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Edited Transcript of GNL earnings conference call or presentation 26-Feb-20 4:00pm GMT

·27 min read

Q4 2019 Global Net Lease Inc Earnings Call NEW YORK Mar 9, 2020 (Thomson StreetEvents) -- Edited Transcript of Global Net Lease Inc earnings conference call or presentation Wednesday, February 26, 2020 at 4:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Christopher J. Masterson Global Net Lease, Inc. - CFO, Treasurer & Secretary * James L. Nelson Global Net Lease, Inc. - President, CEO & Director * Louisa Hall Quarto Global Net Lease, Inc. - EVP ================================================================================ Conference Call Participants ================================================================================ * Benjamin Ira Zucker Aegis Capital Corporation, Research Division - Analyst * Bryan Anthony Maher B. Riley FBR, Inc., Research Division - Analyst * John James Massocca Ladenburg Thalmann & Co. Inc., Research Division - Associate * Michael Patrick Gorman BTIG, LLC, Research Division - MD & REIT Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, and welcome to the Global Net Lease Fourth Quarter 2019 Earnings Conference call and Webcast. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Louisa Quarto, Executive Vice President. Please go ahead. -------------------------------------------------------------------------------- Louisa Hall Quarto, Global Net Lease, Inc. - EVP [2] -------------------------------------------------------------------------------- Thank you, operator. Good morning, everyone, and thank you for joining us for GNL's Fourth Quarter and Year-End 2019 Earnings Call. This call is being webcast in the Investor Relations section of GNL's website at www.globalnetlease.com. Joining me today on the call to discuss the quarter's results are Jim Nelson, GNL's Chief Executive Officer; and Chris Masterson, GNL's Chief Financial Officer. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings, including the Form 10-K for the year ended December 31, 2018, filed on February 28, 2019, and all other filings with the SEC after that date for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, GNL disclaims any intent or obligation to update or revise these forward-looking statements, except as required by law. Also during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company and financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our earnings release, supplement and Form 10-K, all of which are posted to our website at www.globalnetlease.com. I'll now turn the call over to our CEO, Jim Nelson. -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- Thank you, Louisa, and thanks again to everyone for joining us on today's call. 2019 was a busy year for Global Net Lease, as we acquired $576 million of high-quality real estate. We also refinanced much of our European debt at more advantageous rates, recast and upsized our corporate credit facility and continued increasing our portfolio exposure to Industrial and Distribution assets, while opportunistically accessing capital markets to fund acquisitions. We are very pleased with the acquisitions we made during the year, 65% of which were Industrial or Distribution and 35% of which were Office properties based on acquisition price. All acquired properties in 2019 were in the United States and Canada. The weighted average cap rate for these acquisitions was 7.4%, with a weighted average remaining lease term of 12.5 years at closing. The fourth quarter was particularly active as we closed $252 million worth of transactions that will eventually contribute over $18 million of annualized straight-line rent to our portfolio. All of these acquisitions closed in December, and as a result, did not meaningfully contribute to our fourth quarter or full year results. The largest of these transactions, the first part of a $180 million U.S. and European sale-leaseback transaction with Whirlpool, a Fortune 150 company with a Moody's rating of Baa1 closed on December 16. As we mentioned last quarter, this transaction demonstrates our breadth of experience, corporate relationships and familiarity with both the U.S. and European real estate markets. We closed on the second part of this transaction, the European tranche in early 2020. The acquisition's momentum we enjoyed at the end of 2019 is continuing into the new year as we have $274 million of closed or pipeline acquisitions for 2020 as of January 31, that we expect to acquire at a weighted average cap rate of 8.4% and with a weighted average remaining lease term of 17.7 years. We are pleased to report year-over-year increases in adjusted EBITDA, total revenue and NOI. And a year-over-year decrease in net debt to adjusted EBITDA, which declined to 6.7x from 7.9x. Adjusted EBITDA increased 9.2% year-over-year to $234.5 million in 2019 compared to $214.8 million in 2018. Total revenue for the year was $306.2 million, up 8.5% from $282.2 million in the prior year. Net operating income also increased 9.6% to $277.9 million from $253.5 million in 2018. On a per share basis, AFFO decreased year-over-year to $1.85 per share due in part to the timing of the late fourth quarter acquisitions we mentioned earlier and interim deleveraging from the issuance of 13.4 million common shares that helped us fund these acquisitions. Our capital raises as well as strategic property dispositions helped drive year-end cash and cash equivalents of $270.3 million, which we will continue to use to help fund our $274 million pipeline. Combined with fourth quarter acquisitions, we expect that closing on the pipeline will increase net annualized straight-line rent by an incremental $26.9 million. We believe the quality and stability of our earnings is critically important to our long-term performance and the stability of our dividend. Our $3.8 billion, 278 property portfolio is nearly fully occupied at 99.6% leased and has a weighted average remaining lease term of 8.3 years. Additionally, investment-grade or implied investment-grade tenants make up over 68% of the portfolio, which further highlights the quality of our assets and our tenant base. Please refer to our earnings release for more information about what we consider to be implied investment-grade tenants. With no near-term expirations and with embedded contractual rent growth in over 93% of leases, we believe our diversified portfolio remains stable and well positioned to create value over the long term for our shareholders. 