Good afternoon, and welcome to Global Net Lease Second Quarter 2021 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. Please note this conference is being recorded. I would now like to turn the conference over to Luisa Quarto, Executive Vice President.
Please go ahead.
Thank you, operator. Good afternoon, everyone, and thank you for joining us for GNL's Q2 2021 earnings call. This call is being webcast in the Investor Relations section of GNL's website at www.globalnetlease.com. Joining me today on the call to discuss the quarter's results are Jim Nelson, GNL's Chief Executive Officer and Chris Masterson, GNL's Chief Financial Officer. The following information contains forward looking statements, which are subject to risks and uncertainties.
Should 1 or more of these risks We refer all of you to our SEC filings, including the Form 10 ks for the year ended December 31, 2020, filed on February 26, 2021, and all other filings with the SEC after that date for a more detailed discussion of the risk factors that could cause these differences. Any forward looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, GNL disclaims any intent or obligation to update or revise these forward looking statements, except as required by law. Also during today's call, we will discuss non GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP.
A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release and supplement, which are posted to our website atwww.globalnetlease.com. Please also refer to our earnings release for more detailed information about what we consider to be implied investment grade tenants, a term we will use throughout today's call. I'll now turn the call over to our CEO, Jim Nelson. Jim?
Thank you, Louisa, and thanks again to everyone for joining us on today's call. I am pleased to report that GNL had an excellent quarter, highlighted by cash NOI growth of 21.1 percent to $85,500,000 AFFO of $0.44 per share and the ongoing construction of a robust forward acquisition pipeline, including the acquisition of the McLaren Group's headquarters in April that we discussed on last quarter's call. Our year to date closed and forward pipeline acquisitions exceed $380,000,000 of contract purchase price at a weighted average cap rate of 9.7% and a weighted average remaining lease term of 16.9 years. The acquisitions consist of 10 properties, 6 of which are located in the U. S.
And total over 1,300,000 square feet. Since closing on the McLaren headquarters Early in the quarter, McLaren has sought and obtained a B- credit rating from Fitch, effective upon the closing of McLaren's recent senior secured notes Offering. The sale leaseback transaction that we completed was the catalyst for McLaren to reconstitute their balance sheet and issue senior secured notes. You may recall that the attainment of a credit rating of B- or higher was one of the two conditions for a potential rent reset with McLaren. The other condition was that GNL refinanced the debt on the property within 3 years.
The company is under no obligation to complete a refinancing of this loan and has no immediate plans to do so. Our forward acquisitions pipeline includes 2 industrial properties leased to Pilot Point Steel and a 90,000 Square Foot Learning Center leased to Walmart in Bentonville, that we anticipate closing later this year. Our team is also evaluating strategic disposition opportunities and searching for additional acquisition targets that meet our stringent investment requirements. We continue to have strong leasing success And to that list, we can add our FedEx facility in Bohemia, New York, where we have executed a non binding LOI to extend their 158,000 square foot leased for 5 years. We have very minimal lease expirations in the next 2 years And have actually reduced the percent of rent expiring through the end of 2023 by 3% since this time last year.
I am very pleased with the stability in our portfolio and the way we have been able to reduce our exposure to potential lease expirations. Thanks to the mission critical nature of many of our properties and our strong acquisitions underwriting. The vast majority of our leases don't expire until after the end of 2025. Our 4,600,000,000,311 Property Portfolio is nearly fully occupied at 99.7 percent leased with a weighted average remaining lease term of 8.5 years at the end of the quarter. Geographically, 239 of our properties are in the U.
S. And Canada and 72 are in the U. K. And Western Europe, representing 60% 40% of annual straight line rent revenue, respectively. Our portfolio is with 135 tenants in 48 Industries with no single industry representing more than 12% of the whole portfolio based on annualized Straight line rent.
We also continue to increase the concentration of industrial properties in our portfolio. At the end of the second quarter, Our assets were 52 percent industrial and distribution, 43 percent office and 5% retail compared to 47% industrial and distribution, 48% office and 5% retail a year ago. Contributing to our success is our focus on tenant credit, Industrial acquisitions and retail dispositions over the last several years. Across the portfolio, over 64% of annualized straight line rent comes from investment grade or implied investment grade tenants. Finally, GNL's performance has in many measures returned to or exceeded metrics we reported before the pandemic.
Superior execution by our team and the strength of our portfolio contributed to continuing growth in adjusted EBITDA, cash NOI and AFFO. Portfolio occupancy has ticked up to 99.7% as has the percentage of our leases expiring after 2025, which is almost 70%. Exposure to industrial and distribution assets has also increased over 5%, while we collected all of the original cash rent that was payable for the Q3 in a row, underscoring the quality and resilience of our existing portfolio. Our historic emphasis on credit quality, underwriting, asset selection and due diligence have all helped shape a portfolio that continues to perform well. GNL is well positioned to deliver a strong second half of twenty twenty one and continue to grow through accretive acquisitions, interest, strategic dispositions.
