Global Net Lease Inc

Previous wording

Certain statements included in this Quarterly Report on Form 10-Q that are not historical facts may be forward-looking statements, including statements regarding the intent, belief or current expectations of us, 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,” “projects,” “potential,” “predicts,” “expects,” “plans,” “intends,” “would,” “could,” “should” or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. 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.

Current wording

This Quarterly Report on Form 10-Q contains “forward-looking statements”, as that term is defined under the Private Securities Litigation Reform Act of 1995 (“PSLRA”), Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements include statements regarding the intent, belief or current expectations of us, 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,” “projects,” “potential,” “predicts,” “expects,” “plans,” “intends,” “would,” “could,” “should” or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Actual results may differ materially from those contemplated by such forward-looking statements.We believe these forward-looking statements are reasonable; however, you should not place undue reliance on any forward-looking statements, which are based on current expectations. 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. We intend that all forward-looking statements be subject to the safe-harbor provisions of the PSLRA.

Previous wording

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, 2023, this and our other Quarterly Reports on Form 10-Q and our other filings with the U.S Securities and Exchange Commission (“SEC”) as such risks, uncertainties and other important factors may be updated from time to time in our subsequent reports.

Current wording

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. These risks and uncertainties include the risks associated with realization of the anticipated benefits of the merger with The Necessity Retail REIT, Inc. and the internalization of the Company’s property management and advisory functions; that any potential future acquisition or disposition by the Company is subject to market conditions and capital availability and may not be identified or completed on favorable terms, or at all. Some of the additional risks and uncertainties, although not all risks and uncertainties, that could cause the Company’s actual results to differ materially from those presented in its forward-looking statements are set forth in the “Risk Factors” and “Quantitative and Qualitative Disclosures about Market Risk” in our Annual Report on Form 10-K for the year ended December 31, 2023, this and our other Quarterly Reports on Form 10-Q, and our other filings with the U.S. Securities and Exchange Commission (the “SEC”), as such risks, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports.

Previous wording

As of June 30, 2024, we owned 1,242 properties consisting of 64.3 million rentable square feet, which were 94% leased, with a weighted-average remaining lease term of 6.5 years. Based on the percentage of annualized rental income on a straight-line basis as of June 30, 2024, approximately 80% of our properties were located in the U.S. and Canada and approximately 20% were located in Europe. In addition, as of June 30, 2024, our portfolio was comprised of 31% Industrial & Distribution properties, 28% Multi-Tenant retail properties, 21% Single Tenant retail properties and 20% Office properties. These represent our four reportable segments and the percentages are calculated using annualized straight-line rent converted from local currency into the U.S. Dollar (“USD”) as of June 30, 2024. The straight-line rent includes amounts for tenant concessions.

Current wording

As of September 30, 2024, we owned 1,223 properties consisting of 61.9 million rentable square feet, which were 96% leased, with a weighted-average remaining lease term of 6.3 years. Based on the percentage of annualized rental income on a straight-line basis as of September 30, 2024, approximately 80% of our properties were located in the U.S. and Canada and approximately 20% were located in Europe. In addition, as of September 30, 2024, our portfolio was comprised of 33% Industrial & Distribution properties, 27% Multi-Tenant retail properties, 22% Single Tenant retail properties and 18% Office properties. These represent our four reportable segments and the percentages are calculated using annualized straight-line rent converted from local currency into the U.S. Dollar (“USD”) as of September 30, 2024. The straight-line rent includes amounts for tenant concessions.

Previous wording

Our portfolio is leased to primarily “Investment Grade” rated tenants in well established markets in the U.S. and Europe. A total of 58.8% of our rental income on an annualized straight-line basis for leases in place as of June 30, 2024 was derived from Investment Grade rated tenants, comprised of 31.9% leased to tenants with an actual investment grade rating and 26.9% 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 June 30, 2024.

Current wording

Our portfolio is leased to primarily “Investment Grade” rated tenants in well established markets in the U.S. and Europe. A total of 60.5% of our rental income on an annualized straight-line basis for leases in place as of September 30, 2024 was derived from Investment Grade rated tenants, comprised of 31.8% leased to tenants with an actual investment grade rating and 28.7% 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 September 30, 2024.