215 of our properties are in the U.S. and Canada and 63 are in the U.K. and Western Europe representing 63% and 37% of annualized rental revenue, respectively. Our property mix is currently 49% Office, 46% Industrial and Distribution, and 5% Retail, which we consider to be an improvement from our year-end 2018 portfolio where only 39% of annualized straight-line rent came from Industrial or Distribution properties and 8% came from Retail tenants. As part of our disciplined approach to asset management last year, we completed strategic dispositions totaling over $300 million, including the sale of $112 million of Family Dollar stores and a $146 million sale of RWE Energy. We have discussed the Family Dollar disposition at length in previous quarters, but we can summarize by stating that we sold this portfolio for 2 reasons: our assessment of Family Dollar's declining financial metrics and our decision to decrease our exposure to Retail properties. We also sold a large Office property at Essen, Germany. While there was approximately 5 years left on the lease, we were concerned that the lease may not be renewed due to the tenant's ongoing corporate restructuring and associated layoffs. We were pleased to sell the property for about EUR 6.5 million more than we purchased it for and the sale netted proceeds of approximately EUR 68 million after repayment of the associated mortgage debt. We believe our dispositions in 2019 were prudent and benefited GNL's composite portfolio by removing noncore and short-duration leased assets and allowing us to redeploy the net proceeds after the repayment of associated debt into accretive acquisitions, such as the $850 million of property acquired in 2019 and in the 2020 pipeline concentrated on Industrial and Distribution and Office property types. We remain net buyers, as highlighted by our 2019 activity. We'll continue to actively evaluate the portfolio and our tenants in order to ensure the long-term stability and quality of our earnings. During 2019, we also refinanced much of our European debt, in many cases, extending the weighted average maturity and reducing our borrowing rates. An important part of our strategy includes financing European assets locally in the same currency in which we anticipate. Refinancing these various loans required an international effort which directly resulted in decreased cost for the company and our shareholders. In the third quarter, we also expanded our corporate credit facility by $300 million, bringing total commitments to $1.2 billion at a lower-weighted average interest rate while extending the maturity of the revolving portion to 2023 with the option to extend to 2024. Overall, we strengthened our balance sheet by extending our weighted average debt maturities to 5.8 years as of the end of the fourth quarter, up from 4.2 years in 2018, while reducing our weighted average interest rate to 3% from 3.1%. In capital markets, we raised approximately $384 million for general corporate purposes, primarily the acquisitions of new real estate through the sale of common and preferred stock. Our new Series B preferred stock priced at a lower effective yield than the series A preferred stock, helping to make these initiatives more cost efficient. We believe our current sources provide us with ample liquidity as we continue to source acquisitions. Our ability to access the capital markets on favorable terms, allows us to pursue attractive acquisition opportunities and to close transactions in an efficient manner. Regarding the potential implications of Brexit on our portfolio, although there has been a great deal of coverage on the political exit of Great Britain from the EU since our last earnings call, there are numerous trades and other agreements to be hammered out this year before we can begin to measure the impact, if any, they will have on the properties we own. Of course, we will continue to monitor these developments but remain confident that our exposure to both Great Britain and the remaining EU countries is prudent. We remain committed to executing on our global investment strategy by leveraging our unique capacity to acquire assets throughout Europe and North America in order to negotiate with established international companies providing the company a distinct competitive advantage. We can be opportunistic both in the types of real estate and tenants we identify for investment and in the geographic markets, which fit within our strategy. Investing globally allows us to be patient in identifying potential investments and to capitalize on our expanded reach into a universe of high-quality tenants who operate businesses inside and outside the U.S. We remain well positioned to take advantage of evolving real estate markets and macroeconomic conditions in the U.S. and in Europe. We benefit from the added diversification that comes with holding a balanced portfolio of global assets located in strong economic regions. We believe our demonstrated ability to underwrite transactions with an eye toward long-term value is what continues to set GNL apart in the net lease sector. We will continue to execute on our strategy in 2020 and beyond as we grow GNL's global and diversified portfolio. With that, I'll turn the call over to Chris to walk through the operating results in more detail, and then I will follow