary. And then just one more for me. You highlighted in office asset sale and capital recycling into an industrial asset at a 100-basis point cap rate premium. And so I'm wondering if you feel this type of accretive capital redeployment out of office is repeatable as you lower office exposure, and if there are any, I guess, time line goals for where you want to get office exposure overall down to.

So I don't know that we can consistently every time hit that 100 basis point type spread, but that is certainly the goal. And we feel that we have very high-quality office assets, net lease. About 80% of our portfolio is investment grade, as you know. So as we look to lower our exposure to office, we certainly think that we should be able to sell them at a fair value. We talked this quarter about the GSA asset at a 7.2% cap rate. I think that as we look at the rest of the portfolio opportunity, we see it in that range.

I've always talked about our office being worth in a 7% to 8% cap rate range in our minds. So we never wanted to just package it all up and sell at any price because it's performing very well. And for us, as we look to reduce our exposure, it's important to us that we find fair value for this portfolio. Because it continues to perform, we will take a disciplined and strategic approach to how we reduce our exposure.

We haven't said anything specific about target allocation. As we finished this quarter, we're about 24%. We will continue to drive it down. But what we're most excited about is we're about -- we are now with the Modiv acquisition, going to be 75% retail and industrial, which is important. Over 50% of that is on the industrial side. So we will be a predominantly net lease industrial portfolio with long-duration leases and really high-quality tenants.

[Operator Instructions] Our next question comes from the line of Craig Kucera with Lucid Capital Markets.

A lot of the Modiv portfolio tenants are owned by PE firms with manufacturing backgrounds. Does the acquisition potentially open up any new potential relationships for you for future growth or are you already pretty familiar with most of them?

It always enhances relationships, some of which we already have, some of which we're happy to get to know and develop further. It's one of the things that Aaron Halfacre and I continue to talk about and making those introductions and there may be ongoing benefit from those relationships for sure.

Got it. And changing gears, I mean, just given the stock price, it seems that selling assets and buying back stock still makes sense. I think you're about halfway through that $300 million authorization. Should we consider that as sort of a consistent portion of your business model for the remainder of the year as far as acquiring, call it, $30 million to $40 million a quarter?

Well, you are right that we're about halfway through that. We bought back about $158 million since we announced. The average buyback price was $8.05. It is another tool in the toolbox that we will continue to evaluate.

As we look at stock buyback, as we look at reducing the net debt to EBITDA and as we look at acquisitions, those are all 3 very important things to us and tools that I think we've shown we can use effectively. And we'll continue to evaluate them. We have not given any forward statements on how we will and at what level use the buyback, but it's something that we're very happy to have in place and something that we do find good use for.

Got it. Looking to your lease expirations during the rest of the year, are there any known large move-outs during the remainder of 2026?

Craig, we have -- if I'm remembering correctly, and Ori will correct me if I'm wrong, he's in my office with me. I think we have about 6% lease rollover in 2026.

4.4%.

I was high. 4.4% in 2026. So we don't have any material rollovers in '26. And we continue to engage with tenants. Again, I stick to this public -- what's been publicly disclosed as I answer these questions. We have not given any specifics on move-outs. We continue to think that there are opportunities to either renew the existing tenants or re-tenant. And if we don't feel that, that is an opportunity, we will be marketing an asset well in advance of expiration. But we feel that we have a very tight handle on the portfolio.

We had occupancy overall increase in the quarter. We continue to see that as a positive trend. A net lease company is typically in that 98% to 100% occupancy realm, and I'm happy to say that, that's where we are now, and we expect to continue to stay there. We always look to push that up as high as we can. But the portfolio continues to be well tenanted and the tenants operate out of these properties no matter what the sector. So we feel very confident about the remainder of '26.

Thank you. We have reached the end of our question-and-answer session. I'd like to turn the call back over to management for any closing remarks.

Great. Well, thank you all for joining us today. I think you heard a lot of exciting news about Global Net Lease. We thought we were well positioned for 2026 before the announcement of Modiv. We're even more excited to integrate that high-quality portfolio into ours and just continue on with this strategy for growth. And we look forward to talking to any of you after today's call, if you have questions or we'll be seeing you at conferences. So thanks for your time, and we'll talk soon.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a wonderful day.

Good afternoon, and welcome to the Global Net Lease Inc.'s Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to Jordan Jonebeld, 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 Securities Litigation Reform Act of 1995. Please review the forward-looking and cautionary statements 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 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 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, Jordyn. 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, strengthen 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 noncore 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 GBP 250 million or approximately $336 million at a 7.4% cash cap rate.

