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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 March 31, 2023
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
image3a31.gif
Global Net Lease, Inc.
(Exact name of registrant as specified in its charter)
Maryland45-2771978
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per shareGNLNew York Stock Exchange
7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per shareGNL PR ANew York Stock Exchange
6.875% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per shareGNL PR BNew York Stock Exchange
Preferred Stock Purchase RightsNew 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 May 5, 2023, the registrant had 103,846,653 shares of common stock outstanding.

GLOBAL NET LEASE, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Page

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)

March 31,
2023		December 31,
2022
ASSETS 
Real estate investments, at cost (Note 3):
Land
$502,231 $494,101 
Buildings, fixtures and improvements
3,331,471 3,276,656 
Construction in progress
34,221 26,717 
Acquired intangible lease assets
739,067 689,275 
Total real estate investments, at cost
4,606,990 4,486,749 
Less accumulated depreciation and amortization
(936,182)(891,479)
Total real estate investments, net
3,670,808 3,595,270 
Assets held for sale— — 
Cash and cash equivalents119,161 103,335 
Restricted cash1,432 1,110 
Derivative assets, at fair value (Note 8)
30,798 37,279 
Unbilled straight-line rent75,170 73,037 
Operating lease right-of-use asset (Note 10)
50,987 49,166 
Prepaid expenses and other assets56,487 64,348 
Due from related parties568 464 
Deferred tax assets2,581 3,647 
Goodwill21,550 21,362 
Deferred financing costs, net11,954 12,808 
     Total Assets$4,041,496 $3,961,826 
LIABILITIES AND EQUITY  
Mortgage notes payable, net (Note 4)
$1,240,795 $1,233,081 
Revolving credit facility (Note 5)
767,942 669,968 
Senior notes, net (Note 6)
493,464 493,122 
Acquired intangible lease liabilities, net23,852 24,550 
Derivative liabilities, at fair value (Note 8)
1,033 328 
Due to related parties444 1,183 
Accounts payable and accrued expenses30,882 22,889 
Operating lease liability (Note 10)
22,029 21,877 
Prepaid rent
37,849 28,456 
Deferred tax liability
6,386 7,264 
Dividends payable
5,208 5,189 
Total Liabilities2,629,884 2,507,907 
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 March 31, 2023 and December 31, 2022
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 shares issued and outstanding as of March 31, 2023 and December 31, 2022
47 47 
Common Stock, $0.01 par value, 250,000,000 shares authorized, 104,157,910 and 104,141,899 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively
2,371 2,371 
Additional paid-in capital2,683,827 2,683,169 
Accumulated other comprehensive income3,702 1,147 
Accumulated deficit(1,295,547)(1,247,781)
Total Stockholders’ Equity1,394,468 1,439,021 
Non-controlling interest17,144 14,898 
 Total Equity
1,411,612 1,453,919 
     Total Liabilities and Equity$4,041,496 $3,961,826 
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 March 31,
20232022
Revenue from tenants$94,332 $97,133 
 Expenses:
Property operating8,146 7,460 
Operating fees to related parties10,101 10,076 
Impairment charges
— 230 
Acquisition, transaction and other costs99 8 
General and administrative
5,660 3,894 
Equity-based compensation2,925 2,727 
Depreciation and amortization37,029 39,889 
Total expenses
63,960 64,284 
Operating income
30,372 32,849 
Other income (expense):
Interest expense(26,965)(24,123)
(Loss) gain on derivative instruments(1,656)4,615
Other income 66 295 
Total other expense, net
(28,555)(19,213)
Net income before income tax1,817 13,636 
Income tax expense(2,707)(3,095)
Net (loss) income(890)10,541 
Preferred stock dividends(5,099)(5,058)
Net (loss) income attributable to common stockholders$(5,989)$5,483 
Basic and Diluted (Loss) Income Per Share:
Net (loss) income per share attributable to common stockholders — Basic and Diluted$(0.06)$0.05 
Weighted average common shares outstanding:
Weighted average shares outstanding — Basic and Diluted103,782,949 103,596,182 


The accompanying notes are an integral part of these consolidated financial statements.
3
GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)




 Three Months Ended March 31,
20232022
Net (loss) income$(890)$10,541 
Other comprehensive income (loss)
Cumulative translation adjustment6,520 (10,285)
Designated derivatives, fair value adjustments(3,965)10,048 
Other comprehensive income (loss)2,555 (237)
Comprehensive income 1,665 10,304 
Preferred Stock dividends(5,099)(5,058)
Comprehensive (loss) income attributable to common stockholders$(3,434)$5,246 


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)
Three Months Ended March 31, 2023
Series A Preferred StockSeries B Preferred StockCommon Stock
 Number of
Shares		Par ValueNumber of
Shares		Par ValueNumber of
Shares		Par ValueAdditional Paid-in
Capital		Accumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ EquityNon-controlling interestTotal Equity
Balance, December 31, 20226,799,467 $68 4,695,887 $47 104,141,899 $2,371 $2,683,169 $1,147 $(1,247,781)$1,439,021 $14,898 $1,453,919 
Common stock issuances costs— — — — — — (21)— — (21)— (21)
Issuance of Series B Preferred Stock, net— — — — — — — — — — — — 
Dividends declared:
   Common Stock, $0.40 per share
— — — — — — — — (41,677)(41,677)— (41,677)
  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— — — — 16,011 — 679 — — 679 2,246 2,925 
Common shares repurchased upon vesting of restricted stock— — — — — — — — — — — — 
Distributions to non-controlling interest holders— — — — — — — — (100)(100)— (100)
Net loss— — — — — — — — (890)(890)— (890)
Cumulative translation adjustment— — — — — — — 6,520 — 6,520 — 6,520 
Designated derivatives, fair value adjustments— — — — — — — (3,965)— (3,965)— (3,965)
Balance, March 31, 20236,799,467 $68 4,695,887 $47 104,157,910 $2,371 $2,683,827 $3,702 $(1,295,547)$1,394,468 $17,144 $1,411,612 

Three Months Ended March 31, 2022
Series A Preferred StockSeries B Preferred StockCommon Stock
 Number of
Shares		Par ValueNumber of
Shares		Par ValueNumber of
Shares		Par ValueAdditional Paid-in
Capital		Accumulated Other Comprehensive IncomeAccumulated DeficitTotal Stockholders’ EquityNon-controlling interestTotal Equity
Balance, December 31, 20216,799,467 $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 Series B Preferred Stock, net— — 97,384 1 — — 2,395 — — 2,396 — 2,396 
Dividends declared:
— — 
Common Stock, $0.40 per share
— — — — — — — — (41,566)(41,566)— (41,566)
Series A Preferred Stock, $0.45 per share
— — — — — — — — (3,081)(3,081)— (3,081)
Series B Preferred Stock, $0.43 per share
— — — — — — — — (1,977)(1,977)— (1,977)
Equity-based compensation, net of forfeitures— — — — 9,261 — 481 — — 481 2,246 2,727 
Common shares repurchased upon vesting of restricted stock— — — — — — — — — — — — 
Distributions to non-controlling interest holders
— — — — — — — — (100)(100)— (100)
Net income— — — — — — — — 10,541 10,541 — 10,541 
Cumulative translation adjustment
— — — — — — — (10,285)— (10,285)— (10,285)
Designated derivatives, fair value adjustments
— — — — — — — 10,048 — 10,048 — 10,048 
Balance, March 31, 20226,799,467 $68 4,601,277 $46 103,909,713 $2,369 $2,678,030 $15,309 $(1,108,645)$1,587,177 $8,161 $1,595,338 

The accompanying notes are an integral part of these consolidated financial statements.
5
GLOBAL NET LEASE, INC.
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Three Months Ended March 31,
20232022
Cash flows from operating activities: 
Net (loss) income$(890)$10,541 
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation23,818 24,574 
Amortization of intangibles13,211 15,315 
Amortization of deferred financing costs2,085 2,596 
Amortization of mortgage discounts 227 251 
Amortization of below-market lease liabilities(817)(965)
Amortization of above-market lease assets1,556 1,071 
Amortization related to right-of-use assets216 224 
Amortization of lease incentives and commissions424 272 
Bad debt expense— — 
Unbilled straight-line rent(1,888)(2,853)
Termination fee receipt— 9,003 
Equity-based compensation2,925 2,727 
Unrealized gains on foreign currency transactions, derivatives, and other2,647 (4,210)
Lease incentive and commission payments(1,611)(2,315)
Impairment charges— 230 
Changes in operating assets and liabilities, net: 
Prepaid expenses and other assets8,814 (475)
Accounts payable and accrued expenses2,905 2,361 
Prepaid rent9,393 3,472 
Net cash provided by operating activities63,015 61,819 
Cash flows from investing activities:
Investment in real estate and real estate related assets(81,362)— 
Capital expenditures(7,440)(1,782)
Net cash used in investing activities(88,802)(1,782)
Cash flows from financing activities: 
Borrowings under revolving credit facilities91,040 35,000 
Principal payments on mortgage notes payable(4,623)(14,065)
Common Stock issuance costs(21)— 
Series B Preferred Stock issuance proceeds, net— 2,396 
Dividends paid on Common Stock(41,658)(41,566)
Dividends paid on Series A Preferred Stock(3,081)(3,081)
Dividends paid on Series B Preferred Stock(2,018)(1,935)
Distributions to non-controlling interest holders(100)(100)
Net cash provided by (used in) financing activities39,539 (23,351)
Net change in cash, cash equivalents and restricted cash13,752 36,686 
Effect of exchange rate changes on cash2,396 (1,923)
Cash, cash equivalents and restricted cash, beginning of period104,445 93,311 
Cash, cash equivalents and restricted cash, end of period$120,593 $128,074 

Three Months Ended March 31,
20232022
Cash and cash equivalents, end of period$119,161 $123,502 
Restricted cash, end of period1,432 4,572 
Cash, cash equivalents and restricted cash, end of period$120,593 $128,074 
Non-Cash Activity:
Accrued capital expenditures$4,349 $969 
The accompanying notes are an integral part of these consolidated financial statements.
6
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)

Note 1 — Organization
Global Net Lease, Inc. (the “Company”) is an externally managed real estate investment trust for United States (“U.S.”) federal income tax purposes (“REIT”) that focuses on acquiring and managing a globally diversified portfolio of strategically-located commercial real estate properties, which consist primarily of “Investment Grade” tenants (defined below). The Company invests in commercial properties, with an emphasis on sale-leaseback transactions and mission-critical, single tenant net-lease assets.
As of March 31, 2023, the Company owned 317 properties consisting of 39.6 million rentable square feet, which were 98.0% leased, with a weighted-average remaining lease term of 7.8 years. Based on the percentage of annualized rental income on a straight-line basis as of March 31, 2023, 61% of the Company’s properties were located in the U.S. and Canada and 39% were located in Europe. In addition, as of March 31, 2023, the Company’s portfolio was comprised of 55% industrial/distribution properties, 40% office properties and 5% retail properties. These percentages are calculated using annualized straight-line rent converted from local currency into the U.S. Dollar (“USD”) as of March 31, 2023. The straight-line rent includes amounts for tenant concessions.
Substantially all of the Company’s business is conducted through the Global Net Lease Operating Partnership, L.P. (the “OP”), a Delaware limited partnership. The Company has retained Global Net Lease Advisors, LLC (the “Advisor”) to manage the Company’s affairs on a day-to-day basis. The Company’s properties are managed and leased to third parties by Global Net Lease Properties, LLC (the “Property Manager”). The Advisor and the Property Manager are under common control with AR Global Investments, LLC (“AR Global”), and these related parties receive compensation and fees for various services provided to the Company.
“Investment Grade” includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of the tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or tenants that are identified as investment grade by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring an entity’s probability of default.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results for the entire year or any subsequent interim period.
These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2022, which are included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 23, 2023. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, 2023(see “Recently Issued Accounting Pronouncements” section below).
Principles of Consolidation
The accompanying unaudited consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP.


7
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, income taxes, derivative financial instruments, hedging activities, equity-based compensation expenses related to the multi-year outperformance agreements entered into with the Advisor in 2018 (the “2018 OPP”) and in 2021 (the “2021 OPP”) and fair value measurements, as applicable.
Impacts of the COVID-19 Pandemic
The financial stability and overall health of the Company’s tenants is critical to its business. The negative effects that the global COVID-19 pandemic had on the economy impacted the ability of some of the Company’s tenants to pay their monthly rent during 2020. The Company took a proactive approach, during that time, to seek mutually agreeable solutions with its tenants where necessary, and, in some cases, the Company executed rent deferral agreements in 2020 on leases with several tenants. The Company did not enter any rent deferral agreements in 2021, 2022 or the first quarter of 2023.
For accounting purposes, in accordance with ASC 842, normally a company would be required to assess the modification to determine if the modification should be treated as a separate lease and if not, modification accounting would be applied which would require a company to reassess the classification of the lease (i.e. operating, direct financing or sales-type). However, in light of the COVID-19 pandemic due to which many leases were modified, the Financial Accounting Standards Board (“FASB”) and SEC provided relief that allowed companies to make a policy election as to whether they treat COVID-19 related lease amendments as a provision included in the preconcession arrangement, and therefore, not a lease modification, or to treat a lease amendment as a modification. In order to qualify for the relief, the modifications must be COVID-19 related and cash flows must be substantially the same or less than those prior to the concession. The Company elected to use this relief where applicable. In those circumstances, the Company has accounted for these arrangements as if no changes to the lease contract were made. For those leases that do not qualify for the relief, the Company performs a lease modification analysis and if required, uses lease modification accounting.
Revenue Recognition
The Company’s revenues, which are derived primarily from lease contracts, include rents that each tenant pays in accordance with the terms of each lease reported on a straight-line basis over the non-cancelable term of the lease. As of March 31, 2023, these leases had a weighted-average remaining lease term of 7.8 years. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable for, and include in revenue from tenants, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease.
For new leases after acquisition of a property, the commencement date is considered to be the date the lease is executed and the tenant has access to the space. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation for all leases in place at the time of acquisition. In addition to base rent, the Company’s lease agreements generally require tenants to pay or reimburse the Company for all property operating expenses, which primarily reflect insurance costs and real estate taxes incurred by the Company and subsequently reimbursed by the tenant. However, some limited property operating expenses that are not the responsibility of the tenant are absorbed by the Company. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under ASC 842, the Company has reflected them on a net basis.
The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant’s payment history, the credit worthiness and financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under lease accounting rules, the Company is required to assess, based on credit risk only, if it is probable that it will collect virtually all of the lease payments at the lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. Partial reserves, or the ability to assume partial recovery are no longer permitted. If the Company determines that it is probable it will collect virtually all of the lease payments (rent and common area maintenance), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and the straight-line rent receivable would be written off where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in revenue from tenants on the accompanying consolidated statements of operations in the period the related costs are incurred, as applicable.
8
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
On September 3, 2021, the Company entered into a lease termination agreement with one of its tenants, which required the tenant to pay the Company a termination fee of approximately £6.7 million (approximately $9.0 million based on the exchange rate as of the end of the lease term on January 4, 2022). This payment was received in January 2022, however it was recorded in revenue from tenants evenly over the period from September 3, 2021 through the end of the lease term, and as a result, the Company recorded approximately £0.2 million (approximately $0.3 million) in revenue from tenants during the three months ended March 31, 2022.
Accounting for Leases
Lessor Accounting
As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed as incurred.
Lessee Accounting
For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease may now be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 10 — Commitments and Contingencies.
Impairment of Long Lived Assets
If circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings.
Goodwill
The Company evaluates goodwill for impairment at least annually or upon the occurrence of a triggering event. A triggering event is an event or circumstance that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company performed its annual impairment evaluation in the fourth quarter of 2022 to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Based on the Company’s assessment, it determined that the goodwill was not impaired as of December 31, 2022. There were no material changes to this assessment as of March 31, 2023.
Derivative Instruments
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts to hedge all or a portion of the interest rate risk associated with its borrowings. In addition, all foreign currency denominated borrowings under the Company’s Credit Facility (as defined in Note 5 — Revolving Credit Facility and Term Loan, Net) are designated as net investment hedges. Certain of the Company’s foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in the Company’s functional currency, the USD. The Company enters into derivative financial instruments in an effort to protect the value or fix the amount of certain obligations in terms of its functional currency.
The Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to
9
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in foreign operations. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designated and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment (or for derivatives that do not qualify as hedges), any changes in the fair value of these derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statements of operations. If a derivative is designated and qualifies for cash flow hedge accounting treatment, the change in the estimated fair value of the derivative is recorded in other comprehensive income (loss) in the consolidated statements of comprehensive income (loss) to the extent that it is effective.
Equity-Based Compensation
The Company has a stock-based incentive plan under which its directors, officers, other employees of the Advisor, or its affiliates who are involved in providing services to the Company, and certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company, are eligible to receive awards. Awards granted thereunder are accounted for under the guidance for employee share based payments. The cost of services received in exchange for a stock award is measured at the grant date fair value of the award and the expense for such awards is included in equity-based compensation on consolidated statements of operations and is recognized over the vesting period or when the requirements for exercise of the award have been met (see Note 13 — Equity-Based Compensation for additional information).
Multi-Year Outperformance Agreements
On June 2, 2021, the Company entered into the 2021 OPP with the Advisor (see Note 13 — Equity-Based Compensation). Under the 2021 OPP, which became effective June 2, 2021, the Company is recording equity-based compensation evenly over the requisite service period of approximately 3.1 years from May 3, 2021, the date that the Company’s independent directors approved the award of long-term incentive plan units of limited partner interest in the OP (“LTIP Units”) under the 2021 OPP.
Under the accounting guidance, total equity-based compensation expense calculated is fixed and reflected as a charge to earnings over the remaining service period. Further, in the event of a modification, any incremental increase in the value of the instrument measured on the date of the modification both before and after the modification, will result in an incremental amount to be reflected prospectively as a charge to earnings over the remaining service period. The expense for these non-employee awards is included in the equity-based compensation line item of the consolidated statements of operations. For additional information on the original terms and accounting for the awards under the 2021 OPP, see Note 13 — Equity-Based Compensation.
Income Taxes
The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), beginning with the taxable year ended December 31, 2013. Commencing with such taxable year, the Company was organized to operate in such a manner as to qualify for taxation as a REIT under the Code and believes it has so qualified. The Company intends to continue to operate in such a manner to continue to qualify for taxation as a REIT, but no assurance can be given that it will operate in a manner to remain qualified as a REIT. As a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes annually all of its REIT taxable income. REITs are subject to a number of other organizational and operational requirements.
The Company conducts business in various states and municipalities within the U.S., Canada, Puerto Rico, the United Kingdom and Western Europe and, as a result, the Company or one of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and certain foreign jurisdictions. As a result, the Company may be subject to certain federal, state, local and foreign taxes on its income and assets, including alternative minimum taxes, taxes on any undistributed income and state, local or foreign income, franchise, property and transfer taxes. Any of these taxes decrease the Company’s earnings and available cash. In addition, the Company’s international assets and operations, including those owned through direct or indirect subsidiaries that are disregarded entities for U.S. federal income tax purposes, continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.
10
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Significant judgment is required in determining the Company’s tax provision and in evaluating its tax positions. The Company establishes tax reserves based on a benefit recognition model, which the Company believes could result in a greater amount of benefit (and a lower amount of reserve) being initially recognized in certain circumstances. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is greater than 50 percent likely of being ultimately realized upon settlement. The Company derecognizes the tax position when the likelihood of the tax position being sustained is no longer more likely than not.
The Company recognizes deferred income taxes in certain of its subsidiaries taxable in the U.S. or in foreign jurisdictions. Deferred income taxes are generally the result of temporary differences (items that are treated differently for tax purposes than for GAAP purposes). In addition, deferred tax assets arise from unutilized tax net operating losses, generated in prior years. The Company provides a valuation allowance against its deferred income tax assets when it believes that it is more likely than not that all or some portion of the deferred income tax asset may not be realized. Whenever a change in circumstances causes a change in the estimated realizability of the related deferred income tax asset, the resulting increase or decrease in the valuation allowance is included in deferred income tax expense (benefit).
The Company derives most of its REIT taxable income from its real estate operations in the U.S. and has historically distributed all of its REIT taxable income to its shareholders. As such, the Company’s real estate operations are generally not subject to U.S. federal tax, and accordingly, no provision has been made for U.S. federal income taxes in the consolidated financial statements for these operations. These operations may be subject to certain state, local, and foreign taxes, as applicable.
The Company’s deferred tax assets and liabilities are primarily the result of temporary differences related to the following:
•Basis differences between tax and GAAP for certain international real estate investments. For income tax purposes, in certain acquisitions, the Company assumes the seller’s basis, or the carry-over basis, in the acquired assets. The carry-over basis is typically lower than the purchase price, or the GAAP basis, resulting in a deferred tax liability with an offsetting increase to goodwill or the acquired tangible or intangible assets;
•Timing differences generated by differences in the GAAP basis and the tax basis of assets such as those related to capitalized acquisition costs and depreciation expense; and
•Tax net operating losses in certain subsidiaries, including those domiciled in foreign jurisdictions that may be realized in future periods if the respective subsidiary generates sufficient taxable income.
The Company recognizes current income tax expense for state and local income taxes and taxes incurred in its foreign jurisdictions. The Company’s current income tax expense fluctuates from period to period based primarily on the timing of its taxable income.
Recently Issued Accounting Pronouncements
Adopted as of January 1, 2022:
In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470) and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815). The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The ASU became effective for the Company January 1, 2022, and did not have a material impact on the Company’s consolidated financial statements.
Pending Adoption as of March 31, 2023:
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. Topic 848 contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives, and other contracts. The guidance in Topic 848 is optional and may be elected over the period from March 12, 2020 through June 30, 2023 as reference rate reform activities occur. During the first quarter of 2020, the Company elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offered Rate (“LIBOR”) indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. The Company will continue to evaluate the impact of the guidance and may apply other elections as applicable as additional changes in the market occur.
11
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Note 3 — Real Estate Investments, Net
Property Acquisitions
The following table presents the allocation of the assets acquired and liabilities assumed during the three months ended March 31, 2023, and, in the case of assets located outside of the United States, based on the applicable exchange rate at the time of purchase. All acquisitions were considered asset acquisitions for accounting purposes. The Company did not acquire any properties in the three months ended March 31, 2022.
Three Months Ended March 31,
(Dollar amounts in thousands)2023
Real estate investments, at cost: 
Land$4,757 
Buildings, fixtures and improvements30,087 
Total tangible assets34,844 
Intangibles acquired:
In-place leases4,128 
Above-market lease assets40,964 
               Total Intangible assets and liabilities45,092 
ROU asset1,426 
Mortgage note payable— 
Cash paid for acquired real estate investments81,362 
Number of properties purchased$8 

