Good morning, and welcome to the Global Net Lease Second Quarter 2019 Earnings Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Louisa Quarto, Executive Vice President. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining us for GNL's Second Quarter 2019 Earnings Call. This call is being webcast in the Investor Relations section of GNL's website at www.globalnetlease.com. Joining me today on the call to discuss the quarter's results are Jim Nelson, Chief Executive Officer; and Chris Masterson, Chief Financial Officer. The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings including the annual report on Form 10-K for the year ended December 31, 2018, filed on February 28, 2019, and all other filings with the SEC after that date for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements or portfolio information provided during this conference call are only made as of the date of this call. As stated in our SEC filings, GNL disclaims any intent or obligation to update or revise these forward-looking statements or portfolio information except as required by law. During today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of GAAP net income to the non-GAAP measures can be found in our earnings release supplement and Form 10-Q, all of which are posted to our website at www.globalnetlease.com. I'll now turn the call over to our CEO, Jim Nelson.

Thanks, Louisa, and good morning, everyone. Thank you all for joining us on today's call. We are pleased to report another quarter of increases in rental revenue, adjusted EBITDA and AFFO. We had a very active quarter including $187 million of primary industrial, distribution and office acquisitions, which, combined with our retail disposition, increased our portfolio allocation to the industrial and distribution properties and decreased our retail exposure. We also refinanced much of our European debt at more advantageous rates, extending the weighted average maturity of our debt from 3.3 years to 4.6 years in the last 12 months, and subsequent to the quarter end, successfully completed an expansion of our primary credit facility to over $1.2 billion. Total revenue for the second quarter was $76.1 million, up 7.3% from $71 million in prior year quarter. AFFO also increased to $40.1 million from $35.5 million in the second quarter of 2018, and up from $39.5 million in the prior quarter on the strength of our recent acquisitions. On a per share basis, AFFO was $0.47. Our second quarter 2019 saw the majority of the $187 million of acquisitions closed in the back end of the quarter. Thus they only contributed about $1 million of the $3.2 million estimated full quarter rents to our second quarter revenue. Overall, our 288 property portfolio is nearly fully occupied at 99.6% leased, 220 of which are located in the U.S. and 68 are in the U.K. and Western Europe, representing 58% and 42% of annualized rental revenue, respectively. Our investment grade or implied investment grade tenants make up over 72% of the portfolio. Please refer to our earnings release for more information about what we consider to be implied investment grade tenants. Our property mix is currently 53% office, 41% industrial and distribution and…

Thanks, Jim. Second quarter revenue was $76.1 million, up 0.9% over the first quarter 2019 figure. And AFFO was $36.8 million, up 1.6% over the first quarter. Moving on, core FFO grew 5.3% over the first quarter to $38.4 million, and AFFO was $40.1 million, up 1.4% over the prior quarter. AFFO per share was down slightly quarter-over-quarter due to an increase in the weighted average number of shares outstanding in the quarter. During the quarter, we paid common stock dividends of $14.9 million. On our balance sheet, we ended the second quarter with net debt, which is debt less cash and cash equivalents of $1.7 billion at a weighted average interest rate of 3% per annum. Our weighted average debt maturity has lengthened to 4.6 years at the end of the second quarter, an improvement from 3.3 years at the close of 2018 second quarter. This includes $181 million of debt that matures in 2019, which we are actively addressing, the results of which will be announced in future filings. The components of our debt include $259.5 million on the multicurrency revolving credit facility, $280.3 million on the term loan and $1.3 billion of outstanding gross mortgage debt. This debt was approximately 84.6% fixed rate, which is inclusive of floating rate debt with in-place interest rate swaps, an improvement over the quarter ended March 31, 2019, where 83.7% was fixed. Our net debt to annualized adjusted EBITDA improved to 7.1x from 7.4x last year with a strong interest coverage ratio of 4.1x. As of June 30, 2019, liquidity was approximately $259.4 million, which comprises $178.7 million of cash on hand and $90.7 million of availability under our revolving credit facility. GNL's net debt to enterprise value was 48% with an enterprise value of $3.5 billion based on the June…

Thanks, Chris. We had an excellent quarter from a real estate perspective, and we believe we have put the pieces in place to record a strong second half of the year. The portfolio and the rental income generated by the portfolio continue to grow. We are well positioned with available capital to close on our $149 million pipeline of acquisitions of long-term leased primarily industrial assets. Selling the Family Dollar portfolio illustrates our disciplined asset management strategy and provides the opportunity to use the net proceeds to improve our asset mix. We anticipate growth in the portfolio when the proceeds from our second quarter dispositions are fully redeployed and we'll continue to be a net acquire of high-quality, long-term net leased office, distribution and industrial assets. Finally, as we have discussed, our ability to negotiate favorable financings in local markets and at the corporate level meaningfully contributes to our bottom line. With that, operator, we can open the line for questions.

[Operator Instructions]. And our first person today will come from Mitch Germain of JMP Securities.

So it looks like you have another sort of Family Dollar stores for sale as well. Is this the last batch that you own?

Mitch, yes, it's the last batch that we own. Correct.

Ann is the pricing comparable?

Pricing is very comparable, yes.

And I missed that cap rate. What was it, you said 6.25%? Could that be it?

No. I think it was 7%, a little over 7%, 7.25%, if I'm correct.

So after that, is it safe to say that -- obviously, your retail is now 6% going down even further. Is the goal to eliminate that retail entirely at this point?