Previous wording

Pursuant to the terms and conditions of the Agreement and Plan of Merger dated May 23, 2023 (the “Internalization Merger Agreement”) to internalize the advisory and property management functions of the combined companies, on the Acquisition Date, (i) GNL Advisor Merger Sub LLC, a wholly-owned subsidiary of the OP merged with and into the Advisor, with the Advisor continuing in existence; (ii) GNL PM Merger Sub LLC, a wholly-owned subsidiary of the OP merged with and into the Property Manager, with the Property Manager continuing in existence; (iii) RTL Advisor Merger Sub LLC merged with and into Necessity Retail Advisors, LLC (“RTL Advisor”), with RTL Advisor continuing in existence; and (iv) RTL PM

Current wording

Pursuant to the terms and conditions of the Agreement and Plan of Merger dated May 23, 2023 (the “Internalization Merger Agreement”) to internalize the advisory and property management functions of the combined companies, on the Acquisition Date, (i) GNL Advisor Merger Sub LLC, a wholly-owned subsidiary of the OP merged with and into the Advisor, with the Advisor continuing in existence; (ii) GNL PM Merger Sub LLC, a wholly-owned subsidiary of the OP merged with and into the Property Manager, with the Property Manager continuing in existence; (iii) RTL Advisor Merger Sub LLC merged with and into Necessity Retail Advisors, LLC (“RTL Advisor”), with RTL Advisor continuing in existence; and (iv) RTL PM Merger Sub LLC, a wholly-owned subsidiary of the OP merged with and into Necessity Retail Properties, LLC (“RTL Property Manager”), with RTL Property Manager continuing in existence (collectively, the “Internalization Merger”). As a result of the consummation of the Internalization Merger, the advisory agreements were terminated for both us and RTL and, we assumed both ours and RTL’s property management agreements and we were no longer externally managed.

Previous wording

Net loss attributable to common stockholders was $46.6 million for the three months ended June 30, 2024, as compared to $31.4 million for the three months ended June 30, 2023. The change in net loss attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

Current wording

Net loss attributable to common stockholders was $76.6 million for the three months ended September 30, 2024, as compared to $142.5 million for the three months ended September 30, 2023. The change in net loss attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

Previous wording

Consolidated revenue from tenants, detailed by reportable segment, is as follows:

Current wording

Consolidated revenue from tenants includes only 18 days of revenue attributable to properties acquired from RTL on the Acquisition Date in the September 30, 2023 period. Consolidated revenue from tenants, detailed by reportable segment, is as follows:

Previous wording

Revenue from tenants in our Industrial & Distribution segment was $61.4 million and $51.3 million for the three months ended June 30, 2024 and 2023, respectively. The majority of the increase in revenue from tenants was driven by revenue of $8.1 million attributable to properties acquired from RTL on the Acquisition Date, the increase from a full quarterly period of revenue in 2024 from other properties acquired since January 1, 2023, with minimal impact from the year-over-year change in average exchange rates during the three months ended June 30, 2024, when compared to the same period last year.

Current wording

Revenue from tenants in our Industrial & Distribution segment was $59.7 million and $53.8 million for the three months ended September 30, 2024 and 2023, respectively. The majority of the increase in revenue from tenants was driven by a full quarterly period of revenue in the third quarter of 2024 attributable to properties acquired from RTL on the Acquisition Date, the increase from a full quarterly period of revenue in 2024 from other properties acquired since January 1, 2023, with minimal impact from the year-over-year change in average exchange rates during the three months ended September 30, 2024, when compared to the same period last year.

Previous wording

Revenue from tenants in our Office segment was $35.9 million and $40.0 million for the three months ended June 30, 2024 and 2023, respectively. The decrease in the second quarter of 2024 was primarily driven by lower overall revenue from properties owned in both periods and disposals, partially offset by revenue attributable to properties acquired from RTL on the Acquisition Date. The year-over-year change in foreign exchange rates had a minimal impact.

Current wording

Revenue from tenants in our Office segment was $36.2 million and $38.8 million for the three months ended September 30, 2024 and 2023, respectively. The decrease in the third quarter of 2024 was primarily driven by disposals, partially offset by a full quarterly period of revenue in the third quarter of 2024 attributable to properties acquired from RTL on the Acquisition Date. The year-over-year change in foreign exchange rates had a minimal impact.

