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On Friday, JMP Securities analyst Mitch Germain maintained a Market Outperform rating on Global Net Lease (NYSE:GNL), alongside a steadfast $9.00 price target. According to InvestingPro data, GNL currently trades at $7.97 with a market capitalization of $1.84 billion, suggesting potential upside based on the analyst’s target. Germain’s statement highlighted the company’s recent completion of the initial phase of a significant $1.8 billion shopping center portfolio sale. This move is a strategic effort by Global Net Lease to substantially reduce leverage, a primary goal of the management’s future plans. The sale is also expected to decrease corporate overhead and simplify the company’s structure.
Germain noted that the sale is a critical step toward Global Net Lease reaching its targeted leverage ratio, aiming for a high-6x debt-to-EBITDA ratio at the midpoint. The company has been focused on deleveraging since early 2024, announcing over $3 billion in asset sales over the past year. According to Germain, the reduction in leverage is a key driver for potential multiple expansion, and these recent actions have favorably shifted the investment community’s perception of Global Net Lease.
The analyst pointed out that since the announcement of the portfolio sale on February 26, Global Net Lease’s shares have seen an approximate 8% increase in value, contrasting with a 3% decline in the MSCI REIT Index RMZ. This performance suggests that the company’s efforts are being recognized by the market. InvestingPro data shows the stock has delivered an impressive 13.56% return year-to-date, with revenue growth of 56.29% in the last twelve months.
Despite the progress and the company’s alignment with its net-lease Real Estate Investment Trust (REIT) peers in terms of leverage and portfolio characteristics, Global Net Lease’s valuation remains low. Shares are currently trading at a mid-8x multiple of the 2025 estimated Adjusted Funds From Operations (AFFO) per share. This is significantly below the mid-13x multiple at which net-lease REITs generally trade. Germain views this undervaluation as unwarranted, given the company’s strides in reducing leverage and enhancing its portfolio. InvestingPro analysis indicates the stock is currently undervalued, while offering an attractive 13.8% dividend yield. Discover more insights and 6 additional ProTips for GNL with an InvestingPro subscription, including detailed valuation metrics and growth potential indicators.
In other recent news, Global Net Lease, Inc. announced a binding agreement to sell 100 non-core properties for $1.8 billion, a move that Fitch Ratings responded to by placing the company on Rating Watch Positive. This transaction is expected to significantly aid in reducing the company’s leverage. Additionally, Global Net Lease reported its financial results for 2024, though specific figures were not disclosed in the provided context. Truist Securities maintained a Hold rating on the company, adjusting its AFFO projections downward, citing asset sales as a primary factor. The firm anticipates a 29% decrease in AFFO per share in 2025 and a further decrease in 2026. Meanwhile, JMP Securities maintained a Market Outperform rating with a $9 price target, highlighting the company’s effective asset sales strategy. Global Net Lease also amended ownership limits for select investors, allowing them to increase their stakes in the company. This comes alongside the company’s recent $300 million share repurchase program, which Fitch views less favorably in light of the company’s debt reduction goals.
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