UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

	OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________ to __________

Commission file number: 001-37390

Global Net Lease, Inc.

(Exact name of registrant as specified in its charter)

Maryland	45-2771978
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

650 Fifth Ave., 30th Floor, New York, NY                 10019

______________________________________________________________________________ ___________________________________________________________________________

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (212) 415-6500

Securities registered pursuant to section 12(b) of the Act:
Title of each class	Trading Symbols	Name of each exchange on which registered
Common Stock, $0.01 par value per share	GNL	New York Stock Exchange
7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share	GNL PR A	New York Stock Exchange
6.875% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share	GNL PR B	New York Stock Exchange
Preferred Stock Purchase Rights per share		New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No

As of November 1, 2021, the registrant had 103,604,278 shares of common stock outstanding.

GLOBAL NET LEASE, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	2
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	3
Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020	4
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2021	5
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2020	6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2021 and 2020	7
Notes to Consolidated Financial Statements	9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3. Quantitative and Qualitative Disclosures About Market Risk	65
Item 4. Controls and Procedures	65
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	66
Item 1A. Risk Factors	66
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities	66
Item 3. Defaults Upon Senior Securities	66
Item 4. Mine Safety Disclosures	66
Item 5. Other Information	66
Item 6. Exhibits	66
Signatures	68

1

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

GLOBAL NET LEASE, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

(Unaudited)

	September 30, 2021		December 31, 2020
ASSETS
Real estate investments, at cost (Note 3):
Land	$	503,145	$	476,599
Buildings, fixtures and improvements	3,343,308		3,124,884
Construction in progress	6,076		5,486
Acquired intangible lease assets	731,002		711,985
Total real estate investments, at cost	4,583,531		4,318,954
Less accumulated depreciation and amortization	(782,025)		(675,200)
Total real estate investments, net	3,801,506		3,643,754
Assets held for sale	10,433		—
Cash and cash equivalents	176,393		124,245
Restricted cash	2,666		1,448
Derivative assets, at fair value (Note 8)	2,648		525
Unbilled straight-line rent	66,526		61,007
Operating lease right-of-use asset (Note 10)	54,241		58,395
Prepaid expenses and other assets	58,092		43,929
Due from related parties	181		377
Deferred tax assets	2,320		2,367
Goodwill and other intangible assets, net	22,336		23,089
Deferred financing costs, net	5,712		7,878
Total Assets	$	4,203,054	$	3,967,014
LIABILITIES AND EQUITY
Mortgage notes payable, net (Note 4)	$	1,484,890	$	1,363,698
Revolving credit facility (Note 5)	118,676		111,132
Term loan, net (Note 5)	284,342		300,154
Senior notes, net (Note 6)	491,386		490,345
Acquired intangible lease liabilities, net	30,714		32,970
Derivative liabilities, at fair value (Note 8)	8,729		19,984
Due to related parties	—		2,002
Accounts payable and accrued expenses	36,503		28,310
Operating lease liability (Note 10)	23,436		25,350
Prepaid rent	39,225		21,481
Deferred tax liability	11,357		12,157
Dividends payable	5,394		5,152
Total Liabilities	2,534,652		2,412,735
Commitments and contingencies (Note 10)	—		—
Stockholders’ Equity (Note 9):
7.25% Series A cumulative redeemable preferred stock, $0.01 par value, liquidation preference $25.00 per share, 9,959,650 shares authorized, 6,799,467 shares issued and outstanding as of September 30, 2021 and December 31, 2020	68		68
6.875% Series B cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 11,450,000 shares authorized, 4,503,893 and 3,861,953 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	45		39
Common Stock, $0.01 par value, 250,000,000 shares authorized, 103,900,452 and 89,614,601 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively	2,369		2,227
Additional paid-in capital	2,674,710		2,418,659
Accumulated other comprehensive income	10,527		8,073
Accumulated deficit	(1,022,986)		(896,547)
Total Stockholders’ Equity	1,664,733		1,532,519
Non-controlling interest	3,669		21,760
Total Equity	1,668,402		1,554,279
Total Liabilities and Equity	$	4,203,054	$	3,967,014

The accompanying notes are an integral part of these consolidated financial statements.