Previous wording

Consolidated property operating expenses, detailed by reportable segment, is as follows:

Current wording

Consolidated property operating expenses includes only 18 days of expenses attributable to properties acquired from RTL on the Acquisition Date in the September 30, 2023 period. Consolidated property operating expenses, detailed by reportable segment, is as follows:

Previous wording

Property operating expenses in our Industrial & Distribution segment were $5.0 million and $3.3 million for the three months ended June 30, 2024 and 2023, respectively. The increase was primarily due to the timing of our reimbursable costs as well as an increase resulting from properties acquired from RTL on the Acquisition Date, with minimal impact from the year-over-year change in average foreign exchange rates during the three months ended June 30, 2024, when compared to the same period last year.

Current wording

Property operating expenses in our Industrial & Distribution segment were $5.5 million and $3.4 million for the three months ended September 30, 2024 and 2023, respectively. The increase was primarily due to the timing of our reimbursable costs as well as an increase resulting from a full quarterly period of expenses in the third quarter of 2024 from properties acquired from RTL on the Acquisition Date, with minimal impact from the year-over-year change in average foreign exchange rates during the three months ended September 30, 2024, when compared to the same period last year.

Previous wording

Due to the completion of the Internalization Merger (see below) there were no operating fees paid to related parties in the three months ended June 30, 2024. Operating fees paid to related parties were $10.1 million in the three months ended June 30, 2023. The decline in the quarter ended June 30, 2024 was primarily due to the closing of the Internalization Merger on the Acquisition Date. For additional information, see Note 12 — Related Party Transactions to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

Due to the completion of the Internalization Merger (see below) there were no operating fees paid to related parties in the three months ended September 30, 2024. Operating fees paid to related parties were $8.7 million in the three months ended September 30, 2023. The decline in the quarter ended September 30, 2024 was primarily due to the closing of the Internalization Merger on the Acquisition Date. For additional information, see Note 12 — Related Party Transactions to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

During the three months ended June 30, 2024, we determined that the fair values of six of our properties located in the U.S. (three of which were acquired in the REIT Merger) had an estimated fair value that was lower than the carrying value of the properties, based on the estimated selling price of such properties, and as a result, we recorded an impairment charge of approximately $27.4 million. The majority of the impairment charge in the second quarter of 2024 was due to legacy GNL properties. We did not record any impairment charges in the three months ended June 30, 2023.

Current wording

During the three months ended September 30, 2024, the Company determined that 21 of its properties located in the U.S. (19 of which were acquired in the REIT Merger) had an estimated fair value that was lower than the carrying value of the properties, based on the estimated selling price of such properties, and as a result, the Company recorded an impairment charge of approximately $38.6 million.

Previous wording

We recognized $2.3 million and $6.4 million of merger, transaction and other costs during the six months ended June 30, 2024 and 2023, respectively. The decrease was due to higher advisory, legal and other professional costs incurred in the prior year period that were directly related to the Mergers.

Current wording

We recognized $1.9 million and $43.8 million of merger, transaction and other costs during the three months ended September 30, 2024 and 2023, respectively. The decrease was due to higher advisory, legal and other professional costs incurred in the prior year period that were directly related to the Mergers.

Previous wording

We recognized settlement costs in the three months ended June 30, 2023 of $15.1 million, which related to the cash reimbursement of approximately $8.8 million of expenses to the Blackwells Capital LLC (“Blackwells Capital”), an affiliate of Blackwells Onshore I LLC (“Blackwells Onshore” and, together with Blackwells Capital, “Blackwells”), and certain others involved with Blackwells proxy solicitation (collectively and, together with Blackwells, the “Blackwells/Related Parties”) and the noncash equity expense of approximately $6.3 million for Common Stock that was ultimately issued to the Blackwells/Related Parties under the Cooperation Agreement (as defined in Note 10 — Stockholders’ Equity).

Current wording

We recognized settlement costs in the three months ended September 30, 2023 of $14.6 million, which related to non-cash equity expense for Common Stock issued to Blackwells Capital LLC (“Blackwells Capital”), an affiliate of Blackwells Onshore I LLC (“Blackwells Onshore” and, together with Blackwells Capital, “Blackwells”), and certain others involved with Blackwells proxy solicitation (collectively and, together with Blackwells, the “Blackwells/Related Parties”) under the Cooperation Agreement (as defined in Note 10 — Stockholders’ Equity).