The following table summarizes the acquisitions by property type during the three months ended March 31, 2023:
Property Type
Number of Properties
Square Feet (unaudited)
Properties Acquired in 2023:
Office— — 
Industrial— — 
Distribution— — 
Retail8 323,730 
8 323,730 
Acquired Intangible Lease Assets
The Company allocates a portion of the fair value of real estate acquired to identified intangible assets and liabilities, consisting of the value of origination costs (tenant improvements, leasing commissions, and legal and marketing costs), the value of above-market and below-market leases, and the value of tenant relationships, if applicable, based in each case on their relative fair values. The Company periodically assesses whether there are any indicators that the value of the intangible assets may be impaired by performing a net present value analysis of future cash flows, discounted for the inherent risk associated with each investment. The Company did not record any impairment charges on its acquired intangible assets during the three months ended March 31, 2023 or 2022.
Dispositions
During the three months ended March 31, 2023 and 2022, the Company not sell any properties.
Impairment Charges
The Company did not record any impairment charges during the three months ended March 31, 2023. The impairment charge recorded during the three months ended March 31, 2022 of $0.2 million was based on the estimated selling price for the Bradford & Bingley property, less estimated transactions costs.
12
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Assets Held for Sale
When assets are identified by management as held for sale, the Company stops recognizing depreciation and amortization expense on the identified assets and estimates the sales price, net of costs to sell, of those assets. If the carrying amount of the assets classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company’s estimate of the net sales price of the assets. The Company did not have any assets classified as assets held for sale as of March 31, 2023 and December 31, 2022.
Significant Tenants
There were no tenants whose annualized rental income on a straight-line basis represented 10.0% or greater of consolidated annualized rental income on a straight-line basis for all properties as of March 31, 2023 and December 31, 2022. The termination, delinquency or non-renewal of leases by any major tenant may have a material adverse effect on revenues.
Geographic Concentration
The following table lists the countries and states where the Company has concentrations of properties where annualized rental income on a straight-line basis represented greater than 10.0% of consolidated annualized rental income on a straight-line basis as of March 31, 2023 and December 31, 2022.
Country / U.S. StateMarch 31,
2023		December 31,
2022
United States60.1%63.9%
Michigan14.7%15.5%
United Kingdom21.9%17.4%
13
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Note 4 —Mortgage Notes Payable, Net
Mortgage notes payable, net as of March 31, 2023 and December 31, 2022 consisted of the following:
Encumbered Properties
Outstanding Loan Amount (1)
Effective Interest Rate
Interest Rate
CountryPortfolioMarch 31,
2023		December 31,
2022
Maturity
(In thousands)(In thousands)
Finland:Finland Properties5$80,496 $79,232 3.8%(2)Fixed/VariableFeb. 2024
Germany:Germany Properties556,021 55,140 3.6%(3)Fixed/VariableJun. 2023
Luxembourg/ The Netherlands:Benelux Properties 3130,534 128,485 1.4%FixedJun. 2024
Total EUR denominated13267,051 262,857 
United Kingdom:McLaren3124,917 122,182 6.0%FixedApr. 2024
United Kingdom Properties - Bulk Loan41194,032 194,320 3.2%(4)Fixed/VariableAug. 2023
Total GBP denominated44318,949 316,502 
United States:Penske Logistics 170,000 70,000 4.7%(5)FixedNov. 2028
Multi-Tenant Mortgage Loan I 10162,580 162,580 4.4%(5)FixedNov. 2027
Multi-Tenant Mortgage Loan II832,750 32,750 4.4%(5)FixedFeb. 2028
Multi-Tenant Mortgage Loan III798,500 98,500 4.9%(5)FixedDec. 2028
Multi-Tenant Mortgage Loan IV1697,500 97,500 4.6%(5)FixedMay 2029
Multi-Tenant Mortgage Loan V12204,000 204,000 3.7%(5)FixedOct. 2029
Total USD denominated54665,330 665,330 
Gross mortgage notes payable
1111,251,330 1,244,689 3.9%
Mortgage discount
(1,003)(1,207)
Deferred financing costs, net of accumulated amortization (6)
(9,532)(10,401)
Mortgage notes payable, net
111$1,240,795 $1,233,081 3.9%

______________
(1)Amounts borrowed in local currency and translated at the spot rate in effect at the applicable reporting date.
(2)80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable. Variable portion is approximately 1.4% plus 3-month Euribor.
Euribor rate in effect as of March 31, 2023.
(3)80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable. Variable portion is approximately 1.55% plus 3-month Euribor. Euribor rate in effect as of March 31, 2023.
(4)80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable. Variable portion is approximately 2.0% plus daily SONIA as of January 25, 2022 rate in effect as of March 31, 2023. This loan requires principal repayments which began in October 2020 based on amounts specified under the loan.
(5)The borrowers’ (wholly owned subsidiaries of the OP) financial statements are included within the Company’s consolidated financial statements, however, the borrowers’ assets and credit are only available to pay the debts of the borrowers and their liabilities constitute obligations of the borrowers.
(6)Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or paid down before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.
14
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
The following table presents future scheduled aggregate principal payments on the Company’s gross mortgage notes payable over the next four calendar years and thereafter as of March 31, 2023:
(In thousands)
Future Principal Payments (1)
2023 (remainder) (2)
$250,053 
2024335,947 
2025— 
2026— 
2027162,580 
2028201,250 
Thereafter301,500 
Total$1,251,330 
______
(1)Assumes exchange rates of £1.00 to $1.24 for British Pounds Sterling (“GBP”) and €1.00 to $1.09 for Euros (“EUR”) as of March 31, 2023 for illustrative purposes, as applicable.
(2)This amount is comprised of the mortgage loan that encumbers the Company’s properties in Germany ($56.0 million as of March 31, 2023) and the United Kingdom Properties - Bulk Loan ($194.0 million as of March 31, 2023).
The loan in Germany was paid in full on May 5, 2023 (see Note 15 — Subsequent Events).
In April 2023, the Company made its scheduled principal repayment of £3.8 million ($4.7 million using the exchange rate on the date of repayment) on its United Kingdom Properties - Bulk Loan, which reduced the balance to approximately £153.1 million (approximately $191.4 million as of the end of April 2023) after the payment. The Company intends to repay the entire remaining principal amount of the United Kingdom Properties - Bulk Loan in May 2023, after the filing of this Quarterly Report on Form 10-Q, with additional borrowings in GBP under the Revolving Credit Facility. The 41 properties in the U.K. are expected to be added to the borrowing base of the Revolving Credit Facility.
The total gross carrying value of unencumbered assets as of March 31, 2023 was $2.2 billion, of which approximately $1.3 billion was included in the unencumbered asset pool comprising the borrowing base under the Revolving Credit Facility (as defined in Note 5 — Revolving Credit Facility and Term Loan, Net) and therefore is not currently available to serve as collateral for future borrowings.
Mortgage Covenants
The Company’s mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of March 31, 2023, the Company was in compliance with all of its financial covenants under its mortgage notes payable agreements.
Multi-Tenant Mortgage Loan III
During the three months ended December 31, 2020, a tenant failed to renew its lease triggering a cash sweep event under one of the Company’s mortgage loans secured by seven of the Company’s properties with a balance of $98.5 million as of March 31, 2023. The event triggering the cash sweep was not, however, an event of default. During the first quarter of 2021, the Company cured the cash sweep event through one of the available options under the loan by putting a $3.2 million letter of credit in place (subject to future increase under the terms of the loan agreement, to a maximum amount of $7.4 million). During the third quarter of 2021, the amount of the letter of credit was increased by an additional $4.2 million, resulting in the lender holding the $7.4 million maximum amount in respect to this obligation as of September 30, 2021. This $7.4 million letter of credit is being held by the lender until such time the Company is able to find a suitable replacement tenant and it reduces the availability for future borrowings under the Revolving Credit Facility.
The borrower entities under the same mortgage loan, based upon a review conducted during the three months ended June 30, 2022, identified that during the three months ended March 31, 2022, the borrowers failed to maintain the debt service coverage ratio required by the loan agreement for such period (a “DSCR Sweep Trigger”). Such failure, upon delivery of notice of the same by the lender, triggered a separate cash sweep event under the loan. A DSCR Sweep Trigger is not an event of default and instead triggers a cash sweep. The lender notified the borrower entities of the occurrence of the DSCR Sweep Trigger under the loan for the three-months ended March 31, 2022 and the continuance of such DSCR Sweep Trigger for the three months ended June 30, 2022. Per the loan agreement the Company can cure the cash sweep resulting from a DSCR Sweep Trigger by delivering a letter of credit in the face amount of the excess cash flow for the trailing three months immediately preceding the date of the DSCR Sweep Trigger. Such letter of credit is recalculated and increased (but never decreased) every three-month period thereafter until such time as the borrowers demonstrate compliance with the debt service coverage ratio required by the loan for a period of two consecutive calendar quarters. The Company cured the cash sweep resulting from the
15
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
DSCR Sweep Trigger referenced above for the relevant periods by delivering a letter of credit to the lender in the face amount of approximately $0.9 million. The face value of such letter of credit was thereafter increased by $1.3 million to reflect the continuance of the DSCR Sweep Trigger for the three months ended September 30, 2022. The DSCR Sweep Trigger remained in place for the quarters ended December 31, 2022, and March 31, 2023 and the Company intends to cure the cash sweep that would otherwise result from such continuance by further increasing the letter of credit by an additional $1.2 million as required by the terms of the loan agreement. Such letter of credit is held by the lender, and the Company expects to maintain the effectiveness of the cash sweep cure by future increases to the face value of such letter of credit on a quarterly basis, in each case in accordance with the terms of the loan agreement, until such time as the Company restores compliance with the debt service coverage ratio required by the loan agreement for the requisite two-calendar-quarter time period. For so long as it remains outstanding, the face value of such letter of credit will represent a dollar-for-dollar reduction to availability under the Revolving Credit Facility for future borrowings.
Multi-Tenant Mortgage Loan IV
During the three months ended September 30, 2021, a tenant exercised its right to terminate its lease effective December 31, 2022. Notice of the termination triggered a lease sweep event, which began in the fourth quarter of 2021, under one of the Company’s mortgage loans secured by this property. This was not, however, an event of default. The mortgage loan had a balance of $97.5 million as of March 31, 2023 and it encumbers 16 properties, including this property. Pursuant to the terms of the loan agreement, the lender has swept all cash flow attributable to the lease that triggered the lease sweep event into a rollover reserve account not to exceed an aggregate cap of $0.8 million, which has been met. The reserve is being held by the lender who is required to make the reserve funds available to the Company to fund re-tenanting expenses for the property. The lease sweep event will be cured under the loan agreement if and when the Company leases the space to a new tenant approved by the lender and, at such time, any amounts remaining in the rollover reserve account in respect of the lease sweep event will be released to the Company.
Note 5 — Revolving Credit Facility and Term Loan, Net
The table below details the outstanding balances as of March 31, 2023 and December 31, 2022 under the credit agreement with KeyBank National Association (“KeyBank”), as agent, and the other lender parties thereto which was originally entered into on July 24, 2017 and has been amended from time to time (the “Credit Facility”). On April 8, 2022, the Company, KeyBank and the other lender parties thereto amended and restated the Credit Facility.
Following the closing of the amendment and restatement of the Credit Facility, the Credit Facility consists solely of the senior unsecured multi-currency revolving credit facility (the “Revolving Credit Facility”). The amount previously outstanding under the senior unsecured term loan facility (the “Term Loan”) was converted to the Revolving Credit Facility upon the amendment and restatement. In addition, the aggregate total commitments under the Credit Facility were increased from $1.17 billion to $1.45 billion, with a $50.0 million sublimit for letters of credit, a $50.0 million sublimit for swing loans and $100.0 million of which can only be used for U.S. dollar loans. The Credit Facility includes an uncommitted “accordion feature” that, so long as no default or event of default has occurred and is continuing, gives the Company the option to increase the commitments under the Credit Facility, allocated to either or both the Revolving Credit Facility or a new term loan facility, by up to an additional $500.0 million, subject to obtaining commitments from new lenders or additional commitments from participating lenders and certain customary conditions.
On July 26, 2022, the Company entered into an amendment to the Credit Facility to, among other things, increase the maximum aggregate asset value attributable to unencumbered pool assets located in approved foreign countries. The amendment increases the Company’s flexibility to add properties to the pool of unencumbered assets which impacts the amount available for draw under the Credit Facility.
March 31, 2023December 31, 2022
(In thousands)
TOTAL USD (1)
USDGBPEURCAD
TOTAL USD (2)
USDGBPEURCAD
Revolving Credit Facility$767,942 $317,000 £107,000 €267,075 $38,000 $669,968 $287,000 £57,000 €267,075 $38,000 
Total Credit Facility$767,942 $317,000 £107,000 €267,075 $38,000 $669,968 $287,000 £57,000 €267,075 $38,000 
(1) Assumes exchange rates of £1.00 to $1.24 for GBP, €1.00 to $1.09 for EUR and $1.00 Canadian Dollar (“CAD”) to $0.74 as of March 31, 2023 for illustrative purposes, as applicable.
16
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
(2) Assumes exchange rates of £1.00 to $1.21 for GBP , €1.00 to $1.07 for EUR and $1.00 CAD to $0.74 as of December 31, 2022 for illustrative purposes, as applicable.
Credit Facility - Terms
The Credit Facility requires payments of interest only prior to maturity. Borrowings under the Credit Facility bear interest at a variable rate per annum based on an applicable margin that varies based on the ratio of consolidated total indebtedness to consolidated total asset value of the Company and its subsidiaries plus either (i) the Base Rate (as defined in the Credit Facility) or (ii) the applicable Benchmark Rate (as defined in the Credit Facility) for the currency being borrowed. Following the amendment and restatement of the Credit Facility, the applicable interest rate margin is based on a range from 0.30% to 0.90% per annum with respect to Base Rate borrowings under the Revolving Credit Facility and 1.30% to 1.90% per annum with respect to Benchmark Rate borrowings under the Revolving Credit Facility. These spreads reflect a reduction pursuant to the amendment and restatement of the Credit Facility from the previously applicable spreads (see below). For Benchmark Rate Loans denominated in Dollars that bear interest calculated by reference to Term SOFR, there is an additional spread adjustment depending on the length of the interest period. In addition, pursuant to the amendment and restatement of the Credit Facility, (i) if the Company achieves an investment grade credit rating from at least two rating agencies, the OP can elect for the spread to be based on the credit rating of the Company, and (ii) the “floor” on the applicable Benchmark is 0%. As of March 31, 2023, the Credit Facility had a weighted-average effective interest rate of 5.5% after giving effect to interest rate swaps in place.
The Credit Facility matures on October 8, 2026, subject to the Company’s option, subject to customary conditions, to extend the maturity date by up to two additional six-month terms. Borrowings under the Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary breakage costs associated with borrowings for the applicable Benchmark Rate.
The Credit Facility requires the Company through the OP to pay an unused fee per annum of 0.25% of the unused balance of the Revolving Credit Facility if the unused balance exceeds or is equal to 50% of the total commitment or a fee per annum of 0.15% of the unused balance of the Revolving Credit Facility if the unused balance is less than 50% of the total commitment. From and after the time the Company obtains an investment grade credit rating, the unused fee will be replaced with a facility fee based on the total commitment under the Revolving Credit Facility multiplied by 0.30%, decreasing as the Company’s credit rating increases.
The Credit Facility is supported by a pool of eligible unencumbered properties that are owned by the subsidiaries of the OP that serve as guarantors. The availability of borrowings under the Revolving Credit Facility continues to be based on the value of a pool of eligible unencumbered real estate assets owned by the Company and compliance with various ratios related to those assets, and the amendment and restatement of the Credit Facility also included amendments to provisions governing the calculation of the value of the borrowing base. As of March 31, 2023, approximately $65.2 million was available for future borrowings under the Revolving Credit Facility. Any future borrowings may, at the option of the Company, be denominated in USD, EUR, Canadian Dollars, GBP or Swiss Francs. Amounts borrowed may not, however, be converted to, or repaid in, another currency once borrowed.
The Credit Facility contains events of default relating to customary matters, including, among other things, payment defaults, covenant defaults, breaches of representations and warranties, events of default under other material indebtedness, material judgments, bankruptcy events and change of control events, such as certain changes to the composition of the Company’s board of directors and management. Upon the occurrence of an event of default, a majority of the lenders have the right to accelerate the payment on any outstanding borrowings and other obligations.
The Company, through the OP, may reduce the amount committed under the Revolving Credit Facility and repay outstanding borrowings under the Credit Facility, in whole or in part, at any time without premium or penalty, other than customary “breakage” costs payable on index borrowings. In the event of a default, lenders have the right to terminate their obligations under the Credit Facility agreement and to accelerate the payment on any unpaid principal amount of all outstanding loans. The Credit Facility contains various customary operating covenants, including covenants restricting, among other things, restricted payments (including dividends and share repurchases (see additional information below), the incurrence of liens, the types of investments the Company may make, fundamental changes, agreements with affiliates and changes in nature of business. The Credit Facility also contains financial maintenance covenants with respect to maximum consolidated leverage, maximum consolidated secured leverage, minimum fixed charge coverage, maximum secured recourse debt, maximum unencumbered leverage, unencumbered debt service coverage and minimum net worth. As of March 31, 2023, the Company was in compliance with all covenants under the Credit Facility.
Under the terms of the Credit Facility, the Company may not pay distributions, including cash dividends payable with respect to the Company’s common stock, $0.01 par value per share (“Common Stock”), the Company’s 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”), its 6.875% Series B
17
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Cumulative Redeemable Perpetual Preferred Stock $0.01 par value per share (“Series B Preferred Stock”) or any other class or series of stock the Company may issue in the future, or redeem or otherwise repurchase shares of Common Stock, Series A Preferred Stock, Series B Preferred Stock, or any other class or series of stock the Company may issue in the future that exceed 100% of the Company’s Adjusted FFO, as defined in the Credit Facility (which is different from AFFO disclosed in this Quarterly Report on Form 10-Q) for any period of four consecutive fiscal quarters, except in limited circumstances, including that for one fiscal quarter in each calendar year, the Company may pay cash dividends and other distributions, and make redemptions and other repurchases in an aggregate amount equal to no more than 105% of its Adjusted FFO. From and after the time the Company obtains and continues to maintain an investment grade rating, the limitation on distributions discussed above will not be applicable. The Company last used the exception to pay dividends that were between 100% of Adjusted FFO and 105% of Adjusted FFO during the quarter ended on June 30, 2020, and may use this exception in the future.
The Company’s ability to comply with the restrictions on the payment of distributions in the Credit Facility depends on its ability to generate sufficient cash flows that in the applicable periods exceed the level of Adjusted FFO required by these restrictions. If the Company is not able to generate the necessary level of Adjusted FFO, the Company will have to reduce the amount of dividends paid on the common and the preferred stock or consider other actions. Alternatively, the Company could elect to pay a portion of its dividends on the Common Stock in additional shares of Common Stock if approved by the Company’s board of directors.
The Company and certain subsidiaries of the OP acting as guarantors (the “Guarantors”) have guaranteed, and any wholly owned eligible direct or indirect subsidiary of the OP that directly or indirectly owns or leases a real estate asset added to the pool of eligible unencumbered properties required to be maintained under the Credit Facility is required to guarantee, the OP’s obligations under the Credit Facility. For any Guarantor subsidiary of the OP, this guarantee will be released if the Company achieves an investment grade credit rating from at least one rating agency, but will again be required (i) if the Company loses its investment grade credit rating, or (ii) with respect to any Guarantor subsidiary of the Company, for so long as the subsidiary is the primary obligor under or provides a guaranty to any holder of unsecured indebtedness.
The Company and certain of its subsidiaries have guaranteed the OP’s obligations under the Credit Facility pursuant to one or more guarantees (collectively, the “Guaranty”) and a related contribution agreement (the “Contribution Agreement”) which governs contribution rights of the Guarantors in the event any amounts become payable under the Guaranty. In connection with the amendment and restatement of the Credit Facility, the Guaranty and the Contribution Agreement were also amended.
Note 6 — Senior Notes, Net
On December 16, 2020, the Company and the OP issued $500.0 million aggregate principal amount of 3.75% Senior Notes due 2027 (the “Senior Notes”). In connection with the closing of the offering of the Senior Notes, the Company, the OP and their subsidiaries that guarantee the Senior Notes entered into an indenture (the “Indenture”) with U.S. Bank Trust Company, National Association, as successor to U.S. Bank National Association, as trustee. As of March 31, 2023 and December 31, 2022, the carrying amount of the Senior Notes on the Company’s consolidated balance sheets totaled $493.5 million and $493.1 million, respectively, which is net of $6.5 million and $6.9 million of deferred financing costs, respectively. The Senior Notes, which were issued at par, will mature on December 15, 2027 and accrue interest at a rate of 3.750% per year. Interest on the Senior Notes, which began to accrue on December 16, 2020, is payable semi-annually in arrears on June 15 and December 15 of each year.
As of March 31, 2023, the Company was in compliance with the covenants under the Indenture governing the Senior Notes.
Note 7 — Fair Value of Financial Instruments
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:
18
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability and those inputs are significant.
Level 3 — Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. As of March 31, 2023 and December 31, 2022, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.
Financial Instruments Measured at Fair Value on a Recurring Basis
The following table presents information about the Company’s assets and liabilities (including derivatives that are presented net) measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022, aggregated by the level in the fair value hierarchy within which those instruments fall.
(In thousands)Quoted Prices in Active Markets
Level 1		Significant Other Observable Inputs
Level 2		Significant Unobservable Inputs
Level 3		Total
March 31, 2023
Foreign currency forwards, net (GBP & EUR)$— $3,610 $— $3,610 
Interest rate swaps, net (USD,GBP & EUR)$— $26,155 $— $26,155 
December 31, 2022
Foreign currency forwards, net (GBP & EUR)$— $6,174 $— $6,174 
Interest rate swaps, net (USD,GBP & EUR)$— $30,777 $— $30,777 
A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the three months ended March 31, 2023 and year ended December 31, 2022.
Financial Instruments not Measured at Fair Value
The carrying value of short-term financial instruments such as cash and cash equivalents, restricted cash, due to/from related parties, prepaid expenses and other assets, accounts payable, accrued expenses and dividends payable approximates their fair value due to their short-term nature.
19
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
•The gross carrying value of the Company’s mortgage notes payable as of March 31, 2023 and December 31, 2022 was $1.3 billion and $1.2 billion, respectively. The fair value of the Company’s gross mortgage notes payable as of March 31, 2023 and December 31, 2022 was $1.6 billion and $1.2 billion, respectively, and is based on estimates of market interest rates. This approach relies on unobservable inputs and therefore is classified as Level 3 in the fair value hierarchy.
•As of March 31, 2023 the advances to the Company under the Revolving Credit Facility had a carrying value of $767.9 million and a fair value of $767.4 million. As of December 31, 2022 the advances to the Company under the Revolving Credit Facility had a carrying value of $670.0 million and a fair value of $672.6 million.
•As of March 31, 2023, the Company’s Senior Notes had a gross carrying value of $500.0 million and a fair value of $396.3 million. As of December 31, 2022, the Company’s Senior Notes had a gross carrying value of $500.0 million and a fair value of $417.9 million.
Note 8 — Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the Company’s foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency. The Company enters into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of its functional currency, the USD.
The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate and currency risk management. The use of derivative financial instruments carries certain risks, including the risk that any counterparty to a contractual arrangement may not be able to perform under the agreement. To mitigate this risk, the Company only enters into a derivative financial instrument with a counterparty with a high credit rating with a major financial institution, with which the Company and its affiliates may also have other financial relationships. The Company does not anticipate that any such counterparty will fail to meet its obligations, but there is no assurance that any counterparty will meet these obligations.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of March 31, 2023 and December 31, 2022:
(In thousands)Balance Sheet LocationMarch 31,
2023		December 31,
2022
Derivatives designated as hedging instruments:
Interest rate “pay-fixed” swaps (GBP)
Derivative assets, at fair value
$2,725 $4,200 
Interest rate “pay-fixed” swaps (EUR)Derivative assets, at fair value16,955 19,347 
Total$19,680 $23,547 
Derivatives not designated as hedging instruments:
Foreign currency forwards (GBP-USD)Derivative assets, at fair value$2,820 $4,091 
Foreign currency forwards (GBP-USD)Derivative liabilities, at fair value(448)(29)
Foreign currency forwards (EUR-USD)Derivative assets, at fair value1,823 2,411 
Foreign currency forwards (EUR-USD)Derivative liabilities, at fair value(585)(299)
Interest rate swaps (EUR)Derivative assets, at fair value6,475 7,230 
Total $10,085 $13,404 
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps. Interest rate
20
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
All of the changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (“AOCI”) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction impacts earnings. During the three months ended March 31, 2023, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.
Amounts reported in AOCI related to derivatives are reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months ending March 31, 2024, the Company estimates that $12.4 million will be reclassified from other comprehensive income as an increase to interest expense.