up with some closing remarks. Chris? -------------------------------------------------------------------------------- Christopher J. Masterson, Global Net Lease, Inc. - CFO, Treasurer & Secretary [4] -------------------------------------------------------------------------------- Thanks, Jim. We posted improved financial results for both 2019 annual and quarterly results in comparison to the prior year. As Jim mentioned, for 2019, we recorded a 26% increase in EBITDA and an 8.5% increase in revenue, with net income attributable to common stockholders of $34.5 million. FFO increased 9% to $143.3 million and AFFO was up 8.4% to $159.7 million. The company paid common stock dividends of $150.8 million in 2019. Revenues increased primarily due to rental income from acquisitions and rent escalators embedded in existing leases. As always, a reconciliation of GAAP net income to the non-GAAP measures can be found in our earnings release. In the fourth quarter, revenue increased 7.7% to $76.7 million on a year-over-year basis. FFO increased 14.4% to $32.4 million. Our AFFO increased 7.5% to $39.9 million, and during the quarter, the company paid common stock dividends of $47.6 million. I would like to note that the $252 million of acquisitions during the fourth quarter all closed on or after December 3, and more than half of the acquisitions closed during the last 2 weeks of December. Net of the properties sold during the quarter, we expect a $5.1 million or $0.06 per share step-up in annualized straight-line rent to commence in Q1 2020. On the balance sheet, we ended the fourth quarter with net debt of $1.6 billion at a weighted average interest rate of 3%. Our net debt to adjusted EBITDA ratio was 6.7x at the end of the year. The weighted average maturity at the end of the fourth quarter 2019 was 5.8 years, which is an improvement from 4.2 years at the close of 2018 Fourth quarter. Components of our debt include $199.1 million on the multicurrency revolving credit facility, $403.3 million on the term loan and $1.3 billion of outstanding gross mortgage debt. This debt was approximately 88.2% fixed rate, which is inclusive of floating rate debt with in-place interest rate swaps. The company has a well-cushioned interest coverage ratio of 4x. As of December 31, 2019, liquidity was approximately $474.4 million, which comprises $270.3 million of cash on hand and $204.1 million of availability under the credit facility. Our net debt to enterprise value was 43.7%, with an enterprise value of $3.7 billion based on the December 31, 2019 closing share price of $20.28 per common shares, $26.43 for Series A preferred shares, and $25.64 for Series B preferred shares. As a quick update to the hedging program, we have continued to use our hedging strategy to offset some movements in interest rates and local currencies for our European portfolio. Regarding currency hedging, the company employs its disciplined strategy of wiring hedges against 2 currencies over upcoming quarters to manage some exposure to both currencies. With that, I'll turn the call back to Jim for some closing remarks. -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [5] -------------------------------------------------------------------------------- Thanks, Chris. In closing, I am very proud of all that GNL achieved in 2019. We believe the consistent execution of our business plan will continue to benefit our shareholders as we continue this work in 2020 and beyond. As always, thank you all for your continued support. With that, operator, we can open the line for questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- [Operator Instruction] Our first question will come from Michael Gorman with BTIG. -------------------------------------------------------------------------------- Michael Patrick Gorman, BTIG, LLC, Research Division - MD & REIT Analyst [2] -------------------------------------------------------------------------------- I was wondering, if you could just talk a little bit more about the acquisition pipeline? And maybe just give us a little bit more detail in terms of the breakdown geographically, product type, maybe potential timing within the quarter and some of the more details there? -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [3] -------------------------------------------------------------------------------- All right, great. Thanks. I'll let Chris answer some part of this question, and then I'll answer in part. So go ahead, Chris. -------------------------------------------------------------------------------- Christopher J. Masterson, Global Net Lease, Inc. - CFO, Treasurer & Secretary [4] -------------------------------------------------------------------------------- Sure. So in our presentation, we pointed out, obviously, all the deals which we're going to be looking to close. But really, we're going to continue similar to what we've done in the past, mostly industrial distribution. We have $273 million in the pipeline with an 8.42% average cap rate. We actually have closed a few other transactions already. In particular, we have the VIAVI Solutions has closed, CSTK and Whirlpool have closed, so those are a few of the larger deals. So Jim, is there anything else? -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [5] -------------------------------------------------------------------------------- No. All I want to say -- and this we've demonstrated in the past 2 years is that we are very fortunate. We have a target-rich pipeline, and we will continue doing what we've been doing for the last couple of years going forward. -------------------------------------------------------------------------------- Michael Patrick Gorman, BTIG, LLC, Research Division - MD & REIT Analyst [6] -------------------------------------------------------------------------------- Great. And then, Chris, I know this was discussed a bit after the end of last quarter as well. But with the cash