Previous wording

General and administrative expenses were $15.2 million and $10.7 million for the three months ended June 30, 2024 and 2023, respectively, primarily consisting of employee compensation/payroll expenses, professional fees including audit and taxation services, board member compensation and directors’ and officers’ liability insurance. The overall increase in general and administrative expenses was primarily due to the internalization of our management functions (as discussed above), such as employee compensation/payroll expenses.

Current wording

General and administrative expenses were $12.6 million and $7.0 million for the three months ended September 30, 2024 and 2023, respectively, primarily consisting of employee compensation/payroll expenses, professional fees including audit and taxation services, board member compensation and directors’ and officers’ liability insurance. The overall increase in general and administrative expenses was primarily due to a full quarter of expenses in the third quarter of 2024 from the internalization of our management functions (as discussed above), such as employee compensation/payroll expenses.

Previous wording

During the three months ended June 30, 2024 and 2023, we recognized equity-based compensation expense of $2.3 million and $2.9 million, respectively. Equity-based compensation in the quarter ended June 30, 2024 consisted of (i) amortization of restricted shares of Common Stock (“Restricted Shares”) granted to employees of the former Advisor or its affiliates who were involved in providing services to us prior to the Internalization; (ii) amortization of restricted stock units in respect of shares of Common Stock (“RSUs”) granted to our employees (after the Internalization) and our independent directors and; (iii) amortization expense related to performance stock units (“PSUs”) which were issued in October of 2023. Equity-based compensation for the quarter ended June 30, 2023 included amortization expense for Restricted Shares, RSUs and expense related to our multi-year outperformance agreement entered into with the former Advisor in June 2021 (the “2021 OPP”), which expired on September 11, 2023. For additional information, see Note 13 — Equity-Based Compensation to our consolidated financial statements in this Quarterly Report on Form 10-Q.

Current wording

During the three months ended September 30, 2024 and 2023, we recognized equity-based compensation expense of $2.3 million and $10.4 million, respectively. Equity-based compensation in the quarter ended September 30, 2024 consisted of (i) amortization of restricted shares of Common Stock (“Restricted Shares”) granted to employees of the former Advisor or its affiliates who were involved in providing services to us prior to the Internalization; (ii) amortization of restricted stock units in respect of shares of Common Stock (“RSUs”) granted to our employees (after the Internalization) and our independent directors and; (iii) amortization expense related to performance stock units (“PSUs”) which were issued in October of 2023. Equity-based compensation for the quarter ended September 30, 2023 included amortization expense for Restricted Shares, RSUs and expense related to our multi-year outperformance agreement entered into with the former Advisor in June 2021 (the “2021 OPP”), which expired on September 11, 2023. The decrease in the third quarter of 2024 as compared to the prior year quarter was due to higher compensation expense recorded in the third quarter of 2023 as a result of an accelerated amortization expense due to a modification to the 2021 OPP (for additional information, see Note 13 — Equity-Based Compensation to our consolidated financial statements in this Quarterly Report on Form 10-Q).

Previous wording

Depreciation and amortization expense was $89.5 million and $37.3 million for the three months ended June 30, 2024 and 2023, respectively. The increase in the quarter ended June 30, 2024 as compared to the same quarter last year was due to additional depreciation and amortization expense recorded as a result of the impact of the REIT Merger. In addition, the increase was partially due to the impact of the year-over-year change in average foreign exchange rates during the three months ended June 30, 2024, when compared to the same period last year.

Current wording

Depreciation and amortization expense was $85.4 million and $49.2 million for the three months ended September 30, 2024 and 2023, respectively. The increase in the quarter ended September 30, 2024 as compared to the same quarter last year was due to additional depreciation and amortization expense recorded as a result of the impact of the REIT Merger. In addition, the increase was partially due to the impact of the year-over-year change in average foreign exchange rates during the three months ended September 30, 2024, when compared to the same period last year.

Previous wording

Gain on Dispositions of Real Estate Assets

Current wording

Loss on Dispositions of Real Estate Assets

Previous wording

During the three months ended June 30, 2024 we sold 36 properties, 34 of which were acquired in the REIT Merger, and recorded a net gain of $34.1 million during the three months ended June 30, 2024. During the three months ended June 30, 2023, we did not sell any properties.