The McLaren sale generated approximately GBP 80 million or $108 million of value above its original acquisition price and further enhance 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 noncore 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 8.4x to 6.7x 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 derisk 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 2026 to August of 2030, including 2 additional 6-month extension options.

Our decisive actions were recognized by the credit rating agencies, with Fitch upgrading GNL's corporate credit rating to investment grade BBB- from BB+ and S&P Global lifting our corporate rating to BB+ while upgrading our [ bus ] 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 deluging and dispositions to one focus on the accretive recycling of capital. This includes remaining selective and opportunistic with asset sales, particularly those that materially reduced 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 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.

GNL'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 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 as an office asset re-leasing 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% 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.

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 fourth quarter 2025, we recorded revenue of $117 million and net income attributable to common stockholders of $37.2 million. AFFO was $48.5 million or $0.22 per share for the fourth quarter of 2025 and the $0.99 per share for the full year, exceeding our revised 2025 AFFO per share guidance range of [ $0.95 ] to $0.97. The reflecting a strong finish to the year, driven by disciplined execution.

Looking at our balance sheet. The gross outstanding debt balance was $2.6 billion at the end of 2025, a $2.1 billion reduction from the end of 2024. And our net debt to adjusted EBITDA ratio was 6.7x based on net debt of $2.5 billion, down significantly from 7.6x at the end of 2024.

Our debt is comprised of $1 billion in senior notes, $324.2 million on the multicurrency revolving credit facility, and $1.3 billion of outstanding gross mortgage debt. As of the end of 2025, 98% of our debt was effectively fixed through either contractual fixed rates or interest rate swaps, providing strong visibility to future interest expense.

As a result of significant debt reductions from asset sales, refinancing activity and improved borrowing costs, our weighted average interest rate stood at 4.2%, down from 4.8% in the fourth quarter of 2024, driving a 45% reduction in quarterly interest expense of $42.6 million from $77.2 million a year ago. Interest coverage ratio was 2.9x, reflecting the combined benefits of lower leverage and reduced interest costs.

From a debt maturity perspective, we have limited expirations, with only $95 million of debt maturing in [ 2027 ]. Given our strong liquidity position, we expect to address this maturity through refinancing onto our multicurrency revolving credit facility.

We will continue to manage borrowings effectively on our revolving credit facility to take advantage of its lower interest rate spreads across currencies, generating approximately 170 basis points of interest savings based on rates as of January 30, 2026.

As of December 31, 2025, we we have liquidity of approximately $961.9 million and capacity on our revolving credit facility was $1.5 billion compared to $492.2 million and $460 million, respectively as of the end of 2024.

Additionally, we had approximately 216 million shares of common stock outstanding and approximately 219.1 million shares outstanding on a weighted average basis for the fourth quarter of 2025. Beginning in 2025 and through February 20, 2026, we have repurchased 17.2 million shares totaling $135.9 million under our share repurchase program.

We repurchased shares at a weighted average price of [ $7.88 ] and well below recent trading levels, which has since increased approximately 20%. These repurchases were executed in a deliberate and highly accretive manner, which we believe created meaningful value for shareholders.

We are pleased to establish initial 2026 guidance of AFFO in the range of $0.80 to $0.84 per share and net debt to adjusted EBITDA in the range of 6.5x to 6.9x.

The 2026 guidance assumes a gross transaction volume of $250 million to $350 million, inclusive of both acquisitions and dispositions. This initial guidance also reflects our focus on reducing office exposure, along with the optionality to redeploy net sale proceeds in disciplined, leverage-neutral manner, which we anticipate will drive earnings growth.

I'll now turn the call back to Mike for some closing remarks.

Thanks, Chris. The actions we executed throughout 2025 represent a decisive and comprehensive repositioning of GNL as we enhance the overall quality of the company by simplifying the portfolio, materially reducing leverage, strengthening liquidity and improving our credit profile.

There were not incremental changes, but deliberate and coordinated actions taken by GNL to reset the company's trajectory, deliver measurable results across the balance sheet and portfolio and meaningfully expand our strategic flexibility as we enter the next phase of growth.

We look ahead to 2026 from a position of strength with what we believe is a clear path to earnings growth. driven by disciplined capital recycling alongside a continued emphasis on further deleveraging over the long term. Our strategy prioritizes monetizing select office assets and redeploying capital into accretive acquisitions of single-tenant industrial and retail assets that enhance earnings durability and portfolio strength.

We're currently reviewing a number of accretive acquisition opportunities that align with this approach and support our long-term objectives. With a streamlined operating platform and enhanced financial flexibility, we intend to execute this plan with discipline.

