UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2019
2020
OR
☐OR
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to __________
Commission file number: 001-37390
gnl-20200930_g1.gif
Global Net Lease, Inc.
(Exact name of registrant as specified in its charter)
Maryland45-2771978
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
405 Park Ave., 3rd FloorNew York,New York10022
(Address of principal executive offices)(Zip Code)
(212) 415-6500650 Fifth Ave., 30th Floor, New York, NY                 10019
______________________________________________________________________________ ___________________________________________________________________________
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code
code: (212) 415-6500
Securities registered pursuant to section 12(b) of the Act:
Title of each classTrading SymbolsName of each exchange on which registered
Common Stock, $0.01 par valueGNLNew York Stock Exchange
7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par valueGNL PR ANew York Stock Exchange
6.875% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par valueGNL PR BNew York Stock Exchange
Preferred Stock Purchase RightsNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitiondefinitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
As of November 1, 2019,October 30, 2020, the registrant had 89,458,34089,482,566 shares of common stock outstanding.

GLOBAL NET LEASE, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Page
PART I - FINANCIAL INFORMATION
Page
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 20192020 and December 31, 20182019
2
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 20192020 and 20182019
43
Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 20192020 and 20182019
54
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 20192020
65
Consolidated Statements of Changes in Equity for the Three and Nine Months Ended September 30, 20182019
6
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20192020 and 20182019
7
Notes to Consolidated Financial Statements
9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
4237
Item 3. Quantitative and Qualitative Disclosures About Market Risk
6458
Item 4. Controls and Procedures
6458
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
6559
Item 1A. Risk Factors
6559
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities
6662
Item 3. Defaults Upon Senior Securities
6662
Item 4. Mine Safety Disclosures
6662
Item 5. Other Information
6662
Item 6. Exhibits
6662
Signatures
6763

1
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
GLOBAL NET LEASE, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)


 September 30,
2019		 December 31,
2018
ASSETS   
Real estate investments, at cost (Note 3):
   
Land$388,269
 $398,911
Buildings, fixtures and improvements2,463,275
 2,345,202
Construction in progress8,185
 1,235
Acquired intangible lease assets641,307
 675,551
Total real estate investments, at cost3,501,036
 3,420,899
Less accumulated depreciation and amortization(499,507) (437,974)
Total real estate investments, net3,001,529
 2,982,925
Assets held for sale107,868
 112,902
Cash and cash equivalents305,962
 100,324
Restricted cash3,950
 3,369
Derivative assets, at fair value (Note 7)
7,473
 8,730
Unbilled straight-line rent51,195
 47,183
Operating lease right-of-use asset (Note 9)
49,274
 —
Prepaid expenses and other assets41,827
 22,245
Due from related parties20
 16
Deferred tax assets3,254
 3,293
Goodwill and other intangible assets, net21,595
 22,180
Deferred financing costs, net14,652
 6,311
     Total Assets$3,608,599
 $3,309,478
    
LIABILITIES AND EQUITY   
Mortgage notes payable, net (Note 4)$1,366,818
 $1,129,807
Revolving credit facility (Note 5)
101,405
 363,894
Term loan, net (Note 5)389,885
 278,727
Acquired intangible lease liabilities, net31,559
 35,757
Derivative liabilities, at fair value (Note 7)
10,638
 3,886
Due to related parties299
 790
Accounts payable and accrued expenses20,741
 31,529
Operating lease liability (Note 9)
23,547
 —
Prepaid rent20,338
 16,223
Deferred tax liability14,603
 15,227
Taxes payable3
 2,228
Dividends payable3,416
 2,664
Total Liabilities1,983,252
 1,880,732
Commitments and contingencies (Note 9)
—
 —
Stockholders’ Equity (Note 8):
   
7.25% Series A cumulative redeemable preferred stock, $0.01 par value, liquidation preference $25.00 per share, 13,409,650 shares authorized, 6,682,448 and 5,416,890 issued and outstanding as of September 30, 2019 and December 31, 2018, respectively67
 54
Common Stock, $0.01 par value, 150,000,000 shares authorized, 89,458,340 shares issued and outstanding as of September 30, 2019; 100,000,000 shares authorized, 76,080,625 shares issued and outstanding as of December 31, 20182,225
 2,091
Additional paid-in capital2,322,419
 2,031,981
Accumulated other comprehensive (loss) income(14,618) 6,810
Accumulated deficit(694,714) (615,448)
Total Stockholders’ Equity1,615,379
 1,425,488
Non-controlling interest9,968
 3,258
 Total Equity1,625,347
 1,428,746
     Total Liabilities and Equity$3,608,599
 $3,309,478
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements.
GLOBAL NET LEASE, INC.

CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)


September 30,
2020		December 31,
2019
ASSETS 
Real estate investments, at cost (Note 3):
Land$443,555 $414,446 
Buildings, fixtures and improvements2,832,166 2,685,325 
Construction in progress4,905 11,725 
Acquired intangible lease assets670,575 651,768 
Total real estate investments, at cost3,951,201 3,763,264 
Less accumulated depreciation and amortization(625,098)(517,123)
Total real estate investments, net3,326,103 3,246,141 
Cash and cash equivalents300,000 270,302 
Restricted cash808 3,985 
Derivative assets, at fair value (Note 7)
1,898 4,151 
Unbilled straight-line rent58,029 51,795 
Operating lease right-of-use asset (Note 9)
56,229 50,211 
Prepaid expenses and other assets45,422 37,370 
Due from related parties366 351 
Deferred tax assets4,472 4,441 
Goodwill and other intangible assets, net22,492 21,920 
Deferred financing costs, net8,652 10,938 
     Total Assets$3,824,471 $3,701,605 
LIABILITIES AND EQUITY  
Mortgage notes payable, net (Note 4)
$1,417,712 $1,272,154 
Revolving credit facility (Note 5)
264,009 199,071 
Term loan, net (Note 5)
417,072 397,893 
Acquired intangible lease liabilities, net29,402 30,529 
Derivative liabilities, at fair value (Note 7)
18,546 7,507 
Due to related parties24 342 
Accounts payable and accrued expenses28,776 22,903 
Operating lease liability (Note 9)
24,458 23,985 
Prepaid rent22,413 17,236 
Deferred tax liability15,146 14,975 
Taxes payable0 1,046 
Dividends payable5,014 4,006 
Total Liabilities2,242,572 1,991,647 
Commitments and contingencies (Note 9)
0 0 
Stockholders’ Equity (Note 8):
7.25% Series A cumulative redeemable preferred stock, $0.01 par value, liquidation preference $25.00 per share, 9,959,650 shares authorized, 6,799,467 shares issued and outstanding as of September 30, 2020 and December 31, 201968 68 
6.875% Series B cumulative redeemable perpetual preferred stock, $0.01 par value, liquidation preference $25.00 per share, 11,450,000 shares authorized, 3,635,128 and 3,450,000 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively37 35 
Common Stock, $0.01 par value, 250,000,000 shares authorized, 89,614,601 and 89,458,752 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively2,227 2,225 
Additional paid-in capital2,413,117 2,408,353 
Accumulated other comprehensive (loss) income(5,630)20,195 
Accumulated deficit(847,322)(733,245)
Total Stockholders’ Equity1,562,497 1,697,631 
Non-controlling interest19,402 12,327 
 Total Equity1,581,899 1,709,958 
     Total Liabilities and Equity$3,824,471 $3,701,605 
The accompanying notes are an integral part of these consolidated financial statements.
2
GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)

 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
 2019 2018 2019 20182020201920202019
Revenue from tenants $77,942
 $71,924
 $229,529
 $210,981
Revenue from tenants$82,711 $77,942 $243,062 $229,529 
        
Expenses (income):         Expenses (income):
Property operating 8,205
 5,301
 22,613
 20,982
Property operating7,525 8,205 22,737 22,613 
Fire recovery —
 31
 —
 (49)
Operating fees to related parties 8,220
 6,956
 24,425
 20,925
Operating fees to related parties8,939 8,220 26,607 24,425 
Impairment charges 6,375
 —
 6,375
 —
Impairment charges0 6,375 0 6,375 
Acquisition, transaction and other costs (Note 9)
 192
 2,804
 1,301
 5,243
Acquisition, transaction and other costs (Note 9)
75 192 388 1,301 
General and administrative 3,250
 3,215
 8,774
 7,822
General and administrative2,641 3,250 9,014 8,774 
Equity-based compensation 2,501
 2,053
 7,039
 1,198
Equity-based compensation2,479 2,501 7,480 7,039 
Depreciation and amortization 31,620
 30,195
 94,007
 89,504
Depreciation and amortization35,049 31,620 102,566 94,007 
Total expenses 60,363
 50,555
 164,534
 145,625
Total expenses56,708 60,363 168,792 164,534 
Operating income before gain (loss) on dispositions of real estate investments 17,579
 21,369
 64,995
 65,356
Operating income before gain (loss) on dispositions of real estate investments26,003 17,579 74,270 64,995 
Gain (loss) on dispositions of real estate investments 6,977
 (1,933) 14,792
 (5,751)Gain (loss) on dispositions of real estate investments06,977(153)14,792 
Operating income 24,556
 19,436
 79,787
 59,605
Operating income26,003 24,556 74,117 79,787 
Other income (expense):        Other income (expense):
Interest expense (16,154) (15,104) (47,005) (42,494)Interest expense(18,677)(16,154)(52,646)(47,005)
Loss on extinguishment of debt (563) (2,612) (1,328) (3,897)Loss on extinguishment of debt0(563)(309)(1,328)
Gain on derivative instruments 3,044
 1,290
 4,674
 4,688
(Loss) gain on derivative instruments(Loss) gain on derivative instruments(2,464)3,0443624,674
Unrealized income on undesignated foreign currency advances and other hedge ineffectiveness —
 108
 76
 18
Unrealized income on undesignated foreign currency advances and other hedge ineffectiveness00076
Other (loss) income (2) 44
 21
 67
Other income (loss)Other income (loss)142(2)26121
Total other expense, net (13,675) (16,274) (43,562) (41,618)Total other expense, net(20,999)(13,675)(52,332)(43,562)
Net income before income tax 10,881
 3,162
 36,225
 17,987
Net income before income tax5,004 10,881 21,785 36,225 
Income tax expense (940) (530) (2,680) (2,800)Income tax expense(862)(940)(2,512)(2,680)
Net income 9,941
 2,632
 33,545
 15,187
Net income4,142 9,941 19,273 33,545 
Preferred Stock dividends (3,081) (2,455) (8,273) (7,361)
Net income attributable to common stockholders $6,860
 $177
 $25,272
 $7,826
        
Basic and Diluted Earnings Per Share:        
Basic and diluted net income per share attributable to common stockholders $0.08
 $—
 $0.30
 $0.11
Weighted average shares outstanding:        
Basic 85,254,638
 69,441,639
 83,539,304
 68,014,855
Diluted 86,202,582
 69,441,639
 84,487,248
 68,417,253
Preferred stock dividendsPreferred stock dividends(4,644)(3,081)(13,771)(8,273)
Net (loss) income attributable to common stockholdersNet (loss) income attributable to common stockholders$(502)$6,860$5,502$25,272
Weighted average shares outstanding — BasicWeighted average shares outstanding — Basic89,482,577 85,254,638 89,470,525 83,539,304 
Weighted average shares outstanding — DilutedWeighted average shares outstanding — Diluted89,482,577 86,202,582 89,470,525 84,487,248 
Net (loss) income per share attributable to common stockholders — Basic and DilutedNet (loss) income per share attributable to common stockholders — Basic and Diluted$(0.01)$0.08 $0.06 $0.30 
The accompanying notes are an integral part of these consolidated financial statements.
3
GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(In thousands)
(Unaudited)



 Three Months Ended September 30, Nine Months Ended September 30, Three Months Ended September 30,Nine Months Ended September 30,
 2019 2018 2019 20182020201920202019
Net income $9,941
 $2,632
 $33,545
 $15,187
Net income$4,142 $9,941 $19,273 $33,545 
        
Other comprehensive income (loss)        Other comprehensive income (loss)
Cumulative translation adjustment (7,605) (3,735) (9,216) (9,813)Cumulative translation adjustment(245)(7,605)(15,322)(9,216)
Designated derivatives, fair value adjustments (3,031) 1,721
 (11,880) 7,468
Designated derivatives, fair value adjustments36 (3,031)(10,503)(11,880)
Other comprehensive loss (10,636) (2,014) (21,096) (2,345)
Other comprehensive income (loss)Other comprehensive income (loss)(209)(10,636)(25,825)(21,096)
        
Comprehensive income (loss) (695) 618
 12,449
 12,842
Comprehensive income (loss)3,933 (695)(6,552)12,449 
        
Preferred Stock dividends (3,081) (2,455) (8,273) (7,361)Preferred Stock dividends(4,644)(3,081)(13,771)(8,273)
        
Comprehensive income (loss) attributable to common stockholders $(3,776) $(1,837) $4,176
 $5,481
Comprehensive (loss) income attributable to common stockholdersComprehensive (loss) income attributable to common stockholders$(711)$(3,776)$(20,323)$4,176 
The accompanying notes are an integral part of these consolidated financial statements.
4
GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except share data)
(Unaudited)

Nine Months Ended September 30, 2020
Series A Preferred StockSeries B Preferred StockCommon Stock
 Number of
Shares		Par ValueNumber of
Shares		Par ValueNumber of
Shares		Par ValueAdditional Paid-in
Capital		Accumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’ EquityNon-controlling interestTotal Equity
Balance, December 31, 20196,799,467 $68 3,450,000 $35 89,458,752 $2,225 $2,408,353 $20,195 $(733,245)$1,697,631 $12,327 $1,709,958 
Common Stock issuance costs— — — — — — (58)— — (58)— (58)
Issuance of Preferred Stock, net— — 185,128 2 — — 4,419 — — 4,421 — 4,421 
Dividends declared:
Common Stock, $1.33 per share— — — — — — — — (119,242)(119,242)— (119,242)
Series A Preferred Stock, $1.35 per share— — — — — — — — (9,244)(9,244)— (9,244)
Series B Preferred Stock, $1.29 per share— — — — — — — — (4,527)(4,527)— (4,527)
Equity-based compensation— — — — 155,849 2 403 — — 405 7,075 7,480 
Distributions to non-controlling interest holders— — — — — — — — (337)(337)— (337)
Net Income— — — — — — — — 19,273 19,273 — 19,273 
Cumulative translation adjustment— — — — — — — (15,322)— (15,322)— (15,322)
Designated derivatives, fair value adjustments— — — — — — — (10,503)— (10,503)— (10,503)
Balance, September 30, 20206,799,467 $68 3,635,128 $37 89,614,601 $2,227 $2,413,117 $(5,630)$(847,322)$1,562,497 $19,402 $1,581,899 
Three Months Ended September 30, 2020
 Nine Months Ended September 30, 2019Series A Preferred StockSeries B Preferred StockCommon Stock
 Preferred Stock Common Stock             Number of
Shares		Par ValueNumber of
Shares		Par ValueNumber of
Shares		Par ValueAdditional Paid-in
Capital		Accumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’ EquityNon-controlling interestTotal Equity
 Number of
Shares		 Par Value 
Number of
Shares
 Par Value 
Additional Paid-in
Capital
 Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders’ Equity Non-controlling interest Total Equity
Balance, December 31, 2018 5,416,890
 $54
 76,080,625
 $2,091
 $2,031,981
 $6,810
 $(615,448) $1,425,488
 $3,258
 $1,428,746
Adoption of ASU 2017-12 (Note 2)
 —
 —
 —
 —
 —
 (332) 332
 —
 —
 —
Adoption of ASC 842 (Note 2)
 —
 —
 —
 —
 —
 —
 (1,200) (1,200) —
 (1,200)
Issuance of Common Stock, net —
 —
 13,377,715
 134
 258,470
 —
 —
 258,604
 —
 258,604
Balance, June 30, 2020Balance, June 30, 20206,799,467 $68 3,450,000 $35 89,482,576 $2,225 $2,408,527 $(5,421)$(810,923)$1,594,511 $17,044 $1,611,555 
Common Stock issuance costsCommon Stock issuance costs— — — — — — (51)— — (51)— (51)
Issuance of Preferred Stock, net 1,265,558
 13
 —
 —
 31,639
 —
 —
 31,652
 —
 31,652
Issuance of Preferred Stock, net— — 185,128 2 — — 4,522 — — 4,524 — 4,524 
Dividends declared:                    Dividends declared:— — 
Common stock, $1.59 per share (Note 8) —
 —
 —
 —
 —
 —
 (103,265) (103,265) —
 (103,265)
Preferred stock, $1.35 per share —
 —
 —
 —
 —
 —
 (8,273) (8,273) —
 (8,273)
Common Stock, $0.40 per shareCommon Stock, $0.40 per share— — — — — — — — (35,794)(35,794)— (35,794)
Series A Preferred Stock, $0.45 per shareSeries A Preferred Stock, $0.45 per share— — — — — — — — (3,081)(3,081)— (3,081)
Series B Preferred Stock,$0.43 per shareSeries B Preferred Stock,$0.43 per share— — — — — — — — (1,563)(1,563)— (1,563)
Equity-based compensation —
 —
 —
 —
 329
 —
 —
 329
 6,710
 7,039
Equity-based compensation— — — — 132,025 2 119 — — 121 2,358 2,479 
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 (405) (405) —
 (405)Distributions to non-controlling interest holders— — — — — — — — (103)(103)— (103)
Net Income —
 —
 —
 —
 —
 —
 33,545
 33,545
 —
 33,545
Net Income— — — — — — — — 4,142 4,142 — 4,142 
Cumulative translation adjustment —
 —
 —
 —
 —
 (9,216) —
 (9,216) —
 (9,216)Cumulative translation adjustment— — — — — — — (245)— (245)— (245)
Designated derivatives, fair value adjustments —
 —
 —
 —
 —
 (11,880) —
 (11,880) —
 (11,880)Designated derivatives, fair value adjustments— — — — — — — 36 — 36 — 36 
Balance, September 30, 2019 6,682,448
 $67
 89,458,340
 $2,225
 $2,322,419
 $(14,618) $(694,714)
$1,615,379
 $9,968
 $1,625,347
Balance, September 30, 2020Balance, September 30, 20206,799,467 $68 3,635,128 $37 89,614,601 $2,227 $2,413,117 $(5,630)$(847,322)$1,562,497 $19,402 $1,581,899 
  Three Months Ended September 30, 2019
  Preferred Stock Common Stock            
  Number of
Shares		 Par Value 
Number of
Shares
 Par Value 
Additional Paid-in
Capital
 Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders’ Equity Non-controlling interest Total Equity
Balance, June 30, 2019 5,957,848
 $59
 83,861,900
 $2,169
 $2,196,183
 $(3,982) $(656,411) $1,538,018
 $7,609
 1,545,627
Adoption of ASU 2017-12 (Note 2)
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Adoption of ASC 842 (Note 2)
 —
 —
 —
 —
 —
 —
 —
 —
 —
 —
Issuance of Common Stock, net —
 —
 5,596,440
 56
 107,962
 —
 —
 108,018
 —
 108,018
Issuance of Preferred Stock, net 724,600
 8
 —
 —
 18,132
 —
 —
 18,140
 —
 18,140
Dividends declared:                    
   Common stock, $0.53 per share (Note 8) —
 —
 —
 —
 —
 —
 (45,028) (45,028) —
 (45,028)
   Preferred stock, $0.45 per share —
 —
 —
 —
 —
 —
 (3,081) (3,081) —
 (3,081)
Equity-based compensation —
 —
 —
 —
 142
 —
 —
 142
 2,359
 2,501
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 (135) (135) —
 (135)
Net Income —
 —
 —
 —
 —
 —
 9,941
 9,941
 —
 9,941
Cumulative translation adjustment —
 —
 —
 —
 —
 (7,605) —
 (7,605) —
 (7,605)
Designated derivatives, fair value adjustments —
 —
 —
 —
 —
 (3,031) —
 (3,031) —
 (3,031)
Balance, September 30, 2019 6,682,448
 $67
 89,458,340
 $2,225
 $2,322,419
 $(14,618) $(694,714) $1,615,379
 $9,968
 $1,625,347
The accompanying notes are an integral part of these consolidated financial statements.
  Nine Months Ended September 30, 2018
  Preferred Stock Common Stock            
  Number of
Shares		 Par Value 
Number of
Shares
 Par Value 
Additional Paid-in
Capital
 Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders’ Equity Non-controlling interest Total Equity
Balance, December 31, 2017 5,409,650
 $54
 67,287,231
 $2,003
 $1,860,058
 $19,447
 $(468,396) $1,413,166
 $1,077
 $1,414,243
Issuance of Common Stock, net —
 —
 4,784,311
 48
 94,101
 —
 —
 94,149
 —
 94,149
Issuance of Preferred Stock, net 7,240
 —
 —
 —
 (247) —
 —
 (247) —
 (247)
Dividends declared:               

   

   Common stock, $1.59 per share —
 —
 —
 —
 —
 —
 (108,430) (108,430) —
 (108,430)
   Preferred stock, $1.35 per share —
 —
 —
 —
 —
 —
 (7,361) (7,361) —
 (7,361)
Equity-based compensation —
 —
 —
 —
 352
 —
 —
 352
 846
 1,198
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 (448) (448) —
 (448)
Net Income —
 —
 —
 —
 —
 —
 15,187
 15,187
 —
 15,187
Cumulative translation adjustment —
 —
 —
 —
 —
 (9,813) —
 (9,813) —
 (9,813)
Designated derivatives, fair value adjustments —
 —
 —
 —
 —
 7,468
 —
 7,468
 —
 7,468
Balance, September 30, 2018 5,416,890
 $54
 72,071,542
 $2,051
 $1,954,264
 $17,102
 $(569,448) $1,404,023
 $1,923
 $1,405,946
  Three Months Ended September 30, 2018
  Preferred Stock Common Stock            
  Number of
Shares		 Par Value 
Number of
Shares
 Par Value 
Additional Paid-in
Capital
 Accumulated Other Comprehensive (Loss) Income Accumulated Deficit Total Stockholders’ Equity Non-controlling interest Total Equity
Balance, June 30, 2018 5,413,665
 $54
 67,306,615
 $2,003
 $1,859,990
 $19,116
 $(532,566) $1,348,597
 $—
 $1,348,597
Issuance of Common Stock, net —
 —
 4,764,927
 48
 94,173
 —
 —
 94,221
 —
 94,221
Issuance of Preferred Stock, net 3,225
 —
 —
 —
 (28) —
 —
 (28) —
 (28)
Dividends declared:               

   

   Common stock, $0.53 per share —
 —
 —
 —
 —
 —
 (36,769) (36,769) —
 (36,769)
   Preferred stock, $0.45 per share —
 —
 —
 —
 —
 —
 (2,455) (2,455) —
 (2,455)
Equity-based compensation —
 —
 —
 —
 129
 —
 —
 129
 1,923
 2,052
Distributions to non-controlling interest holders —
 —
 —
 —
 —
 —
 (290) (290) —
 (290)
Net Income —
 —
 —
 —
 —
 —
 2,632
 2,632
 —
 2,632
Cumulative translation adjustment —
 —
 —
 —
 —
 (3,735) —
 (3,735) —
 (3,735)
Designated derivatives, fair value adjustments —
 —
 —
 —
 —
 1,721
 —
 1,721
 —
 1,721
Balance, September 30, 2018 5,416,890
 $54
 72,071,542
 $2,051
 $1,954,264
 $17,102
 $(569,448) $1,404,023
 $1,923
 $1,405,946


The accompanying notes are an integral part of these consolidated financial statements.

5
GLOBAL NET LEASE, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In thousands, except share data)
(Unaudited)
Nine Months Ended September 30, 2019
Preferred StockCommon Stock
 Number of
Shares		Par ValueNumber of
Shares		Par ValueAdditional Paid-in
Capital		Accumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’ EquityNon-controlling interestTotal Equity
Balance, December 31, 20185,416,890 $54 76,080,625 $2,091 $2,031,981 $6,810 $(615,448)$1,425,488 $3,258 $1,428,746 
Adoption of ASU 2017-12 (Note 2)
— — — — — (332)332 — — — 
Adoption of ASC 842 (Note 2)
— — — — — — (1,200)(1,200)— (1,200)
Issuance of Common Stock, net— — 13,377,715 134 258,470 — — 258,604 — 258,604 
Issuance of Series A Preferred Stock, net1,265,558 13 — — 31,639 — — 31,652 — 31,652 
Dividends declared:— — 
   Common Stock, $1.59 per share— — — — — — (103,265)(103,265)— (103,265)
   Series A Preferred Stock, $1.35 per share— — — — — — (8,273)(8,273)— (8,273)
Equity-based compensation— — — — 329 — — 329 6,710 7,039 
Distributions to non-controlling interest holders— — — — — — (405)(405)— (405)
Net Income— — — — — — 33,545 33,545 — 33,545 
Cumulative translation adjustment— — — — — (9,216)— (9,216)— (9,216)
Designated derivatives, fair value adjustments— — — — — (11,880)— (11,880)— (11,880)
Balance, September 30, 20196,682,448 $67 89,458,340 $2,225 $2,322,419 $(14,618)$(694,714)$1,615,379 $9,968 $1,625,347 
Three Months Ended September 30, 2019
Preferred StockCommon Stock
 Number of
Shares		Par ValueNumber of
Shares		Par ValueAdditional Paid-in
Capital		Accumulated Other Comprehensive (Loss) IncomeAccumulated DeficitTotal Stockholders’ EquityNon-controlling interestTotal Equity
Balance, June 30, 20195,957,848 $59 83,861,900 $2,169 $2,196,183 $(3,982)$(656,411)$1,538,018 $7,609 $1,545,627 
Issuance of Common Stock, net— — 5,596,440 56 107,962 — — 108,018 — 108,018 
Issuance of Series A Preferred Stock, net724,600 8 — — 18,132 — — 18,140 — 18,140 
Dividends declared:
   Common Stock, $0.53 per share— — — — — — (45,028)(45,028)— (45,028)
  Series A Preferred Stock, $0.45 per share— — — — — — (3,081)(3,081)— (3,081)
Equity-based compensation— — — — 142 — — 142 2,359 2,501 
Distributions to non-controlling interest holders— — — — — — (135)(135)— (135)
Net Income— — — — — — 9,941 9,941 — 9,941 
Cumulative translation adjustment— — — — — (7,605)— (7,605)— (7,605)
Designated derivatives, fair value adjustments— — — — — (3,031)— (3,031)— (3,031)
Balance, September 30, 20196,682,448 $67 89,458,340 $2,225 $2,322,419 $(14,618)$(694,714)$1,615,379 $9,968 $1,625,347 
The accompanying notes are an integral part of these consolidated financial statements.
6
GLOBAL NET LEASE, INC.
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Nine Months Ended September 30,
20202019
Cash flows from operating activities: 
Net income$19,273 $33,545 
Adjustments to reconcile net income to net cash provided by operating activities: 
Depreciation59,387 48,167 
Amortization of intangibles43,179 45,840 
Amortization of deferred financing costs5,732 4,825 
Amortization of mortgage discounts and premiums, net13 232 
Amortization of below-market lease liabilities(2,509)(2,900)
Amortization of above-market lease assets2,512 3,286 
Amortization of operating lease right-of-use assets631 636 
Amortization of lease incentive226 0 
Bad debt expense0 0 
Unbilled straight-line rent(6,434)(5,063)
Equity-based compensation7,480 7,039 
Unrealized loss (gain) on foreign currency transactions, derivatives, and other2,304 (1,673)
Unrealized loss on undesignated foreign currency advances and other hedge ineffectiveness0 76 
Payments for settlement of derivatives0 (1,773)
Loss on extinguishment of debt0 1,328 
Loss (gain) on disposition of real estate investments153 (14,792)
Lease incentive payment(4,676)0 
Impairment charges0 6,375 
Changes in operating assets and liabilities, net: 
Prepaid expenses and other assets(1,232)(16,232)
Deferred tax assets(31)39 
Accounts payable and accrued expenses6,018 (12,373)
Prepaid rent5,177 4,116 
Deferred tax liability171 (624)
Taxes payable(1,046)(2,225)
Net cash provided by operating activities136,328 97,849 
Cash flows from investing activities:
Investment in real estate and real estate related assets(170,810)(309,003)
Deposits for future real estate acquisitions(4,012)(1,051)
Capital expenditures(3,576)(13,686)
Proceeds from dispositions of real estate investments0 141,538 
Net cash used in investing activities(178,398)(182,202)
Cash flows from financing activities: 
Borrowings under revolving credit facilities227,000 240,264 
Repayments on revolving credit facilities(161,343)(499,649)
Proceeds from mortgage notes payable163,607 579,369 
Payments on mortgage notes payable(27,003)(307,813)
Loss on extinguishment of debt(309)(426)
Common Stock issuance (costs) proceeds, net(58)258,604 
Series A Preferred Stock issuance (costs) proceeds, net(75)31,652 
Series B Preferred Stock issuance (costs) proceeds, net4,496 124,264 
Payments of financing costs(4,530)(19,000)
Dividends paid on Common Stock(119,215)(103,141)
Dividends paid on Series A Preferred Stock(9,243)(7,646)
Dividends paid on Series B Preferred Stock(3,541)0 
Distributions to non-controlling interest holders(337)(405)
Net cash provided by financing activities69,449 296,073 
Net change in cash, cash equivalents and restricted cash27,379 211,720 
Effect of exchange rate changes on cash(858)(5,501)
Cash, cash equivalents and restricted cash, beginning of period274,287 103,693 
Cash, cash equivalents and restricted cash, end of period$300,808 $309,912 

7
  Nine Months Ended September 30,
  2019 2018
Cash flows from operating activities:    
Net income $33,545
 $15,187
Adjustments to reconcile net income to net cash provided by operating activities:  
  
Depreciation 48,167
 48,153
Amortization of intangibles 45,840
 41,351
Amortization of deferred financing costs 4,825
 3,738
Amortization of mortgage discounts and premiums, net 232
 1,131
Amortization of below-market lease liabilities (2,900) (2,703)
Amortization of above-market lease assets 3,286
 3,500
Amortization of above- and below- market ground lease assets 636
 743
Bad debt expense —
 184
Unbilled straight-line rent (5,063) (4,828)
Equity-based compensation 7,039
 1,198
Unrealized loss (gain) on foreign currency transactions, derivatives, and other (1,673) (4,921)
Unrealized loss on undesignated foreign currency advances and other hedge ineffectiveness 76
 (18)
Payments for settlement of derivatives (1,773) —
Loss on extinguishment of debt 1,328
 3,897
(Gain) loss on disposition of real estate investments (14,792) 5,751
Impairment charges 6,375
 —
Changes in operating assets and liabilities, net:    
Prepaid expenses and other assets (16,232) (11,962)
Deferred tax assets 39
 30
Accounts payable and accrued expenses (12,373) 6,237
Prepaid rent 4,116
 (1,277)
Deferred tax liability (624) (444)
Taxes payable (2,225) (1,550)
Net cash provided by operating activities 97,849
 103,397
Cash flows from investing activities:    
Investment in real estate and real estate related assets (309,003) (267,379)
Deposits for real estate acquisitions (1,051) (3,775)
Capital expenditures (13,686) (2,614)
Proceeds from dispositions of real estate investments 141,538
 23,310
Payments for settlement of net investment hedges —
 (561)
Net cash used in investing activities (182,202) (251,019)
Cash flows from financing activities:    
Borrowings under revolving credit facilities 240,264
 247,000
Repayments on revolving credit facilities (499,649) (87,375)
Proceeds from mortgage notes payable 579,369
 332,424
Payments on mortgage notes payable (307,813) (317,595)
Deposits on mortgages —
 (200)
Payments on early extinguishment of debt charges (426) (2,398)
Proceeds from issuance of common stock, net 258,604
 94,149
Proceeds from issuance of preferred stock, net 31,652
 (247)
Proceeds from term loan 124,264
 60,706
Payments of financing costs (19,000) (6,200)
Dividends paid on Common Stock (103,141) (108,352)
Dividends paid on Preferred Stock (7,646) (7,357)
Distributions to non-controlling interest holders (405) (448)
Net cash provided by financing activities 296,073
 204,107
Net change in cash, cash equivalents and restricted cash 211,720
 56,485
Effect of exchange rate changes on cash (5,501) (5,533)
Cash, cash equivalents and restricted cash, beginning of period 103,693
 107,727
Cash, cash equivalents and restricted cash, end of period $309,912
 $158,679



GLOBAL NET LEASE, INC.
  
