UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 13, 2017
Global Net Lease, Inc.
(Exact Name of Registrant as Specified in Charter)
Maryland | 001-37390 | 45-2771978 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
405 Park Avenue, 4th Floor New York, New York 10022 |
(Address, including zip code, of Principal Executive Offices)
Registrant’s telephone number, including area code: (212) 415-6500 |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 7.01. Regulation FD Disclosure.
Press Release and Hedging Program Presentation
On June 13, 2017, Global Net Lease, Inc. (the “Company”) issued a press release and prepared a presentation relating to the successful execution of additional foreign currency hedges as part of its hedging program, copies of which are furnished as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K. The information set forth in Item 7.01 of this Current Report on Form 8-K and in the attached Exhibits 99.1 and 99.2 are deemed to have been “furnished”, and shall not be deemed to have been “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and shall not be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act regardless of any general incorporation language in such filing.
The statements in this Current Report on Form 8-K include statements regarding the intent, belief or current expectations of the Company and members of its management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “strives,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements, including as a result of those factors set forth in the Risk Factors section of the Company’s most recent annual report on Form 10-K. Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, or revise forward-looking unless required by law.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. | Description | |
99.1 | Press Release dated June 13, 2017 | |
99.2 | Hedging Program Presentation dated June 13, 2017 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: June 13, 2017 | By: | /s/ Scott J. Bowman | ||
Name: | Scott J. Bowman | |||
Title: | Chief Executive Officer and President |
Exhibit 99.1
FOR IMMEDIATE RELEASE
Global Net Lease Announces British Pound and Euro Hedge Placement in Advance of 2017 U.K. Elections
New York, June 13, 2017 – Global Net Lease, Inc. (“GNL” or the “Company”) (NYSE: GNL) announced today the successful execution of additional foreign exchange hedges in advance of the U.K.’s 2017 elections, in accordance with its comprehensive hedging program. Last week, GNL entered into foreign exchange forward contracts fixing the exchange rate on approximately £5,000,000 (British Pounds) of future cash flows at pre-vote levels and foreign exchange options setting a floor on the exchange rate for €10,000,000 (Euro). The new hedges extend through the end of 2018. The Company continues to strategically employ a number of foreign exchange hedging instruments in an effort to continually mitigate risk for investors including swaps, forwards, options and natural hedges.
GNL’s hedging program is designed to protect the investments and cash flows from the Company’s European portfolio, which contains properties in seven European countries, representing 49.4% of GNL’s annualized straight-line rent as of March 31, 2017.
Nick Radesca, Chief Financial Officer of GNL, commented “We are pleased to have been able to execute these FX hedges prior to the 2017 U.K. elections. Our hedging program calls for regular placement of derivatives providing layers of protection over time. The hedging program has been part of management’s strategic plan of building a quality globally-focused net lease REIT, providing superior risk-adjusted returns. We believe this is one such example of how we have been able to successfully execute on this stated plan.”
About Global Net Lease, Inc.
Global Net Lease, Inc. (NYSE: GNL) is a publicly traded real estate investment trust listed on the NYSE focused on acquiring a diversified global portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant, mission critical income producing net-leased assets across the United States, 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. These forward-looking statements involve risks and uncertainties that could cause the outcome to be materially different. In addition, words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions indicate a forward-looking statement, although not all forward-looking statements include these words. Actual results may differ materially from those contemplated by such forward-looking statements, including those set forth in the Risk Factors section of GNL’s most recent Annual Report on Form 10-K. Further, forward-looking statements speak only as of the date they are made, and GNL undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
Contacts
Media Inquiries: | Investor Inquiries: | |
Tim Cifelli President DDCworks tcifelli@ddcworks.com (484) 342-3600 |
Nick Radesca Chief Financial Officer Global Net Lease, Inc. nradesca@globalnetlease.com (212) 415-6500 |
Scott J. Bowman Chief Executive Officer and President Global Net Lease, Inc. sbowman@globalnetlease.com (212) 415-6500 |
Exhibit 99.2
June 2017 Hedging Program Update
Comprehensive Hedging Program Foreign Exchange Hedges ; Net Investment Hedges: Asset – Liability Matching ; Matches the value of assets with liabilities in the same currency (EUR or GBP), creating a “natural hedge” on the value of GNL assets against movement in foreign exchange rates vs. the USD ; Net Cash Flow Hedging ; Provides protection against unfavorable movements in Euro (“EUR”) and British Pound (“GBP”) vs. the U.S. Dollar (“USD”) associated with the Company’s projected future net cash flows Interest Rate Hedges ; Fixing Interest on Floating Rate Debt ; Cost effective tools that mitigate against adverse fluctuations in interest rates; effectively acting to convert variable rate debt into fixed rate debt resulting in reduced exposure to variability in cash flows related to interest payments GNL continues to employ a comprehensive hedging program, with a number of components designed to limit the impact of currency and interest rate movements to its European portfolio 2