On behalf of the entire management team and Board, I want to sincerely thank all of our shareholders and analysts, who have put their trust in GNL as we've accomplished all of these corporate goals. We intend to remain on this path with a continued focus on thoughtful execution and long-term value creation. We're available to answer any questions you may have after the call.

Operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Mitch Germain with Citizens JMP.

Congrats on the year. Michael, I'd love to get some perspective on the McLaren office sale. Was that a reverse inquiry? Or is that an asset that you were marketing?

We had an inquiry from an independent from a third party. As I have kind of talked about in the past, having a relationship with McLaren that I did, I want to make sure that they had an opportunity to see the asset before we took any action. And through kind of their ownership structure, it proceeded that way.

So no, it was not a highly marketed transaction. But as many people know, it is a very well-known campus. And McLaren being the successful organization that they are coming off of the 2 F1 championships, et cetera, there was just natural interest in that asset.

That's helpful. Do you think that you could replicate that kind of pricing for additional office sales? Or do you think that that's not representative, given the quality of the property and brand that is tenanting the asset?

So we actually believe, Mitch, that the net lease office portfolio within GNL is, in many cases, equivalent value to what we sold McLaren for. And one of the reasons that we've identified that as a 2026 goal is because we can say that. But I think the best way to prove value is to execute on it.

So we are not at a point where we want to disclose specifics, but we have a number of office assets that have significant interest. And I'm very comfortable that this is the area of pricing that you that you'll see. We'll probably have announcements maybe end of first quarter, but definitely second quarter on several office assets.

Great. Last one for me. Just talking about capital allocation, given the attractiveness or the discount that you could buy your stock back at, I mean, how does that weigh in? Because it definitely seems like there might be a shift in deployment or asset rather than stock here. So just curious in terms of how the buyback fits in your overall strategy on a go-forward basis, please?

Thank you, Mitch. So the buyback remains a very important tool that we have at our disposal. We're going to continue to evaluate opportunities. As I said, we have some interesting potential acquisitions. But we're certainly not going to just put money out for the sake of saying we bought certain assets. There's still benefit to opportunistically retiring more shares of GNL.

As you said, and I completely agree, 2, 3 months ago, it was a no brainer that stock buyback was much more accretive than anything that we could see in the market. There will still be a reasonable expectation that this stock is worth buying back, but we will be more active in evaluating acquisitions.

Again, I think we've been extremely deliberate and very disciplined in how we've approached this last months of GNL's performance. And there's nothing that we're more focused on than continuing that.

Our next question comes from the line of Up Rana with KeyBanc.

.Just on the office asset dispositions, is there a particular strategy you're trying to accomplish there that either improves your portfolio the most or showcasing the embedded value in your office portfolio?

Yes, definitely, we want to highlight the implied value of the office because I think there's a bit of a disconnect in the market. Single-tenant net lease investment grade with duration is still a valuable asset class.

The other thing, Upal, that we're really focused on is we've heard from a lot of shareholders. And frankly, the feed is they believe that GNL will be a better portfolio, more heavily weighted to industrial primarily and also retail. So we certainly don't want to dismiss that. But we don't want to value either.

So we're going to intentionally market the properties. Our asset management team is working very hard on identifying the right brokers, talking to potential buyers and really unlocking value here.

So as Mitch asked and as you bring up, when we can do this in kind of the same, let's just call it, mid-7 range, maybe a little lower, maybe right there; that's real value, and then we'll redeploy into the asset classes of net lease industrial. Some retail. But right now, I'm really focused on industrial. So I think that's the way to proceed into 2026.

Okay. Great. That was helpful. And can you talk about the decision to provide transaction guidance? And maybe you can break down how much -- or dispositions and how much are acquisitions?

Yes. So I think that it was important that we made it very clear. We spent the last, call it, 18 months aggressively pursuing a disposition strategy because it was really the important part of what we could do. We lowered our leverage. We lowered our cost of capital. It was very, very important that we continued that.

Having sold about $3.4 billion, frankly, we're ready now, as I talked about last quarter, kind of just alluding to, but we're really ready to get back on what I think of as the offensive. And we will evaluate opportunities. We will take our time. And as we've done in the past, we'll disclose when we believe that the deal is at a point that it has real assurity.

But we're also going to, as I said, continue with a few more opportunistic dispositions. So no, we're not at a point right now where we want to break out the transaction volume, but we did want people to know that there will be growth in this portfolio starting this year that we've got still more focused on continued deleveraging, but we really also are focused on earnings growth. And we're going to do that through the combination of opportunistic share repurchase and beneficial acquisitions for the long term.

Okay. Great. That was helpful. And then last one for me. On acquisitions, what cap rates are you eyeing? And what investment spreads are you targeting there? And are these acquisitions likely to be in the U.S. or abroad? .

