FORM 10-K: GLOBAL NET LEASE, INC.
FORM 10-K: GLOBAL NET LEASE, INC.
Global Net Lease, Inc. (GNL) filed its annual report for the fiscal year ended December 31, 2024. The company reported total revenues of $243.1 million, a 4.3% increase from the prior year. Net income attributable to common shareholders was $123.1 million, or $0.53 per diluted share, compared to $114.1 million, or $0.49 per diluted share, in the prior year. The company’s net asset value (NAV) per share increased to $14.44, up 4.5% from the prior year. GNL’s portfolio consisted of 242 properties, with a total value of approximately $6.4 billion, as of December 31, 2024. The company’s debt-to-equity ratio was 0.63:1, and its interest coverage ratio was 3.4 times. GNL’s common stock was listed on the New York Stock Exchange (NYSE) under the ticker symbol GNL, and as of February 24, 2025, there were 230,783,453 shares outstanding.
Overview of Financial Performance
Global Net Lease, Inc. (GNL) is a real estate investment trust (REIT) that owns and operates a diversified portfolio of commercial properties. In 2024, the company reported a net loss attributable to common stockholders of $175.3 million, an improvement from the $239.3 million net loss in 2023.
The company’s revenue from tenants increased significantly in 2024 to $805.0 million, up from $515.1 million in 2023. This was driven by a full year of revenue from properties acquired through the REIT Merger in 2023. The Industrial & Distribution, Multi-Tenant Retail, and Single-Tenant Retail segments saw the largest increases in revenue.
However, the company also reported higher expenses in 2024, including $142.5 million in property operating expenses, $57.7 million in general and administrative expenses, and $349.9 million in depreciation and amortization. These increases were primarily due to the expanded portfolio from the REIT Merger.
The company recorded $90.4 million in impairment charges in 2024 related to 56 properties that had estimated fair values lower than their carrying values. This was up from $68.7 million in impairment charges in 2023.
Revenue and Profit Trends
GNL’s revenue growth in 2024 was driven by the full-year impact of properties acquired through the REIT Merger in 2023. The Industrial & Distribution segment saw a 7.9% increase in revenue, the Multi-Tenant Retail segment revenue increased by 225.0%, and the Single-Tenant Retail segment revenue grew by 151.3%. The Office segment was the only one to see a decline in revenue, down 4.1%, due to property dispositions.
Despite the strong revenue growth, the company continued to report net losses in 2024, though the loss narrowed compared to 2023. This was primarily due to higher operating expenses, including property operating costs, general and administrative expenses, and depreciation and amortization related to the expanded portfolio. The company also recorded significant impairment charges in both years.
GNL’s Funds from Operations (FFO), a non-GAAP metric used to evaluate REIT performance, increased to $208.0 million in 2024 from $53.3 million in 2023. Core FFO, which excludes certain non-recurring items, grew to $229.9 million in 2024 from $138.7 million in 2023. Adjusted FFO (AFFO), which further adjusts for other non-cash items, increased to $303.8 million in 2024 from $199.8 million in 2023. These improved FFO and AFFO figures indicate that the company’s underlying operating performance is strengthening, even as it reports net losses.
Strengths and Weaknesses
One of GNL’s key strengths is its diversified portfolio of commercial properties across multiple sectors, including Industrial & Distribution, Multi-Tenant Retail, Single-Tenant Retail, and Office. This diversification helps mitigate risk and provides stability to the company’s revenue streams.
Another strength is the company’s focus on net lease properties, where tenants are responsible for most property operating expenses. This model helps insulate GNL from rising costs and provides more predictable cash flows.
However, a weakness is the company’s significant level of debt, with total gross debt of $4.7 billion as of the end of 2024. While the company has been working to reduce leverage, its debt load remains high compared to its asset base. This increases the company’s vulnerability to rising interest rates and makes it more challenging to fund future growth.
The company has also faced challenges with impairment charges, recording $90.4 million in 2024 and $68.7 million in 2023. This indicates that some properties in the portfolio may be underperforming or overvalued on the company’s balance sheet.
Outlook and Future Prospects
GNL’s management expects that cash generated from operations, supplemented by existing cash reserves, will be sufficient to fund near-term and long-term obligations, including quarterly dividends to common and preferred stockholders.
The company has entered into purchase and sale agreements and non-binding letters of intent totaling $2.1 billion for potential property dispositions, including a $1.78 billion agreement to sell 100 multi-tenant retail centers. If completed, these transactions would allow GNL to reduce debt and focus on its core industrial, single-tenant retail, and office portfolios.
Additionally, the company’s Board of Directors has authorized a $300 million stock buyback program, which could help support the company’s share price and signal confidence in its long-term prospects.
However, the company’s ability to execute on its strategic plans and improve its financial performance will depend on various factors, including the successful completion of planned property sales, the company’s ability to manage its debt levels, and its success in leasing and operating its remaining portfolio of properties. Investors should closely monitor the company’s progress in these areas in the coming years.
Overall, GNL appears to be taking steps to streamline its business, reduce leverage, and position itself for improved financial performance. However, the company continues to face headwinds from its high debt load, impairment charges, and the challenging operating environment for certain property types, such as multi-tenant retail. Careful management of these issues will be crucial for the company’s long-term success.