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, 2022

	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

Former name, former address and former fiscal year, if changed since last report: Not Applicable

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 October 31, 2022, the registrant had 103,795,364 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, 2022 and December 31, 2021	2
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021	3
Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2022 and 2021	4
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2022	5
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 2021	6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	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	63
Item 4. Controls and Procedures	63
PART II - OTHER INFORMATION
Item 1. Legal Proceedings	64
Item 1A. Risk Factors	64
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	64
Item 3. Defaults Upon Senior Securities	64
Item 4. Mine Safety Disclosures	64
Item 5. Other Information	64
Item 6. Exhibits	64
Signatures	66

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, 2022		December 31, 2021
ASSETS
Real estate investments, at cost (Note 3):
Land	$	480,991	$	511,579
Buildings, fixtures and improvements	3,195,358		3,424,431
Construction in progress	16,601		6,975
Acquired intangible lease assets	670,337		748,363
Total real estate investments, at cost	4,363,287		4,691,348
Less accumulated depreciation and amortization	(828,682)		(810,686)
Total real estate investments, net	3,534,605		3,880,662
Assets held for sale	45,125		—
Cash and cash equivalents	128,014		89,668
Restricted cash	6,634		3,643
Derivative assets, at fair value (Note 8)	48,611		4,260
Unbilled straight-line rent	68,615		74,221
Operating lease right-of-use asset (Note 10)	45,493		52,851
Prepaid expenses and other assets	52,848		49,178
Due from related parties	244		—
Deferred tax assets	1,363		1,488
Goodwill	20,355		22,060
Deferred financing costs, net	13,661		4,925
Total Assets	$	3,965,568	$	4,182,956
LIABILITIES AND EQUITY
Mortgage notes payable, net (Note 4)	$	1,258,179	$	1,430,915
Revolving credit facility (Note 5)	605,109		225,566
Term loan, net (Note 5)	—		278,554
Senior notes, net (Note 6)	492,773		491,735
Acquired intangible lease liabilities, net	24,759		29,345
Derivative liabilities, at fair value (Note 8)	—		4,259
Due to related parties	76		893
Accounts payable and accrued expenses	27,558		25,887
Operating lease liability (Note 10)	20,255		22,771
Prepaid rent	40,502		32,756
Deferred tax liability	6,423		8,254
Taxes payable	190		—
Dividends payable	5,170		5,386
Total Liabilities	2,480,994		2,556,321
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, 2022 and December 31, 2021	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, 4,695,887 and 4,503,893 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	47		45
Common Stock, $0.01 par value, 250,000,000 shares authorized, 104,144,480 and 103,900,452 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	2,371		2,369
Additional paid-in capital	2,682,600		2,675,154
Accumulated other comprehensive (loss) income	(24,899)		15,546
Accumulated deficit	(1,188,266)		(1,072,462)
Total Stockholders’ Equity	1,471,921		1,620,720
Non-controlling interest	12,653		5,915
Total Equity	1,484,574		1,626,635
Total Liabilities and Equity	$	3,965,568	$	4,182,956

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,
	2022		2021		2022		2021
Revenue from tenants	$	92,599	$	95,758	$	284,909	$	284,712
Expenses:
Property operating	7,765		6,747		23,023		21,784
Operating fees to related parties	10,088		9,880		30,245		28,998
Impairment charges	796		1,199		17,057		7,906
Acquisition, transaction and other costs	103		54		244		99
General and administrative	4,060		3,911		11,629		12,240
Equity-based compensation	3,132		2,721		9,217		8,305
Depreciation and amortization	37,791		41,665		117,039		121,051
Total expenses	63,735		66,177		208,454		200,383
Operating income before gain (loss) on dispositions of real estate investments	28,864		29,581		76,455		84,329
Gain on dispositions of real estate investments	143		1,195		205		1,188
Operating income	29,007		30,776		76,660		85,517
Other income (expense):
Interest expense	(24,207)		(24,858)		(71,779)		(70,244)
Loss on extinguishment of debt	(41)		—		(383)		—
Gain on derivative instruments	13,121		3,560		25,534		4,888
Unrealized income on undesignated foreign currency advances and other hedge ineffectiveness	—		—		2,439		—
Other income (loss)	10		(158)		854		(59)
Total other expense, net	(11,117)		(21,456)		(43,335)		(65,415)
Net income before income tax	17,890		9,320		33,325		20,102
Income tax expense	(3,052)		(1,930)		(8,662)		(5,940)
Net income	14,838		7,390		24,663		14,162
Preferred stock dividends	(5,099)		(5,016)		(15,288)		(15,048)
Net income (loss) attributable to common stockholders	$	9,739	$	2,374	$	9,375	$	(886)
Basic and Diluted Income (Loss) Per Share:
Net income (loss) per share attributable to common stockholders — Basic and Diluted	$	0.09	$	0.02	$	0.08	$	(0.12)
Weighted average common shares outstanding:
Weighted average shares outstanding — Basic and Diluted	103,714,646		101,477,699		103,654,157		96,498,748