Current wording

During the three months ended September 30, 2024 we sold 20 properties, 13 of which were acquired in the REIT Merger, and recorded a net loss of $4.3 million during the three months ended September 30, 2024. During the three months ended September 30, 2023, we sold two properties in the U.S., which were acquired in the REIT Merger, and recorded a net loss of $0.7 million.

Previous wording

Interest expense was $89.8 million and $27.7 million for the three months ended June 30, 2024 and 2023, respectively. The increase was due to the increase in the net amount of our total gross debt outstanding to $5.1 billion as of June 30, 2024 from $2.5 billion as of June 30, 2023. The weighted-average effective interest rate of our total debt was 4.8% as of June 30, 2023 and 4.7% as of June 30, 2024. The increase in the net amount of our gross debt outstanding was primarily due to debt assumed in the REIT Merger and additional borrowings on our Revolving Credit Facility to pay off RTL’s former credit facility.

Current wording

Interest expense was $77.1 million and $41.2 million for the three months ended September 30, 2024 and 2023, respectively. The increase was due to higher non-cash amortization expense due to the amortization of discounts recorded on debt acquired in the REIT Merger. The amount of our total gross debt outstanding was $5.0 billion as of September 30, 2024, as compared to from $5.3 billion as of September 30, 2023. The weighted-average effective interest rate of our total debt was 4.7% as of September 30, 2023 and 4.8% as of September 30, 2024.

Previous wording

The increase in interest expense was also impacted by the year-over-year change in average foreign exchange rates during the three months ended June 30, 2024, when compared to the same period last year. As of June 30, 2024, approximately 10.0% of our total debt outstanding was denominated in EUR, 9.0% of our total debt outstanding was denominated in GBP and 1.0% was denominated in Canadian Dollars (“CAD”). As of June 30, 2023, approximately 22% of our total debt outstanding was denominated in EUR, 18% of our total debt outstanding was denominated in GBP and 1% was denominated in CAD.

Current wording

The increase in interest expense was also impacted by the year-over-year change in average foreign exchange rates during the three months ended September 30, 2024, when compared to the same period last year. As of September 30, 2024, approximately 11.0% of our total debt outstanding was denominated in EUR, 9.0% of our total debt outstanding was denominated in GBP and 1.0% was denominated in Canadian Dollars (“CAD”). As of September 30, 2023, approximately 10% of our total debt outstanding was denominated in EUR, 8% of our total debt outstanding was denominated in GBP and 1% was denominated in CAD.

Previous wording

We view a combination of secured and unsecured financing as an efficient and accretive means to acquire properties and manage working capital. As of June 30, 2024, approximately 47% of our total debt outstanding was secured and 53% was unsecured, the latter including amounts outstanding under our Revolving 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.

Current wording

We view a combination of secured and unsecured financing as an efficient and accretive means to acquire properties and manage working capital. As of September 30, 2024, approximately 48% of our total debt outstanding was secured and 52% was unsecured, the latter including amounts outstanding under our Revolving 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.

Previous wording

The gain of $0.5 million on derivative instruments for the three months ended June 30, 2024 and the loss of $0.8 million on derivative instruments for the three months ended June 30, 2023, 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 June 30, 2024, the gain on derivative instruments consisted of unrealized gains of $0.2 million and realized gains of $0.3 million. For the three months ended June 30, 2023, the loss on derivative instruments consisted of unrealized losses of $1.6 million and realized gains of $0.8 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).

Current wording

The loss of $4.7 million on derivative instruments for the three months ended September 30, 2024 and the gain of $3.2 million on derivative instruments for the three months ended September 30, 2023, 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 September 30, 2024, the loss on derivative instruments consisted of unrealized losses of $4.4 million and realized losses of $0.3 million. For the three months ended September 30, 2023, the gain on derivative instruments consisted of unrealized gains of $1.9 million and realized gains of $1.3 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 or losses are included in AFFO (as defined below).

Previous wording

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. Income tax expense was $2.1 million and $6.2 million for the six months ended June 30, 2024 and 2023 respectively. The decrease was due to a tax benefit recorded in the second quarter of 2024 for previous tax years.

Current wording

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 benefit (expense) 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. Income tax expense was $1.3 million and $2.8 million for the three months ended September 30, 2024 and 2023, respectively.