As of March 31, 2023 and December 31, 2022, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
March 31, 2023December 31, 2022
DerivativesNumber of
Instruments		Notional AmountNumber of
Instruments		Notional Amount
(In thousands)(In thousands)
Interest rate “pay-fixed” swaps (GBP)45$234,896 45$229,752 
Interest rate “pay-fixed” swaps (EUR)16348,525 16343,055 
Interest rate “pay-fixed” swaps (USD)—— —— 
Total61$583,421 61$572,807 
The table below details the location in the consolidated financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three months ended March 31, 2023 and 2022.
Three Months Ended March 31,
(In thousands)20232022
Amount of gain recognized in AOCI from derivatives
$(950)$8,854 
Amount of loss reclassified from AOCI into income as interest expense
$3,301 $(1,300)
Total interest expense recorded in the consolidated statements of operations
$26,965 $24,123 
Net Investment Hedges
The Company is exposed to fluctuations in foreign currency exchange rates on property investments in foreign countries which pay rental income, incur property related expenses and borrow in currencies other than its functional currency, the USD. For derivatives designated as net investment hedges, all of the changes in the fair value of the derivatives, including the ineffective portion of the change in fair value of the derivatives, if any, are reported in AOCI (outside of earnings) as part of the cumulative translation adjustment. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. As of March 31, 2023 and December 31, 2022 the Company did not have foreign currency derivatives that were designated as net investment hedges used to hedge its net investments in foreign operations and during the three months ended March 31, 2023 and the year ended December 31, 2022, the Company did not use foreign currency derivatives that were designated as net investment hedges.
Foreign Denominated Debt Designated as Net Investment Hedges
All foreign currency denominated borrowings under the Credit Facility are designated as net investment hedges. As such, the designated portion of changes in value due to currency fluctuations are reported in AOCI (outside of earnings) as part of the cumulative translation adjustment. The remeasurement gains and losses attributable to the undesignated portion of the foreign currency denominated debt are recognized directly in earnings. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated, or if the Company should no longer possess a controlling interest. The Company records adjustments to earnings for currency impacts related to undesignated excess positions, if any. During the three months ended March 31, 2023 and 2022, the Company did not have any undesignated excess positions.
21
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Non-designated Derivatives
The Company is exposed to fluctuations in the exchange rates of its functional currency, the USD, against the GBP and the EUR. The Company has used and may continue to use foreign currency derivatives, including options, currency forward and cross currency swap agreements, to manage its exposure to fluctuations in GBP-USD and EUR-USD exchange rates. While these derivatives are economically hedging the fluctuations in foreign currencies, they do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of derivatives not designated as hedges under qualifying hedging relationships are recorded directly in net income (loss). The Company recorded loss of $1.7 million for the three months ended March 31, 2023, and a gain of $4.6 million for the three months ended March 31, 2022.
As of March 31, 2023 and December 31, 2022, the Company had the following outstanding derivatives that were not designated as hedges under qualifying hedging relationships.
March 31, 2023December 31, 2022
DerivativesNumber of
Instruments		Notional AmountNumber of
Instruments		Notional Amount
(In thousands)(In thousands)
Foreign currency forwards (GBP-USD)32$56,893 30$53,833 
Foreign currency forwards (EUR-USD)3851,126 3950,323 
Interest rate swaps (EUR)3151,801 3149,418 
Interest rate swaps (USD)—— —— 
Interest rate swaps (GBP)—— —— 
Total73$259,820 72$253,574 
Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of March 31, 2023 and December 31, 2022. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying consolidated balance sheets.
Gross Amounts Not Offset on the Balance Sheet

(In thousands)
Gross Amounts of Recognized AssetsGross Amounts of Recognized (Liabilities)Gross Amounts Offset on the Balance SheetNet Amounts of (Liabilities) Assets presented on the Balance SheetFinancial InstrumentsCash Collateral Received (Posted)Net Amount
March 31, 2023$30,798 $(1,033)$— $29,765 $— $— $29,765 
December 31, 2022$37,279 $(328)$— $36,951 $— $— $36,951 
In addition to the above derivative arrangements, the Company also uses non-derivative financial instruments to hedge its exposure to foreign currency exchange rate fluctuations as part of its risk management program, including foreign denominated debt issued and outstanding with third parties to protect the value of its net investments in foreign subsidiaries against exchange rate fluctuations. The Company has drawn, and expects to continue to draw, foreign currency advances under the Credit Facility to fund certain investments in the respective local currency which creates a natural hedge against the original equity invested in the real estate investments, removing the need for the final cross currency swaps. 
22
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
As of March 31, 2023, the Company did not have any counterparties where the net derivative fair value held by that counterparty was in a net liability position including accrued interest but excluding any adjustment for nonperformance. As of March 31, 2023, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value.
Note 9 — Stockholders' Equity
Common Stock
As of March 31, 2023 and December 31, 2022, the Company had 104,157,910 and 104,141,899, respectively, shares of Common Stock issued and outstanding, including Restricted Shares of Common Stock (“Restricted Shares”) and excluding unvested restricted stock units that may be settled in, or converted into, shares of Common Stock in the future (“RSUs”) and LTIP Units. LTIP Units may be convertible into shares of Common Stock in the future.
ATM Program — Common Stock
The Company has an “at the market” equity offering program (the “Common Stock ATM Program”) pursuant to which the Company may sell shares of Common Stock, from time to time, through its sales agents. In November 2022, the Company filed a new shelf registration statement and prospectus supplement covering the Common Stock ATM Program having an aggregate offering amount of up to $285.0 million, prior to the expiration of its previous registration statement, which had an aggregate offering amount of up to $500 million ($285.0 million was sold under the previous registration statement).
•During the three months ended March 31, 2023 and 2022 the Company did not sell any shares of Common Stock through the Common Stock ATM Program.
Preferred Stock
The Company is authorized to issue up to 30,000,000 shares of Preferred Stock.
•The Company has classified and designated 9,959,650 shares of its authorized Preferred Stock as authorized shares of Series A Preferred Stock, as of March 31, 2023 and December 31, 2022. The Company had 6,799,467 shares of Series A Preferred Stock issued and outstanding as of March 31, 2023 and December 31, 2022.
•The Company has classified and designated 11,450,000 shares of its authorized Preferred Stock as authorized shares of Series B Preferred Stock, as of March 31, 2023 and December 31, 2022. The Company had 4,695,887 shares of Series B Preferred Stock issued and outstanding as of March 31, 2023 and December 31, 2022.
•The Company has classified and designated 100,000 shares of its authorized Preferred Stock as authorized shares of its Series C preferred stock, $0.01 par value (“Series C Preferred Stock”), as of March 31, 2023 and December 31, 2022. No shares of Series C Preferred Stock were issued and outstanding as of March 31, 2023 and December 31, 2022.
ATM Program — Series B Preferred Stock
In December 2019, the Company established an “at the market” equity offering program for its Series B Preferred Stock (the “Series B Preferred Stock ATM Program”) pursuant to which the Company may sell shares of Series B Preferred Stock, from time to time through its sales agents. In November 2022, the Company filed a new shelf registration statement and prospectus supplement covering the Series B Preferred Stock ATM Program having an aggregate offering price of up to $170.0 million, prior to the expiration of its previous registration statement, which had an aggregate offering price up to $200.0 million.
•During the three months ended March 31, 2023 and 2022, the Company did not sell any shares of its Series B Preferred Stock through the Series B Preferred Stock ATM Program.
Dividends
Common Stock Dividends
During the three months ended March 31, 2023 and the year ended December 31, 2022, the Company paid dividends on its Common Stock at an annual rate of $1.60 per share or $0.40 per share on a quarterly basis.
Dividends authorized by the Company’s board of directors and declared by the Company are paid on a quarterly basis in arrears on the 15th day of the first month following the end of each fiscal quarter (unless otherwise specified) to common
23
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
stockholders of record on the record date for such payment. The Company’s board of directors may alter the amounts of dividends paid or suspend dividend payments at any time prior to declaration and therefore dividend payments are not assured. For purposes of the presentation of information herein, the Company may refer to distributions by the OP on OP Units and LTIP Units as dividends. In addition, see Note 5 — Revolving Credit Facility and Term Loan, Net for additional information on the restrictions on the payment of dividends and other distributions imposed by the Credit Facility.
Series A Preferred Stock Dividends
Dividends on Series A Preferred Stock accrue in an amount equal to $0.453125 per share per quarter to Series A Preferred Stock holders, which is equivalent to 7.25% of the $25.00 liquidation preference per share of Series A Preferred Stock per annum. Dividends on the Series A Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day) to holders of record at the close of business on the record date set by the Company’s board of directors.
Series B Preferred Stock Dividends
Dividends on Series B Preferred Stock accrue in an amount equal to $0.429688 per share per quarter to Series B Preferred Stock holders, which is equivalent to 6.875% of the $25.00 liquidation preference per share of Series B Preferred Stock per annum. Dividends on the Series B Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day) to holders of record at the close of business on the record date set by the Company’s board of directors.
Stockholder Rights Plan
In April 2020, the Company announced that its board of directors approved a stockholder rights plan (the “Plan”). The Plan is intended to allow the Company to realize the long-term value of the Company’s assets by protecting the Company from the actions of third parties that the Company’s board determines are not in the best interest of the Company. In connection with the adoption of the Plan, the Company’s board of directors authorized a dividend of one preferred share purchase right for each outstanding share of Common Stock to stockholders of record on April 20, 2020 to purchase from the Company one one-thousandth of a share of Series C Preferred Stock for an exercise price of $50.00, once the rights become exercisable, subject to adjustment as provided in the related rights agreement. By the terms of the Plan, the rights will initially trade with Common Stock and will generally only become exercisable on the 10th business day after the Company’s board of directors becomes aware that a person or entity has become the owner of 4.9% or more of the shares of Common Stock or the commencement of a tender or exchange offer which would result in the offeror becoming an owner of 4.9% or more of the Common Stock. The plan expires on April 8, 2024, unless earlier exercised, exchanged, amended redeemed or terminated. The adoption of the Plan did not have a material impact on the Company's financial statements and its earnings per share.
Note 10 — Commitments and Contingencies
Lessee Arrangements — Ground Leases
The Company leases land under 11 ground leases associated with certain properties, with lease durations ranging from 13 to 121 years as of March 31, 2023. The Company entered into two additional ground leases during the three months ended March 31, 2023.
As of March 31, 2023 and December 31, 2022, the Company’s balance sheets include ROU assets of $51.0 million and $49.2 million, respectively, and operating lease liabilities of $22.0 million and $21.9 million, respectively. In determining the operating ROU assets and lease liabilities for the Company’s operating leases in accordance with lease accounting rules, the Company was required to estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. Since the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the Company’s estimate of this rate required significant judgment.
The Company’s ground operating leases have a weighted-average remaining lease term of approximately 29.5 years and a weighted-average discount rate of 4.4% as of March 31, 2023. For the three months ended March 31, 2023, the Company paid cash of approximately $0.3 million for amounts included in the measurement of lease liabilities and recorded expense of $0.4 million on a straight-line basis in accordance with the standard. For the three months ended March 31, 2022, the Company paid cash of approximately $0.3 million, for amounts included in the measurement of lease liabilities and recorded expense of $0.3 million, on a straight-line basis in accordance with the standard.