balance where it is, can you maybe lay out how you're thinking about the deployment of that over the upcoming quarters? Or are you thinking about making the current quarter acquisitions more cash heavy and then layer in on debt layer -- later? How are you thinking about the timing of the deployment of that $270 million? -------------------------------------------------------------------------------- Christopher J. Masterson, Global Net Lease, Inc. - CFO, Treasurer & Secretary [7] -------------------------------------------------------------------------------- Sure. So one thing I do want to point out, the large increase that we saw at quarter end was in large part driven by the RWE sale, which took place at the very end of the quarter. So we saw the proceeds come in, and they were sitting on the balance sheet at that point. But yes, over the course of the quarter, we would look to use the cash to fund the acquisitions rather than trying to layer on additional debt. -------------------------------------------------------------------------------- Michael Patrick Gorman, BTIG, LLC, Research Division - MD & REIT Analyst [8] -------------------------------------------------------------------------------- Okay, great. And then last one for me... -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [9] -------------------------------------------------------------------------------- And let me also say this -- excuse me, Michael. Let me say this about the RWE sale, which we talked about in the comments before we opened this up for questions for questions. But this was a very strategic disposition. We made a significant profit on it. And we are redeploying the cash at a much higher cap rate, a much better cap rate. So I think we have about a 38 basis point arbitrage spread on that transaction alone. So with all the reasons to sell it and the value that we gained from selling it, in the long run, it turns out to be a very good move for GNL and the GNL shareholders. -------------------------------------------------------------------------------- Michael Patrick Gorman, BTIG, LLC, Research Division - MD & REIT Analyst [10] -------------------------------------------------------------------------------- Absolutely. And kind of in that vein, as you think about 2020, you guys did a good job with some strategic sales last year, both on the Retail side and at the year-end. Is there anything else that you're looking at in 2020? Are there things that are maybe on your radar screen from a strategic sale perspective? Or is that largely not in the picture for this year so far at least? -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [11] -------------------------------------------------------------------------------- Well, I think as prudent managers, we are constantly evaluating the portfolio and our tenants. We haven't posted anything on any dispositions at this point, but we're constantly looking at the portfolio and we will be prudent managers going forward as we have been in the past. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- Our next question will come from Bryan Maher with B. Riley FBR. -------------------------------------------------------------------------------- Bryan Anthony Maher, B. Riley FBR, Inc., Research Division - Analyst [13] -------------------------------------------------------------------------------- A couple of quick questions. Following up on the acquisition discussion, do you have or can you share, based upon what you're seeing, Jim, in the market now, thoughts on -- and this can be a broad answer, what 2020 is looking like? I mean we were modeling $200 million just to be conservative, you're already in the mid- to high 200s with the pipeline. Is it possible that, that number for 2020 is $400 million or $500 million again? -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [14] -------------------------------------------------------------------------------- Well, Bryan, I think, as you know, we don't give guidance. But I think you can see that, as I said just a minute ago, we have a very target-rich pipeline, and we are moving ahead with our plan as we've done in the last 2 years. -------------------------------------------------------------------------------- Bryan Anthony Maher, B. Riley FBR, Inc., Research Division - Analyst [15] -------------------------------------------------------------------------------- And should we expect further shift from waiting European over to U.S. with these new acquisitions. I guess my question is -- and you talked about this, maybe 3, 4 quarters ago, starting to see some opportunities, I think it was in the U.K. and maybe in Europe, and that -- are those opportunities still showing up or with Brexit, you just want to sit on your hands a little while longer on that? -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [16] -------------------------------------------------------------------------------- Well, let me talk about Brexit as that's the prelude to the answer to your question. I think now with Brexit over, we have a little more clarity on what's going on, at least the Brexit question has been answered. I think what everyone's waiting to see are the trade deals that they make with the European community. So I think we still have a wait-and-see attitude, but there is somewhat more clarity there. As far as European acquisitions, we are very actively looking part of this Whirlpool acquisition had some assets in Europe, which were recently closed. We are continuing to look in Europe. But I think, as you've seen from the pipeline that we've announced, primarily, these acquisitions are in the U.S. at this point. -------------------------------------------------------------------------------- Bryan Anthony Maher, B. Riley FBR, Inc., Research Division - Analyst [17] -------------------------------------------------------------------------------- Okay. And then just 2 more for me, short