Our strong balance sheet and mature capital structure help to keep financing costs low And our hedging program protects our non dollar denominated cash flows from exchange rate risk. With that, I'll turn the call over to Chris to walk through the operating results in more detail before I follow-up with some closing remarks. Chris?
Thanks, Jim. For the Q2 of 2021, we recorded adjusted EBITDA of $73,200,000 up from $61,000,000 in We also reported a 22.8% increase in revenue to $99,600,000 from 81 point $1,000,000 with net loss attributable to common stockholders of $2,400,000 FFO and AFFO for the 2nd quarter were $44,000,000 $42,800,000 respectively or $0.46 $0.44 per share compared to $0.39 $0.44 per share in the Q2 of 2020. As always, a reconciliation of GAAP net income to the non GAAP measures can be found in our earnings release. On the balance sheet, we ended the quarter with net debt of $2,300,000,000 at a weighted average interest rate of 3.4%. Our net debt to adjusted EBITDA ratio was 7.8 times at the end of the quarter.
The weighted average debt maturity at the end of the Q2 2021 was 4.7 years. The components of our debt include $500,000,000 in senior $167,900,000 on the multicurrency revolving credit facility, dollars 293,500,000 on the term loan and $1,500,000,000 of outstanding gross mortgage debt. This debt was approximately 92% fixed rate, which is inclusive of floating rate debt with in place interest rate swaps. The company has a well cushioned interest coverage ratio of 3.4 times. As of June 30, 2021, liquidity was approximately 268,500,000 The company distributed $38,100,000 in common dividends to shareholders in the quarter or $0.40 per share.
Our net debt to enterprise value was 51.4 percent with an enterprise value of $4,500,000,000 based on the June 30, 20 closing share price of $18.50 for common shares, dollars 26.79 for Series A preferred shares and $27.50 for Series B preferred shares. With that, I'll turn the call back to Jim for some closing remarks.
Thank you, Chris. We had a very good second quarter, reflecting the impact of the acquisitions we have made year to date. I'm proud of the growth we reported in AFFO, adjusted EBITDA and cash NOI in the 2nd quarter and our continued collection of all the cash rent payable across the portfolio. In the second half of the year, we will continue to evaluate to enhance our portfolio through accretive acquisitions and select dispositions as well as capitalize on historically low interest rates And our extensive capital markets experience to further strengthen our balance sheet. We have had an exciting and encouraging quarter and I look forward to keeping this momentum going.
With that operator, we can open the line for questions.
Thank Our first question is from Brian Maher with B. Riley Securities. Please proceed.
Yes. Good morning, or I should say, good afternoon, Jim. Good afternoon, Brian. It's been a long week, right? Yes.
You made a comment in your prepared comments about evaluating Without getting specific, can you give us an idea of kind of the asset type and or geography that would kind of rise to The top of that list?
Well, there's only a couple that we're looking at right now. And Chris, do you have any color on that?
Sure. So in terms of the properties that we're looking to dispose, one of them is The vacant property that we've had for the last few years and evaluating the opportunities there, a sale at this point seems like The best option. And then in terms of just an overall level, there are a couple office properties that we are looking at. None of them are material in size though.
And Brian, if you remember, I've said this several times, we are opportunistic sellers Retail. So if we do see any good opportunities to sell our retail, we will. As you know, we look at reducing our retail Closure over the long term.
Great. And then on the AFIN call earlier today, Michael While I was talking about potentially pursuing at least a rating, if not an investment grade rating, and I think you guys are BB plus by S and P, do you guys give that any thought, What would be the benefits for you? What do you think you need to do to get that if you were to pursue it?
Well, we certainly have taken a good look at that. I mean, as you remember, the bond offering we did in last December Was rated by S&P at BBB- and we are working towards an investment grade rating over time.
And I don't know, maybe for Chris, do you guys already borrow at substantially low rates. Do you see any Lower interest rate benefit from doing that? Or would you guys be interested in borrowing on
So there definitely would be benefits of being investment grade from a borrowing percentage. First, the rates do come down on our credit facility If we are investment grade by 2 rating agencies, and then obviously as we tap the unsecured market, which we plan to do in the future, The rates will obviously be better there for us.
And just last for me on that topic, not to beat the dead horse, But if you guys decided to go that route, do you think that you would pursue that in In some type of financial engineering way or would you be willing to wait to do it over time as EBITDA grows organically?
I think it makes more sense to do it over time. We've been working towards it. A lot of the metrics have improved over time. The rating agencies really like our portfolio. They like the strength of our properties and our tenants.
So there are a few other things we need to accomplish, but they'll be accomplished over time.
Okay. Thank you, Jim. Thanks. Okay. Thanks, Brian.