24
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
The following table reflects the base cash rental payments due from the Company as of March 31, 2023:
(In thousands)
Future Base Rent Payments (1)
2023 (remainder) (2)
$1,345 
20241,349 
20251,354 
20261,355 
20271,355 
Thereafter34,972 
Total minimum lease payments (2)
41,730 
Less: Effects of discounting(19,701)
Total present value of lease payments$22,029 
________
(1)Assumes exchange rates of £1.00 to $1.24 for GBP and €1.00 to $1.09 for EUR as of March 31, 2023 for illustrative purposes, as applicable.
(2)Ground lease rental payments due for the Company’s ING Amsterdam lease are not included in the table above as the Company’s ground rent for this property is prepaid through 2050.
Litigation and Regulatory Matters
On December 19, 2022, the Company filed a complaint against Blackwells Capital LLC (“Blackwells Capital”), an affiliate of Blackwells Onshore (together with Blackwells Capital, “Blackwells”), and certain others involved with Blackwells proxy solicitation (collectively the “Defendants”), captioned Global Net Lease, Inc. v. Blackwells Capital LLC, et al., No. 1:22-cv-10702 (Dec. 19, 2022), in the United States District Court for the Southern District of New York. The complaint alleges that Blackwells and the other Defendants violated Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder by omitting or misstating material information in materials filed by the Defendants. The complaint seeks, among other things, to (i) declare that the proxy materials filed by Blackwells violate Section 14(a) of the Exchange Act and Rule 14a-9 promulgated thereunder, (ii) order Blackwells and the other Defendants to publicly correct their material misstatements or omissions, (iii) enjoin Blackwells and the other Defendants from publishing any soliciting materials until each of them files corrective statements to address the material misstatements or omissions, and (iv) preliminarily and permanently enjoin Blackwells and the other Defendants from committing any further violations of federal securities law.
In addition, on December 19, 2022, Blackwells Onshore filed a complaint against the Company and another defendant captioned Blackwells Onshore I LLC v. Global Net Lease, Inc., et al., No. 24C22005195, in the Circuit Court of Maryland for Baltimore City. The complaint alleges that the Company committed a breach of contract and violated its duties under Maryland law by rejecting the purported nomination of two persons to the Company’s board proposed by Blackwells and various proposals which Blackwells seeks to have considered at the Company’s 2023 annual meeting of stockholders. The complaint seeks, among other things, (i) to enjoin the Company from interpreting its bylaws in a fashion that would preclude Blackwells Onshore from nominating two candidates for election to the Company’s board, (ii) to declare that the Company’s bylaws do not preclude Blackwells Onshore’s nominees or business proposals, (iii) to declare the previously announced Second Amendment to the Company’s bylaws void and unenforceable, (iv) to enjoin the Company from taking any steps to reject the nominations made by Blackwells Onshore and require the Company to count votes cast in favor of any of the persons nominated by Blackwells Onshore, and (v) unspecified damages for purported breach of the bylaws. The Company intends to vigorously defend against the claims.
On March 10, 2023, the Company filed a motion for a preliminary injunction seeking to enjoin Defendants from publishing any soliciting materials, or soliciting until they file corrective statements; and enjoining them from making false statements about the absence of any joint venture between Blackwells and Related. The Court denied the preliminary injunction motion on May 3, 2023. On May 4, 2023, the Company filed a notice of appeal with the Court of Appeals for the Second Circuit.
On April 21, 2023, Blackwells filed a motion in the Circuit Court of Maryland for Baltimore City for a preliminary injunction seeking to enjoin the Company from, among other things, (i) refusing to count votes in favor of Blackwells nominees; (ii) refusing to seat Blackwells’ nominees should they be elected; and (iii) communicating that Blackwells’ nominees are invalid or otherwise improperly nominated. The Company has filed its opposition to the preliminary injunction motion. The Court has not yet set a date for a hearing.
There are no other material legal or regulatory proceedings pending or known to be contemplated against the Company.
25
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of March 31, 2023, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.
Note 11 — Related Party Transactions
As of March 31, 2023 and December 31, 2022, AR Global and certain affiliates owned, in the aggregate, 35,900 shares of outstanding Common Stock. The Advisor, which is an affiliate of AR Global, and its affiliates incur, directly or indirectly, costs and fees in performing services for the Company.
As of March 31, 2023 the Company had $0.6 million of receivables from the Advisor or its affiliates. As of December 31, 2022 the Company had $0.5 million of receivables from the Advisor or its affiliates. As of March 31, 2023 and December 31, 2022, the Company had $0.4 million and $1.2 million, respectively, of payables to the Advisor or its affiliates.
As of March 31, 2023 and December 31, 2022, AR Global indirectly owned all of the membership interests in the Advisor.
The Company is the sole general partner of the OP. There were no OP Units held by anyone other than the Company outstanding as of March 31, 2023 and December 31, 2022.
The Company paid $0.1 million in distributions to the Advisor as the sole holder of LTIP Units during the three months ended March 31, 2023, and the Company paid $0.1 million in distributions to the Advisor as the sole holder of LTIP Units during the three ended March 31, 2022, which are included in accumulated deficit in the consolidated statements of equity. As of March 31, 2023 and December 31, 2022, the Company had no unpaid distributions on the LTIP Units.
Fees Paid in Connection with the Operations of the Company
Under the Fourth Amended and Restated Advisory Agreement (the “Advisory Agreement”), by and among the Company, the OP and the Advisor, the Company pays the Advisor the following fees in cash:
(a)    a base fee of $18.0 million per annum payable in cash monthly in advance (“Minimum Base Management Fee”); and
(b)    a variable fee amount equal to 1.25% per annum of the sum, since the effective date of the Advisory Agreement in June 2015, of: (i) the cumulative net proceeds of all common equity issued by the Company (ii) any equity of the Company issued in exchange for or conversion of preferred stock or exchangeable notes, based on the stock price at the date of issuance; and (iii) any other issuances of common, preferred, or other forms of equity of the Company, including units in an operating partnership (excluding equity based compensation but including issuances related to an acquisition, investment, joint-venture or partnership) (the “Variable Base Management Fee”).
The Company will pay any Advisor any Incentive Compensation (as defined in the Advisory Agreement), generally payable in quarterly installments 50% in cash and 50% in shares of Common Stock (subject to certain lock up restrictions). The Advisor did not earn any Incentive Compensation during the three months ended March 31, 2023 or 2022. After the end of each performance period, the Incentive Compensation is subject to a final adjustment in accordance with the terms of the Advisory Agreement based on the difference, if any, between the amount of Incentive Compensation paid to the Advisor during the year and the amount actually earned by the Advisor at the end of the year. In connection with any adjustments, shares of Common Stock that were issued as a portion of any quarterly installment payment are retained and, for purposes of any repayment required to be made by the Advisor, have the value they had at the time of issuance and are adjusted in respect of any dividend or other distribution received with respect to those shares to allow recoupment of the same.
The Incentive Compensation can be earned by the Advisor based on the Company’s achievement relative to two threshold levels of Core AFFO Per Share:(1) the Incentive Fee Lower Hurdle (as defined in the Advisory Agreement) and the Incentive Fee Upper Hurdle (as defined in the Advisory Agreement).
The Incentive Fee Lower Hurdle is equal to $2.25 per share in the aggregate and $0.5625 per share per quarter, subject to potential annual increases by the Company’s independent directors as described below. The Incentive Fee Upper Hurdle is equal to $2.92 per share in the aggregate and $0.73 per share per quarter, subject to potential annual increases by the Company’s independent directors as described below.

The Company’s independent directors (in their good faith reasonable judgment, after consultation with the Advisor) may increase the thresholds at a percentage equal to between 0% and 3%. In addition, beginning in May 2026, the Advisor has a right to request that the Company’s independent directors reduce the then current Incentive Fee Lower Hurdle and Incentive
26
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Fee Upper Hurdle and make a determination whether any reduction in the annual thresholds is warranted. The Advisor will again have this right in May 2031 and then every five years thereafter.
The annual aggregate amount of the Minimum Base Management Fee and Variable Base Management Fee (collectively, the “Base Management Fee”) that may be paid under the Advisory Agreement are subject to varying caps based on assets under management (“AUM”),(2) as defined in the Advisory Agreement. The amount of the Base Management Fee to be paid under the Advisory Agreement is capped at the AUM for the preceding year multiplied by (a) 0.75% if equal to or less than $3.0 billion; (b) 0.75% less (i) a fraction, (x) the numerator of which is the AUM for such specified period less $3.0 billion and (y) the denominator of which is $11.7 billion multiplied by (ii) 0.35% if AUM is greater than $3.0 billion but less than $14.6 billion; or (c) 0.4% if equal to or greater than $14.7 billion.
_________
(1)For purposes of the Advisory Agreement, Core AFFO Per Share means for the applicable period (i) net income adjusted for the following items (to the extent they are included in net income): (a) real estate related depreciation and amortization; (b) net income from unconsolidated partnerships and joint ventures; (c) one-time costs that the Advisor deems to be non-recurring; (d) non-cash equity compensation (other than any Restricted Share Payments (as defined in the Advisory Agreement)); (e) other non-cash income and expense items; (f) certain non-cash interest expenses related to securities that are convertible to Common Stock; (g) gain (or loss) from the sale of investments; (h) impairment loss on real estate; (i) acquisition and transaction related costs (known as acquisition, transaction and other costs on the face of the Company’s income statement); (j) straight-line rent; (k) amortization of above and below market lease assets and liabilities; (l) amortization of deferred financing costs; (m) accretion of discounts and amortization of premiums on debt investments; (n) marked-to-market adjustments included in net income; (o) unrealized gain (loss) resulting from consolidation from, or deconsolidation to, equity accounting, (p) consolidated and unconsolidated partnerships and joint ventures and (q) Incentive Compensation, (ii) divided by the weighted-average outstanding shares of Common Stock on a fully-diluted basis for such period.
(2)For purposes of the Advisory Agreement, AUM means, for a specified period, an amount equal to (A) (i) the aggregate costs of the Company’s investments (including acquisition fees and expenses) at the beginning of such period (before reserves for depreciation of bad debts, or similar non-cash reserves) plus (ii) the aggregate cost of the Company’s investment at the end of such period (before reserves from depreciation or bad debts, or similar non-cash reserves) divided by (B) two (2).
In addition, the per annum aggregate amount of the Base Management Fee and the Incentive Compensation to be paid under the Advisory Agreement is capped at (a) 1.25% of the AUM for the previous year if AUM is less than or equal to $5.0 billion; (b) 0.95% if the AUM is equal to or exceeds $15.0 billion; or (c) a percentage equal to: (A) 1.25% less (B) (i) a fraction, (x) the numerator of which is the AUM for such specified period less $5.0 billion and (y) the denominator of which is $10.0 billion multiplied by (ii) 0.30% if AUM is greater than $5.0 billion but less than $15.0 billion. The Variable Base Management Fee is also subject to reduction if there is a sale or sales of one or more Investments in a single or series of related transactions exceeding $200.0 million and a special dividend(s) related thereto is paid to stockholders.
Under the Advisory Agreement, the Company has also agreed to reimburse, indemnify and hold harmless each of the Advisor and its affiliates, and the directors, officers, employees, partners, members, stockholders, other equity holders, agents and representatives of the Advisor and its affiliates (each, an “Advisor Indemnified Party”), of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including reasonable attorneys’ fees) in respect of or arising from any acts or omissions of the Advisor Indemnified Party performed in good faith under the Advisory Agreement and not constituting bad faith, willful misconduct, gross negligence, or reckless disregard of duties on the part of the Advisor Indemnified Party. In addition, the Company has agreed to advance funds to an Advisor Indemnified Party for reasonable legal fees and other reasonable costs and expenses incurred as a result of any claim, suit, action or proceeding for which indemnification is being sought, subject to repayment if the Advisor Indemnified Party is later found pursuant to a final and non-appealable order or judgment to not be entitled to indemnification.
Property Management Fees
The Property Manager provides property management and leasing services for properties owned by the Company, for which the Company pays fees to the Property Manager equal to: (i) with respect to stand-alone, single-tenant net leased properties which are not part of a shopping center, 2.0% of gross revenues from the properties managed and (ii) with respect to all other types of properties, 4.0% of gross revenues from the properties managed in each case plus market-based leasing commissions applicable to the geographic location of the applicable property.
For services related to overseeing property management and leasing services provided by any person or entity that is not an affiliate of the Property Manager, the Company pays the Property Manager an oversight fee equal to 1.0% of gross revenues of the property managed. This oversight fee is no longer applicable to 39 of the Company’s properties which became subject to separate property management agreements with the Property Manager in connection with certain mortgage loans entered into by the Company in October 2017, April 2019 and September 2019 (the “Loan Property PMLAs”) on otherwise nearly identical terms to the primary property and management leasing agreement (the “Primary PMLA”), which remains applicable to all other properties.
27
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
In February 2019, the Company entered into an amendment to the Primary PMLA with the Property Manager, providing for automatic extensions for an unlimited number of successive one-year terms unless terminated by either party upon notice. Following this amendment, either the Company or the Property Manager may terminate the Primary PMLA at any time upon at least 12 months’ written notice prior to the applicable termination date. This termination notice period does not apply to the Loan Property PMLAs, which may be terminated by either the Company or the Property Manager upon 60 days’ written notice prior to end of the applicable term.
If cash flow generated by any of the Company’s properties is not sufficient to fund the costs and expenses incurred by the Property Manager in fulfilling its duties under the property management and leasing agreements, the Company is required to fund additional amounts. Costs and expenses that are the responsibility of the Company under the property management and leasing agreements include, without limitation, reasonable wages and salaries and other employee-related expenses of all on-site and off-site employees of the Property Manager who are engaged in the operation, management, maintenance and leasing of the properties and other out-of-pocket expenses which are directly related to the operation, management, maintenance and leasing of specific properties, but may not include the Property Manager’s general overhead and administrative expenses.
The Company pays leasing commissions to the Property Manager which are expensed over the terms of the related leases. During the three months ended March 31, 2023, the Company paid $1.4 million of leasing commissions to the Property Manager. During the three months ended March 31, 2023 and 2022, $0.2 million and $86,133, respectively, was recorded as an expense in property management fees (see table below).
Professional Fees and Other Reimbursements
The Company reimburses the Advisor or its affiliates for expenses paid or incurred by the Advisor or its affiliates in providing services to the Company under the Advisory Agreement, except for those expenses that are specifically the responsibility of the Advisor under the Advisory Agreement, such as salaries, bonus and other wages, payroll taxes and the cost of employee benefit plans of personnel of the Advisor and its affiliates (including the Company’s executive officers) who provide services to the Company under the Advisory Agreement, the Advisor’s rent and general overhead expenses, the Advisor’s travel expenses (subject to certain exceptions), professional services fees incurred with respect to the Advisor for the operation of its business, insurance expenses (other than with respect to the Company’s directors and officers) and information technology expenses. In addition, these reimbursements are subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company’s operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income, unless the excess amount is otherwise approved by the Company’s board of directors. The amount of expenses reimbursable for the three months ended March 31, 2023 and 2022 did not exceed these limits.
Fees Paid in Connection with the Liquidation of the Company’s Real Estate Assets
Under the Advisory Agreement, the Company is required to pay to the Advisor a fee in connection with net gain recognized by the Company in connection with the sale or similar transaction of any investment equal to 15% of the amount by which the gains from the sale of investments in the applicable month exceed the losses from the sale of investments in that month unless the proceeds from such transaction or series of transactions are reinvested in one or more investments within 180 days thereafter (the “Gain Fee”). The Gain Fee is calculated at the end of each month and paid, to the extent due, with the next installment of the Base Management Fee. The Gain Fee is calculated by aggregating all of the gains and losses from the preceding month. There was no Gain Fee paid during the three months ended March 31, 2023 or 2022.

