– Company Exceeds Full-Year 2025 AFFO Guidance
– Reduced Net Debt by $2.2 Billion and Improved Net Debt to Adjusted EBITDA From 7.6x to 6.7x in 2025
– Repurchased 17.2 Million Shares at a Weighted Average Price of $7.88, Totaling $135.9 Million Since Launch of Repurchase Program in February 2025
– Sold McLaren Campus for £250 Million, Approximately £80 Million Above Original Purchase Price
– Corporate Credit Rating Upgraded to Investment-Grade
– Introduces Initial 2026 Financial Guidance; Focus on Reducing Office Exposure and Accretive Capital Redeployment
NEW YORK, Feb. 25, 2026 (GLOBE NEWSWIRE) — Global Net Lease, Inc. (NYSE: GNL) (“GNL” or the “Company”), an internally managed real estate investment trust that focuses on acquiring and managing a globally diversified portfolio of strategically located commercial real estate properties, announced today its financial and operating results for the quarter and year ended December 31, 2025.
Fourth Quarter and Full Year 2025 Highlights
Revenue was $117.0 million in fourth quarter 2025 compared to $137.8 million in fourth quarter 2024, primarily reflecting the impact of asset dispositions, including the Multi-Tenant Retail Portfolio saleNet income attributable to common stockholders was $37.2 million in fourth quarter 2025, compared to a net loss of $17.5 million in fourth quarter 2024, reflecting the substantial gain on the sale of the McLaren CampusAdjusted Funds From Operations (“AFFO”)1 was $48.5 million1, or $0.22 per share in fourth quarter 2025, compared to $78.3 million, or $0.34 per share, in fourth quarter 2024; full-year 2025 AFFO was $221.0 million or $0.99 per share, exceeding revised full year guidance range of $0.95 to $0.97Continued to use net proceeds from non-core asset sales to reduce leverage and strengthen the balance sheet; reduced net debt by $2.2 billion in 2025, improving Net Debt to Adjusted EBITDA from 7.6x to 6.7x in 2025Completed a $1.8 billion refinancing of the Revolving Credit Facility, achieving an immediate 35 basis point reduction in the interest rate spread through improved pricing, while extending weighted average debt maturityReduced weighted average interest rate to 4.2% in fourth quarter 2025, down from 4.8% in fourth quarter of 2024Increased liquidity to $961.9 million and Revolving Credit Facility capacity to $1.5 billion in fourth quarter 2025, compared to $492.2 million and $460.0 million, respectively, in fourth quarter 2024Sales resulting from the strategic disposition program total approximately $3.4 billion since 2024, with a weighted average lease term of 5.4 years; achieved a cash cap rate of 7.6% on non-core closed single-tenant dispositions, demonstrating tangible proof of portfolio qualitySold the McLaren Campus for £250 million, or $336 million2, at a 7.4% cash cap rate, generating an approximate £80 million, or $108 million2, gain above its April 2021 purchase price, while increasing the proportion of investment-grade tenants among the top ten to 80%Repurchased 17.2 million shares of outstanding common stock under the Share Repurchase Program announced in February 2025, at a weighted average price of $7.88, for a total of $135.9 million; includes 4.5 million shares repurchased in fourth quarter 2025 for a total of $37.3 million and 1.8 million shares repurchased in first quarter 2026 for a total of $15.9 millionLeased over 3.7 million square feet in 2025, resulting in over $33.9 million of new straight-line rentAchieved a 12% renewal leasing spread in 2025, up from 7% in 2024, with a weighted average renewal term of 6.5 years; new leases completed in 2025 had a weighted average lease term of 5.2 yearsWeighted average annual rent increase of 1.4% provides organic rental growth, excluding 19.6% of the portfolio with CPI linked leases that have historically experienced significantly higher rental increasesSector-leading 66% of annualized straight-line rent in fourth quarter 2025 comes from investment-grade or implied investment-grade tenants3, up from 61% in fourth quarter of 2024Corporate credit rating upgraded to investment-grade BBB- from BB+ by Fitch Ratings; unsecured notes also upgraded to investment-grade BBB- by S&P Global, underscoring the Company’s strategic progress in deleveraging, enhancing operations and bolstering liquidity over the past two years
“2025 marked a decisive transformation for GNL, driven by coordinated initiatives to simplify the portfolio, materially reduce leverage, strengthen liquidity and improve our credit profile,” said Michael Weil, CEO of GNL. “This disciplined execution of our corporate strategy translated into meaningful shareholder value creation in 2025, reflected in a total return of 32%, outpacing the net lease sector. While we are pleased with the progress made and the narrowing of our valuation gap with peers, we believe there is a clear path to continued growth as we execute our 2026 objectives. We enter 2026 from a position of strength, focused on earnings growth through disciplined capital recycling and continued long-term deleveraging. Our strategy prioritizes reducing office exposure by disposing of select office assets and redeploying capital into accretive single-tenant industrial and retail investments that enhance earnings durability and portfolio quality. With a streamlined platform and enhanced financial flexibility, we believe GNL is well-positioned to execute this next phase with discipline and drive long-term value for shareholders.”