Previous wording

Preferred stock dividends were $10.9 million for the three months ended June 30, 2024 and $5.1 million for the three months ended June 30, 2023. The amounts in the three months ended March 31, 2024 represent the dividends that are attributable to holders of Series A Preferred Stock, Series B Preferred Stock, Series D Preferred Stock and Series E Preferred Stock. The amounts in the three months ended March 31, 2023 represents the dividends that were attributable to holders of Series A Preferred Stock and holders of Series B Preferred Stock.

Current wording

Preferred stock dividends were $10.9 million for the three months ended September 30, 2024 and $6.3 million for the three months ended September 30, 2023. The amounts in both periods represent the dividends that are attributable to holders of Series A Preferred Stock, Series B Preferred Stock, Series D Preferred Stock and Series E Preferred Stock.

Previous wording

Net loss attributable to common stockholders was $81.3 million for the six months ended June 30, 2024, as compared to net loss of $37.3 million for the six months ended June 30, 2023. The change in net loss attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

Current wording

Net loss attributable to common stockholders was $157.9 million for the nine months ended September 30, 2024, as compared to net loss of $179.8 million for the nine months ended September 30, 2023. The change in net loss attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.

Previous wording

Revenue from tenants in our Industrial & Distribution segment was $123.4 million and $104.1 million for the six months ended June 30, 2024 and 2023, respectively. The increase in revenue from tenants was primarily driven by revenue of $16.2 million attributable to properties acquired from RTL on the Acquisition Date and the increase from a full period of revenue in 2024 from other properties acquired since January 1, 2023, as well as the impact from the year-over-year change in average foreign exchange rates during the six months ended June 30, 2024, when compared to the same period last year.

Current wording

Revenue from tenants in our Industrial & Distribution segment was $183.1 million and $157.9 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in revenue from tenants was primarily driven by a full period of revenue in the nine months ended September 30, 2024 attributable to properties acquired from RTL on the Acquisition Date and the increase from a full period of revenue in 2024 from other properties acquired since January 1, 2023, with minimal impact from the year-over-year change in average foreign exchange rates during the nine months ended September 30, 2024, when compared to the same period last year.

Previous wording

Revenue from tenants in our Office segment was $72.4 million and $77.8 million for the six months ended June 30, 2024 and 2023, respectively. The decrease as presented in the table above was primarily driven by lower overall revenue from properties owned in both periods and disposals, partially offset by revenue attributable to properties acquired from RTL on the Acquisition Date, as well as the impact from the year-over-year change in foreign exchange rates during the six months ended June 30, 2024, when compared to the same period last year.

Current wording

Revenue from tenants in our Office segment was $108.6 million and $116.6 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease as presented in the table above was primarily driven by disposals, partially offset by a full period of revenue in the nine months ended September 30, 2024 attributable to properties acquired from RTL on the Acquisition Date, with minimal impact from the year-over-year change in foreign exchange rates during the nine months ended September 30, 2024, when compared to the same period last year.

Previous wording

Property operating expenses in our Industrial & Distribution segment were $9.6 million and $6.6 million for the six months ended June 30, 2024 and 2023, respectively. The increase was primarily due to the timing of our reimbursable costs and the year-over-year change in average foreign exchange rates during the three months ended June 30, 2024, when compared to the same period last year.

Current wording

Property operating expenses in our Industrial & Distribution segment were $15.1 million and $10.1 million for the nine months ended September 30, 2024 and 2023, respectively. The increase was primarily due to the timing of our reimbursable costs and a full period of expenses in the nine months ended September 30, 2024 attributable to properties acquired from RTL on the Acquisition Date, with minimal impact from the year-over-year change in average foreign exchange rates during the nine months ended September 30, 2024, when compared to the same period last year.

Previous wording

Property operating expenses in our Single-Tenant Retail were $8.5 million and $0.3 million for the six months ended June 30, 2024 and 2023, respectively. The increase was primarily due to an increase in property operating expenses of $7.3 million resulting from properties acquired from RTL on the Acquisition Date and a full period of property operating expenses from other properties acquired since January 1, 2023, as well as the impact of the year-over-year change in average foreign exchange rates, when compared to the same period last year.