Well, we haven't provided that level of detail in our disclosure, Upal. So what we are committed to is accretion and AFFO growth. So as we take a look at cost of debt and cap rates, the market is one where you really have to selectively pick and choose your acquisition targets.

As I've said in the past, the relationships that we have with developers, with certain brokers in the market; it will give us an opportunity to make sure that we're able to maintain buying cap rates that allow for that type of growth. So without giving more detail than I can, that is how we will underwrite.

The opportunity to buy in the U.S. and U.K. and Europe, we will certainly consider opportunities in the U.K. and Europe as well as, of course, the U.S. So the team is busy. Everyone is very excited to be back at that part of the job that we had kind of put on hold for the last 2 years. But it will be a very selective process, it will continue to have duration. It will have credit tenants, primarily investment grade or implied investment grade and I think fair to say, predominantly in the industrial space.

Our next question comes from the line of John Kim with BMO Capital Markets.

Just wanted to ask about your strategy change. So over the last few years, you've been prioritizing strengthen the balance sheet and your stock has rewarded for it last year. And now you seem like you're shifting to offense and focusing more on growth.

I guess my question is why stop now with your leverage of 6.7?

So we're not stopping, John. I think that's a great point to clarify. But we also have to really mine the earnings within the portfolio. We sold, as you know, $3.4 billion of assets, which is quite a bit. We've been able to protect the dividend, which is something that I feel very confident about and something that was really a priority of ours.

So by no means are we saying, "Hey, we're now going to just do 180-degree turn and go 100 miles an hour and just be blind to acquisitions so that we can align the sheet and say we bought this and we bought that." We will continue to look at different opportunities, including share repurchase, select acquisitions, et cetera, through the disposition targets that we have internally. That will give us an opportunity to continue to take leverage into consideration.

So I think, for right now, it's important that we have that opportunity to selectively grow. And we're going to balance the things that we know are important to the market. It will still continue to have a focus on leverage, but we are going to start putting our foot back in the water on some potential acquisitions.

And you mentioned the office disposition cap rates in [ mid-7 ]. Is there anything unique about these assets that you're selling that would lead to this attractive pricing? And if there's any secured debt associated with these assets or locationally, are they unique? And if you can give us just a quantum on how much you're looking to sell versus buy this year?

So what's unique about these assets compared to office in general is that the net lease characteristics of office are just stronger than the overall U.S. office market. We have a majority of our tenants are investment grade. We've got good duration on the portfolio.

And these are tenants that people are comfortable with. They're typically, as I've said, over the many quarters, mission critical to the companies themselves. They're predominantly office, but they may have a component of R&D or light assembly and storage.

So just for the long-term operation of the tenant's business, these are important assets. And because of that, they have a successful return to office program that's been in place for probably longer than most office properties.

It's typically a local buyer, who will acquire these properties. It could be a [ 1031 ] buyer, but we have sufficient evidence that we'll be able to trade at these types of levels and really prove value for these properties.

We haven't specified dollar value of what we will sell, but we'll continue to update quarterly. And I think people will be pleased with the results.

And then in terms of acquisitions, your shares are probably trading at approximately 8.5% AFFO yield. Is that the hurdle rate for acquisitions that you're looking at? Or are there other factors that would lead to a different cap rate on acquisitions?

I mean as I say over and over because it's the primary focus, it's driven by accretion. And so we have those targets. Now we look at everything overall. So the proceeds from dispositions, the combination of stock buyback and then acquisitions itself; we know where we need to be, and that will drive our kind of go, no go on those acquisitions.

Our next question comes from the line of Jay Kornreich with Cantor for Gerald.

I guess just sticking with the theme here of the office sales. I guess I just wanted to clarify, is there a goal range for a percent of exposure you'd like to get the office segment down towards? And then additionally, are there any other maybe non-office dispositions you'd be eyeing to reduce certain tenant exposures this year?

So I think that it's important that we evaluate the contribution that the stabilized office portfolio makes to the overall earnings of GNL. So I think that if we can take a subset of the office portfolio and prove value, my hope is that it gives people the confidence that this is a good performing asset class. And we will intentionally continue to lower our exposure to office.

But we don't want to get into any kind of rushed sale because then we -- you lose the opportunity to really maximize value. And because of the performance of the office portfolio, there's no reason to sell at a price that we don't think represents the types of values that we're talking about.

So we'll continue to update our activity as it relates to office, but we are committed to continuing to lower. It's part of the overall 2026 operating plan to do that.

As far as other assets, there are certain assets that for a number of reasons, it could be potential value from redevelopment or a tenant's plan at an asset that yes, we will potentially dispose of certain other assets during the course of the year.