Full Year 2026 Guidance4
The following is a summary of the Company’s full-year 2026 guidance:
Financial Metric 2026 Guidance AFFO Per Share $0.80 to $0.84Net Debt to Adjusted EBITDA 6.5x to 6.9x
2026 Guidance assumes gross transaction volume, inclusive of both dispositions and acquisitions, of $250 million to $350 million. This initial guidance reflects GNL’s focus on disposing of select office assets and redeploying capital into accretive acquisitions of single-tenant industrial and retail assets.
Summary Fourth Quarter 2025 Results
Three Months Ended December 31,(In thousands, except per share data) 2025 2024 Revenue from tenants $116,953 $137,783 Net income (loss) attributable to common stockholders $37,245 $(17,458)Net income (loss) per diluted common share $0.16 $(0.08) NAREIT defined FFO attributable to common stockholders $13,102 $64,334 NAREIT defined FFO per diluted common share $0.06 $0.28 AFFO attributable to common stockholders $48,516 $78,297 AFFO per diluted common share $0.22 $0.34
Property Portfolio
At December 31, 2025, GNL’s portfolio of 820 net leased properties was comprised of approximately 41 million rentable square feet, located in ten countries and territories. The Company operates in three reportable segments: (1) Industrial & Distribution, (2) Retail and (3) Office. Portfolio metrics include:
97% leased with a remaining weighted-average lease term of 6.1 years586% of the portfolio contains contractual rent increases based on annualized straight-line rent66% of portfolio annualized straight-line rent derived from investment grade and implied investment grade rated tenants74% U.S. and Canada, 26% Europe (based on annualized straight-line rent)46% Industrial & Distribution, 27% Retail and 27% Office (based on an annualized straight-line rent)
Capital Structure and Liquidity Resources6
As of December 31, 2025, the Company had liquidity of $961.9 million7 and $1.5 billion7 of capacity under the Company’s revolving credit facility, compared to $492.2 million and $460.0 million, respectively, at the end of the fourth quarter 2024. As of December 31, 2025, the Company had net debt of $2.5 billion8, including $1.3 billion of mortgage debt and reduced Net Debt to Adjusted EBITDA from 7.6x to 6.7x in 2025.
As of December 31, 2025, the percentage of debt that was fixed rate (including variable rate debt fixed with swaps) was 98%, compared to 91% as of December 31, 2024. The Company’s total combined debt had a weighted average interest rate of 4.2%, down from 4.8% in the fourth quarter of 2024, resulting in an interest coverage ratio of 2.9 times9. Weighted average debt maturity was 3.010 years as of December 31, 2025 as compared to 3.0 years as of December 31, 2024.
Footnotes/Definitions
1 While we consider AFFO a useful indicator of our performance, we do not consider AFFO as an alternative to net income (loss) or as a measure of liquidity. Furthermore, other REITs may define AFFO differently than we do. Projected AFFO per share data included in this release is for informational purposes only and should not be relied upon as indicative of future dividends or as a measure of future liquidity.
2 Calculated based on a GBP/USD exchange rate of 1.3377 as of December 22, 2025.
3 As used herein, “Investment Grade Rating” includes both actual investment grade ratings of the tenant or guarantor, if available, or implied investment grade. Implied Investment Grade may include actual ratings of tenant parent, guarantor parent (regardless of whether or not the parent has guaranteed the tenant’s obligation under the lease) or by using a proprietary Moody’s analytical tool, which generates an implied rating by measuring a company’s probability of default. The term “parent” for these purposes includes any entity, including any governmental entity, owning more than 50% of the voting stock in a tenant. Ratings information is as of December 31, 2025. Comprised of 34% leased to tenants with an actual investment grade rating and 32% leased to tenants with an Implied Investment Grade rating based on annualized straight-line rent as of December 31, 2025.
4 We do not provide guidance on net income. We only provide guidance on AFFO per share and our Net Debt to Adjusted EBITDA ratio and do not provide reconciliations of this forward-looking non-GAAP guidance to net income per share or our debt to net income due to the inherent difficulty in quantifying certain items necessary to provide such reconciliations as a result of their unknown effect, timing and potential significance. Examples of such items include impairment of assets, gains and losses from sales of assets, and depreciation and amortization from new acquisitions and other non-recurring expenses.
5 Weighted-average remaining lease term in years is based on square feet as of December 31, 2025.
6 During the year ended December 31, 2025, the Company did not sell any shares of Common Stock or Series B Preferred Stock through its Common Stock or Series B Preferred Stock under its “at-the-market” programs. As of February 20, 2026, the Company had repurchased 17.2 million shares of outstanding common stock under its Share Repurchase Program announced in February 2025 for a total of $135.9 million, which includes 4.5 million shares repurchased in fourth quarter 2025 for a total of $37.3 million and 1.8 million shares repurchased in first quarter 2026 for a total of $15.9 million.
