Global Net Lease Opens New Chapter
- Jun 02, 2015
Global Net Lease Inc., formerly known as American Realty Capital Global Trust Inc., began trading its common stock Tuesday morning on the New York Stock Exchange. Its CEO called the listing an “important milestone” for GNL and shareholders in the REIT that focuses on sale-leaseback transactions for single-tenant, net-leased assets across the United States and Western Europe.
As previously announced, the REIT also launched a tender offer to purchase up to $125 million of its shares of common stock at $10.50 per share. In an earlier public statement, the company said the tender offer was expected to supplement the liquidity options available to stockholders in conjunction with the listing.
GNL’s leadership concluded that the NYSE listing would provide maximum value for shareholders, explained Scott Bowman, the company’s CEO.
“We felt and in the discussions with the board that we had built inherent value in our portfolio and in the GNL business,” Bowman told Commercial Property Executive on Tuesday. “We had stable income coming from strong assets, investment grade tenants and had developed a unique portfolio across both the U.S. and Europe that really differentiates us from our peer set.”
It will also drive growth, particularly in Europe, according to Bowman and Andrew Winer, the company’s president and chief investment officer. While more than 60 percent of the inventory is located in the U.S., economic conditions and opportunities in Europe could shift that balance closer to 50-50. Bowman said GNL has deployed nearly $1 billion in Europe in the past year.
And Winer said Western Europe’s economy is struggling to emerge from a long slump. As a result, “companies are starting to free up their balance sheets by selling real estate. “That creates ample opportunities for sale-leaseback or net-lease transactions because about 75 percent of real estate in Germany is owned by the end user and 50 percent in the United Kingdom, compared to 23 percent in the U.S.
Winer also noted that there are “a lot (fewer) people chasing and more potential sellers” in Europe. GNL and with its London-based partner , Moor Park Capital Partners, L.L.C., have a “leg up on our competition” because of Moor Park’s expertise in Europe, particularly in the net-lease sector. Since 2013, Moor Park has acquired 101 properties in Europe valued at $2.8 billion and encompassing 9.8 billion square feet.
The NYSE listing comes about three years after the REIT’s initial public offering in April 2012. Since then, the company has assembled a 16.5 million-square-foot portfolio of more than 300-plus properties in the U.S., United Kingdom, Germany, Finland and the Netherlands.
A little more than half the assets are office properties; and the rest consists of retail and industrial assets. The current portfolio is fully leased and has 79 tenants representing 35 different industries with an average 11.2 years remaining on leases. Most are investment-grade tenants.
While there are still deals to be made in the U.S., Winer said pricing is up now that the recession has ended. More buyers are coming into the markets so that the REITs have lost some leverage.
“We’re selective,” he told CPE, adding that they are seeking corporate headquarters and other mission-critical assets. Tenants in those properties are likely to stay for entire term of their leases and are more likely than typical occupants to expand or renew in place.
“It has to be the right asset type in the right location for the right type of tenants,” Winer said.
In addition to Moor Park, GNL is externally advised by AR Capital, the New York investment firm run by Nicholas Schorsch that has acquired over $30 billion in real estate and created over 20 public registered companies.
Bowman previously said they have built a “proven management team, that along with the valued support of our European managers, Moore Park Capital Partners, has a track record of success in acquiring a diversified, high-quality net-lease portfolio.”
Sue Perrotty, non-executive chair of GNL’s board of directors, also announced that a new management agreement was filed last week prior to Tuesday’s listing on the NYSE.
Perrotty, who was named to her position in March, said in a statement that the agreement will “not only provide long-term economic benefits to GNL’s stockholders, including lower fees, but will also insure the continuity of experienced management, as well as further align the interests of stockholders and the manager.”
In an investor presentation about the GNL listing, the company noted that the agreement eliminates acquisition and financing fees and establishes management fees similar to those among its peer groups. The agreement provides immediate savings through lower fees to GNL shareholders and is projected to continue to “create meaningful savings for shareholders over the 20-year term.”
GNL is among the companies that were part of the real estate empire built by Schorsch that are moving forward following the accounting scandal at American Realty Capital Properties revealed last fall. Schorsch, who remains as chairman of the AR Capital investment firm, had resigned in December from ARCP and the boards of 13 companies, including ARC Global Trust, GNL’s predecessor. In early March, ARCP released six quarters of restated financials and is moving on under new management in Phoenix.