Global Net Lease (GNL) risk factors, FY2024 10-K

Risks Related to Our Properties and Operations

1. 01We may be unable to enter into contracts for and complete property acquisitions or dispositions on advantageous terms and our property acquisitions may not perform as we expect
2. 02Our ability to grow our assets depends on our ability to access capital from external sources, and there can be no assurance we will be able to so on favorable terms or at all
3. 03If we are not able to increase the amount of cash we have available to pay dividends, we may have to reduce dividend payments or identify other financing sources to fund the payment of dividends at their current levels
4. 04Market and economic challenges experienced by the U.S. and global economies may adversely impact our operating results and financial condition
5. 05We are subject to additional risks from our international investments
6. 06Investments in properties or other real estate investments outside the U.S. subject us to foreign currency risk
7. 07may not continue in the future. Changes to exchange rates have affected and may continue to affect the book value of our assets and the amount of stockholders’ equity
8. 08Also, governments from time to time intervene in the currency markets, directly and by regulation, in order to influence exchange rates. These events and actions are unpredictable
9. 09A major tenant default may have an adverse impact on our results of operations
10. 10A high concentration of our properties in a particular geographic area magnifies the effects of downturns in that geographic area and could have a disproportionate adverse effect on the value of our investments and results of operations
11. 11Total European Countries 20%
12. 12Likewise, a high concentration of our tenants in a similar industry magnifies the effects of downturns in that industry and would have a disproportionate adverse effect on the value of investments and results of operations
13. 13The inability of a tenant in single-tenant properties to pay rent will materially reduce our revenues
14. 14Single-tenant properties may be difficult to sell or re-lease
15. 15Our real estate investments are generally illiquid which could significantly impede our ability to respond to market conditions or adverse changes in the performance of our tenants or our properties and which would harm our financial condition
16. 16Retail conditions and decreased demand for office space may adversely affect our revenues
17. 17A shift in retail shopping from brick-and-mortar stores to online shopping may have an adverse impact on our Multi-Tenant Retail segment tenants
18. 18Our revenue in our Multi-Tenant Retail segment is impacted by the success and economic viability of our anchor retail tenants. Our reliance on single or significant tenants in certain buildings may decrease our ability to lease vacated space
19. 19transfer to a new anchor tenant could also allow other tenants to make reduced rental payments or to terminate their leases at the retail center
20. 20A sale-leaseback transaction may be recharacterized in a tenant’s bankruptcy proceeding
21. 21If a tenant or lease guarantor declares bankruptcy or becomes insolvent, we may be unable to collect balances due under relevant leases
22. 22A bankruptcy could delay efforts to collect past due balances under the relevant leases, and could ultimately preclude full collection of these sums and may decrease or eliminate rental payments from the impacted tenant reducing our cash flow
23. 23The credit profile of our tenants may create a higher risk of lease defaults and therefore lower revenues
24. 24You should not rely solely on the credit ratings of our tenants
25. 25Long-term leases may result in income lower than short term leases
26. 26Properties may have vacancies for a significant period
27. 27We generally obtain only limited warranties when we purchase a property and would therefore have only limited recourse if our due diligence did not identify any issues that lower the value of our property
28. 28We may be unable to secure funds for future tenant improvements or capital needs, which could impact the value of the applicable property or our ability to lease the applicable property on favorable terms
29. 29We have acquired or financed, and may continue to acquire or finance, properties with lock-out provisions which may prohibit us from selling a property, or may require us to maintain specified debt levels for a period of years on some properties
30. 30Rising expenses could reduce cash flow
31. 31Real estate-related taxes may increase and if these increases are not passed on to tenants, our cash flow will be reduced
32. 32greater resources than we do, which could materially and adversely affect us
33. 33Our properties and our tenants may face competition that may affect tenants’ ability to pay rent
34. 34We may incur significant costs to comply with governmental laws and regulations, including those related to environmental matters
35. 35Damage from catastrophic weather and other natural events and climate change could result in losses to us
36. 36If we sell properties by providing financing to purchasers, we will be exposed to defaults by the purchasers
37. 37We may incur a material amount of costs associated with complying with the Americans with Disabilities Act
38. 38Actual or threatened terrorist attacks and other acts of violence, civilian unrest, or war may affect the markets in which we operate our business and our profitability
39. 39Inflation and continuing increases in the inflation rate may have an adverse effect on our investments and results of operations
40. 40Periodically, we have experienced, and we may experience in the future, a decline in the fair value of our real estate assets, resulting in impairment charges that impact our financial condition and results of operations
41. 41Our business and operations could suffer if we experience system failures or cyber incidents or a deficiency in cybersecurity
42. 42We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, which can cause severe disruptions in the U.S., and global economy
43. 43We may make investments in asset classes or countries outside of our core investment strategy which may be perceived as complicating our strategy relative to our peers
44. 44Loss of senior executives with long-standing business relationships could materially impair our ability to operate successfully