28
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
The following table reflects related party fees incurred and contractually due as of and for the periods presented:
Three Months Ended March 31,
 20232022
(In thousands)IncurredIncurred
Ongoing fees (1):
  Asset management fees (2)
$8,364 $8,239 
  Property management fees
1,737 1,837 
Total related party operational fees and reimbursements$10,101 $10,076 
______________
(1)The Company incurred general and administrative costs and other expense reimbursements of approximately $0.3 million and $0.4 million for the three months ended March 31, 2023 and 2022, respectively, which are recorded within general and administrative expenses in the consolidated statements of operations and are not reflected in the table above.
(2)The Advisor, in accordance with the Advisory Agreement, received asset management fees in cash each quarter equal to one quarter of the annual Minimum Base Management Fee of $18.0 million and the Variable Base Management Fee. The Variable Base Management Fee was $3.9 million and $3.7 million for the three months ended March 31, 2023 and 2022, respectively.
Note 12 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor, to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, accounting services, investor relations, transfer agency services, as well as other administrative responsibilities for the Company.
As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.
Note 13 — Equity-Based Compensation
2021 Equity Plan
At the Company’s 2021 annual meeting of stockholders held on April 12, 2021, the Company’s stockholders approved the 2021 Omnibus Incentive Compensation Plan of Global Net Lease, Inc. (the “Individual Plan”) and the 2021 Omnibus Advisor Incentive Compensation Plan of Global Net Lease, Inc. (the “Advisor Plan” and together with the Individual Plan, the “2021 Equity Plan”). Both the Individual Plan and the Advisor Plan became effective upon stockholder approval.
The terms of the Advisor Plan are substantially similar to the terms of the Individual Plan, except with respect to the eligible participants. Generally, directors of the Company, employees of the Company and employees of the Advisor or its affiliates who are involved in providing services to the Company (including the Company’s executive officers) as well as certain consultants to the Company and the Advisor and its affiliates are eligible to participate in the Individual Plan. Only the Advisor and any of its affiliates that are involved in providing services to the Company or any of its subsidiaries are eligible to receive awards under the Advisor Plan. The total number of shares of Common Stock that can be issued or subject to awards under the Advisor Plan and the Individual Plan, in the aggregate, is 6,300,000 shares. Shares issued or subject to awards under the Individual Plan reduce the number of shares available for awards under the Advisor Plan on a one-for-one basis and vice versa. The Individual Plan and the Advisor Plan will expire on April 12, 2031.
The 2021 Equity Plan permit awards of Restricted Shares, RSUs, stock options, stock appreciation rights, stock awards, LTIP Units and other equity awards.
Restricted Share Plan
The Company’s employee and director incentive restricted share plan (“RSP”) provides the Company with the ability to grant awards of Restricted Shares and RSUs to directors, officers and full-time employees (if any), of the Company, the Advisor and its affiliates, and certain persons that provide services to the Company, the Advisor or its affiliates.
29
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Under the RSP, prior to stockholder approval of the 2021 Equity Plan, the number of shares of Common Stock available for awards was equal to 10.0% of the Company’s outstanding shares of Common Stock on a fully diluted basis at any time, and, if any awards granted under the RSP were forfeited for any reason, the number of forfeited shares was again available for purposes of granting awards under the RSP. Because the 2021 Equity Plan was approved by the Company’s stockholders, only 2,772,905 shares of Common Stock remained available for the grant of new awards under the RSP through the expiration of the RSP on April 20, 2022, and shares of Common Stock underlying awards that expire, terminate, are cancelled or are forfeited under the RSP will not again be available for issuance under the RSP. Awards previously granted under the RSP will remain outstanding (and eligible to vest and settle) in accordance with their terms under the RSP.
RSUs
RSUs may be awarded under terms that provide for vesting on a straight-line basis over a specified period of time for each award. RSUs represent a contingent right to receive shares of Common Stock at a future settlement date, subject to satisfaction of applicable vesting conditions or other restrictions, as set forth in the RSP and an award agreement evidencing the grant of RSUs. RSUs may not, in general, be sold or otherwise transferred until restrictions are removed and the RSUs are settled in, or converted into, the shares of Common Stock. Holders of RSUs do not have or receive any voting rights with respect to the RSUs or any shares underlying any award of RSUs, but such holders are generally credited with dividend or other distribution equivalents which are subject to the same vesting conditions or other restrictions as the underlying RSUs and only paid at the time such RSUs are settled in shares of Common Stock. RSU award agreements generally provide for accelerated vesting of all unvested RSUs in connection with a termination without cause from the Company’s board of directors or a change of control and accelerated vesting of the portion of the unvested RSUs scheduled to vest in the year of the recipient’s voluntary resignation from or failure to be re-elected to the Company’s board of directors.
The following table reflects the activity of RSUs outstanding for the periods presented:
 
Number of RSUsWeighted-Average Issue Price
Unvested, December 31, 202247,723 $15.82 
Vested
(16,011)14.63 
Granted
— — 
Unvested, March 31, 202331,712 16.42 
 
Number of RSUsWeighted-Average Issue Price
Unvested, December 31, 202144,510 $17.30 
Vested
(9,411)13.37 
Granted
— — 
Unvested, March 31, 202235,099 17.30 

The fair value of the RSUs granted on or after the listing is based on the market price of Common Stock as of the grant date. The fair value of the equity awards is expensed over the vesting period.
Restricted Shares
Restricted Shares are shares of Common Stock awarded under terms that provide for vesting over a specified period of time. Holders of Restricted Shares receive nonforfeitable cash dividends prior to the time that the restrictions on the Restricted Shares have lapsed. Any dividends to holders of Restricted Shares payable in shares of Common Stock are subject to the same restrictions as the underlying Restricted Shares. Restricted Shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested.
In May 2022, May 2021, and September 2020, the Company granted 207,242, 213,125 and 132,025 Restricted Shares, respectively, to employees of the Advisor or its affiliates who are involved in providing services to the Company, including its Chief Executive Officer and Chief Financial Officer. In accordance with accounting rules, the fair value of the Restricted Shares granted is being recorded on a straight-line basis over the vesting period of four years. In addition, during the third quarter of 2022, the Company issued 23,156 restricted shares to former employees of the Advisor, working as consultants to the Advisor, which, for accounting purposes, the fair value of such grants was fully expensed during the third quarter of 2022.
30
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
The awards to the Chief Executive Officer and Chief Financial Officer were recommended by the Advisor and approved by the compensation committee. The other awards were made pursuant to authority delegated by the compensation committee to Edward M. Weil, Jr., a member of the Company’s board of directors. No awards may be made pursuant to this delegation of authority to anyone who is also a partner, member or equity owner of the parent of the Advisor.
The Restricted Shares granted to employees of the Advisor or its affiliates vest in 25% increments on each of the first four anniversaries of the grant date. Except in connection with a change in control (as defined in the award agreement) of the Company, any unvested Restricted Shares will be forfeited if the holder’s employment with the Advisor terminates for any reason. During the three months ended March 31, 2023, no Restricted Shares were forfeited. Upon a change in control of the Company, 50% of the unvested Restricted Shares will immediately vest and the remaining unvested Restricted Shares will be forfeited.
The following table reflects the activity of Restricted Shares outstanding for the periods presented:
 
Number of Restricted SharesWeighted-Average Issue Price
Unvested, December 31, 2022359,840 $17.16 
Vested
— — 
Granted
— — 
Forfeitures
— — 
Unvested, March 31, 2023359,840 17.16 
 
Number of Restricted SharesWeighted-Average Issue Price
Unvested, December 31, 2021305,107 $18.81 
Vested
— — 
Granted
— — 
Forfeitures
(150)19.41 
Unvested, March 31, 2022304,957 18.81 

Compensation Expense — RSP
Compensation expense for awards granted pursuant to the RSP was $0.7 million and $0.5 million for the three months ended March 31, 2023 and 2022, respectively. Compensation expense is recorded as equity-based compensation in the accompanying consolidated statements of operations.
As of March 31, 2023, the Company had $0.3 million of unrecognized compensation cost related to RSUs granted under the RSP, which is expected to be recognized over a weighted-average period of 1.7 years. As of March 31, 2023, the Company had $4.6 million of unrecognized compensation cost related to Restricted Shares granted under the RSP, which is expected to be recognized over a period of 3.1 years.
Director Compensation
The Company pays independent director compensation as follows: (i) the annual retainer payable to all independent directors is $100,000 per year, (ii) the annual retainer for the non-executive chair is $105,000, (iii) the annual retainer for independent directors serving on the audit committee, compensation committee or nominating and corporate governance committee is $30,000. All annual retainers are payable 50% in the form of cash and 50% in the form of RSUs which vest over a three-year period. In addition, the directors have the option to elect to receive the cash component in the form of RSUs which would vest over a three-year period.
Multi-Year Outperformance Agreements
2021 OPP
On May 3, 2021, the Company’s independent directors, acting as a group, authorized an award of LTIP Units under the 2021 OPP. On June 3, 2021, the Company, the OP and the Advisor entered into the 2021 OPP.
31
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Based on a maximum award value of $50.0 million and $20.00 (the “2021 Initial Share Price”), the closing price of Common Stock on June 2, 2021, the Advisor was granted a total of 2,500,000 LTIP Units pursuant to the 2021 OPP. These LTIP Units may be earned and become vested based on the Company’s total shareholder return (“TSR”), including both share price appreciation and reinvestment of Common Stock dividends, compared to the 2021 Initial Share Price over a performance period commencing on June 3, 2021 and ending on the earliest of (i) June 3, 2024, (ii) the effective date of any Change of Control (as defined in the Advisor Plan) and (iii) the effective date of any termination of the Advisor’s service as the Company’s advisor.
Under current accounting rules, the total fair value of the LTIP Units granted under the 2021 OPP of $27.7 million was fixed as of June 3, 2021 and will not be remeasured in subsequent periods unless the 2021 OPP is amended (see Note 2 — Summary of Significant Accounting Policies for a description of accounting rules related to non-employee equity awards). The fair value of the LTIP Units that were granted is being recorded evenly over the requisite service period which is approximately 3.1 years from May 3, 2021, the date that the Company’s independent directors approved the award of LTIP Units under the 2021 OPP.
Compensation Expense - 2021 OPP
During the three months ended March 31, 2023 and 2022, the Company recorded total compensation expense related to the LTIP Units of $2.2 million.
LTIP Units/Distributions/Redemption
The rights of the Advisor as the holder of the LTIP Units are governed by the terms of the LTIP Units set forth in the agreement of limited partnership of the OP. Holders of LTIP Units are entitled to distributions on the LTIP Units equal to 10% of the distributions made per OP Unit (other than distributions of sale proceeds) until the LTIP Units are earned. Distributions paid on an OP Unit are equal to dividends paid on a share of Common Stock. Distributions paid on LTIP Units are not subject to forfeiture, even if the LTIP Units are ultimately forfeited. The Advisor is entitled to a priority catch-up distribution on each earned LTIP Unit equal to 90% of the aggregate distributions paid on OP Units during the applicable performance period. Any LTIP Units that are earned become entitled to receive the same distributions paid on the OP Units. If and when the Advisor’s capital account with respect to an earned LTIP Unit is equal to the capital account balance of an OP Unit, the Advisor, as the holder of the earned LTIP Unit, in its sole discretion, is entitled to convert the LTIP Unit into an OP Unit, which may in turn be redeemed on a one-for-one basis for, at the Company’s election, a share of Common Stock or the cash equivalent thereof.
In total, the Company paid $0.1 million and $0.1 million of distributions related to LTIP Units during the three months ended March 31, 2023 and 2022, respectively, which is included in accumulated deficit in the consolidated statements of changes in equity.
Performance Measures
With respect to one-half of the LTIP Units granted under the 2021 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the Company’s achievement of absolute TSR levels as shown in the table below.
Number of LTIP Units Earned
Performance Level (% of LTIP Units Earned)   Absolute TSR2021 OPP
Below Threshold 0 % Less than 24 %0 
Threshold25 %24 %312,500 
Target 50 %30 %625,000 
Maximum 100 %36 %or higher1,250,000 
If the Company’s absolute TSR is more than 24% but less than 30%, or more than 30% but less than 36%, the number of LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively.
With respect to the remaining one-half of the LTIP Units granted under the 2021 OPP, the number of LTIP Units that become earned (if any) will be determined as of the last day of the performance period based on the difference (expressed in terms of basis points, whether positive or negative, as shown in the table below) between the Company’s absolute TSR on the last day of the performance period relative to the average TSR of a peer group consisting of Lexington Realty Trust, Office Properties Income Trust and W.P. Carey, Inc. as of the last day of the performance period.
32
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
Number of LTIP Units Earned
Performance Level (% of LTIP Units Earned)   Relative TSR Excess2021 OPP
Below Threshold 0 % Less than -600 basis points0 
Threshold25 %-600 basis points312,500 
Target 50 %0 basis points625,000 
Maximum 100 %600 basis points1,250,000 
If the relative TSR excess is more than -600 basis points but less than zero basis points, or more than zero basis points but less than +600 basis points, the number of LTIP Units that become earned is determined using linear interpolation as between those tiers, respectively.
Other Terms
Under the 2021 OPP, in the case of a Change of Control or a termination of the Advisor for any reason, the number of LTIP Units that become earned at the end of the performance period is calculated based on actual performance through the last trading day prior to the effective date of the Change of Control or termination (as applicable), with the hurdles for calculating absolute TSR prorated to reflect a performance period of less than three years but without prorating the number of LTIP Units that may become earned to reflect the shortened performance period.
Pursuant to the terms of the Advisor Plan, the LTIP Units awarded under the 2021 OPP will be administered by the Company’s board or a committee thereof, defined as the “Committee” in the Advisor Plan. Promptly following the performance period, the Committee will determine the number of LTIP Units earned (if any), as calculated by an independent consultant engaged by the Committee and as approved by the Committee in its reasonable and good faith discretion. The Committee also must approve the transfer of any LTIP Units or any OP Units into which LTIP Units may be converted in accordance with the terms of the agreement of limited partnership of the OP. Any LTIP Units that are not earned will automatically be forfeited effective as of the end of the performance period and neither the Company nor the OP will be required to pay any future consideration in respect thereof.
Other Equity-Based Compensation
The Company may issue Common Stock in lieu of cash to pay fees earned by the Company’s directors at each director’s election. If the Company did so, there would be no restrictions on the shares issued since these payments in lieu of cash relate to fees earned for services performed. There were no such shares of Common Stock issued in lieu of cash during the three months ended March 31, 2023 and 2022.
Note 14 — Earnings Per Share
The following is a summary of the basic and diluted net (loss) income per share computation for the periods presented:
Three Months Ended March 31,
(In thousands, except share and per share data)20232022
Net (loss) income attributable to common stockholders$(5,989)$5,483 
Adjustments to net (loss) income attributable to common stockholders for common share equivalents (239)(222)
Adjusted net (loss) income attributable to common stockholders$(6,228)$5,261 
Weighted average common shares outstanding — Basic and Diluted103,782,949 103,596,182 
Net (loss) income per share attributable to common stockholders — Basic and Diluted$(0.06)$0.05 
Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or
33
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2023
(Unaudited)
accumulated) and participation rights in undistributed earnings. The Company’s unvested Restricted Shares, unvested RSUs and unearned LTIP Units contain rights to receive distributions considered to be non-forfeitable, except in certain limited circumstances, and therefore the Company applies the two-class method of computing earnings per share. The calculation of earnings per share above excludes the distributions to the unvested Restricted Shares, unvested RSUs and unearned LTIP Units from the numerator.
Diluted net income per share assumes the conversion of all Common Stock share equivalents into an equivalent number of shares of Common Stock, unless the effect is anti-dilutive. The Company considers unvested Restricted Shares, unvested RSUs and unvested LTIP Units to be common share equivalents. The following table shows common share equivalents on a weighted average basis that were excluded from the calculation of diluted earnings per share for the three months ended March 31, 2023 and 2022:
Three Months Ended March 31,
20232022
Unvested RSUs (1)
47,011 43,883 
Unvested Restricted Shares (2)
359,840 305,105 
LTIP Units (3)
2,500,000 2,500,000 
Total common share equivalents excluded from EPS calculation2,906,851 2,848,988 
(1) There were 31,712 and 35,099 unvested RSUs issued and outstanding as of March 31, 2023 and 2022, respectively. See Note 13 — Equity-Based Compensation for additional information on the RSUs.
(2) There were 359,840 and 304,957 unvested Restricted Shares issued and outstanding as of March 31, 2023 and 2022, respectively. See Note 13 — Equity-Based Compensation for additional information on the Restricted Shares.
(3) There were 2,500,000 LTIP Units issued and outstanding under the 2021 OPP as of March 31, 2023 and 2022. See Note 13 — Equity-Based Compensation for additional information on the 2021 OPP.
Conditionally issuable shares relating to the 2021 OPP award would be included in the computation of fully diluted EPS (if dilutive) based on shares that would be issued as if the balance sheet date were the end of the measurement period. No LTIP Unit share equivalents were included in the computation for the three months ended March 31, 2023 and 2022.
Note 15 — Subsequent Events
The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have not been any events that have occurred that would require adjustments to, or disclosures in the consolidated financial statements, except as disclosed in the applicable footnotes and below.
Acquisitions and Dispositions
The Company did not acquire or dispose of any properties subsequent to March 31, 2023.
Mortgage Loan Repayment
On May 5, 2023 the Company repaid the mortgage loan that encumbered its five properties in Germany, which had a balance of €51.4 million ($56.0 million) as of March 31, 2023. The repayment was fully funded with additional borrowings in EUR under the Revolving Credit Facility and the five properties in Germany were added to the borrowing base of the Revolving Credit Facility. The interest rates on the mortgage loan that was repaid and the Revolving Credit Facility were 3.6% and 5.5% as of March 31, 2023, respectively. The loan balance was approximately $56.7 million using the exchange rate on the date of repayment.
34
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Global Net Lease, Inc. and the notes thereto. As used herein, the terms “Company,” “we,” “our” and “us” refer to Global Net Lease, Inc., a Maryland corporation, including, as required by context, Global Net Lease Operating Partnership, L.P. (the “OP”), a Delaware limited partnership, and its subsidiaries. We are externally managed by Global Net Lease Advisors, LLC (the “Advisor”), a Delaware limited liability company.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements, including statements regarding the intent, belief or current expectations of us, our Advisor and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements are set forth under “Risk Factors” and “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2022, this and our other Quarterly Reports on Form 10-Q and our other filings with the U.S Securities and Exchange Commission (“SEC”).
35
Overview
We are an externally managed real estate investment trust for United States (“U.S.”) federal income tax purposes (“REIT”) that focuses on acquiring and managing a globally diversified portfolio of strategically-located commercial real estate properties, which are leased primarily to “Investment Grade” (defined below) tenants. We invest in commercial properties, with an emphasis on sale-leaseback transactions and mission-critical, single tenant net-lease assets.
As of March 31, 2023, we owned 317 properties consisting of 39.6 million rentable square feet, which were 98.0% leased, with a weighted-average remaining lease term of 7.8 years. Based on the percentage of annualized rental income on a straight-line basis, as of March 31, 2023, 61% of our properties were located in the U.S. and Canada and 39% of our properties were located in Europe. In addition, as of March 31, 2023, our portfolio was comprised of 55% industrial/distribution properties, 40% office properties and 5% retail properties. These percentages are calculated using annualized straight-line rent converted from local currency into the U.S. Dollar (“USD”) as of March 31, 2023. The straight-line rent includes amounts for tenant concessions.
Substantially all of our business is conducted through the OP and its wholly-owned subsidiaries. Our Advisor manages our day-to-day business with the assistance of Global Net Lease Properties, LLC (the “Property Manager”). Our Advisor and Property Manager are under common control with AR Global Investments, LLC (“AR Global”) and these related parties receive compensation and fees for providing services to us. We also reimburse these entities for certain expenses they incur in providing these services to us.
Our portfolio is leased to primarily “Investment Grade” rated tenants in well established markets in the U.S. and Europe. A total of 59.6% of our rental income on an annualized straight-line basis for leases in place as of March 31, 2023 was derived from Investment Grade rated tenants, comprised of 33.2% leased to tenants with an actual investment grade rating and 26.4% leased to tenants with an implied investment grade rating. For our purposes, “Investment Grade” includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied investment grade may include actual ratings of the tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or tenants that are identified as investment grade by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring an entity’s probability of default. Ratings information is as of March 31, 2023.
Impacts of the COVID-19 Pandemic
The COVID-19 global pandemic has not had a significant impact on our business. For a further discussion of the risks and uncertainties associated with the impact of the COVID-19 pandemic on us, see Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022.
Significant Accounting Estimates and Critical Accounting Policies
For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our 2022 Annual Report on Form 10-K. Except for those required by new accounting pronouncements discussed in the section referenced below, there have been no material changes from these significant accounting estimates and critical accounting policies.
Recently Issued Accounting Pronouncements
See Note 2 — Summary of Significant Accounting Policies — Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.
36
Properties
We acquire and operate a diversified portfolio of commercial properties. All such properties may be acquired and operated by us alone or jointly with another party. The following table represents our portfolio of real estate properties as of March 31, 2023:
Portfolio
Acquisition Date
Country
Number of Properties
Square Feet (in thousands) (1)
Average Remaining Lease Term (2)
McDonald'sOct. 2012UK191.0
Wickes Building Supplies IMay 2013UK1308.8
Everything EverywhereJun. 2013UK1654.3
Thames WaterJul. 2013UK1792.4
Wickes Building Supplies IIJul. 2013UK1293.7
PPD Global LabsAug. 2013US1771.8
Northern RockSep. 2013UK2864.4
Wickes Building Supplies IIINov. 2013UK1285.7
XPO LogisticsNov. 2013US71050.7
WolverineDec. 2013US14694.8
RheinmetallJan. 2014GER13205.8
GE AviationJan. 2014US13692.8
Provident FinancialFeb. 2014UK111712.6
Crown CrestFeb. 2014UK180615.9
TraneFeb. 2014US1250.7
AvivaMar. 2014UK11326.2
DFS Trading IMar. 2014UK52407.0
GSA IMar. 2014US11350.0
National Oilwell Varco IMar. 2014US1240.3
GSA IIApr. 2014US2259.9
OBI DIYApr. 2014GER114411.1
DFS Trading IIApr. 2014UK2397.0
GSA IIIApr. 2014US2280.1
GSA IVMay 2014US1332.3
Indiana Department of RevenueMay 2014US1999.8
National Oilwell Varco IIMay 2014US1236.9
NissanMay 2014US14625.5
GSA VJun. 2014US1272.0
Lippert ComponentsJun. 2014US153914.9
Select Energy Services IJun. 2014US31363.6
Bell Supply Co IJun. 2014US6805.8
Axon Energy ProductsJun. 2014US2887.2
LhoistJun. 2014US1239.8
GE Oil & GasJun. 2014US2705.2
Select Energy Services IIJun. 2014US41433.6
Bell Supply Co IIJun. 2014US2195.8
Superior Energy ServicesJun. 2014US2421.0
Amcor PackagingJun. 2014UK72951.7
GSA VIJun. 2014US171.0
Nimble StorageJun. 2014US11650.0
FedEx -3-PackJul. 2014US33396.3
Sandoz, Inc.Jul. 2014US11543.3
WyndhamJul. 2014US1322.1
ValassisJul. 2014US11010.1
GSA VIIJul. 2014US1261.6
AT&T ServicesJul. 2014US14023.3
37
Portfolio
Acquisition Date
Country
Number of Properties
Square Feet (in thousands) (1)
Average Remaining Lease Term (2)
PNC - 2-PackJul. 2014US22106.3
FujitsuJul. 2014UK31637.0
Continental TireJul. 2014US1912.3
BP OilAug. 2014UK132.6
MalthurstAug. 2014UK2411.5
HBOSAug. 2014UK3362.3
Thermo FisherAug. 2014US11151.4
Black & DeckerAug. 2014US17110.2
CapgeminiAug. 2014UK1907.0
Merck & Co.Aug. 2014US11462.4
GSA VIIIAug. 2014US1241.4
Waste ManagementSep. 2014US1844.8
Intier Automotive InteriorsSep. 2014UK11531.1
HP Enterprise ServicesSep. 2014UK1993.0
FedEx IISep. 2014US1121.0
Shaw Aero Devices, Inc.Sep. 2014US11319.8
Dollar General - 39-Pack Sep. 2014US212005.0
FedEx IIISep. 2014US22214.9
Mallinkrodt PharmaceuticalsSep. 2014US1901.4
KukaSep. 2014US12001.3
CHE TrinitySep. 2014US23745.2
FedEx IVSep. 2014US22555.2
GE AviationSep. 2014US11020.0
DNV GLOct. 2014US1821.9
RexamOct. 2014GER11761.9
FedEx VOct. 2014US1761.3
OnguardOct. 2014US11207.8
Metro TonicOct. 2014GER16362.5
TokmanniNov. 2014FIN180110.4
Fife CouncilNov. 2014UK1370.9
GSA IXNov. 2014US1289.1
KPN BVNov. 2014NETH11333.8
Follett SchoolDec. 2014US14871.8
Quest Diagnostics Dec. 2014US12241.4
Diebold Dec. 2014US11580.0
Weatherford IntlDec. 2014US1202.6
AM Castle Dec. 2014US11286.6
FedEx VIDec. 2014US1286.4
Constellium Auto Dec. 2014US13216.7
C&J Energy II Mar. 2015US11257.6
Fedex VIIMar. 2015US1121.5
Fedex VIIIApr. 2015US1261.5
Crown Group IAug. 2015US22040.8
Crown Group IIAug. 2015US241112.4
Mapes & Sprowl Steel, Ltd.Sep. 2015US1616.8
JIT Steel ServicesSep. 2015US21276.8
Hannibal/Lex JV LLCSep. 2015US11096.5
FedEx GroundSep. 2015US1912.3
Office DepotSep. 2015NETH12065.9
FinnairSep. 2015FIN46568.0
Auchan Dec. 2016FR11529.9
38
Portfolio
Acquisition Date
Country
Number of Properties
Square Feet (in thousands) (1)
Average Remaining Lease Term (2)
Pole Emploi Dec. 2016FR1410.3
NCR Dundee Dec. 2016UK11323.6
FedEx Freight IDec. 2016US1690.4
DB Luxembourg Dec. 2016LUX11563.7
ING Amsterdam Dec. 2016NETH15094.2
Worldline Dec. 2016FR11110.8
Foster Wheeler Dec. 2016UK13661.3
ID Logistics I Dec. 2016GER13091.6
ID Logistics II Dec. 2016FR29641.7
Harper CollinsDec. 2016UK18732.4
DCNSDec. 2016FR1971.6
Cott Beverages IncFeb. 2017US11703.8
FedEx Ground - 2 PackMar. 2017US21623.5
Bridgestone TireSep. 2017US1484.3
GKN AerospaceOct. 2017US1983.8
Momentum Manufacturing Group-St. Johnsbury IOct. 2017US1879.6
Momentum Manufacturing Group-St. Johnsbury IIOct. 2017US1859.6
Momentum Manufacturing Group-St. Johnsbury IIIOct. 2017US1419.6
Tremec North AmericaNov. 2017US11274.5
CumminsDec. 2017US1592.2
GSA XDec. 2017US1266.8
Momentum Manufacturing GroupDec. 2017US1839.8
ChemoursFeb. 2018US13004.8
FCA USAMar. 2018US11284.9
Lee SteelMar. 2018US11145.5
LSI Steel - 3 PackMar. 2018US32184.6
Contractors Steel CompanyMay 2018US51,3925.2
FedEx Freight IIJun. 2018US1229.4
DuPont PioneerJun. 2018US12009.3
Rubbermaid - Akron OHJul. 2018US16695.8
NetScout - Allen TXAug. 2018US11457.4
Bush Industries - Jamestown NYSep. 2018US145615.5
FedEx - Greenville NCSep. 2018US1299.8
PenskeNov. 2018US16065.6
Momentum Manufacturing GroupNov. 2018US16515.7
LKQ Corp.Dec. 2018US1587.8
WalgreensDec. 2018US1862.7
Grupo AntolinDec. 2018US13609.6
VersaFlexDec. 2018US111315.8
CumminsMar. 2019US1375.7
Stanley SecurityMar. 2019US1805.3
Sierra NevadaApr. 2019US1606.0
EQTApr. 2019US11277.3
HanesApr. 2019US12765.5
Union PartnersMay 2019US23906.0
ComDocJun. 2019US11086.2
Metal TechnologiesJun. 2019US122811.2
Encompass HealthJun. 2019US119910.0
HeatcraftJun. 2019US12165.3
39
Portfolio
Acquisition Date
Country
Number of Properties
Square Feet (in thousands) (1)
Average Remaining Lease Term (2)
C.F. Sauer SLBAug. 2019US659816.3
SWECOSep. 2019US119112.2
Viavi SolutionsSep. 2019US21329.4
FaureciaDec. 2019US12786.0
PlasmaDec. 2019US91257.3
WhirlpoolDec. 2019US62,9248.8
FedExDec. 2019CN2206.2
Momentum Manufacturing GroupDec. 2019US111616.8
Viavi SolutionsJan. 2020US1469.4
CSTK Feb. 2020US1567.0
Metal TechnologiesFeb. 2020US13111.9
Whirlpool Feb. 2020IT2293.2
Fedex Mar. 2020CN12,19517.0
Klaussner Mar. 2020US41968.9
PlasmaMay 2020US6788.4
KlaussnerJun. 2020US126117.0
Momentum Manufacturing GroupJun. 2020US14817.3
Johnson ControlsSep. & Dec. 2020UK, SP & FR41569.5
Broadridge Financial SolutionsNov. 2020US41,2486.7
ZF Active SafetyDec. 2020US121610.6
FCA USADec. 2020US19977.3
Momentum Manufacturing GroupApr. 2021US19318.1
Cameron InternationalApr. 2021US1445.6
The McLaren GroupApr. 2021UK384118.1
Trafalgar CourtSep. 2021C.I. 11147.6
Pilot Point SteelOct. 2021US216613.6
Walmart Learning CenterOct. 2021US1905.5
PromessDec. 2021US36813.8
Thetford CorporationDec. 2021US & NETH448313.8
PFB CorporationDec. 2021CAN & US860418.8
Executive Mailing ServiceApr. 2022US117514.1
Caledonia HouseMay 2022UK16710.6
Momentum Manufacturing GroupJun. 2022US15819.3
Wallgreens Boots Alliance Inc.Jan. 2023UK832411.3
      Total31739,5517.8
________
(1)Total may not foot due to rounding.
(2)If the portfolio has multiple properties with varying lease expirations, average remaining lease term is calculated on a weighted-average basis. Weighted- average remaining lease term in years is calculated based on square feet as of March 31, 2023.