questions. Maybe this one for Chris. The -- with interest rates dropping substantially just in the past month or so, and I know you're sitting on a lot of cash right now that you're using -- going to use to deploy, but does it make some sense to explore the debt markets just to kind of lock in these rates for the next few years as opposed to what you may have been thinking about just, what, 6 weeks ago? -------------------------------------------------------------------------------- Christopher J. Masterson, Global Net Lease, Inc. - CFO, Treasurer & Secretary [18] -------------------------------------------------------------------------------- Absolutely, especially with rates dropping, I mean, now it's obviously a good time to start locking rates. So it's something we're evaluating. And over the last 1 or 2 years, when we've seen comparable types of situations, we've done that. As you've seen some of the times where we've locked in some of the long-term debt at low rates. So it's definitely something we're evaluating. -------------------------------------------------------------------------------- Bryan Anthony Maher, B. Riley FBR, Inc., Research Division - Analyst [19] -------------------------------------------------------------------------------- And then just lastly, given that a lot of the REITs that we cover here are not necessarily net lease situations. We're hearing a lot of complaints, particularly in the U.S. about property tax increases. Just to be clear, that's not something that you have to deal with? Or it's a pass-through, and there's just maybe some time delay from the time that the property tax comes to you before it's put off on to the tenant? How impactful is that all mainly from a timing standpoint? -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [20] -------------------------------------------------------------------------------- Fortunately, we are uniquely positioned as a triple net lease REIT. So it's not really something that's an issue for us. It hasn't been and we don't expect to be an issue going forward. -------------------------------------------------------------------------------- Bryan Anthony Maher, B. Riley FBR, Inc., Research Division - Analyst [21] -------------------------------------------------------------------------------- Do any of your tenants complain about that and use that as leverage and lease renewals to maybe get a lesser increase because they're bearing the brunt of that? -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [22] -------------------------------------------------------------------------------- We haven't seen that, to be very honest. We don't really have many short-term lease expirations coming up. So we haven't really seen that. But most of our tenants seem to be -- we have a very high percentage of investment-grade or implied investment-grade tenants. And I think that benefits us because they're less sensitive to it -- slight increases in taxation, then a lot of smaller tenants might be. -------------------------------------------------------------------------------- Operator [23] -------------------------------------------------------------------------------- Our next question will be from Ben Zucker with Aegis Capital. -------------------------------------------------------------------------------- Benjamin Ira Zucker, Aegis Capital Corporation, Research Division - Analyst [24] -------------------------------------------------------------------------------- So just real quickly for the Doomsday Preppers out there, I just wanted to ask about the coronavirus. And it might be too soon to say that you're seeing that have any impact on demand or pricing in the market, but I'm just -- given your purview as someone who operates both domestically and internationally, I mean, have you seen any kind of conversations or pause in the market or repricing as a result of this yet? Or do you think... -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [25] -------------------------------------------------------------------------------- We haven't seen anything because most of the markets -- all the markets that we're in have little or no coronavirus impact at the present time. We feel we're uniquely positioned to weather the storm because of the high percentage of credit quality tenants that we have. So we, again, have a wait-and-see attitude, but we're feeling that we're in a pretty good position to weather the storm that may or may not come. -------------------------------------------------------------------------------- Benjamin Ira Zucker, Aegis Capital Corporation, Research Division - Analyst [26] -------------------------------------------------------------------------------- Understood. Just looking at your -- the recent closed deals in your pipeline, we saw FedEx and Whirlpool show up in 4Q '19 and then both of those guys, again, in the 1Q '20 pipeline. So when -- what's the process like when there's a corporate client coming up and it's someone that you guys have done a deal with them in the past? I mean do you -- in order to win that business, again, is this truly like the relationship that you get with the broader platform that you guys have? Are you guys trying to bond an inside track? Do you feel like, to win those deals when they come back to you? I just would love to hear your thoughts there. -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [27] -------------------------------------------------------------------------------- Well, I think we're really positioned well to win these deals. We have a history of closing a lot of deals. We've closed over $1 billion worth of transactions in the last 2 years. We deal with a lot of the same companies that we know well. They bring us other properties they want to do sale and leaseback on we oftentimes get a first look at properties from -- through the people that we deal with. So I think we're in a very, very good position to find great