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)



Nine Months Ended September 30,
20202019
Cash and cash equivalents, end of period$300,000 $305,962 
Restricted cash, end of period808 3,950 
Cash, cash equivalents and restricted cash, end of period$300,808 $309,912 
  Nine Months Ended September 30,
  2019 2018
Cash and cash equivalents, end of period $305,962
 $155,188
Restricted cash, end of period 3,950
 3,491
Cash, cash equivalents and restricted cash, end of period $309,912
 $158,679
     
Supplemental Disclosures:    
Cash paid for interest $45,270
 $37,766
Cash paid for income taxes 5,155
 4,350
Non-Cash Financing Activity:    
Loss on extinguishment of debt 902
 1,499

The accompanying notes are an integral part of these consolidated financial statements.
8
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)


Note 1 — Organization
Global Net Lease, Inc. (the “Company”), incorporated on July 13, 2011, is a Maryland corporation that elected to be taxed as a real estate investment trust (“REIT”) for United States (“U.S.”) federal income tax purposes beginning with the taxable year ended December 31, 2013. The Company’s common stock, $0.01 par value per share (“Common Stock”) is listed on the New York Stock Exchange (“NYSE”) under the symbol “GNL,“GNL.” andIn addition, the Company’s 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”), is and its 6.875% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series B Preferred Stock”) are both listed on the New York Stock ExchangeNYSE under the symbolsymbols “GNL PR A.A” and “GNL PR B,” respectively.
The Company invests in commercial properties, with an emphasis on sale-leaseback transactions involvingand mission-critical single tenant net-leased commercial properties. Substantially all of the Company’s business is conducted through the Global Net Lease Operating Partnership, L.P. (the “OP”), a Delaware limited partnership. The Company has retained Global Net Lease Advisors, LLC (the “Advisor”) to manage the Company’s affairs on a day-to-day basis. The Company’s properties are managed and leased to third parties by Global Net Lease Properties, LLC (the “Property Manager”). The Advisor and the Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital LLC, “AR Global”), and these related parties receive compensation and fees for various services provided to the Company.
As of September 30, 2019,2020, the Company owned 264299 properties consisting of 28.934.7 million rentable square feet, which were 99.6% leased, with a weighted-average remaining lease term of 8.08.7 years. Based on the percentage of annualized rental income on a straight-line basis as of September 30, 2019, 59.0%2020, 63% of the Company’s properties are located in the U.S. and 41.0%Canada and 37% in Europe. The Company may also originate or acquire first mortgage loans, mezzanine loans, preferred equity or securitized loans (secured by real estate). As of September 30, 2019,2020, the Company did not own any first mortgage loans, mezzanine loans, preferred equity or securitized loans.
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements of the Company included herein were prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to this Quarterly Report on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information furnished includes all adjustments and accruals of a normal recurring nature, which, in the opinion of management, are necessary for a fair statement of results for the interim periods. All intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the three and nine months ended September 30, 20192020 are not necessarily indicative of the results for the entire year or any subsequent interim period.
These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto as of and for the year ended December 31, 2018,2019, which are included in the Company’s Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 28, 2019.2020. Except for those required by new accounting pronouncements discussed below, there have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2019,2020, other than those relating to new accounting pronouncements (see “Recently Issued Accounting Pronouncements” section below).
Principles of Consolidation
The accompanying unaudited consolidated financial statements include the accounts of the Company, the OP and its subsidiaries. All intercompany accounts and transactions are eliminated in consolidation. In determining whether the Company has a controlling financial interest in a joint venture and the requirement to consolidate the accounts of that entity, management considers factors such as ownership interest, authority to make decisions and contractual and substantive participating rights of the other partners or members as well as whether the entity is a variable interest entity (“VIE”) for which the Company is the primary beneficiary. The Company has determined that the OP is a VIE of which the Company is the primary beneficiary. Substantially all of the Company’s assets and liabilities are held by the OP.
Reclassifications
9
The Company has aggregated revenue from its lease components and non-lease components (tenant operating expense reimbursements) into one line (see additional information in the “Recently Issued Accounting Pronouncements” section below. The prior period has been reclassified to conform to this presentation.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)

Judgments andUse of Estimates
The Company regularly makes a numberpreparation of financial statements in conformity with GAAP requires management to make estimates and assumptions relating tothat affect the reportingreported amounts of assets and liabilities theand disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses in order to prepare its consolidated financial statements in conformity with GAAP. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, such asduring the prevailing economic and business environment. Management adjusts such estimates when facts and circumstances dictate. The most significant estimates management makes include recoverability of accounts receivable, allocation of property purchase price to tangible and intangible assets acquired and liabilities assumed, determination of impairment of long-lived assets, valuation of derivative financial instruments, valuation of compensation plans, and estimating the useful life of a long-lived asset.reporting period. Actual results could differ materially from those estimated.
Investments in Real Estate
Investmentsestimates. Management makes significant estimates regarding revenue recognition, purchase price allocations to record investments in real estate, real estate taxes, income taxes, derivative financial instruments, hedging activities, equity-based compensation expenses related to a multi-year outperformance agreement entered into with the Advisor in 2018 (the “2018 OPP”) and fair value measurements, as applicable.
Revenue Recognition
The Company’s revenues, which are recorded at cost. Improvements and replacements are capitalized when they extendderived primarily from lease contracts, include rents that each tenant pays in accordance with the useful
lifeterms of each lease reported on a straight-line basis over the initial term of the asset. Costslease. As of repairsSeptember 30, 2020, these leases had an average remaining lease term of 8.7 years. Because many of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable for, and maintenanceinclude in revenue from tenants, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease.
For new leases after acquisition, the commencement date is considered to be the date the lease is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. In addition to base rent, the Company’s lease agreements generally require tenants to pay or reimburse the Company for all property operating expenses, which primarily reflect insurance costs and real estate taxes incurred by the Company and subsequently reimbursed by the tenant. However, some limited property operating expenses that are not the responsibility of the tenant are absorbed by the Company. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.
The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. Under lease accounting rules, the Company is required to assess, based on credit risk only, if it is probable that it will collect virtually all of the lease payments at the lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. Partial reserves, or the ability to assume partial recovery are no longer permitted. If the Company determines that it is probable it will collect virtually all of the lease payments (rent and common area maintenance), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and the straight line rent receivable would be written off where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in revenue from tenants on the accompanying consolidated statements of operations in the period the related costs are incurred, as applicable.
Accounting for Leases
Lessor Accounting
As a lessor of real estate, the Company has elected, by class of underlying assets, to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under the accounting guidance. Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed as incurred.
AtUpdate on the time an assetImpacts of the COVID-19 Pandemic
The financial stability and overall health of the Company’s tenants is acquired,critical to its business. The negative effects that the global COVID-19 pandemic has had on the economy has impacted the ability of some of the Company’s tenants to pay their monthly rent. The Company has taken a proactive approach to seek mutually agreeable solutions with its tenants where necessary and, in some cases in the second quarter of 2020, the Company evaluatesexecuted rent deferral agreements on leases with several tenants. For accounting purposes, in accordance with ASC 842, normally a company would be required to assess the inputs, processes and outputs of the asset acquiredmodification to determine if the transaction is a business combination or an asset acquisition. If an acquisition qualifiesmodification should be treated as a business combination, the related transaction costs are recorded as an expense in the consolidated statements of operations. If an acquisition qualifies as an asset acquisition, the related transaction costs are generally capitalized and subsequently amortized over the useful life of the acquired assets.
In both a business combination and an asset acquisition, the Company allocates the purchase price of acquired properties to
tangible and identifiable intangible assets or liabilities based on their respective fair values. Tangible assets may include land, land improvements, buildings, fixtures and tenant improvements on an as if vacant basis. Intangible assets or liabilities may include the value of in-place leases, above- and below- market leases and other identifiable assets or liabilities based on lease or property specific characteristics. In addition, any assumed mortgages receivable or payable and any assumed or issued non-controlling interests (in a business combination) are recorded at their estimated fair values. In allocating the fair value to assumed mortgages, amounts are recorded to debt premiums or discounts based on the present value of the estimated cash flows, which is calculated to account for either above or below-market interest rates. In a business combination, the difference between the purchase price and the fair value of identifiable net assets acquired is either recorded as goodwill or as a bargain purchase gain. In an asset acquisition, the difference between the acquisition price (including capitalized transaction costs) and the fair value of identifiable net assets acquired is allocated to the non-current assets. All acquisitions during the nine months ended September 30, 2019 and the year ended December 31, 2018 were asset acquisitions.
Purchase Accounting and Acquisition of Real Estate
The Company allocates the purchase price of acquired properties to tangible and identifiable intangible assets acquired based on their respective fair values. Tangible assets include land, land improvements, buildings, fixtures and tenant improvements on an as-if vacant basis. The Company utilizes various estimates, processes and information to determine the as-if vacant property value. Estimates of value are made using customary methods, including data from appraisals, comparable sales, discounted cash flow analysis and other methods. Amounts allocated to land, land improvements, buildings and fixtures are based on cost segregation studies performed by independent third parties or on the Company’s analysis of comparable properties in the Company’s portfolio. Identifiable intangible assets include amounts allocated to acquire leases for above- and below-market lease rates, the value of in-place leases, and the value of customer relationships, as applicable.
Factors considered in the analysis of the in-place lease intangibles include an estimate of carrying costs during the expected lease-up period for each property, taking into account current market conditions and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at contract rates during the expected lease-up period, which typically ranges from 12 to 18 months. The Company also estimates costs to execute similar leases including leasing commissions, legal and other related expenses.
Above-market and below-market lease values for acquired properties are initially recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid pursuant to each in-placeseparate lease and (ii) management’s estimate of fair market lease rates for each corresponding in-place lease, measured overif not, modification accounting would be applied which would require a period equalcompany to reassess the remaining termclassification of the lease for above-market leases and the remaining initial term plus the term of any below-market fixed rate renewal options for below-market leases. The capitalized above-market lease values are amortized as a reduction of base rental revenue over the remaining terms of the respective leases, and the capitalized below-market lease values are amortized as an increase to base rental revenue over the remaining initial terms plus the terms of any below-market fixed rate renewal options of the respective leases. If a tenant with a below market rent renewal does not renew, any remaining unamortized amount will be taken into income at that time.(i.e. operating, direct financing or sales-type).
10
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)

The aggregate value of intangible assets related to customer relationship, as applicable, is measured based on the Company’s evaluationHowever, in light of the specific characteristics of each tenant’sCOVID-19 pandemic due to which many leases are being modified, the FASB and SEC have provided relief that will allow companies to make a policy election as to whether they treat COVID-19 related lease and the Company’s overall relationship with the tenant. Characteristics considered by the Company in determining these values include the nature and extent of its existing business relationships with the tenant, growth prospects for developing new business with the tenant, the tenant’s credit quality and expectations of lease renewals, among other factors.
In making estimates of fair values for purposes of allocating purchase price, the Company utilizes a number of sources, including independent appraisals that may be obtained in connection with the acquisition or financing of the respective property and other market data. The Company also considers information obtained about each propertyamendments as a result of the Company’s pre-acquisition due diligence in estimating the fair value of the tangible and intangible assets acquired and intangible liabilities assumed.
Derivative Instruments
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest
rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the Company’s foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of the Company’s cash receipts and paymentsprovision included in the Company’s functional currency,pre-concession arrangement, and therefore, not a lease modification, or to treat a lease amendment as a modification. In order to qualify for the U.S. Dollar (“USD”).relief, the modifications must be COVID-19 related and cash flows must be substantially the same or less than those prior to the concession, but not substantially greater. The Company enters into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of its functional currency.
The Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair
value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in
a hedging relationship and apply hedge accounting and whetheruse this relief where applicable. In those circumstances, the hedging relationshipCompany has satisfied the criteria necessary to
apply hedge accounting. Derivatives designated and qualifyingaccounted for these arrangements as a hedge of the exposure toif no changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in a foreign operation. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contractslease contract were made. For those leases that are intended to economically hedge certain risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
The accounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and
qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment (or for derivatives that
do not qualify for the relief, the Company performs a lease modification analysis and if required, uses lease modification accounting.
Lessee Accounting
For lessees, the accounting standard requires the application of a dual lease classification approach, classifying leases as hedges), any changes ineither operating or finance leases based on the fair valueprinciple of these derivative instrumentswhether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized immediately in gains (losses) on derivative instruments ina straight-line basis over the consolidated statements of operations. If a derivative is designated and qualifies for cash flow hedge accounting treatment, the change in the estimated fair valueterm of the derivativelease, while lease expense for finance leases is recorded in other comprehensive income (loss) inrecognized based on an effective interest method over the consolidated statementsterm of comprehensive income (loss)the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the extent that it is effective. Any ineffective portion ofseller-lessee if the transaction was not a change in derivative fair value is immediately recorded in earnings.qualified sale-leaseback and accounted for as a financing transaction. For additional information and disclosures related to the Company’s operating leases, see Note 9 — Commitments and Contingencies.
Impairment of Long Lived Assets
When circumstances indicate the carrying value of a property may not be recoverable, the Company reviews the asset for impairment. This review is based on an estimate of the future undiscounted cash flows, excluding interest charges, expected to result from the property’s use and eventual disposition. These estimates consider factors such as expected future operating income, market and other applicable trends and residual value, as well as the effects of leasing demand, competition and other factors. If impairment exists due to the inability to recover the carrying value of a property, an impairment loss is recorded to the extent that the carrying value exceeds the estimated fair value of the property for properties to be held and used. For properties held for sale, the impairment loss is the adjustment to fair value less estimated cost to dispose of the asset. These assessments have a direct impact on net income because recording an impairment loss results in an immediate negative adjustment to net earnings.
Goodwill
The Company evaluates goodwill for impairment at least annually in the fourth quarter of each year, or upon the occurrence of a triggering event. A triggering event is an event or circumstance that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company performed a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. The Company determined that the potential impact of the COVID-19 pandemic represented a triggering event, and, as such, performed an updated goodwill assessment. Based on the Company’s assessment, it determined that the goodwill was not0t impaired as of DecemberMarch 31, 2018.2020. There were no material changes as of September 30, 2020.
Derivative Instruments
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. In addition, all foreign currency denominated borrowings under the Company’s Credit Facility (as defined in Note 5 - Credit Facilities) are designated as net investment hedges. Certain of the Company’s foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in the Company’s functional currency, the U.S. Dollar (“USD”). The Company enters into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of its functional currency.
The Company records all derivatives on the consolidated balance sheets at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether the Company has elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Derivatives may also be designated as hedges of the foreign currency exposure of a net investment in foreign operations. Hedge accounting generally provides for the matching of the timing of gain
11
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)

Revenue Recognitionor loss recognition on the hedging instrument with the recognition of the changes in the fair value of the hedged asset or liability that are attributable to the hedged risk in a fair value hedge or the earnings effect of the hedged forecasted transactions in a cash flow hedge. The Company may enter into derivative contracts that are intended to economically hedge certain risk, even though hedge accounting does not apply or the Company elects not to apply hedge accounting.
The Company’s revenues, which are derived primarily from lease contracts, which include rentsaccounting for subsequent changes in the fair value of these derivatives depends on whether each has been designed and qualifies for hedge accounting treatment. If the Company elects not to apply hedge accounting treatment (or for derivatives that each tenant paysdo not qualify as hedges), any changes in accordance with the termsfair value of each lease agreementthese derivative instruments is recognized immediately in gains (losses) on derivative instruments in the consolidated statements of operations. If a derivative is designated and are reported on a straight-line basis overqualifies for cash flow hedge accounting treatment, the initial termchange in the estimated fair value of the lease. Asderivative is recorded in other comprehensive income (loss) in the consolidated statements of September 30, 2019, these leases had an average remaining lease termcomprehensive income (loss) to the extent that it is effective. Any ineffective portion of 8.0 years. Since manya change in derivative fair value is immediately recorded in earnings.
Equity-Based Compensation
The Company has a stock-based incentive plan under which its directors, officers and other employees of the Company’s leases provide for rental increases at specified intervals, straight-line basis accounting requires the Company to record a receivable for, and includeAdvisor,or its affiliates who are involved in revenues, unbilled rent receivables that the Company will only receive if the tenant makes all rent payments required through the expiration of the initial term of the lease. For new leases after acquisition, the commencement date is considered to be the date the lease modification is executed. The Company defers the revenue related to lease payments received from tenants in advance of their due dates. When the Company acquires a property, the acquisition date is considered to be the commencement date for purposes of this calculation. In addition to base rent, the Company’s lease agreements generally require tenants to pay or reimburse the Company for all property operating expenses, which primarily reflect insurance costs and real estate taxes incurred by the Company and subsequently reimbursed by the tenant. However, some limited property operating expenses that are not the responsibility of the tenant are absorbed by the Company. Under ASC 842, the Company has elected to report combined lease and non-lease components in a single line “Revenue from tenants.” For comparative purposes, the Company has also elected to reflect prior revenue and reimbursements previously reported under ASC 840 on a single line as well. For expenses paid directly by the tenant, under both ASC 842 and 840, the Company has reflected them on a net basis.
The following tables present future base rent payments on a cash basis dueproviding services to the Company overare eligible to receive awards. Awards granted thereunder are accounted for under the periods indicated. These amounts exclude tenant reimbursements and contingent rent payments, as applicable, that may be collected from certain tenantsguidance for employee share based on provisions related to sales thresholds and increasespayments. The cost of services received in annual rent based on exceeding certain economic indexes among other items.
As of September 30, 2019:
(In thousands) 
Future  Base Rent Payments (1)
2019 (remainder) $71,010
2020 285,409
2021 286,619
2022 277,834
2023 255,818
2024 213,361
Thereafter 788,523
  $2,178,574

(1)
Assumes exchange rates of £1.00 to $1.23 for British Pounds Sterling (“GBP”) and €1.00 to $1.09 for EUR as of September 30, 2019 for illustrative purposes, as applicable.
As of December 31, 2018:
(In thousands) 
Future 
Base Rent Payments (1)
2019 $275,118
2020 278,651
2021 279,630
2022 270,569
2023 247,237
Thereafter 856,838
Total $2,208,043

(1)
Assumes exchange rates of £1.00 to $1.27 for GBP and €1.00 to $1.14 for EUR as of December 31, 2018 for illustrative purposes, as applicable.
The Company continually reviews receivables related to rent and unbilled rent receivables and determines collectability by taking into considerationexchange for a stock award is measured at the tenant’s payment history, the financial conditiongrant date fair value of the tenant, business conditions inaward and the industry in
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

which the tenant operates and economic conditions in the area in which the propertyexpense for such awards is located. Under the new leasing standard (see the “Recently Issued Accounting Pronouncements” section below), the Company is required to assess, based on credit risk only, if it is probable that it will collect virtually all of the lease payments at lease commencement date and it must continue to reassess collectability periodically thereafter based on new facts and circumstances affecting the credit risk of the tenant. Partial reserves, or the ability to assume partial recovery are no longer permitted. If the Company determines that it is probable it will collect virtually all of the lease payments (rent and common area maintenance), the lease will continue to be accounted for on an accrual basis (i.e. straight-line). However, if the Company determines it is not probable that it will collect virtually all of the lease payments, the lease will be accounted for on a cash basis and a full reserve would be recorded on previously accrued amounts in cases where it was subsequently concluded that collection was not probable. Cost recoveries from tenants are included in Revenue from tenantsequity-based compensation on the accompanying consolidated statements of operations and is recognized over the vesting period or when the requirements for exercise of the award have been met (seeNote 12 — Equity-Based Compensation for additional information).
Multi-Year Outperformance Agreements
Concurrent with the listing of Common Stock on the NYSE on June 2, 2015 and modifications to the Fourth Amended and Restated Advisory Agreement (the “Advisory Agreement”) by and among the Company, the OP and the Advisor, the Company entered into a multi-year outperformance agreement with the Advisor in June 2015 (the “2015 OPP”). Following the end of the performance period under the 2015 OPP on June 2, 2018, the Company entered into the 2018 OPP with the Advisor (see Note 12 — Equity-Based Compensation). Under the 2018 OPP, effective June 2, 2018, the Company records equity-based compensation evenly over the requisite service period of approximately 2.8 years from the grant date. Under accounting guidance adopted by the Company on January 1, 2019, total equity-based compensation expense calculated as of the adoption of the new guidance is fixed as of that date and reflected as a charge to earnings over the remaining service period. Further, in the periodevent of a modification, any incremental increase in the related costs are incurred,value of the instrument measured on the date of the modification both before and after the modification, will result in an incremental amount to be reflected prospectively as applicable.
Under ASC 842, uncollectible amounts are reflected as reductionsa charge to earnings over the remaining service period. The expense for these non-employee awards is included in revenue. Under ASC 840, the Company recorded such amounts as bad debt expense as partequity-based compensation line item of property operating expenses. During the nine-month period ended September 30,consolidated statements of operations. For additional information on the original terms, a February 2019 modification of the 2018 such amount was $0.2 million. The Company did not record any bad debt expense during the nine months ended September 30, 2019.OPP, and accounting for these awards, see Note 12 — Equity-based compensation.
Income Taxes
The Company elected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended (the “Code”), beginning with the taxable year ended December 31, 2013. Commencing with such taxable year, the Company was organized to operate in such a manner as to qualify for taxation as a REIT under the Code and believes it has so qualified. The Company intends to continue to operate in such a manner to continue to qualify for taxation as a REIT, but no assurance can be given that it will operate in a manner so as to remain qualified as a REIT. As a REIT, the Company generally will not be subject to federal corporate income tax to the extent it distributes annually all of its REIT taxable income. REITs are subject to a number of other organizational and operational requirements.
The Company conducts business in various states and municipalities within the U.S. and, Canada, Puerto Rico, the United Kingdom and Western Europe and, as a result, the Company or one of its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and certain foreign jurisdictions. As a result, the Company may be subject to certain federal, state, local and foreign taxes on its income and assets, including alternative minimum taxes, taxes on any undistributed income and state, local or foreign income, franchise, property and transfer taxes. Any of these taxes decrease the Company’s earnings and available cash. In addition, the Company’s international assets and operations, including those owned through direct or indirect subsidiaries that are disregarded entities for U.S. federal income tax purposes, continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.
Significant judgment is required in determining the Company’s tax provision and in evaluating its tax positions. The Company establishes tax reserves based on a benefit recognition model, which the Company believes could result in a greater amount of benefit (and a lower amount of reserve) being initially recognized in certain circumstances. Provided that the tax position is deemed more likely than not of being sustained, the Company recognizes the largest amount of tax benefit that is
12
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
greater than 50 percent likely of being ultimately realized upon settlement.
The Company derecognizes the tax position when the likelihood of the tax position being sustained is no longer more likely than not.
The Company recognizes deferred income taxes in certain of its subsidiaries taxable in the U.S. or in foreign jurisdictions. Deferred income taxes are generally the result of temporary differences (items that are treated differently for tax purposes than for GAAP purposes). In addition, deferred tax assets arise from unutilized tax net operating losses, generated in prior years. The Company provides a valuation allowance against its deferred income tax assets when it believes that it is more likely than not that all or some portion of the deferred income tax asset may not be realized. Whenever a change in circumstances causes a change in the estimated realizability of the related deferred income tax asset, the resulting increase or decrease in the valuation allowance is included in deferred income tax expense (benefit).
The Company derives most of its REIT taxable income from its real estate operations in the U.S. and has historically distributed all of its REIT taxable income to its shareholders. As such, the Company’s real estate operations are generally not subject to U.S. federal tax, and accordingly, no provision has been made for U.S. federal income taxes in the consolidated financial statements for these operations. These operations may be subject to certain state, local, and foreign taxes, as applicable.
The Company’s deferred tax assets and liabilities are primarily the result of temporary differences related to the following:
•Basis differences between tax and GAAP for certain international real estate investments. For income tax purposes, in certain acquisitions, the Company assumes the seller’s basis, or the carry-over basis, in the acquired assets. The carry-over basis is typically lower than the purchase price, or the GAAP basis, resulting in a deferred tax liability with an offsetting increase to goodwill or the acquired tangible or intangible assets;
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

•Timing differences generated by differences in the GAAP basis and the tax basis of assets such as those related to capitalized acquisition costs and depreciation expense; and
•Tax net operating losses in certain subsidiaries, including those domiciled in foreign jurisdictions that may be realized in future periods if the respective subsidiary generates sufficient taxable income.
The Company recognizes current income tax expense for state and local income taxes and taxes incurred in its foreign jurisdictions. The Company’s current income tax expense fluctuates from period to period based primarily on the timing of its taxable income.
Reportable Segments
The Company determined that it has 1 reportable segment, with activities related to investing in real estate. The Company’s investments in real estate generate rental revenue and other income through the leasing of properties, which comprise 100% of total consolidated revenues. Management evaluates the operating performance of the Company’s investments in real estate on an individual property level.
Equity-Based Compensation
The Company has a stock-based incentive award plan for its directors, and awards thereunder which are accounted for under the guidance for employee share based payments. The cost of services received in exchange for a stock award is measured at the grant date fair value of the award and the expense for such awards is included in equity-based compensation on consolidated statements of operations and is recognized over the vesting period or when the requirements for exercise of the award have been met (seeNote 12 — Equity-Based Compensation).
Multi-Year Outperformance Agreements
Concurrent with the Listing and modifications to the Fourth Amended and Restated Advisory Agreement (the “Advisory Agreement”) by and among the Company, the OP and the Advisor, the Company entered into a multi-year outperformance agreement with the Advisor in June 2015 (the “2015 OPP”). Following the end of the performance period under the 2015 OPP on June 2, 2018, the Company entered into a new multi-year outperformance agreement with the Advisor in July 2018 (the “2018 OPP”) (see Note 12 — Equity-Based Compensation). Under the 2015 OPP, the Company recorded equity-based compensation expense associated with the awards over the requisite service period on a graded basis. Under the 2018 OPP, effective June 2, 2018, the Company records equity-based compensation evenly over the requisite service period of approximately 2.8 years from the grant date. The equity-based compensation expense was adjusted each reporting period for changes in the estimated market-related performance. Under new accounting guidance adopted by the Company on January 1, 2019, total equity-based compensation expense calculated as of adoption of the new guidance will be fixed as of that date and will not be remeasured in subsequent periods. For additional information see Recently Issued Accounting Pronouncements section below.
Recently Issued Accounting Pronouncements
Adopted as of January 1, 2019:
ASU No. 2016-02 — Leases
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”) which provides new guidance related to the accounting for leases, as well as the related disclosures. For lessors of real estate, leases are accounted for using an approach substantially the same as previous accounting guidance for operating leases and direct financing leases. For lessees, the new standard requires the application of a dual lease classification approach, classifying leases as either operating or finance leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. Lease expense for operating leases is recognized on a straight-line basis over the term of the lease, while lease expense for finance leases is recognized based on an effective interest method over the term of the lease. Also, lessees must recognize a right-of-use asset (“ROU”) and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Further, certain transactions where at inception of the lease the buyer-lessor accounted for the transaction as a purchase of real estate and a new lease, may now be required to have symmetrical accounting to the seller-lessee if the transaction was not a qualified sale-leaseback and accounted for as a financing transaction.
Upon adoption, lessors were allowed a practical expedient, which the Company has elected, by class of underlying assets to account for lease and non-lease components (such as tenant reimbursements of property operating expenses) as a single lease component as an operating lease because (a) the non-lease components have the same timing and pattern of transfer as the associated lease component; and (b) the lease component, if accounted for separately, would be classified as an operating lease. Additionally, only incremental direct leasing costs may be capitalized under this new guidance, which is consistent with the Company’s existing policies. Also, upon adoption, companies were allowed a practical expedient package, which the Company has elected, that allowed the Company: (a) to not reassess whether any expired or existing contracts entered into prior to January 1, 2019 are or contain
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

leases; (b) to not reassess the lease classification for any expired or existing leases entered into prior to January 1, 2019 (including assessing sale-leaseback transactions); and (c) to not reassess initial direct costs for any expired or existing leases entered into prior to January 1, 2019. As a result, all of the Company’s existing leases will continue to be classified as operating leases under the new standard. Further, any existing leases for which the property is leased to a tenant in a transaction that at inception was a sale-leaseback transaction will continue to be treated (absent a modification) as operating leases. The Company did not have any leases that would be considered financing leases as of January 1, 2019.
The Company assessed the impact of adoption from both a lessor and lessee perspective, which is discussed in more detail below, and adopted the new guidance prospectively on January 1, 2019, using a prospective transition approach under which the Company elected to apply the guidance effective January 1, 2019 and not adjust prior comparative reporting periods (except for the Company’s presentation of lease revenue discussed below).
Lessor Accounting
As discussed above, the Company was not required to re-assess the classification of its leases, which are considered operating leases under ASU 2016-02. The following is a summary of the most significant impacts to the Company of the new accounting guidance, as lessor:
Because the Company elected the practical expedient noted above to not separate non-lease component revenue from the associated lease component, the Company has aggregated revenue from its lease components and non-lease components (tenant operating expense reimbursements) into one line. The prior period has been conformed to this new presentation.
Changes in the Company’s assessment of receivables that result in bad debt expense is now required to be recorded as an adjustment to revenue, rather than a charge to bad debt expense. This new classification applies for the first quarter of 2019 and reclassification of prior period amounts is not permitted. At transition on January 1, 2019, after assessing its reserve balances at December 31, 2018 under the new guidance, the Company wrote off accounts receivable of $3.4 million, net of $2.2 million in bad debt reserves as an adjustment to the opening balance of accumulated deficit, and accordingly rent for these tenants is currently recorded on a cash basis.
Indirect leasing costs in connection with new or extended tenant leases, if any, are being expensed. Under prior accounting guidance, the recognition would have been deferred.
Lessee Accounting
The Company is a lessee under ground leases for 7 properties as of January 1, 2019. The following is a summary of the most significant impacts to the Company of the new accounting guidance, as lessee:
Upon adoption of the new standard, the Company recorded ROU assets and lease liabilities equal to $24.0 million for the present value of the lease payments related to its ground leases. These amounts are included in prepaid expenses and other assets and accounts payable and accrued expenses on the consolidated balance sheet.
•
The Company also reclassified $27.0 million, net related to amounts previously reported as above and below market ground lease intangibles to the ROU assets. For additional information and disclosures related to these operating leases, see Note 9 — Commitments and Contingencies.
Other Recently Issued Accounting Pronouncements
In July 2017, the FASB issued ASU 2017-11, Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Non-Controlling Interests with a Scope Exception guidance that changes the method to determine the classification of certain financial instruments with a down round feature as liabilities or equity instruments and clarify existing disclosure requirements for equity-classified instruments. A down round feature no longer precludes equity classification when assessing whether the instrument is indexed to an entity’s own stock. As a result, a freestanding equity-linked financial instrument no longer would be accounted for as a derivative liability, rather, an entity that presents earnings per share is required to recognize the effect of the down round feature when it is triggered. That effect is treated as a dividend and as a reduction of income available to common shareholders in basic EPS. Convertible instruments with embedded conversion options that have down round features are now subject to the specialized guidance for contingent beneficial conversion features. The revised guidance is effective for annual periods and interim periods within those annual periods, beginning after December 15, 2018. The revised guidance became effective for the Company effective January 1, 2019 and it did not have an impact on the Company’s consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815):Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). The purpose of this updated guidance is to better align a company’s financial reporting
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

for hedging activities with the economic objectives of those activities. ASU 2017-12 is effective for public business entities for fiscal years beginning after December 15, 2018. The Company adopted ASU 2017-12 on January 1, 2019 using a modified retrospective transition method, as required, and recognized the cumulative effect of the change on the opening balance of each affected component of equity as of the date of adoption. The opening balance sheet adjustment specifically related to the elimination of the requirement for separate measurement of hedge ineffectiveness and resulted in a credit, or decrease, to accumulated deficit of $0.3 million, with a corresponding debit, or decrease, to accumulated other comprehensive income.
In February 2018, the FASB issued ASU 2018-02, Income Statement- Reporting Comprehensive Income(Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The new guidance addresses the impact of Tax Cuts and Jobs Act signed into law on December 22, 2017, (“Tax Cuts and Jobs Act”) on items within accumulated other comprehensive (loss) income (“AOCI”) which do not reflect the appropriate tax rate. ASU 2018-02 allows the Company to retrospectively reclassify the income tax effects on items in AOCI to retained earnings for all periods in which the effect of the change in the U.S. federal corporate income tax rate was recognized. In addition, all companies are required to disclose whether the company has elected to reclassify the income tax effects of the Tax Cuts and Jobs Act to retained earnings and disclose information about any other income tax effects that are reclassified from AOCI by the Company. The amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. Companies are required to apply the proposed amendments either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized. The revised guidance became effective for the Company effective January 1, 2019 and it did not have an impact on the Company’s consolidated financial statements.
In July 2018, the FASB issued ASU 2018-07, Compensation- Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”) as an amendment and update expanding the scope of Topic 718. The amendment specifies that Topic 718 now applies to all share-based payment transactions, even non-employee awards, in which a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards. Under the new guidance, awards to nonemployees are measured on the grant date, rather than on the earlier of the performance commitment date or the date at which the nonemployee’s performance is complete. Also, the awards would be measured by estimating the fair value of the equity instruments to be issued, rather than the fair value of the goods or services received or the fair value of the equity instruments issued, whichever can be measured more reliably. In addition, entities may use the expected term to measure nonemployee awards or elect to use the contractual term as the expected term, on an award-by-award basis. The new guidance is effective for the Company in annual periods beginning after December 15, 2018, and interim periods within those annual periods, with early adoption permitted. The Company adopted the new guidance on January 1, 2019 and began applying the new rules to its non-employee award made to the Advisor pursuant to the 2018 OPP. As a result, total equity-based compensation expense calculated as of adoption of the new guidance will be fixed as of that date and will not be remeasured in subsequent periods (unless modified). In addition, the expense is being recorded over the requisite service period of approximately 2.8 years from the grant date. See Note 12 — Equity-Based Compensation for additional information on the awards to the Advisor pursuant to the 2018 OPP and the 2015 OPP.
Pending Adoption as of September 30, 2019:2020:
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which changes how entities measure credit losses for financial assets carried at amortized cost. The update eliminates the requirement that a credit loss must be probable before it can be recognized and instead requires an entity to recognize the current estimate of all expected credit losses. Additionally, the update requires credit losses on available-for-sale debt securities to be carried as an allowance rather than as a direct write-down of the asset. The amendments become effective for reporting periods beginning after December 15, 2019. On July 25, 2018, the FASB proposed an amendment to ASU 2016-13 to clarify that operating lease receivables recorded by lessors (including unbilled straight-line rent) are explicitly excluded from the scope of ASU 2016-13. Early adoption is permittedThe revised guidance became effective for reporting periods beginning after December 15, 2018. Thethe Company is currently evaluatingeffective January 1, 2020 and it did not have a material impact on the impact of this new guidance.Company’s consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. The objective of ASU 2018-13 is to improve the effectiveness of disclosures in the notes to the financial statements by removing, modifying, and adding certain fair value disclosure requirements to facilitate clear communication of the information required by generally accepted accounting principles. The amended guidance is effective for the Company beginning on January 1, 2020.2020 and it did not have a material impact on the Company’s financial statements.
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU 2020-04 contains practical expedients for reference rate reform-related activities that impact debt, leases, derivatives, and other contracts. The Companyguidance in ASU 2020-04 is currently evaluatingoptional and may be elected over time as reference rate reform activities occur. During the potentialfirst quarter of 2020, we elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future London Interbank Offered Rate (“LIBOR”) indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. We will continue to evaluate the impact of this new guidance.the guidance and may apply other elections as applicable as additional changes in the market occur.
13
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and Other Options (Topic 470)and Derivatives and Hedging – Contracts in Entity’s Own Equity (Topic 815). The new standard reduces the number of accounting models for convertible debt instruments and convertible preferred stock, and amends the guidance for the derivatives scope exception for contracts in an entity's own equity. The standard also amends and makes targeted improvements to the related earnings per share guidance. The ASU is effective for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The standard allows for either modified or full retrospective transition methods. The Company is currently evaluating this guidance to determine the impact it may have on its consolidated financial statements.
Note 3 — Real Estate Investments, Net
Property Acquisitions
The following table presents the allocation of the assets acquired and liabilities assumed during the nine months ended September 30, 20192020 and 2018,2019, and, in the case of assets located outside of the United States, based on the applicable exchange rate at the time of purchase. All acquisitions in both periods were considered asset acquisitions for accounting purposes.
  Nine Months Ended September 30,
(Dollar amounts in thousands) 2019 2018
Real estate investments, at cost:    
Land $22,441
 $24,269
Buildings, fixtures and improvements 243,545
 205,990
Total tangible assets 265,986
 230,259
Acquired intangible lease assets:    
In-place leases 44,256
 42,031
Above-market lease assets 406
 48
Below-market lease liabilities (1,645) (4,959)
Cash paid for acquired real estate investments $309,003
 $267,379
Number of properties purchased 20
 17

