Global Net Lease, Inc. (NYSE: GNL) has recently released its 10-K report, providing an insight into its financial condition and operations. GNL is a real estate investment trust listed on the NYSE, focusing on acquiring a diversified global portfolio of commercial properties, with an emphasis on sale-leaseback transactions involving single tenant, mission-critical income-producing net-leased assets across the United States, Western and Northern Europe.
The 10-K report indicates that the estimated fair value of GNL's fixed-rate debt and variable-rate debt would be affected by changes in interest rates. A decrease or increase in interest rates of 1% would change the estimated fair value of this debt as of December 31, 2023, by an aggregate increase of $759.1 million or an aggregate decrease of $914.5 million, respectively. Additionally, annual interest expense on GNL's unhedged variable-rate debt that does not bear interest at fixed rates as of December 31, 2023, would increase or decrease by approximately $11.1 million for each respective 1% change in annual interest rates.
The report also highlights the foreign currency exchange rate risk faced by GNL due to its investments primarily in Europe and Canada. The company is subject to risk from the effects of exchange rate movements in the Euro, the GBP, and the CAD, which have affected and may continue to affect future costs and cash flows in its functional currency, the USD. GNL manages foreign currency exchange rate movements by matching its debt service obligation to the lender and the tenant’s rental obligation in the same currency, reducing its exposure to currency fluctuations. The company has also used currency hedging to further reduce exposure to net cash flow.
Furthermore, GNL has provided a detailed breakdown of its scheduled future minimum rents and debt service payments for its foreign operations for the next five calendar years and thereafter. The report also discusses the concentration of credit risk, indicating that the majority of GNL's directly owned real estate properties and related loans are located in the U.S. and Canada, with concentrations in asset types such as Industrial & Distribution, Multi-Tenant Retail, Single-Tenant Retail, and Office.
Today the company's shares have moved 0.7% to a price of $7.34. If you want to know more, read the company's complete 10-K report here.