.
40

Leasing Activity
During the first quarter of 2023, we executed seven lease renewals with existing tenants, including the previously announced lease with Rheinmetall totaling approximately 0.7 million square feet and $6.8 million per year in net new straight-line rent ($39.6 million over the new weighted-average remaining lease term). The overall changes in rental rates per square foot were not significant.
Results of Operations
Comparison of the Three Months Ended March 31, 2023 and 2022
Net (loss) Income Attributable to Common Stockholders
Net loss attributable to common stockholders was $6.0 million for the three months ended March 31, 2023, as compared to a net income of $5.5 million for the three months ended March 31, 2022. The change in net (loss) income attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.
Revenue from Tenants
Revenue from tenants was $94.3 million and $97.1 million for the three months ended March 31, 2023 and 2022, respectively. In addition to base rent, our lease agreements generally require tenants to pay or reimburse us for all property operating expenses, which primarily reflect insurance costs and real estate taxes incurred by us and subsequently reimbursed by the tenant. However, some limited property operating expenses that are not the responsibility of the tenant are absorbed by us. The decrease in revenue from tenants was primarily driven by the year-over-year change in foreign exchange rates.
During the three months ended March 31, 2023 there were decreases of 9.4% in the average exchange rate for British Pounds Sterling (“GBP”) to USD and 4.4% in the Euro (“EUR”) to USD, when compared to the same period last year. On a constant currency basis, applying the average monthly currency rates from the first quarter of 2022, revenues for the first quarter of 2023 would have been up by $3.2 million to $97.5 million.
Property Operating Expenses
Property operating expenses were $8.1 million and $7.5 million for the three months ended March 31, 2023 and 2022, respectively. These costs primarily consist of property insurance and real estate taxes on our properties, most of which are generally reimbursable by our tenants. The main exceptions are properties leased to the Government Services Administration, which do not require the tenant to reimburse the costs. The increase was primarily due to the timing of our reimbursable costs, partially offset by decreases during the three months ended March 31, 2023 of 9.4% in the average exchange rate for GBP to USD and 4.4% in the EUR to USD, when compared to the same period last year.
Operating Fees to Related Parties
Operating fees paid to related parties were $10.1 million for the three months ended March 31, 2023 and 2022. Operating fees to related parties consist of compensation to the Advisor for asset management services, as well as property management fees paid to the Property Manager. The Advisor did not earn any Incentive Compensation during the quarters ended March 31, 2023 or 2022 and the Variable Base Management Fee did not materially change in the three months ended March 31, 2023 as compared to the three months ended March 31, 2022. Operating fees to related parties are not impacted by changes in currency exchange rates.
Our Property Manager is paid fees to manage our properties, which may include market-based leasing commissions. Property management fees are calculated as a percentage of our gross revenues generated by the applicable properties. For additional information on our property management agreement with the Property Manager, see Note 11 — Related Party Transactions to our consolidated financial statements included in this Quarterly Report on Form 10-Q. During the three months ended March 31, 2023 and 2022, property management fees were $1.7 million and $1.8 million, respectively. Included in property management fees for the three months ended March 31, 2023 and 2022 are lease commission expenses of $0.2 million and $86,133, respectively, which are being amortized over the terms of the related leases. For additional information on leasing commissions earned by our Property Manager, see Note 11 — Related Party Transactions to our consolidated financial statements in this Quarterly Report on Form 10-Q.
Impairment Charges
We did not record any impairment charges in the first quarter of 2023. In the first quarter of 2022, we recorded an impairment charge of $0.2 million based on the estimated selling price of a property, less estimated transaction costs.
41
Acquisition, Transaction and Other Costs
We recognized $0.1 million and $8,000 of acquisition, transaction and other costs during the three months ended March 31, 2023 and 2022, respectively.
General and Administrative Expenses
General and administrative expenses were $5.7 million and $3.9 million for the three months ended March 31, 2023 and 2022, respectively, primarily consisting of professional fees including audit and taxation services, board member compensation and directors’ and officers’ liability insurance and including expense reimbursements of approximately $0.3 million to the Advisor under the Advisory Agreement for each of the three months ended March 31, 2023 and 2022, respectively. The overall increase in general and administrative expenses was primarily a result of higher legal and other costs in the quarter ended March 31, 2023 of approximately $1.7 million, which were attributable to the proxy contest and related litigation with Blackwells described herein. There were no similar costs in the quarter ended March 31, 2022. We anticipate our fees for legal and other costs to continue at a rate higher than our historical expenses due to, among other things, the proxy contest and related litigation for the foreseeable future in 2023.
Equity-Based Compensation
During the three months ended March 31, 2023 and 2022, we recognized equity-based compensation expense of $2.9 million and $2.7 million, respectively. Equity-based compensation in both periods consists of (i) expense related to our multi-year outperformance agreement entered into with the Advisor in June 2021 (the “2021 OPP”); (ii) amortization of restricted shares of Common Stock (“Restricted Shares”) granted to employees of the Advisor or its affiliates who are involved in providing services to us and; (iii) amortization of restricted stock units in respect of shares of Common Stock (“RSUs”) granted to our independent directors. The increase in equity-based compensation expense was due to the impact of additional amortization expense recorded for grants of Restricted Shares and RSUs that occurred during the second quarter of 2022. For additional information, see Note 13 — Equity-Based Compensation to our consolidated financial statements in this Quarterly Report on Form 10-Q.
Depreciation and Amortization
Depreciation and amortization expense was $37.0 million and $39.9 million for the three months ended March 31, 2023 and 2022, respectively. The decrease in the first quarter of 2023 as compared to the first quarter of 2022 was due to decreases during the three months ended March 31, 2023 of 9.4% in the average exchange rate for GBP to USD and 4.4% in the EUR to USD, when compared to the same period last year, partially offset by additional depreciation and amortization expense recorded as a result of the impact of our property acquisitions made in the first quarter of 2023 and the full-quarter impact of property acquisitions made during the year ended December 31, 2022.
Interest Expense
Interest expense was $27.0 million and $24.1 million for the three months ended March 31, 2023 and 2022, respectively. The net amount of our total gross debt outstanding was $2.5 billion as of March 31, 2023 and 2022, however, the weighted-average effective interest rate of our total debt increased from 3.4% as of March 31, 2022 to 4.4% as of March 31, 2023.
The increase in interest expense was partially offset by decreases during the three months ended March 31, 2023 of 9.4% in the average exchange rate for GBP to USD and 4.4% in the average exchange rate for EUR to USD, when compared to the same period last year. As of March 31, 2023, approximately 22.0% of our total debt outstanding was denominated in EUR, 18.0% of our total debt outstanding was denominated in GBP and 1.0% was denominated in Canadian Dollars (“CAD”). As of March 31, 2022, approximately 26% of our total debt outstanding was denominated in EUR 17% of our total debt outstanding was denominated in GBP and 1.0% was denominated in CAD.
We view a combination of secured and unsecured financing as an efficient and accretive means to acquire properties and manage working capital. As of March 31, 2023, approximately 50% of our total debt outstanding was secured and 50% was unsecured, the latter including amounts outstanding under our Credit Facility and Senior Notes. The availability of borrowings under the Revolving Credit Facility is based on the value of a pool of eligible unencumbered real estate assets owned by us and compliance with various ratios related to those assets. Our interest expense in future periods will vary based on interest rates, the level of future borrowings, which will depend on refinancing needs and acquisition activity, and changes in currency exchange rates.
Foreign Currency and Interest Rate Impact on Operations
The loss of $1.7 million on derivative instruments for the three months ended March 31, 2023 and the gain of $4.6 million on derivative instruments for the three months ended March 31, 2022, reflect the marked-to-market impact from foreign currency and interest rate derivative instruments used to hedge the investment portfolio from currency and interest rate movements, and was mainly driven by exchange rate changes in the GBP and EUR compared to the USD. For the three months ended March 31, 2023, the loss on derivative instruments consisted of unrealized losses of $2.6 million and realized gains of $0.9 million. For the three months ended March 31, 2022, the gain on derivative instruments consisted of unrealized gains of
42
$4.2 million and realized gains of $0.4 million. The overall gains (or losses) on derivative instruments directly impact our results of operations since they are recorded on the gain on derivative instruments line item in our consolidated results of operations. However, only the realized gains are included in AFFO (as defined below).
As a result of our foreign investments in Europe, and, to a lesser extent, our investments in Canada, we are subject to risk from the effects of exchange rate movements in the EUR, GBP and, to a lesser extent, CAD against the USD, which may affect costs and cash flows in our functional currency, the USD. We generally manage foreign currency exchange rate movements by matching our debt service obligation to the lender and the tenant’s rental obligation to us in the same currency. This reduces our overall exposure to currency fluctuations. In addition, we may use currency hedging to further reduce the exposure to our net cash flow. We are generally a net receiver of these currencies (we receive more cash than we pay out), and therefore our results of operations of our foreign properties benefit from a weaker USD, and are adversely affected by a stronger USD, relative to the foreign currency. Conversely, realized gains from derivatives would generally be lower from a weaker USD, and higher from a stronger USD. We maintain our hedging approach by consistently entering into new foreign exchange forwards for three year periods. Interest rate increases could increase the interest expense on our floating rate debt or any new debt and we are constantly evaluating the use of hedging strategies to mitigate this risk.
See Note 8 — Derivatives and Hedging Activities to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional information on our hedging program.
Income Tax Expense
Although as a REIT we generally do not pay U.S. federal income taxes on the amount of REIT taxable income that is distributed to shareholders, we recognize income tax (expense) benefit domestically for state taxes and local income taxes incurred, if any, and also in foreign jurisdictions in which we own properties. In addition, we perform an analysis of potential deferred tax or future tax benefit and expense as a result of book and tax differences and timing differences in taxes across jurisdictions. Our current income tax expense fluctuates from period to period based primarily on the timing of those taxes. Income tax expense was $2.7 million and $3.1 million for the three months ended March 31, 2023 and 2022, respectively.
Cash Flows from Operating Activities
During the three months ended March 31, 2023, net cash provided by operating activities was $63.0 million. The level of cash flows provided by operating activities is driven by, among other things, rental income received, operating fees paid to related parties for asset and property management services and interest payments on outstanding borrowings. Cash flows provided by operating activities during the three months ended March 31, 2023 reflect net loss of $0.9 million, adjusted for non-cash items of $44.4 million (primarily depreciation, amortization of intangibles, amortization of deferred financing costs, amortization of mortgage discounts, amortization of above- and below-market lease assets and liabilities, amortization of right of use assets, amortization of lease incentives and commissions, bad debt expense, unbilled straight-line rent (including the effect of adjustments due to rent deferrals), equity-based compensation and unrealized gains on foreign currency transactions, derivatives and other). In addition, operating cash flow was impacted by lease incentive and commission payments of $1.6 million and an increase of $21.1 million in working capital items due to a decrease in prepaid expenses and other assets of $8.8 million, an increase in accounts payable and accrued expenses of $2.9 million and an increase in prepaid rent of $9.4 million.