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,
	2022		2021		2022		2021
Net income	$	14,838	$	7,390	$	24,663	$	14,162
Other comprehensive income (loss)
Cumulative translation adjustment	(30,706)		(9,759)		(68,738)		(5,858)
Designated derivatives, fair value adjustments	15,321		2,983		28,293		8,312
Other comprehensive (loss) income	(15,385)		(6,776)		(40,445)		2,454
Comprehensive income (loss)	(547)		614		(15,782)		16,616
Preferred Stock dividends	(5,099)		(5,016)		(15,288)		(15,048)
Comprehensive (loss) income attributable to common stockholders	$	(5,646)	$	(4,402)	$	(31,070)	$	1,568

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, 2022
	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, 2021	6,799,467	$	68	4,503,893	$	45	103,900,452	$	2,369	$	2,675,154	$	15,546	$	(1,072,462)	$	1,620,720	$	5,915	$	1,626,635
Issuance of Common Stock, net	—	—		—	—		70,218	1		950		—		—		951		—		951
Issuance of Series B Preferred Stock, net	—	—		191,994	2		—	—		4,705		—		—		4,707		—		4,707
Dividends declared:
Common Stock, $1.20 per share	—	—		—	—		—	—		—		—		(124,879)		(124,879)		—		(124,879)
Series A Preferred Stock, $1.35 per share	—	—		—	—		—	—		—		—		(9,243)		(9,243)		—		(9,243)
Series B Preferred Stock, $1.29 per share	—	—		—	—		—	—		—		—		(6,045)		(6,045)		—		(6,045)
Equity-based compensation, net of forfeitures	—	—		—	—		227,243	2		2,477		—		—		2,479		6,738		9,217
Common shares repurchased upon vesting of restricted stock	—	—		—	—		(53,433)	(1)		(686)		—		—		(687)		—		(687)
Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		(300)		(300)		—		(300)
Net Income	—	—		—	—		—	—		—		—		24,663		24,663		—		24,663
Cumulative translation adjustment	—	—		—	—		—	—		—		(68,738)		—		(68,738)		—		(68,738)
Designated derivatives, fair value adjustments	—	—		—	—		—	—		—		28,293		—		28,293		—		28,293
Balance, September 30, 2022	6,799,467	$	68	4,695,887	$	47	104,144,480	$	2,371	$	2,682,600	$	(24,899)	$	(1,188,266)	$	1,471,921	$	12,653	$	1,484,574

	Three Months Ended September 30, 2022
	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, 2022	6,799,467	$	68	4,685,712	$	47	104,097,372	$	2,371	$	2,680,737	$	(9,514)	$	(1,156,198)	$	1,517,511	$	10,407	$	1,527,918
Issuance of Common Stock, net	—	—		—	—		70,218	1		996		—		—		997		—		997
Issuance of Series B Preferred Stock, net	—	—		10,175	—		—	—		238		—		—		238		—		238
Dividends declared:																—				—
Common Stock, $0.40 per share	—	—		—	—		—	—		—		—		(41,707)		(41,707)		—		(41,707)
Series A Preferred Stock, $0.45 per share	—	—		—	—		—	—		—		—		(3,081)		(3,081)		—		(3,081)
Series B Preferred Stock, $0.43 per share	—	—		—	—		—	—		—		—		(2,018)		(2,018)		—		(2,018)
Equity-based compensation, net of forfeitures	—	—		—	—		(1,500)	—		886		—		—		886		2,246		3,132
Common shares repurchased upon vesting of restricted stock	—	—		—	—		(21,610)	(1)		(257)		—		—		(258)		—		(258)
Distributions to non-controlling interest holders	—	—		—	—		—	—		—		—		(100)		(100)		—		(100)
Net Income	—	—		—	—		—	—		—		—		14,838		14,838		—		14,838
Cumulative translation adjustment	—	—		—	—		—	—		—		(30,706)		—		(30,706)		—		(30,706)
Designated derivatives, fair value adjustments	—	—		—	—		—	—		—		15,321		—		15,321		—		15,321
Balance, September 30, 2022	6,799,467	$	68	4,695,887	$	47	104,144,480	$	2,371	$	2,682,600	$	(24,899)	$	(1,188,266)	$	1,471,921	$	12,653	$	1,484,574

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, 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 (Loss) 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 A Preferred Stock, net	—	—		641,940	6		—	—		15,872		—		—		15,878		—		15,878
Dividends declared:																—				—
Common Stock, $1.20 per share	—	—		—	—		—	—		—		—		(114,654)		(114,654)		—		(114,654)
Series A Preferred Stock, $1.35 per share	—	—		—	—		—	—		—		—		(9,243)		(9,243)		—		(9,243)
Series B Preferred Stock, $1.29 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)