Global Net Lease: a 10.4% dividend that costs more than the cash the rents leave behind

Global Net Lease pays $0.19 a share every quarter, $0.76 a year and a 10.4% yield at $7.31. The company reports that as about 91% of its adjusted funds from operations (AFFO). But reported AFFO leaves out property reinvestment, leasing costs and stock pay. After those, I estimate recurring cash of $0.734 per share in 2027, so the dividend costs 103.5% of it, and in my Base the cash drifts down to $0.674 by 2031 as maturing debt is refinanced at higher rates.

At $7.31, a quote from 15:27 New York time on October 19, 2026, the shares trade 15.9% above my triangulated Base value of $6.31. The Bear value of $1.85 is 74.7% below the price and the Bull value of $10.64 is 45.6% above it. Confidence is grade C (13/25), the required margin of safety (MOS) is 40%, and the maximum buy price is $3.79. Single-input tests move that ceiling between $3.40 and $4.20. The latest filed statements are for the second quarter to June 30, 2026. The third quarter report comes on November 4, 2026 and is not in these numbers.

Valuation route: a mixed single-tenant net lease REIT. Primary method: hard AFFO, which is AFFO after property reinvestment, leasing cash, stock pay and recurring costs, with the dividends paid on the way and a 9.5 times exit in 2031, discounted at 11%. Secondary method: property net asset value (NAV) from capitalization rates, less debt, preferred stock and corporate costs. Classification: standard company, scorecard 3 of 10 available points. All amounts are US dollars. Values are present fair value estimates for one common share or equivalent operating partnership unit, not 12 month price targets.

What Global Net Lease is

Global Net Lease owns about 800 properties, roughly 40 million square feet, and leases them to single tenants on long contracts where the tenant pays most property costs. On June 30, 2026 the portfolio was 47% industrial, 28% retail and 25% office by rent, 74% in the United States and Canada and 26% in Europe, 97% leased with a weighted average remaining lease term of 5.7 years. Of its rent, 63% comes from investment grade or implied investment grade tenants, but only 38.0% is actually rated; the rest relies on a parent's rating.

The company has changed shape three times: the 2023 merger and internalization, the 2025 sale of its multi-tenant portfolio, and the acquisition of Modiv Industrial, which closed on August 12, 2026. Modiv adds about $535 million of mostly industrial property with long leases and raises industrial exposure to about 50% of rent and the average lease term to 6.6 years. Those changes simplified the company and reduced debt, but selling rent-producing assets to repay debt is not organic growth, and the per-share numbers show it: AFFO per share was $1.40 in 2023, $1.32 in 2024 and $0.99 in 2025. Common stock sits behind four series of preferred shares with a liquidation claim of $600.6 million.

The latest results

Management raised the 2026 AFFO guidance to $0.82 to $0.85 per share from $0.80 to $0.84, and that includes only about one and a half quarters of Modiv. Occupancy was 97%, the renewal leasing spread was +5.6%, net debt to adjusted EBITDA was 6.6 times, interest coverage 3.2 times, the weighted average debt maturity only 2.7 years, and liquidity $919 million, including $765 million of undrawn revolver and $154 million of cash. About 92% of debt was fixed or swapped at June. The company still expects 6.5 to 6.9 times for the year.

The quarterly dividend of $0.19 declared on October 1 was paid on October 16 to holders of record on October 12, so a buyer today does not receive it. The next report is due after the close on November 4, with the call on November 5.

Which cash to value

Company AFFO removes straight-line rent and several noncash items, which is reasonable. But it does not subtract property capital spending or leasing costs, and it adds back stock pay and some financing costs. I use hard AFFO: common AFFO after property capital spending, leasing cash, the economic cost of stock pay and a small reserve for recurring deal and financing costs. Preferred dividends are already out of common AFFO and are not subtracted again.

The common dividend was 111% of that diagnostic. The cash flow statement tells the same story: operating cash flow of $106.8 million, less $3.4 million of capital spending, covered preferred dividends of $21.9 million and common dividends of $81.9 million with $0.4 million short. First half capital spending of $3.4 million, down from $19.6 million a year earlier, partly reflects the smaller portfolio, and I do not extrapolate it.

The $211.4 million is four times the second quarter plus the Modiv property income, less its general costs and the interest on the $316.5 million revolver draw that funded the deal. It is a run rate, not a forecast, and it is $0.895 per share, above management's $0.835 midpoint only because that guidance includes Modiv for part of the year. I do not add the announced 4% accretion a second time.