7 Liquidity represents the aggregate amount of cash and cash equivalents and borrowing and borrowing availability under our Revolving Credit Facility, utilizing the value of our applicable assets as of December 31, 2025 for the borrowing base calculation under such facility, and capacity represents the total undrawn commitments under our Revolving Credit Facility. Liquidity includes $781.7 million of availability under the Revolving Credit Facility and $180.1 million of cash and cash equivalents as of December 31, 2025.
8 Comprised of the principal amount of GNL’s outstanding debt totaling $2.6 billion less cash and cash equivalents totaling $180.1 million, as of December 31, 2025.
9 The interest coverage ratio is calculated by dividing adjusted EBITDA for the applicable quarter by Cash Paid for Interest (calculated based on the interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net). Management believes that interest coverage ratio is a useful supplemental measure of our ability to service our debt obligations. Adjusted EBITDA and Cash Paid for Interest are Non-GAAP metrics and are reconciled below.
10 Assumes we exercise each of our two 6-month extension options on our Revolving Credit Facility.
Conference Call
GNL will host a webcast and conference call on February 26, 2026 at 11:00 a.m. ET to discuss its financial and operating results.
To listen to the live call, please go to GNL’s “Investor Relations” section of the website at least 15 minutes prior to the start of the call to register and download any necessary audio software.
Dial-in instructions for the conference call and the replay are outlined below.
Conference Call Details
Live Call
Dial-In (Toll Free): 1-877-407-0792
International Dial-In: 1-201-689-8263
Conference Replay*
For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the GNL website at http://www.globalnetlease.com.
Or dial-in below:
Domestic Dial-In (Toll Free): 1-844-512-2921
International Dial-In: 1-412-317-6671
Conference Number: 13757483
*Available from 2:00 p.m. ET on February 26, 2026 through May 26, 2026.
Supplemental Schedules
The Company will furnish supplemental information packages with the Securities and Exchange Commission (the “SEC”) to provide additional disclosure and financial information. Once posted, the supplemental package can be found under the “Presentations” tab in the Investor Relations section of GNL’s website at http://www.globalnetlease.com and on the SEC website at http://www.sec.gov.
About Global Net Lease, Inc.
Global Net Lease, Inc. (NYSE: GNL) is a publicly traded real estate investment trust that focuses on acquiring and managing a global portfolio of income producing net lease assets across the United States, and Western and Northern Europe. Additional information about GNL can be found on its website at http://www.globalnetlease.com.
Forward-Looking Statements
The statements in this press release that are not historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to a number of risks and uncertainties that could cause the outcome to be materially different. The words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “projects,” “potential,” “predicts,” “expects,” “plans,” “intends,” “would,” “could,” “should” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. These risks and uncertainties include the risks that any potential future acquisition or disposition by the Company is subject to market conditions, capital availability and timing considerations and may not be identified or completed on favorable terms, or at all. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause the Company’s actual results to differ materially from those presented in its forward-looking statements are set forth in the “Risk Factors” and “Quantitative and Qualitative Disclosures about Market Risk” sections in the Company’s Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, and all of its other filings with the U.S. Securities and Exchange Commission, as such risks, uncertainties and other important factors may be updated from time to time in the Company’s subsequent reports. Further, forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update or revise any forward-looking statement to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
Contacts:
Investors and Media:
Email: [email protected]
Phone: (332) 265-2020
Global Net Lease, Inc.
Consolidated Balance Sheets
(In thousands) December 31, 2025 2024 ASSETS (Unaudited) (Unaudited)Real estate investments, at cost: Land $659,086 $802,317 Buildings, fixtures and improvements 3,592,121 4,120,664 Construction in progress 2,993 3,364 Acquired intangible lease assets 523,406 695,597 Total real estate investments, at cost 4,777,606 5,621,942 Less: accumulated depreciation and amortization (966,982) (999,909)Total real estate investments, net 3,810,624 4,622,033 Real estate assets held for sale 49,654 17,406 Assets related to discontinued operations 348 1,816,131 Cash and cash equivalents 180,114 159,698 Restricted cash 13,949 64,510 Derivative assets, at fair value 7 2,471 Unbilled straight-line rent 72,919 89,804 Operating lease right-of-use asset 63,362 66,163 Prepaid expenses and other assets 60,415 51,504 Multi-tenant disposition receivable, net 27,934 — Deferred tax assets 5,167 4,866 Goodwill 45,898 51,370 Deferred financing costs, net 16,812 9,808 Total Assets $4,347,203 $6,955,764 LIABILITIES AND EQUITY Mortgage notes payable, net $1,264,604 $1,768,608 Revolving credit facility 324,165 1,390,292 Senior notes, net 928,169 906,101 Acquired intangible lease liabilities, net 17,501 24,353 Derivative liabilities, at fair value 5,298 3,719 Accounts payable and accrued expenses 43,821 52,878 Operating lease liability 41,429 40,080 Prepaid rent 28,254 13,571 Deferred tax liability 17,796 5,477 Dividends payable 11,718 11,909 Real estate liabilities held for sale 60 — Liabilities related to discontinued operations 890 551,818 Total Liabilities 2,683,705 4,768,806 Commitments and contingencies — — Stockholders’ Equity: 7.25% Series A cumulative redeemable preferred stock 68 68 6.875% Series B cumulative redeemable perpetual preferred stock 47 47 7.50% Series D cumulative redeemable perpetual preferred stock 79 79 7.375% Series E cumulative redeemable perpetual preferred stock 46 46 Common stock 3,490 3,640 Additional paid-in capital 4,249,018 4,359,264 Accumulated other comprehensive income (loss) 22,169 (25,844)Accumulated deficit (2,611,419) (2,150,342)Total Stockholders’ Equity 1,663,498 2,186,958 Total Liabilities and Stockholders’ Equity $4,347,203 $6,955,764
Global Net Lease, Inc.