Okay. And then just as you think about shifting more offensively, you referenced having a priority for industrial and some retail, but as you think about your -- the markets between the U.S. and Europe, does one of those two present, I guess, a more favorable investment outlook for you guys going forward?

Right now, I think that to be prudent, we probably are leaning a little bit more towards the U.S. market just because there's some uncertainty. As it relates to U.K. and Europe, we're very comfortable there, we have a great team in place, we know the assets in the markets very well.

But as -- I think as the U.S. is working through tariffs and trade relationships and things like that, for the time being, I think that the U.S. just is a little easier to understand.

But again, by no means do I want to say that we don't value the U.K. and European assets that we own. One of the great things about them is they're typically not export businesses in the U.K. and Europe, their operating businesses that supply their local market. So they haven't been impacted by recent tariff and trade agreements.

So to come back to what I've already said, [ Jay ], yes, I think for right now, we're most focused on the U.S.

Our next question comes from the line of Michael Gorman with BTIG.

Just a quick one for me. Chris, I just want to maybe understand some puts and takes on the guidance side. Fourth quarter run rate would annualize to about $0.88 a share, understanding you got to make an adjustment for the McLaren sale, which was very late in the quarter.

Just when I think about the -- even after that adjustment kind of 2% to 3% growth from the in-place portfolio, talk about accretion from capital recycling, it feels like maybe there's a couple of points that we're missing here that would maybe kind of push the guidance down to that $0.82 midpoint from where I would expect it to be.

Is there anything else kind of going into guidance in '26 that might be a headwind against some of the growth metrics that you guys are talking about here?

Well, I think it's probably worth just pointing out within the fourth quarter, we did have some tax benefits that we identified as part of our year-end process, which did give us a little over $0.01 in AFFO. So that's something that kind of throws off the fourth quarter run rate. .

Yes. That's super helpful. And then, Mike, maybe just one quick one. We spent a lot of time talking about the portfolio and kind of asset transactions going into '26. Are there any potential vacant asset sales that you're targeting for 2026 that maybe could provide funding for acquisitions and also a benefit maybe from a debt-to-EBITDA perspective?

The majority of the assets that had that vacant component had been addressed in 2025. There are a few important assets that we're looking at from that disposition standpoint that yes, we'll have free cash post sale that we'll be able to deploy.

We've taken an approach with the guidance $0.80 to $0.84 because we're really at the beginning of the year. We -- those are definitely numbers that are backed up by what we know in the portfolio.

But there are certain things that we will pursue during the course of the year that are kind of macro-type events. We think that there could be some benefit in Fed pricing as we come into spring that could open up opportunities in the market, that we're -- we think that we're well positioned to take advantage of.

So the overall idea is to continue to execute the business to be very smart and deliberate and look for opportunities that we think are going to be there, primarily kind of in the summer and second half of the year.

[Operator Instructions] Our next question comes from the line of Craig Kucera with Lucid Capital Markets.

Mike, you made mention in the past that you were looking to reduce your C-store exposure. And I think you work that down from maybe 5% or so of the portfolio last year to maybe a little bit more than 1% through the third quarter. Are you where you want to be on that front? Or do you still think you might make some additional sales?

I'm just trying to get the final breakdown. Just one second on [ guess ] and convenience because yes, as you said, it was definitely an intentional strategy to reduce our exposure. [ Gas ] and convenience is an asset class that has resilience, but it's very creator driven.

So if we're at 1%, we are definitely comfortable. We have taken the real risk out of what we saw from an operator standpoint. And I think the team did a great job of getting value for those assets and us move into some things that just are a little bit easier to forecast.

Okay. That's helpful. Changing gears, I want to talk about your 2026 office lease expirations, which I think are a decent amount of the total in '26. Are those more concentrated in the U.S. or Europe? And how are those discussions going so far?

They are more heavily weighted to Europe and the U.K. The conversations are going well, tenants are engaged. We're figuring out opportunities. We know that for the most part, tenants are going to renew. There are a number of conversations that we'll be playing out over the next 1 to 2 quarters. I'll be with the team next week in London, and we'll be really digging in on some of these conversations.

Okay. Great. And just one more for me. And you kind of alluded to it in the Q&A. But I guess, as you're thinking about selling office, just given the McLaren sale, it would appear that there's stronger demand in Europe and the U.K. But are you expecting to also be able to sell out of the U.S. portfolio as well? Or is it going to be more heavily weighted towards -- over the sea?