The share count is 231.3 million common shares after the merger plus 4.9 million operating partnership units, which gives 236.2 million economic shares. The market data page shows 231.25 million common shares, which matches the common part. Preferred stock is a separate claim of $600.6 million: Series A 7.25%, B 6.875%, D 7.5% and E 7.375%, costing $43.7 million a year.

Debt and liquidity

The June debt detail, the maturity ladder and the cash estimate come from the quarterly supplement and my own bridge, and I did not recheck every line. As I read it, mortgage principal matures at $94 million in 2027, $270 million in 2028 and $528 million in 2029, a $500 million 3.75% note falls due in December 2027, a $500 million 4.50% note in September 2028, and the revolver in 2030 including extension options. The weighted average interest rate was 4.1% in June. My Base resets new debt at 5.75% for bonds and mortgages and 4.75% for the revolver, so annual refinancing cost rises by $36.7 million between 2027 and 2031. That is the main reason cash drifts down.

The $133.4 million of cash is not a reported balance. It starts from June cash of $153.6 million and the Modiv acquired cash, adds estimated operating cash, and subtracts the July and October common dividends, preferred dividends, capital spending and the remaining deal costs. A $25 million error moves my value by about $0.04 per share.

The valuation

The Base keeps rents growing 1.5% a year, sells $100 million of property at the start of 2027 at a 7.6% yield (taking the rent away with it) and uses all of the proceeds to repay the revolver. Stock pay, general costs and capital spending rise 2% a year. No acquisitions or buybacks are assumed.

The 2027 dividend of $0.76 exceeds hard cash by $6.0 million, so cash is drawn down. Later dividends of $0.68, $0.66 and $0.64 are my assumption about what the company can sustain, not an announced cut. Retained cash repays debt once and is not also paid out.

Primary method. Dividends for 2027 to 2031 are worth $2.62 per share today at 11%. The 2031 hard cash of $0.6745 at 9.5 times is $6.41 at the end of 2031, or $3.80 today. The total is $6.43, of which 59.2% comes from the exit.

Secondary method. I capitalize cash property income after ground rent at 7.5% for industrial ($227.6 million, worth $3,034 million), 8.0% for retail ($106.2 million, $1,328 million) and 9.5% for office ($109.0 million, $1,148 million), which gives property value of $5,510 million. The anchors are the 7.6% cash yield on Modiv and the 7.6% yield on occupied properties sold this year. I then subtract debt of $2,813.7 million and the preferred claim of $600.6 million, add the $53.4 million of cash above the reserve, and subtract $675.4 million for capitalized corporate costs (eight times annual general costs, stock pay, recurring costs and $15 million of cash tax) and $25 million of other claims. That leaves $1,448.6 million, or $6.13 per share.

The two Base values are close, but that is weaker evidence than it looks: both use the same properties, the same capital structure and similar cost judgments. The Bear is the opposite story. With 9.0% to 12.0% capitalization rates and a 5% loss of property income, senior claims leave only $0.54 of common NAV, while the payout model still values the cash that could be distributed before distress. That 133.8% gap is why Confidence is C and not B.

What the price already assumes

None of this needs an operating boom. A modest improvement in funding cost, renewal cost or property pricing would justify the quote, which is why the stock is not an obvious short. But it also means the price already includes that improvement, and it provides no cushion if the improvement does not come. Holding $0.76 forever needs at least $0.76 of hard cash per share, and my Base has $0.734 falling to $0.674.

Bear, Base and Bull

Even in the Bear, the cash path reaches the minimum cash reserve and needs more borrowing, so it is not an income-safe case. The Bull needs cheaper financing and Modiv's long leases to lift hard cash to $0.922 per share by 2031.

Sensitivities

No single reasonable change reaches the 40% margin at $7.31. Even the combined generous case has a ceiling of $5.06, and the full Bull scenario has a ceiling of $6.39. A purchase needs a lower price or more demonstrated hard cash, not a different multiple on reported AFFO.

The dividend

The negative payout ratio of -271% on the screens is not meaningful, because depreciation and property sales distort the loss. The real warning is the 103.5%. The dividend was cut in 2024 and again in 2025 to the present $0.19, so the history of the yield is not stable income. My Base assumes a gradual reduction to $0.64, which is a valuation assumption and not a forecast of a particular announcement. This is a gross US dollar analysis; tax, withholding and currency conversion depend on the investor.

Peers

GNL trades at 8.75 times company AFFO against a peer median of 12.21 times, which looks cheap. But the peers carry a longer debt maturity (NNN averages 10.1 years against GNL's 2.7), lower leverage and better payout coverage, and GNL's price is about 9.95 times its hard AFFO after the costs the company excludes. Multiplying GNL's reported AFFO by the peer median would not be a valuation. Peer multiples get no weight in my value.