Consolidated Statements of Operations
(In thousands, except per share data) Three Months Ended Year Ended December 31,
2025 December 31,
2024 December 31,
2025 December 31,
2024 (Unaudited) (Unaudited) (Unaudited) (Unaudited)Revenue from tenants $116,953 $137,783 $495,286 $569,793 Expenses: Property operating 12,566 15,430 51,206 64,324 Impairment charges 31,972 20,098 157,532 90,310 Merger, transaction and other costs 1,458 1,792 6,662 6,022 General and administrative 13,377 13,012 52,753 52,358 Equity-based compensation 3,024 2,309 12,514 8,931 Depreciation and amortization 44,439 50,248 191,189 216,820 Goodwill impairment — — 7,134 — Total expenses 106,836 102,889 478,990 438,765 Operating income before gain on dispositions of real estate investments 10,117 34,894 16,296 131,028 Gain on dispositions of real estate investments 100,625 21,389 94,687 57,091 Operating income 110,742 56,283 110,983 188,119 Other income (expense): Interest expense (42,626) (59,604) (194,718) (255,685)Loss on extinguishment and modification of debt (2,335) (2,413) (11,222) (15,877)(Loss) gain on derivative instruments (268) 6,853 (10,676) 4,203 Unrealized gains (losses) on undesignated foreign currency advances and other hedge ineffectiveness — 1,917 (12,644) 3,249 Other income 780 694 4,331 1,075 Total other expense, net (44,449) (52,553) (224,929) (263,035)Net income (loss) before income tax 66,293 3,730 (113,946) (74,916)Income tax expense (12,434) (1,025) (21,801) (4,445)Income (loss) from continuing operations 53,859 2,705 (135,747) (79,361)Loss from discontinued operations (5,678) (9,227) (89,710) (52,211)Net income (loss) 48,181 (6,522) (225,457) (131,572)Preferred stock dividends (10,936) (10,936) (43,743) (43,744)Net income (loss) attributable to common stockholders $37,245 $(17,458) $(269,200) $(175,316) Basic and Diluted Income (Loss) Per Common Share: Net income (loss) per share from continuing operations $0.19 $(0.04) $(0.81) $(0.54)Net loss per share from discontinued operations (0.03) (0.04) (0.40) (0.22)Net income (loss) per share attributable to common stockholders — Basic and Diluted $0.16 $(0.08) $(1.21) $(0.76)Weighted Average Common Shares Outstanding: Basic 219,056 230,596 223,255 230,440 Diluted 219,056 230,596 223,255 230,440
Global Net Lease, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands) Three Months Ended Year Ended March 31,
2025 June 30,
2025 September 30,
2025 December 31,
2025 December 31,
2025Adjusted EBITDA Net (loss) income $(189,379) $(24,143) $(60,116) $48,181 $(225,457)Depreciation and amortization 56,334 45,636 44,780 44,439 191,189 Interest expense 53,437 53,348 45,307 42,626 194,718 Income tax expense 3,280 2,995 3,092 12,434 21,801 Discontinued operations adjustments 47,219 6,375 — — 53,594 EBITDA (29,109) 84,211 33,063 147,680 235,845 Impairment charges 60,315 9,812 55,433 31,972 157,532 Equity-based compensation 3,093 3,338 3,059 3,024 12,514 Merger, transaction and other costs 1,579 2,002 1,623 1,458 6,662 Loss (gain) on dispositions of real estate investments 1,678 (1,537) 5,797 (100,625) (94,687)Loss (gain) on derivative instruments 3,856 8,823 (2,271) 268 10,676 Unrealized losses (gains) on undesignated foreign currency advances and other hedge ineffectiveness 6,351 6,324 (31) — 12,644 Loss on extinguishment and modification of debt 418 4,348 4,121 2,335 11,222 Other income (48) (1,683) (1,820) (780) (4,331)Goodwill impairment[1] 7,134 — — — 7,134 Write offs of straight-line rent — 68 3,216 384 3,668 Discontinued operations adjustments 83,149 (2,279) (3,056) 5,637 83,451 Adjusted EBITDA 138,416 113,427 99,134 91,353 442,330 General and administrative 16,203 11,339 11,834 13,377 52,753 Write offs of straight-line rent — (68) (3,216) (384) (3,668)Discontinued operations adjustments 1,255 1,395 101 13 2,764 NOI 155,874 126,093 107,853 104,359 494,179 Amortization related to above- and below-market lease intangibles and right-of-use assets, net 160 1,232 1,147 1,088 3,627 Straight-line rent (5,235) (2,959) 3,433 (777) (5,538)Cash NOI $150,799 $124,366 $112,433 $104,670 $492,268 Cash Paid for Interest: Interest Expense – continuing operations $53,437 $53,348 $45,307 $42,626 $194,718 Interest Expense – discontinued operations 17,457 6,374 — — 23,831 Non-cash portion of interest expense (2,486) (2,499) (2,681) (1,961) (9,627)Amortization of discounts on mortgages and senior notes (13,960) (14,609) (8,640) (8,833) (46,042)Total Cash Paid for Interest $54,448 $42,614 $33,986 $31,832 $162,880 __________ [1] This is a non-cash item and is added back as it is not considered indicative of operating performance.