Nine Months Ended September 30,
(Dollar amounts in thousands)20202019
Real estate investments, at cost: 
Land$28,622 $22,441 
Buildings, fixtures and improvements121,311 243,545 
Total tangible assets149,933 265,986 
Acquired intangible lease assets:
In-place leases16,842 44,256 
Above-market lease assets53 406 
Below-market lease liabilities(1,040)(1,645)
               Total intangible assets15,855 43,017 
ROU asset5,022 0 
Cash paid for acquired real estate investments$170,810 $309,003 
Number of properties purchased21 20 
Acquired Intangible Lease Assets
The Company allocates a portion of the fair value of real estate acquired to identified intangible assets and liabilities, consisting of the value of origination costs (tenant improvements, leasing commissions, and legal and marketing costs), the value of above-market and below-market leases, and the value of tenant relationships, if applicable, based in each case on their relative fair values. The Company periodically assesses whether there are any indicators that the value of the intangible assets may be impaired by performing a net present value analysis of future cash flows, discounted for the inherent risk associated with each investment. For the three and nine months ended September 30, 20192020 and 2018,2019, the Company did not record any impairment charges for the intangible assets associated with the Company’s real estate investments.
Dispositions
WhenDuring the three and nine months ended September 30, 2020, the Company sells a property,did 0t sell any gains or losses from the sale are reflected within Gain (loss) on dispositions of real estate investments in the consolidated statements of operations.properties.
During the three months ended September 30, 2019, the Company sold 33 properties located in the United States (32 Family Dollar retail stores and 1 industrial property) for a total contract salessale price of $53.0 million resulting in an aggregate gain of $7.0 million, which is reflected in gains on dispositions of real estate investments in the accompanying consolidated statements of operations for the three months ended September 30, 2019.
During the nine months ended September 30, 2019, the Company sold 97 properties located in the United States (94 Family Dollar retail stores and 3 industrial properties) and 1 property located in the United Kingdom for a total contract sales price of $145.8 million, resulting in an aggregate gain of $14.8 million, which is reflected in gains on dispositions of real estate investments in the accompanying consolidated statements of operations for the nine months ended September 30, 2019.
The Company sold 1 real estate asset during the three months ended September 30, 2018, located in Vandalia, Ohio for a total contract sales price of $5.0 million. Prior to the sale, the Company agreed to terminate the lease with the existing tenant and received a termination fee of $3.0 million in accordance with the terms of the lease, which is recorded in rental income in the accompanying consolidated statements of operations for the three months ended September 30, 2018. At closing, the Company paid approximately $3.0 million in excess of proceeds received for the repayment of mortgage debt and recorded a loss of $1.9 million, which is reflected in loss on dispositions on real estate investments in the accompanying consolidated statements of operations for the three months ended September 30, 2018.
14
In addition to the sale of the real estate asset located in Vandalia, Ohio, the Company sold 1 other real estate asset, located in San Jose, California, during the nine months ended September 30, 2018. This property was sold for a total contract sales price of $20.3 million, resulting in net proceeds of $1.3 million after repayment of mortgage debt and a loss of $3.8 million, which is
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)

reflected in loss on dispositions of real estate investments in the accompanying consolidated statements of operations for the nine months ended September 30, 2018.
Impairment Charges
In November 2019, the Company sold 2 properties in the Netherlands (see Note 14 — Subsequent Events). As of September 30, 2019 the Company concluded that the estimated future undiscounted cash flows associated with these two properties did not exceed their respective carrying values, and as a result, recorded an impairment charge of $6.4 million to reflect the estimated fair value of the properties.
Assets Held for Sale
When assets are identified by management as held for sale,As of September 30, 2020 and December 31, 2019, the Company stops recognizing depreciation and amortization expense on the identifieddid 0t have any assets and estimates the sales price, net of costs to sell, of those assets. If the carrying amount of the assetsthat were classified as held for sale exceeds the estimated net sales price, the Company records an impairment charge equal to the amount by which the carrying amount of the assets exceeds the Company’s estimate of the net sales price of the assets.
As of September 30, 2019 and December 31, 2018, the Company had 3 properties which were not considered discontinued operations and therefore are recorded and classified as held for sale. Accordingly, the operating results of these properties remain classified within continuing operations for all periods presented.
Significant Tenants
There were no tenants whose annualized rental income on a straight-line basis represented 10.0% or greater of consolidated annualized rental income on a straight-line basis for all properties as of September 30, 20192020 and December 31, 2018.2019. The termination, delinquency or non-renewal of leases by any major tenant may have a material adverse effect on revenues.
Geographic Concentration
The following table lists the countries and U.S. states where the Company has concentrations of properties where annualized rental income on a straight-line basis represented greater than 10.0% of consolidated annualized rental income on a straight-line basis as of September 30, 20192020 and December 31, 2018.2019.
Country / U.S. StateSeptember 30,
2020		December 31,
2019
United States62.1%63.0%
Michigan14.0%14.6%
United Kingdom17.4%18.2%
Country / U.S. State September 30,
2019		 December 31,
2018
United States 59.0% 55.7%
      Michigan 13.9% 13.7%
United Kingdom 17.5% 19.0%
15

GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)

Note 4 —Mortgage Notes Payable, Net
Mortgage notes payable, net as of September 30, 20192020 and December 31, 20182019 consisted of the following:
Encumbered Properties
Outstanding Loan Amount (1)
Effective Interest RateInterest Rate
CountryPortfolioSeptember 30,
2020		December 31,
2019		Maturity
(In thousands)(In thousands)
Finland:Finland Properties5$86,762 $82,996 1.7%(2)Fixed/VariableFeb. 2024
France:Worldline00 5,608 0(3)——
DCNS00 10,655 0(3)——
ID Logistics II00 11,776 0(3)——
French Properties782,072 0 2.5%(4)Fixed/VariableMay 2025
Germany:Germany Properties560,382 57,761 1.8%(5)Fixed/VariableJun. 2023
Luxembourg/ The Netherlands:Benelux Properties3140,696 134,587 1.4%FixedJun. 2024
Total EUR denominated20369,912 303,383 
United Kingdom:United Kingdom Properties42287,304 294,315 3.1%(6)Fixed/VariableAug. 2023
Total GBP denominated42287,304 294,315 
United States:Penske Logistics170,000 70,000 4.7%(7)FixedNov. 2028
Multi-Tenant Mortgage Loan I12187,000 187,000 4.4%(7)FixedNov. 2027
Multi-Tenant Mortgage Loan II832,750 32,750 4.4%(7)FixedFeb. 2028
Multi-Tenant Mortgage Loan III798,500 98,500 4.9%(7)FixedDec. 2028
Multi-Tenant Mortgage Loan IV1697,500 97,500 4.6%(7)FixedMay 2029
Multi-Tenant Mortgage Loan V12204,000 204,000 3.7%(7)FixedOct. 2029
Whirlpool Loan688,000 0 3.5%(8)FixedJul. 2027
Total USD denominated62777,750 689,750 
Gross mortgage notes payable1241,434,966 1,287,448 3.4%
Mortgage discount0 (26)
Deferred financing costs, net of accumulated amortization (9)
(17,254)(15,268)
Mortgage notes payable, net124$1,417,712 $1,272,154 3.4%

______________
(1)Amounts borrowed in local currency and translated at the spot rate in effect at the applicable reporting date.
(2)80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable. Variable portion is approximately 1.4% plus 3-month Euribor rate in effect as of September 30, 2020.
(3)These loans were refinanced in May 2020 as part of the French Refinancing (see below for further details). As a result, the Company terminated an interest rate swap agreement for two of these properties (see Note 7 — Derivatives and Hedging Activities).
(4)90% fixed as a result of a “pay-fixed” interest rate swap agreement and 10% variable. Variable portion is approximately 2.3% plus 3-month Euribor. Euribor rate in effect as of September 30, 2020.
(5)80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable. Variable portion is approximately 1.55% plus 3 month Euribor. Euribor rate in effect as of September 30, 2020.
(6)80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable. Variable portion is approximately 2.0% plus 3-month GBP LIBOR. LIBOR rate in effect as of September 30, 2020. This loan requires principal repayments beginning in 2020 based on amounts specified under the loan.
(7)The borrower’s (wholly owned subsidiaries of the Company) financial statements are included within the Company’s consolidated financial statements, however, the borrowers’ assets and credit are only available to pay the debts of the borrowers and their liabilities constitute obligations of the borrowers.
(8)Fixed as a result of “pay-fixed” interest rate swap agreements.
(9)Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or paid down before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.
16
    Encumbered Properties 
Outstanding Loan Amount (1)
 Effective Interest Rate Interest Rate  
Country Portfolio  September 30,
2019		 December 31,
2018		   Maturity
      (In thousands) (In thousands)      
Finland: 
Finnair (8)
 — $—
 $32,501
 —% —
 —
  
Tokmanni (8)
 — —
 33,159
 —% —
 —
  Finland 5 80,785
 —
 1.7%
(2) 
Fixed/Variable Feb. 2024
               
France: Auchan 1 9,061
 9,498
 1.7%
(3) 
Fixed Dec. 2019
  Pole Emploi 1 6,332
 6,637
 1.7%
(3) 
Fixed Dec. 2019
  Sagemcom 1 39,192
 41,083
 1.7%
(3) 
Fixed Dec. 2019
  Worldline 1 5,458
 5,722
 1.9%
(3) 
Fixed Jul. 2020
  DCNS 1 10,371
 10,872
 1.5%
(3) 
Fixed Dec. 2020
  ID Logistics II 2 11,463
 12,016
 1.3% Fixed Jun. 2021
               
Germany 
Rheinmetall (9)(10)
 — —
 12,130
 —%
—
 —
  
OBI DIY (9)(10)
 — —
 5,150
 —% —
 —
  RWE AG 3 68,231
 71,524
 1.6%
(3) 
Fixed 
Oct. 2019 (14)
  
Rexam (11)
 — —
 5,876
 —%
—
 —
  
Metro Tonic (11)
 — —
 30,326
 —% —
 —
  
ID Logistics I (11)
 — —
 4,578
 —% —
 —
  Germany 5 56,222
 —
 2.0%
(13) 
Fixed/Variable Jun. 2023
               
Luxembourg: 
DB Luxembourg (12)
 — —
 41,198
 —% —
 —
The Netherlands: 
ING Amsterdam (12)
 — —
 50,353
 —% —
 —
Luxembourg/ The Netherlands Benelux 3 131,004
 —
 1.4% Fixed Jun. 2024
  Total EUR denominated 23 418,119
 372,623
      
               
United Kingdom: UK Multi-Property Cross Collateralized Loan 42 274,512
 292,890
 3.2%
(4) 
Fixed/Variable Aug. 2023
  Total GBP denominated 42 274,512
 292,890
      
               
United States: 
Quest Diagnostics (5)
 — —
 52,800
 —% —
 —
  
AT&T Services (5)
 — —
 33,550
 —% —
 —
  
Penske Logistics (6)
 1 70,000
 70,000
 4.7% Fixed Nov. 2028
  
Multi-Tenant Mortgage Loan I (6)
 12 187,000
 187,000
 4.4% Fixed Nov. 2027
  Multi-Tenant Mortgage Loan II 8 32,750
 32,750
 4.4% Fixed Feb. 2028
  Multi-Tenant Mortgage Loan III 7 98,500
 98,500
 4.9% Fixed Dec. 2028
  Multi-Tenant Mortgage Loan IV 16 97,500
 —
 4.6% Fixed May 2029
  Multi-Tenant Mortgage Loan V 12 204,000
 —
 3.7% Fixed Oct. 2029
  Total USD denominated 56 689,750
 474,600
      
  Gross mortgage notes payable 121 1,382,381
 1,140,113
 3.3%    
  Mortgage discount   (53) (569)      
  
Deferred financing costs, net of accumulated amortization (7)
   (15,510) (9,737)      
  Mortgage notes payable, net 121 $1,366,818
 $1,129,807
 3.3%    






GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)


(1)
Amounts borrowed in local currency and translated at the spot rate in effect at the applicable reporting date.
(2)
80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable. Variable portion is approximately 1.4% plus 3-month Euribor. Euribor rate in effect as of September 30, 2019.
(3)
Fixed as a result of a “pay-fixed” interest rate swap agreement.
(4)
80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable. Variable portion is approximately 2.0% plus 3-month GBP LIBOR. LIBOR rate in effect as of September 30, 2019.
(5)
This loan was refinanced in September 2019 as part of the Multi-Tenant Mortgage Loan V.
(6)
The borrower’s (wholly owned subsidiaries of the Company) financial statements are included within the Company’s consolidated financial statements, however, the borrowers’ assets and credit are only available to pay the debts of the borrowers and their liabilities constitute obligations of the borrowers.
(7)
Deferred financing costs represent commitment fees, legal fees, and other costs associated with obtaining commitments for financing. These costs are amortized over the terms of the respective financing agreements using the effective interest method. Unamortized deferred financing costs are expensed when the associated debt is refinanced or paid down before maturity. Costs incurred in seeking financial transactions that do not close are expensed in the period in which it is determined that the financing will not close.
(8)
These loans were refinanced in February 2019 as part of the Finland Refinancing (see below for further details).
(9)
These loans were repaid in full upon maturity in January 2019.
(10)
These loans were refinanced in May 2019 as part of the German Refinancing (see below for further details).
(11)
These loans were refinanced in May 2019 as part of the German Refinancing (see below for further details).
(12)
These loans were refinanced in June 2019 as part of the Benelux Refinancing (see below for further details).
(13)
The loan initially bore interest at a rate of 3-month Euribor plus 1.80% per annum, but, following the replacement of an easement on one property, the loan will bear interest going forward at a rate of Euribor plus 1.55% per annum beginning on October 1, 2019. 80% fixed as a result of a “pay-fixed” interest rate swap agreement and 20% variable.
(14)
The Company was under contract to sell these three properties in Germany as of September 30, 2019. This mortgage loan was originally scheduled to mature in October 2019. However, during October 2019 the Company negotiated an extension of the maturity date to December 2019, to coincide with the expected closing date of the three mortgaged properties.
The following table presents future scheduled aggregate principal payments on the Company’s gross mortgage notes payable over the next five calendar years and thereafter as of September 30, 2019:2020:
(In thousands)
Future Principal Payments (1)
2020 (remainder)$2,609 
202112,772 
202219,779 
2023319,537 
2024227,458 
202582,072 
Thereafter770,739 
Total$1,434,966 
(In thousands) 
Future Principal Payments (1)
2019 (remainder) $122,816
2020 18,342
2021 23,762
2022 19,046
2023 296,877
2024 211,789
Thereafter 689,749
Total $1,382,381
________________________
_________________________(1)Assumes exchange rates of £1.00 to $1.29 for GBP and €1.00 to $1.17 for EUR as of September 30, 2020 for illustrative purposes, as applicable.
(1)
Assumes exchange rates of £1.00 to $1.23 for GBP and €1.00 to $1.09 for EUR as of September 30, 2019 for illustrative purposes, as applicable.
The Company’s mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As of September 30, 2019,2020, the Company was in compliance with all other financial covenants under its mortgage notes payable agreements.
During the three months ended September 30, 2020, the borrower entities under the mortgage loan secured by all the Company’s properties located in the United Kingdom did not maintain the required loan-to-value ratios with respect to the mortgaged properties, and, as a result, a cash trap event under the loan occurred which was immediately cured when the Company executed, as required by the terms of the loan, an unsecured corporate guaranty of the borrower entities’ obligations under the loan. The guaranty remains in effect and contains a covenant that requires the Company to maintain unrestricted cash and cash equivalents (or amounts available for future borrowings under credit facility, such as the Credit Facility) in an amount sufficient to meet its actual and contingent liabilities under the guaranty.As of September 30, 2020, the Company was in compliance with the covenants under the Credit Facility and mortgage notes payable agreements.
The total gross carrying value of unencumbered assets as of September 30, 20192020 was $1.1$1.4 billion, of which approximately $1.0$1.3 billion was included in the unencumbered asset pool comprising the borrowing base under the Revolving Credit Facility (as defined in Note 5 — Credit Facilities) and therefore is not available to serve as collateral for future borrowings.
Multi-Tenant MortgageWhirlpool Loan V
On September 12, 2019,July 10, 2020, the Company, through certain wholly owned subsidiaries, borrowed $204.0$88.0 million from KeyBank National Association (“KeyBank”)a syndicate of regional banks led by BOK Financial. The loans are secured by a first mortgage on 12 of the Company’s single tenant net leased office and6 industrial properties triple-net leased to Whirlpool Corporation and located in 10 states. Approximately $86.5 million of the net proceeds from the loan was used to repay outstanding mortgage indebtedness related to the mortgaged properties. Of the remaining net proceeds, approximately $0.3 million was used to fund deposits required to be made at closing into reserve accountsTennessee and approximately $126.5 million was available for working capital and general corporate purposes.The loan bears interest at a fixed rate of 3.65% and matures on October 1, 2029. The loan is interest-only, with the principal balance due on the maturity date. From and after November 2, 2021, the loan may be prepaid at any time, in whole but not in part, subject to certain conditions and limitations, including payment of a prepayment premium
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

for any prepayments made prior to July 1, 2029. Partial prepayments are also permitted under certain circumstances, subject to certain conditions and limitations.
Benelux Refinancing
On June 12, 2019, the Company, through certain wholly owned subsidiaries, borrowed €120.0 million from Landesbank Hessen-Thüringen Girozentrale, secured by 3 of the Company’s properties located in the Netherlands and Luxembourg. The loan bears interest at a fixed rate of 1.383% and matures on June 11, 2024. The loan is interest-only, with the principal due at maturity. At the closing of the loan, approximately €80.3 million of the net proceeds was used to repay all outstanding indebtedness encumbering 2 of the properties.
German Refinancing
On May 10, 2019, the Company, through certain wholly owned subsidiaries, borrowed €51.5 million from Landesbank Hessen-Thüringen Girozentrale, secured by 5 of the Company’s properties located in Germany. The loan is interest-only with the principal due at maturity, which is June 30, 2023. The maturity date may be extended at the Company’s option to February 29, 2024 subject to conditions. The loan initially bore interest at a rate of 3-month Euribor plus 1.80% per annum, but, following the replacement of an easement on one property, the loan will bear interest going forward at a rate of Euribor plus 1.55% per annum beginning on October 1, 2019. The Company also entered into a swap to fix the interest rate for 80% of the principal amount. The net proceeds from the loan were used to repay all €35.6 million outstanding in mortgage indebtedness that previously encumbered 3 of the properties that secure the loan.
Multi-Tenant Mortgage Loan IV
On April 12, 2019, the Company, through certain wholly owned subsidiaries, borrowed $97.5 million from Column Financial, Inc. and Société Générale Financial Corporation, secured by 16 of the Company’s single tenant net leased office and industrial properties located in 12 statesOhio that were simultaneously removed from the borrowing base under the Revolving Credit Facility. At closing, approximately $90.0$84.0 million was used to repay amounts outstanding indebtedness under the Revolving Credit Facility, with the remaining proceeds of approximately $2.2 million, after costs and fees related to the loan, available for working capital and general corporate purposes. The loan bears interest at a fixedfloating interest rate of 4.489% and has a maturity date of May 6, 2029.one-month LIBOR plus 2.9%, with the interest rate fixed at 3.45% by swap agreement. The loan is interest-only with the principal balance due at maturity on the maturity date.July 10, 2027. The Company may prepay the loan in whole or in part at any time, subjectand mandatory prepayments are required to certain fees andbe made in connection with any unpaid interest depending onrelease of a property from the timing and other circumstances of the prepayment.loan.
FinlandFrench Refinancing
On February 6, 2019,May 14, 2020, the Company, through certain wholly ownedof its subsidiaries, entered into a loan agreement with HSBC France (“HSBC”) and borrowed an aggregate of €74.0€70.0 million ($84.275.6 million based on the prevailing exchange rate on that date) secured by mortgages on the Company’s 57 properties locatedthe Company owns in Finland.France. The maturity date of this loan is February 1, 2024,May 14, 2025 and it bears interest at a rate of 3-month EuriborEURIBOR (with a floor of 0.0%) plus 1.4%an initial margin of 2.3% per year, with the interest rate for approximately €59.2€63.0 million ($67.468.0 million based on the prevailing exchange rate on that date) fixed by an interest rate swap agreement. The amount fixed by swap agreement represents 80%90% of the principal amount of the loan and is fixed at 1.8%2.5% per year. The loan is interest-only with the principal due at maturity. At the closing of the loan, €57.4€25.0 million ($65.327.0 million based on the prevailing exchange rate on that date) was used to repay all outstanding indebtedness encumberingon 4 of the five properties, withproperties. Of the remaining proceeds, after costs and fees related toapproximately €20.0 million ($21.6 million based on the loan, available for working capital and general corporate purposes.
Multi-Tenant Mortgage Loan II
On January 26, 2018, the Company, through certain wholly owned subsidiaries, borrowed $32.8 million. The loan bears interest at a fixed interestexchange rate of 4.32% per annum and matures in February 2028. The loan is interest only with the principal due at maturity and is secured by 8 properties in 6 states, totaling approximately 627,500 square feet. Proceeds were primarilyon that date) was used to repay approximately $30.0 million ofamounts outstanding indebtedness under the Revolving Credit Facility.Facility and the remaining balance is available for general corporate purposes.
17
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
Note 5 — Credit Facilities
The table below details the outstanding balances as of September 30, 20192020 and December 31, 20182019 under the credit agreement with KeyBank National Association (“KeyBank”), as agent, and the other lender parties thereto, which provides for a $835.0 million senior unsecured multi-currency revolving credit facility (the “Revolving Credit Facility”) and a €359.6 million ($392.5421.6 million based on the prevailing exchange rate as of September 30, 2019)2020) senior unsecured term loan facility (the “Term Loan” and, together with the Revolving Credit Facility, the “Credit Facility”). The Credit Facility was originally entered into on July 24, 2017 and it has been amended from time to time. On August 1, 2019, the Company, through the OP, entered into an amendment and restatement of the credit agreement related to the Credit Facility (the “Credit Facility Amendment”) to, among other things, increase the aggregate total commitments, lower the interest rate and revise certain covenants.covenants, and the terms of the Credit Facility described below generally reflect this amendment and restatement.
GLOBAL NET LEASE, INC.
September 30, 2020December 31, 2019
(In thousands)
TOTAL USD (1)
USDGBPEUR
TOTAL USD (2)
USDGBPEUR
Revolving Credit Facility$264,009 $183,211 £40,000 €25,000 $199,071 $62,211 £40,000 €75,000 
Term Loan421,560 0 0 359,551 403,258 0 0 359,551 
Deferred financing costs(4,488)0 0 0 (5,365)0 0 0 
Term Loan, Net417,072 0 0 359,551 397,893 0 0 359,551 
Total Credit Facility$681,081 $183,211 £40,000 €384,551 $596,964 $62,211 £40,000 €434,551 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1)Assumes exchange rates of £1.00 to $1.29 for GBP and €1.00 to $1.17 for EUR as of September 30, 20192020 for illustrative purposes, as applicable.
(Unaudited)
(2)Assumes exchange rates of £1.00 to $1.32 for GBP and €1.00 to $1.12 for EUR as of December 31, 2019 for illustrative purposes, as applicable.

  September 30, 2019 December 31, 2018
(In thousands) 
TOTAL USD (1)
  USD GBP EUR 
TOTAL USD (2)
  USD GBP EUR
Revolving Credit Facility $101,405
  $52,211
 £40,000
 €—
 $363,894
  $278,625
 £40,000
 €30,000
                   
Term Loan 392,519
  —
 —
 359,551
 282,069
  —
 —
 246,481
Deferred financing costs (2,634)  —
 —
 —
 (3,342)  —
 —
 —
Term Loan, Net 389,885
  —
 —
 359,551
 278,727
  —
 —
 246,481
Total Credit Facility $491,290
  $52,211
 £40,000
 €359,551
 $642,621
  $278,625
 £40,000
 €276,481
(1)
Assumes exchange rates of £1.00 to $1.23 for GBP and €1.00 to $1.09 for EUR as of September 30, 2019 for illustrative purposes, as applicable.
(2)
Assumes exchange rates of £1.00 to $1.27 for GBP and €1.00 to $1.14 for EUR as of December 31, 2018 for illustrative purposes, as applicable.

Credit Facility - Terms
On July 24, 2017, the Company, through the OP, entered into a credit agreement with KeyBank. Based on USD equivalents at the closing, on July 24, 2017, theThe aggregate total commitments under the Credit Facility were $725.0 million. On July 2, 2018, upon the Company’s request, the lenders under the Credit Facility increased the aggregate total commitments from $722.2 million to $914.4 million, based on prevailing exchange rates on that date, with approximately $132.0 million of the increase allocated to the Revolving Credit Facility and approximately €51.8 million ($60.2 million based on the prevailing exchange rate on that date) allocated to the Term Loan. The Company used all the proceeds from the increased borrowings under the Term Loan to repay amounts outstanding under the Revolving Credit Facility. Under the Credit Facility Amendment, the aggregate total commitments under the Credit Facility were increased toare $1.235 billion, based on the USD equivalent on August 1, 2019, the date of the closing.
Priormost recent amendment to the Credit Facility Amendment, upon the Company’s request, subject in all respects to the consent of the lenders in their sole discretion, the aggregate total commitments under the Credit Facility could have been increased up to an aggregate additional amount of $35.6 million, allocated to either or both portions of the Credit Facility, with total commitments under the Credit Facility not to exceed $950.0 million. Following the Credit Facility Amendment, uponFacility. Upon the Company’s request, subject in all respects to the consent of the lenders in their sole discretion, these aggregate total commitments under the Credit Facility may be increased up to an aggregate additional amount of approximately $515.0 million, allocated to either or among both componentsportions of the Credit Facility, with total commitments under the Credit Facility not to exceed $1.75 billion, increased from the previous maximum of $950.0 million.
The Credit Facility consists of two components, a Revolving Credit Facility and a Term Loan, both of which are interest-only. Prior to the Credit Facility Amendment, the Revolving Credit Facility was scheduled to mature on July 24, 2021, subject to 1 one-year extension at the Company’s option, and the Term Loan was scheduled to mature on July 24, 2022. Following the Credit Facility Amendment, theThe Revolving Credit Facility matures on August 1, 2023, subject to two2 six-month extensions at the Company’s option, and the Term Loan matures on August 1, 2024. Borrowings under the Credit Facility bear interest at a variable rate per annum based on an applicable margin that varies based on the ratio of consolidated total indebtedness and the consolidated total asset value of the Company and its subsidiaries plus either (i) LIBOR, as applicable to the currency being borrowed, or (ii) a “base rate” equal to the greatest of (a) KeyBank’s “prime rate,” (b) 0.5% above the Federal Funds Effective Rate, or (c) 1.0% above one-month LIBOR. Prior to the Credit Facility Amendment, the range of applicable interest rate margins was from 0.60% to 1.20% per annum with respect to base rate borrowings and 1.60% to 2.20% per annum with respect to LIBOR borrowings. Following the Credit Facility Amendment, theThe applicable interest rate margin is based on a range from 0.45% to 1.05% per annum with respect to base rate borrowings under the Revolving Credit Facility, 1.45% to 2.05% per annum with respect to LIBOR borrowings under the Revolving Credit Facility, 0.40% to 1.00% per annum with respect to base rate borrowings under the Term Loan and 1.40% to 2.00% per annum with respect to LIBOR borrowings under the Term Loan. As of September 30, 2020, the Credit Facility had a weighted-average effective interest rate of 2.5% after giving effect to interest rate swaps in place.
LIBOR will likely only be available in substantially its current form until the end of 2021. The Credit Facility Amendment also addedcontains terms governing the establishment of a replacement index to serve as an alternative to LIBOR, if necessary. As of September 30, 2019,To transition from LIBOR under the Credit Facility, hadthe Company anticipates that it will either utilize the Base Rate or negotiate a weighted-average effective interestreplacement reference rate of 2.2% after giving effect to interest rate swaps in place.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

for LIBOR with the lenders.
The Credit Facility requires the Company through the OP to pay an unused fee per annum of 0.25% of the unused balance of the Revolving Credit Facility if the unused balance exceeds or is equal to 50% of the total commitment or a fee per annum of 0.15% of the unused balance of the Revolving Credit Facility if the unused balance is less than 50% of the total commitment. From and after the time the Company obtains an investment grade credit rating, the unused fee will be replaced with a facility fee based on the total commitment under the Revolving Credit Facility multiplied by 0.30%, decreasing as the Company’s credit rating increases.
18
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
The availability of borrowings under the Revolving Credit Facility is based on the value of a pool of eligible unencumbered real estate assets owned by the Company and compliance with various ratios related to those assets, and the Credit Facility Amendment also included amendments to provisions governing the calculation of the value of the borrowing base.assets. As of September 30, 2019, the Company had an outstanding balance of $101.42020, approximately $92.0 million under the Revolving Credit Facility, with approximately $101.2 millionwas available for future borrowings, and an outstanding balance of $389.9 million under the Term Loan, net of deferred financing costs. Any future borrowings under the Revolving Credit FacilityFacility. Any future borrowings may, at the option of the Company, be denominated in USD, EUR, Canadian Dollars, GBP or Swiss Francs. The Term Loan is denominated in EUR. Amounts borrowed may not, however, be converted to, or repaid in, another currency once borrowed. As of June 30, 2019, the Company had an outstanding balance of $259.5 million under the Revolving Credit Facility and an outstanding balance of $277.4 million under theThe Term Loan net of deferred financing costs. Following the closing of the Credit Facility Amendment, the entire €359.6 million ($400.0 million based on USD equivalents) total commitment with the respect to the Term Loan component was outstanding, and $170.7 million of the $835.0 million total commitment with the respect to the Revolving Credit Facility component was outstanding. Based on USD equivalents, this represented an increase of $39.4 millionis denominated in the aggregate amount outstanding under the Credit Facility. Additionally, during the third quarter of 2019, the Company repaid an additional $70.0 million outstanding under the Revolving Credit Facility. In April 2019, the Company, through certain wholly owned subsidiaries, entered into a new loan agreement with Column Financial, Inc. and Société Générale Financial Corporation secured by 16 of the Company’s single tenant net leased office and industrial properties located in 12 states that were simultaneously removed from the borrowing base under the Revolving Credit Facility. For additional information, seeNote 4 — Mortgage Notes Payable, net.EUR.
The Company, through the OP, may reduce the amount committed under the Revolving Credit Facility and repay outstanding borrowings under the Credit Facility, in whole or in part, at any time without premium or penalty, other than customary “breakage” costs payable on LIBOR borrowings. In the event of a default, the lenders have the right to terminate their obligations under the Credit Facility agreement and to accelerate the payment on any unpaid principal amount of all outstanding loans. The Credit Facility also imposes certain affirmative and negative covenants on the OP, the Company and certain of its subsidiaries including restrictive covenants with respect to, among other things, liens, indebtedness, investments, distributions (see additional information below), mergers and asset sales, as well as financial covenants requiring the OP to maintain, among other things, ratios related to leverage, secured leverage, fixed charge coverage and unencumbered debt services, as well as a minimum consolidated tangible net worth.
The Credit Facility Amendment also revised certain affirmative and negative covenants on the OP, the Company and certain of its subsidiaries including financial covenants and the covenant restricting the payment of distributions. The revisions to the restrictive covenants with respect to distributions increased the maximum amount the Company may use to pay cash distributions. Under the terms of the Credit Facility, the Company may not pay distributions, including cash dividends payable with respect to Common Stock, Series A Preferred Stock, Series B Preferred Stock or any other classesclass or series of preferred stock that the Company may issue in athe future, offering, or redeem or otherwise repurchase shares of the Company’s capital stock, Common Stock, Series A Preferred Stock, Series B Preferred Stock, or any other classesclass or series of preferred stock the Company may issue in athe future offering, based on a threshold levelthat exceed 100% of the Company’s Adjusted FFO, as defined in the Credit Facility. Pursuant to the Credit Facility Amendment,(which is different from AFFO disclosed in this maximum threshold was increased from 95% to 100% of the Company’s Adjusted FFOQuarterly Report on Form 10-Q) for any period of four consecutive fiscal quarters, except in limited circumstances, including that for one fiscal quarter in each calendar year, the Company may pay cash dividends and other distributions, and make redemptions and makeother repurchases in an aggregate amount equal to no more than 100%105% of its Adjusted FFO prior to the Credit Facility Amendment and 105% of Adjusted AFFO after the Credit Facility Amendment. Following the Credit Facility Amendment, fromFFO. From and after the time the Company obtains and continues to maintain an investment grade rating, the limitation on distributions discussed above will not be applicable. The Company used the exception to pay dividends that were between 95%100% of Adjusted FFO to 100%105% of Adjusted FFO during the quarter ended on March 31, 2019.June 30, 2020.
The Company’s ability to comply with the restrictions on the payment of distributions in the Credit Facility depends on its ability to generate sufficient cash flows from its existing properties and through acquisitions or otherwise such that its cash flows in the applicable periods exceed the level of Adjusted FFO required by these restrictions. Among other things, there can be no assurance the Company will complete acquisitions and other investments on a timely basis or on acceptable terms and conditions, if at all. If the Company is not able to increase the amount of cash it has available to pay dividends, including through additional cash flows the Company expects to generate from completing acquisitions, the Company may have to reduce dividend payments
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

or identify other financing sources to fund the payment of dividends at their current levels. Alternatively, the Company could elect to pay a portion of its dividends in shares if approved by the Company’s board of directors.
The Company and certain of its subsidiaries have guaranteed the OP’s obligations under the Credit Facility pursuant to a guarantee and a related contribution agreement which governs contribution rights of the guarantors in the event any amounts become payable under the guaranty.
Note 6 — Fair Value of Financial Instruments
The Company determines fair value based on quoted prices when available or through the use of alternative approaches, such as discounting the expected cash flows using market interest rates commensurate with the credit quality and duration of the investment. This alternative approach also reflects the contractual terms of the derivatives, including the period to maturity, and uses observable market-based inputs, including interest rate curves and implied volatilities. The guidance defines three levels of inputs that may be used to measure fair value:
Level 1 — Quoted prices in active markets for identical assets and liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 — Inputs other than quoted prices included within Level 1 that are observable for the asset and liability or can be corroborated with observable market data for substantially the entire contractual term of the asset or liability and those inputs are significant.
Level 3 — Unobservable inputs that reflect the entity’s own assumptions about the assumptions that market participants would use in the pricing of the asset or liability and are consequently not based on market activity, but rather through particular valuation techniques.
19
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
The determination of where an asset or liability falls in the hierarchy requires significant judgment and considers factors specific to the asset or liability. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company evaluates its hierarchy disclosures each quarter and depending on various factors, it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between levels will be rare.
Although the Company has determined that the majority of the inputs used to value its derivatives fall within Level 2 of the fair value hierarchy, the credit valuation adjustments associated with those derivatives utilize Level 3 inputs, such as estimates of current credit spreads to evaluate the likelihood of default by the Company and its counterparties. As of September 30, 20192020 and December 31, 2018,2019, the Company has assessed the significance of the impact of the credit valuation adjustments on the overall valuation of its derivative positions and has determined that the credit valuation adjustments are not significant to the overall valuation of the Company’s derivatives. As a result, the Company has determined that its derivative valuations in their entirety are classified in Level 2 of the fair value hierarchy.
The valuation of derivative instruments is determined using a discounted cash flow analysis on the expected cash flows of each derivative. This analysis reflects the contractual terms of the derivatives, including the period to maturity, as well as observable market-based inputs, including interest rate curves and implied volatilities. In addition, credit valuation adjustments are incorporated into the fair values to account for the Company’s potential nonperformance risk and the performance risk of the counterparties.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