Risks Related to our Indebtedness

1. 45We have substantial indebtedness and we will have the ability to incur significant additional indebtedness and other liabilities
2. 46We may be unable to service our indebtedness
3. 47Our derivative financial instruments have been, and any derivative financial instruments in the future, will be subject to counterparty default risk
4. 48Changes in the debt markets could have a material adverse impact on our earnings and financial condition
5. 49If we are unable to borrow monies on terms and conditions that we find acceptable, our ability to purchase properties or, meet other capital requirements may be limited, and the return on the properties we own may be lower. In addition, we may find it difficult, costly or impossible to refinance maturing indebtedness
6. 50Covenants in our debt agreements restrict our activities and could adversely affect our business
7. 51We may not have the funds necessary to finance the repurchase of the Senior Notes in connection with a change of control offer required by the indentures governing each series of notes
8. 52A lowering or withdrawal of the ratings assigned to our debt securities by rating agencies may increase our future borrowing costs and reduce our access to capital

Risks Related to Our Corporate Structure, Common Stock and Preferred Stock

1. 53The trading prices of our Common Stock and Preferred Stock may fluctuate significantly
2. 54We depend on our OPs and their subsidiaries for cash flow and are structurally subordinated in right of payment to the obligations of our OPs and their subsidiaries
3. 55We may issue additional equity securities in the future thereby diluting the holdings of existing stockholders
4. 56We cannot guarantee that we will repurchase our Common Stock pursuant to our share repurchase program or that our share repurchase program will enhance long-term stockholder value. Share repurchases could also increase the volatility of the price of our Common Stock and could diminish our cash reserves
5. 57The terms of our Preferred Stock, and the terms other preferred stock we may issue, may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders
6. 58Maryland law prohibits certain business combinations, which may make it more difficult for us to be acquired and may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders
7. 59Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders
8. 60Maryland law limits the ability of a third-party to buy a large stake in us and exercise voting power in electing directors, which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders
9. 61We indemnify our officers and directors against claims or liability they may become subject to due to their service to us, and our rights and the rights of our stockholders to recover claims against our officers and directors are limited
10. 62Material weaknesses in or a failure to maintain an effective system of internal control over financial reporting or disclosure controls could prevent us from accurately and timely reporting our financial results, which could materially and adversely affect us
11. 63We may become subject to litigation, which could materially and adversely affect us
12. 64Our failure to remain qualified as a REIT would subject us to U.S. federal income tax and potentially state and local tax
13. 65To qualify as a REIT, we must meet annual distribution requirements, which may force us to forgo otherwise attractive opportunities or borrow funds during unfavorable market conditions. This could delay or hinder our ability to meet our investment objectives and reduce our stockholders’ overall return
14. 66Recharacterization of sale-leaseback transactions may cause us to lose our REIT status
15. 67Certain of our business activities are potentially subject to the prohibited transaction tax
16. 68TRSs are subject to corporate-level taxes and our dealings with TRSs may be subject to a 100% excise tax
17. 69If the OP failed to qualify as a partnership or is not otherwise disregarded for U.S. federal income tax purposes, we would cease to qualify as a REIT
18. 70We may choose to make distributions in a combination of cash and shares of our Common Stock, in which case our stockholders may be required to pay U.S. federal income taxes in excess of the cash portion of such distributions they receive
19. 71The taxation of distributions can be complex; however, distributions to stockholders that are treated as dividends for U.S. federal income tax purposes generally will be taxable as ordinary income, which may reduce our stockholders’ after-tax anticipated return from an investment in us
20. 72Complying with REIT requirements may limit our ability to hedge our liabilities effectively and may cause us to incur tax liabilities
21. 73Complying with REIT requirements may force us to forgo or liquidate otherwise attractive investment opportunities
22. 74The ability of our Board to revoke our REIT qualification without stockholder approval may subject us to U.S. federal income tax and reduce distributions to our stockholders
23. 75We may be subject to adverse legislative or regulatory tax changes that could increase our tax liability, reduce our operating flexibility and reduce the market price of shares of our stock
24. 76The share ownership restrictions for REITs and the 8.8% share ownership limit in our charter may inhibit market activity in shares of our stock and restrict our business combination opportunities
25. 77These ownership limits could delay or prevent a transaction or a change in control that might involve a premium price for shares of our stock or otherwise be in the best interests of the stockholders
26. 78Potential characterization of dividends and other distributions or gain on sale may be treated as unrelated business taxable income to tax-exempt investors