Global Net Lease, Inc. Q4 FY2025 earnings call

• 2025 was transformational with $1.8 billion multi-tenant retail portfolio sale, accelerating deleveraging, strengthening balance sheet, becoming pure-play single-tenant net lease REIT. Completed ~$3.4 billion asset sales in disposition program. - Portfolio at end of Q4 2025 had 820 properties, 97% occupancy, weighted average remaining lease term 6.1 years, 66% tenants with investment grade or implied investment grade ratings, average annual contractual rental increase 1.4% (excluding CPI-linked leases). - Executed leases on over 3.7 million square feet in 2025, renewal spreads ~12% above expiring rents. - Applied proceeds from asset sales to deleverage balance sheet, reduced debt by over $2.8 billion since Q4 2023, refinanced revolving credit facility with improved pricing, maturity extended, credit ratings upgraded. - Began opportunistic share repurchases in 2025. - Evolving strategy to accretive recycling of capital, evaluating office portfolio sales and redeploying proceeds into single-tenant industrial and retail acquisitions on leverage-neutral basis.

In the fourth quarter of 2025, revenue was $117 million, net income attributable to common stockholders was $37.2 million, AFFO was $48.5 million ($0.22 per share) for the quarter and $0.99 per share for the full year, exceeding revised guidance. Gross outstanding debt balance was $2.6 billion at end of 2025, a $2.1 billion reduction from end of 2024. Net debt to adjusted EBITDA was 6.7 times. Weighted average interest rate was 4.2%, down from 4.8% in Q4 2024. Liquidity was approximately $961.9 million as of Dec 31, 2025. Repurchased 17.2 million shares through Feb 20, 2026, totaling $135.9 million. 2026 guidance: AFFO range 80 - 84 cents per share, net debt to adjusted EBITDA range 6.5 - 6.9 times, gross transaction volume 250 million - $350 million including acquisitions and dispositions.

• 2026 AFFO guidance: 80 cents to 84 cents per share. - Net debt to adjusted EBITDA guidance: 6.5 times to 6.9 times. - Gross transaction volume guidance: 250 million to $350 million, inclusive of acquisitions and dispositions. - Focus on reducing office exposure and redeploying net sale proceeds in disciplined, leverage-neutral manner to drive earnings growth.

Q: Michael, I'd love to get some perspective on the McLaren office sale. Was that a reverse inquiry, or was that an asset that you were marketing?

A: We had an inquiry from an independent third party. I wanted to make sure McLaren had an opportunity to see the asset before taking action. No, it was not a highly marketed transaction but there was natural interest due to McLaren's success.

Q: 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?

A: We actually believe the net lease office portfolio within G&L is in many cases equivalent value to what we sold McLaren for. We have a number of office assets with significant interest and expect to have announcements on several office assets maybe end of first quarter, definitely second quarter.

Q: Just talking about capital allocation, given the attractiveness of 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 for an 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.

A: The buyback remains a very important tool. We'll continue to evaluate opportunities. There's still benefit to opportunistically retiring more shares of G&L, but we'll be more active in evaluating acquisitions. We've been deliberate and disciplined in our approach and will continue that.

Q: Hi, Upal. Hey, how's it going? Good morning out there. You know, 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 showcases the embedded value in your office portfolio?

A: We want to highlight the implied value of the office as there's a disconnect in the market. Single tenant net lease investment grade with duration is valuable. We're also focused on shareholder feedback wanting a better portfolio weighted to industrial and retail. Our asset management team is working hard to identify right brokers and talk to potential buyers to unlock value.

Q: And maybe you can break down how much are dispositions and how much are acquisitions?

A: We spent 18 months aggressively pursuing disposition strategy. We're ready to get back on offensive. We'll evaluate opportunities, take time, disclose when deals are assured. We'll continue with a few more opportunistic dispositions. Not breaking out transaction volume now but will update quarterly and people will be pleased with results. Focus on continued deleveraging and earnings growth through combination of opportunistic share repurchase and beneficial acquisitions.

Q: 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?

A: Committed to accretion and AFFO growth. Will selectively pick and choose acquisition targets. Consider opportunities in U.S., U.K. and Europe. Team is busy, process will be selective, focus on credit tenants, primarily investment grade or implied investment grade, predominantly in industrial space.

Q: Just wanted to ask about your strategy change. So over the last few years, you've been prioritizing strengthening the balance sheet, and your stock got rewarded for it last year. And now it seems like you're shifting to offense and focusing more on growth. I guess my question is, why stop now with your leverage at 6.7?

A: We're not stopping. We have to mind earnings within the portfolio. We sold $3.4 billion of assets, protected dividend. Will continue to look at different opportunities including share repurchase, select acquisitions, etc., balancing leverage and growth.

Q: And你 mentioned the office disposition cap rates and mid-7s. 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.

A: Unique about these assets is the net lease characteristics of office are stronger than overall U.S. office market. Majority of tenants are investment grade, good duration, tenants are mission critical. Typically local buyers acquire them. Haven't specified dollar value of what will sell, will update quarterly.

Q: In terms of acquisitions, your shares are probably trading at approximately eight and a half percent, uh, AFFO yield. Is that the hurdle rate for acquisitions that you're looking at? Or are there other factors that would lead to different cap rate on acquisitions?

A: Driven by accretion. Look at everything overall, proceeds from dispositions, combination of stock buyback and acquisitions will drive go, no-go on acquisitions.

Q: I guess just sticking with the theme here of the office sales, I guess我 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?

A: Evaluate contribution of stabilized office portfolio to overall earnings. Hope proving value of subset of office portfolio gives confidence to lower exposure. Don't want rush sale to lose value. Will continue to update office activity. There are certain other assets that may be disposed of during the year.

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

A: Right now, leaning a little more towards U.S. markets due to some uncertainty in UK and Europe. But value UK and European assets as they're operating businesses supplying local market. Most focused on U.S. for now.

Q: 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've 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 82 cents 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?

A: In fourth quarter, had some tax benefits identified in year-end process that gave a little over one cent in AFFO, which throws off fourth quarter run rate.

Q: 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 benefit maybe from a debt to EBITDA perspective?

A: Majority of vacant component assets addressed in 2025. There are a few important assets for disposition that will have free cash post-sale to deploy. Guidance 80 to 84 cents backed by portfolio, but there are macro events in spring that could open up opportunities to take advantage of.

Q: Mike, you made mention in the past that you were looking to reduce your C-store exposure, and I think you'd 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?

A: At 1%, we are comfortable. We have taken real risk out of operator standpoint, team did great job getting value for those assets.

Q: Changing gears, I want to talk about your 2026 office lease expirations, which I think are a decent amount of the total in 2026. Are those more concentrated in the US or Europe, and how are those discussions going so far?

A: More heavily weighted to Europe and UK. Conversations are going well, tenants are engaged, most tenants will renew, there are conversations playing out over next one to two quarters.

Q: 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?

A: Definitely see U.S. market equivalently strong. McLaren was in UK, a special credit. Office opportunities in U.S. are very strong market as well. 2026 lease maturity on office is about 3.1% of straight line rent, focused on renewals, not an overweight amount of potential in coming year.