Financial Instruments Measured at Fair Value on a Recurring Basis
The following table presents information about the Company’s assets and liabilities (including derivatives that are presented net) measured at fair value on a recurring basis as of September 30, 20192020 and December 31, 2018,2019, aggregated by the level in the fair value hierarchy within which those instruments fall.
(In thousands) 
Quoted Prices in Active Markets
Level 1
 
Significant Other Observable Inputs
Level 2
 
Significant Unobservable Inputs
Level 3
 Total
September 30, 2019        
Foreign currency forwards, net (GBP & EUR) $—
 $7,332
 $—
 $7,332
Interest rate swaps, net (USD,GBP & EUR) $—
 $(10,497) $—
 $(10,497)
December 31, 2018        
Foreign currency forwards, net (GBP & EUR) $—
 $5,472
 $—
 $5,472
Interest rate swaps, net (USD,GBP & EUR) $—
 $(628) $—
 $(628)
2018 OPP (1)
 $—
 $—
 $(18,804) $(18,804)

(1) Effective with the adoption of ASU 2018-07 on January 1, 2019, the 2018 OPP is no longer measured at fair market value on a recurring basis (see Note 2 — Summary of Significant Accounting Policies — Recently Issued Accounting Pronouncements and seeNote 12 — Equity-Based Compensation for additional information).
The valuation of the 2018 OPP was determined using a Monte Carlo simulation. This analysis reflected the contractual terms of the 2018 OPP, including the performance periods and total return hurdles, as well as observable market-based inputs, including interest rate curves, and unobservable inputs, such as expected volatility. As a result, the Company determined that the 2018 OPP valuation in its entirety was classified in Level 3 of the fair value hierarchy as of December 31, 2018.
(In thousands)Quoted Prices in Active Markets
Level 1		Significant Other Observable Inputs
Level 2		Significant Unobservable Inputs
Level 3		Total
September 30, 2020
Foreign currency forwards, net (GBP & EUR)$0 $424 $0 $424 
Interest rate swaps, net (USD,GBP & EUR)$0 $(17,072)$0 $(17,072)
December 31, 2019
Foreign currency forwards, net (GBP & EUR)$0 $2,726 $0 $2,726 
Interest rate swaps, net (USD,GBP & EUR)$0 $(6,082)$0 $(6,082)
A review of the fair value hierarchy classification is conducted on a quarterly basis. Changes in the type of inputs may result in a reclassification for certain assets. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the nine months ended September 30, 2019.
Level 3 Valuations
As discussed above, the 2018 OPP is no longer measured at fair value on a recurring basis and in accordance with newly adopted accounting rules is being amortized on a straight-line basis beginning on January 1, 2019 (see Note 2 — Summary of Significant Accounting Policies — Recently Issued Accounting Pronouncements and seeNote 12 — Equity-Based Compensation for additional information).2020.
Financial Instruments not Measured at Fair Value on a Recurring Basis
The Company is required to disclose the fair value of financial instruments for which it is practicable to estimate value. The faircarrying value of short-term financial instruments such as cash and cash equivalents, restricted cash, due to/from related parties,parties, prepaid expenses and other assets, accounts payable, deferred rentaccrued expenses and dividends payable approximateapproximates their carryingfair value on the consolidated balance sheets due to their short-term nature. The fair valuesAs of September 30, 2020 the Company’s remaining financial instruments that are not reported at fair value onof advances to the consolidated balance sheets are reported below.
    September 30, 2019 December 31, 2018
(In thousands) Level Carrying Amount Fair Value Carrying Amount Fair Value
Mortgage notes payable (1) (2)
 3 $1,366,818
 $1,439,910
 $1,129,807
 $1,157,710
Revolving Credit Facility (3)
 3 $101,405
 $101,437
 $363,894
 $365,591
Term Loan (3) (4)
 3 $389,885
 $396,867
 $278,727
 $283,558

(1)
Carrying value includes $1.4 billion gross mortgage notes payable less $0.1Company under the Credit Facility was $266.3 million, which is approximately equivalent to the carrying value of $264.0 million of mortgage discounts and $15.5 million of deferred financing costs as of September 30, 2019.
(2)
Carrying value includes $1.1 billion gross mortgage notes payable less $0.6 million of mortgage discounts and $9.7 million of deferred financing costs as of December 31, 2018.
(3)
Both the Revolving Credit Facility and the Term Loan are part of the Credit Facility (see Note 5 — Credit Facilities for more information).
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020. As of December 31, 2019
(Unaudited)

(4)
Carrying value includes $392.5 million and $282.1 million gross Term Loan payable less $2.6 million and $3.3 million of deferred financing costs as of September 30, 2019 and December 31, 2018, respectively.
the $199.1 million carrying value of advances under the Credit Facility approximated their fair value. The fair value of the Company’s mortgage notes payable as of September 30, 2020 and December 31, 2019 were $1.5 billion and $1.3 billion, respectively. The fair value of gross mortgage notes payable the Revolving Credit Facility and the Term Loan are estimated using a discounted cash flow analysis,is based on estimates of market interest rates. This approach relies on unobservable inputs and therefore is classified as Level 3 in the Advisor’s experience with similar types of borrowing arrangements.fair value hierarchy.
Note 7 — Derivatives and Hedging Activities
Risk Management Objective of Using Derivatives
The Company may use derivative financial instruments, including interest rate swaps, caps, options, floors and other interest rate derivative contracts, to hedge all or a portion of the interest rate risk associated with its borrowings. Certain of the
20
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
Company’s foreign operations expose the Company to fluctuations of foreign interest rates and exchange rates. These fluctuations may impact the value of the Company’s cash receipts and payments in terms of the Company’s functional currency. The Company enters into derivative financial instruments to protect the value or fix the amount of certain obligations in terms of its functional currency, the USD.
The principal objective of such arrangements is to minimize the risks and/or costs associated with the Company’s operating and financial structure as well as to hedge specific anticipated transactions. The Company does not intend to utilize derivatives for speculative or other purposes other than interest rate and currency risk management. The use of derivative financial instruments carries certain risks, including the risk that any counterparty to a contractual arrangement may not be able to perform under the agreement. To mitigate this risk, the Company only enters into a derivative financial instrument with a counterparty with a high credit rating with a major financial institution which the Company and its affiliates may also have other financial relationships with. The Company does not anticipate that any such counterparty will fail to meet its obligations.
The table below presents the fair value of the Company’s derivative financial instruments as well as their classification on the consolidated balance sheets as of September 30, 20192020 and December 31, 2018:2019:
(In thousands) Balance Sheet Location September 30,
2019		 December 31,
2018
Derivatives designated as hedging instruments:      
Interest rate “pay-fixed” swaps (USD) Derivative (liabilities) assets, at fair value $(1,516) $3,258
Interest rate “pay-fixed” swaps (GBP) Derivative liabilities, at fair value (6,503) (1,157)
Interest rate “pay-fixed” swaps (EUR) Derivative liabilities, at fair value (2,373) (1,443)
Total   $(10,392) $658
Derivatives not designated as hedging instruments:      
Foreign currency forwards (GBP-USD) Derivative assets, at fair value $3,846
 $3,247
Foreign currency forwards (GBP-USD) Derivative liabilities, at fair value (141) —
Foreign currency forwards (EUR-USD) Derivative assets, at fair value 3,627
 2,225
Interest rate swaps (EUR) Derivative liabilities, at fair value (105) (1,286)
Total   $7,227
 $4,186

(In thousands)Balance Sheet LocationSeptember 30,
2020		December 31,
2019
Derivatives designated as hedging instruments:
Interest rate “pay-fixed” swaps (USD)Derivative liabilities, at fair value$(5,495)$(939)
Interest rate “pay-fixed” swaps (GBP)Derivative assets, at fair value0 366 
Interest rate “pay-fixed” swaps (GBP)Derivative liabilities, at fair value(9,173)(4,524)
Interest rate “pay-fixed” swaps (EUR)Derivative assets, at fair value0 228 
Interest rate “pay-fixed” swaps (EUR)Derivative liabilities, at fair value(2,404)(1,139)
Total$(17,072)$(6,008)
Derivatives not designated as hedging instruments:
Foreign currency forwards (GBP-USD)Derivative assets, at fair value$1,018 $1,205 
Foreign currency forwards (GBP-USD)Derivative liabilities, at fair value(1,020)(831)
Foreign currency forwards (EUR-USD)Derivative assets, at fair value880 2,352 
Foreign currency forwards (EUR-USD)Derivative liabilities, at fair value(454)0 
Interest rate swaps (EUR)Derivative liabilities, at fair value0 (74)
Total$424 $2,652 
Cash Flow Hedges of Interest Rate Risk
The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Company primarily uses interest rate swaps. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
Effective January 1, 2019, all All of the changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in accumulated other comprehensive income (loss)(“AOCI”) and are subsequently reclassified into earnings in the period that the hedged forecasted transaction impacts earnings. Prior to January 1, 2019, the ineffective portion of the change in fair value of the derivatives was recognized directly in earnings. During the three and nine months ended September 30, 2019,2020, such derivatives were used to hedge the variable cash flows associated with variable-rate debt.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

Additionally, during the three and nine months ended September 30, 2019, and 2018, the Company accelerated the reclassification of amounts in other comprehensive income to earnings as a result of the hedged forecasted transactions becoming probable not to occur. During the three and nine months ended September 30, 2019, the accelerated amounts were losses of $0.1 million and $0.1 million, respectively. During the three and nine months ended September 30, 2018, the accelerated amounts were losses of $90,899 and $0.1 million, respectively. Amounts reported in accumulated other comprehensive incomeAOCI related to derivatives will be reclassified to interest expense as interest payments are made on the Company’s variable-rate debt. During the next 12 months ending September 30, 2021, the Company estimates that an additional $2.0$7.1 million will be reclassified from other comprehensive income as an increase to interest expense.

21
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
As of September 30, 20192020 and December 31, 2018,2019, the Company had the following outstanding interest rate derivatives that were designated as cash flow hedges of interest rate risk:
September 30, 2020December 31, 2019
DerivativesNumber of
Instruments		Notional AmountNumber of
Instruments		Notional Amount
(In thousands)(In thousands)
Interest rate “pay-fixed” swaps (GBP)49$284,033 49$290,965 
Interest rate “pay-fixed” swaps (EUR)22613,141 16521,471 
Interest rate “pay-fixed” swaps (USD)9238,000 3150,000 
Total80$1,135,174 68$962,436 
  September 30, 2019 December 31, 2018
Derivatives 
Number of
Instruments
 Notional Amount 
Number of
Instruments
 Notional Amount
    (In thousands)   (In thousands)
Interest rate “pay-fixed” swaps (GBP) 49 $271,387
 48 $234,312
Interest rate “pay-fixed” swaps (EUR) 22 630,399
 13 212,255
Interest rate “pay-fixed” swaps (USD) 3 150,000
 3 150,000
Total 74 $1,051,786
 64 $596,567

In connection with a multi-property loan which refinanced all of the Company’s mortgage notes payable secured by itsthe Company’s properties located in France during the second quarter of 2020 (see Note 4 — Mortgage Notes Payable, Net), the Company terminated 2 interest rate swaps with an aggregate notional amount of €14.5 million for a payment of approximately $0.1 million. Amounts recorded to AOCI and interest expense following these terminations was not significant.
In connection with a multi-property loan which refinanced all of the Company’s mortgage notes payable secured by the Company’s properties located in Finland during the first quarter of 2019, the Company terminated 5 interest rate swaps with an aggregate notional amount of €57.4 million for a payment of approximately $0.8 million. Following these terminations, $0.7 million was recorded in AOCI and is being recorded as an adjustment to interest expense over the term of the original EUR hedges and respective borrowings. Of the amount recorded in AOCI following these terminations, $0.1$0.1 million and $0.3 million was recorded as an increase to interest expense for the three and nine months ended September 30, 20192020, respectively, and approximately $0.4 millionan immaterial amount remained in AOCI as of September 30, 2019.2020.
In connection with a multi-property loan which refinanced all of the Company’s mortgage notes payable denominated in GBP during the third quarter of 2018, the Company terminated 15 interest rate swaps with an aggregate notional amount of £208.8 million and 1 floor with a notional amount of £28.1 million. Following these terminations, the amount relating to GBP borrowings still outstanding of approximately $1.2 million was recorded in AOCI and is being recorded as an adjustment to interest expense over the term of the original GBP hedges and respective borrowings. Of the amount recorded in AOCI following these terminations, $0.1approximately $18,000 and $0.2 million was recorded as an increase to interest expense for the three and nine months ended September 30, 2019 and approximately $0.3 million remained in AOCI as2020. As of September 30, 2019.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

2020, there is 0 balance remaining in AOCI related to these terminations.
The table below details the location in the consolidated financial statements of the gain or loss recognized on interest rate derivatives designated as cash flow hedges for the three and nine months ended September 30, 20192020 and 2018.2019.
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Amount of (loss) gain recognized in accumulated other comprehensive income (loss) from derivatives
 $(4,139) $2,018
 $(13,250) $8,656
Amount of loss reclassified from accumulated other comprehensive income (loss) into income as interest expense $(660) $(755) $(1,640) $(3,090)
Amount of loss recognized in income on derivative instruments (ineffective portion, reclassifications of missed forecasted transactions and amounts excluded from effectiveness testing) $—
 $16
 $—
 $(96)
Total interest expense recorded in the consolidated statement of operations $16,154
 $15,104
 $47,005
 $42,494

Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2020201920202019
Amount of loss recognized in AOCI from derivatives
$(1,207)$(4,139)$(14,290)$(13,250)
Amount of loss reclassified from AOCI into income as interest expense$(1,729)$(660)$(3,843)$(1,640)
Total interest expense recorded in the consolidated statements of operations$18,677 $16,154 $52,646 $47,005 
Net Investment Hedges
The Company is exposed to fluctuations in foreign currency exchange rates on property investments in foreign countries which pay rental income, incur property related expenses and hold debt instruments in currencies other than its functional currency, the USD. Through the third quarter of 2018, the Company used foreign currency derivatives including cross currency swaps to hedge its exposure to changes in foreign exchange rates on certain of its foreign investments. Cross currency swaps involve fixing the applicable exchange rate for delivery of a specified amount of foreign currency on specified dates.
Effective January 1, 2019, forFor derivatives designated as net investment hedges, all of the changes in the fair value of the derivatives, including the ineffective portion of the change in fair value of the derivatives, if any, are reported in AOCI (outside of earnings) as part of the cumulative translation adjustment. Prior to January 1,Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated. As of September 30, 2020 and December 31, 2019 the ineffectiveCompany did not have foreign currency derivatives that were designated as net investment hedges used to hedge its net investments in foreign
22
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
operations and during the nine months ended September 30, 2020 and the year ended December 31, 2019, the Company did not use foreign currency derivatives that were designated as net investment hedges.
Foreign Denominated Debt Designated as Net Investment Hedges
Effective May 17, 2015, all foreign currency denominated borrowings under the Credit Facility were designated as net investment hedges. As such, the effective portion of changes in value due to currency fluctuations are reported in AOCI (outside of earnings) as part of the cumulative translation adjustment. The undesignated portion of the change in fair value of the derivatives if any, wasis recognized directly in earnings. Amounts are reclassified out of AOCI into earnings when the hedged net investment is either sold or substantially liquidated.
As ofliquidated, or if the Company should no longer possess a controlling interest. The Company records adjustments to earnings for currency impacts related to undesignated excess positions, if any. There were no undesignated excess positions at any time during the three and nine months ended September 30, 20192020 and December 31, 2018 the Company did not have foreign currency derivatives that were designated as net investment hedges used to hedge its net investments in foreign operation.2019.
Non-designated Derivatives
The Company is exposed to fluctuations in the exchange rates of its functional currency, the USD, against the GBP and the EUR. The Company useshas used and may continue to use foreign currency derivatives, including options, currency forward and cross currency swap agreements, to manage its exposure to fluctuations in GBP-USD and EUR-USD exchange rates. While these derivatives are economically hedging the fluctuations in foreign currencies, they do not meet the strict hedge accounting requirements to be classified as hedging instruments. Changes in the fair value of derivatives not designated as hedges under qualifying hedging relationships are recorded directly in net income (loss). The Company recorded a loss of $2.5 million and a gain of $0.4 million for the three and nine months ended September 30, 2020, respectively. The Company recorded gains of $3.1 million and $4.8 million for the three and nine months ended September 30, 2019, respectively. The Company recorded gains of $1.4 million and $4.8 million for the three and nine months ended September 30, 2018, respectively.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

As of September 30, 20192020 and December 31, 2018,2019, the Company had the following outstanding derivatives that were not designated as hedges under qualifying hedging relationships.
  September 30, 2019 December 31, 2018
Derivatives 
Number of
Instruments
 Notional Amount 
Number of
Instruments
 Notional Amount
    (In thousands)   (In thousands)
Foreign currency forwards (GBP-USD) 45 $44,275
 50 $43,000
Foreign currency forwards (EUR-USD) 36 32,478
 38 39,500
Interest rate swaps (EUR) 1 10,371
 5 138,625
Total 82 $87,124
 93 $221,125

September 30, 2020December 31, 2019
DerivativesNumber of
Instruments		Notional AmountNumber of
Instruments		Notional Amount
(In thousands)(In thousands)
Foreign currency forwards (GBP-USD)38$29,605 38$38,898 
Foreign currency forwards (EUR-USD)3321,104 3227,478 
Interest rate swaps (EUR)00 110,655 
Total71$50,709 71$77,031 
Offsetting Derivatives
The table below presents a gross presentation, the effects of offsetting, and a net presentation of the Company’s derivatives as of September 30, 20192020 and December 31, 2018.2019. The net amounts of derivative assets or liabilities can be reconciled to the tabular disclosure of fair value. The tabular disclosure of fair value provides the location that derivative assets and liabilities are presented on the accompanying consolidated balance sheets.
          Gross Amounts Not Offset on the Balance Sheet  

(In thousands)
 Gross Amounts of Recognized Assets Gross Amounts of Recognized (Liabilities) Gross Amounts Offset on the Balance Sheet Net Amounts of (Liabilities) Assets presented on the Balance Sheet Financial Instruments Cash Collateral Received (Posted) Net Amount
September 30, 2019 $7,473
 $(10,638) $—
 $(3,165) $(141) $—
 $(3,306)
December 31, 2018 $8,730
 $(3,886) $—
 $4,844
 $141
 $—
 $4,985

Gross Amounts Not Offset on the Balance Sheet

(In thousands)
Gross Amounts of Recognized AssetsGross Amounts of Recognized (Liabilities)Gross Amounts Offset on the Balance SheetNet Amounts of (Liabilities) Assets presented on the Balance SheetFinancial InstrumentsCash Collateral Received (Posted)Net Amount
September 30, 2020$1,898 $(18,546)$0 $(16,648)$0 $0 $(16,648)
December 31, 2019$4,151 $(7,507)$0 $(3,356)$0 $0 $(3,356)
In addition to the above derivative arrangements, the Company also uses non-derivative financial instruments to hedge its exposure to foreign currency exchange rate fluctuations as part of its risk management program, including foreign denominated debt issued and outstanding with third parties to protect the value of its net investments in foreign subsidiaries against exchange rate fluctuations. The Company has drawn, and expects to continue to draw, foreign currency advances under the Credit Facility
23
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
to fund certain investments in the respective local currency which creates a natural hedge against the original equity invested in the real estate investments, removing the need for the final cross currency swaps (see Note 4 — Mortgage Notes Payable, Net). swaps. 
Credit-risk-related Contingent Features
The Company has agreements with each of its derivative counterparties that contain a provision where if the Company either defaults or is capable of being declared in default on any of its indebtedness, then the Company could also be declared in default on its derivative obligations.
As of September 30, 2019,2020, the fair value of derivatives in a net liability positionposition including accrued interest but excluding any adjustment for nonperformance risk related to these agreements was $11.5$19.3 million. As of September 30, 2019,2020, the Company had not posted any collateral related to these agreements and was not in breach of any agreement provisions. If the Company had breached any of these provisions, it could have been required to settle its obligations under the agreements at their aggregate termination value.
Note 8 — Stockholders' Equity
Common Stock
As of September 30, 20192020 and December 31, 2018,2019, the Company had 89.5 million89,614,601 and 76.1 million89,458,752, respectively, shares of Common Stock issued and outstanding respectively,including restricted shares of Common Stock (“Restricted Shares”) and excluding unvested restricted stock units in respect of shares of Common Stock (“RSUs”) and long-term incentive plan units of limited partner interest in the OP (“LTIP Units”). LTIP Units may be convertible into shares of Common Stock in the future.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

ATM Program — Common Stock
The Company has an “at the market” equity offering program (the “Common Stock ATM Program”) pursuant to which the Company may sell shares of Common Stock, from time to time through its sales agents. During the three months ended March 31, 2019, the Company sold 7,759,322 shares of Common Stock through the Common Stock ATM Program for gross proceeds of $152.8 million, before commissions paid of $1.5 million and additional issuance costs of $0.8 million. Following these sales, the Company had raised all $175.0 million contemplated by its existing equity distribution agreement related to the Common Stock ATM Program. In February 2019, the Company terminated its existing equity distribution agreement and entered into a new equity distribution agreement with substantially the same sales agents on substantially the same terms. During the three months ended September 30, 2019, the Company sold 5,596,452 shares of Common Stock under the new equity distribution agreement for gross proceeds of $109.9 million, before commissions paid of $1.6 million and additional issuance costs of $0.2 million. In total, during the nine months ended September 30, 2019, the Company sold 13,555,774 shares of Common Stock for gross proceeds of $262.6 million, before commissions paid of $3.1 million and additional issuance costs of $1.0 million.
During the three and nine months ended September 30, 2018, theThe Company sold 164,927did 0t sell any shares of Common Stock through the Common Stock ATM Program for gross proceeds of $3.5 million, before commissions paid of $35,140 and additional issuance costs of $0.3 million.
Underwriting Agreement - Common Stock
On August 20, 2018,during the Company completed the issuance and sale of 4,600,000 shares of Common Stock (including 600,000 shares issued and sold pursuant to the underwriters' exercise of their option to purchase additional shares in full) in an underwritten public offering at a price per share of $20.65. The gross proceeds from this offering were $95.0 million before deducting the underwriting discount of $3.8 million and additional offering expenses of $0.3 million.three or nine months ended September 30, 2020.
Preferred Stock
The Company is authorized to issue up to 16,670,00030,000,000 shares of Preferred Stock, of which itStock.
•The Company has classified and designated 13,409,6509,959,650 shares of its authorized Preferred Stock as authorized shares of its 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series A Preferred StockStock”), as of September 30, 20192020 and December 31, 2018.2019. The Company had 6,682,448 and 5,416,8906,799,467 shares of Series A Preferred Stock issued and outstanding, as of September 30, 20192020 and December 31, 2018,2019.
•The Company has classified and designated 11,450,000 shares of its authorized Preferred Stock as authorized shares of its 6.875% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series B Preferred Stock”), as of September 30, 2020 and December 31, 2019. The Company had 3,635,128 and 3,450,000 shares of Series B Preferred Stock issued and outstanding, as of September 30, 2020 and December 31, 2019, respectively.
•The Company has classified and designated 100,000 shares of its authorized Preferred Stock as authorized shares of its Series C preferred stock, $0.01 par value (“Series C Preferred Stock”), as of September 30, 2020. NaN shares of Series C Preferred Stock were authorized as of December 31, 2019 and 0 shares of Series C Preferred Stock were issued and outstanding as of September 30, 2020 and December 31, 2019.
24
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
ATM ProgramPrograms — Series A Preferred Stock and Series B Preferred Stock
In March 2018, the Company established an “at the market” equity offering program for its Series A Preferred Stock (the “Preferred“Series A Preferred Stock ATM Program”) pursuant to which the Company maywas permitted to raise aggregate sales proceeds of $200.0 million through sales of shares of Series A Preferred Stock from time to time through its sales agents. During the three months ended September 30, 2019, the Company sold 724,600 shares of Series A Preferred Stock through the Series A Preferred Stock ATM Program for gross proceeds of $18.5 million, before commissions paid of approximately $0.3 million and additional issuance costs of approximately $0.1 million. During the nine months ended September 30, 2019, the Company sold 1,265,558 shares of Series A Preferred Stock through the Series A Preferred Stock ATM Program for gross proceeds of $32.3 million, before commissions paid of approximately $0.5 million and additional issuance costs of approximately $0.2 million. In November 2019, the Company terminated the Series A Preferred Stock ATM Program.
In December 2019, the Company established an “at the market” equity offering program for its Series B Preferred Stock (the “Series B Preferred Stock ATM Program”) pursuant to which the Company may raise aggregate sales proceeds of $200 million through sales of shares of Series B Preferred Stock from time to time through its sales agents. During the three and nine months ended September 30, 2018,2020, the Company sold 3,225185,128 shares of Series AB Preferred Stock through the Series B Preferred Stock ATM Program for gross proceeds of $81,009,$4.6 million, before commissions paid of $1,215approximately $70,000 and additional issuance costs of $0.1 million. During the nine months ended September 30, 2018, the Company sold 7,240 shares of Series A Preferred Stock through the Preferred Stock ATM Program for gross proceeds of $0.2 million, before commissions paid of $2,724 and additional issuance costs of $0.4 million.
On November 8, 2019, the Company delivered a notice to the agents under the Preferred Stock ATM Program terminating the equity distribution agreement related to the Preferred Stock ATM Program effective on November 12, 2019. See Note 14 — Subsequent Events for additional information.
Dividends
Common Stock Dividends
Historically, and through March 31, 2019,2020, the Company generally paid dividends on Common Stock on the 15th day of each month (or, if not a business day, the next succeeding business day) to common stockholders of record on the applicable record date during the month at an annualized rate of $2.13 per share or $0.1775$0.5325 per share on a monthlyquarterly basis. Prior to July 2018, the record date for the Company’s regular dividend was generally the 8thday of the applicable month. On April 5, 2019,In March 2020, the Company’s board of directors approved a change in the dividend to an annual rate of $1.60 per share or $0.40 per share on a quarterly basis, which became effective in the second quarter of 2020 with the Company’s Common StockApril 1, 2020 dividend policy. Accordingly, consistent with its peers, the Company anticipates paying future dividendsdeclaration.
Dividends authorized by itsthe Company’s board of directors on shares of its Common Stockare paid on a quarterly
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

basis in arrears on the 15th day of the first month following the end of each fiscal quarter (unless otherwise specified) to common stockholders of record on the record date for such payment. This change affects the frequency of dividend payments only, and does not impact the annualized dividend rate on Common Stock of $2.13. The Company’s board of directors may alter the amounts of dividends paid or suspend dividend payments at any time prior to declaration and therefore dividend payments are not assured. For purposes of the presentation of information herein, the Company may refer to distributions by the OP on ordinary units of limited partner interest in the OP Units(“OP Units”) and LTIP Units as dividends. In addition, see Note 5 — Credit Facilities for additional information on the restrictions on the payment of dividends and other distributions imposed by the Credit Facility.
Series A Preferred Stock DividendDividends
Dividends on Series A Preferred Stock accrue in an amount equal to $0.453125 per share per quarter to Series A Preferred Stock holders, which is equivalent to 7.25% of the $25.00 liquidation preference per share of Series A Preferred Stock per annum. Dividends on the Series A Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day) to holders of record at the close of business on the record date set by the Company’s board of directors.
Series B Preferred Stock Dividends
Dividends on Series B Preferred Stock accrue in an amount equal to $0.429688 per share per quarter to Series B Preferred Stock holders, which is equivalent to 6.875% of the $25.00 liquidation preference per share of Series B Preferred Stock per annum. Dividends on the Series B Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day) to holders of record at the close of business on the record date set by the Company’s board of directors.
Stockholder Rights Plan
In April 2020, the Company announced that its board of directors which must be not more than 30 nor fewer than 10 days priorapproved a short-term stockholder rights plan (the “Plan”) to protect the long-term interests of the Company. The Company adopted the Plan due to the applicable payment date.substantial volatility in the trading of the Common Stock that has resulted from the ongoing COVID-19 pandemic. The adoption of the Plan is intended to allow the Company to realize the long-term value of the Company’s assets by protecting the Company from the actions of third parties that the Company’s board determines are not in the best interest of the Company. By adopting the Plan, the Company believes that it has best positioned itself to navigate through this period of volatility brought on by COVID-19. The Plan is designed to reduce the likelihood that any person or group (including a group of persons that are acting in concert with each other) would gain control of the Company through open market accumulation of stock by imposing significant penalties upon
25
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
any person or group that acquires 4.9% or more of the outstanding shares of Common Stock without the approval of the Company’s board of directors. In connection with the adoption of the Plan, the Company’s board of directors authorized a dividend of one preferred share purchase right for each outstanding share of Common Stock to stockholders of record on April 20, 2020 to purchase from the Company one one-thousandth of a share of Series C Preferred Stock for an exercise price of $50.00, once the rights become exercisable, subject to adjustment as provided in the related rights agreement. By the terms of the Plan, the rights will initially trade with Common Stock and will generally only become exercisable on the 10th business day after the Company’s board of directors become aware that a person or entity has become the owner of 4.9% or more of the shares of Common Stock or the commencement of a tender or exchange offer which would result in the offeror becoming an owner of 4.9% or more of the Common Stock. The Plan expires on April 8, 2021 unless the Plan is amended or the rights are earlier exercised, exchanged or redeemed. The adoption of the Plan did not have a material impact on the Company's financial statements and its earnings per share.

