Global Net Lease to Acquire Necessity Retail REIT, Creating $9.6 Billion Shopping Center Company

by Hayden Spiess

New York City — Global Net Lease (NYSE: GNL) and The Necessity Retail REIT (NASDAQ: RTL) have entered into a merger agreement under which GNL will acquire RTL in an all-stock transaction. The combined company is expected to own and manage over 1,350 properties with an aggregate real estate asset value of approximately $9.6 billion.

Under terms of the merger agreement, GNL stockholders are expected to own approximately 45 percent of GNL post-closing, RTL stockholders are expected to own about 39 percent, and the owner of the former external manager are expected to own up to 17 percent. 

The merger is projected to generate approximately $21 million in annual cash savings realized within 12 months of transaction close, according to the companies. The combined entity will be internally managed, with external asset and property management functions to be performed by AR Global. Internalizing management is expected to result in approximately $54 million in annual cash savings.

Headquartered in New York City, Global Net Lease is a publicly traded REIT that focuses on commercial properties with an emphasis on sale-leaseback transactions involving single tenant, mission critical income producing net-leased assets across the United States and in Europe.

The Necessity Retail REIT is a publicly traded REIT that acquires and manages a portfolio of single-tenant retail and open-air shopping center properties in the U.S.

Upon completion of the merger, the size of the GNL board of directors will be expanded to nine members, including the members of the current GNL board and three independent RTL directors. Current GNL CEO James Nelson and current RTL CEO Michael Weil will become co-CEOs. Weil will be the sole CEO upon Nelson’s retirement in April 2024. Sue Perrotty, GNL’s current independent chairperson, will remain in her position.

“The merger of Global Net Lease and The Necessity Retail REIT is an exceptional opportunity to build a premier global net lease portfolio with very attractive future prospects,” says Perrotty.

BMO Capital Markets Corp. provided financial advisement to GNL while Shapiro Sher provided legal counsel. Truist Securities was financial advisor to TRL and Arnold & Porter Kaye Scholer LLP provided legal counsel. The external manager was advised by Paul, Weiss, Rifkind, Wharton and Garrison LLP.

The special committees of the boards of directors of both GNL and RTL unanimously approved the transaction. The sale is scheduled to close in the third quarter of 2023.

RTL’s stock price opened at $5.96 per share today, May 26, down from $7.81 one year ago. GNL’s stock price opened at $9.29 per share, down from $14.27 one year ago.

— Channing Hamilton

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