2

GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue from tenants	$	95,758	$	82,711	$	284,712	$	243,062
Expenses:
Property operating	6,747		7,525		21,784		22,737
Operating fees to related parties	9,880		8,939		28,998		26,607
Impairment charges	1,199		—		7,906		—
Acquisition, transaction and other costs	54		75		99		388
General and administrative	3,911		2,641		12,240		9,014
Equity-based compensation	2,721		2,479		8,305		7,480
Depreciation and amortization	41,665		35,049		121,051		102,566
Total expenses	66,177		56,708		200,383		168,792
Operating income before gain (loss) on dispositions of real estate investments	29,581		26,003		84,329		74,270
Gain (loss) on dispositions of real estate investments	1,195		—		1,188		(153)
Operating income	30,776		26,003		85,517		74,117
Other income (expense):
Interest expense	(24,858)		(18,677)		(70,244)		(52,646)
Loss on extinguishment of debt	—		—		—		(309)
Gain (loss) on derivative instruments	3,560		(2,464)		4,888		362
Other (expense) income	(158)		142		(59)		261
Total other expense, net	(21,456)		(20,999)		(65,415)		(52,332)
Net income before income tax	9,320		5,004		20,102		21,785
Income tax expense	(1,930)		(862)		(5,940)		(2,512)
Net income	7,390		4,142		14,162		19,273
Preferred stock dividends	(5,016)		(4,644)		(15,048)		(13,771)
Net income (loss) attributable to common stockholders	$	2,374	$	(502)	$	(886)	$	5,502
Basic and Diluted Earnings (Loss) Per Share:
Net income (loss) per share attributable to common stockholders — Basic and Diluted	$	0.02	$	(0.01)	$	(0.12)	$	0.06
Weighted average common shares outstanding:
Weighted average shares outstanding — Basic	101,477,699		89,482,577		96,498,748		89,470,525
Weighted average shares outstanding — Diluted	101,477,699		89,482,577		96,498,748		89,470,525

The accompanying notes are an integral part of these consolidated financial statements.

3

GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net income	$	7,390	$	4,142	$	14,162	$	19,273
Other comprehensive income (loss)
Cumulative translation adjustment	(9,759)		(245)		(5,858)		(15,322)
Designated derivatives, fair value adjustments	2,983		36		8,312		(10,503)
Other comprehensive (loss) income	(6,776)		(209)		2,454		(25,825)
Comprehensive income (loss)	614		3,933		16,616		(6,552)
Preferred Stock dividends	(5,016)		(4,644)		(15,048)		(13,771)
Comprehensive (loss) income attributable to common stockholders	$	(4,402)	$	(711)	$	1,568	$	(20,323)

The accompanying notes are an integral part of these consolidated financial statements.

4

GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

(Unaudited)

	Nine Months Ended September 30, 2021
	Series A Preferred Stock			Series B Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity		Non-controlling interest		Total Equity
Balance, December 31, 2020	6,799,467	$	68	3,861,953	$	39	89,614,601	$	2,227	$	2,418,659	$	8,073	$	(896,547)	$	1,532,519	$	21,760	$	1,554,279
Issuance of Common Stock, net	—	—		—	—		11,935,349	119		213,962		—		—		214,081		—		214,081
Issuance of Series B Preferred Stock, net	—	—		641,940	6		—	—		15,872		—		—		15,878		—		15,878
Dividends declared:
Common Stock, $0.80 per share	—	—		—	—		—	—		—		—		(114,654)		(114,654)		—		(114,654)
Series A Preferred Stock, $0.90 per share	—	—		—	—		—	—		—		—		(9,243)		(9,243)		—		(9,243)
Series B Preferred Stock, $0.86 per share	—	—		—	—		—	—		—		—		(5,805)		(5,805)		—		(5,805)
Redemption of OP Units	—	—		—	—		2,135,496	21		25,276		—		—		25,297		(25,297)		—
Equity-based compensation, net of forfeitures	—	—		—	—		224,365	2		1,097		—		—		1,099		7,206		8,305
Common shares repurchased upon vesting of restricted stock	—	—		—	—		(9,359)	—		(156)		—		—		(156)		—		(156)
Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		(10,899)		(10,899)		—		(10,899)
Net Income	—	—		—	—		—	—		—		—		14,162		14,162		—		14,162
Cumulative translation adjustment	—	—		—	—		—	—		—		(5,858)		—		(5,858)		—		(5,858)
Designated derivatives, fair value adjustments	—	—		—	—		—	—		—		8,312		—		8,312		—		8,312
Balance, September 30, 2021	6,799,467	$	68	4,503,893	$	45	103,900,452	$	2,369	$	2,674,710	$	10,527	$	(1,022,986)	$	1,664,733	$	3,669	$	1,668,402