26
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
Note 9 — Commitments and Contingencies
Lessee Arrangements — Ground Leases
The Company leases land under ground leases for 810 of its properties with lease durations ranging from 1615 to 8597 years as of September 30, 2019. On January 1, 2019, the Company adopted ASU 2016- 02 and recorded ROU assets and lease liabilities related to these2020, which includes 2 ground leases which are all considered operating leases underacquired during the new standard (see Note 2 — Summarythird quarter of Significant Accounting Polices for additional information on the impact of adopting the new standard).
2020. As of September 30, 2019,2020, the Company’s balance sheet includes ROU assets and liabilities of $49.3$56.2 million and $23.5$24.5 million, respectively, which are included in prepaid expenses and other assets and accounts payable and accrued expenses, respectively. In determining operating ROU assets and lease liabilities for the Company’s existing operating leases upon the adoption of the new lease guidance as well as for new operating leases in the current period, if any, the Company was required to estimate an appropriate incremental borrowing rate on a fully-collateralized basis for the terms of the leases. Since the terms of the Company’s ground leases are significantly longer than the terms of borrowings available to the Company on a fully-collateralized basis, the Company’s estimate of this rate required significant judgment.
The Company’s ground operating leases have a weighted-average remaining lease term of approximately 33.332.3 years and a weighted-average discount rate of 4.33% as of September 30, 2019.2020. For the three and nine months ended September 30, 2019,2020, the Company paid cash of approximately $0.3approximately $0.4 million and $1.0$1.1 million for amounts included in the measurement of lease liabilities and recorded expense of $0.3 million and $1.0 million, respectively, on a straight-line basis in accordance with the standard. The lease expense is recorded in property operating expenses in the consolidated statements of operations and comprehensive loss. The Company did not enter into any additional ground leases during the quarter ended September 30, 2019.2020. The Company incurred rent expense on ground leases of $0.4$0.3 million and $1.1$1.0 million during the three and nine months ended September 30, 2018.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019,
(Unaudited)

 respectively.
The following table reflects the base cash rental payments due from the Company as of September 30, 2019:2020:
(In thousands)
Future Base Rent Payments (1)
2020 (remainder)$361 
20211,445 
20221,445 
20231,445 
20241,450 
Thereafter41,905 
Total minimum lease payments (2)
48,051 
Less: Effects of discounting(23,593)
Total present value of lease payments$24,458 
(In thousands) 
Future Base Rent Payments (1)
2019 (remainder) $346
2020 1,385
2021 1,385
2022 1,385
2023 1,385
2024 1,390
Thereafter 40,189
Total minimum lease payments (2)
 47,465
Less: Effects of discounting (23,918)
Total present value of lease payments $23,547
________

(1)Assumes exchange rates of £1.00 to $1.29 for GBP and €1.00 to $1.17 for EUR as of September 30, 2020 for illustrative purposes, as applicable.
(2)(1)
Assumes exchange rates of £1.00 to $1.23 for GBP and €1.00 to $1.09 for EUR as of September 30, 2019 for illustrative purposes, as applicable.
(2)
Ground lease rental payments due for the Company’s ING Amsterdam lease are not included in the table above as the Company’s ground for this property is prepaid through 2050.

The following table reflects the base cash rental payments due fromfor the CompanyCompany’s ING Amsterdam lease are not included in the table above as of December 31, 2018:
(In thousands) 
Future Base Rent Payments (1)
2019 $1,371
2020 1,371
2021 1,371
2022 1,371
2023 1,371
Thereafter 40,519
Total minimum lease payments (2)
 47,374
Less: Effects of discounting (23,370)
Total present value of lease payments $24,004
(1)the Company’s ground for this property is prepaid through 2050.
Assumes exchange rates of £1.00 to $1.27 for GBP and €1.00 to $1.14 for EUR as of December 31, 2018 for illustrative purposes, as applicable.
(2)
Ground lease rental payments due for the Company’s ING Amsterdam lease are not included in the table above as the Company’s ground for this property is prepaid through 2050.
Litigation and Regulatory Matters
In the ordinary course of business, the Company may become subject to litigation, claims and regulatory matters. There are no material legal or regulatory proceedings pending or known to be contemplated against the Company.
On January 16,25, 2018, the Company notified Moor Park Capital Partners LLP (the “Former Service Provider”), an entity that had, subject to the Advisor's oversight and pursuant to a service provider agreement, provided certain real estate and investment-related services with respect to the Company’s investments in Europe, that it was being terminated, and this termination became effective as of March 17, 2018. On January 25, 2018, the Former Service Provider filed a complaint against (i) the Company and the OP; (ii) the Property Manager, Global Net Lease Special Limited Partner, LLC, an affiliate of AR Global that directly owns the Advisor and the Property Manager, and the Advisor (collectively, the “GNL Advisor Defendants”);Advisor; and (iii) AR Capital Global Holdings, LLC, and AR Global, (together, the “AR Defendants”), in the Supreme Court of the State of New York, County of New York (“New York Supreme Court”). The complaint alleged that the notice sent to the Former Service Provider by the Company on January 15, 2018, terminating the service provider agreement, was a pretext to enable the AR Defendants to seize the Former Service Provider’s business. The complaint alleged breach of contract against the Company, the OP and the GNL Advisor Defendants, and tortious interference against the AR Defendants. The complaint sought: (i) monetary damages against the defendants, (ii) to enjoin the termination of the Service Provider Agreement, and (iii) judgment declaring the termination to be
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

void.York. On March 4, 2019, the parties entered into a settlement agreement pursuant to which the lawsuit was dismissed. The Company paid $7.4 million to the Former Service Provider pursuant to the settlement agreement. The Company recorded a reserve of $7.4 million related to the then anticipated settlement payment during the fourth quarter of 2018 and subsequently paid the settlement amount during the first quarter of 2019. During the nine months ended September 30, 2019, the Company incurred approximately $1.0 million in additional legal expenses related to this litigation. These costs are included in acquisition, transaction and other costs in the consolidated statement of operations.
27
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
Environmental Matters
In connection with the ownership and operation of real estate, the Company may potentially be liable for costs and damages related to environmental matters. As of September 30, 2019,2020, the Company had not been notified by any governmental authority of any non-compliance, liability or other claim, and is not aware of any other environmental condition that it believes will have a material adverse effect on the results of operations.
Note 10 — Related Party Transactions
As of September 30, 20192020 and December 31, 2018,2019, AR Global and certain affiliates owned, in the aggregate, 35,900 shares of outstanding Common Stock. The Advisor, which is an affiliate of AR Global, and its affiliates currently may incur and, the Former Service Provider previously incurred costs and fees on behalf of the Company. As of September 30, 20192020 and December 31, 2018,2019, the Company had $20,000$0.4 million and $16,000,$0.4 million, respectively, of receivables from former affiliates of the Advisor.Advisor and $24,000 and $0.3 million of payables to their affiliates, respectively.
As of September 30, 2019,2020, AR Global indirectly owned 95% of the membership interests in the Advisor and Scott J. Bowman, the Company’s former chief executive officer and president, directly owned the other 5% of the membership interests in the Advisor. James L. Nelson, the Company’s chief executive officer and president, holds a non-controlling profit interest in the Advisor and Property Manager. Mr. Nelson was appointed the Company’s chief executive officer and president, effective as of August 8, 2017.
The Company is the sole general partner of the OP and thereOP. There were no OP Units held by anyone other than the Company outstanding as of September 30, 20192020 and December 31, 2018.2019.
In addition, theThe Company paid $0.1 million and $0.4$0.3 million in distributions to the Advisor as the sole holder of LTIP Units during the three and nine months ended September 30, 2019,2020, respectively, and the Company paid $0.2$0.1 million and $0.4 million in distributions related to LTIP Unitsunits during the three and nine months ended September 30, 2018, respectively. These distributions2019, respectively, which are included in accumulated deficit in the audited consolidated statements of equity. As of September 30, 20192020 and December 31, 2018,2019, the Company had no0 unpaid distributions on the LTIP Units.
During the third quarter of 2020, the Company granted Restricted Shares to employees of the Advisor or its affiliates who are involved in providing services to the Company, including the Company’s Chief Executive Officer and Chief Financial Officer. For additional information, see Note 12 — Equity-Based Compensation.
Fees Paid in Connection with the Operations of the Company
On June 2, 2015, concurrent with its listing on the New York Stock Exchange, the Company entered into the Advisory Agreement. The Advisory Agreement which was subsequentlymost recently amended on August 14, 2018May 6, 2020 (the “August Amendment”“Amendment”) and November 6, 2018 (the “November Amendment”). These amendments only revise the provisions regardingto temporarily lower the effective annual thresholds of Core AFFO Per Share (as defined in the Advisory Agreement)(1) that the Company must satisfy for the Advisor to be paid Incentive Compensation (as defined in the Advisory Agreement). in light of the unprecedented market disruption resulting from the COVID-19 pandemic.
Under the Advisory Agreement, the Company pays the Advisor the following fees in cash:
(i)    a base fee of $18.0 million per annum payable in cash monthly in advance:advance (“Minimum Base Management Fee”); and
(i)a base fee of $18.0 million per annum (“Minimum Base Management Fee”); and
(ii)a variable fee, equal to 1.25% per annum of the cumulative net proceeds realized by the Company from the issuance of any common equity, including any common equity issued in exchange for or conversion of preferred stock or exchangeable notes, as well as, from any other issuances of common, preferred, or other forms of equity of the Company, including units of any operating partnership (“Variable Base Management Fee”).
(ii)    a variable fee, equal to 1.25% per annum of the cumulative net proceeds realized by the Company from the issuance of any common equity, including any common equity issued in exchange for or conversion of preferred stock or exchangeable notes, as well as, from any other issuances of common, preferred, or other forms of common, preferred, or other forms of equity of the Company, including units of any operating partnership (“Variable Base Management Fee”).
Additionally, the Company pays the Advisor the Incentive Compensation an amount earned each quarter which is payable 50% payable in cash and 50% payable in shares of Common Stock (subject to certain lock up restrictions)., except for the period beginning April 1, 2020 and ending December 31, 2020, when it is payable in cash only. The Incentive Compensation is generally calculated on an annual basis for the 12-month period from July 1 to June 30 of each year, in quarterly installments,installments. The Incentive Compensation is subject to a final year-end adjustment after the performance period ends, such that the difference, if any, between the amount of the Incentive Compensation actually paid to the Advisor in the preceding year under the quarterly installments and the actual amount payable for the year is either repaid by or paid to the Advisor as applicable. Shares of Common Stock that wereare issued as a portion of any quarterly installment payment are retained and, for purposes of any repayment required to be made by the Advisor, have the value they had at the time of issuance and are adjusted in respect of any dividend or other distribution received with respect to those shares to allow recoupment of the same.
28
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)

Under the Advisory Agreement, prior to the August Amendment, the Incentive Compensation was equal to: (a) 15% of the Company’s Core AFFO (as defined in the Advisory Agreement) per weighted-average share of Common Stock outstanding for the applicable period (“Core AFFO Per Share”)(1) in excess of an incentive hurdle based on an annualized Core AFFO Per Share of $2.37, plus (b) 10% of the Core AFFO Per Share in excess of an incentive hurdle of an annualized Core AFFO Per Share of $3.08. The $2.37 and $3.08 incentive hurdles were subject to annual increases of 1% to 3%.
Under the Advisory Agreement, as amended by the August Amendment, the Incentive Fee Lower Hurdle (as defined in the Advisory Agreement) was decreased from $2.37 to (a) $2.15 for the 12 months endingended June 30, 2019, and (b) $2.25 for the 12 months ending June 30, 2020. Following the Amendment, the Incentive Fee Lower Hurdle is equal to (i) $1.6875 per share in the aggregate and $0.5625 per share per quarter for the period beginning July 1, 2019 and ending March 31, 2020; (ii) $1.35 per share in the aggregate and $0.45 per share per quarter for the period beginning April 1, 2020 and ending December 31, 2020; (iii) $1.125 per share in the aggregate and $0.5625 per share per quarter for the period beginning January 1, 2021 and ending June 30, 2021; and (iv) $2.25 per share in the aggregate and $0.5625 per share per quarter for the annual period beginning July 1, 2021. In addition, prior to the Amendment, the Incentive Fee Upper Hurdle (as defined in the Advisory Agreement) was decreased from $3.08 to (a) $2.79 for the 12 months endingended June 30, 2019, and (b) $2.92 for the 12 months ending June 30, 2020. Following the Amendment, the Incentive Fee Upper Hurdle is equal to (i) $2.19 per share in the aggregate and $0.73 per share per quarter for the period beginning July 1, 2019 and ending March 31, 2020; (ii) $1.75 per share in the aggregate and $0.583 per share per quarter for the period beginning April 1, 2020 and ending December 31, 2020; (iii) $1.46 per share in the aggregate and $0.73 per share per quarter for the period beginning January 1, 2021 and ending June 30, 2021; and (iv) $2.92 per share in the aggregate and $0.73 per share per quarter for the annual period beginning July 1, 2021. During the three and nine months ended September 30, 2020, $24,000 of Incentive Compensation was earned which was payable in cash only. During the three and nine months ended September 30, 2019, and 2018, 0 Incentive Compensation was earned.
In addition, the AugustThe Amendment revised the provisions in the Advisory Agreement governing adjustments to these annual thresholds. The annual thresholds may, beginning with effectalso extended from July 1, 2020 be increased each year into July 1, 2021 the sole discretion offirst date that the annual thresholds are subject to annual increases by a majority of the Company’s independent directors (in their good faith reasonable judgment, after consultation with the Advisor), by. The percentage at which independent directors may so increase the thresholds remains a percentage equal to between 0% and 3% instead of 1% and 3%. In addition, incommencing August 2023 and every five years thereafter, the Advisor will havehas a right to request that the Company’s independent directors reduce the then current Incentive Fee Lower Hurdle and Incentive Fee Upper Hurdle and make a determination whether any reduction in the annual thresholds is warranted.
The annual aggregate amount of the Minimum Base Management Fee and Variable Base Management Fee (collectively, the “Base Management Fee”) that may be paid under the Advisory Agreement are subject to varying caps based on assets under management (“AUM”)(2), as defined in the Advisory Agreement. The amount of the Base Management Fee to be paid under the Advisory Agreement is capped at the AUM for the preceding year multiplied by (a)0.75% if equal to or less than $3.0 billion; (b) 0.75% less (i) a fraction, (x) the numerator of which is the AUM for such specified period less $3.0 billion and (y) the denominator of which is $11.7 billion multiplied by 0.35% if AUM is greater than $3.0 billion but less than $14.6 billion; or (c) 0.4% if equal to or greater than $14.7 billion.

(1)
(1)For purposes of the Advisory Agreement, Core AFFO Per Share means for the applicable period (i) net income adjusted for the following items (to the extent they are included in net income): (a) real estate related depreciation and amortization; (b) net income from unconsolidated partnerships and joint ventures; (c) one-time costs that the Advisor deems to be non-recurring; (d) non-cash equity compensation (other than any Restricted Share Payments (as defined in the Advisory Agreement)); (e) other non-cash income and expense items; (f) certain non-cash interest expenses related to securities that are convertible to Common Stock; (g) gain (or loss) from the sale of investments; (h) impairment loss on real estate; (i) acquisition and transaction related costs (known as acquisition, transaction and other costs on the face of the Company’s income statement); (j) straight-line rent; (k) amortization of above and below market leases assets and liabilities; (l) amortization of deferred financing costs; (m) accretion of discounts and amortization of premiums on debt investments; (n) marked-to-market adjustments included in net income; (o) unrealized gain (loss) resulting from consolidation from, or deconsolidation to, equity accounting, (p) consolidated and unconsolidated partnerships and joint ventures and (q) Incentive Compensation, (ii) divided by the weighted-average outstanding shares of Common Stock on a fully-diluted basis for such period.
(2)For purposes of the Advisory Agreement, AUM means, for a specified period, an amount equal to (A) (i) the aggregate costs of the Company’s investments (including acquisition fees and expenses) at the beginning of such period (before reserves for depreciation of bad debts, or similar non-cash reserves) plus (ii) the aggregate cost of the Company’s investment at the end of such period (before reserves from depreciation or bad debts, or similar non-cash reserves) divided by (B) two (2).
For purposes of the Advisory Agreement, as amended by the November Amendment, Core AFFO per share means (i) net income adjusted for the following items (to the extent they are included in net income): (a) real estate related depreciation and amortization; (b) net income from unconsolidated partnerships and joint ventures; (c) one-time costs that the Advisor deems to be non-recurring; (d) non-cash equity compensation (other than any Restricted Share Payments (as defined in the Advisory Agreement)); (e) other non-cash income and expense items; (f) certain non-cash interest expenses related to securities that are convertible to Common Stock; (g) gain (or loss) from the sale of investments; (h) impairment loss on real estate; (i) acquisition and transaction related costs (now known as acquisition, transaction and other costs on the face of the Company’s income statement); (j) straight-line rent; (k) amortization of above and below market leases assets and liabilities; (l) amortization of deferred financing costs; (m) accretion of discounts and amortization of premiums on debt investments; (n) marked-to-market adjustments included in net income; (o) unrealized gain (loss) resulting from consolidation from, or deconsolidation to, equity accounting, (p) consolidated and unconsolidated partnerships and joint ventures and (q) Incentive Compensation, (ii) divided by the weighted-average outstanding shares of Common Stock on a fully-diluted basis for such period.
(2)
For purposes of the Advisory Agreement, AUM means, for a specified period, an amount equal to (A) (i) the aggregate costs of the Company’s investments (including acquisition fees and expenses) at the beginning of such period (before reserves for depreciation of bad debts, or similar non-cash reserves) plus (ii) the aggregate cost of the Company’s investment at the end of such period (before reserves from depreciation or bad debts, or similar non-cash reserves) divided by (B) two (2).
In addition, the per annum aggregate amount of the Base Management Fee and the Incentive Compensation to be paid under the Advisory Agreement is capped at (a) 1.25% of the AUM for the previous year if AUM is less than or equal to $5.0 billion; (b) 0.95% if the AUM is equal to or exceeds $15.0 billion; or (c) a percentage equal to: (A) 1.25% less (B) (i) a fraction, (x) the numerator of which is the AUM for such specified period less $5.0 billion and (y) the denominator of which is $10.0 billion multiplied by (ii) 0.30% if AUM is greater than $5.0 billion but less than $15.0 billion. The Variable Base Management Fee is also subject to reduction if there is a sale or sales of one or more Investments in a single or series of related transactions exceeding $200.0 million and a special dividend(s) related thereto is paid to stockholders.
The Company has also agreed under the Advisory Agreement to reimburse, indemnify and hold harmless each of the Advisor and its affiliates, and the directors, officers, employees, partners, members, stockholders, other equity holders, agents and representatives of the Advisor and its affiliates (each, a “Advisor Indemnified Party”), of and from any and all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever (including reasonable attorneys’ fees) in
29
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
respect of or arising from any acts or omissions of the Advisor Indemnified Party performed in good faith under the Advisory Agreement and not constituting bad faith, willful misconduct, gross negligence, or reckless disregard of duties on the part of the Advisor Indemnified Party. In addition, the Company has agreed to advance funds to an Advisor Indemnified Party for reasonable legal fees and other reasonable costs and expenses incurred as a result of any claim, suit, action or proceeding for which indemnification is being sought, subject to repayment if the Advisor Indemnified Party is later found pursuant to a final and non-appealable order or judgment to not be entitled to indemnification.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

Property Management Fees
The Property Manager provides property management and leasing services for properties owned by the Company, for which the Company pays fees to the Property Manager equal to: (i) with respect to stand-alone, single-tenant net leased properties which are not part of a shopping center, 2.0% of gross revenues from the properties managed and (ii) with respect to all other types of properties, 4.0% of gross revenues from the properties managed.
For services related to overseeing property management and leasing services provided by any person or entity that is not an affiliate of the Property Manager, the Company pays the Property Manager an oversight fee equal to 1.0% of gross revenues of the property managed. This oversight fee is no longer applicable to 39 of the Company’s properties which became subject to separate property management agreements with the Property Manager in connection with a multi-property mortgage loan in October 2017, a multi-property mortgage loan in April 2019, and a multi-property mortgage loan in September 2019 (the “ Loan Property PMLAs”) on otherwise nearly identical terms to the primary property and management leasing agreement (the “Primary PMLA”), which remains applicable to all other properties.
In February 2019, the Company entered into an amendment to the Primary PMLA, following which it continues to have a one-year term that is automatically extended for an unlimited number of successive one-year terms unless terminated by either party upon notice. Under the Primary PMLA prior to this amendment, either the Company or the Property Manager could terminate upon 60 days’ written notice prior to the end of the applicable term. Following this amendment, either the Company or the Property Manager may terminate the Primary PMLA at any time upon at least 12 months’ prior written notice. The extended termination notice period does not apply to the Loan Property PMLAs, pursuant to which either the Company or the Property Manager can terminate upon 60 days’ written notice prior to end of the applicable term.
Solely with respect to the Company’s investments in properties located in Europe, prior to the effectiveness of the termination of the Former Service Provider in March 2018, the Former Service Provider received, from the Property Manager, a portion of the fees payable to the Property Manager equal to: (i) with respect to single-tenant net leased properties which are not part of a shopping center, 1.75% of the gross revenues from such properties and (ii) with respect to all other types of properties, 3.5% of the gross revenues from such properties. The Property Manager was paid 0.25% of the gross revenues from European single-tenant net leased properties which are not part of a shopping center and 0.5% of the gross revenues from all other types of properties, reflecting a split of the oversight fee with the Former Service Provider. Following the termination of the Former Service Provider, the Former Service Provider no longer receives any amounts from the Advisor. For additional information, see Note 1 — Organization.
Professional Fees and Other Reimbursements
The Company reimburses the Advisor’s costs of providing administrative services, subject to the limitation that the Company will not reimburse the Advisor for any amount by which the Company’s operating expenses (including the asset management fee) at the end of the four preceding fiscal quarters exceeds the greater of (a) 2.0% of average invested assets and (b) 25.0% of net income, unless the excess amount is otherwise approved by the Company’s board of directors. Additionally, the Company reimburses the Advisor for expenses of the Advisor and its affiliates incurred on behalf of the Company, except for those expenses that are specifically the responsibility of the Advisor under the Advisory Agreement, such as fees and compensation paid to the Former Service Provider prior to its termination and the Advisor’s overhead expenses, rent and travel expenses, professional services fees incurred with respect to the Advisor for the operation of its business, insurance expenses (other than with respect to the Company’s directors and officers) and information technology expenses.

30
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)

The following table reflects related party fees incurred, forgiven and contractually due as of and for the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
 2020201920202019Payable as of
(In thousands)IncurredForgivenIncurredForgivenIncurredForgivenIncurredForgivenSeptember 30, 2020December 31, 2019
One-time fees and reimbursements:    
Fees on gain from sale of investments$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 
Ongoing fees (1):
Asset management fees (2)
7,383 0 6,758 0 22,136 0 20,123 0 0 0 
Property management fees
1,532 0 1,462 0 4,447 0 4,302 0 0 0 
Incentive compensation24 0 0 0 24 0 0 0 24 0 
Total related party operational fees and reimbursements$8,939 $0 $8,220 $0 $26,607 $0 $24,425 $0 $24 $0 
______________
(1)
  Three Months Ended September 30, Nine Months Ended September 30,     
  2019 2018 2019 2018 Payable as of 
(In thousands) Incurred Forgiven Incurred Forgiven Incurred Forgiven Incurred Forgiven September 30, 2019 December 31, 2018 
One-time fees and reimbursements:                     
Fees on gain from sale of investments $—
 $—
 $—
 $—
 $—
 $—
 $—
 $—
 $—
 $49
(2) 
Ongoing fees (3):
                     
Asset management fees (1)
 6,758
 —
 5,312
 —
 20,123
 —
 16,852
 —
 —
 —
 
Property management fees 1,462
 —
 1,283
 —
 4,302
 —
 3,712
 —
 —
 —

Incentive compensation —
 —
 361
 —
 —
 —
 361
 —
 —
 —
 
Total related party operational fees and reimbursements $8,220
 $—
 $6,956
 $—
 $24,425
 $—
 $20,925
 $—
 $—
 $49
 
___________________________________________________________________________The Company incurred general and administrative costs and other expense reimbursements of approximately $0.7 million and $0.8 million for the nine months ended September 30, 2020 and 2019, respectively, which are recorded within general and administrative expenses in the consolidated statements of operations and are not reflected in the table above.
(1)
(2)The Advisor, in accordance with the Advisory Agreement, received asset management fees in cash each quarter equal to one quarter of the annual Minimum Base Management Fee of $18.0 million and the Variable Base Management Fee for the respective three months ended. The Variable Base Management Fee was $2.9 million and $2.3 million for the three months ended September 30, 2020 and 2019, respectively, and $8.6 million and $6.6 million for the nine months ended September 30, 2020 and 2019, respectively.
The Advisor, in accordance with the Advisory Agreement, received asset management fees in cash equal to one quarter of the annual Minimum Base Management Fee of $18.0 million and the Variable Base Management Fee. The Variable Base Management Fee was $2.3 million and $6.6 million for the three and nine months ended September 30, 2019, respectively. The Variable Base Management Fee was $0.8 million and $3.4 million for the three and nine months ended September 30, 2018, respectively.
(2)
Balance included within due to related parties on the consolidated balance sheets as of September 30, 2019 and December 31, 2018.
(3)
The Company incurred general and administrative costs and other expense reimbursements of approximately $0.8 million and $0.8 million for the nine months ended September 30, 2019 and 2018, respectively, which are recorded within general and administrative expenses on the audited consolidated statements of operations and are not reflected in the table above.
Fees Paid in Connection with the Liquidation of the Company’s Real Estate Assets
In connection with any sale or similar transaction involving any investment, subject to the terms of the Advisory Agreement, the Company will pay to the Advisor a fee in connection with net gain recognized by the Company in connection with the sale or transaction (the “Gain Fee”) unless the proceeds of the sale or transaction are reinvested in one or more investments within 180 days thereafter. The Gain Fee is calculated at the end of each month and paid, to the extent due, with the next installment of the Base Management Fee. The Gain Fee is calculated by aggregating all of the gains and losses from the preceding month. As of December 31, 2018, the Gain Fee due to the Advisor was approximately $49,000. There was 0 Gain Fee for the nine months ended September 30, 2020 or 2019.
Note 11 — Economic Dependency
Under various agreements, the Company has engaged or will engage the Advisor, its affiliates and entities under common control with the Advisor, to provide certain services that are essential to the Company, including asset management services, supervision of the management and leasing of properties owned by the Company, asset acquisition and disposition decisions, the sale of shares of Common Stock available for issue, transfer agency services, as well as other administrative responsibilities for the Company including accounting services and investor relations.
As a result of these relationships, the Company is dependent upon the Advisor and its affiliates. In the event that these companies are unable to provide the Company with the respective services, the Company will be required to find alternative providers of these services.
Note 12 — Equity-Based Compensation
Stock Option Plan
The Company has a stock option plan (the “Plan”) which authorizes the grant of nonqualified Common Stock options to the Company’s directors, officers, advisors, consultants and other personnel of the Company, the Advisor and the Property Manager and their affiliates, subject to the absolute discretion of the board of directors and the applicable limitations of the Plan. The exercise price for allany stock options granted under the Plan will be equal to the closing price of a share of Common Stock on the last trading day preceding the date of grant. A total of 0.5 million shares have been authorized and reserved for issuance under the Plan. As of September 30, 20192020 and December 31, 2018,2019, 0 stock options were issued under the Plan.
31
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 20192020
(Unaudited)

Restricted Share Plan
The Company’s employee and director incentive restricted share plan (“RSP”) provides the Company with the ability to grant awards of restricted shares of Common Stock (“Restricted Shares”)Shares and RSUs to the Company’s directors, officers and employees, employees of the Advisor and its affiliates, employees of entities that provide services to the Company, directors of the Advisor or of entities that provide services to the Company, certain consultants to the Company and the Advisor and its affiliates or to entities that provide services to the Company.
The Company pays independent director compensation as follows: (i) the annual retainer payable to all independent directors is $100,000 per year, (ii) the annual retainer for the non-executive chair is $105,000, (iii) the annual retainer for independent directors serving on the audit committee, compensation committee or nominating and corporate governance committee is $30,000. All annual retainers are payable 50% in the form of cash and 50% in the form of RSUs which vest over a three-year period. In addition, the directors have the option to elect to receive the cash component in the form of RSUs which would vest over a three-year period.
Under the RSP, the number of shares of Common Stock available for awards is equal to 10.0% of the Company’s outstanding shares of Common Stock on a fully diluted basis at any time. If any awards granted under the RSP are forfeited for any reason, the number of forfeited shares is again available for purposes of granting awards under the RSP. Restricted Share awards entitle the recipient to receive shares of Common Stock from us
RSUs
RSUs are awarded under terms that provide for vesting on a straight-line basis over a specified period of time. Restricted Shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested. Holders of Restricted Shares receive cash dividends prior to the time that the restrictions on the Restricted Shares have lapsed. Any dividends to holders of Restricted Shares payable in shares of Common Stock are subject to the same restrictions as the underlying Restricted Shares.
for each award. RSUs represent a contingent right to receive shares of Common Stock at a future settlement date, subject to satisfaction of applicable vesting conditions or other restrictions, as set forth in the RSP and an award agreement evidencing the grant of RSUs. RSUs may not, in general, be sold or otherwise transferred until restrictions are removed and the rights to the shares of Common Stock have vested. Holders of RSUs do not have or receive any voting rights with respect to the RSUs or any shares underlying any award of RSUs, but such holders are generally credited with dividend or other distribution equivalents which are subject to the same vesting conditions or other restrictions as the underlying RSUs and only paid at the time such RSUs are settled in shares of Common Stock. RSU award agreements generally provide for accelerated vesting of all unvested RSUs in connection with a termination without cause from the Company’s board of directors or a change of control and accelerated vesting of the portion of the unvested RSUs scheduled to vest in the year of the recipient’s voluntary resignation from or failure to be re-elected to the Company’s board of directors.
The following table reflects the amount of RSUs outstanding as of September 30, 2020 and 2019:
 Number of RSUsWeighted-Average Issue Price
Unvested, December 31, 201940,541 $20.47 
Vested(23,824)21.71 
Granted28,232 13.37 
Unvested, September 30, 202044,949 15.35 
 Number of RSUs Weighted-Average Issue Price Number of RSUsWeighted-Average Issue Price
Unvested, December 31, 2018 46,352
 $22.04
Unvested, December 31, 201846,352 $22.04 
Vested (21,955) 22.56
Vested(21,955)22.56 
Granted 16,563
 18.89
Granted16,563 18.89 
Unvested, September 30, 2019 40,960
 20.49
Unvested, September 30, 201940,960 20.49 

The fair value of the equity awards in the form of Restricted Shares granted prior to the listing of the Common Stock on the NYSE on June 2, 2015 was based on the per share price in the Company’s initial public offering of Common Stock completed prior to the listing, and the fair value of the RSUs granted on or after the listing is based on the market price of Common Stock as of the grant date, anddate. The fair value of the equity awards is expensed over the vesting period.