Reasons to own

• Contracted rent. Long leases, 97% occupancy and a +5.6% renewal spread support the existing rent base.
• Better duration. Modiv's 15 year average lease term lifts the portfolio average to 6.6 years and raises industrial exposure to about 50%.
• Execution on the balance sheet. Debt reduction, simplification and investment grade progress are real, and 2024 and 2025 results met or beat initial guidance.
• A lower price could pay. A 10% yield bought at a real discount to a conservative value, with a verified hard cash budget, would be a different decision.

Main risks

• Refinancing. Cheap old coupons reset over several years, and the average maturity was only 2.7 years in June. The 92% fixed share was measured before the revolver draw for Modiv.
• Renewal costs. Leases covering 34.7% of rent expire from 2027 to 2029. Tenant improvements, commissions and downtime can make real coverage weaker than AFFO shows.
• Senior claims. Debt, preferred stock and overhead leave common equity sensitive to small changes in capitalization rates: 50 bp moves the NAV by about $1.4 to $1.6 per share.
• Portfolio change hides per-share results. Sales, acquisitions, stock awards and operating partnership units can improve leverage without improving the cash per share.

What would change the call

A move in the price alone changes nothing. I would revisit the call after the third quarter report, and again on any refinancing, large sale or change in the dividend.

How I checked the model

I rebuilt the parts of the model that can be recomputed from the stated inputs. The economic share count (236.232 million), preferred stock (claim $600.606 million, dividends $43.743 million), property values ($5,509.8 million), corporate cost capitalization ($675.4 million) and NAV of $6.1320 per share all reproduced. So did the NAV sensitivity table, the 38.3 bp cap rate shift, the primary value of $6.43 (using the rounded cash path, within a cent), the exit multiple grid, the reverse multiple of 11.7 times and terminal cash of $0.831, the annualized return of 7.4% and the 12% entry price of $6.21, the blend of $6.31, the ceiling of $3.79 and the divergence figures. The year-by-year debt path is consistent with the stated dividends and cash. I could not rebuild the Bear and Bull inputs or the interim cash bridge in full, and I show their values as the analysis gives them. I checked the second quarter figures, guidance, leverage, liquidity, dividend dates, the Modiv terms and closing date, the share count and the report date against the company's releases and a market data page.

Main data limits: October cash, debt and the share count are my estimates, with no balance sheet for that date. The maturity ladder, operating partnership unit count, merger share count, cash NOI by segment, capitalization rates and corporate tax budget come from the supplement and my own judgment, and I did not recheck them all. The peer figures are from the peers' second quarter releases and I did not recheck them. Aggregated data pages show a different market capitalization and yield from the figures I use because their share bases differ. The $7.31 quote was confirmed by a second reading of $7.31 at 15:38 New York time, against a close of $7.43 on October 16, and the stock is at a 52-week low.

Final verdict: reduce at $7.31

Global Net Lease has improved its portfolio and balance sheet, and a 10.4% yield is attractive on paper. But at $7.31 you pay more than my Base value for a dividend that exceeds recurring cash after reinvestment, with a refinancing wall still ahead and a preferred stack in front of the common shares.

Verdict: REDUCE at $7.31, watchlist for new money. Triangulated Base value $6.31, downside 13.7%, Confidence C (13/25), required margin of safety 40%, maximum buy price $3.79, one-input range $3.40 to $4.20.

For current holders this means reducing, not panicking: the Bull case at $10.64 is real, and I show what it requires. For new money it means waiting for a much lower price or a verified improvement in hard cash.

Sources

Primary sources include Global Net Lease's second quarter 2026 quarterly report on Form 10-Q, the second quarter earnings release of August 5, 2026, the second quarter supplemental information, the pro forma financial information filed September 11, 2026, the completion of the Modiv acquisition, the fourth quarter common dividend announcement, the third quarter report date announcement, the 2025 annual report, the 2025 results, the 2024 results and the 2026 proxy statement. For the peer check I used the second quarter 2026 releases of NNN, EPRT and WPC. The quote and share count cross-check come from a third-party market data page (GNL). Broker price targets and ratings are not used.

The reference market price is $7.31, a quote from 15:27 New York time on October 19, 2026 while the regular session was open. Values per share use 236.2 million economic shares, which count common shares and operating partnership units. October cash of $133.4 million, debt of $2,813.7 million and the 2027 to 2031 paths, cap rates and multiples are analytical estimates, not company guidance.