New York City and Atlanta — Global Net Lease Inc. has entered into a binding agreement to sell its multi-tenant retail portfolio of 100 non-core properties to a subsidiary of RCG Ventures Holdings LLC, for approximately $1.8 billion. The transaction represents an 8.4 percent cash cap rate.
GNL says the transaction would accelerate its deleveraging initiative and position the company as a pure-play, single-tenant net lease (STNL) company.
GNL launched its disposition initiative in 2024, with the objectives of significantly reducing debt, enhancing financial flexibility and lowering its cost of capital. Following the completion of the multi-tenant portfolio sale, which would represent the most significant step in this initiative to date, GNL expects to have completed nearly $3 billion in dispositions between the start of 2024 and the end of 2025, inclusive of properties in its disposition pipeline.
The company expects to use the net proceeds from the multi-tenant portfolio sale to significantly reduce the outstanding balance on its revolving credit facility. The board of directors has concurrently approved a share repurchase program authorizing the company to opportunistically repurchase up to $300 million of its outstanding common stock in accordance with typical practice for such programs.
“We believe the proposed sale of our multi-tenant portfolio is a strategic and prudent transaction that will bolster our balance sheet and position GNL for continued success,” says Michael Weil, CEO of GNL. “The proposed transaction greatly decreases operational complexities, general and administrative expenses and capital expenditures associated with multi-tenant retail properties.”
Weil adds that the resulting improvement in GNL’s capital structure is expected to strengthen the company’s position to achieve an investment-grade credit rating, which may further reduce its cost of capital and enhance financial flexibility to support long-term growth.
The transaction is expected to positively impact GNL’s portfolio metrics by boosting occupancy to 98 percent, extending weighted average remaining lease term (WALT) to 6.4 years, increasing the proportion of investment-grade tenants to 66 percent and enhancing annual rent escalations to 89 percent. Information regarding the property sizes or locations was not provided.
GNL received a $25 million non-refundable deposit from RCG at signing of the binding agreement. The transaction is expected to close in three phases — the unencumbered portfolio is scheduled to close by the end of the first quarter, while the encumbered portfolio is set to close in two stages by the end of the second quarter, pending approval of the respective loan assumptions and other customary closing conditions.
New York City-based GNL is a publicly traded real estate investment trust (REIT) that focuses on acquiring and managing a global portfolio of net lease assets across the United States, as well as Western and Northern Europe. The company’s stock price opened at $7.62 per share Wednesday, Feb. 26, relatively unchanged from $7.29 per share one year ago.
RCG Ventures is a fully integrated real estate investment firm based in Atlanta that specializes in the acquisition, development, leasing, management and financing of multi-tenant retail real estate. Since its inception in 2003, RCG has acquired over $1.6 billion in retail assets and has managed as much as 14 million square feet of retail real estate.
— Kristin Harlow