	Three Months Ended September 30, 2021
	Series A Preferred Stock			Series B Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Accumulated Deficit		Total Stockholders’ Equity		Non-controlling interest		Total Equity
Balance, June 30, 2021	6,799,467	$	68	4,503,893	$	45	100,469,583	$	2,335	$	2,616,383	$	17,303	$	(984,958)	$	1,651,176	$	1,423	$	1,652,599
Issuance of Common Stock, net	—	—		—	—		3,441,853	34		58,038		—		—		58,072		—		58,072
Issuance of Series B Preferred Stock, net	—	—		—	—		—	—		(30)		—		—		(30)		—		(30)
Dividends declared:																—				—
Common Stock, $0.40 per share	—	—		—	—		—	—		—		—		(40,302)		(40,302)		—		(40,302)
Series A Preferred Stock, $0.45 per share	—	—		—	—		—	—		—		—		(3,081)		(3,081)		—		(3,081)
Series B Preferred Stock,$0.43 per share	—	—		—	—		—	—		—		—		(1,935)		(1,935)		—		(1,935)
Redemption of OP Units	—	—		—	—		—	—		—		—		—		—		—		—
Equity-based compensation, net of forfeitures	—	—		—	—		(1,625)	—		475		—		—		475		2,246		2,721
Common shares repurchased upon vesting of restricted stock	—	—		—	—		(9,359)	—		(156)		—		—		(156)		—		(156)
Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		(100)		(100)		—		(100)
Net Income	—	—		—	—		—	—		—		—		7,390		7,390		—		7,390
Cumulative translation adjustment	—	—		—	—		—	—		—		(9,759)		—		(9,759)		—		(9,759)
Designated derivatives, fair value adjustments	—	—		—	—		—	—		—		2,983		—		2,983		—		2,983
Balance, September 30, 2021	6,799,467	$	68	4,503,893	$	45	103,900,452	$	2,369	$	2,674,710	$	10,527	$	(1,022,986)	$	1,664,733	$	3,669	$	1,668,402

The accompanying notes are an integral part of these consolidated financial statements.

5

GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(In thousands, except share data)

(Unaudited)

	Nine Months Ended September 30, 2020
	Series A Preferred Stock			Series B Preferred Stock			Common Stock
	Number of Shares	Par Value		Number of Shares	Par Value		Number of Shares	Par Value		Additional Paid-in Capital		Accumulated Other Comprehensive (Loss) Income		Accumulated Deficit		Total Stockholders’ Equity		Non-controlling interest		Total Equity
Balance, December 31, 2019	6,799,467	$	68	3,450,000	$	35	89,458,752	$	2,225	$	2,408,353	$	20,195	$	(733,245)	$	1,697,631	$	12,327	$	1,709,958
Issuance of Common Stock, net	—	—		—	—		—	—		(58)		—		—		(58)		—		(58)
Issuance of Series A Preferred Stock, net	—	—		185,128	2		—	—		4,419		—		—		4,421		—		4,421
Dividends declared:																—				—
Common Stock, $1.33 per share	—	—		—	—		—	—		—		—		(119,242)		(119,242)		—		(119,242)
Series A Preferred Stock, $1.35 per share	—	—		—	—		—	—		—		—		(9,244)		(9,244)		—		(9,244)
Series B Preferred Stock, $1.29 per share	—	—		—	—		—	—		—		—		(4,527)		(4,527)		—		(4,527)
Equity-based compensation	—	—		—	—		155,849	2		403		—		—		405		7,075		7,480
Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		(337)		(337)		—		(337)
Net Income	—	—		—	—		—	—		—		—		19,273		19,273