32
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)

Restricted Shares
Restricted Shares are shares of Common Stock awarded under terms that provide for vesting over a specified period of time.Holders of Restricted Shares receive nonforfeitable cash dividends prior to the time that the restrictions on the Restricted Shares have lapsed. Any dividends to holders of Restricted Shares payable in shares of Common Stock are subject to the same restrictions as the underlying Restricted Shares. Restricted Shares may not, in general, be sold or otherwise transferred until restrictions are removed and the shares have vested.
During the three months ended September 30, 2020, the Company granted 132,025 Restricted Shares to employees of the Advisor or its affiliates who are involved in providing services to the Company, and including its Chief Executive Officer and Chief Financial Officer. The Restricted Shares were issued in October 2020 at the time the related award agreements were executed and were granted at a price of $17.41 per share. The awards were made pursuant to authority delegated by the compensation committee to Edward M. Weil, Jr., a member of the Company’s board of directors. Following the grant of these awards there remained an additional 217,975 Restricted Shares that may be awarded in the future pursuant to the delegation of authority to Mr. Weil. No awards may be made pursuant to this delegation of authority to anyone who is also a partner, member or equity owner of the parent of the Advisor.
The Restricted Shares granted to employees of the Advisor or its affiliates vest in 25% increments on each of the first four anniversaries of the grant date. Except in connection with a change in control (as defined in the award agreement) of the Company, any unvested Restricted Shares will be forfeited if the holder’s employment with the Advisor terminates for any reason. Upon a change in control of the Company, 50% of the unvested Restricted Shares will immediately vest and the remaining unvested Restricted Shares will be forfeited.
Compensation Expense — RSP
Compensation expense relatedfor awards granted pursuant to RSUsthe RSP was $0.1 million and $0.4 million for the three and nine months ended September 30, 2020, respectively. Compensation expense for awards issued pursuant to the RSP was $0.1 million and $0.3 million for the three and nine months ended September 30, 2019, respectively. Compensation expense related to RSUs was $0.1 million and $0.4 million for the three and nine months ended September 30, 2018, respectively. Compensation expense is recorded as equity-based compensation in the accompanying consolidated statements of operations. As of September 30, 2019,2020, the Company had $0.7$0.5 million unrecognized compensation costscost related to unvested RSUs granted under the RSP. That costRSP, which is expected to be recognized over a weighted-average period of 2.12.0 years. As of September 30, 2020, the Company had $2.3 million unrecognized compensation cost related to Restricted Share awards granted under the RSP, which is expected to be recognized over a period of 4.0 years.
Multi-Year Outperformance Agreement
On July 16, 2018, the Company’s compensation committee approved the 2018 OPP, which was subsequently entered into by the Company and the OP with the Advisor on July 19, 2018. The 2018 OPP was entered into in connection with the conclusion of the performance period under the 2015 OPP on June 2, 2018. Because no performance goals under the 2015 OPP were achieved during the performance period, no LTIP Units issued under the 2015 OPP were earned and all LTIP Units issued under the 2015
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

OPP were automatically forfeited without the payment of any consideration by the Company or the OP effective as of June 2, 2018.
The equity-based compensation expense associated with the awards pursuant to the 2015 OPP was adjusted each reporting period for changes in the estimated market-related performance and expensed over the requisite service period on a graded vesting basis. Under new accounting rules adopted by the Company on January 1, 2019, the total fair value of the LTIP Units of $18.8 million was calculated as of adoption of the new guidance is fixed as of that date and will not be remeasured in subsequent periods unless the 2018 OPP is amended (see Note 2 — Summary of Significant Accounting Policies for a description of new accounting rules related to non-employee equity awards). The fair value of LTIP Units is being recorded evenly over the requisite service period of approximately 2.8 years from the grant date. In February 2019, the Company entered into an amendment to the 2018 OPP with the Advisor to reflect a change in the peer group resulting from the merger of two members of the peer group, Government Properties Income Trust and Select Income REIT, with Government Properties Income Trust surviving the merger renamed as Office Properties Income Trust.group. Under the accounting rules, the Company was required to calculate any excess of the new value of LTIP Units awarded pursuant to the 2018 OPP (the “Award LTIP Units”) in accordance with the provisions of the amendment ($29.9 million) over the fair value immediately prior to the amendment ($23.3 million). This excess of approximately $6.6 million is being expensed over the period from February 21, 2019, the date the Company’s compensation committee approved the amendment, through June 2, 2021.2021, the end of the service period.
During the three and nine months ended September 30, 2020, the Company recorded compensation expense related to the 2018 OPP of $2.4 million and $7.1 million, respectively. During the three and nine months ended September 30, 2019, the Company recorded compensation expense related to the 2018 OPP of $2.4 million and $6.7 million, respectively. During the three and nine months ended September 30, 2018, the Company recorded compensation expense of $1.9 million and $0.8 million, respectively, related to the 2018 OPP and 2015 OPP.
LTIP Units/Distributions/Redemption
33
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
The rights of the Advisor as the holder of the LTIP Units are governed by the terms of the LTIP Units contained in the agreement of limited partnership of the OP. Until an LTIP Unit is earnedThe agreement of limited partnership of the OP was amended in accordanceJuly 2018 in connection with the provisionsexecution of the applicable outperformance award agreement,2018 OPP to reflect the issuance of LTIP Units thereunder and to make certain clarifying and ministerial revisions, but these amendments did not alter the terms of the LTIP Units established in connection with the Company’s entry into the 2015 OPP in June 2015.
The Advisor, as the holder of the LTIP UnitUnits is entitled to distributions on the LTIP UnitUnits equal to 10% of the distributions made per OP Unit (other than distributions of sale proceeds) made on an OP Unit.until the LTIP Units are earned. The Company paid $0.4$0.3 million and $0.4 million in distributions related to LTIP Units during the nine months ended September 30, 20192020 and 2018,2019, respectively, which is included in accumulated deficit in the consolidated statementstatements of changes in equity. Distributions paid with respect to an LTIP Unit willThese distributions are not be subject to forfeiture, even if the LTIP Unit isUnits are ultimately forfeited because it is not earned in accordance with the terms of the agreement under which it was issued. After anforfeited. If any LTIP Unit isUnits are earned, the holderAdvisor will be entitled to a priority catch-up distribution peron each earned LTIP Unit equal to the accruedaggregate distributions paid on OP Units during the applicable performance period, less the aggregate distributions already paid on the LTIP Unit during the performance period. As of the valuation date on the final day of the applicable performance period, the earned LTIP Units will become entitled to receive the same distributions aspaid on the OP Units. AtFurther, at the time the Advisor’s capital account with respect to an LTIP Unit that is earned and vested is economically equivalent to the average capital account balance of an OP Unit, the Advisor, as the holder of the LTIP Unit, has been earned and it has been vested for 30 days, the Advisor, in its sole discretion, will in accordance with the limited partnership agreement of the OP, be entitled to convert the LTIP Unit into an OP Unit, which may, in accordance with the limited partnership agreement of the OP. In accordance with, and subject to the terms of, the limited partnership agreement of the OP, OP Units mayturn, be redeemed on a one-for-one basis for, at the Company’s election, sharesa share of Common Stock or the cash equivalent thereof.
2018 OPP
Based on a maximum award value of $50.0 million and $19.57 (the “Initial Share Price”), the closing price of Common Stock on June 1, 2018, the trading day prior to the effective date of the 2018 OPP, the Advisor was issued a total of 2,554,930 Award LTIP Units pursuant to the 2018 OPP. The AwardThese LTIP Units represent the maximum number of LTIP Units that could be earned by the Advisor based on the Company’s total shareholder return (“TSR”), including both share price appreciation and Common Stock dividends, against the Initial Share Price over a performance period, (the “Performance Period”), commencing on June 2, 2018 and ending on the earliest of (i) June 2, 2021, (ii) the effective date of any Change of Control (as defined in the 2018 OPP) and (iii) the effective date of any termination of the Advisor’s service as advisor of the Company.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

Company (the “Performance Period”).
Half of the Award LTIP Units (the “Absolute TSR LTIP Units”) will beare eligible to be earned as of the last day of the Performance Period (the “Valuation Date”) if the Company achieves an absolute TSR with respect to threshold, target and maximum performance goals for the Performance Period as follows:
Performance Level (% of Absolute TSR LTIP Units Earned)    Absolute TSR   Number of Absolute TSR LTIP Units Earned
Below Threshold—%  Less than24%  —
Threshold25%  24%  319,366
Target50%  30%  638,733
Maximum100%  36%or higher 1,277,465

Performance Level (% of Absolute TSR LTIP Units Earned)   Absolute TSR  Number of Absolute TSR LTIP Units Earned
Below Threshold0 % Less than24 %0 
Threshold25 %24 %319,366 
Target50 %30 %638,733 
Maximum100 %36 %or higher1,277,465 
If the Company’s absolute TSR is more than 24% but less than 30%, or more than 30% but less than 36%, the percentage of the Absolute TSR LTIP Units earned will be determined using linear interpolation as between those tiers, respectively.
Half of the Award LTIP Units (the “Relative TSR LTIP Units”) will beare eligible to be earned as of the Valuation Date if the amount, expressed in terms of basis points, (bps), whether positive or negative, by which the Company’s absolute TSR onfor the Valuation DatePerformance Period exceeds the average TSR of a peer group for the Performance Period consisting of Lexington Realty Trust, W.P. Carey Inc. and Office Properties Income Trust as of the Valuation Date as follows:
Performance Level (% of Relative TSR LTIP Units Earned)   Relative TSR Excess  Number of Absolute TSR LTIP Units Earned
Below Threshold0 % Less than-600 basis points0 
Threshold25 %-600 basis points319,366 
Target50 %0 basis points638,733 
Maximum100 %+600 basis points1,277,465 
Performance Level (% of Relative TSR LTIP Units Earned)    Relative TSR Excess   Number of Absolute TSR LTIP Units Earned
Below Threshold—%  Less than-600
basis points —
Threshold25%  -600
basis points 319,366
Target50%  —
basis points 638,733
Maximum100%  +600
basis points 1,277,465
34
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
If the relative TSR excess is more than -600 basis points but less than 0 basis points, or more than 0 basis points but less than +600 bps, the percentage of the Relative TSR LTIP Units earned will be determined using linear interpolation as between those tiers, respectively.
If the Valuation Date is the effective date of a Change of Control or a termination of the Advisor for any reason (i.e., with or without cause), then calculations relating to the number of Award LTIP Units earned pursuant to the 2018 OPP will be performed based on actual performance as of (and including) the effective date of the Change of Control or termination (as applicable) based on the performance through the last trading day prior to the effective date of the Change of Control or termination (as applicable), with the hurdles for calculating absolute TSR pro-rated to reflect that the Performance Period lasted less than three years but without pro-rating the number of Absolute TSR LTIP Units or Relative TSR LTIP Units the Advisor would be eligible to earn to reflect the shortened period.
The award of LTIP Units under the 2018 OPP is administered by the compensation committee of the Company’s board of directors, provided that any of the compensation committee’s powers can be exercised instead by the board if the board so elects. Following the Valuation Date, the compensation committee is responsible for determining the number of Absolute TSR LTIP Units and Relative TSR LTIP Units earned, as calculated by an independent consultant engaged by the compensation committee and as approved by the compensation committee in its reasonable and good faith discretion. The compensation committee also must approve the transfer of any Absolute TSR LTIP Units and Relative TSR LTIP Units (or OP Units into which they may be converted in accordance with the terms of the agreement of limited partnership of the OP).
LTIP Units earned as of the Valuation Date will also become vested as of the Valuation Date. Any LTIP Units that are not earned and vested after the Compensation Committee makes the required determination will automatically and without notice be forfeited without the payment of any consideration by the Company or the OP, effective as of the Valuation Date.
The rights of the Advisor as the holder of the LTIP Units are governed by the terms of the LTIP Units contained in the agreement of limited partnership of the OP. The agreement of limited partnership of the OP was amended in July 2018 in connection with the execution of the 2018 OPP to reflect the issuance of LTIP Units thereunder and to make certain clarifying and ministerial revisions, but these amendments did not alter the terms of the LTIP Units established in connection with the Company’s entry into the 2015 OPP in June 2015.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

2015 OPP
In connection with the listing of Common Stock on the New York Stock Exchange, on June 2, 2015, the Company entered into the 2015 OPP with the OP and the Advisor. Under the 2015 OPP, the Advisor was issued 3,013,933 LTIP Units in the OP with a maximum award value on the issuance date equal to 5.00% of the Company’s market capitalization (the “OPP Cap”). Because no performance goals under the 2015 OPP were achieved, no LTIP Units issued under the 2015 OPP were earned and all LTIP Units issued under the 2015 OPP were automatically forfeited without the payment of any consideration by the Company or the OP, effective as of June 2, 2018.
Under the 2015 OPP, the Advisor was eligible to earn a number of LTIP Units with a value equal to a portion of the OPP Cap upon the first, second and third anniversaries of June 2, 2015, based on the Company’s achievement of certain levels of absolute TSR and the amount by which the Company’s absolute TSR exceeded the average TSR of a peer group for the three-year performance period commencing on June 2, 2015 (the “Three-Year Period”); each 12-month period during the Three-Year Period (the “One-Year Periods”); and the initial 24-month period of the Three-Year Period (the “Two-Year Period”), as follows:
    Performance Period Annual Period Interim Period
Absolute Component: 4% of any excess Total Return attained above an absolute hurdle measured from the beginning of such period: 21% 7% 14%
Relative Component: 4% of any excess Total Return attained above the Total Return for the performance period of the Peer Group*, subject to a ratable sliding scale factor as follows based on achievement of cumulative Total Return measured from the beginning of such period:      
 •100% will be earned if cumulative Total Return achieved is at least: 18% 6% 12%
 •50% will be earned if cumulative Total Return achieved is: —% —% —%
 •0% will be earned if cumulative Total Return achieved is less than: —% —% —%
 •a percentage from 50% to 100% calculated by linear interpolation will be earned if the cumulative Total Return achieved is between: 0% - 18% 0% - 6% 0% - 12%

*The “Peer Group” was comprised of Gramercy Property Trust Inc., Lexington Realty Trust, Select Income REIT, and W.P. Carey Inc.
The potential outperformance award was calculated at the end of each One-Year Period, the Two-Year Period and the Three-Year Period. The award earned for the Three-Year Period was based on a formula less any awards earned for the Two-Year Period and One-Year Periods, but not less than zero; the award earned for the Two-Year Period was based on a formula less any award earned for the first and second One-Year Period, but not less than zero. Any LTIP Units that were unearned at the end of the Three-Year Period were to be forfeited.
One third of any earned LTIP Units were to vest, subject to the Advisor’s continued service through each vesting date, on each of the third, fourth and fifth anniversaries of June 2, 2015. Any earned and vested LTIP Units would have been converted into OP Units in accordance with the terms and conditions of the limited partnership agreement of the OP. The 2015 OPP provided for early calculation of LTIP Units earned and for the accelerated vesting of any earned LTIP Units in the event the Advisor was terminated or in the event the Company incurred a change in control, in either case prior to the end of the Three-Year Period. As of June 2, 2017 (end of the Two-Year Period), June 2, 2016 (end of the first One-Year Period) and June 2, 2018 (end of the Three-Year Period), no LTIP units were earned by the Advisor under the terms of the 2015 OPP. Accordingly, all LTIP Units that had been issued under the 2015 OPP were automatically forfeited without the payment of any consideration by the Company or the OP as of the end of the Three-Year Period.
Other Equity-Based Compensation
The Company may issue Common Stock in lieu of cash to pay fees earned by the Company’s directors at each director’s election. There are no restrictions on the shares issued since these payments in lieu of cash relate to fees earned for services performed. There were 0 such shares of Common Stock issued in lieu of cash during the nine months ended September 30, 20192020 and 2018.2019.
Note 13 — Earnings Per Share
The following is a summary of the basic and diluted net income per share computation for the periods presented:
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands, except share and per share data)2020201920202019
Net income (loss) attributable to common stockholders$(502)$6,860 $5,502 $25,272 
Adjustments to net income (loss) attributable to common stockholders for common share equivalents(102)(176)(366)(510)
Adjusted net income (loss) attributable to common stockholders$(604)$6,684 $5,136 $24,762 
Weighted average common shares outstanding — Basic89,482,577 85,254,638 89,470,525 83,539,304 
Weighted average common shares outstanding — Diluted89,482,577 86,202,582 89,470,525 84,487,248 
Net income (loss) per share attributable to common stockholders — Basic and Diluted$(0.01)$0.08 $0.06 $0.30 
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands, except share and per share data) 2019 2018 2019 2018
Net income attributable to common stockholders $6,860
 $177
 $25,272
 $7,826
Adjustments to net income attributable to common stockholders for common share equivalents (176) (316) (510) (526)
Adjusted net income attributable to common stockholders $6,684
 $(139) $24,762
 $7,300
         
Basic and diluted net income per share attributable to common stockholders $0.08
 $—
 $0.30
 $0.11
Weighted average shares outstanding:        
Basic 85,254,638
 69,441,639
 83,539,304
 68,014,855
Diluted 86,202,582
 69,441,639
 84,487,248
 68,417,253

Under current authoritative guidance for determining earnings per share, all unvested share-based payment awards that contain non-forfeitable rights to distributions are considered to be participating securities and therefore are included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that determines earnings per share for each class of common shares and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. The Company’s unvested Restricted Shares, unvested RSUs and unearned LTIP Units contain rights to receive distributions considered to be non-forfeitable, except in certain limited circumstances, and therefore the Company applies the two-class method of computing earnings per share. The calculation of earnings per share above excludes the non-forfeitable distributions to the unvested Restricted Shares, unvested RSUs and unearned LTIP Units from the numerator.
35
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2020
(Unaudited)
Diluted net income per share assumes the conversion of all Common Stock share equivalents into an equivalent number of shares of Common Stock, unless the effect is anti-dilutive. The Company considers unvested Restricted Shares, unvested RSUs and unvested LTIP Units to be common share equivalents. The following table shows common share equivalents on a weighted average basis that were excluded from the calculation of diluted earnings per share for the three and nine months ended September 30, 20192020 and 2018:2019:
 Three Months Ended September 30, Nine Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
 2019 2018 2019 20182020201920202019
Unvested RSUs 40,944
 46,767
 40,944
 —
Unvested RSUs44,949 40,944 44,949 40,944 
Unvested Restricted Shares (1)
Unvested Restricted Shares (1)
21,526 0 7,228 0 
LTIP Units (1)(2)
 1,647,230
 2,110,594
 1,647,230
 355,631
2,554,930 1,647,230 2,554,930 1,647,230 
Total anti-dilutive common share equivalents 1,688,174
 2,157,361
 1,688,174
 355,631
Total common share equivalents excluded from EPS calculationTotal common share equivalents excluded from EPS calculation2,621,405 1,688,174 2,607,107 1,688,174 
(1) Weighted-average numberThere were 132,025 Restricted Shares issued and outstanding as of LTIP Units outstanding.September 30, 2020. See Note 12— Equity-Based Compensation for additional information on the Restricted Shares, including their issuance during September 30, 2020.
(2) There were 2,554,930 LTIP Units issued and outstanding under the 2018 OPP as of September 30, 20192020 and September 30, 2018. The 3,013,933 LTIP Units issued under the 2015 OPP were forfeited as of June 2, 2018 since no LTIP Units were earned under the 2015 OPP.2019. See Note 12 — Equity-Based Compensation for additional information on the 2018 OPP and 2015 OPP.
Conditionally issuable shares relating to the 2018 OPP award (see Note 12 — Equity-Based Compensation) arewould be included in the computation of fully diluted EPS on a weighted average basis for the three and nine months ended September 30, 2019 and the nine months ended September 30, 2018(if dilutive) based on shares that would be issued as if the balance sheet date were the end of the measurement period. NaN commonNo LTIP Unit share equivalents related to LTIP Units were included in the computation for the three and nine months ended September 30, 2018 due to a loss in the period.2020 and 2019.
GLOBAL NET LEASE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 2019
(Unaudited)

Note 14 — Subsequent Events
The Company has evaluated subsequent events through the filing of this Quarterly Report on Form 10-Q, and determined that there have not been any events that have occurred that would require adjustments to, or disclosures in the consolidated financial statements, except for as disclosed below.
Dispositions
InOn November 20195, 2020, the Company sold 2acquired 4 properties, all located in the NetherlandsUnited States, for a contract salesan aggregate total base purchase price of €17.1approximately $153.0 million, (approximately $19.1 million basedexcluding acquisition related costs. The acquisition was funded with cash on USD equivalents). Ashand.
36
Table of September 30, 2019 the Company concluded that the estimated future undiscounted cash flows associated with these two properties did not exceed their respective carrying values, and as a result, recorded an impairment charge of $6.4 million to reflect the estimated fair value of the properties.Contents
Termination of Preferred Stock ATM Program
On November 8, 2019, the Company delivered a notice to the agents under the Preferred Stock ATM Program terminating the equity distribution agreement related to the Preferred Stock ATM Program effective on November 12, 2019.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of Global Net Lease, Inc. and the notes thereto. As used herein, the terms “Company,” “we,” “our” and “us” refer to Global Net Lease, Inc., a Maryland corporation, including, as required by context, Global Net Lease Operating Partnership, L.P. (the “OP”), a Delaware limited partnership, which we refer to as the “OP,” and its subsidiaries. We are externally managed by Global Net Lease Advisors, LLC (the “Advisor”), a Delaware limited liability company.
Forward-Looking Statements
Certain statements included in this Quarterly Report on Form 10-Q are forward-looking statements including statements regarding the intent, belief or current expectations of us, our Advisor and members of our management team, as well as the assumptions on which such statements are based, and generally are identified by the use of words such as “may,” “will,” “seeks,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” “should” or similar expressions. Actual results may differ materially from those contemplated by such forward-looking statements. Further, forward-looking statements speak only as of the date they are made, and we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time, unless required by law.
The followingThese forward-looking statements are somesubject to risks, uncertainties, and other factors, many of which are outside of our control, which could cause actual results to differ materially from the results contemplated by the forward-looking statements. Some of the risks and uncertainties, although not all risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements:
Allforward looking statements are set forth in the Risk Factors section of our executive officers are also officers, managers, employees or holdersAnnual Report on Form 10-K for the year ended December 31, 2019, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, our Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, and Part II. Item 1A, “Risk Factors” of this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
37
Table of Contents
Overview
We were incorporated on July 13, 2011 as a direct or indirect controlling interestMaryland corporation that elected to be taxed as a real estate investment trust for U.S. federal income tax purposes (“REIT”) beginning with our taxable year ended December 31, 2013. Our common stock, $0.01 par value per share (“Common Stock”) is listed on the New York Stock Exchange (“NYSE”) under the symbol “GNL.” Our 7.25% Series A Cumulative Redeemable Preferred Stock $0.01 par value per share (“Series A Preferred Stock”) is listed on the NYSE under the symbol “GNL PR A” and our 6.875% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share (“Series B Preferred Stock”) is listed on the NYSE under the symbol “GNL PR B.”
We invest in commercial properties, with an emphasis on sale-leaseback transactions and mission-critical single tenant net-leased commercial properties. Substantially all of our business is conducted through the OP. We have retained the Advisor to manage our affairs on a day-to-day basis. Our properties are managed and other entities affiliatedleased to third parties by Global Net Lease Properties, LLC (the “Property Manager”). The Advisor, and the Property Manager are under common control with AR Global Investments, LLC (the successor business to AR Capital LLC, “AR Global”). As a result, and these related parties receive compensation and fees for various services provided to us. For additional information on our executive officers,advisory agreement with the Advisor and its affiliates face conflicts(our “Advisory Agreement”), see Note 10 — Related Party Transactions to our consolidated financial statements included in this Quarterly Report on Form 10-Q.
As of interest, including significant conflicts created bySeptember 30, 2020, we owned 299 properties consisting of 34.7 million rentable square feet, which were 99.6% leased, with a weighted-average remaining lease term of 8.7 years. Based on the Advisor’s compensation arrangements with us and other investment programs advised by AR Global affiliates and conflicts in allocating time among these investment programs and us. These conflicts could result in unanticipated actions.
Because investment opportunities that are suitable for us may also be suitable for other investment programs advised by affiliatespercentage of AR Global, the Advisor and its affiliates face conflictsannualized rental income on a straight-line basis, as of interest relating to the purchase of properties and other investments and these conflicts may not be resolved in our favor.
We are obligated to pay fees which may be substantial to the Advisor and its affiliates.
We depend on tenants for our rental revenue and, accordingly, our rental revenue is dependent upon the success and economic viabilitySeptember 30, 2020, 63% of our tenants.
Increasesproperties were located in interest rates could increase the amount of our debt payments.
We may be unable to repay, refinance, restructure or extend our indebtedness as it becomes due.
Adverse changes in exchange rates may reduce the net income and cash flow associated with our properties located outside of the United States (“U.S.”) and Canada and 37% of our properties were located in Europe, and our portfolio was comprised of 47% industrial/distribution properties, 48% office properties and 5% retail properties. These percentages as of September 30, 2020 are calculated using annualized straight-line rent converted from local currency into the U.S. Dollar (“USD”) as of September 30, 2020 for the in-place lease on the property on a straight-line basis, which includes tenant concessions such as free rent, as applicable. We may also originate or acquire first mortgage loans, mezzanine loans, preferred equity or securitized loans (secured by real estate). As of September 30, 2020, we did not own any first mortgage loans, mezzanine loans, preferred equity or securitized loans.
Management Update on the Impacts of the COVID-19 Pandemic
The Advisoreconomic uncertainty created by the COVID-19 global pandemic has created several risks and uncertainties that may notimpact our business, including our future results of operations and our liquidity. A pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global pandemic of COVID-19, affecting states or regions in which we or our tenants operate could have material and adverse effects on our business, financial condition, results of operations and cash flows. The ultimate impact on our results of operations, our liquidity and the ability of our tenants to continue to pay us rent will depend on numerous factors including the overall length and severity of the COVID-19 pandemic. Management is unable to predict the nature and scope of any of these factors. These factors include the following, among others:
•The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be ableunable to identify a sufficient number of property acquisitions satisfying our investment objectives on amake rent payments to us timely, basis and on acceptable terms and prices, or at all. However, we have taken proactive steps with regard to rent collections to mitigate the impact on our business (see “ - Management Actions” below).
We•There may be unablea decline in the demand for tenants to continuelease real estate, as well as a negative impact on rental rates. As of September 30, 2020, our portfolio had a high occupancy level of 99.6%, the weighted-average remaining term of our leases was 8.7 years (based on annualized straight line rent) and only 2% of our leases were expiring in the next two years (based on annualized straight line rent).
•Capital market volatility and a tightening of credit standards could negatively impact our ability to obtain debt financing, however, as of September 30, 2020, we do not have a significant amount of debt principal repayments that come due in 2020 or 2021.
•The volatility in the global financial market could negatively impact our ability to raise additional debt orcapital through equity financing on attractive terms, or at all,offerings, which as a result, could impact our decisions as to when and there can be no assuranceif we will be ableseek additional equity funding.
•The negative impact of the pandemic on our results of operations and cash flows could impact our ability to fund future acquisitions.
Provisionscomply with covenants in our revolving credit facility (our “Revolving Credit Facility”) and the related term loan facility (our “Term Loan”), which together comprise our senior unsecured multi-currency credit facility (our ‘‘“Credit Facility”) Credit Facility’’), may limitFacility and the amount available for future borrowings thereunder.
•The potential negative impact on the health of personnel of our Advisor, particularly if a significant number of our Advisor’s employees are impacted, could result in a deterioration in our ability to pay dividendsensure business continuity.
    For additional information on our common stock, $0.01 par value per share (“Common Stock”)the risks and uncertainties associated with the COVID-19 pandemic, please see Item 1A, our 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share (“Series A Preferred Stock”) or any other stock we may issue.
We may be unable to pay or maintain cash dividends or increase dividends over time.
We may not generate cash flows sufficient to pay dividends to our stockholders or fund operations, and, as such, we may be forced to borrow at unfavorable rates to pay dividends to our stockholders or fund our operations.
Any dividends that we pay on our Common Stock, our Series A Preferred Stock, or any other stock we may issue, may exceed cash flows from operations, reducing the amount of capital available to invest in properties and other permitted investments.
“Risk Factors — We are subject to risks associated with our international investments, including risks associated with compliance with and changes in foreign laws, fluctuations in foreign currency exchange rates and inflation.

We are subject to risks associated with any dislocationsa pandemic, epidemic or liquidityoutbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, which has caused severe disruptions that may exist or occur in the creditU.S., Canadian, European and global economy and financial markets and has already had adverse effects and may worsen” included in this Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.
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The Advisor has responded to the challenges resulting from the COVID-19 pandemic. Beginning in early March, the Advisor took proactive steps to prepare for and actively mitigate the inevitable disruption COVID-19 would cause, such as, enacting safety measures, both required or recommended by relevant governmental authorities, including remote working policies, cooperation with localized closure or curfew directives, and social distancing measures at all of our properties. Additionally, there has been no material adverse impact on our financial reporting systems or internal controls and procedures and the Advisor’s ability to perform services for us. In light of the U.S. and Europe from time to time.
We may fail to continue to qualify as a real estate investment trust for U.S. federal income tax purposes (“REIT”), which would result in higher taxes, may adversely affect operations, and would reducecurrent COVID-19 pandemic, we are supplementing the trading pricehistorical discussion of our Common Stockresults of operations for the three and Series A Preferred Stock,nine months ended September 30, 2020 with a current update on the measures we have taken to mitigate the negative impacts of the pandemic on our business and future results of operations.
Management’s Actions
We have taken several steps to mitigate the impact of the pandemic on our business. For rent collections, we have been in direct contact with our tenants since the crisis began, cultivating open dialogue and deepening the fundamental relationships that we have carefully developed through prior transactions and historic operations. Based on this approach and the overall financial strength and creditworthiness of our tenants, we believe that we have had positive results in our rent collections during this pandemic. We have collected approximately 97% of the original cash rent due for the third quarter of 2020 across our entire portfolio, including approximately 99% from our top 20 tenants (based on the total of third quarter cash due from our top 20 tenants), representing 49% of our annual base rent.
The table below presents additional information on our cash rent collection for the third quarter of 2020 and is based on available for dividends.
We may be exposedinformation as of October 31, 2020. With respect to risks due to a lackthird quarter data previously reported, the amount of tenant diversity, investment types and geographic diversity.
We are exposed to changescash rent in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, and changes in conditions of U.S.various categories described herein increased or international lending, capital and financing markets, includingdecreased as a result of additional payments of cash rent and changes in the U.K.’s potentialstatus of negotiations. This information may not be indicative of any future period and remains subject to changes based ongoing collection efforts and negotiation of additional agreements. Moreover, there is no assurance that we will be able to collect the cash rent that is due in future months including the deferred 2020 rent amounts due during 2021 under deferral agreements we have entered into with our tenants. The impact of the COVID-19 pandemic on our tenants and thus our ability to collect rents in future periods cannot be determined at present.
Third Quarter 2020 Cash Rent Status
United States (1)
United KingdomEuropeTotal Portfolio
Cash rent paid (2)
96 %99 %99 %97 %
Approved deferral agreement (3)
1 %1 %1 %1 %
Deferral in negotiation(4)
1 %— %— %— %
Other (5)
2 %— %— %2 %
100 %100 %100 %100 %
____________
(1) Also includes Canada and Puerto Rico.
(2) Includes both cash rent paid in full and in part pursuant to rent deferral agreements or actual withdrawal fromotherwise.
(3) Represents an amendment to the European Unionoriginal lease agreement, or any other eventslease amendments executed prior to this amendment, executed or approved by the tenant and landlord in light of COVID-19 pandemic to defer a certain portion of cash rent. The typical Deferral Agreement defers a portion of the payment of the cash rent due during the third quarter 2020, with payment due during 2021. We retain all our rights and remedies upon default under the lease, including the right to accelerate the unpaid portion of deferred amounts if those amounts are not repaid in accordance with the rent deferral agreements.
(4) Represents active tenant discussions where no deferral agreement has yet been reached. There can be no assurance that create,we will be able to enter into deferral agreements on favorable terms, or giveat all.
(5) In general, this represents tenants that have made a partial payment and/or tenants without active communication on a potential deferral agreement. There can be no assurance that the impression they could create, economic or political instabilitycash rent will be collected.
In addition to the proactive measures taken on rent collections, we have taken additional steps to maximize our flexibility related to our liquidity and minimize the related risk during this uncertain time. In March 2020, consistent with our plans to acquire additional properties, we borrowed $205.0 million, under our Credit Facility. Additionally, on March 30, 2020, we announced a reduction in Europe,our dividend, which may cause the revenue derived from, and the market value of, properties locatedbegan in the United Kingdom and continental Europesecond quarter of 2020, reducing the cash needed to decline.



Overview
We were incorporatedfund dividend payments by approximately $48.0 million per year based on July 13, 2011 as a Maryland corporationshares outstanding at that elected to be taxed as a REIT beginning withtime. For additional information on our taxable yearfinancing activity during the nine months ended December 31, 2013. Our Common Stock is listed on the New York Stock Exchange under the symbol “GNL” and our Series A Preferred Stock is listed on the New York Stock Exchange under the symbol “GNL PR A.”
We invest in commercial properties, with an emphasis on sale-leaseback transactions involving single tenant net-leased commercial properties. Substantially all of our business is conducted through the Global Net Lease Operating Partnership, L.P. (the “OP”), a Delaware limited partnership. We have retained the Advisor to manage our affairs on a day-to-day basis. Our properties are managed and leased by Global Net Lease Properties, LLC (the “Property Manager”). The Advisor, and the Property Manager are under common control with AR Global and these related parties receive compensation and fees for various services provided to us.
As of September 30, 2019, we owned 264 properties consisting of 28.9 million rentable square feet, which were 99.6% leased, with a weighted-average remaining lease term of 8.0 years. Based on the percentage of annualized rental income on a straight-line basis, as of2020 and subsequent to September 30, 2019, 59%2020, see the “Liquidity and Capital Resources - Borrowings” section of our properties were located in the U.S.this Management’s Discussion and 41%Analysis of our properties were located in Europe. We may also originate or acquire first mortgage loans, mezzanine loans, preferred equity or securitized loans (secured by real estate). AsFinancial Condition and Results of September 30, 2019, we did not own any first mortgage loans, mezzanine loans, preferred equity or securitized loans.Operations.
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Significant Accounting Estimates and Critical Accounting Policies
For a discussion about our significant accounting estimates and critical accounting policies, see the “Significant Accounting Estimates and Critical Accounting Policies” section of our 20182019 Annual Report on Form 10-K. Except for those required by new accounting pronouncements discussed in the section referenced below, there have been no material changes from these significant accounting estimates and critical accounting policies.
Recently Issued Accounting Pronouncements
See Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion.