Global Net Lease, Inc.
Quarterly Reconciliation of Non-GAAP Measures (Unaudited)
(In thousands, except per share data) Three Months Ended Year Ended March 31,
2025 June 30,
2025 September 30,
2025 December 31,
2025 December 31,
2025Funds from operations (FFO): Net (loss) income attributable to common stockholders (in accordance with GAAP) $(200,315) $(35,079) $(71,051) $37,245 $(269,200)Impairment charges 60,315 9,812 55,433 31,972 157,532 Depreciation and amortization 56,334 45,636 44,780 44,439 191,189 Loss (gain) on dispositions of real estate investments 1,678 (1,537) 5,797 (100,625) (94,687)Discontinued operations FFO adjustments 114,949 (33,232) (1,214) 71 80,574 FFO (defined by NAREIT) 32,961 (14,400) 33,745 13,102 65,408 Merger, transaction and other costs 1,579 2,002 1,623 1,458 6,662 Loss on extinguishment and modification of debt 418 4,348 4,121 2,335 11,222 Discontinued operations Core FFO adjustments 9 15,172 — 2 15,183 Core FFO attributable to common stockholders 34,967 7,122 39,489 16,897 98,475 Non-cash equity-based compensation 3,093 3,338 3,059 3,024 12,514 Non-cash portion of interest expense 2,486 2,499 2,681 1,961 9,627 Amortization related to above- and below-market lease intangibles and right-of-use assets, net 160 1,232 1,147 1,088 3,627 Straight-line rent (5,235) (2,959) 3,433 (777) (5,538)Unrealized losses (gains) on undesignated foreign currency advances and other hedge ineffectiveness 6,351 6,324 (31) — 12,644 Eliminate unrealized losses (gains) losses on foreign currency transactions[1] 3,304 7,177 (3,421) (792) 6,268 Amortization of discounts on mortgages and senior notes 13,960 14,609 8,640 8,833 46,042 Goodwill impairment[2] 7,134 — — — 7,134 Eliminate deferred tax expense related to the disposition of the McLaren campus[3] — — — 12,741 12,741 Eliminate losses (gains) related to multi-tenant disposition receivable[4] — 13,766 (1,834) 5,541 17,473 Adjusted funds from operations (AFFO) attributable to common stockholders $66,220 $53,108 $53,163 $48,516 $221,007 Weighted average common shares outstanding – Basic and Diluted 230,264 222,960 220,891 219,056 223,255 Net (loss) income per share attributable to common shareholders — Basic and Diluted $(0.87) $(0.16) $(0.32) $0.16 $(1.21)FFO per diluted common share $0.14 $(0.06) $0.15 $0.06 $0.29 Core FFO per diluted common share $0.15 $0.03 $0.18 $0.08 $0.44 AFFO per diluted common share $0.29 $0.24 $0.24 $0.22 $0.99 Dividends declared to common stockholders $64,027 $43,429 $42,366 $42,055 $191,877 __________ [1] For AFFO purposes, we adjust for unrealized gains and losses. For the three months ended March 31, 2025, the loss on derivative instruments was $3.9 million, which consisted of unrealized losses of $3.3 million and realized losses of $0.6 million. For the three months ended June 30, 2025, the loss on derivative instruments was $8.8 million, which consisted of unrealized losses of $7.2 million and realized losses of $1.6 million. For the three months ended September 30, 2025, the gain on derivative instruments was $2.3 million, which consisted of unrealized gains of $3.4 million and realized losses of $1.1 million. For the three months ended December 31, 2025, the loss on derivative instruments was $0.3 million, which consisted of unrealized gains of $0.8 million and realized losses of $1.1 million. For the year ended December 31, 2025, the loss on derivative instruments was $10.7 million, which consisted of unrealized losses of $6.3 million and realized losses of $4.4 million.[2] This is a non-cash item and is added back as it is not considered indicative of operating performance.[3] Represents deferred tax expense specifically related to the capital gain recorded upon the disposition of the McLaren Campus. This amount is recorded in the income tax expense line item in our consolidated statements of operations. We do not consider this expense to be part of our normal operating performance and have, accordingly, increased AFFO for this amount.[4] Represents adjustments to the fair value of the embedded derivative feature of the multi-tenant disposition receivable. We do not consider these adjustments to be indicative of our normal operating performance and have, accordingly, increased or (decreased) AFFO for these amounts.
