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On Wednesday, Global Net Lease (NYSE:GNL), currently trading at $8.15 with a market capitalization of $1.88 billion, maintained its Market Outperform rating and a $9.00 price target from JMP Securities. According to InvestingPro data, the stock has shown significant momentum with a 10% return over the past week. The firm acknowledged the company’s effective strategy in asset sales, which has seen $3 billion in transactions since the leverage reduction strategy was announced approximately one year ago. JMP Securities highlighted the company’s adeptness in navigating a difficult market and executing sales, which are projected to reduce leverage by 1.5x-2.0x in terms of debt/EBITDA by mid-2025.
JMP Securities also noted the positive market response to the company’s recent announcement of selling its shopping centers. Shares have risen approximately $1, or around 12%, yet the firm believes the stock’s valuation remains attractive. InvestingPro analysis shows the company trading at an EV/EBITDA multiple of 10.55x, while offering a substantial 13.5% dividend yield. The expected mid-8x multiple on 2025 estimated adjusted funds from operations (AFFO) per share contrasts with the mid-13x multiple seen across the net-lease real estate investment trust (REIT) sector.
Additionally, JMP Securities sees Global Net Lease’s new $300 million share buyback program as a judicious use of capital. The analysts reasoned that further debt reduction would be expensive due to high defeasance costs as near-term maturities decrease significantly. Moreover, the current share price suggests an implied capitalization rate of approximately 10%, which is favorable compared to other capital deployment options and offers an accretive use of capital. InvestingPro data reveals the company maintains a "GOOD" overall financial health score of 2.66, with analyst price targets ranging from $7 to $12 per share.
The research firm has previously been critical of share buybacks, favoring them only when they can be executed without impacting leverage. In the case of Global Net Lease, the use of proceeds from asset sales or cash retained from the recent dividend cut is anticipated to enable a leverage-neutral buyback.
In other recent news, Global Net Lease, Inc. reported its financial results for the fourth quarter of 2024, revealing a slight improvement in earnings per share (EPS), which came in at -$0.08, beating the forecast of -$0.10. The company’s revenue for the quarter was $199.1 million, slightly above the expected $193.28 million. Despite a decline in revenue from the previous year, the net loss attributable to common stockholders improved significantly, shrinking to $17.5 million from $59.5 million. Additionally, Global Net Lease completed a significant sale of non-core properties, transforming into a single-tenant net lease company, and reduced net debt by $734 million, enhancing its financial stability. Looking forward, the company has set an Adjusted Funds from Operations (AFFO) per share guidance for 2025 between $0.90 and $0.96. The company also announced a $300 million share repurchase program and plans to complete nearly $3 billion in property dispositions by year-end. In strategic moves, Global Net Lease entered into a binding agreement to sell 100 non-core multi-tenant properties to RCG Ventures Holdings for approximately $1.8 billion. Lastly, the company plans to reduce its quarterly dividend per share from $0.275 to $0.19, beginning with the dividend expected to be declared in April 2025.
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