Overview of U.K. 2017 Election 3 ; Seeking to increase the Conservative Party’s majority in Parliament in advance of the upcoming negotiations for Britain to leave the European Union, Prime Minister Theresa May, moved in April to call for a snap election. The next general election in the U.K. is scheduled to take place in May 2020 ; On April 19 th , British Parliament voted in favor of holding early elections on June 8, 2017 ; Despite early polls showing overwhelming support for the Conservative Party in the weeks leading up to the election, the polls tightened and May’s Conservative Party lost 13 seats in the House of Commons and failed to maintain a majority ; As a result, a hung British Parliament where one single party lacks a majority, has created further uncertainty in global financial markets regarding Britain’s strength heading into exit negotiations with the European Union ; In the first day following the election, the GBP fell to new multi - month lows against the USD and EUR, falling as low as $1.26 GBP - USD
U.K. Election Hedging Measures In accordance with its comprehensive hedging program, GNL’s management team executed on the following hedging measures prior to the U.K. general election on June 8 th , 2017 4 • GNL uses foreign exchange forward contracts and other instruments to fix the rate on net cash flow generated in GBP, or EUR to the USD • GNL added foreign exchange forwards prior to the Brexit vote in 2016 in order to minimize exchange rate risk on projected net cash flow through 2019 • The Company continued to layer on additional foreign exchange derivatives to protect cash flows from further currency movements • Ahead of last week’s election, GNL added an additional layer of foreign exchange forwards and foreign exchange options in anticipation of any potential negative foreign exchange rate movements in the GBP • ₤5 million FX forward contracts locked in the GBP rate at pre - vote levels • €10 million FX options on the EUR to USD setting an exchange rate floor • Approximately 91% of GNL’s projected 2017 net cash flows from U.K. properties are hedged to protect against fluctuations in exchange rates between the GBP and USD
Well Diversified Portfolio Global Portfolio Overview 1. Investment Grade Rating includes both actual ratings of the tenant or Implied Investment Grade. Implied Investment Grade incl ude s ratings of tenant parent (regardless of whether the parent has guaranteed the tenant’s obligation under the lease) or lease guarantor. Implied Investment Grade ratings are determined using proprietary Moody’s analytical tool, which c omp ares the risk metrics of the non - rated company to those of a company with an actual rating. Ratings information is as of March 31, 2017. 2. Weighted by annualized straight - line rent (“SLR”) converted from local currency into USD as of March 31, 2017 for the in - place l ease on the property on a straight - line basis, which includes tenant concessions such as free rent, as applicable. 3. Weighted average remaining lease term in years based on square feet as of March 31, 2017. 4. Contractual rent increases include fixed percent or actual increases, or country CPI - indexed increases. x Largely investment - grade tenants x Long duration leases x Diversification by country, property type and tenant industry x ~50.6% of SLR derived from U.S. assets (2) x 38% of SLR derived from top 10 tenants (2) Lease Expiration Schedule (% of SF Per Year) Weighted Average Lease Term: 9.5 (3) years # of Properties 312 Total Square Feet (mm) 22.2 Number of Tenants 94 Number of Industries 40 Countries 7 Occupancy 100% Weighted Average Remaining Lease Term (3) 9.5 years % of SLR from Investment Grade or Implied Investment Grade Tenants (1)(2) 76.7% % of SLR with contractual rent increases (2)(4) 90.3% GNL owns a portfolio of 312 assets diversified across 7 countries, 94 tenants and 40 industries Key Themes 5 Geography (2) 2% 2% 7% 11% 26% 14% 38% 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026-2039 USA 50.6% United Kingdom 21.8% Germany 8.2% Luxembourg 2.0% France 5.0% The Netherlands 6.5% Finland 5.9%
Conclusion 6 ; GNL is well positioned to protect its investments and cash flows in European countries by using an array of hedging instruments ; GNL’s management continues to monitor economic and political developments and further utilize hedging strategies to safeguard the portfolio against unfavorable movements in foreign exchange rates ; GNL’s portfolio is well - diversified in terms of geography and tenant base, with approximately 50.6% of its annualized SLR derived from GNL’s U.S. properties, as of March 31, 2017 ; European properties are 100% leased with long duration leases to mostly investment grade tenants, helping insulate GNL’s portfolio from short to medium term market volatility, and economic and political risks ; No near term lease expirations – first U.K. lease expires in August 2022
Forward Looking Statements ; Certain statements made in this presentation are “forward - looking statements” (as defined in Section 21 E of the Exchange Act), which reflect the expectations of GNL regarding future events . The forward - looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those contained in the forward - looking statements . Such forward - looking statements include, but are not limited to, the company’s plans, market and other expectations, objectives, intentions, as well as any expectations or projections, including regarding future dividends and market valuations, and other statements that are not historical facts . ; The following additional factors, among others, could cause actual results to differ from those set forth in the forward - looking statements : whether the benefits from the merger with ARC Global Trust II are achieved ; market volatility ; continuation or deterioration of current market conditions ; future regulatory or legislative actions that could adversely affect the company ; and the business plans of its tenants . Additional factors that may affect future results are contained in GNL’s filings with the SEC, including (i) the Annual Report on Form 10 - K for the year ended December 31 , 2016 filed on February 28 , 2017 , the Quarterly Report on Form 10 - Q for the quarter ended March 31 , 2017 , filed on May 8 , 2017 , and in future periodic reports filed by GNL under the Securities Exchange Act of 1934 , as amended, which are available at the SEC’s website at www . sec . gov . GNL disclaims any obligation to update and revise statements contained in these materials based on new information or otherwise . 7
