Good morning and welcome to the Global Net Lease First Quarter 2017 Earnings Call. All participants will be in listen-only mode. After today's presentation, there will an opportunity to ask questions. Please note that this call is being recorded. I would now like to turn the conference over to Mr. Matthew Furbish, GNL's Vice President of Investor Relations. Please go ahead.

Thank you, Amy. Good morning, everyone, and thank you for joining us for Global Net Lease's first quarter 2017 earnings call. With me today is Scott Bowman, GNL's President and Chief Executive Officer; and Nick Radesca, GNL's Chief Financial Officer, Treasurer and Secretary. This morning's call is being webcast at globalnetlease.com in the Investor Relations section. I would like to remind everyone that certain statements and assumptions in this earnings call which are not historical facts will be forward-looking and are being made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to certain assumptions and risk factors, which could cause GNL's actual results to differ materially from these forward-looking statements. The risk factors that could cause these differences are more fully discussed in our filings with the SEC. In addition, the forward-looking statements included in this conference call are only made as of the date of this call. And as stated in our SEC reports, GNL disclaims any intent or obligation to update or revise these forward-looking statements except as expressly required by law. Now, I'd like to turn the call over to GNL's CEO, Scott Bowman. Scott?

Thank you, Matt. Good morning everyone and thank you for joining today's call. I'm joined by our CFO Nick Radesca and together we will review GNL's first quarter 2017 results, provide a portfolio update, as well as provide insight into our key 2017 initiatives. Let me begin by saying that I'm pleased to report that GNL hit the ground running in the first quarter 2017 following the close of our acquisition of Global II at the end of 2016. We've made substantial progress on our stated objectives for the year and continue to work diligently to position GNL for sustained long-term growth. In the first quarter 2017, we completed the integration of the Global II portfolio. We completed acquisitions of three properties and sold one property. We paid off the remaining balance of our €52.7 million mezzanine facility which was assumed as part of the Global II acquisition and carries with it an 8.25% interest rate resulting in $3 million in annualized savings and we completed a one-for-three reverse stock split at the beginning of March. We reported net income attributable to stockholders of $7.4 million up 14.5% year-over-year, net operating income of $55.6 million, up 12.8% year-over-year, and core FFO of $34.2 million up 14.5% year-over-year. In just a moment, Nick will discuss our financial results in greater detail. Looking at our portfolio activity, as I just mentioned in the first quarter we acquired three properties in the U.S. for a total purchase price of $30.3 million at an average cash cap rate of 7.2%. The properties are high quality distribution facilities located in the U.S. with long duration leases to our new construction assets and the third completed a remodel in Q1 of this year. We also closed on the sale of a suburban U.S. office property for…

Thank you, Scott, and good morning everyone. As you saw in today's release, we posted another solid quarter. Our first full quarter results since the acquisition of Global II at the end of the fourth quarter of last year. I'll note that the merger has gone as smoothly as anticipated and GNL is receiving the benefit of both the portfolio stable cash flows, as well as an enhanced risk profile from increased diversification. Looking at our results, we reported for the first quarter 2017 net income attributable to stockholders of approximately $7.4 million which was up 14.5% year-over-year, net operating income of $55.6 million up 12.8% year-over-year, Navy defined funds from operations of $33.5 million or $0.51 per share up 11.7% year-over-year, core funds from operations of $34.2 million or $0.52 per share up 14.5% year-over-year, adjusted funds from operations of $34.5 million up 6.7% year-over-year and we ended the quarter with $72 million in cash and cash equivalents. A reconciliation of net income to the non-GAAP measures can be found starting on Page 8 of our earnings release, as well as other GAAP financial information. As we discussed in our last earnings call, our debt restructuring initiative is a priority for GNL in 2017 which includes improving our balance sheet metrics, extending the average remaining term of our debt, and increasing the mix of unsecured debt. The goal of the restructuring is both to prudently manage our cost of capital, as well as to position the company to secure an investment grade rating. Accordingly, we took a significant step in our restructuring effort by paying down the remaining €52.7 million mezzanine facility that carried an interest rate of 8.25%. Assumed as part of the Global II acquisition, fully extinguishing this higher cost debt obligation at quarter end exchange rates…

