Global Net Lease, Inc. (GNL)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue declined to $124.9M as portfolio dispositions flowed through; GAAP diluted EPS was -$0.16 and AFFO/share was $0.24, with management lifting the low end of FY25 AFFO guidance to $0.92–$0.96 and reaffirming net debt/Adj. EBITDA of 6.5x–7.1x .
• Balance sheet actions were the quarter’s core positive: net debt fell another $748M q/q (down ~$2.0B y/y) to ~$3.0B and S&P upgraded the corporate rating to BB+ while raising the unsecured notes to investment-grade BBB-, followed by a $1.8B revolver refinancing that cut spread by 35 bps and pushed out maturities; liquidity is now ~$1.0B .
• Against Wall Street: Q2 revenue missed S&P Global consensus (actual $124.9M vs est. $138.4M*), Primary EPS (S&P definition) was better than expected (-$0.027* vs -$0.11*), and EBITDA was below consensus ($97.1M* vs $106.4M*) as the earnings base reset post-dispositions; AFFO consensus was not provided .
• Portfolio transformation to a pure-play net lease REIT is largely complete (multi-tenant retail sale closed); leasing stayed constructive with ~200k sq ft executed, 6% renewal spreads, 98% leased, and 60% IG/implied-IG tenant base—supporting the positive guidance bias despite lower scale .

Note: Asterisked values are from S&P Global consensus/actuals. Values retrieved from S&P Global.

What Went Well and What Went Wrong

• What Went Well

  • Deleveraging and credit: Net debt reduced by $748M in Q2 and ~$2.0B y/y; S&P upgraded the corporate rating to BB+ and the unsecured notes to BBB- investment grade, immediately reducing cost of capital and supporting a 35 bps tighter revolver spread after refinancing .
  • Liquidity and runway: Liquidity increased to ~$1.0B and, with the revolver extension, the company now has no significant debt maturities until 2027, lengthening weighted-average debt maturity to ~3.7 years (pro forma) .
  • Execution on portfolio strategy: Final phases of the $1.8B multi-tenant retail sale closed, simplifying operations, cutting G&A by ~$6.5M annually, lowering recurring capex by ~$30M, improving occupancy to 98%, and sustaining strong tenant credit quality (60% IG/implied IG) .

• What Went Wrong

  • Topline and EBITDA reset: Q2 revenue fell to $124.9M (from $145.5M y/y) and Adjusted EBITDA to $113.4M as asset sales reduced scale; Core FFO also dropped to $7.1M from $50.9M y/y .
  • Revenue/EBITDA vs estimates: Revenue and EBITDA came in below S&P Global consensus for Q2 (rev: $124.9M vs $138.4M*; EBITDA: $97.1M* vs $106.4M*), reflecting the magnitude and timing of dispositions; there is no widely tracked AFFO consensus .
  • Office overhang and dilution optics: Management plans to further reduce office exposure opportunistically, but acknowledged dilution trade-offs versus deleveraging and buybacks; investors pressed on trajectory to re-accelerate earnings growth post-dispositions .

Financial Results

Vs S&P Global Consensus (Q2 2025):

• Primary EPS (S&P “Primary EPS”): actual -$0.0266* vs est. -$0.11* → beat by $0.0834*
• Revenue: actual $124.905M vs est. $138.378M* → miss by $13.473M*
• EBITDA: actual $97.05M* vs est. $106.442M* → miss by $9.392M*

Note: Asterisked values are from S&P Global consensus/actuals. Values retrieved from S&P Global.

Segment results (Q2 2025 vs Q2 2024):

Key portfolio and balance sheet KPIs:

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We’ve executed on a series of targeted strategic goals, including the sale of over $3 billion of non-core assets, which reduced leverage by nearly 2.0x turns and lowered our cost of debt by 70 basis points.” — CEO Michael Weil, Q2 press release .
• “Subsequent to the second quarter, we refinanced our revolving credit facility…immediate 35 basis point reduction in the interest rate spread…increased liquidity and extended our weighted average debt maturity to 3.7 years.” — CEO, prepared remarks .
• “We’re going to be very strategic in how we approach the office portfolio…continue to bring office properties to market at the completion of…renewals…and…lower that percentage [office exposure].” — CEO, Q&A .
• “If we continue to use future dispositions to fund stock buyback, we can achieve both of our goals [deleveraging and equity value].” — CEO, Q&A .

Q&A Highlights

• Office disposition cadence: Management will time sales post-renewals to optimize value; no fixed target mix/timing, but intent is to lower office exposure while highlighting strong tenant credit (77% IG/implied IG in office) and 100% rent collection .
• Capital allocation: Dispositions are envisioned to fund a mix of deleveraging and buybacks; CEO emphasized balance—investment-grade credit goal remains top priority while repurchases at ~12% AFFO yield are compelling .
• Sector exposures: Gas/convenience exposure reduced (~$108M sold; to ~2.1%, with pipeline to ~1.4%); auto manufacturing concentration discussed with reassurance on asset criticality (e.g., Detroit final assembly) and McLaren strength .
• Pipeline and authorization: Dispositions pipeline cited at ~$200–$300M; buyback authorization remaining about ~$220M .

Estimates Context

• Against S&P Global consensus, Q2 revenue and EBITDA missed while Primary EPS (S&P’s definition) was less negative than expected: revenue $124.905M vs $138.378M*; EBITDA $97.05M* vs $106.442M*; Primary EPS -$0.0266* vs -$0.11* .
• Management does not guide to GAAP EPS; Street focus for REITs is typically AFFO/FFO, and an explicit S&P Global AFFO consensus was not available in our pull. FY25 AFFO/share guidance was nudged up on the low end ($0.92–$0.96), indicating confidence in post-disposition run-rate .

Note: Asterisked values are from S&P Global consensus/actuals. Values retrieved from S&P Global.

Key Takeaways for Investors

• Deleveraging is working and externally validated: net debt down ~$2B y/y, rating upgrade (BB+ corporate; BBB- notes) and a spread-saving revolver extension de-risk the capital stack and compress funding costs, with no significant maturities until 2027 .
• Scale reset is the near-term trade-off: revenue/EBITDA step-down post-dispositions pressured Core FFO, and Q2 revenue/EBITDA missed S&P Global consensus; however, 98% occupancy, IG tenant mix, and renewal spreads support medium-term stability .
• Guidance bias turned constructive: raising the low end of AFFO/share to $0.92–$0.96 suggests improved visibility after the portfolio transition and refinancing .
• Capital allocation optionality: with ~$1.0B liquidity, a remaining ~$220M buyback authorization, and a $200–$300M dispositions pipeline, GNL can balance leverage goals with per-share accretion opportunities .
• Office strategy will be watched: selective reduced exposure post-renewals aims to limit dilution while de-risking; improved private-market bid interest could be an upside catalyst .
• Dividend reset is holding: quarterly payout at $0.19 supports internal capital retention to accelerate deleveraging and fund optionality .
• Trading setup: near-term narrative hinges on execution against the dispositions pipeline, maintaining occupancy/lease spreads, and further cost-of-capital improvements—key drivers for narrowing the valuation gap to net-lease peers .

Appendix: Additional Q2 2025 Company Communications

• Credit rating upgrade (S&P to BB+ corporate; BBB- notes) — June 30, 2025 .
• $1.8B revolver refinancing (-35 bps spread; maturities extended; no significant maturities until 2027) — August 6, 2025 .
• Q2 2025 common dividend declared: $0.19 per share, paid July 16, 2025 .
• Release schedule for Q2 2025 results and call logistics .