Current wording

Property operating expenses in our Single-Tenant Retail were $11.4 million and $1.1 million for the nine months ended September 30, 2024 and 2023, respectively. The increase was primarily due to an increase in property operating expenses resulting from a full period of expenses in the nine months ended September 30, 2024 attributable to properties acquired from RTL on the Acquisition Date and a full period of property operating expenses from other properties acquired since January 1,

Previous wording

Property operating expenses in our Office segment were $9.7 million and $10.2 million for the six months ended June 30, 2024 and 2023, respectively. The decrease was primarily due to the timing of our reimbursable expenses, partially offset by an increase in property operating expenses resulting from properties acquired from RTL on the Acquisition Date and the year-over-year change in average foreign exchange rates, when compared to the same period last year.

Current wording

Property operating expenses in our Office segment were $14.7 million and $15.2 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease was primarily due to the timing of our reimbursable expenses, with minimal impact from the year-over-year change in average foreign exchange rates.

Previous wording

Due to the completion of the Internalization Merger (see below) there were no operating fees paid to related parties in the six months ended June 30, 2024. Operating fees paid to related parties were $20.2 million in the six months ended June 30, 2023. The decline in the quarter ended June 30, 2024 was primarily due to the closing of the Internalization Merger on the Acquisition Date. For additional information, see Note 12 — Related Party Transactions to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Current wording

Due to the completion of the Internalization Merger (see below) there were no operating fees paid to related parties in the nine months ended September 30, 2024. Operating fees paid to related parties were $28.9 million in the nine months ended September 30, 2023. The decline in the nine months ended September 30, 2024 was primarily due to the closing of the Internalization Merger on the Acquisition Date. For additional information, see Note 12 — Related Party Transactions to our consolidated financial statements included in this Quarterly Report on Form 10-Q.

Previous wording

During the six months ended June 30, 2024, we determined that the fair values of 12 of our properties located in the U.S. (three of which were acquired in the REIT Merger) had an estimated fair value that was lower than the carrying value of the properties, based on the estimated selling price of such properties, and as a result, we recorded an impairment charge of approximately $31.7 million. The majority of the impairment charges in the first six months of 2024 were due to legacy GNL properties. We did not record any impairment charges in the six months ended June 30, 2023.

Current wording

During the nine months ended September 30, 2024, we determined that the fair values of 33 of our properties located in the U.S. (28 of which were acquired in the REIT Merger) had an estimated fair value that was lower than the carrying value of the properties, based on the estimated selling price of such properties, and as a result, we recorded an impairment charge of approximately $70.3 million. The majority of the impairment charges in the first nine months of 2024 were due to legacy GNL properties.

Previous wording

We recognized settlement costs of $15.1 million which related to the cash reimbursement of approximately $8.8 million of expenses to the Blackwells/Related Parties and non-cash equity expense recorded in the six months ended June 30, 2023 of approximately $6.3 million for Common Stock that was ultimately issued to Blackwells under the Cooperation Agreement (as defined in Note 10 — Stockholders’ Equityto our consolidated financial statements in this Quarterly Report on Form 10-Q ).

Current wording

We recognized settlement costs of $29.7 million during the nine months ended September 30, 2023, which related to the cash reimbursement of approximately $8.8 million of expenses to the Blackwells/Related Parties and non-cash equity expense recorded in the nine months ended September 30, 2023 of approximately $20.9 million for Common Stock that was ultimately issued to Blackwells under the Cooperation Agreement (as defined in Note 10 — Stockholders’ Equityto our consolidated financial statements in this Quarterly Report on Form 10-Q ).

Previous wording

General and administrative expenses were $31.4 million and $16.3 million for the six months ended June 30, 2024 and 2023, respectively, and primarily consist of employee compensation/payroll expenses, professional fees including audit and taxation services, board member compensation and directors’ and officers’ liability insurance. The overall increase in general and administrative expenses was primarily due to the internalization of our management functions (as discussed above), such as employee compensation/payroll expenses and higher legal and other costs in the six months ended June 30, 2024.

Current wording

General and administrative expenses were $44.0 million and $23.3 million for the nine months ended September 30, 2024 and 2023, respectively, and primarily consist of employee compensation/payroll expenses, professional fees including audit and taxation services, board member compensation and directors’ and officers’ liability insurance. The overall increase in general and administrative expenses was primarily due to a full period of expenses in the nine months ended September 30, 2024 from the internalization of our management functions (as discussed above).