No, we definitely see the U.S. market equivalently strong. It's just obviously McLaren was based in the U.K. And we always felt that McLaren was special credit in the portfolio. The building was so specifically designed for them. It was a large single-tenant building. So when we had that opportunity, we were thrilled. We loved owning it, and we also love selling it at that price. But as we think about office opportunities in the U.S., very strong market as well.

And Craig, I'm sorry, I just want to go back to your last question and just put a little clarification around it. I believe the 2026 lease maturity on office is about 3.1% of straight-line rent. So it is something we're focused on. And we expect to have a lot of success with renewals. But it's by no means, an overweight or disproportionate amount of potential in the coming year.

We have no further questions at this time. Mr. Weil, I'd like to turn the floor back over to you for closing comments.

Great. Well, thank you, everyone. We always appreciate you taking time to join us. We are very excited about not only what we've accomplished in 2025 but the year ahead. This is a business where you come to work every day, and you just grind it out. And that's what we're already doing in 2026.

I think that we will have some announcements that are very interesting and beneficial for the company and most importantly, for our shareholders. So we look forward to speaking again soon. And if anyone does have specific questions for Chris or myself, please reach out. We're always available for conversation. Thanks, everybody.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

Good afternoon, and welcome to Global Net Lease, Inc.'s Third Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the call over to Jordyn Schoenfeld, Assistant Vice President at Global Net Lease. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for GNL's Third Quarter 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 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, 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 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, Jordyn. Good morning, and thank you all for joining us today. It has now been approximately 2 years since GNL's internalization, and we're very proud of what we've accomplished thus far and enthusiastic about what lies ahead. Since the internalization, we have set ambitious and transformative strategic goals to streamline our portfolio, reduce leverage and lower our cost of capital. We have consistently exceeded these objectives and are already yielding measurable benefits reflected in the stable operations and improved credit profile and enhanced financial flexibility, culminating in our recent achievement of earning an investment-grade corporate credit rating from Fitch Ratings.

The main driver of our strategic agenda has been a prudent disposition program focused on selling noncore 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 sale of our multi-tenant retail portfolio completed in June of 2025, which accelerated our debt reduction initiatives and firmly positioned GNL as a pure-play single-tenant net lease REIT while maintaining our industry-leading proportion of investment-grade tenants.

Since the implementation of this disposition program, we have sold approximately $3 billion of dispositions, including the sale of noncore short duration single-tenant assets at a 7.7% cash cap rate, while reducing our net debt by approximately $2 billion since the third quarter of 2024. These results, particularly the 7.7% cash cap rate achieved on our noncore single-tenant asset sales, provides 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 has meaningfully reduced our leverage, we capitalized on an attractive opportunity to further lower our cost of capital by refinancing our revolving credit facility, including new institutional lenders attracted by GNL's strengthened 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 upgrade of GNL's corporate credit rating to investment-grade BBB- from BB+. 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 accretively repurchase shares, which we believe enhances long-term shareholder value.

Through October 31, 2025, we have repurchased 12.1 million shares at a weighted average price of $7.59 totaling $91.7 million, capitalizing on the opportunity to buy back shares at an AFFO yield of approximately 12%. We believe buying back shares at this AFFO 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 GNL's growth.

In addition to our specific achievements, we believe broader market developments are creating 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 fund rates, and we'll monitor the newly constituted Federal Reserve in the spring of 2026 as we anticipate a dovish stance towards the economy, which should further lower our cost of capital. These rate reductions have a direct impact on GNL's bottom line as they lower the floating rate on the U.S. dollar portion of our revolving credit facility, reducing our cost of capital and supporting our ongoing efforts to strengthen the balance sheet.

Additionally, dividend income from REIT tends to become increasingly attractive in a rate-cutting environment as they can offer a more attractive return relative to U.S. treasury securities, creating a potential pathway for favorable market performance by the net lease REIT 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 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 GXO Logistics. New leases that were completed in the 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 at 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 perform strongly with 100% rent collection across all tenants, the highest proportion of investment-grade tenancy at 77% and minimal lease rollover. Annual expirations represent 2.5% 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. AFFO was $53.2 million or $0.24 per share. Looking at our balance sheet, the gross 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, $664 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 fixed rates. Our weighted average interest rate stood at 4.2%, down from 4.8% in the third quarter of 2024, and our interest coverage ratio was 2.9x. At the end of the third quarter of 2025, our net debt to adjusted EBITDA ratio was 7.2x based on net debt of $2.9 billion, significantly down from 8x 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 will remain within our stated net debt to adjusted EBITDA 2025 guidance range of 6.5x to 7.1x. As of September 30, 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 31, 2025, we have repurchased 12.1 million shares at a weighted average price of $7.59 per share under our share repurchase program. Turning to our outlook for the remainder of 2025. We are confident in our performance and are raising our AFFO per share guidance for 2025 to a new range of $0.95 to $0.97. We also reaffirm our stated net debt to adjusted EBITDA range of 6.5x to 7.1x.

