Highlights Lack of Financial or Strategic
Value for GNL Stockholders
Identifies Key Questions for GNL Stockholders
to Ask GNL Board
NEW
YORK, Aug. 15, 2023 /PRNewswire/ -- Orange
Capital Ventures, LP ("Orange Capital"), a New York-based investment firm, today released
a detailed presentation outlining why it intends to vote AGAINST
the proposed merger of Global Net Lease, Inc. (NYSE: GNL) ("GNL" or
the "Company") and the Necessity Retail REIT, Inc.
(Nasdaq: RTL) ("RTL") (the "Merger"). The Merger is subject to
GNL and RTL stockholder approval at the Special Meeting of
Stockholders scheduled for September 8,
2023.
Specifically, Orange Capital's rationale includes:
- RTL's Retail Real Estate Assets Are Non-Core and Dilutive to
GNL's High-Quality Portfolio of Mission Critical, Net Lease Real
Estate Assets. Orange Capital believes RTL's mix of
multi-tenant retail assets would dilute the quality of GNL's
mission-critical, net lease asset portfolio. Retail REITs, such as
RTL's real estate portfolio, trade at a discount to net lease and
industrial REITs like GNL.
- RTL is an Inferior Business Compared to GNL. Orange
Capital believes RTL has a lower-quality portfolio of assets with
higher vacancy, higher capital expenditure requirements, lower
geographic diversification, higher leverage, and significant
multi-tenant concentration in the retail industry. Furthermore, RTL
has historically traded at a 1.5x FFO (Funds From Operations)
discount to GNL.
- Substantial Dilutive Stock Issuance. The Merger
requires the issuance of substantial stock to AR Global at a
valuation representing a 49% discount to GNL's NAV, a discount
Orange Capital believes is largely due to AR Global's poor
performance as GNL's external manager. The proposed Merger also
accelerates unvested GNL and RTL stock awards.
- Superior Alternatives. Orange Capital believes the
Merger was in direct response to the Blackwells Capital proxy
contest with GNL and RTL, and has pinpointed several actionable
alternatives that it considers to be superior to the Merger,
including: a stand-alone internalization of GNL, a potential sale
of GNL to a third party, or the continuation of the current status
quo. Orange Capital is confident that the implementation of the GNL
Board's (the "GNL Board") proposed governance modifications,
whether in conjunction with the Merger or independently, will
generate immediate stockholder value.
- Wastefully High Internalization Costs. GNL holds
the option to terminate AR Global's external management contract by
paying 2.5 times AR Global's current advisory fee, which
termination payment Orange Capital estimates would be $83 million in the event of a change of control
with an independent third-party. This is in stark comparison to the
Merger's proposed windfall payment of $375
million to AR Global (equivalent to 5.8 times AR Global's
current advisory fees), a difference of approximately $2.70 per GNL share (a +25% premium to the GNL
unaffected stock price of $10.56).
Orange Capital finds it deeply concerning that the GNL Board
sanctioned this internalization fee without conducting a market
assessment of GNL's assets.
- Simplified and Focused REITs Trade at Higher Multiples than
Diversified REITs. Orange Capital's research concludes that the
market assigns an NAV discount to diversified REITs that own assets
in multiple subsectors, like RTL's portfolio, in comparison to
those with a focused asset base like GNL's portfolio.
- The Merger Makes it Harder to Explore Eventual Strategic
Alternatives, including a Sale of the Combined GNL-RTL. Orange
Capital sees a limited pool of buyers for large diversified REITs
like the post-Merger entity ("NewCo"), especially one that is
diversified across multiple subsectors.
- AR Global's Massive Influence Post Merger. AR Global
would own approximately 14% of NewCo, which Orange Capital believes
effectively serves as a self-imposed poison pill on future
transactions, thereby diminishing the influence of the GNL Board's
proposed governance reforms.
Orange Capital has pinpointed several strategic alternatives
that, in its assessment, hold greater potential for enhancing value
for GNL stockholders when compared to the Merger. These
include:
- Standalone GNL internalization
- Sale of GNL following the execution of a comprehensive
strategic alternatives process
- Maintaining the status quo, particularly if GNL implements
the governance reforms the GNL Board "enthusiastically
supports."
Finally, Orange Capital identifies numerous important questions
for GNL stockholders to ask the GNL Board before and at the
stockholder vote on September 8,
2023.
The full presentation can be found here.
About Orange Capital
Orange Capital Ventures GP, LP is
a New York based investment
manager in private and public equity and debt. Orange Capital LLC
was founded in 2004 by Mr. Daniel
Lewis, who serves as Managing Partner.
Forward-Looking Statements
This release contains a
number of forward-looking statements. Words such as "plan,"
"believe," "anticipate," "reflect," "invest," "see," "make,"
"expect," "deliver," "drive," "improve," "intend," "assess,"
"remain," "evaluate," "establish," "focus," "build," "turn,"
"expand," "leverage," "grow," "will," and variations of such words
and similar future or conditional expressions are intended to
identify forward-looking statements. Examples of forward-looking
statements include, but are not limited to, statements regarding
Orange Capital's, GNL's, RTL's or AR Global's plans, impacts of
accounting standards and guidance, growth, legal matters, taxes,
costs and cost savings, impairments, dividends, expectations,
investments, innovations, opportunities, capabilities, execution,
initiatives, and pipeline. These forward-looking statements reflect
management's current expectations and are not guarantees of future
performance and are subject to a number of risks and uncertainties,
many of which are difficult to predict and beyond the Issuer's
control. Orange Capital disclaims and does not undertake any
obligation to update, revise, or withdraw any forward-looking
statement in this press release, except as required by applicable
law or regulation.
Investor Contacts:
Daniel
Lewis, Orange Capital
Walied Soliman, Norton Rose
Fulbright LLP
GNL.OrangeCap@gmail.com
Media Contacts
ASC Advisors
Taylor Ingraham / Steve Bruce
tingraham@ascadvisors.com / sbruce@ascadvisors.com
203 992 1230
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SOURCE Orange Capital Ventures, LP