GNL Stock Forecast & Price Target

Global Net Lease Inc. is anticipated to experience significant improvement in its operating metrics as a result of its de-leveraging strategy, with credit-rated tenant exposure increasing by 400 basis points to 62%, and the portfolio's leased rate rising by 200 basis points to 98%. Additionally, the proportion of leases with contractual escalations is projected to grow from 78% to 89%, enhancing the company's revenue stability. The focus on single-tenant assets with a diversified geographical presence is expected to further strengthen the portfolio's performance metrics following the completion of the remaining asset disposition pipeline.

The fundamental reasons for a negative outlook on Global Net Lease's stock stem from its significant leverage, with the net debt/EBITDA ratio reported at 8.4x at the end of 2023, only improving to 6.7x by 1Q25. The company is undergoing a strategic shift towards a greater emphasis on industrial assets, which now constitute 46% of its rental income, indicating a substantial reduction from its previous reliance on retail sectors. While management efforts to address internal issues through de-leveraging and portfolio restructuring are underway, the lingering high leverage levels and the challenges of transitioning asset focus contribute to a cautious financial perspective.