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On Tuesday, Truist Securities maintained a Hold rating on Global Net Lease (NYSE:GNL) stock, with a steady price target of $8.00. Currently trading at $7.95, InvestingPro analysis suggests the REIT is undervalued, with an EV/EBITDA multiple of just 10.5x. The firm’s analyst adjusted the Company Defined Adjusted Funds From Operations (AFFO) projections for the next two years, citing an increase in asset sales as the primary reason for the revision.
The updated estimates indicate a significant year-over-year (YOY) decline in AFFO per share (ps), with a forecasted decrease of 29% in 2025 to $0.94, down from the previous estimate of $1.24. This figure still falls within the company’s own guidance range of $0.90 to $0.96. For 2026, the AFFO estimate has been reduced even further to $0.86ps from the earlier projection of $1.22ps, representing a 9% YOY decrease. Despite these challenges, the company maintains a substantial 13.7% dividend yield, according to InvestingPro data, which shows Global Net Lease’s commitment to shareholder returns. Additionally, Truist Securities anticipates an average annual decrease of about 10% through 2029.
The revised AFFO estimates are based on the assumption that Global Net Lease will complete $2.7 billion in property dispositions in 2025, which includes exiting the multitenant retail segment, followed by $600 million in dispositions for 2026.
Despite the price target suggesting a potential 12% total return, Truist Securities cautions investors about the possibility of continued volatility in Global Net Lease’s stock price. The analyst noted that the company’s high leverage, sensitivity to interest rates, and limited liquidity are factors that could contribute to price fluctuations. InvestingPro data confirms these concerns, revealing a current ratio of 0.81 and significant debt levels, with total debt to capital at 71%. Get access to the comprehensive Pro Research Report for deeper insights into GNL’s financial health and future prospects.
Furthermore, the analyst acknowledged recent improvements in corporate governance and efforts to reduce debt at Global Net Lease. However, they expressed skepticism that these measures would significantly narrow the valuation gap, as the nature of a triple-net real estate investment trust (REIT) like Global Net Lease requires a favorable cost of capital to invest and grow effectively. The Hold rating reflects this cautious outlook on the stock’s future performance.
In other recent news, Global Net Lease, Inc. (GNL) reported its financial results for 2024, highlighting a slight improvement in earnings per share (EPS) compared to forecasts. The company posted an EPS of -$0.08, surpassing the expected -$0.10, while revenue for the fourth quarter reached $199.1 million, slightly above the forecast of $193.28 million. Additionally, GNL announced a significant transaction involving the sale of 100 non-core properties to RCG Ventures Holdings for $1.8 billion, aiming to speed up its deleveraging strategy. Fitch Ratings placed GNL on Rating Watch Positive following this announcement, indicating potential improvements in the company’s financial metrics.
JMP Securities maintained its Market Outperform rating for GNL, with a price target of $9.00, acknowledging the company’s effective asset sales strategy and the anticipated reduction in leverage by mid-2025. The firm also noted the favorable market response to GNL’s recent asset sales and its new $300 million share buyback program as a prudent use of capital. In other developments, GNL amended its ownership limits, allowing key investors Bellevue Capital Partners (WA:CPAP) and Nicholas and Shelley Schorsch to increase their stakes in the company.
The company has also authorized a $300 million share repurchase program, although Fitch views this less favorably in light of GNL’s debt reduction goals. Furthermore, the company plans to reset its quarterly dividend per share to $0.190 from $0.275, starting in April 2025, to generate incremental cash flow. These recent developments reflect GNL’s ongoing efforts to improve financial stability and operational efficiency.
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