Previous wording

During the six months ended June 30, 2024 and 2023, we recognized equity-based compensation expense of $4.3 million and $5.8 million, respectively. Equity-based compensation in the six months ended June 30, 2024 consisted of (i) amortization of restricted shares of Common Stock (“Restricted Shares”) granted to employees of the former Advisor or its affiliates who were involved in providing services to us prior to the Internalization; (ii) amortization of restricted stock units in respect of shares of Common Stock (“RSUs”) granted to our employees (after the Internalization) and our independent directors and; (iii) amortization expense related to performance stock units (“PSUs”) which were issued in October of 2023. Equity-based compensation for the six months ended June 30, 2023 included amortization expense for Restricted Shares, RSUs and expense related to our multi-year outperformance agreement entered into with the former Advisor in June 2021 (the “2021 OPP”), which expired on September 11, 2023. For additional information, see Note 13 — Equity-Based Compensation to our consolidated financial statements in this Quarterly Report on Form 10-Q.

Current wording

During the nine months ended September 30, 2024 and 2023, we recognized equity-based compensation expense of $6.6 million and $16.2 million, respectively. Equity-based compensation in the nine months ended September 30, 2024 consisted of (i) amortization of Restricted Shares granted to employees of the former Advisor or its affiliates who were involved in providing services to us prior to the Internalization; (ii) amortization of RSUs granted to our employees (after the Internalization) and our independent directors and; (iii) amortization expense related to PSUs which were issued in October of 2023. Equity-based compensation for the nine months ended September 30, 2023 included amortization expense for Restricted Shares, RSUs and expense related to the 2021 OPP, which expired on September 11, 2023. The decrease in the nine months ended September 30, 2024 as compared to the prior year quarter was due to higher compensation expense recorded in the third quarter of 2023 as a result of an accelerated amortization expense due to a modification to the 2021 OPP (for additional information, see Note 13 — Equity-Based Compensation to our consolidated financial statements in this Quarterly Report on Form 10-Q).

Previous wording

Depreciation and amortization expense was $181.5 million and $74.3 million for the six months ended June 30, 2024 and 2023, respectively. The increase in the first six months of 2024 compared to the first six months of 2023 was due to additional depreciation and amortization expense recorded as a result of the impact of the REIT Merger and the year-over-year change in average foreign exchange rates during the six months ended June 30, 2024, when compared to the same period last year.

Current wording

Depreciation and amortization expense was $266.9 million and $123.6 million for the nine months ended September 30, 2024 and 2023, respectively. The increase in the first nine months of 2024 compared to the first nine months of 2023 was due to additional depreciation and amortization expense recorded for a full period in the nine months ended September 30, 2024 as a result of the impact of the REIT Merger and the year-over-year change in average foreign exchange rates during the nine months ended September 30, 2024, when compared to the same period last year.

Previous wording

During the six months ended June 30, 2024, we sold 55 properties, 51 which were acquired in the REIT Merger, and recorded a net gain of $40.0 million. During the six months ended June 30, 2023 we did not sell any properties.

Current wording

During the nine months ended September 30, 2024, we sold 75 properties, 64 which were acquired in the REIT Merger, and recorded a net gain of $35.7 million. During the nine months ended September 30, 2023, we sold two properties, which were acquired in the REIT Merger, and recorded a net loss of $0.7 million

Previous wording

Interest expense was $172.6 million and $54.7 million for the six months ended June 30, 2024 and 2023, respectively. The increase was due to the increase in the net amount of our total gross debt outstanding of $2.5 billion as of June 30, 2023 to $5.1 billion as of June 30, 2024. The weighted-average effective interest rate of our total debt was 4.8% as of June 30, 2023 and 4.7% as of June 30, 2024. The increase in the net amount of our gross debt outstanding was primarily due to debt assumed in the REIT Merger and additional borrowings on our Revolving Credit Facility to pay off RTL’s former credit facility.

Current wording

Interest expense was $249.7 million and $95.8 million for the nine months ended September 30, 2024 and 2023, respectively. The increase was due to higher non-cash amortization expense due to the amortization of discounts recorded on debt acquired in the REIT Merger. The net amount of our total gross debt outstanding was $5.3 billion as of September 30, 2023 as compared to $5.0 billion as of September 30, 2024. The weighted-average effective interest rate of our total debt was 4.7% as of September 30, 2023 and 4.8% as of September 30, 2024.