Well, as you can see, we're very selective and timing is also important. So I wouldn't say the goal is to eliminate all of it, but we will be very selective in any further reductions beyond the Family Dollar.

Okay. And then -- okay. Just in terms of some of the acquisition activity. In terms of what you guys are looking at in the future, is it still that kind of mix of heavyweighted to industrial. Does that continue to be the goal? Or is the pipeline that you're looking at have maybe an increased skew toward office?

No. Definitely not an increased skew towards office. As you saw, we've only purchased one office building so far this year. But we -- as we stated before and we will continue to focus on is primarily distribution and industrial properties. That's our primary focus.

Okay. Last one from me. I know about I think it was probably the fall you announced the disposition in Europe. Is that still pending? Or is that no longer under consideration?

No. It's definitely still pending.

But that's not on what you guys have. It's not part of the $135 million in Germany. That's in addition to, correct?

No, no. The $135 million in Germany is one building in Germany that's held for sale and will close relatively soon.

Our next question will come from Bryan Maher of B. Riley FBR.

Mitch got my question on the Family Dollar, so that's good. But, Jim, can you elaborate a little bit more on the European strategy here now with the couple for sale and really any context of you last quarter comments that you're starting to see more opportunities over the year? And I forget if it was on the continent or in the U.K. relative to Brexit? But you -- can you just give us your thoughts on the U.K. and Europe right now?

Sure. Absolutely, thank you. Good -- actually, a very good question. The U.K., we have a wait-and-see attitude. I mean with the way things are going there, it's really hard to foretell what's going to happen. I think we have enough exposure in the U.K. and unless we saw something that was extremely compelling, it would be hard to pull the trigger. Whereas on the continent, we have -- we're looking very hard to find properties that fit into our strategy, our acquisition strategy and fit our model. We're working very hard to find properties there. We haven't closed on anything yet this year, but we're looking very, very carefully.

Okay. Great. And then in the U.S., when it comes to the acquisitions here, and I understand it's mostly industrial and distribution. Are there better regions within the country that you're seeing opportunities? It seems like over the past several quarters, maybe there was more of a skewing to kind of the Heartland Middle America, Ohio, Chicago, Milwaukee region. Is that still where there is opportunities? Or is it shifting elsewhere?

Well, you're absolutely right. That's where a lot of the acquisitions have been. We continue to look across the U.S. And we are relatively agnostic to location. It's more the property value that you assign when you're buying a good property. So we continue to look all across the U.S. We've got a very robust pipeline. So -- and as you know, we've closed about $270 million worth of properties year-to-date. So we're moving ahead very nicely.

And then just lastly from me. This a little bit of minutia. On the office property you acquired in Birmingham. Was that truly an office building? Or was it a medical office building? How would you characterize that property?

Go ahead, Chris.

Well, Encompass Health, this is their headquarter building. So it's primarily a corporate headquarters that's strictly office. And then they have a connected office garage to the building. But it's really a nice relatively new building that is their headquarters. I mean the company is a health care company. But it's their corporate headquarters.

And I just wanted to differentiate between that and -- as well as covered health care REITs that have been buying medical office buildings. So I just wanted to make sure that it was truly an office building and not a medical office building?

Yes. We don't buy medical office buildings. We would buy this primarily as a corporate headquarters. So you're absolutely right, it was a great question. Thank you.

[Operator Instructions]. The next question will come from John Massocca of Ladenburg Thalmann.

On the financing front. And I'm kind of moving to the debt side. Is it fair to kind of assume I mean I think you have one piece of U.S. debt coming due relatively shortly in '19. But outside of that, the primary refinancing focus left is just the French mortgages that are out there?

Correct. That's correct.

Okay. And would -- when we think about the potential rate on any kind of debt there. I mean has that come in over the last couple of months here? I mean should we expect kind of on level with where the mortgages are today or something kind of inside of that?

It's hard to say because the deal hasn't closed. But I think the rates will be within reason to where they were and hopefully better.

Okay. And then on the in-place portfolio. The Deutsche Bank building you own in Luxembourg. Any impact there from some of their operational changes? I'd imagine it doesn't have too much of an impact given a lot of the focus seems to be on the U.S. side? But is anything there potentially? Or is that pretty steady eddy right now?

We haven't seen anything. I met with the COO there, the last time I was in Luxembourg for Board meeting. And their business in Luxembourg is still very good. It's a very important office to them. The building was built specifically for them. It's their signature building in Luxembourg. And I think for a lot of their international clients, Luxembourg is very important. So we haven't seen it and we don't expect it to have any effect on Luxembourg.

Okay. And then on the kind of new additions to the pipeline or the closed or you have to say that are under a kind of purchase agreement or LOI. Is any of that European? It looks like the last assets you had on there might be European one. But just kind of following up on the -- on shift of focus maybe to have some more European acquisitions? Is there anything in the pipeline right now that's European?

Well, everything that's in the pipeline right now is in the US. And as I said on the previous question, we're looking very hard in Europe, but we don't have any signed LOIs in Europe to talk about. So we haven't -- we don't really have anything in the pipeline yet to talk about in Europe.

Ladies and gentlemen, this will conclude our question-and-answer session. At this time, I'd like to turn the conference back over to Jim Nelson, CEO, for any closing remarks.

I want to thank you all for joining us on today's call. We really appreciate your participation, and again I thank you very much.

The conference has now concluded. We thank you for attending today's presentation, and you may now disconnect your lines.