During the three months ended March 31, 2022, net cash provided by operating activities was $61.8 million. Cash flows provided by operating activities during the three months ended March 31, 2022 reflect net income of $10.5 million, adjusted for non-cash items of $39.2 million (primarily depreciation, amortization of intangibles, amortization of deferred financing costs, amortization of mortgage discounts, amortization of above- and below-market lease assets and liabilities, amortization of right of use assets, amortization of lease incentives and commissions, unbilled straight-line rent (including the effect of adjustments due to rent deferrals), equity-based compensation, unrealized gains on foreign currency transactions, derivatives and other, and impairments). In addition, operating cash flow was impacted by the receipt of a $9.0 million termination fee from a tenant, an increase of $5.4 million in working capital items and lease incentive and commission payments of $2.3 million.
Cash Flows from Investing Activities
Net cash used in investing activities during the three months ended March 31, 2023 of $88.8 million consisted of property acquisitions of $81.4 million and capital expenditures of $7.4 million.
Net cash used in investing activities during the three months ended March 31, 2022 of $1.8 million was due to capital expenditures.
Cash Flows from Financing Activities
Net cash provided by financing activities of $39.5 million during the three months ended March 31, 2023 was a result of net proceeds from borrowings under our Revolving Credit Facility of $91.0 million, partially offset by net payments of mortgage notes payable of $4.6 million, dividends paid to common stockholders of $41.7 million, dividends paid to holders of our 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”) of $3.1 million, dividends paid to holders of our 6.875% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series B Preferred Stock”) of $2.0 million and distributions to non-controlling interest holders of $0.1 million.
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Net cash used in financing activities of $23.4 million during the three months ended March 31, 2022 was a result of net payments of mortgage notes payable of $14.1 million, dividends paid to common stockholders of $41.6 million, dividends paid to holders of our Series A Preferred Stock, of $3.1 million, dividends paid to holders of our Series B Preferred Stock, of $1.9 million and distributions to non-controlling interest holders of $0.1 million. These cash outflows were partially offset by net proceeds from borrowings under our Revolving Credit Facility of $35.0 million and net proceeds from the issuance of Series B Preferred Stock of $2.4 million.
Liquidity and Capital Resources
Our principal future needs for cash and cash equivalents include the purchase of additional properties or other investments, payment of related acquisition costs, improvement costs, operating and administrative expenses, continuing debt service obligations and dividends to holders of our Common Stock, Series A Preferred Stock and Series B Preferred Stock, as well as to any future class or series of preferred stock we may issue. As of March 31, 2023 and December 31, 2022, we had cash and cash equivalents of $119.2 million and $103.3 million, respectively. See discussion above for how our cash flows from various sources impacted our cash. We are required to maintain unrestricted cash and cash equivalents (or amounts available for future borrowings under credit facilities, such as the Credit Facility) in an amount sufficient to meet our actual and contingent liabilities under a limited unsecured corporate guaranty by us of £20.0 million (approximately $24.7 million as of March 31, 2023) of the obligations under a mortgage loan secured by 41 of the properties located in the United Kingdom.
Management expects that cash generated from operations (see Consolidated Cash Flow Statements in our consolidated financial statements included in this Quarterly Report on Form 10-Q) supplemented by our existing cash will be sufficient to fund, the payment of quarterly dividends to our common stockholders and holders of our Series A Preferred Stock and Series B Preferred Stock, as well as anticipated capital expenditures. During the three months ended March 31, 2023, cash used to pay 100% of our dividends was generated from cash flows provided by operations.
Our other sources of capital, which we have used and may use in the future, include proceeds received from our Revolving Credit Facility, proceeds from secured or unsecured financings (which may include note issuances), proceeds from our offerings of equity securities (including Common Stock and preferred stock), proceeds from any future sales of properties and undistributed funds from operations, if any.
Acquisitions and Dispositions
We are in the business of acquiring real estate properties and leasing the properties to tenants. Generally, we fund our acquisitions through a combination of cash and cash equivalents, proceeds from offerings of equity securities (including Common Stock and preferred stock), borrowings under our Revolving Credit Facility and proceeds from mortgage or other debt secured by the acquired or other assets at the time of acquisition or at some later point. In addition, to the extent we dispose of properties, we have used and may continue to use the net proceeds from the dispositions (after repayment of any mortgage debt, if any) for future acquisitions or other general corporate purposes.
Acquisitions and Dispositions —Three Months Ended March 31, 2023
During the three months ended March 31, 2023 we acquired eight properties for $81.4 million, including capitalized acquisition costs. During the three months ended March 31, 2023 we did not sell any properties.
Acquisitions and Dispositions Subsequent to March 31, 2023 and Pending Transactions
We did not acquire or dispose of any properties subsequent to March 31, 2023.
We have signed one non-binding letter of intent (“LOI”) to dispose of one property for sale price of $50.0 million. The LOI is subject to conditions and there can be no assurance we will be able to complete this disposition on its contemplated terms, or at all.
Equity Offerings
Common Stock
We have an “at the market” equity offering program (the “Common Stock ATM Program”) pursuant to which we may sell shares of Common Stock, from time to time through our sales agents. In November 2022, we filed a new shelf registration statement and prospectus supplement covering the Common Stock ATM Program having an aggregate offering amount of up to $285.0 million, prior to the expiration of our previous registration statement, which had an aggregate offering amount of up to $500.0 million ($285.0 million was sold under our previous registration statement). During the three months ended March 31, 2023, we did not sell any shares of Common Stock through the Common Stock ATM Program.
Preferred Stock
We have an “at the market” equity offering program for our Series B Preferred Stock (the “Series B Preferred Stock ATM Program”) pursuant to which we may sell shares of Series B Preferred Stock, from time to time through our sales agents. In November 2022, we filed a new shelf registration statement and prospectus supplement covering the Series B Preferred Stock
44
ATM Program having an aggregate offering amount of up to $170.0 million, prior to the expiration of our previous registration statement, which had an aggregate offering amount of up to $200.0 million.    
During the three months ended March 31, 2023, we did not sell any shares of Series B Preferred Stock through the Series B Preferred Stock ATM Program.
The timing differences between when we raise equity proceeds or receive proceeds from dispositions and when we invest those proceeds in acquisitions or other investments that increase our operating cash flows have affected, and may continue to affect, our results of operations.
Borrowings
As of March 31, 2023 and December 31, 2022, we had total debt outstanding of $2.5 billion and $2.4 billion, respectively, bearing interest at a weighted-average interest rate per annum equal to 4.4% and 4.0%, respectively.
As of March 31, 2023, 67.0% of our total debt outstanding either bore interest at fixed rates, or was swapped to a fixed rate, which bore interest at a weighted average interest rate of 3.9% per annum. As of March 31, 2023, 33.0% of our total debt outstanding was variable-rate debt, which bore interest at a weighted average interest rate of 5.3% per annum. The total gross carrying value of unencumbered assets as of March 31, 2023 was $2.2 billion, of which approximately $1.3 billion was included in the unencumbered asset pool comprising the borrowing base under the Revolving Credit Facility and therefore is not currently available to serve as collateral for future borrowings. We do not have hedging in place for the non-U.S. portion of the Revolving Credit Facility. We may add certain of these unencumbered assets to the borrowing base under the Revolving Credit Facility to increase the amount available for future borrowings thereunder.
Our debt leverage ratio was 58.3% and 56.6% (total debt as a percentage of total purchase price of real estate investments, based on the exchange rate at the time of purchase) as of March 31, 2023 and December 31, 2022, respectively. The increase was primarily due to additional borrowings under the Revolving Credit Facility in the quarter ended March 31, 2023 (see Credit Facility below for details). See Note 7 — Fair Value of Financial Instruments to our consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of fair value of such debt as of March 31, 2023. As of March 31, 2023, the weighted-average maturity of our indebtedness was 3.7 years. We believe we have the ability to service our debt obligations as they come due.
Senior Notes
On December 16, 2020, we, together with the OP, issued $500.0 million aggregate principal amount of 3.75% Senior Notes due 2027 (the “Senior Notes”). As of March 31, 2023, and December 31, 2022, the carrying amount of the outstanding Senior Notes on our balance sheets totaled $493.5 million and $493.1 million, respectively, which is net of $6.5 million and $6.9 million of deferred financing costs, respectively. The Senior Notes require payment of interest-only with the principal due to maturity. See Note 6 — Senior Notes, Net to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion on the Senior Notes and related covenants.
Mortgage Notes Payable
As of March 31, 2023, we had secured mortgage notes payable of $1.2 billion, net of mortgage discounts and deferred financing costs. Repayments of principal under the mortgage loan secured by all of our properties located in the United Kingdom (the “United Kingdom Properties - Bulk Loan”) began in October 2020. All of our other mortgage loans require payment of interest-only with the principal due at maturity. During the first quarter of 2023 we made the scheduled principal payment on the United Kingdom Properties - Bulk Loan of $4.6 million with cash on hand.
Total principal of $250.1 million is due on our mortgages during 2023, of which $56.0 million is due during the second quarter of 2023 and $194.0 million is due during the third quarter of 2023. This indebtedness maturing in calendar year 2023 bears interest at a weighted rate of 3.3% per annum. Please see below for a subsequent event update on these maturities:
•On May 5, 2023 we repaid the mortgage loan that encumbered our five properties in Germany, which had a balance of €51.4 million ($56.0 million) as of March 31, 2023. The repayment was fully funded with additional borrowings in EUR under the Revolving Credit Facility and the five properties in Germany were added to the borrowing base of the Revolving Credit Facility. The interest rates on the mortgage loan that was repaid and the Revolving Credit Facility were 3.6% and 5.5% as of March 31, 2023, respectively. The loan balance was approximately $56.7 million using the exchange rate on the date of repayment.
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•In April 2023, we made our scheduled principal repayment of £3.8 million ($4.7 million using the exchange rate on the date of repayment) on its United Kingdom Properties - Bulk Loan, which reduced the balance to approximately £153.1 million (approximately $191.4 million as of the end of April 2023) after the payment. We expect to repay the entire remaining principal amount of the United Kingdom Properties - Bulk Loan in May 2023, after the filing of this Quarterly Report on Form 10-Q. This mortgage loan encumbers 41 of our properties in the U.K. and had a balance of £156.9 million ($194.0 million) as of March 31, 2023. We intend to fund the repayment with additional borrowings in GBP under the Revolving Credit Facility and the 41 properties in the U.K. are expected to be added to the borrowing base of the Revolving Credit Facility. The interest rates on the mortgage loan that will be repaid and the Revolving Credit Facility were 3.2% and 5.5% as of March 31, 2023, respectively.