I'll now turn the call back to Mike for some closing remarks.

Thank you, Chris. Achieving an investment-grade rating from Fitch Ratings is a major milestone for GNL 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. Specifically, since Q3 2024, total outstanding debt has declined to $3 billion from $5 billion. Liquidity has increased to $1.1 billion from $253 million.

Capacity on our revolving credit facility has grown to $1.2 billion from $366 million, and annualized G&A has decreased to $47 million from $50 million. We believe these actions have positioned GNL as a pure-play single-tenant net lease REIT with enhanced financial flexibility built for sustainable growth. Looking forward, we believe these achievements position GNL to capitalize on a variety of market opportunities and continue creating meaningful shareholder value. We believe our strong balance sheet, disciplined capital allocation and proven track record of execution position GNL 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 GNL 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.

[Operator Instructions]

Our first question comes from the line of Upal Rana with KeyBanc Capital Markets.

On the quarter. Michael, you mentioned acquisitions don't look attractive to you in today's environment. I'm just trying to understand what needs to happen for you to become an active buyer again? And if so, what would be sort of your funding plans for that?

So we would look to finish our disposition program, which we are, I would say, in the late innings of. And as a part of that strategy, of course, we've continued to actively monitor the acquisition environment. And 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. So I think there are a number of things that just the discipline of our acquisition strategy, the reason so much of our portfolio is investment grade 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.

So I think a big part of what we're monitoring is the state of cost of debt, the pricing generated off of the 10-year treasuries, et cetera. And I just don't think we're there right now. I continue to see the acquisition pace in the industry is slower than what we've seen over the last decade. But again, when we think about it in terms of our #1 goal is to continue the completion of the debt reduction program. So we've been identifying or allocating proceeds from dispositions to continue to do that, and we will. We're not finished. But as you've seen over the last couple of quarters, the immediate accretion of stock buyback is so significant that, frankly, for us, it's just a very easy decision.

That 12% accretion yield from stock buyback is very impactful. And of course, we want to grow. We want to be active. But first and foremost, we want to drive the greatest possible benefit for shareholders. And we think that's the combination of finishing our debt reduction program and the opportunistic share repurchase program.

Okay. Great. That was helpful. And then with leverage, it ticked up in the quarter, and it looks like it was timing related from your multi-ten sale. But it currently stands at the high end of your guidance range. And so -- and you have some more disposition to close by year-end as well. So just trying to understand how you get to the midpoint of your leverage guidance by year-end.

Upal, you're right that some of it is driven by just timing. And so we're very confident that by completing what is already scheduled in our pipeline activity, some things that we anticipate occurring in the fourth quarter that we haven't had an opportunity to disclose yet that we are going to be comfortably within our range on net debt. And coupled that with the fact that we were able to raise our AFFO per share guidance. I think that we're -- we come to work every day like you would expect us. Sometimes we joke about we just carry rocks uphill every day because there's not a lot of glory here in what we're doing, but it is just consistent dedication and hard work.

So we've been able to really execute on the plan, which at the end of the year will show material reduction of net debt to EBITDA. But just as important, we've been able to grow AFFO per share. And I think you realize that's not necessarily easy. And we've used all the levers available to us. Our real estate team has done a really commendable job on dispositions and maximizing value of noncore assets. The fact that our single-tenant portfolio sale of noncore assets, assets with about 5 years or less remaining, we've been able to generate a 7.7% cap rate. It just really indicates the underlying value of the tenants in the portfolio and the real estate. we'll continue to maximize that.

We'll use those proceeds as we talked about on the call, to continue to lower net debt to EBITDA. The hard work of Chris and Ori and the team with recasting the credit facility, which had an immediate and impactful savings on cost of debt as well as extending our maturities. These are all things that continue and what we think is important is to show the market that 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 GNL, which is one where we can really maximize value through growth.

Okay. Great. That was helpful. And then just one last one for me would be, based on your revised AFFO per share guidance, 4Q implies $0.19 at the midpoint. And could you walk us through how you get from $0.24 in 3Q to $0.19 in 4Q? I know dispositions will have some kind of impact, but anything else that we should be looking out for our model?

Yes. Chris, do you want to walk Upal through some of that?

Sure. What I would say there, really, it comes down to get into the midpoint in the range for the AFFO guidance is the timing of the dispositions. Obviously, in third quarter, we had the plan in place. So we did have some properties that the dispositions closed later in the quarter, and the same thing will happen during the fourth quarter, and we are confident that we will land in the range that we provided.