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Properties
We acquire and operate a diversified portfolio of commercial properties. All such properties may be acquired and operated by us alone or jointly with another party. Our portfolio of real estate properties was comprised of the following properties as of September 30, 2019:2020:
PortfolioAcquisition DateCountryNumber of PropertiesSquare Feet (in thousands)
Average Remaining Lease Term (1)
McDonald'sOct. 2012UK193.5
Wickes Building Supplies IMay 2013UK1304.0
Everything EverywhereJun. 2013UK1656.8
Thames WaterJul. 2013UK1791.9
Wickes Building Supplies IIJul. 2013UK1296.2
PPD Global LabsAug. 2013US1774.2
Northern RockSep. 2013UK2862.9
Wickes Building Supplies IIINov. 2013UK1288.2
Con-way FreightNov. 2013US71053.2
WolverineDec. 2013US14692.3
EncantoDec. 2013PR18654.8
RheinmetallJan. 2014GER13203.3
GE AviationJan. 2014US13695.3
Provident FinancialFeb. 2014UK111715.1
Crown CrestFeb. 2014UK180618.4
TraneFeb. 2014US1253.2
AvivaMar. 2014UK11328.7
DFS Trading IMar. 2014UK52409.5
GSA IMar. 2014US11351.9
National Oilwell Varco IMar. 2014US1242.8
GSA IIApr. 2014US2252.4
OBI DIYApr. 2014GER11443.3
DFS Trading IIApr. 2014UK2399.5
GSA IIIApr. 2014US2282.2
GSA IVMay 2014US1334.8
Indiana Department of RevenueMay 2014US1992.3
National Oilwell Varco IIMay 2014US1239.4
NissanMay 2014US14628.0
GSA VJun. 2014US1272.5
Lippert ComponentsJun. 2014US15395.9
Select Energy Services IJun. 2014US31366.1
Bell Supply Co IJun. 2014US6808.3
Axon Energy Products (2)
Jun. 2014US32144.0
LhoistJun. 2014US1232.3
GE Oil & GasJun. 2014US2704.8
Select Energy Services IIJun. 2014US41436.1
Bell Supply Co IIJun. 2014US2198.3
Superior Energy ServicesJun. 2014US2423.5
Amcor PackagingJun. 2014UK72954.2
GSA VIJun. 2014US173.5
Nimble StorageJun. 2014US11651.1
FedEx -3-PackJul. 2014US33392.3
Sandoz, Inc.Jul. 2014US11545.8
WyndhamJul. 2014US1324.6
ValassisJul. 2014US11012.6
GSA VIIJul. 2014US1264.1
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Portfolio Acquisition Date Country Number of Properties Square Feet (in thousands) 
Average Remaining Lease Term (1)
McDonald's Oct. 2012 UK 1 9 4.5
Wickes Building Supplies I May 2013 UK 1 30 5.0
Everything Everywhere Jun. 2013 UK 1 65 7.8
Thames Water Jul. 2013 UK 1 79 2.9
Wickes Building Supplies II Jul. 2013 UK 1 29 7.2
PPD Global Labs Aug. 2013 US 1 77 5.2
Northern Rock Sep. 2013 UK 2 86 3.9
Wickes Building Supplies III Nov. 2013 UK 1 28 9.2
Con-way Freight Nov. 2013 US 7 105 4.2
Wolverine Dec. 2013 US 1 469 3.3
Encanto Dec. 2013 PR 18 65 5.8
Rheinmetall Jan. 2014 GER 1 320 4.3
GE Aviation Jan. 2014 US 1 369 6.3
Provident Financial Feb. 2014 UK 1 117 16.1
Crown Crest Feb. 2014 UK 1 806 19.0
Trane Feb. 2014 US 1 25 4.2
Aviva Mar. 2014 UK 1 132 9.7
DFS Trading I Mar. 2014 UK 5 240 10.5
GSA I Mar. 2014 US 1 135 2.9
National Oilwell Varco I Mar. 2014 US 1 24 3.8
GSA II Apr. 2014 US 2 25 3.4
OBI DIY Apr. 2014 GER 1 144 4.3
DFS Trading II Apr. 2014 UK 2 39 10.5
GSA III Apr. 2014 US 2 28 3.2
GSA IV May 2014 US 1 33 5.8
Indiana Department of Revenue May 2014 US 1 99 3.3
National Oilwell Varco II May 2014 US 1 23 10.4
Nissan May 2014 US 1 462 9.0
GSA V Jun. 2014 US 1 27 3.5
Lippert Components Jun. 2014 US 1 539 3.3
Select Energy Services I Jun. 2014 US 3 136 7.1
Bell Supply Co I Jun. 2014 US 6 80 9.3
Axon Energy Products (2)
 Jun. 2014 US 3 214 3.5
Lhoist Jun. 2014 US 1 23 3.3
GE Oil & Gas Jun. 2014 US 2 70 5.8
Select Energy Services II Jun. 2014 US 4 143 7.1
Bell Supply Co II Jun. 2014 US 2 19 9.3
Superior Energy Services Jun. 2014 US 2 42 4.5
Amcor Packaging Jun. 2014 UK 7 295 5.2
GSA VI Jun. 2014 US 1 7 4.5
Nimble Storage Jun. 2014 US 1 165 2.1
FedEx -3-Pack Jul. 2014 US 3 339 2.8
Sandoz, Inc. Jul. 2014 US 1 154 6.8
Wyndham Jul. 2014 US 1 32 5.6

PortfolioAcquisition DateCountryNumber of PropertiesSquare Feet (in thousands)
Average Remaining Lease Term (1)
AT&T ServicesJul. 2014US14025.8
PNC - 2-PackJul. 2014US22108.8
FujitsuJul. 2014UK31639.5
Continental TireJul. 2014US1911.8
BP OilAug. 2014UK135.0
MalthurstAug. 2014UK245.1
HBOSAug. 2014UK3364.8
Thermo FisherAug. 2014US11153.9
Black & DeckerAug. 2014US1711.3
CapgeminiAug. 2014UK1902.5
Merck & Co.Aug. 2014US11464.9
GSA VIIIAug. 2014US1243.9
Waste ManagementSep. 2014US1842.3
Intier Automotive InteriorsSep. 2014UK11533.6
HP Enterprise ServicesSep. 2014UK1995.5
FedEx IISep. 2014US1123.5
Shaw Aero Devices, Inc.Sep. 2014US11312.0
Dollar General - 39-PackSep. 2014US212007.5
FedEx IIISep. 2014US22213.8
Mallinkrodt PharmaceuticalsSep. 2014US1903.9
KukaSep. 2014US12003.8
CHE TrinitySep. 2014US23742.2
FedEx IVSep. 2014US22552.3
GE AviationSep. 2014US11022.3
DNV GLOct. 2014US1824.4
Bradford & BingleyOct. 2014UK11219.0
RexamOct. 2014GER11764.4
FedEx VOct. 2014US1763.8
C&J EnergyOct. 2014US1963.1
OnguardOct. 2014US11203.3
Metro TonicOct. 2014GER16365.0
Axon Energy ProductsOct. 2014US1264.1
TokmanniNov. 2014FIN180112.9
Fife CouncilNov. 2014UK1373.4
GSA IXNov. 2014US1281.6
KPN BVNov. 2014NETH11336.3
Follett SchoolDec. 2014US14874.3
Quest DiagnosticsDec. 2014US12243.9
DieboldDec. 2014US11581.3
Weatherford IntlDec. 2014US1205.1
AM CastleDec. 2014US11289.1
FedEx VIDec. 2014US1283.9
Constellium AutoDec. 2014US13219.2
C&J Energy IIMar. 2015US11253.1
Fedex VIIMar. 2015US1124.0
Fedex VIIIApr. 2015US1264.0
Crown Group IAug. 2015US22043.3
Crown Group IIAug. 2015US241114.9
Mapes & Sprowl Steel, Ltd.Sep. 2015US1619.3
JIT Steel ServicesSep. 2015US21279.3
Beacon Health System, Inc.Sep. 2015US1505.5
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Portfolio Acquisition Date Country Number of Properties Square Feet (in thousands) 
Average Remaining Lease Term (1)
Valassis Jul. 2014 US 1 101 3.6
GSA VII Jul. 2014 US 1 26 5.1
AT&T Services Jul. 2014 US 1 402 6.8
PNC - 2-Pack Jul. 2014 US 2 210 9.8
Fujitsu Jul. 2014 UK 3 163 10.5
Continental Tire Jul. 2014 US 1 91 2.8
Achmea Jul. 2014 NETH 2 190 4.3
BP Oil Aug. 2014 UK 1 3 6.1
Malthurst Aug. 2014 UK 2 4 6.1
HBOS Aug. 2014 UK 3 36 5.8
Thermo Fisher Aug. 2014 US 1 115 4.9
Black & Decker Aug. 2014 US 1 71 2.3
Capgemini Aug. 2014 UK 1 90 3.5
Merck & Co. Aug. 2014 US 1 146 5.9
GSA VIII Aug. 2014 US 1 24 4.9
Waste Management Sep. 2014 US 1 84 3.3
Intier Automotive Interiors Sep. 2014 UK 1 153 4.6
HP Enterprise Services Sep. 2014 UK 1 99 6.5
FedEx II Sep. 2014 US 1 12 4.5
Shaw Aero Devices, Inc. Sep. 2014 US 1 131 3.0
Dollar General - 39-Pack Sep. 2014 US 21 200 8.5
FedEx III Sep. 2014 US 2 221 4.8
Mallinkrodt Pharmaceuticals Sep. 2014 US 1 90 4.9
Kuka Sep. 2014 US 1 200 4.8
CHE Trinity Sep. 2014 US 2 374 3.2
FedEx IV Sep. 2014 US 2 255 3.3
GE Aviation Sep. 2014 US 1 102 3.3
DNV GL Oct. 2014 US 1 82 5.4
Bradford & Bingley Oct. 2014 UK 1 121 10.0
Rexam Oct. 2014 GER 1 176 5.4
FedEx V Oct. 2014 US 1 76 4.8
C&J Energy Oct. 2014 US 1 96 4.1
Onguard Oct. 2014 US 1 120 4.3
Metro Tonic Oct. 2014 GER 1 636 6.0
Axon Energy Products Oct. 2014 US 1 26 5.1
Tokmanni Nov. 2014 FIN 1 801 13.9
Fife Council Nov. 2014 UK 1 37 4.4
GSA IX Nov. 2014 US 1 28 2.6
KPN BV Nov. 2014 NETH 1 133 7.3
RWE AG Nov. 2014 GER 3 594 5.2
Follett School Dec. 2014 US 1 487 5.3
Quest Diagnostics Dec. 2014 US 1 224 4.9
Diebold Dec. 2014 US 1 158 2.3
Weatherford Intl Dec. 2014 US 1 20 6.1
AM Castle Dec. 2014 US 1 128 5.1
FedEx VI Dec. 2014 US 1 28 4.9
Constellium Auto Dec. 2014 US 1 321 10.2
C&J Energy II Mar. 2015 US 1 125 4.1
Fedex VII Mar. 2015 US 1 12 5.0

PortfolioAcquisition DateCountryNumber of PropertiesSquare Feet (in thousands)
Average Remaining Lease Term (1)
Hannibal/Lex JV LLCSep. 2015US11099.0
FedEx GroundSep. 2015US1914.8
Office DepotSep. 2015NETH12068.4
FinnairSep. 2015FIN465610.5
AuchanDec. 2016FR11522.9
Pole EmploiDec. 2016FR1412.8
SagemcomDec. 2016FR12653.3
NCR DundeeDec. 2016UK11326.1
FedEx Freight IDec. 2016US1692.9
DB LuxembourgDec. 2016LUX11563.2
ING AmsterdamDec. 2016NETH15094.7
WorldlineDec. 2016FR11113.3
Foster WheelerDec. 2016UK13663.8
ID Logistics IDec. 2016GER13094.1
ID Logistics IIDec. 2016FR29644.2
Harper CollinsDec. 2016UK18734.9
DCNSDec. 2016FR1974.0
Cott Beverages IncFeb. 2017US11706.3
FedEx Ground - 2 PackMar. 2017US21626.0
Bridgestone TireSep. 2017US1486.8
GKN AerospaceOct. 2017US1986.3
NSA-St. Johnsbury IOct. 2017US18712.1
NSA-St. Johnsbury IIOct. 2017US18512.1
NSA-St. Johnsbury IIIOct. 2017US14112.1
Tremec North AmericaNov. 2017US11277.0
CumminsDec. 2017US1594.7
GSA XDec. 2017US1269.3
NSA IndustriesDec. 2017US18312.3
ChemoursFeb. 2018US13007.3
Fiat ChryslerMar. 2018US11287.4
Lee SteelMar. 2018US11148.0
LSI Steel - 3 PackMar. 2018US32187.1
Contractors Steel CompanyMay 2018US51,3927.7
FedEx Freight IIJun. 2018US12211.9
DuPont PioneerJun. 2018US12008.2
Rubbermaid - Akron OHJul. 2018US16698.3
NetScout - Allen TXAug. 2018US11459.9
Bush Industries - Jamestown NYSep. 2018US145618.0
FedEx - Greenville NCSep. 2018US12912.3
PenskeNov. 2018US16068.1
NSA IndustriesNov. 2018US16518.2
LKQ Corp.Dec. 2018US15810.3
WalgreensDec. 2018US1865.2
Grupo AntolinDec. 2018US136012.1
VersaFlexDec. 2018US111318.3
CumminsMar. 2019US1378.2
Stanley SecurityMar. 2019US1807.8
Sierra NevadaApr. 2019US1608.5
EQTApr. 2019US11279.8
HanesApr. 2019US12768.0
Union PartnersMay 2019US23908.5
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Portfolio Acquisition Date Country Number of Properties Square Feet (in thousands) 
Average Remaining Lease Term (1)
Fedex VIII Apr. 2015 US 1 26 5.0
Crown Group I Aug. 2015 US 2 204 4.3
Crown Group II Aug. 2015 US 2 411 15.9
Mapes & Sprowl Steel, Ltd. Sep. 2015 US 1 61 10.3
JIT Steel Services Sep. 2015 US 2 127 10.3
Beacon Health System, Inc. Sep. 2015 US 1 50 6.5
Hannibal/Lex JV LLC Sep. 2015 US 1 109 10
FedEx Ground Sep. 2015 US 1 91 5.8
Office Depot Sep. 2015 NETH 1 206 9.4
Finnair Sep. 2015 FIN 4 656 4.9
Auchan Dec. 2016 FR 1 152 3.9
Pole Emploi Dec. 2016 FR 1 41 3.8
Sagemcom Dec. 2016 FR 1 265 4.3
NCR Dundee Dec. 2016 UK 1 132 7.1
FedEx Freight I Dec. 2016 US 1 69 3.9
DB Luxembourg Dec. 2016 LUX 1 156 4.2
ING Amsterdam Dec. 2016 NETH 1 509 5.8
Worldline Dec. 2016 FR 1 111 4.3
Foster Wheeler Dec. 2016 UK 1 366 4.8
ID Logistics I Dec. 2016 GER 1 309 5.1
ID Logistics II Dec. 2016 FR 2 964 5.2
Harper Collins Dec. 2016 UK 1 873 5.9
DCNS Dec. 2016 FR 1 97 5.0
Cott Beverages Inc Feb. 2017 US 1 170 7.3
FedEx Ground - 2 Pack Mar. 2017 US 2 162 7.0
Bridgestone Tire Sep. 2017 US 1 48 7.8
GKN Aerospace Oct. 2017 US 1 98 7.3
NSA-St. Johnsbury I Oct. 2017 US 1 87 13.1
NSA-St. Johnsbury II Oct. 2017 US 1 85 13.1
NSA-St. Johnsbury III Oct. 2017 US 1 41 13.1
Tremec North America Nov. 2017 US 1 127 8.0
Cummins Dec. 2017 US 1 59 5.7
GSA X Dec. 2017 US 1 26 10.3
NSA Industries Dec. 2017 US 1 83 13.3
Chemours Feb. 2018 US 1 300 8.3
Fiat Chrysler Mar. 2018 US 1 128 8.4
Lee Steel Mar. 2018 US 1 114 9.0
LSI Steel - 3 Pack Mar. 2018 US 3 218 8.1
Contractors Steel Company May 2018 US 5 1,392 8.3
FedEx Freight II Jun. 2018 US 1 22 12.9
DuPont Pioneer Jun. 2018 US 1 200 9.2
Rubbermaid - Akron OH Jul. 2018 US 1 669 9.3
NetScout - Allen TX Aug. 2018 US 1 145 10.9
Bush Industries - Jamestown NY Sep. 2018 US 1 456 19
FedEx - Greenville NC Sep. 2018 US 1 29 13.4
Penske Nov. 2018 US 1 606 9.1
NSA Industries Nov. 2018 US 1 65 19.2
LKQ Corp. Dec. 2018 US 1 58 11.3
Walgreens Dec. 2018 US 1 86 6.2
PortfolioAcquisition DateCountryNumber of PropertiesSquare Feet (in thousands)
Average Remaining Lease Term (1)
ComDocJun. 2019US11088.7
Metal TechnologiesJun. 2019US122813.7
Encompass HealthJun. 2019US119912.5
HeatcraftJun. 2019US12167.8
C.F. SauerAug. 2019US659818.8
SWECOSep. 2019US11919.7
Viavi SolutionsSep. 2019US213211.9
FaureciaDec. 2019US12788.5
PlasmaDec. 2019US91259.8
WhirlpoolDec. 2019US62,92411.3
FedExDec. 2019CN2208.7
NSA IndustriesDec. 2019US111619.3
Viavi SolutionsJan. 2020US14611.9
CSTKFeb. 2020US1569.5
Metal TechnologiesFeb. 2020US13114.4
WhirlpoolFeb. 2020IT219611.4
FedexMar. 2020CN1295.7
KlaussnerMar. 2020US42,19519.5
PlasmaMay 2020US67910.9
KlaussnerJun. 2020US126119.5
NSA IndustriesJun. 2020US14819.8
Johnson ControlsSep. 2020UK & SP312419.7
Total29934,6828.7

___________
(1)If the portfolio has multiple properties with varying lease expirations, average remaining lease term is calculated on a weighted-average basis. Weighted- average remaining lease term in years is calculated based on square feet as of September 30, 2020.
(2)Of the three properties, one location is vacant while the other two properties remain in use.
44
Portfolio Acquisition Date Country Number of Properties Square Feet (in thousands) 
Average Remaining Lease Term (1)
Grupo Antolin Dec. 2018 US 1 360 13.1
VersaFlex Dec. 2018 US 1 113 19.3
Cummins Mar. 2019 US 1 37 9.2
Stanley Security Mar. 2019 US 1 80 8.8
Sierra Nevada Apr. 2019 US 1 60 9.5
EQT Apr. 2019 US 1 127 10.8
Hanes Apr. 2019 US 1 276 9.0
Union Partners May 2019 US 2 390 9.5
ComDoc Jun. 2019 US 1 108 9.7
Metal Technologies Jun. 2019 US 1 228 14.7
Encompass Health Jun. 2019 US 1 199 14.3
Heatcraft Jun. 2019 US 1 216 8.8
C.F. Sauer SLB Jul. 2019 US 6 598 19.8
Viavi Solutions Sep. 2019 US 2 132 12.9
SWECO Sep. 2019 US 1 191 10.7
Total     264 28,939
(3) 
8.0

(1)
If the portfolio has multiple properties with varying lease expirations, average remaining lease term is calculated on a weighted-average basis. Weighted- average remaining lease term in years is calculated based on square feet as of September 30, 2019.
(2)
Of the three properties, one location is vacant while the other two properties remain in use.
(3)
Total square feet may not foot, due to rounding.

Results of Operations
In addition to the comparative period-over-period discussions below, please see the “Overview -Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s actions taken to mitigate those risks and uncertainties.
Comparison of the Three Months Ended September 30, 20192020 and 20182019
Net (Loss) Income Attributable to Common Stockholders
Net (loss) income attributable to common stockholders was $6.9$(0.5) million for the three months ended September 30, 2019,2020, as compared to net income attributable to common stockholders of $0.2$6.9 million for the three months ended September 30, 2018.2019. The change in net (loss) income attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.
Revenue from Tenants
In addition to base rent, our lease agreements generally require tenants to pay or reimburse us for all property operating expenses, which primarily reflect insurance costs and real estate taxes incurred by us and subsequently reimbursed by the tenant. However, some limited property operating expenses that are not the responsibility of the tenant are absorbed by us.
Revenue from tenants was $77.9$82.7 million and $71.9$77.9 million for the three months ended September 30, 20192020 and 2018,2019, respectively. The increase was primarily driven by the impact of our property acquisitions partially offset bysince September 30, 2019 and the impact of our dispositions since September 30, 2018.foreign exchange rates. During the third quarter of 2019 we had 33 dispositions which did not materially impact revenue from tenants for the three months ended September 30, 2019 because the dispositions occurred toward the end2020 there were increases of September 2019.
The increase in revenue from tenants was partially offset by decreases during the three months ended September 30, 2019 of 5.4%4.8% in the average exchange rate for British Pounds Sterling (“GBP”)GBP to U.S. Dollar (“USD”)USD and 4.4%5.1% in the EUR to USD, when compared to the same period last year. Bad debt expense duringThese increases were partially offset by the three months endedimpact of our dispositions since September 30, 2019, which is recorded as a reduction to revenue from tenants, was not significant. Prior period amounts for bad debt expense are included in property operating expenses (see below and see Note 2 — Summary of Significant Accounting Polices to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional details). Also, in the third quarter of 2018, we recorded income of $3.0 million relating to a lease termination fee from the disposal of Veolia Water, which was sold during the three months ended September 30, 2018. Prior to the sale, we agreed to terminate the lease with the existing tenant and, as a result, received the termination fee in accordance with the terms of the lease.

2019.
Property Operating Expenses
Property operating expenses were $8.2$7.5 million and $5.3$8.2 million for the three months ended September 30, 20192020 and 2018,2019, respectively. These costs primarily relate to insurance costs and real estate taxes on our properties, which are generally reimbursable by our tenants. The main exceptions are GSAGovernment Services Administration (“GSA”) properties for which certain expenses are not reimbursable by tenants. The increasedecrease was primarily due to higherlower reimbursable expenses incurred in the third quarterthree months ended September 30, 2020, primarily driven by the impact of 2019. Prior to January 1,our property dispositions since September 30, 2019, property operating expenses included provisions for bad debt expense associated with receivables we believed were doubtful of collection. Effective January 1, 2019, in accordance with new accounting guidance, bad debt expense is recorded as an adjustment to revenue. The increase in property operating expenses was partially offset by decreasesthe impact of our acquisitions since September 30, 2019 and increases during the three months ended September 30, 20192020 of 5.4%4.8% in the average exchange rate for GBP to USD and 4.4%5.1% in the EUR to USD, when compared to the same period last year.
During the three months ended September 30, 2018,we recognized bad debt expense of $80,000 for receivables, which primarily related to one of our tenants that vacated its space and ceased making rental payments.
Operating Fees to Related Parties
Operating fees paid to related parties were $8.2$8.9 million and $7.0$8.2 million for the three months ended September 30, 20192020 and 2018,2019, respectively. Operating fees to related parties consist of compensation to the Advisor for asset management services, as well as property management fees paid to the Advisor and Property Manager. Our advisory agreementAdvisory Agreement requires us to pay to the Advisor a Minimum Base Management Fee of $18.0 million per annum ($4.5 million per quarter) and a Variable Base Management Fee, both payable in cash, and Incentive Compensation (as defined in our advisory agreement)Advisory Agreement), generally payable in cash and shares, if the applicable hurdles are met met. In light of the unprecedented market disruption resulting from the COVID-19 pandemic, in May 2020, we amended our Advisory Agreement to temporarily lower the effective thresholds of these applicable hurdles. There was $24,000 of Incentive Compensation earned for the quarter ended September 30, 2020 and no Incentive Compensation was earned for the quarter ended September 30, 2019. The increase to operating fees between the periods in part results from an increase of $0.6 million in the Variable Base Management Fee resulting from the incremental additional net proceeds generated from offerings of equity securities since September 2019. The Variable Base Management Fee would also increase in connection with other offerings or issuances of equity securities.(see seeNote 10 — Related Party Transactions to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional details). The increase to operating fees between the periods in part results from an increase of $1.4 million in the Variable Base Management Fee resulting from the incremental additional net proceeds of approximately $367.0 million generated between October 1, 2018 and September 30, 2019 from sales of Series A Preferred Stock pursuant to our “at the market” equity program for our Series A Preferred Stock (the “Preferred Stock ATM Program”) and sales of Common Stock pursuant to our “at the market” equity offering program for Common Stock (the “Common Stock ATM Program”). The Variable Base Management Fee would also increase in connection with other offerings or issuances of equity securities. During the three months ended September 30, 2019 and 2018, no Incentive Compensation was earned.
Our Property Manager is paid fees for the management of our properties. Property management fees are calculated as a percentage of gross revenues generated by the applicable properties. During the three months ended September 30, 20192020 and 2018,2019, property management fees were $1.5 million and $1.3 million, respectively.
Impairment Charges
In November 2019 we sold two properties in the Netherlands. As of September 30, 2019 we concluded that the estimated future undiscounted cash flows associated with these two properties did not exceed their respective carrying values, and as a result, recorded an impairment charge of $6.4 million to reflect the estimated fair value of the properties.each period.
Acquisition, Transaction and Other Costs
We recognized $0.2 million$75,000 and $2.8$0.2 million of acquisition, transaction and other costs during the three months ended September 30, 20192020 and 2018,2019, respectively. Acquisition, transaction and other costs during the three months ended September 30, 20182020 were primarily relateddue to $0.5 million in litigation costs for terminated acquisitions and for the three months ended September 30, 2019, these costs were primarily related to the termination of the Moor Park Capital Partners LLP (the “Former Service Provider”) and $1.7 million in fees associated with the explorationour former European service provider.
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General and Administrative ExpenseExpenses
General and administrative expenses were $3.3$2.6 million and $3.2$3.3 million for the three months ended September 30, 20192020 and 2018,2019, respectively, primarily consisting of professional fees including audit and taxation services, board member compensation and directors’ and officers’ liability insurance. The decrease for the three months ended September 30, 2020 compared to the three months ended September 30, 2019 was primarily due to lower professional fees.
Equity-Based Compensation Expense
During the three months ended September 30, 2020 and 2019, we recognized equity-based compensation expense of $2.5 million and $2.5 million, respectively, which primarily related to our multi-year outperformance agreement entered into with the Advisor in July 2018 (the “2018 OPP”). During the three months ended September 30, 2018, we recognized equity-based compensation expense of $2.1 million related to the 2018 OPP and the multi-year outperformance agreement entered into in June 2015 (“2015 OPP”). Equity basedEquity-based compensation expense also includes amortization of restricted shares of Common Stock (“Restricted Shares”) granted to employees of the Advisor or its affiliates who are involved in providing services to us and restricted stock units in respect of shares of Common Stock (“RSUs”) granted to our independent directors.
Through December 31, 2018, the 2015 OPP and 2018 OPP were remeasured at fair market value as of each balance sheet date with a cumulative effect adjustment based on the new value each period and vesting. As the value declined, prior accruals

were reversed and income was recognized. Ultimately, the 2015 OPP resulted in no LTIP Units being earned upon final measurement at June 2, 2018.
Under new accounting guidance adopted by us on January 1, 2019 that applies Equity-based compensation expense related to the 2018 OPP beginning on that date, the equity-based compensation expense calculated as of adoption of the new guidance is now fixed as of that dateJanuary 1, 2019 and will not beis only remeasured in subsequent periods unlessif the 2018 OPP is amended. In February 2019, the 2018 OPP was amended in light of the effectiveness of a merger of one member of the peer group. Under the accounting rules, we were required to calculate any excess of the new value of Award LTIP Units in accordance with the provisions of the amendment ($29.9 million) over the fair value immediately prior to the amendment ($23.3 million). This excess of approximately $6.6 million is being expensed over the period from February 21, 2019, the date our compensation committee approved the amendment, through June 2, 2021. For additional information, see Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncementsand see Note 12 — Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q.
Depreciation and Amortization
Depreciation and amortization expense was $31.6$35.0 million and $30.2$31.6 million for the three months ended September 30, 20192020 and 2018,2019, respectively. The increase in the third quarter of 20192020 as compared to the third quarter of 2018 is2019 was due to additional depreciation and amortization expense incurred primarily fromrecorded as a result of the impact of our property acquisitions partially offset by the impact of our dispositions since September 30, 2018. During the third quarter of 2019 we had 33 dispositions which did not materially impact depreciation and amortization expense for the three months ended September 30, 2019 because the dispositions occurred toward the end of September 2019. The increase in depreciation and amortization expense was partially offset by decreasesincreases during the three months ended September 30, 20192020 of 5.4%4.8% in the average exchange rate for GBP to USD and 4.4%5.1% in the EUR to USD, when compared to the same period last year.year, partially offset by the impact of our dispositions since September 30, 2019.
Gain(Loss)Gain on Dispositions of Real Estate Investments
During the three months ended September 30, 2020, we did not sell any properties. During the three months ended September 30, 2019, we sold 33 properties located in the United States (32 Family Dollar retail stores and one industrial property) for a total contract sales price of $53.0 million, resulting in an aggregate gain of $7.0 million.
We sold one real estate asset during the three months ended September 30, 2018, located in Vandalia, Ohio. Prior to the sale, we agreed to terminate the lease with the existing tenant and received a termination fee of $3.0 million in accordance with the terms of the lease, which is recorded in revenue from tenants in the accompanying consolidated statements of operations for the three months ended September 30, 2018. At closing, we paid approximately $3.0 million in excess of proceeds received for the repayment of mortgage debt and recorded a loss of $1.9 million.
Interest Expense
Interest expense was $16.2$18.7 million and $15.1$16.2 million for the three months ended September 30, 20192020 and 2018,2019, respectively. The increase was primarily related to an increase in average borrowings. The net amount of our total debt outstanding increased from $1.7 billion as of September 30, 2018 to $1.9 billion as of September 30, 2019 to $2.1 billion as of September 30, 2020 and the weighted-average effective interest rate of our total debt was 3.0% as of September 30, 20182019 and 3.0%3.1% as of September 30, 2019.2020. The increase in interest expense was partially offsetalso impacted by decreasesincreases during the three months ended September 30, 20192020 of 5.4%4.8% in the average exchange rate for GBP to USD and 4.4%5.1% in the EUR andto USD, when compared to the same period last year.
We view a mixcombination of secured and unsecured financing sources as an efficient and accretive means to acquire properties and manage working capital. Our interest expense in future periods will vary based on interest rates as well as our level of future borrowings, and interest rates, which will depend on our refinancing needs and our acquisition activity.activity and interest rates.
Loss on Extinguishment of Debt
Loss on extinguishment of debt wasof $0.6 million and $2.6 million for the three months ended September 30, 2019 and 2018, respectively. The loss in the third quarter of 2019 was primarily due to charges for previously recorded deferred financing costs related to the repayment of two mortgages. During the third quarter of 2018, we entered into the UK loan, which is secured by all 43 of our properties located in the United Kingdom. At closing, the £209.0 million of net proceeds were used to repay all outstanding mortgage indebtedness encumbering 38 of the 43 properties. As a result of this transaction, we recorded charges totaling $2.6 million, consisting of $1.5 million of previously recorded deferred financing costs, $0.6 million in mortgage prepayment fees as a result of the UK Loan and $0.5 million in mortgage prepayment fees as a result of a property disposition.
Foreign Currency and Interest Rate Impact on Operations
The gains on derivatives instrumentsloss of $2.5 million and gain of $3.0 million and $1.3 millionon derivative instruments for the three months ended September 30, 20192020 and 2018,2019, respectively, reflect the marked-to-market impact from foreign currency and interest rate derivative instruments used to hedge the investment portfolio from currency and interest rate movements, and was mainly driven by currency rate changes in the GBP and EUR compared to the USD.

The quarterly average GBP to USD exchange rate increased 4.8% and the quarterly average EUR to USD exchange rate increased 5.1% during the three months ended September 30, 2020 as compared to the three months ended September 30, 2019.
We had no gains or losses on undesignated foreign currency advances and other hedge ineffectiveness for the three months ended September 30, 20192020 and losses of $108,000 for the three months ended September 30, 2018.2019.
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As a result of our foreign investments in Europe, and, to a lesser extent, our investments in Canada, we are subject to risk from the effects of exchange rate movements in the EuroEUR, GBP and, GBP currencies,to a lesser extent, CAD, which may affect costs and cash flows in our functional currency, the USD. We generally manage foreign currency exchange rate movements by matching our debt service obligation to the lender and the tenant’s rental obligation to us in the same currency. This reduces our overall exposure to currency fluctuations. In addition, we may use currency hedging to further reduce the exposure to our net cash flow. We are generally a net receiver of these currencies (we receive more cash than we pay out), and therefore our results of operations of our foreign properties benefit from a weaker USD, and are adversely affected by a stronger USD, relative to the foreign currency. During the three months ended September 30, 2019,2020, the average exchange rate for GBP to USD decreasedincreased by 5.4%4.8%, and the average exchange rate for EuroEUR to USD decreasedincreased by 4.4%5.1%, when compared to the same period last year.
Income Tax Expense
Although as a REIT we generally do not pay U.S. federal income taxes, we recognize income tax (expense) benefit domestically for state taxes and local income taxes incurred, if any, and also in foreign jurisdictions in which we own properties. In addition, we perform an analysis of potential deferred tax or future tax benefit and expense as a result of book and tax differences and timing differences in taxes across jurisdictions. Our current income tax expense fluctuates from period to period based primarily on the timing of those taxes. Income tax expense was $0.9 million and $0.5$0.9 million for the three months ended September 30, 20192020 and 2018,2019, respectively.
Comparison of the Nine Months Ended September 30, 20192020 and 20182019
Net (Loss) Income Attributable to Common Stockholders
Net (loss) income attributable to common stockholders was income of $5.5 million for the nine months ended September 30, 2020, as compared to $25.3 million for the nine months ended September 30, 2019, as compared to net income attributable to common stockholders of $7.8 million for the nine months ended September 30, 2018.2019. The change in net (loss) income attributable to common stockholders is discussed in detail for each line item of the consolidated statements of operations in the sections that follow.
Revenue from Tenants
In addition to base rent, our lease agreements generally require tenants to pay or reimburse us for all property operating expenses, which primarily reflect insurance costs and real estate taxes incurred by us and subsequently reimbursed by the tenant. However, some limited property operating expenses that are not the responsibility of the tenant are absorbed by us.
Revenue from tenants was $229.5$243.1 million and $211.0$229.5 million for the nine months ended September 30, 20192020 and 2018,2019, respectively. The increase was primarily driven by the impact of our property acquisitions since September 30, 2019, partially offset by the impact of our dispositions since September 30, 2018.2019. The impact of the changes in average exchange rates for GBP and EUR did not have a significant impact on the change in revenue from tenants. During the nine months ended September 30, 2019 we had 33 dispositions which did not materially impact revenue from tenants for the nine months ended September 30, 2019 because the dispositions occurred toward the end2020 there was a decrease of September 2019.
The increase in revenue from tenants was partially offset by decreases during the nine months ended September 30, 2019 of 5.8%0.2% in the average exchange rate for GBP to USD and 5.9%an increase of 0.1% in the EUR to USD, when compared to the same period last year. Also, during the nine months ended September 30, 2019, we did not recognize any bad debt expense, which effective January 1, 2019, is recorded as a reduction to revenue from tenants. Prior period amounts are included in property operating expenses (see below and see Note 2 — Summary of Significant Accounting Polices to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional details). Also, in the third quarter of 2018, we recorded income of $3.0 million relating to a lease termination fee from the disposal of Veolia Water, which was sold during the three months ended September 30, 2018. Prior to the sale, we agreed to terminate the lease with the existing tenant and, as a result, received the termination fee in accordance with the terms of the lease.
Property Operating Expenses
Property operating expenses were $22.6$22.7 million and $21.0$22.6 million for the nine months ended September 30, 20192020 and 2018,2019, respectively. These costs primarily relate to insurance costs and real estate taxes on our properties, which are generally reimbursable by our tenants. The main exceptions are GSA properties for which certain expenses are not reimbursable by tenants. The increase was primarily due to higher reimbursable expenses incurred in the nine months ended September 30, 2020, primarily driven by the impact of our property acquisitions since September 30, 2019, partially offset by the impact of our dispositions since September 30, 2019. Prior to January 1, 2019, property operating expenses included provisionsThe change in average exchange rates for bad debt expense associated with receivables we believed were doubtful of collection. Effective January 1, 2019, in accordance with new accounting guidance, bad debt expenses is recorded as an adjustment to revenue. The increaseGBP and EUR did not have a significant impact on the change in property operating expenses was partially offset by decreases during the nine months ended September 30, 2019 of 5.8% in the average exchange rate for GBP to USD and 5.9% in the EUR to USD, when compared to the same period last year.