The following table provides operating financial information for the Company’s four reportable segments:
Three Months Ended December 31, Year Ended December 31, (In thousands) 2025 2024 2025 2024 Industrial & Distribution: Revenue from tenants $55,960 $54,561 $225,665 $237,645 Property operating expense 4,891 6,694 18,990 21,820 Net operating income $51,069 $47,867 $206,675 $215,825 Retail[1]: Revenue from tenants $30,177 $42,709 $132,783 $165,595 Property operating expense 3,819 4,126 14,763 16,095 Net operating income $26,358 $38,583 $118,020 $149,500 Office: Revenue from tenants $30,816 $38,775 $136,838 $143,571 Property operating expense 3,856 4,526 17,453 18,865 Net operating income $26,960 $34,249 $119,385 $124,706 Multi-Tenant Retail[2]: Revenue from tenants $ — $1,738 $ — $22,982 Property operating expense — 84 — 7,544 Net operating income $ — $1,654 $ — $15,438 __________[1] Amounts in the Retail segment reflect the reclassification and inclusion of one property that was previously part of the Multi-Tenant Retail segment, which was not included in the Multi-Tenant Retail Disposition.
[2] Reflects former Multi-Tenant Retail properties that were sold individually prior to December 31, 2024. Does not include the Multi-Tenant Retail Portfolio which is presented as a discontinued operation.
Caution on Use of Non-GAAP Measures
Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”), Adjusted Funds from Operations (“AFFO”), Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), Net Operating Income (“NOI”) and Cash Net Operating Income (“Cash NOI”) and Cash Paid for Interest should not be construed to be more relevant or accurate than the current GAAP methodology in calculating net income or in its applicability in evaluating our operating performance. The method utilized to evaluate the value and performance of real estate under GAAP should be construed as a more relevant measure of operational performance and considered more prominently than the non-GAAP measures.
Other REITs may not define FFO in accordance with the current National Association of Real Estate Investment Trusts (“NAREIT”) definition (as we do), or may interpret the current NAREIT definition differently than we do, or may calculate Core FFO or AFFO differently than we do. Consequently, our presentation of FFO, Core FFO and AFFO may not be comparable to other similarly-titled measures presented by other REITs in our peer group.
We consider FFO, Core FFO and AFFO useful indicators of our performance. Because FFO, Core FFO and AFFO calculations exclude such factors as depreciation and amortization of real estate assets and gain or loss from sales of operating real estate assets (which can vary among owners of identical assets in similar conditions based on historical cost accounting and useful-life estimates), FFO, Core FFO and AFFO presentations facilitate comparisons of operating performance between periods and between other REITs in our peer group.
As a result, we believe that the use of FFO, Core FFO and AFFO, together with the required GAAP presentations, provide a more complete understanding of our operating performance including relative to our peers and a more informed and appropriate basis on which to make decisions involving operating, financing, and investing activities. However, FFO, Core FFO and AFFO are not indicative of cash available to fund ongoing cash needs, including the ability to make cash distributions. Investors are cautioned that FFO, Core FFO and AFFO should only be used to assess the sustainability of our operating performance excluding these activities, as they exclude certain costs that have a negative effect on our operating performance during the periods in which these costs are incurred.
Funds from Operations, Core Funds from Operations and Adjusted Funds from Operations
Funds From Operations
Due to certain unique operating characteristics of real estate companies, as discussed below, NAREIT, an industry trade group, has promulgated a measure known as FFO, which we believe to be an appropriate supplemental measure to reflect the operating performance of a REIT. FFO is not equivalent to net income or loss as determined under GAAP.
