Global Net Lease (NYSE:GNL) raised the lower end of its 2026 earnings outlook after completing the Modiv Industrial acquisition, repurchasing shares and advancing property sales aimed at reducing its office exposure.
The real estate investment trust reported third-quarter revenue of $112.9 million and a net loss attributable to common stockholders of $67.1 million. Adjusted funds from operations, or AFFO, totaled $48.3 million, or $0.22 per share.
Chief Financial Officer Chris Masterson said the company raised its full-year AFFO guidance to $0.83 to $0.85 per share from a previous lower bound of $0.82. It also increased the low end of its gross transaction volume guidance to $750 million, resulting in a range of $750 million to $800 million, and reaffirmed its net debt to adjusted EBITDA outlook of 6.5 to 6.9 times.
Office sales and Modiv integration
Chief Executive Officer Michael Weil said the company completed and integrated its acquisition of Modiv Industrial on August 12. Global Net Lease absorbed the acquired properties without increasing third-quarter general and administrative expenses, he said, citing the elimination of duplicative personnel and third-party costs.
The company identified three to five non-core assets in the acquired 40-property portfolio for potential sale, with estimated gross proceeds of $75 million to $100 million. Weil said he expects those sales between the earnings call and the middle of 2027. Asked about the transaction’s original projected 4% AFFO-per-share accretion, Weil said that was where the acquisition was coming in.
Across the broader portfolio, completed and pending dispositions totaled $391 million through October 30, including $167 million of completed sales. The completed sales carried a 7.7% cash capitalization rate on occupied properties. Office properties accounted for about 68% of total completed and pending disposition volume.
Office exposure stood at 23% of straight-line rent after $123 million of office sales through September 30, Weil said. The company expects that exposure to fall to about 18% when pending transactions close, although he noted that some office sales are structured to close in 2027, in certain cases after lease expirations.
Global Net Lease also had 15 gas, convenience store and car wash properties under contract for about $70 million at a 6.5% cash cap rate. Weil said the company expects those transactions to close by year-end and that the remaining exposure to those categories would be about 2% of straight-line rent.
Buybacks, debt and capital allocation
Global Net Lease repurchased 6.6 million shares for approximately $58.5 million in the third quarter. From the program’s inception through October 30, it bought back 29.7 million shares for $245.8 million at a weighted average price of $8.28, representing an approximately 10% AFFO yield based on the midpoint of its annual guidance.
Weil said management continues to weigh repurchases against debt reduction and acquisitions. Higher funding costs have compressed investment spreads, he said, and the company passed on acquisition opportunities during the quarter where the gap between property yields and debt costs was insufficient.
As of September 30, gross debt was $2.9 billion and net debt was $2.7 billion. Masterson said 86% of debt was fixed or swapped to fixed rates, and the weighted average interest rate was 4.1%. The company reported approximately $863 million of liquidity and $1 billion of capacity on its revolving credit facility.
Global Net Lease has no debt maturities until the fourth quarter of 2027. Weil said the company would be prepared to refinance if an attractive opportunity emerges, but could use its credit facility temporarily if market conditions are unsatisfactory. Masterson said the company also evaluates whether to add interest-rate swaps.
Portfolio and dividend outlook
At quarter-end, the company owned 835 properties totaling 44 million rentable square feet. Occupancy was 96%, and the weighted average remaining lease term was 6.3 years, up from 5.7 years in the preceding quarter. Weil said 63% of tenants carried investment-grade or implied investment-grade ratings.
During the quarter, Global Net Lease renewed more than 840,000 square feet at rents approximately 4.9% above expiring levels. The renewals included a 10-year extension with Refresco at a Missouri distribution facility and four Dollar General locations renewed at a spread of approximately 8%.
Asked whether asset sales could lead to a dividend adjustment, Weil said he was confident in the portfolio’s ability to fund the current dividend, while noting that he could not speak for the board on future decisions. “I am comfortable and confident in our ability to continue at this dividend level,” he said.
About Global Net Lease (NYSE:GNL)
Global Net Lease, Inc (NYSE:GNL) is a real estate investment trust that owns and manages a diversified portfolio of commercial properties subject to long-term, net leases. Under these arrangements, tenants generally pay property operating expenses such as taxes, insurance and maintenance, which can provide the company with relatively predictable rental income.
The company invests primarily in single-tenant office, industrial and retail properties leased to corporate and other commercial tenants.
