Global Net Lease Sells Americold Portfolio for $170 Million

Rhea-AI Summary

Global Net Lease (NYSE: GNL) has sold a portfolio of nine cold storage properties leased to Americold Realty Trust (NYSE: COLD) for $170 million, achieving a 7.88% cash cap rate on a 3.3-year weighted average remaining lease term. This sale is part of GNL's broader $567 million disposition initiative, targeting a 7-8% cash cap rate. The company plans to use the proceeds to reduce debt and leverage, aligning with its strategic goals and 2024 full-year guidance. GNL originally acquired these properties for $153.4 million.

Positive

• Sale of properties for $170 million at a 7.88% cash cap rate.
• Proceeds will be used to reduce outstanding debt and lower leverage.
• Part of a larger $567 million disposition initiative at a 7.2% cash cap rate.

Negative

• Weighted average remaining lease term is relatively short at 3.3 years, indicating potential future uncertainties.

Insights

Financial Analyst

Global Net Lease's recent sale of a $170 million cold storage portfolio at a 7.88% cash cap rate is notable for several reasons. Firstly, the cap rate, which is a measure of the return on investment properties, aligns well with the company’s full-year guidance of 7-8%. This demonstrates effective risk management and alignment with strategic financial goals. The 3.3-year weighted average remaining lease term hints at potential short-term volatility that GNL is keen to mitigate by reducing debt. This move should improve their leverage ratios, making them more appealing to conservative investors looking for financial stability.

Debt reduction is usually well-received by the market since it enhances the company's balance sheet and reduces interest expenses. By selling properties that have a shorter lease term and using the proceeds to pay down debt, GNL is effectively improving its financial health. This could potentially bring its valuation in line with its peers, as stated by the CEO. However, investors should remain cautious and monitor how these changes impact revenue streams in the short term. Reducing leverage can create future borrowing capacity for more strategic acquisitions.

Real Estate Market Analyst

From a real estate market perspective, GNL’s sale of the cold storage portfolio aligns with its strategic disposition initiative, indicative of a broader industry trend towards optimizing property portfolios. Selling at a 7.88% cash cap rate suggests a strong market for industrial properties, particularly those related to cold storage. The sale price of $170 million compared to the original acquisition price of $153.4 million shows a solid return on investment, reflecting healthy demand and appreciation in this niche market sector.

Cold storage real estate has been increasingly valuable due to the rise in e-commerce and the need for efficient logistics networks, especially in the food and pharmaceutical sectors. By divesting these assets, GNL is capitalizing on high market demand while eliminating risks associated with tenant renewals. This strategic move also helps to extend the average lease term across their remaining portfolio, reducing vacancy risk.

Market Research Analyst

For retail investors, it's important to understand the broader implications of this sale within the context of GNL’s strategic goals. The transaction is part of a larger $567 million disposition pipeline aimed at refining the company’s portfolio and strengthening its financial position. The proceeds will be used to pay down existing debt, which is a prudent move to enhance financial stability and reduce leverage. This can potentially narrow the gap between GNL’s real estate value and its stock price, as suggested by the CEO.

Moreover, the sale of the cold storage assets could indicate a strategic shift away from specialized industrial properties towards more diversified or core real estate assets. This might be seen as reducing operational risk but could also indicate a potential change in growth strategy. Understanding these nuances aids in assessing the long-term resilience and adaptability of GNL’s business model.

- 7.88% Cash Cap Rate on 3.3 Years of Weighted Average Remaining Lease Term
- Part of the Previously Announced $567 Million of Closed and Disposition Pipeline at a Cash Cap Rate of 7.2%

NEW YORK, June 27, 2024 (GLOBE NEWSWIRE) -- Global Net Lease, Inc. (NYSE: GNL) (“GNL” or the “Company”) today announced the successful disposition of a portfolio of nine cold storage properties that are currently leased to subsidiaries of Americold Realty Trust, Inc. (NYSE: COLD) for $170 million, at a 7.88% cash cap rate on 3.3 years of weighted average remaining lease-term.

This disposition is a significant achievement in GNL’s ongoing strategic disposition initiative and aligns with the Company’s 2024 full-year guidance, which projected a disposition cash cap rate range of 7% to 8%. GNL plans to use the net proceeds from this sale to reduce outstanding debt and further lower the Company’s leverage. The sale of this portfolio, which GNL acquired for $153.4 million, is part of the previously announced $567 million¹ of closed and pipeline dispositions at a cash cap rate of 7.2%.

“We believe the sale of this portfolio not only reduces risk within our portfolio by eliminating uncertainty around tenant renewals but also extends our weighted average remaining lease term,” said Michael Weil, CEO of GNL. “We intend to use the net sale proceeds of this disposition to strategically pay down existing debt, aligning with our goal of lowering our Net Debt to Adjusted EBITDA to bring it more in line with our peers. We continue to be extremely pleased with the velocity of our strategic disposition initiative and we look forward to continuing to execute on this strategy until we narrow the gap between the value of our real estate and our stock price.”

About Global Net Lease, Inc.
Global Net Lease, Inc. is a publicly traded real estate investment trust listed on the NYSE, which focuses on acquiring and managing a global portfolio of income producing net lease assets across the United States, and Western and Northern Europe. Additional information about GNL can be found on its website at www.globalnetlease.com.

Important Notice
The statements in this press release that are not historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve risks and uncertainties that could cause the outcome to be materially different. The words such as "may," "will," "seeks," "anticipates," "believes," "expects," "estimates," "projects," “potential,” “predicts,” "plans," "intends," “would,” “could,” "should" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside of the Company's control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include the risks associated with realization of the anticipated benefits of the merger with The Necessity Retail REIT, Inc. and the internalization of the Company’s property management and advisory functions; that any potential future acquisition or disposition by the Company is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause the Company’s actual results to differ materially from those presented in the Company’s forward-looking statements are set forth in the Risk Factors and “Quantitative and Qualitative Disclosures about Market Risk” in the Company’s Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and all of its other filings with the U.S. Securities and Exchange Commission, as such risks, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.

Contacts:
Investor Relations
Email: investorrelations@globalnetlease.com
Phone: (332) 265-2020

Footnotes:
¹ As previously disclosed on GNL’s Current Report Form 8-K filed with the U.S. Securities and Exchange Commission on June 3, 2024.

FAQ

What is the value of the properties sold by Global Net Lease to Americold Realty Trust?

Global Net Lease sold the properties for $170 million.

What is the cash cap rate for the properties sold by Global Net Lease?

The cash cap rate for the sold properties is 7.88%.

What will Global Net Lease use the proceeds from the $170 million sale for?

Global Net Lease plans to use the proceeds to reduce outstanding debt and lower the company's leverage.

How does the sale of properties align with Global Net Lease's strategic goals?

The sale aligns with Global Net Lease's goal to reduce debt and leverage, and is part of a larger $567 million disposition pipeline.

What is the weighted average remaining lease term for the properties sold by Global Net Lease?

The weighted average remaining lease term for the properties sold is 3.3 years.