We calculate FFO, a non-GAAP measure, consistent with the standards established over time by the Board of Governors of NAREIT, as restated in a White Paper approved by the Board of Governors of NAREIT effective in December 2018 (the “White Paper”). The White Paper defines FFO as net income or loss computed in accordance with GAAP, excluding depreciation and amortization related to real estate, gain and loss from the sale of certain real estate assets, gain and loss from change in control and impairment write-downs of certain real estate assets and investments in entities when the impairment is directly attributable to decreases in the value of depreciable real estate held by the entity. Adjustments for unconsolidated partnerships and joint ventures are calculated to exclude the proportionate share of the non-controlling interest to arrive at FFO, Core FFO, AFFO and NOI attributable to stockholders, as applicable. Our FFO calculation complies with NAREIT’s definition.
FFO includes adjustments related to the treatment of the sale of the Multi-Tenant Retail Portfolio as a discontinued operation, which includes adjustments for depreciation and amortization and loss (gain) on dispositions of real estate investments.
The historical accounting convention used for real estate assets requires straight-line depreciation of buildings and improvements, and straight-line amortization of intangibles, which implies that the value of a real estate asset diminishes predictably over time. We believe that, because real estate values historically rise and fall with market conditions, including inflation, interest rates, unemployment and consumer spending, presentations of operating results for a REIT using historical accounting for depreciation and certain other items may be less informative. Historical accounting for real estate involves the use of GAAP. Any other method of accounting for real estate such as the fair value method cannot be construed to be any more accurate or relevant than the comparable methodologies of real estate valuation found in GAAP. Nevertheless, we believe that the use of FFO, which excludes the impact of real estate related depreciation and amortization, among other things, provides a more complete understanding of our performance to investors and to management, and when compared year over year, reflects the impact on our operations from trends in occupancy rates, rental rates, operating costs, general and administrative expenses, and interest costs, which may not be immediately apparent from net income.
Core Funds From Operations
In calculating Core FFO, we start with FFO, then we exclude certain non-core items such as merger, transaction and other costs, as well as certain other costs that are considered to be non-core, such as debt extinguishment or modification costs. The purchase of properties, and the corresponding expenses associated with that process, is a key operational feature of our core business plan to generate operational income and cash flows in order to make dividend payments to stockholders. In evaluating investments in real estate, we differentiate the costs to acquire the investment from the subsequent operations of the investment. We also add back non-cash write-offs of deferred financing costs, prepayment penalties and certain other costs incurred with the early extinguishment or modification of debt which are included in net income but are considered financing cash flows when paid in the statement of cash flows. We consider these write-offs and prepayment penalties to be capital transactions and not indicative of operations. By excluding expensed acquisition, transaction and other costs as well as non-core costs, we believe Core FFO provides useful supplemental information that is comparable for each type of real estate investment and is consistent with management’s analysis of the investing and operating performance of our properties.
Core FFO includes adjustments related to the treatment of the sale of the Multi-Tenant Retail Portfolio as a discontinued operation, which includes adjustments for acquisition and transaction costs and loss on extinguishment of debt.
Adjusted Funds From Operations
In calculating AFFO, we start with Core FFO, then we exclude certain income or expense items from AFFO that we consider more reflective of investing activities, other non-cash income and expense items and the income and expense effects of other activities or items, including items that were paid in cash that are not a fundamental attribute of our business plan or were one time or non-recurring items. These items include, for example, early extinguishment or modification of debt and other items excluded in Core FFO as well as unrealized gain and loss, which may not ultimately be realized, such as gain or loss on derivative instruments, gain or loss on foreign currency transactions, and gain or loss on investments. In addition, by excluding non-cash income and expense items such as amortization of above-market and below-market leases intangibles, amortization of deferred financing costs, straight-line rent and equity-based compensation from AFFO, we believe we provide useful information regarding income and expense items which have a direct impact on our ongoing operating performance. We also exclude revenue attributable to the reimbursement by third parties of financing costs that we originally incurred because these revenues are not, in our view, related to operating performance. We also include the realized gain or loss on foreign currency exchange contracts for AFFO as such items are part of our ongoing operations and affect our current operating performance.
In calculating AFFO, we also exclude certain expenses which under GAAP are treated as operating expenses in determining operating net income. All paid and accrued acquisition, transaction and other costs (including prepayment penalties for debt extinguishments or modifications and merger related expenses) and certain other expenses, including expenses related to our European tax restructuring and transition costs related to the Merger and Internalization, negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will also have negative effects on returns to investors, but are excluded by us as we believe they are not reflective of our on-going performance. Further, under GAAP, certain contemplated non-cash fair value and other non-cash adjustments are considered operating non-cash adjustments to net income. In addition, as discussed above, we view gain and loss from fair value adjustments as items which are unrealized and may not ultimately be realized and not reflective of ongoing operations and are therefore typically adjusted for when assessing operating performance. Excluding income and expense items detailed above from our calculation of AFFO provides information consistent with management’s analysis of our operating performance. Additionally, fair value adjustments, which are based on the impact of current market fluctuations and underlying assessments of general market conditions, but can also result from operational factors such as rental and occupancy rates, may not be directly related or attributable to our current operating performance. By excluding such changes that may reflect anticipated and unrealized gain or loss, we believe AFFO provides useful supplemental information. By providing AFFO, we believe we are presenting useful information that can be used to, among other things, assess our performance without the impact of transactions or other items that are not related to our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently. Furthermore, we believe that in order to facilitate a clear understanding of our operating results, AFFO should be examined in conjunction with net income (loss) calculated in accordance with GAAP and presented in our consolidated financial statements. AFFO should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity or ability to make distributions.