Our next question comes from Mitch Germain with Citizens Bank.

Just a little bit of occupancy decline quarter-over-quarter. 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?

So it is opportunistic in that we had a tenant expiration that we've been very engaged on in the U.K. portfolio. And it's a timing piece for us because we are actively engaged with several tenants on new leasing at that location. It's going to be a nice pickup on straight-line rent. It's going to be a nice pickup on occupancy. And I would suggest that we will finish the year much closer to fully occupied than the 97% that we reported at the end of the quarter.

Great. That's super helpful. Last one for me. You've mentioned the word growth a couple of times in this call, which obviously is a little bit of a departure first versus kind of the, call it, kind of shrinking of the portfolio and the deleveraging that's been a key theme. I'm curious, though, kind of how you view the playbook without giving guidance, but how you view the strategy and the playbook going into 2026. It seems like you may be a little bit more open to acquisitions. How much will dispositions remain a theme? Maybe just kind of walk me into how we should be thinking about the forward outlook for you guys.

Thanks, Mitch. The way we're thinking about it is really going to be reflected in how we see the stock price perform. 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, that's going to determine our course of action. I talk about potential or restarting of 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 easy to see more accretive than acquisitions that I've been seeing in the market. So again, I don't want to give guidance right now, and I appreciate you pointing that out. It is something that we will talk about. But we still feel that we have some work to do on reduction of net debt to EBITDA. By no means are we saying that we're finished there. But we are seeing opportunities. We had an incredible quarter of pickup on renewal spreads, which, of course, helps our EBITDA, which, of course, helps our net debt to EBITDA.

So as you know, there are certain -- there are many different ways to lower net debt to EBITDA. Of course, we can continue to lower our balance sheet debt, which we intend to do, but we can also grow EBITDA. So we're fully engaged. I'm not going to say that we will absolutely be finished the disposition program because if we continue to see value in disposition that allows us to execute on different parts, we feel that the job here is to realize value for shareholders, and we're going to continue to do that and drive this price.

[Operator Instructions]

Our next question comes from John Kim from BMO Capital Markets.

This quarter, you had a good renewal leasing spread of 26.4%. Just wondering how achievable this is going forward, especially on your industrial lease expirations? And also, if you could disclose that figure, including new leases, that would be appreciated.

So for Q3, we were 26% on renewal spreads. Over the year-to-date, it's been 18.5%. So I would say 26% is a terrific quarter. Every opportunity that we have to see spreads like that, we're very pleased. But spreads have continued to be strong in the renewal activity. I think it's a good quarter when you're 5% or 6% on renewal spreads.

So the fact that we can continue to do that shows 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 lease expires. Our asset management team engages, as we've said many times, typically 2 years out before a lease expiration so that we can begin the conversations, and it's what really helps us drive these types of results. So we're very pleased with where we are year-to-date and exceptionally pleased where we came in this quarter.

Do you typically get a higher spread on renewals than new leases? I'm just wondering why that renewal is being taken out.

Well, if you think about the kind of the way a renewal works, a tenant has been in a property for 10 or 15 years. And in many net lease structures, there's a 1% or 1.5% annual escalator. Occasionally, you'll get a 2%. So there are many situations where after 5 -- I'm sorry, after 10 or 15 years, they're under market and the renewal includes a catch-up to get them back to where they should be to stay in that property. So it's one of those things. Market dictates spreads on new leases versus renewals and both can add a lot of value to the overall portfolio.

Okay. Kind of an odd question, but if you look on your balance sheet from last quarter.

From you?

Yes.

Okay, go ahead.

You had $524 million of multi-tenant mortgage loans, 5 different tranches. That was as of 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 your debt didn't move that much this quarter.

Chris, do you want to take that?

Yes. So yes, what we had from discontinued operations, that would have been related to the mortgage payables that were assumed by RCG as part of the transaction. If you look just strictly at our mortgage payables line on the balance sheet in 2Q, we would not have had any of those assumed mortgages in there. They would have been reclassified out. So it's comparable quarter-over-quarter.

So you don't have that on balance sheet today?

Correct. We do not have that on the balance sheet today.

As there are no further questions, I would now like to hand the conference over to Mike Weil for closing comments.

Great. Well, as always, we appreciate you taking time to listen to the update on Global Net Lease. We're excited about what we've accomplished in the third quarter. But by no means do we feel that this is the place we want to be. 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 to unlock this value. So thank you for your involvement, and thank you for your feedback. We look forward to catching up with everybody over the next couple of days, and we'll talk soon. Thankk youu.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.