Credit Facility
As of March 31, 2023 and December 31, 2022, outstanding borrowings under our Revolving Credit Facility were $767.9 million and $670.0 million, respectively. The additional borrowings were primarily used for acquisitions in the first quarter of 2023, with the remainder used for general corporate purposes. As of March 31, 2023, approximately $65.2 million was available for future borrowings under the Revolving Credit Facility.
On April 8, 2022, we amended and restated the Credit Facility, among other things, converting amounts outstanding under the Term Loan into amounts drawn under the Revolving Credit Facility which, following the amendment, now represents all amounts outstanding under the Credit Facility. In addition to converting the Term Loan, the aggregate total commitments under the Credit Facility were increased from $1.17 billion to $1.45 billion, with a $50.0 million sublimit for letters of credit, a $50.0 million sublimit for swing loans and $100.0 million of which can only be used for U.S. dollar denominated loans. The Credit Facility includes an uncommitted “accordion feature” that, so long as no default or event of default has occurred and is continuing, gives us the option to increase the commitments under the Credit Facility, allocated to either or both the Revolving Credit Facility or a new term loan facility, by up to an additional $500.0 million, subject to obtaining commitments from new lenders or additional commitments from participating lenders and certain customary conditions. We incurred approximately $10.1 million of deferred financing costs during the second quarter of 2022 related to the amendment and restatement. Also, on July 26, 2022, we further amended the Credit Facility to, among other things, increase the maximum aggregate asset value attributable to unencumbered pool assets located in approved foreign countries. The amendment increases our flexibility to add properties to the pool of unencumbered assets which impacts the amount available for draw under the facility.
The Credit Facility is supported by a pool of eligible unencumbered properties that are owned by the subsidiaries of the OP that serve as guarantors. The availability of borrowings under the Revolving Credit Facility continues to be based on the value of a pool of eligible unencumbered real estate assets owned by us (see details below) and compliance with various ratios related to those assets, and the amendment and restatement of the Credit Facility also included amendments to provisions governing the calculation of the value of the borrowing base.
The Credit Facility requires payments of interest only prior to maturity. Borrowings under the Credit Facility bear interest at a variable rate per annum based on an applicable margin that varies based on the ratio of consolidated total indebtedness to consolidated total asset value of us and our subsidiaries plus either (i) the Base Rate (as defined in the Credit Facility) or (ii) the applicable Benchmark Rate (as defined in the Credit Facility) for the currency being borrowed. Following the amendment and restatement of the Credit Facility, the applicable interest rate margin is based on a range from 0.30% to 0.90% per annum with respect to Base Rate borrowings under the Revolving Credit Facility and 1.30% to 1.90% per annum with respect to Benchmark Rate borrowings under the Revolving Credit Facility. These spreads reflect a reduction from the previous spreads. For Benchmark Rate Loans denominated in Dollars that bear interest calculated by reference to Term SOFR, there is an additional spread adjustment depending on the length of the interest period. In addition, (i) if we achieve an investment grade credit rating from at least two rating agencies, the OP can elect for the spread to be based on our credit rating, and (ii) the “floor” on the applicable Benchmark is 0%. As of March 31, 2023, the Credit Facility had a weighted-average effective interest rate of 5.5% after giving effect to interest rate swaps in place.
Through March 31, 2022, prior to the amendment and restatement of Credit Facility, the Credit Facility consisted of two components, a Revolving Credit Facility and a Term Loan, both of which required payment of interest-only. The Revolving Credit Facility was scheduled to mature on August 1, 2023, and the Term Loan was scheduled to mature on August 1, 2024.
Following the amendment and restatement, the Credit Facility now matures on October 8, 2026, subject to our option, subject to customary conditions, to extend the maturity date by up to two additional six-month terms. Borrowings under the Credit Facility may be prepaid at any time, in whole or in part, without premium or penalty, subject to customary breakage costs associated with borrowings for the applicable Benchmark Rate.
Our Credit Facility requires us through the OP to pay an unused fee per annum of 0.25% of the unused balance of the Revolving Credit Facility if the unused balance exceeds or is equal to 50% of the total commitment or a fee per annum of 0.15% of the unused balance of the Revolving Credit Facility if the unused balance is less than 50% of the total commitment. From and after the time we obtain an investment grade credit rating, the unused fee will be replaced with a facility fee based on the total commitment under the Revolving Credit Facility multiplied by 0.30%, decreasing as our credit rating increases.
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The availability of borrowings under the Revolving Credit Facility is based on the value of a pool of eligible unencumbered real estate assets owned by us and compliance with various ratios related to those assets. As noted above, we are required to maintain unrestricted cash and cash equivalents (or amounts available for future borrowings under credit facilities, such as the Credit Facility) in an amount sufficient to meet our actual and contingent liabilities under a limited unsecured corporate guaranty by us of £20.0 million (approximately $24.7 million as of March 31, 2023) of the obligations under a mortgage loan secured by 41 of the properties located in the United Kingdom. Also, we have a $7.4 million letter of credit held by lenders which were put in place to cure cash trap sweep events under one of our mortgages (see “— Covenants —Multi-Tenant Mortgage Loan III” section below for additional information on this letter of credit). These letters of credit reduce the availability for future borrowings under the Revolving Credit Facility.
Any future borrowings may, at our option be denominated in USD, EUR, CAD, GBP or Swiss Francs. Amounts borrowed may not, however, be converted to, or repaid in, another currency once borrowed.
Covenants
As of March 31, 2023, we were in compliance with the covenants under the Indenture governing the Senior Notes and the Credit Facility (see Note 5 — Revolving Credit Facility and Term Loan, Net and Note 6 — Senior Notes, Net to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion on the Credit Facility and Senior Notes and the related covenants).
Our mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of March 31, 2023, we were in compliance with all of the financial covenants under our mortgage notes payable agreements.
Multi-Tenant Mortgage Loan III
During the three months ended December 31, 2020, a tenant failed to renew its lease triggering a cash sweep event under one of our mortgage loans secured by seven of our properties with a balance of $98.5 million as of March 31, 2023. The event triggering the cash sweep was not, however, an event of default. During the first quarter of 2021, we cured the cash sweep event through one of the available options under the loan by putting a $3.2 million letter of credit in place (subject to future increase under the terms of the loan agreement, to a maximum amount of $7.4 million). During the third quarter of 2021, the amount of the letter of credit was increased by an additional $4.2 million, resulting in the lender holding the $7.4 million maximum amount in respect to this obligation as of September 30, 2021. This $7.4 million letter of credit is being held by the lender until such time we are able to find a suitable replacement tenant and it reduces the availability for future borrowings under the Revolving Credit Facility.
The borrower entities under the same mortgage loan identified, based upon a review conducted during the three months ended June 30, 2022, that during the three months ended March 31, 2022, the borrowers failed to maintain the debt service coverage ratio required by the loan agreement for such period (a “DSCR Sweep Trigger”). Such failure, upon delivery of notice of the same by the lender, triggered a separate cash sweep event under the loan. A DSCR Sweep Trigger is not an event of default and instead triggers a cash sweep. The lender notified the borrower entities of the occurrence of a DSCR Sweep Trigger under the loan for the three-months ended March 31, 2022 and the continuance of such DSCR Sweep Trigger for the three months ended June 30, 2022. Per the loan agreement we can cure the cash sweep resulting from a DSCR Sweep Trigger by delivering a letter of credit in the face amount of the excess cash flow for the trailing three months immediately preceding the date of the DSCR Sweep Trigger. Such letter of credit is thereafter recalculated and increased (but never decreased) every three-month period thereafter until such time as the borrowers demonstrate compliance with the debt service coverage ratio required by the loan for a period of two consecutive calendar quarters. We cured the cash sweep resulting from the DSCR Sweep Trigger referenced above for the relevant periods by delivering a letter of credit to the lender in the face amount of approximately $0.9 million. The face value of such letter of credit was thereafter increased by $1.3 million to reflect the continuance of the DSCR Sweep Trigger for the three months ended September 30, 2022. The DSCR Sweep Trigger remained in place for the quarters ended December 31, 2022 and March 31, 2023 and we intend to cure the cash sweep that would otherwise result from such continuance by further increasing the letter of credit by an additional $1.2 million as required by the terms of the loan agreement. Such letter of credit is held by the lender, and we expect to maintain the effectiveness of the cash sweep cure by future increases to the face value of such letter of credit on a quarterly basis, in each case in accordance with the terms of the loan agreement, until such time as we restore compliance with the debt service coverage ratio required by the loan agreement for the requisite two-calendar-quarter time period. For so long as it remains outstanding, the face value of such letter of credit will represent a dollar-for-dollar reduction to availability under the Revolving Credit Facility for future borrowings.
Multi-Tenant Mortgage Loan IV
During the three months ended September 30, 2021, a tenant exercised its right to terminate its lease effective December 31, 2022. Notice of the termination triggered a lease sweep event, which began in the fourth quarter of 2021, under one of our mortgage loans secured by this property. This was not, however, an event of default. The mortgage loan had a balance of $97.5 million as of March 31, 2023 and it encumbers 16 properties, including this property. Pursuant to the terms of the loan agreement, the lender has swept all cash flow attributable to the lease that triggered the lease sweep event into a rollover reserve account not to exceed, an aggregate cap of $0.8 million, which has been met. The reserve is being held by the lender who is
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required to make the reserve funds available to us to fund re-tenanting expenses for the property. The lease sweep event will be cured under the loan agreement if and when we lease the space to a new tenant approved by the lender and, at such time, any amounts remaining in the rollover reserve account in respect of the lease sweep event will be released to us.
Non-GAAP Financial Measures
This section discusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”) and Adjusted Funds from Operations (“AFFO”). A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income, is provided below.
Use of Non-GAAP Measures
FFO, Core FFO, and AFFO should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP FFO, Core FFO and AFFO measures. Other REITs may not define FFO in accordance with the current NAREIT (as defined below) definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate Core FFO or AFFO differently than we do. Consequently, our presentation of FFO, Core FFO and AFFO may not be comparable to other similarly-titled measures presented by other REITs.
We consider FFO, Core FFO and AFFO useful indicators of our performance. Because FFO, Core FFO and AFFO calculations exclude such factors as depreciation and amortization of real estate assets and gain or loss from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO, Core FFO and AFFO presentations facilitate comparisons of operating performance between periods and between other REITs.
As a result, we believe that the use of FFO, Core FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our operating performance including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO, Core FFO and AFFO are not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Investors are cautioned that FFO, Core FFO and AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.
Constant currency results exclude any benefit or loss caused by foreign exchange fluctuations between foreign currencies and the United States dollar which would not have occurred if there had been a constant exchange rate. Revenue from tenants on a Constant Currency basis is calculated by applying the average monthly currency rates from prior comparable period to Revenues from tenants from the applicable period. We believe that this measure provides investors with information about revenue results and trends that eliminates currency volatility while increasing the comparability of our underlying results and trends.
Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations
Funds from Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, the National Association of Real Estate Investment Trusts (“NAREIT”), an industry trade group, has promulgated a measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gain and loss from the sale of certain real estate assets, gain and loss from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Our FFO calculation complies with NAREIT’s definition.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that
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the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and, when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Core Funds from Operations
In calculating Core FFO, we start with FFO, then we exclude certain non-core items such as acquisition, transaction and other costs, as well as certain other costs that are considered to be non-core, such as debt extinguishment costs, fire loss and other costs related to damages at our properties. The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of our core business plan to generate operational income and cash flows in order to make dividend payments to stockholders. In evaluating investments in real estate, we differentiate the costs to acquire the investment from the subsequent operations of the investment. We also add back non-cash write-offs of deferred financing costs and prepayment penalties incurred with the early extinguishment of debt which are included in net income but are considered financing cash flows when paid in the statement of cash flows. We consider these write-offs and prepayment penalties to be capital transactions and not indicative of operations. By excluding expensed acquisition, transaction and other costs as well as non-core costs, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties.
Adjusted Funds from Operations
In calculating AFFO, we start with Core FFO, then we exclude certain income or expense items from AFFO that we consider more reflective of investing activities, other non-cash income and expense items and the income and expense effects of other activities that are not a fundamental attribute of our business plan. These items include early extinguishment of debt and other items excluded in Core FFO as well as unrealized gain and loss, which may not ultimately be realized, such as gain or loss on derivative instruments, gain or loss on foreign currency transactions, and gain or loss on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market leases intangibles, amortization of deferred financing costs, straight-line rent and equity-based compensation from AFFO, we believe we provide useful information regarding income and expense items which have a direct impact on our ongoing operating performance. We also exclude revenue attributable to the reimbursement by third parties of financing costs that we originally incurred because these revenues are not, in our view, related to operating performance. We also include the realized gain or loss on foreign currency exchange contracts for AFFO as such items are part of our ongoing operations and affect our current operating performance.
In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income. All paid and accrued acquisition, transaction and other costs (including prepayment penalties for debt extinguishments) and certain other expenses, including general and administrative expenses incurred for our 2023 proxy contest and related Blackwells litigation (as described herein), negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will also have negative effects on returns to investors, but are not reflective of on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income. In addition, as discussed above, we view gain and loss from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management’s analysis of our operating performance. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gain or loss, we believe AFFO provides useful supplemental information. By providing AFFO, we believe we are presenting useful information that can be used to, among other things, assess our performance without the impact of transactions or other items that are not related to our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently. Furthermore, we believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. AFFO should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to make distributions.
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Three Months Ended March 31,
(In thousands)20232022
Net (loss) income attributable to common stockholders (in accordance with GAAP)$(5,989)$5,483 
Impairment charges
— 230 
Depreciation and amortization37,029 39,889 
Gain on dispositions of real estate investments— — 
FFO (as defined by NAREIT) attributable to common stockholders (1)
31,040 45,602 
Acquisition, transaction and other costs99 8 
Loss on extinguishment of debt
— — 
Core FFO attributable to common stockholders (1)
31,139 45,610 
Non-cash equity-based compensation
2,925 2,727 
Non-cash portion of interest expense
2,085 2,596 
Amortization related to above- and below- market lease intangibles and right-of-use assets, net955 330 
Straight-line rent (1,888)(2,853)
Straight-line rent (rent deferral agreements) (2)
— (120)
Eliminate unrealized gains on foreign currency transactions (3)
2,647 (4,210)
Amortization of mortgage discounts 227 251 
Expenses attributable to 2023 proxy contest and related litigation (4)
1,716 — 
AFFO attributable to common stockholders (1)
$39,806 $44,331 
Summary
FFO (as defined by NAREIT) attributable to common stockholders$31,040 $45,602 
Core FFO attributable to common stockholders$31,139 $45,610 
AFFO attributable to common stockholders$39,806 $44,331 
_________
(1)FFO, Core FFO and AFFO for the three months ended March 31, 2022 include income from a lease termination fee of $0.3 million, which is recorded in Revenue from tenants in the consolidated statement of operations. The termination fee of approximately $9.0 million was paid to us by the tenant at the end of the lease term on January 4, 2022, however it was earned and recorded as income evenly over the period from September 3, 2021 through January 4, 2022.
(2)Represents amounts related to deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on our balance sheet but are considered to be earned revenue attributed to the current period for rent that was deferred, for purposes of AFFO, as they are expected to be collected. Accordingly, when the deferred amounts are collected, the amounts reduce AFFO.
(3)For AFFO purposes, we adjust for unrealized gains and losses. For the three months ended March 31, 2023, the loss on derivative instruments was $1.7 million, which consisted of unrealized losses of $2.6 million and realized gains of $0.9 million. For the three months ended March 31, 2022, the gain on derivative instruments was $4.6 million, which consisted of unrealized gains of $4.2 million and realized gains of $0.4 million.
(4)Amount relates to general and administrative expenses incurred for the Company’s 2023 proxy contest and related Blackwells litigation (as described herein). The Company does not consider these expenses to be part of its normal operating performance and has, accordingly, increased its AFFO for this amount.

Constant Currency Revenue Reconciliation
(In thousands)Three Months Ended March 31, 2023
Revenue from tenants $94,332 
Foreign currency translation impact (using foreign currency exchange rates from Q1 2022)3,176 
Revenue from tenants, constant currency basis$97,508 


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Dividends
The amount of dividends payable to our common stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, our financial condition, provisions in our Credit Facility or other agreements that may restrict our ability to pay dividends, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT.
During the three months ended March 31, 2023 and the year ended December 31, 2022, we paid dividends on our common stock at an annual rate of $1.60 per share or $0.40 per share on a quarterly basis. Dividends authorized by our board of directors and declared by us are paid on a quarterly basis in arrears on the 15th day of the first month following the end of each fiscal quarter (unless otherwise specified) to common stockholders of record on the record date for such payment.
Dividends on our Series A Preferred Stock accrue in an amount equal to $0.453125 per share per quarter to Series A Preferred Stock holders, which is equivalent to 7.25% of the $25.00 liquidation preference per share of Series A Preferred Stock per annum. Dividends on our Series B Preferred Stock accrue in an amount equal to $0.429688 per share per quarter to Series B Preferred Stockholders, which is equivalent to 6.875% of the $25.00 liquidation preference per share of Series B Preferred Stock per annum. Dividends on the Series A Preferred Stock and Series B Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day) to holders of record on the close of business on the record date set by our board of directors. Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock and Series B Preferred Stock become part of the liquidation preference thereof.
Pursuant to the Credit Facility, we may not pay distributions, including cash dividends on, or redeem or repurchase Common Stock, Series A Preferred Stock, Series B Preferred Stock, or any other class or series of stock we may issue in the future, that exceed 100% of our Adjusted FFO as defined in the Credit Facility (which is different from AFFO disclosed in this Quarterly Report on Form 10-Q) for any period of four consecutive fiscal quarters, except in limited circumstances, including that for one fiscal quarter in each calendar year, we may pay cash dividends and other distributions and redeem or repurchase an aggregate amount equal to no more than 105% of our Adjusted FFO. We last used the exception to pay dividends that were between 100% of Adjusted FFO and 105% of Adjusted FFO during the quarter ended on June 30, 2020, and may use this exception in the future. In the past, the lenders under our Credit Facility have consented to increase the maximum amount of our Adjusted FFO we may use to pay cash dividends and other distributions and make redemptions and other repurchases in certain periods, but there can be no assurance that they will do so again in the future.
The following table shows the sources for the payment of dividends to holders of Common Stock, Series A Preferred Stock, Series B Preferred Stock and distributions to holders of LTIP Units for the periods indicated:
Three Months Ended March 31, 2023
(In thousands)Percentage of Dividends
Dividends and Distributions:
Dividends to holders of Common Stock$41,658 
Dividends to holders of Series A Preferred Stock3,081 
Dividends to holders of Series B Preferred Stock2,018 
Distributions to holders of LTIP Units100 
Total dividends and distributions
$46,857 
Source of dividend and distribution coverage:
Cash flows provided by operations $46,857 100.0 %
Total sources of dividend and distribution coverage$46,857 100.0 %
Cash flows provided by operations (GAAP basis)
$63,015 
Net loss (in accordance with GAAP)$(890)
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Foreign Currency Translation
Our reporting currency is the USD. The functional currency of our foreign investments is the applicable local currency for each foreign location in which we invest. Assets and liabilities in these foreign locations (including intercompany balances for which settlement is not anticipated in the foreseeable future) are translated at the spot rate in effect at the applicable reporting date. The amounts reported in the consolidated statements of operations are translated at the average exchange rates in effect during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive income in the consolidated statements of changes in equity. We are exposed to fluctuations in foreign currency exchange rates on property investments in foreign countries which pay rental income, incur property related expenses and borrow in currencies other than our functional currency, the USD. We have used and may continue to use foreign currency derivatives including options, currency forward and cross currency swap agreements to manage our exposure to fluctuations in foreign GBP-USD and EUR-USD exchange rates (see Note 8 — Derivatives and Hedging Activities to the consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion).
Election as a REIT 
We elected to be taxed as a REIT under Sections 856 through 860 of the Code, effective for our taxable year ended December 31, 2013. We believe that, commencing with such taxable year, we have been organized and have operated in a manner so that we qualify for taxation as a REIT under the Code. We intend to continue to operate in such a manner to qualify for taxation as a REIT, but can provide no assurances that we will operate in a manner so as to remain qualified as a REIT. To continue to qualify for taxation as a REIT, we must distribute annually at least 90% of our REIT taxable income (which does not equal net income as calculated in accordance with GAAP), determined without regard for the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax on the portion of our REIT taxable income that we distribute to our stockholders. Even if we qualify for taxation as a REIT, we may be subject to certain state and local taxes on our income and properties, as well as federal income and excise taxes on our undistributed income.
In addition, our international assets and operations, including those owned through direct or indirect subsidiaries that are disregarded entities for U.S. federal income tax purposes, continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.
Inflation
We may be adversely impacted by inflation on the leases that do not contain indexed escalation provisions, or those leases which have escalations at rates which do not exceed or approximate current inflation rates. As of March 31, 2023, the increase to the 12-month CPI for all items, as published by the Bureau of Labor Statistics, was 5.0%. To help mitigate the adverse impact of inflation, approximately 94.9% of our leases with our tenants contain rent escalation provisions that increase the cash rent that is due under these leases over time by an average cumulative increase of 1.2% per year. These provisions generally increase rental rates during the terms of the leases either at fixed rates or indexed escalations (based on the Consumer Price Index or other measures). As of March 31, 2023, based on straight-line rent, approximately 60.5%, are fixed-rate with increases averaging 1.7%, 27.1% are based on the Consumer Price Index, subject to certain caps, 7.0% are based on other measures, and 5.4% do not contain any escalation provisions.
In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation. However, our net leases require the tenant to pay its allocable share of operating expenses, which may include common area maintenance costs, real estate taxes and insurance. This may reduce our exposure to increases in costs and operating expenses resulting from inflation. As the costs of general goods and services continue to rise, we may be adversely impacted by increases in general and administrative costs due to overall inflation.
Related-Party Transactions and Agreements
See Note 11 — Related Party Transactions to our consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of the various related party transactions, agreements and fees.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There has been no material change in our exposure to market risk during the three months ended March 31, 2023. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
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In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting
During the quarter ended March 31, 2023, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
Please refer to “Litigation and Regulatory Matters” in Part I - Item 1 - Note 10 — Commitments and Contingencies, in our accompanying Consolidated Financial Statements.
Item 1A. Risk Factors.
There have been no material changes to the risk factors disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2022, except for the below risk factor, and we direct your attention to those risk factors.
We are subject to risks associated with proxy contests and other actions of activist stockholders.
On October 24, 2022, Blackwells Onshore I LLC (“Blackwells Onshore”) (together with its affiliates, “Blackwells”) delivered a purported notice of intent to nominate two candidates for election to our board of directors at the 2023 annual meeting of stockholders (the “2023 Annual Meeting”) and to submit six non-binding proposals at the 2023 Annual Meeting. We have advised Blackwells that its notice did not satisfy the requirements for notice of these matters set forth in our bylaws and that we intend to exclude them from being considered at the 2023 Annual Meeting. Blackwells subsequently filed a preliminary proxy statement with the SEC relating to the solicitation of our shareholders in favor of its purported nominees and proposals.
We and Blackwells have each filed complaints related to the purported nominations and proposals and related matters. The outcome of this ongoing litigation is uncertain and we will likely continue to incur substantial expenses associated with the litigation as well as any resulting proxy contest. The litigation could also be costly, time consuming and distracting. Further, a court may require us to consider Blackwell’s nominees and proposals at the 2023 Annual Meeting. The proxy statement we filed with the SEC on April 10, 2023 did not contain the names of Blackwell’s purported nominees. If the court determines that Blackwells’ purported nominations are valid, we would have to discard any proxy cards received from the GOLD proxy card accompanying the proxy statement that was mailed to stockholders on April 11, 2023. We would then be required to furnish universal proxy cards including the candidates nominated by Blackwells.
In addition, a proxy contest, unsolicited takeover or other form of stockholder activism or related activities on the part of Blackwells or another stockholder, including in the event that we are required to consider Blackwells’ nominees and proposals at the 2023 Annual Meeting, could adversely affect our business for a number of reasons, including, without limitation, the following:
a.responding to proxy contests and other actions by activist stockholders can be costly and time-consuming, disrupting our operations and diverting the attention of management and our Advisor;
b.stockholder activism or actual or potential changes to the composition of our board of directors may lead to the perception of a change in the direction of our business, instability or lack of continuity, which may be exploited by our competitors, cause concern to current or potential sellers of properties, clients and financing sources. If potential or existing sellers of properties, clients or financing sources choose to delay, defer or reduce transactions with us or transact with our competitors instead of us because of any such issues, then our results of operations could be adversely affected;
c.we may suffer damage to our reputation or brand by way of actions taken or statements made by outside constituents, including activist investors and shareholder advisory firms, which could adversely affect the trading price of our securities; and
d.if the nominees advanced by an activist stockholder were to be elected to our board of directors with a specific agenda, it could adversely affect our ability to effectively and timely run our business or to realize long-term value from our assets, and this could in turn have an adverse effect on our business and on our results of operations and financial condition.
Proxy contests and related litigation may also cause our stock price to experience periods of volatility based upon temporary or speculative market perceptions or other factors that do not necessarily reflect our underlying fundamentals and prospects.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sale of Unregistered Equity Securities
There were no sales of unregistered equity securities made during the quarter ended March 31, 2023.
Purchases of Equity Securities by the Issuer and Related Purchasers
There were no repurchases of our Common Stock made during the quarter ended March 31, 2023.
Item 3. Defaults Upon Senior Securities.
None.
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Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.


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Item 6. Exhibits.
The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No.Description
3.1 (1)
Articles of Restatement of Global Net Lease, Inc., effective February 24, 2021.
3.2 (2)
Amended and Restated Bylaws of Global Net Lease, Inc.
3.3 (3)
Amendment to Amended and Restated Bylaws of Global Net Lease, Inc.
3.4 (4)
Second Amendment to Amended and Restated Bylaws of Global Net Lease, Inc.
 
Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
 
Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 *
 Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS *
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH *
Inline XBRL Taxonomy Extension Schema Document.
101.CAL *
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 *
Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
_________
*Filed herewith
(1) Filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on February 26, 2021.
(2) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on June 3, 2015.
(3) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on April 9, 2020.
(4) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on July 19, 2022 and incorporated herein by reference.




.







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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 Global Net Lease, Inc.
 By:/s/ James L. Nelson
  James L. Nelson
  Chief Executive Officer and President
(Principal Executive Officer)
By:/s/ Christopher J. Masterson
 Christopher J. Masterson
 Chief Financial Officer, Treasurer, and Secretary
(Principal Financial Officer and Principal Accounting Officer)

Dated: May 10, 2023
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