Thank you, Nick. After transformative 2016, GNL has gotten off to a strong start in 2017. We continue to be pragmatic in our approach. For 2017 we have a few important initiatives well underway starting with the restructuring of our debt stack that we believe will position GNL well toward our goal of securing investment grade rating. This initiative coupled with our goal of $150 million to $200 million in acquisitions and $50 million to $75 million in dispositions, will put GNL in a very strong position and sets the foundation for continued growth. We are excited for the future and believe that our unique ability to access U.S. and European real estate and capital markets coupled within interest coverage ratio among the top of our peer group and ample liquidity we’ll continue to drive strong organic growth in our portfolio. That concludes our prepared remarks so let's go ahead and open up the call for questions. Amy?

[Operator Instructions] The first question comes from David Corak at FBR.

Good morning. Could you talk a little about the Gramercy of European portfolio that recently transacted maybe how that compares to your European assets and your thoughts on pricing?

Sure, thanks David. Yes so Gramercy recently announced that they have a European JV that they sold for in the range of $1 billion. They had a minority stake in that JV and very interestingly it made up of distribution and office assets largely went at a 6.2 cash cap rate. We think that this result reinforces the value of the European portfolio of GNL and helps to highlight the fact that GNL likely does not receive a full valuation in our current stock price for the quality and value of the European portfolio. And we continue to see very positive indications out of the European market that will lead us to believe that we continue to have appreciation in our portfolio and post the French election we could even see that continue further.

Okay. Sticking with Europe, can you comment a little bit on the capital flows maybe that you guys or even your advisor the Moorpark have seen into European real estate in your markets specifically those in that sweet spot you guys target and in Europe the $25 million to $75 million kind of range.

Yes, we're seeing an interesting evolution David since last June where there was a little bit of a wait-and-see in the markets especially in the U.K. to understand valuations but clearly there have been inflows not only Moorpark but ourselves have received numerous inbound inquiries about assets we have in our portfolio at very interesting valuations although we are a long-term holder of real estate. So we feel good about the assets that we hold. And also that we've started to see increased inflows into the market as the stability has continued to improve as there has been limited uncertainty and as you think about with regard to the French election this follows the Dutch elections. So clearly the tide is moving towards EU support and those elections clearly enhance that and should only create added value. There is liquidity and availability of money in Europe as well so there is a supportive environment to do real estate transaction and there's money both from Europe, as well as the U.S. and Asia coming into the European sector at this point.

Okay. That’s good color, thank you. And then obviously you guys started on the acquisitions stuff now, can you talk a little about what’s attracting to industrial distribution kind of assets in the U.S. versus other net lease type product in the United States?

So there's a few things number one, I think first and foremost the advantage of the GNL strategy is to be able to invest on both sides of the Atlantic opportunistically based upon market conditions. And we've seen a widening in the U.S. that is made it an opportunistic time for us to invest and increase our U.S. portfolio and specifically within the distribution sector where we have bought all of our first quarter assets and have a big piece of our future pipeline, we've seen a widening that makes this very interesting to us when you look at the cash cap rates versus our cost of debt today. And as we continue to deploy capital, we’ll continue to evaluate this. It's also David part of our strategy to bring back the office mix to about 50% and increase distribution and industrial backup towards its high 30s 40%. And we feel like that will be a good stage one, as we continue to evaluate the mix of our portfolio and continue to allow GNL’s best-in-class portfolio to evolve.

Okay, well you just answered my next question but I guess part B of that question was just are you comfortable with the parity between U.S. and Europe now or would you see that shifting a little bit and do you have a timeline on that?

We've been comfortable with the parity of U.S. and Europe right now based on what we see. We are more focused on the U.S. and we could move back toward as much as 60% in the U.S. Again it really depends as we continue to strategically take advantage of both the markets and see where we can create the most value for our shareholders.

Okay. And then just going back to retail obviously there has been a string of retail bankruptcy of late we had some pretty well-publicized drama last week with one of the retail focused net lease REITs. You guys are little under 10% retail now can you just talk a little bit about your comfort level with the specific tenant and industry basis that you have and then maybe specifically talk about discount retail and how you think that fits into the broader retail picture at this point?