Risk Factors ; The following are some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward - looking statements . See the section entitled “Item 1 A . Risk Factors” in GNL’s Annual Report on Form 10 - K filed with the SEC on February 28 , 2017 and the section entitled “Item 1 A . Risk Factors” in GNL’s Quarterly Report on form 10 - Q filed with the SEC on May 8 , 2017 for a discussion of the risks which should be considered in connection with your investment . ; All of our executive officers are also officers, managers and/or holders of a direct or indirect controlling interest in the Advisor and other entities affiliated with AR Global Investments, LLC ("AR Global") . As a result, our executive officers, the Advisor and its affiliates face conflicts of interest, including significant conflicts created by the Advisor's compensation arrangements with us and other investment programs advised by AR Global affiliates and conflicts in allocating time among these investment programs and us . These conflicts could result in unanticipated actions . ; Because investment opportunities that are suitable for us may also be suitable for other AR Global - advised investment programs, the Advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and such conflicts may not be resolved in our favor, which could reduce the investment return to our stockholders . ; The anticipated benefits from the merger with ARC Global Trust II may not be realized or may take longer to realize than expected . ; We may be unable to pay or maintain cash dividends or increase dividends over time . ; We are obligated to pay fees which may be substantial to the Advisor and its affiliates . ; We depend on tenants for our rental revenue and, accordingly, our rental revenue is dependent upon the success and economic viability of our tenants . ; Increases in interest rates could increase the amount of our debt payments and limit our ability to pay dividends to our stockholders . ; We may be unable to raise additional debt or equity financing on attractive terms or at all . ; Adverse changes in exchange rates may reduce the value of our properties located outside of the United States ("U . S . ") . 8
Risk Factors (Continued) ; We may not generate cash flows sufficient to pay dividends to our stockholders, as such, we may be forced to borrow at unfavorable rates or depend on the Advisor to waive reimbursement of certain expense and fees to fund our operations . There is no assurance that the Advisor will waive reimbursement of expenses or fees . ; Any dividends in excess of cash flow may reduce the amount of capital we ultimately invest in properties and other permitted investments and negatively impact the value of our common stock . ; We are subject to risks associated with our international investments, including risks associated with compliance with and changes in foreign laws, fluctuations in foreign currency exchange rates and inflation . ; We are subject to risks associated with any dislocations or liquidity disruptions that may exist or occur in the credit markets of the U . S . and Europe from time to time . ; We may fail to continue to qualify, as a real estate investment trust for U . S . federal income tax purposes ("REIT"), which would result in higher taxes, may adversely affect operations and would reduce the trading price of our common stock and our cash available for dividends . ; We may be deemed to be an investment company under the Investment Company Act of 1940 , as amended (the “Investment Company Act"), and thus subject to regulation under the Investment Company Act . ; We may be exposed to risks due to a lack of tenant diversity, investment types and geographic diversity . ; The revenue derived from, and the market value of, properties located in the United Kingdom and continental Europe may decline as a result of the U . K . 's discussions with respect to exiting the European Union (the “Brexit Process”) . ; Our ability to refinance or sell properties located in the United Kingdom and continental Europe may be impacted by the economic and political uncertainty caused by the Brexit Process . ; We may be exposed to changes in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, and changes in conditions of U . S . or international lending, capital and financing markets, including as a result of the Brexit Process . 9
Projections ; This presentation includes estimated projections of future operating results . These projections were not prepared in accordance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of financial projections . This information is not fact and should not be relied upon as being necessarily indicative of future results ; the projections were prepared in good faith by management and are based on numerous assumptions that may prove to be wrong . Important factors that may affect actual results and cause the projections to not be achieved include, but are not limited to, risks and uncertainties relating to the company and other factors described in the “Risk Factors” section of GNL's Annual Report on Form 10 - K filed with the SEC on February 28 , 2017 , GNL's Quarterly Report on Form 10 - Q filed for the quarter ended March 31 , 2017 , filed on May 8 , 2017 , and in GNL's future filings with the SEC . The projections also reflect assumptions as to certain business decisions that are subject to change . As a result, actual results may differ materially from those contained in the estimates . Accordingly, there can be no assurance that the estimates will be realized . ; This presentation also contains estimates and information concerning our industry, including market position, market size, and growth rates of the markets in which we participate, that are based on industry publications and reports . This information involves a number of assumptions and limitations, and you are cautioned not to give undue weight to these estimates . We have not independently verified the accuracy or completeness of the data contained in these industry publications and reports . The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the “Risk Factors” section of GNL’s Annual Report on Form 10 - K filed with the SEC on February 28 , 2017 , the Quarterly Report on Form 10 - Q filed for the quarter ended March 31 , 2017 , filed on May 8 , 2017 , and in future filings with the SEC . These and other factors could cause results to differ materially from those expressed in these publications and reports . 10
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