Global Net Lease: 9%+ Yield, Monthly Dividends, But 104% Payout Ratio

Real estate investment trusts – or REITs, for short – give investors a method to indirectly own high-quality real estate assets without the hassles and headaches associated with traditional real estate investment strategies.

They are also a great source of dividend income. Thanks to the steady cash flows delivered by rent or lease payments, REITs often have dividend yields well above the average stock in the S&P 500.

Global Net Lease (GNL) is one example of this.

The REIT’s 9%+ dividend yield make it stand out even among the short list of high dividend stocks with 5%+ yields.

Even better, the company pays monthly dividends. This is very rare, as the vast majority of publicly-traded companies pay dividends on a quarterly basis.

Global Net Lease’s very high dividend yield and monthly dividend payments make it an intriguing stock for income-oriented investors.

This article will analyze the investment prospects of Global Net Lease in detail.

Business Overview & Corporate History

Global Net Lease is a triple net lease real estate investment trust that operates in many of the most important global economies, including the United States and various countries in Europe.

Triple net leases are those where the occupant is responsible for paying the three major secondary costs associated with buying real estate:

  • Maintenance costs
  • Insurance costs
  • Property taxes

Triple net leases are also called net-net-net (NNN) leases.

Global Net Lease rents its international property portfolio to various corporations, often investment grade. The trust typically locks in its tenants under long-term contracts – Global Net Lease has a weighted average remaining lease term of 9.5 years.

GNL Global Net Lease Company Highlights

Source: Global Net Lease May 2017 Investor Presentation, slide 6

Before becoming a publicly-traded investment vehicle, Global Net Lease was a privately-held REIT named American Realty Capital Global Trust.

Importantly, Global Net Lease’s predecessor name is not American Realty Capital Properties (ARCP) – note the slight difference in name. This is a separate REIT that experienced significant negative media attention after both the Chief Financial Officer and Chief Accounting Officer made crucial accounting mistakes that resulted in an overstatement of its adjusted funds from operations in 2014.

Related: ARCP’s Accounting Takes Center Stage At Brian Block’s Fraud Trial

Also Related: ARCP Insiders Generated $900M in Fees During Buying Binge: Lawsuit

With that in mind, Global Net Lease’s name change was possibly done to avoid association with this scandalous (yet separate) REIT.

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