Sure David. So let's start with our outlook on retail. We are very diligent in not only our underwriting process but also in continuing to evaluate our portfolio and our tenants. Part of the effort to have our asset recycling program which we completed in Q1 and announced in Q2 of 2016 was to reduce some of our retail exposure not only did we reduce discount retail which we’ll talk more about in a second from a 142 Family Dollar and Dollar General Stores to roughly 115 but we also sold off the only big box retail stores we owned in the U.S. because we felt like that was a vulnerability for us that we were able to eliminate and we chose to do so. As we look at the dollar stores we feel good about those stores in value call it $1 million to $2 million per location, they tend to be focused on very local markets not big footprints and less impacted by online businesses because of the type of assortment and how they’ve been into their markets. So overall we feel pretty good about our retail assets in addition to the dollar stores. There's also a mix of a do-it-yourself stores in both the U.K. and Germany similar to what a Home Depot would be we feel great about those assets. And a mix of some other small portfolio of assets we do own a group of fast service restaurants in Puerto Rico which is probably going to be your next question David they're all young brand. So Kentucky Fried Chicken, Pizza Hut et cetera and we feel good about those we continue to monitor them and we’ll continue to monitor them and talk with you more in second quarter about those assets as well. And the last thing David just Dollar Stores today after the sales that we've had combined account for about 4% of our straight line rent.

Okay, that’s helpful. Couple for Nick and then yield the floor. So I’m sure things are progressing down the - with the rating agencies may be its later this year maybe next year but do you think – the near-term what can we think about in terms of the debt stack what can that look like given your kind of ability to borrow on both sides of the pond. In terms of just terming out the revolver with maybe bank debt is that still an option and any thoughts on pricing around anything you're looking at today would be helpful?

So let me start by reiterating our current revolving credit facility has a maturity at the end of July of 2017 and there is still another 12 month extension that we can exercise on that facility. Our intention is to have something to announce prior to that extension date. And we are in active discussions with vendors that are currently in that facility and some others. As we said last quarter we do see an interest from the banks in terming out a portion of any refinance credit facility. And you know we believe the pricing is consistent with what the pricing would be on the facility itself to have term of four or five years on the debt.

Okay, that’s helpful. And then just in terms of leverage are you guys work towards a specific leverage target that you could share with us how do you think about your kind of cash flow leverage as it stand today and where you'd like to be going forward?

Sure I think we look at it more as we like to trend towards something seven times or slightly below, but the exact date we get there is not certain and that depends on what we see in the marketplace for acquisitions as well as what's available to us on our credit facility. But our discussions and planning to become investment grade rated all lead to in the next call it 18 months having that number in a range that the agencies are very, very comfortable with.

That makes sense all right thank you very much guys.

The next question is from [David Cramer at GNR] [ph].

Good morning, and thank you for the call. I had two questions, the first one is related to - you mentioned the recycling program and selling off number of assets and if I’m not mistaken I think you’re only trade as the cap rate was a little bit over 7% and I think you mentioned that you recently sold one property with an exit cap rate of about 10%. Could come in on those sound without me knowing that market sound like high cap rates i.e. sale price perhaps so could you comment on that and also on how you made out with the sales overall in other words whether there was a calculation of rate of return over the holding period is that the asset level?

Sure, thanks David. Yes, so first off is the final asset which was the asset that had the 10 cap on it is included in the overall 7%. Obviously there are some of the assets in that portfolio that were sold sub six and the highest was the one that we announced in this quarter at 10% and was also a mix of being really more focused on cleansing the portfolio as we wanted to fine tune based upon current market conditions and the makeup or the construction of the portfolio. And so reducing retail exposure, eliminating big-box based upon over the last two or three years evolution of the performance of big-box retailers I'm sure you’ve seen some of them go out, but also many of them want to reduce footprint et cetera we eliminated that exposure. And so we felt very good about the seven exit cap rate overall we have not communicated and exit IRR so I really can't go there. But we feel very good about the pricing compared to what we had modeled out for these assets and have been able to with partnership with Nick be able to redeploy this capital partly taking out high cost debt, as well as being able to put it into the acquisition pipeline in first quarter of the year. Second part of the question based on what we own the assets and what we sold them for, we did recognize in 2016 for the year a $13.3 million gain on sale of investments and this year for the first quarter we had a total I believe on this one asset of $400,000 gain even at that 10.1%.