properties to acquire. And I think we're in a good position to be able to close them. -------------------------------------------------------------------------------- Benjamin Ira Zucker, Aegis Capital Corporation, Research Division - Analyst [28] -------------------------------------------------------------------------------- That's helpful. Just turning to the income statement real quickly. It seems like there's a big drop in the property operating expenses. Was there anything that drove that reduction and maybe did along -- on the G&A line item? Just trying to get an understanding of any potential one-time or -- so I can think about the proper run rate here for the model? -------------------------------------------------------------------------------- Christopher J. Masterson, Global Net Lease, Inc. - CFO, Treasurer & Secretary [29] -------------------------------------------------------------------------------- Well, the one thing I would say about both of those items, obviously, a lot of it comes down to timing. So you will see some swings for the G&A, there's definitely timing for property operating. I do want to point out that the net operating expense is pretty consistent quarter-over-quarter. So there was then a slight reduction in the operating expense reimbursements, which has been why it looks like the revenues are down, but the total rental income is actually up. So I would just say really timing across the board. -------------------------------------------------------------------------------- Benjamin Ira Zucker, Aegis Capital Corporation, Research Division - Analyst [30] -------------------------------------------------------------------------------- Okay, that's helpful. And then I think I heard this in your prepared remarks, but I might have missed it. Did you say when the 10-K is going to be coming out? -------------------------------------------------------------------------------- Christopher J. Masterson, Global Net Lease, Inc. - CFO, Treasurer & Secretary [31] -------------------------------------------------------------------------------- We did not say. It definitely will be, obviously, this week. -------------------------------------------------------------------------------- Operator [32] -------------------------------------------------------------------------------- (Operator Instructions) Our next question will come from John Massocca with Ladenburg Thalmann. -------------------------------------------------------------------------------- John James Massocca, Ladenburg Thalmann & Co. Inc., Research Division - Associate [33] -------------------------------------------------------------------------------- In the press release, you guys talked a little bit about income tax expense spiking a little bit in 4Q. Can you provide a little more color on what caused that? -------------------------------------------------------------------------------- Christopher J. Masterson, Global Net Lease, Inc. - CFO, Treasurer & Secretary [34] -------------------------------------------------------------------------------- Sure. So really, it has to do with some of the changes in the different agreements between countries in Europe. And for example, during the fourth quarter, we saw about $0.5 charge related to France, where previously, we didn't have any income taxes there. This is something where -- I mean, we don't have that much more material to point out for looking forward, but it's something that we're monitoring and staying ahead of. -------------------------------------------------------------------------------- John James Massocca, Ladenburg Thalmann & Co. Inc., Research Division - Associate [35] -------------------------------------------------------------------------------- Okay. And then on the debt side, I know speaking of France, you had some of that French mortgage debt coming due. And ultimately, you're probably looking to refinance that. Are you still looking to refinance that? -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [36] -------------------------------------------------------------------------------- Absolutely. Absolutely. -------------------------------------------------------------------------------- John James Massocca, Ladenburg Thalmann & Co. Inc., Research Division - Associate [37] -------------------------------------------------------------------------------- And what's kind of essentially the progress been on that refinancing conversation? And maybe roughly speaking, when should we expect something? If you can... -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [38] -------------------------------------------------------------------------------- It's moving ahead nicely. I would expect within next in the next few months, you'll see something on it. -------------------------------------------------------------------------------- Operator [39] -------------------------------------------------------------------------------- This will conclude today's question-and-answer session. I would like to turn the conference back over to Jim Nelson, CEO, for any closing remarks. -------------------------------------------------------------------------------- James L. Nelson, Global Net Lease, Inc. - President, CEO & Director [40] -------------------------------------------------------------------------------- Yes. I want to thank you all for calling in today. It was really good to hear your questions and answer them. We thank you for that. And for all of you who follow GNL, we intend to continue moving ahead with our business plan, as you've seen in the last few years going forward for the next many numbers of years. So thank you all very much. -------------------------------------------------------------------------------- Operator [41] -------------------------------------------------------------------------------- The conference has now concluded. Thank you for attending today's presentation, and you may now disconnect.