NEW YORK — Global Net Lease Inc. (NYSE: GNL) has approved a definitive merger agreement to acquire all of the outstanding common stock of American Realty Capital Global Trust II Inc., a non-traded REIT, for approximately $247 million. Both REITs focus on acquiring single-tenant net leased commercial properties in sale-leaseback transactions. The property types include office, retail and industrial.
The combined companies create a larger global net lease REIT with an expected enterprise value of $3.3 billion. The transaction joins two complementary U.S. and European net lease portfolios with a combined asset base of 345 properties in seven countries spanning 23 million square feet. The portfolio is currently net leased to 99 tenants.
“We are excited about GNL’s combination with Global II, which represents another positive step in the evolution of our company and reinforces our efforts to grow accretively, creating shareholder value,” says Scott Bowman, CEO and president of GNL.
Under the terms of the agreement, Global II shareholders will receive 2.27 shares of GNL for each share of Global II common stock they own, which implies $19.59 per each share of Global II. Upon closing, Global II shareholders will own approximately 14 percent of the combined company. The stock-for-stock transaction is expected to be tax-free to shareholders.
The top 10 tenants in the combined company will account for just 35 percent of annualized net operating income (NOI), down from Global II’s current top 10 tenant concentration of 94 percent.
The top 10 tenants in GNL’s portfolio, based on 2015 NOI, include RWE Group, a German electric utilities provider; FedEx Ground; Family Dollar; the General Services Administration; Finnair, Finland’s largest airline; Quest Diagnostics; Poundstretcher, a discount retailer based in the United Kingdom (UK); Tokmanni, Finland’s largest discount store chain; Fujitsu, a personal computer equipment and services company based in Tokyo with offices in the UK; and Trinity Health, a Catholic healthcare system.
New York-based GNL will add one director to be appointed by Global II, bringing the total number of independent directors to four. GNL’s management team will run the combined company. The transaction is expected to close during the fourth quarter of 2016.
GNL formed a committee from among the independent members of the REIT’s board of directors to evaluate the proposed acquisition of Global II. UBS Investment Bank is serving as exclusive financial advisor to the committee, and Shapiro Sher Guinot & Sandler is serving as its legal counsel. Proskauer Rose LLP is serving as legal counsel to GNL.
Global II also formed a committee to evaluate the transaction. BMO Capital Markets is serving as exclusive financial advisor to Global II’s committee, and Miles and Stockbridge P.C. is serving as its legal counsel.
Nearly 60 percent of GNL’s portfolio is located in the United States and 20 percent in the UK. The balance is located in Germany, Finland and the Netherlands.
At the end of 2015, Global II’s portfolio included 16 assets spanning more than 4.2 million square feet in France, the United States, the UK, Luxemburg, the Netherlands and Germany.
GNL’s stock price closed on Friday, Aug. 5 at $8.63 per share, up from $8.02 per share at this time last year.
— John Nelson