All right, I see thank you. The other question is with the caveat that I now the comments at the beginning in the forward-looking statements and you can't predict or say. But I had a number of clients in net lease to that we're merged into this program and the statement values were about $0.92 on the dollar before the merger and about - from memory about $0.73 on the dollar after the merger. Any comments on what might have caused the drop in statement value. And then secondly any comments on outlook from the standpoint of setting region expectations again with the proper caveats about what they may look forward to in terms of regaining some of their statement value to get closer to what they started with?

So David for the second part of your question obviously we can't predict future valuations on a public market, but we do think that all the things that we’ve talked about should set the foundation for GNL to have good opportunity to enhance value for shareholders. With regard to point one, there was a negotiation between GNL and G II Boards of Directors the independent directors who form special committees negotiating what they felt was fair pricing and the best opportunity for both companies in the acquisition both Boards felt it appropriate to have shareholder votes on the transaction was required for the Global II side but GNL also felt it was appropriate. I just want to remind everyone that while 93% of the GNL shareholders voted for this transaction over 86% of the Global II shareholders voted recognizing that GNL provide better long-term value. But that value started at a valuation based on multiples and GNL did pay a slight premium to Global II for the multiple against their earnings to bring those shareholders into GNL. And as Nick and I've mentioned, we are working on a number of different initiatives that hopefully the market will recognize and provide enhanced valuations which will be good long-term for the shareholders.

Okay. Thank you.

The next question comes from [Mark Berger at MVK Associates] [ph].

Thank you for taking my question. You said basically you're working on some enhanced strategies to increase the evaluation of the company, why do you think we're not valued equal to our peers. What makes us different or delinquent in valuation?

Well I think that number one as I think the entire net lease sector has taken a recent hit based upon the market volatility that we've seen over the past few weeks. Prior to that GNL had been trading in the top quartile of its peer group and continue to do well. The reality is GNL trades in a range of multiple with its peer group above some and below others. We would like to see GNL's valuation increase. We believe that the quality of GNLs portfolio when you look at investment grade tenants, mix which is you know high compared to anyone in our peers the strategic importance of many of the assets in our portfolio, the flexibility of U.S. and Europe, the quality of the European portfolio only enhanced or validated by the recent Gramercy transaction. And we will just continue to do the things that that we are doing to be pragmatic and gain recognition but today we sit within the goalposts of where our peer group trades and like our peer group we had some impact recently but we have been trading since the beginning of the year in the upper quartile of that group if you go back and research that.

Okay. What about additional research on the company, I don't see too many people that have coverage's probably a goal in the future to try to get some more coverage and therefore more distribution of the stock among shareholders.

We are actively working with a number of different firms on research both Nick and I are engaged in that in a daily really weekly basis. We do believe that you will see additional research coming online as people open up availability to add names and we are working to make that happen as soon as it can. We do recognize that many institutional investors will look for research and so we're appreciative of the firm that cover us FBR and look forward to having some other important firms covering GNL in the near future.

Last question with regard to dividend, do you have for any forward thoughts as to based on the income coming in what you would raise your dividend too or can we look forward to potential dividend races in the near future based on some of the items you have in the hopper?

We continue to evaluate our dividend with our board. Our board has reaffirmed the dividend through the end of this quarter. So through the June distribution as you know, GNL paid distributions on a monthly basis and we will continue to monitor and evaluate that with our board but really we can't go beyond that - there is no public direction at this time.

Thank you very much.

I believe that was our last question Amy.

Yes, I show no further questions at this time.

Okay, then thanks very much Amy and thank you all very much for joining us today. We look forward to continuing to update you soon. Have a great day. Matt?

Thank you Scott, and Nick. Thank you everyone for joining us today. As always our management team is available should you have any follow-up questions. If so, please don't hesitate to contact me directly at 917-475-2153. Have a great day.

Thank you, Mr. Furbish. As a reminder, this conference call will be available for replay beginning approximately one hour after this call. Dial-in for replay is 1-877-344-7529 with the confirmation code of 10106108. Again the dial-in for replay is 1-877-344-7529 with the confirmation code of 10106108. The conference call has now concluded. Thank you for attending today's presentation. You may now disconnect.