Adjusted Earnings before Interest, Taxes, Depreciation and Amortization, Net Operating Income, Cash Net Operating Income and Cash Paid for Interest
We believe that Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation and amortization adjusted for acquisition, transaction and other costs, other non-cash items and including our pro-rata share from unconsolidated joint ventures, is an appropriate measure of our ability to incur and service debt. We also exclude revenue attributable to the reimbursement by third parties of financing costs that we originally incurred because these revenues are not, in our view, related to operating performance. All paid and accrued acquisition, transaction and other costs (including prepayment penalties for debt extinguishments or modifications) and certain other expenses, including expenses related to our European tax restructuring and transition costs related to the Merger and Internalization, negatively impact our operating performance during the period in which expenses are incurred or properties are acquired and will also have negative effects on returns to investors, but are not reflective of on-going performance. Adjusted EBITDA should not be considered as an alternative to cash flows from operating activities, as a measure of our liquidity or as an alternative to net income (loss) as calculated in accordance with GAAP as an indicator of our operating activities. Other REITs may calculate Adjusted EBITDA differently and our calculation should not be compared to that of other REITs.
EBITDA includes adjustments related to the treatment of the sale of the Multi-Tenant Retail Portfolio as a discontinued operation, which includes adjustments for depreciation and amortization and interest expense. Adjusted EBITDA includes adjustments related to the treatment of the sale of the Multi-Tenant Retail Portfolio as a discontinued operation, which includes adjustments for merger, transaction and other costs, (loss) gain on dispositions of real estate investments, loss (gain) on derivative instruments, loss on extinguishment of debt and other income (expense).
NOI is a non-GAAP financial measure equal to net income (loss), the most directly comparable GAAP financial measure, less discontinued operations, interest, other income and income from preferred equity investments and investment securities, plus corporate general and administrative expense, acquisition, transaction and other costs, depreciation and amortization, other non-cash expenses and interest expense. We use NOI internally as a performance measure and believe NOI provides useful information to investors regarding our financial condition and results of operations because it reflects only those income and expense items that are incurred at the property level. Therefore, we believe NOI is a useful measure for evaluating the operating performance of our real estate assets and to make decisions about resource allocations. Further, we believe NOI is useful to investors as a performance measure because, when compared across periods, NOI reflects the impact on operations from trends in occupancy rates, rental rates, operating costs and acquisition activity on an unlevered basis, providing perspective not immediately apparent from net income. NOI excludes certain components from net income in order to provide results that are more closely related to a property’s results of operations. For example, interest expense is not necessarily linked to the operating performance of a real estate asset and is often incurred at the corporate level as opposed to the property level. In addition, depreciation and amortization, because of historical cost accounting and useful life estimates, may distort operating performance at the property level. NOI presented by us may not be comparable to NOI reported by other REITs that define NOI differently. We believe that in order to facilitate a clear understanding of our operating results, NOI should be examined in conjunction with net income (loss) as presented in our consolidated financial statements. NOI should not be considered as an alternative to net income (loss) as an indication of our performance or to cash flows as a measure of our liquidity.
Cash NOI is a non-GAAP financial measure that is intended to reflect the performance of our properties. We define Cash NOI as net operating income (which is separately defined herein) excluding amortization of above/below market lease intangibles and straight-line rent adjustments that are included in GAAP lease revenues. We believe that Cash NOI is a helpful measure that both investors and management can use to evaluate the current financial performance of our properties and it allows for comparison of our operating performance between periods and to other REITs. Cash NOI should not be considered as an alternative to net income, as an indication of our financial performance, or to cash flows as a measure of liquidity or our ability to fund all needs. The method by which we calculate and present Cash NOI may not be directly comparable to the way other REITs calculate and present Cash NOI.
Cash NOI includes all of the adjustments described above for Adjusted EBITDA related to the treatment of the sale of the Multi-Tenant Retail Portfolio as a discontinued operation, as well as adjustments for general and administrative expenses.
Cash Paid for Interest is calculated based on the interest expense less non-cash portion of interest expense and amortization of mortgage (discount) premium, net. Management believes that Cash Paid for Interest provides useful information to investors to assess our overall solvency and financial flexibility. Cash Paid for Interest should not be considered as an alternative to interest expense as determined in accordance with GAAP or any other GAAP financial measures and should only be considered together with and as a supplement to our financial information prepared in accordance with GAAP.