Our next question is from Craig Mailman with KeyBanc Capital Markets. Please proceed.
Hey, guys. Maybe for Chris just to start out, the $5,200,000 the reimbursement financing costs from McLaren, Does that amortize back into AFFO over any certain period of time? Or how should we think about that? Because it seemed like a bit of a wash from This quarter.
So that will not amortize back into AFFO in the future. This is just a case where The accounting for the revenue is just different than the expense portion. So they don't naturally net out. So what you'll see is just here, there's One time back out of that amount and you won't see that backed out or any reference to it in future periods.
But it will still be the benefit will still be
a top line going forward?
It will still shift to the revenue for the remainder of this year. One time.
Okay. And then just Jim, looking at what you guys have under contract for kind of the balance of the year, Skewing a little bit more office. Is that just the nature of kind of what you guys have seen on the opportunity set and Pricing that's going on in industrial, that office may look a little bit better here for the near term?
Well, I think again, I think it's a matter of opportunities More than anything else, our focus is primarily on industrial and distribution. But when we see like this Walmart Learning Center, I mean, Walmart is a fantastic tenant. It's an excellent property that we got at a very good price. So it made sense to buy it. And the same thing with Trafalgar Court, which is in Guernsey, the island of Guernsey, and it's a fantastic building.
It has Northern Trust And Astec Group, which is a huge financial services company, is tenants. And it was just it was compelling to buy it. It was a very, very good price. So and a great property with good leases in place. So it made a lot of sense to do that.
But we are still focused On industrial distribution and we will maintain that focus going forward.
Okay. And you guys Hit the ATM a little bit in the quarter, I think $51,000,000 raised. Do you guys feel like you have enough capital here? Or how much Runway, do you feel like the capital you have and liquidity you have gives you? And would you kind of take a step back here and maybe wait until Some of the benefit of those acquisitions roll through and maybe positively impact the share price before coming back?
Well, we've the ATM has been really effective for us, as you know. I mean, it's Great way to raise capital. It's low cost compared to some other ways to do it. And it's very efficient because you can raise capital sort of when you need it, Assuming the ATMs are in demand at any given time. So we continue to look at our growth, what we need To grow what we need to buy these properties and we will probably use the ATM as necessary going forward.
Okay, great. Thank you. Thanks, Craig.
And our final question is going to come from James Willard with Ladenburg Thalmann. Please proceed.
Good afternoon, guys.
Hey, how are you? Good afternoon.
Doing well. Yes, I guess most of my
questions have been answered, but can
you give us some more color On the opportunities you're seeing in the investment grade office space and kind of how that how cap rates have kind of trended as there's kind of this Delay of return to work.
Well, that's a really interesting question. We've seen On the industrial distribution side, a little bit of compression in cap rates. But remember, a lot of our acquisitions are relationship driven. So we have a very strong pipeline of relationship driven properties that we look at to buy. We're not really chasing after deals.
We're not really chasing after low cap rate deals. I mean, we do have a very, Very, very serious underwriting metrics that we use. So we don't deviate from that very much unless there's something compelling about Property. But as you can see, there's a couple of office properties in the pipeline right now that will close In the next quarter, either this quarter or early Q4. And they were very compelling properties.
As I said earlier, the Walmart Learning Center was a great property. Trafalgar Court, our asset manager in London went to see the building. He says it's the nicest Building on Guernsey and we got it at a very good very, very good terms price and terms. So we're going to continue doing what we've been doing for the last 4 years. We do have a focus on industrial distribution.
You will see a lot more of that than you'll see office. But when we see something Compelling in the office sector, we and it's priced right, we will close on it.
Are you seeing, I guess, better still somewhat scared to bid, I guess, bid down the cap rate kind of where we are in the pandemic?
You're talking about office still?
Yes, still on office.
I've said this On previous calls, we're in a very unique position with the office properties that we own. We don't have office properties in the major metropolitan areas. So a lot of our tenants, they're not using public transportation to commute to work, and they're in suburbs or 2nd tier Cities, so it's a very different situation than in the major metropolitan areas. So we're in a much and if you look back at rent collection, We've collected even during the early year of the pandemic, we collected roughly 99% of all our cash rents. We're in a very good position with the office properties that we have.
And our tenants, they pay their rent, they're happy and they're going back to work at different points Time, but they're usually headquarter building or something that's very important to the tenant. So we're in a very comfortable position with the Office properties that we own and what we're looking at to buy.
Sure. That's good color. Thanks. That's all for me.
All right. Thank you for calling in.
We have reached the end of our question and answer session. I would like Transfer the conference back over to James for closing remarks.
Yes. I just want to thank everybody for listening in today. Global Net Lease continues on its path of accretive growth and we're very happy with our results And we look forward to talking to you next quarter. Thank you all very much. Bye bye.
Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for