During the nine months ended September 30, 2018 we recognized bad debt expense of $0.2 million for receivables, which primarily related to one of our tenants that vacated its space and ceased making rental payments.expenses.
Operating Fees to Related Parties
Operating fees paid to related parties were $24.4$26.6 million and $20.9$24.4 million for the nine months ended September 30, 20192020 and 2018,2019, respectively. Operating fees to related parties consist of compensation to the Advisor for asset management services, as well as property management fees paid to the Advisor and Property Manager, including amounts subsequently paid by the Advisor and the Property Manager to the Former Service Provider for our European investments, prior to the termination of the Former Service Provider effective in March 2018.Manager. Our advisory agreementAdvisory Agreement requires us to pay to the Advisor a Base Management Fee of $18.0 million per annum ($4.5 million per quarter) and a Variable Base Management Fee, both payable in cash, and Incentive Compensation (as defined in our Advisory Agreement), generally payable in cash and shares, if the applicable hurdles are met (met. In light of the unprecedented market disruption resulting from the COVID-19 pandemic, in May 2020, we amended our Advisory Agreement to temporarily lower the effective thresholds of these applicable hurdles. There was no Incentive Compensation earned for the nine months ended September 30, 2020 or 2019. The increase to operating fees between the periods in part results from an increase of $2.0 million in the Variable Base Management Fee resulting from the incremental additional net proceeds generated from offerings of equity securities. The Variable Base Management Fee would also increase in connection with other offerings or issuances of equity securities (see seeNote 10 — Related Party Transactions to our consolidated financial statements in this Quarterly Report on Form 10-Q for additional details). The increase to operating fees between the periods in part results from an increase
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Table of $3.3 million in the Variable Base Management Fee resulting from the incremental additional net proceeds of approximately $367.0 million generated between July 1, 2018 and September 30, 2019 from sales pursuant to the Preferred Stock ATM Program and the Common Stock ATM Program. The Variable Base Management Fee would also increase in connection with other offerings or issuances of equity securities. During the nine months ended September 30, 2019 and 2018, no Incentive Compensation was earned.Contents
Our Property Manager is paid fees for the management of our properties. Property management fees are calculated as a percentage of gross revenues generated by the applicable properties. During the nine months ended September 30, 20192020 and 2018,2019, property management fees were $4.4 million and $4.3 million, and $3.7 million, respectively.
Impairment Charges
In November 2019 we sold two properties in the Netherlands. As of September 30, 2019 we concluded that the estimated future undiscounted cash flows associated with these two properties did not exceed their respective carrying values, and as a result, recorded an impairment charge of $6.4 million to reflect the estimated fair value of the properties.
Acquisition, Transaction, and Other Costs
We recognized $0.4 million and $1.3 million of acquisition, transaction and other costs during the nine months ended September 30, 2020 and 2019, whichrespectively. Acquisition, transaction and other costs during the nine months ended September 30, 2020 were due to costs for terminated acquisitions and the costs during the nine months ended September 30, 2019 primarily consist of litigation costs related to the termination of the Former Service Provider. During the nine months ended September 30, 2018, acquisition and transaction related expenses totaled $5.2 million, which primarily related to $1.9 million in litigation costs related to the termination of the Former Service Provider, $1.7 million in fees associated with the exploration of a potential equity offering, $0.6 million in costs to refinance foreign debt and $1.0 million of other costs.our former European service provider.
General and Administrative ExpenseExpenses
General and administrative expenses were $8.8$9.0 million and $7.8$8.8 million for the nine months ended September 30, 20192020 and 2018,2019, respectively, and primarily consist of professional fees including audit and taxation services, board member compensation and directors’ and officers’ liability insurance. The increase for the nine months ended September 30, 20192020 compared to the nine months ended September 30, 20182019 was primarily due to the increase in professional fees.
Equity-Based Compensation Expense
During the nine months ended September 30, 20192020 and 2018,2019, we recognized equity-based compensation expense of $7.5 million and $7.0 million, respectively, which primarily related to the 2018 OPP. DuringEquity-based compensation expense also includes amortization of Restricted Shares granted to employees of the nine months ended September 30, 2018, we recognized $1.2 million for equity-basedAdvisor or its affiliates who are involved in providing services to us and RSUs granted to our independent directors. Equity-based compensation expense related to the 2018 OPP and the 2015 OPP. Equity based compensation expense also includes amortization of restricted stock units in respect of shares of Common Stock (“RSUs”) granted to our independent directors.
Through December 31, 2018, the 2015 OPP and 2018 OPP were remeasured at fair market valueis fixed as of each balance sheet date with a cumulative effect adjustment based on the new value each period and vesting. As the value declined, prior accruals were reversed and income was recognized. Ultimately, the 2015 OPP resulted in no LTIP Units being earned upon final measurement at June 2, 2018.
Under new accounting guidance adopted by us on January 1, 2019 that applies to the 2018 OPP beginning on that date, the equity-based compensation expense calculated as of adoption of the new guidanceand is now fixed as of that date and will not beonly remeasured in subsequent periods unlessif the 2018 OPP is amended. In February 2019, the 2018 OPP was amended in light of the effectiveness of a merger of one member of the peer group. Under the accounting rules, we were required to calculate any excess of the new value of Award LTIP Units in accordance with the provisions of the amendment ($29.9 million) over the fair value immediately prior to the amendment ($23.3 million). This excess of approximately $6.6 million is being expensed over the period from February 21, 2019, the date our compensation committee approved the amendment, through June 2, 2021. For additional information, see Note 2 — Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncementsand see Note 12 -— Equity-Based Compensation to our consolidated financial statements included in this Quarterly Report on Form 10-Q.


Depreciation and Amortization
Depreciation and amortization expense was $94.0$102.6 million and $89.5$94.0 million for the nine months ended September 30, 20192020 and 2018,2019, respectively. The increase in the first nine months of 20192020 compared to the first nine months of 20182019 was due to additional depreciation and amortization expense recorded as a result of the net impact of our property acquisitions since September 30, 2019, partially offset by the impact of our dispositions since September 30, 2018. 2019. The change in average exchange rates for GBP and EUR did not have a significant impact on the change in depreciation and amortization expense.
Gain on Dispositions of Real Estate Investments
During the nine months ended September 30, 20192020, we had 33 dispositions which did not materially impact depreciation and amortization expense for the nine months ended September 30, 2019 because the dispositions occurred toward the end of September 2019. The increase in depreciation and amortization expense was partially offset by decreases during the nine months ended September 30, 2019 of 5.8% in the average exchange rate for GBP to USD and 5.9% in the EUR to USD, when compared to the same period last year.
Gain (Loss) on Dispositions of Real Estate Investments
sell any properties. During the nine months ended September 30, 2019, we sold 97 properties located in the United States (94 Family Dollar retail stores and three industrial properties) and one property located in the United Kingdom for a total contract sales price of $145.8 million, resulting in a gain of $14.8 million.
During the nine months ended September 30, 2018, we sold two real estate assets for a total contract sales price of $25.3 million, resulting in a loss of $5.8 million.
Interest Expense
Interest expense was $47.0$52.6 million and $42.5$47.0 million for the nine months ended September 30, 20192020 and 2018,2019, respectively. The increase was primarily related to an increase in average borrowings. The amount of our total debt outstanding increased from $1.7 billion as of September 30, 2018 to $1.9 billion as of September 30, 2019 to $2.1 billion as of September 30, 2020 and the weighted-average effective interest rate of our total debt was 3.0% as of September 30, 20182019 and 3.0%3.1% as of September 30, 2019.2020. The increasechange in average exchange rates for GBP and EUR did not have a significant impact on the change in interest expense was partially offset by decreases during the nine months ended September 30, 2019 of 5.8% in the average exchange rate for GBP to USD and 5.9% in the EUR to USD, when compared to the same period last year.expense.
We view a mixcombination of secured and unsecured financing sources as an efficient and accretive means to acquire properties and manage working capital. Our interest expense in future periods will vary based on interest rates as well as our level of future borrowings, and interest rates, which will depend on our refinancing needs and our acquisition activity.
Loss on Extinguishment of Debt
Loss on extinguishment of debt was $1.3$0.3 million and $3.9$1.3 million for the nine months ended September 30, 2020 and 2019, and 2018, respectively. The loss in the 2018 period was dueThis amount relates to the write offrefinancing of $1.5 million of previously recorded deferred financing costsour properties in France and related prepayment penalties paid on early extinguishment of debt of $2.4 million. Prepayment penalties for the nine months ended September 30, 2018 includes the reclassification of $1.3 million of costs which were previously classified as acquisition2020 and transaction related costs for the threenine months ended JuneSeptember 30, 2018.2019, this amount was primarily due to charges for previously recorded deferred financing costs related to the repayment of two mortgages.

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Foreign Currency and Interest Rate Impact on Operations
The gains on derivative instruments of $4.7$0.4 million and $4.7 million for the nine months ended September 30, 20192020 and 2018,2019, respectively, reflect the marked-to-market impact from foreign currency and interest rate derivative instruments used to hedge the investment portfolio from currency and interest rate movements, and was mainly driven by currency rate changes in the GBP and EUR compared to the USD.
During the nine months ended September 30, 20192020 we recorded no gains or losses on undesignated foreign currency advances and 2018,other hedge ineffectiveness. During the nine months ended September 30, 2019, we recorded gains on undesignated foreign currency advances and other hedge ineffectiveness of $0.1 million and losses of $18,000, respectively.million.
As a result of our foreign investments in Europe, and, to a lesser extent, our investments in Canada, we are subject to risk from the effects of exchange rate movements in the EuroEUR, GBP and, GBP currencies,to a lesser extent, CAD, which may affect costs and cash flows in our functional currency, the USD. We generally manage foreign currency exchange rate movements by matching our debt service obligation to the lender and the tenant’s rental obligation to us in the same currency. This reduces our overall exposure to currency fluctuations. In addition, we may use currency hedging to further reduce the exposure to our net cash flow. We are generally a net receiver of these currencies (we receive more cash than we pay out), and therefore our results of operations of our foreign properties benefit from a weaker USD, and are adversely affected by a stronger USD, relative to the foreign currency. During the nine months ended September 30, 2019,2020, the average exchange rate for GBP to USD decreased by 5.8%0.2%, and the average exchange rate for EuroEUR to USD decreasedincreased by 5.9%0.1%, when compared to the same period last year. During the three months ended September 30, 2019, we entered into an LOI to acquire three properties in Canada for a purchase price of $10.4 million. The LOI may not lead to a definitive agreement, and there can be no assurance we will complete this pending acquisition on its contemplated terms, or at all. If we do complete the acquisition, it will be our first acquisition outside of the United States (including Puerto Rico) and Europe, and we will thereafter be exposed to fluctuations in the Canadian dollar, in addition to the GBP and the Euro.
Income Tax Expense
Although as a REIT we generally do not pay U.S. federal income taxes, we recognize income tax (expense) benefit domestically for state taxes and local income taxes incurred, if any, and also in foreign jurisdictions in which we own properties. In addition,

we perform an analysis of potential deferred tax or future tax benefit and expensesexpense as a result of book and tax differences and timing differences in taxationtaxes across jurisdictions. Our current income tax expense fluctuates from period to period based primarily on the timing of tax payments. Income tax expense was $2.5 million and $2.7 million for nine months ended September 30, 2020 and $2.8 million for2019 respectively.
Cash Flows from Operating Activities
During the nine months ended September 30, 20192020, net cash provided by operating activities was $136.3 million. The level of cash flows provided by operating activities is driven by, among other things, rental income received, operating fees paid to related parties for asset and 2018, respectively.
property management services and interest payments on outstanding borrowings. Cash Flowsflows provided by operating activities during the nine months ended September 30, 2020 reflect net income of $19.3 million, adjusted for non-cash items of $112.7 million (primarily depreciation, amortization of intangibles, amortization of deferred financing costs, amortization of mortgage premium/discount, amortization of above- and below-market lease and ground lease assets and liabilities, bad debt expense, unbilled straight-line rent (including the effect of adjustments due to rent deferrals), and equity-based compensation). In addition, operating cash flow increased by $9.1 million, due to working capital items and a lease incentive payment of $4.7 million related to the signing of lease extensions for four properties leased to Finnair during the nine months ended September 30, 2020 which reduces cash flows. The incentive was negotiated in exchange for extending the weighted-average remaining lease term on the properties from Operating Activities4.7 years to 11.0 years.
During the nine months ended September 30, 2019, net cash provided by operating activities was $97.8 million. The level of cash flows provided by operating activities is driven by, among other things, rental income received, operating fees paid to related parties for asset and property management services and interest payments on outstanding borrowings. Cash flows provided by operating activities during the nine months ended September 30, 2019 reflect net income of $33.5 million, adjusted for non-cash items of $102.1 million (primarily depreciation, amortization of intangibles, amortization of deferred financing costs, amortization of mortgage premium/discount, amortization of above- and below-market lease and ground lease assets and liabilities, bad debt expense, unbilled straight-line rent, and equity-based compensation). In addition, working capital items decreased operating cash flow by $27.3 million.
During the nine months ended September 30, 2018, netCash Flows from Investing Activities
Net cash provided by operating activities was $103.4 million. The level of cash flows provided by operating activities is driven by, among other things, rental income received, operating fees paid to related parties for asset and property management and interest payments on outstanding borrowings. Cash flows provided by operatingused in investing activities during the nine months ended September 30, 2018 reflect net income2020 of $15.2$178.4 million adjustedwas driven by property acquisitions of $170.8 million, deposits for non-cash itemsreal estate investments of $92.5$4.0 million, (primarily depreciation, amortizationand capital expenditures of intangibles, amortization of deferred financing costs, amortization of mortgage premium/discount, amortization of above- and below-market lease and ground lease assets and liabilities, bad debt expense, unbilled straight-line rent, and equity-based compensation). In addition, working capital items decreased operating cash flow by $9.0$3.6 million.
Cash Flows from Investing Activities
Net cash used in investing activities during the nine months ended September 30, 2019 of $182.2 million was driven by property acquisitions of $309.0 million, property acquisition deposits of $1.1 million and capital expenditures of $13.7 million. These cash uses were partially offset by net proceeds from asset dispositions of $141.5 million during the nine months ended September 30, 2019.

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Cash Flows from Financing Activities
Net cash used in investingprovided by financing activities during the nine months ended September 30, 2018 of $251.0 million was driven by property acquisitions of $267.4 million, property acquisition deposits of $3.8 million and capital expenditures of $2.6 million. These cash uses were partially offset by cash from asset dispositions of $23.3$69.4 million during the nine months ended September 30, 2018.
Cash Flows2020 was a result of net proceeds from Financing Activitiesborrowings under our Revolving Credit Facility of $65.7 million, net proceeds from mortgage notes payable of $136.6 million and net proceeds from the issuance of Series B Preferred Stock of $4.5 million, partially offset by dividends paid to common stockholders of $119.2 million, dividends paid to Series A preferred stockholders of $9.2 million, and dividends paid to Series B preferred stock holders of $3.5 million.
Net cash provided by financing activities of $296.1 million during the nine months ended September 30, 2019 related to proceeds from mortgage notes payable of $579.4 million, net proceeds from issuance of Common Stock of $258.6 million and net proceeds from issuance of Series A Preferred Stock of $31.7 million, partially offset by net repayment of amounts outstanding under our Revolving Credit Facility of $259.4 million, payments of financing costs of $19.0 million, payments on mortgage notes payable of $307.8 million, dividends paid to common stockholders of $103.1 million and dividends paid to Series A preferred stockholders of $7.6 million.
Net cash provided by financing activities of $204.1 million during the nine months ended September 30, 2018 related to net borrowings on our Revolving Credit Facility of $159.6 million, proceeds from mortgage notes payable of $332.4 million, net proceeds from issuance of Common Stock of $94.1 million and proceeds from our Term Loan of $60.7 million, partially offset by payments of financing costs of $6.2 million, payments on mortgage notes payable of $317.6 million, dividends paid to common stockholders of $108.4 million and dividends paid to preferred stockholders of $7.4 million.
Liquidity and Capital Resources
The negative impacts of the COVID-19 pandemic has caused and may continue to cause certain of our tenants to be unable to make rent payments to us timely, or at all, which had, and could continue to have, an adverse effect on the amount of cash we receive from our operations. We have taken proactive steps with regard to rent collections to mitigate the impact on our business and liquidity. The ultimate impact on our results of operations, our liquidity and the ability of our tenants to continue to pay us rent will depend on numerous factors including the overall length and severity of the COVID-19 pandemic. Management is unable to predict the nature and scope of any of these factors. Because substantially all of our income is derived from rentals of commercial real property, our business, income, cash flow, results of operations, financial condition, liquidity, prospects our ability to service our debt obligations, our ability to consummate future property acquisitions and our ability to pay dividends, and other distributions to our stockholders would be adversely affected if a significant number of tenants are unable to meet their obligations to us.
In addition to the discussion below, please see the “Overview — Management Update on the Impacts of the COVID-19 Pandemic” section above for additional information on the risks and uncertainties associated with the COVID-19 pandemic and management’s actions taken to mitigate those risks and uncertainties.
As of September 30, 20192020 and December 31, 2018,2019, we had cash and cash equivalents of $306.0$300.0 million and $100.3$270.3 million, respectively. Principal future demands on cash and cash equivalents will include the purchase of additional properties or other investments in accordance with our investment strategy, payment of related acquisition costs, improvement costs, operating and administrative expenses, continuing debt service obligations and dividends to holders of our Common Stock, Series A Preferred Stock and Series AB Preferred Stock, as well as to any future class or series of preferred stock we may issue. Management expects to usethat operating income from our existing properties and properties we expect to acquire to fund operating expenses, and the payment of quarterly dividends to our common stockholders and holders of our Series A Preferred Stock and Series B Preferred Stock, but in certain periods we have needed to fund these amounts from cash on hand generated from other sources and we may also need to do so in future periods.
During the nine months ended September 30, 2019,2020, cash used to pay our dividends was generated mainly from cash flows provided by operations andbut also included cash on hand, generatedconsisting of proceeds from our other sources of capital. Theseborrowings. Our other sources of capital, which we have used and expect to continue to use for dividends and other capital needs, include proceeds received from our Revolving Credit Facility, proceeds

from secured or unsecured financings from banks or other lenders, proceeds from our Common Stock ATM Program (or any similar future program), proceeds from other future offerings of debt or equity securities (including Common Stock and preferred equity securities)stock), proceeds from the sale of properties and undistributed funds from operations, if any.
Acquisitions and Dispositions
We are in the business of acquiring real estate properties and leasing the properties to tenants. Our goal is to grow through acquiring additional properties. Generally, we fund our acquisitions through a combination of cash and cash equivalents, proceeds from offerings of equity securities (including Common Stock and preferred stock), borrowings under our Revolving Credit Facility and proceeds from mortgage or other debt secured by the acquired or other assets at the time of acquisition or at some later point (see Note 4 - Mortgage Notes Payable, Net and Note 5 — Credit Facilities to our consolidated financial statements included in this Quarterly Report on Form 10-Q for further discussion). In addition, ifto the extent we dispose of properties, we have used and may continue to use the net proceeds from the dispositions (after repayment of any mortgage debt, if any) for future acquisitions or other general corporate purposes.
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Acquisitions and Dispositions — Nine Months Ended September 30, 20192020
During the nine months ended September 30, 2019,2020, we acquired 2021 properties for $309.0$170.8 million, including capitalized acquisition costs. The acquisition of ninethree of these properties for $98.0$26.1 million, including capitalized acquisition costs, was completed during the three months ended September 30, 2019. During2020. The acquisitions during the three and nine months ended September 30, 2019, our acquisitions2020 were primarily funded with financing activity, which includes netcash on hand, including proceeds from our refinancing activitiesunderwritten offering of Series B Preferred Stock on November 20, 2019, and borrowings under the Revolving Credit Facility, and proceeds from our Common Stock ATM Program and Preferred Stock ATM Program. During the nine months ended September 30, 2019, our acquisitions were primarily funded with the proceeds raised from our Common Stock ATM Program and our Preferred Stock ATM Program, proceeds from dispositions and financing activity, which includes net proceeds from our refinancing activities and borrowings under the Revolving Credit Facility. Also, during the three months ended March 31, 2019, we funded, using the same sources, $11.4 million of capital expenditures to expand and remodel four properties that are leased to a single tenant, in exchange for increased annual rent at the respective properties. For additional information on activity related to the Revolving Credit Facility, see “Borrowings” section below.
DuringWe did not dispose of any properties during the three and nine months ended September 30, 2019, we sold 97 properties located in the United States (94 Family Dollar retail stores and three industrial properties) and one property located in the United Kingdom for a total contract sales price of $145.8 million. Of the 98 properties sold during the nine months ended September 30, 2019, 33 properties were sold during the three months ended September 30, 2019, for a total contract sales price of $53.0 million. We have used, and expect to continue to use, these net proceeds primarily to fund future acquisitions.2020.
Acquisitions and Dispositions Subsequent to September 30, 20192020 and Pending Transactions
Subsequent to September 30, 2019, and through November 4, 2019,2020, we did not acquire any properties. We have signedacquired four definitive purchase and sale agreements (“PSAs”) to acquire a total of 12 net lease properties, all of which are located in the United States, for an aggregate total base purchase price of approximately $93.5 million.$153.0 million, excluding acquisition related costs. The acquisition was funded with cash on hand. We have signed threeone non-binding lettersletter of intent and one non-binding award letter (collectively “LOIs”(“LOI”) to acquire a total of 17one net lease properties,property located in the United States, Italy and Canada,France for an aggregatea purchase price of $280.0$5.1 million. The PSAs are subject to conditions and the LOIsLOI may not lead to a definitive agreement. There can be no assurance we will complete any of these transactions,this transaction, or any future acquisitions or other investments, on a timely basis or on acceptable terms and conditions, if at all. If we do completeSince the Canadian acquisition, it will be our first acquisition outsideonset of the United States (including Puerto Rico)COVID-19 pandemic, the overall amount of available acquisitions has been reduced, and Europe.
In November 2019although we sold two propertieshave adjusted our historical capitalization rate target, in the Netherlands formany cases current sellers have not yet made similar changes to their pricing expectations. We believe that over time, bidding and asking prices will converge to establish a contract sales pricelong-term trend of €17.1 million (approximately $19.1 million based on USD equivalents). As of September 30, 2019 we concluded that the estimated future undiscounted cash flows associated with these two properties did not exceed their respective carrying values, and as a result, recorded an impairment charge of $6.4 million to reflect the estimated fair value of the properties.
We have entered into a definitive PSA to dispose of a total of three net lease properties located in Germany, which we amended in September 2019 to extend the closing date to December 2019 and reduce the purchase price by €4.5 million. Following these amendments, we also amended the associated mortgage debt to extend the maturity date to correspond with the new closing date for the disposition. See “Mortgage Notes Payable” section below. Thisdisposition is for a contract sales price of €130.5 million and is expected to generate €68 million after repayment of associated debt. The PSA is subject to conditions. There can be no assurance we will complete this disposition, or any future dispositions, on a timely basis or on acceptable terms and conditions, if at all.lower prices.
Equity Offerings
Common Stock
We have the Common Stock ATM Program, an “at the market” equity offering program (the “Common Stock ATM Program”), pursuant to which we may sell sharesraise aggregate sales proceeds of $250.0 million through sales of Common Stock from time to time through our sales agents. During the three months ended March 31, 2019, we sold 7,759,322We did not sell any shares of Common Stock through the Common Stock ATM Program for gross proceeds of $152.8 million, before commissions paid of $1.5 million and additional issuance costs of $0.8 million. Following these sales, we had raised all $175.0 million

contemplated by our existing equity distribution agreement related to the Common Stock ATM Program. In February 2019, we terminated our existing equity distribution agreement and entered into a new equity distribution agreement with substantially the same sales agents on substantially the same terms. The new equity distribution agreement provides for the continuation of the Common Stock ATM Program to raise additional aggregate sales proceeds of up to $250.0 million. During the three months ended September 30, 2019, we sold 5,596,452 shares of Common Stock under the new equity distribution agreement for gross proceeds of $109.9 million, before commissions paid of $1.6 million and additional issuance costs of $0.2 million. In total, during the first nine months ended September 30, 2019, we sold 13,555,774 shares of Common Stock for gross proceeds of $262.6 million, before commissions paid of $3.1 million and additional issuance costs of $1.0 million.2020.
Preferred Stock
In March 2018,December 2019, we established the Preferred Stock ATM Program, an “at the market” equity offering program for our Series AB Preferred Stock (the “Series B Preferred Stock ATM Program”) pursuant to which we may raise aggregate sales proceeds of $200.0 million through sales of shares of Series AB Preferred Stock from time to time through our sales agents. During the three and nine months ended September 30, 2019,2020, we sold 724,600185,128 shares of Series AB Preferred Stock through the Series B Preferred Stock ATM Program for gross proceeds of $18.5$4.6 million, before commissions paid of approximately $0.3$0.1 million and additional issuance costs of approximately $0.1 million. During the nine months ended September 30, 2019, we sold 1,265,558 shares of Series A Preferred Stock through the Preferred Stock ATM Program for gross proceeds of $32.3 million, before commissions paid of approximately $0.5 million and additional issuance costs of approximately $0.2 million. In November 2019, we terminated the Preferred Stock ATM Program.
The timing differences between when we raise equity proceeds or receive proceeds from dispositions and when we invest those proceeds in acquisitions or other investments that increase our operating cash flows have affected, and may continue to affect, our results of operations. See “Item 1A. Risk Factors - If we are not able to increase the amount of cash we have available to pay dividends, including through additional cash flows we expect to generate from completing acquisitions, we may have to reduce dividend payments or identify other financing sources to fund the payment of dividends at their current levels.”
Borrowings
As of September 30, 2019,2020, we had total debt outstanding of $1.9$2.1 billion, with a weighted-average interest rate per annum equal to 3.0%, consisting of secured mortgage notes payable of $1.4 billion, net of mortgage discounts and deferred financing costs, outstanding borrowings under our Revolving Credit Facility of $101.4 million and a total outstanding balance on our term loan of $389.9 million, net of deferred financing costs. As of December 31, 2018, we had outstanding advances under our Revolving Credit Facility of $363.9 million.
During the nine months ended September 30, 2019, we repaid amounts outstanding under the Revolving Credit Facility using proceeds from our Common Stock ATM Program and then re-borrowed additional amounts under the Revolving Credit Facility to fund our then-current pipeline of acquisitions and other investment transactions. This activity during the nine months ended September 30, 2019, as well as a reduction in the amount outstanding under the Revolving Credit Facility corresponding to an increase in the amount outstanding under the Term Loan in connection with the Credit Facility Amendment, resulted in a $262.5 million decrease in the amount outstanding under the Revolving Credit Facility from December 31, 2018 to September 30, 2019. In the future, we may similarly use “at the market” equity offering programs, dispositions and other sources of capital to fund repayments of amounts under the Revolving Credit Facility and then re-borrow additional amounts to fund our existing pipeline of acquisitions and other investment transactions.
On August 1, 2019, we, through the OP, entered into an amendment and restatement of the credit agreement related to our Credit Facility (the “Credit Facility Amendment”) to, among other things, increase the aggregate total commitments, lower the interest rate and revise certain covenants. Following the closing of the Credit Facility Amendment, the aggregate amount outstanding under the Credit Facility increased by $39.4 million based on USD equivalents. The additional borrowings are expected to be used for acquisitions.
The availability of borrowings under the Revolving Credit Facility is based on the value of a pool of eligible unencumbered real estate assets owned by us and compliance with various ratios related to those assets, and the Credit Facility Amendment also included amendments to provisions governing the calculation of the value of the borrowing base.3.1%. As of September 30, 2019, approximately $101.2 million was available for future borrowings under the Revolving Credit Facility.
As of September 30, 2019, 93.0%2020, 90.5% of our total debt outstanding either bore interest at fixed rates, or was swapped to a fixed rate, which bore interest at a weighted average interest rate of 3.0%3.1% per annum. As of September 30, 2019, 7.0%2020, 9.5% of our total debt outstanding was variable-rate debt, which bore interest at a weighted average interest rate of 3.0%2.8% per annum. The total gross carrying value of unencumbered assets as of September 30, 20192020 was $1.1$1.4 billion, of which approximately $1.0$1.3 billion was included in the unencumbered asset pool comprising the borrowing base under the Revolving Credit Facility and therefore is not available to serve as collateral for future borrowings. We intend to add certain of these unencumbered assets to the borrowing base under the Revolving Credit Facility increase the amount available for future borrowings thereunder.
Our debt leverage ratio was 49.7%57.3% (total debt as a percentage of total purchase price of real estate investments, based on the exchange rate at the time of purchase) as of September 30, 2019.2020. See Note 6 — Fair Value of Financial Instruments to our

consolidated financial statements included in this Quarterly Report on Form 10-Q for fair value of such debt as of September 30, 2019.2020. As of September 30, 2019,2020, the weighted-average maturity of our indebtedness was 5.75.1 years. We believe we have the ability to service our obligations as they come due.
Mortgage Notes Payable
OnAs of September 12, 2019,30, 2020, we borrowed $204.0 millionhad secured by, among other things, a first mortgage on 12notes payable of our single tenant$1.4 billion, net leased officeof mortgage discounts and industrial properties located in ten states. Approximately $86.5 million of the net proceeds from the loan was used to repay outstanding mortgage indebtedness related to the mortgaged properties. Of the remaining net proceeds, approximately $0.3 million was used to fund deposits required to be made at closing into reserve accounts and approximately $126.5 million was available for working capital and general corporate purposes.The loan bears interest at a fixed rate of 3.65% and matures on October 1, 2029. The loan is interest-only, with the principal balance due on the maturity date. From and after November 2, 2021, the loan may be prepaid at any time, in whole but not in part, subject to certain conditions and limitations, including payment of a prepayment premium for any prepayments made prior to July 1, 2029. Partial prepayments are also permitted under certain circumstances, subject to certain conditions and limitations.
On June 12, 2019, we borrowed €120.0 million secured by three of our properties located in the Netherlands and Luxembourg. The loan bears interest at a fixed rate of 1.383% and matures on June 11, 2024. The loan is interest-only, with the principal due at maturity. At the closing of the loan, approximately €80.3 million of the net proceeds was used to repay all outstanding indebtedness encumbering two of the properties.deferred financing costs.
On May 10, 2019,14, 2020, we, borrowed €51.5 million, secured by fivethrough certain of our properties located in Germany. The loan is interest-only with the principal due at maturity, which is June 30, 2023. The maturity date may be extended at our option to February 29, 2024 subject to conditions. The loan initially bore interest at a rate of 3-month Euribor plus 1.80% per annum, but, following the replacement of an easement on one property, the loan will bear interest going forward at a rate of Euribor plus 1.55% per annum beginning on October 1, 2019. We alsosubsidiaries, entered into a swap to fix the interest rate for 80% of the principal amount. The net proceeds from the loan were used to repay all €35.6 million outstanding in mortgage indebtedness that previously encumbered the properties that secure the loan.
On April 12, 2019, we, through certain wholly owned subsidiaries,agreement with HSBC France and borrowed $97.5 million, secured by 16 of our single tenant net leased office and industrial properties located in 12 states that were simultaneously removed from the borrowing base under the Revolving Credit Facility. At closing, approximately $90.0 million was used to repay outstanding indebtedness under the Revolving Credit Facility, with the remaining proceeds, after costs and fees related to the loan, available for working capital and general corporate purposes. The loan bears interest at a fixed rate of 4.489% and has a maturity date of May 6, 2029. The loan is interest-only, with the principal balance due on the maturity date. We may prepay the loan in whole or in part at any time, subject to certain fees depending on the timing and other circumstances of the prepayment.
On February 6, 2019, we, through certain wholly owned subsidiaries, borrowed an aggregate of €74.0€70.0 million ($84.275.6 million based on the prevailing exchange rate on that date) secured by mortgages on our fivethe seven properties locatedwe own in Finland.France. The
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maturity date of this loan is February 1, 2024,May 14, 2025 and it bears interest at a rate of 3-month EuriborEURIBOR (with a floor of 0.0%) plus 1.4%an initial margin of 2.3% per year, with the interest rate for approximately €59.2€63.0 million ($67.468.0 million based on the prevailing exchange rate on that date) fixed by an interest rate swap agreement. The amount fixed by swap agreement represents 80%90% of the principal amount of the loan and is fixed at 1.8%2.5% per year. The loan is interest-only with the principal due at maturity. At the closing of the loan, €57.4€25.0 million ($65.327.0 million based on the prevailing exchange rate on that date) was used to repay all outstanding indebtedness encumberingon four of the fiveproperties. Of the remaining proceeds, approximately €20.0 million ($21.6 million based on the exchange rate on that date) was used to repay amounts outstanding under our Revolving Credit Facility and the remaining balance is available for general corporate purposes.
On July 10, 2020, we borrowed $88.0 million from a syndicate of regional banks led by BOK Financial. The loans are secured by six industrial properties triple-net leased to Whirlpool Corporation and located in Tennessee and Ohio that were simultaneously removed from the borrowing base under the Revolving Credit Facility. At closing, approximately $84.0 million was used to repay amounts outstanding under the Revolving Credit Facility, with the remaining proceeds of approximately $2.2 million, after costs and fees related to the loan, available for working capital and general corporate purposes.
In January 2019, we repaid two maturing mortgage loans in full using approximately $17.3 million of cash on hand.
For the year ending December 31, 2019, we have future scheduled principal payments on our mortgage notes of $122.8 million, with The loan bears interest at a weighted averagefloating interest rate of 1.7% per year.one-month LIBOR plus 2.9%, with the interest rate fixed at 3.45% by a swap agreement. The loan is interest-only with the principal due at maturity on July 10, 2027. We may prepay the loan in whole or in part at any time, and mandatory prepayments are workingrequired to completebe made in connection with any release of a refinancing ofproperty from the mortgages of the properties we own in France, with an aggregate outstanding balance of $54.6 million asloan.
Credit Facility
As of September 30, 2019 that are scheduled to mature in December 2019. As previously discussed in “—Acquisitions2020, outstanding borrowings under our Revolving Credit Facility were $264.0 million and Dispositions,” a mortgage loan encumbering three of our properties in Germany had an aggregatethe total outstanding balance on our term loan was $417.1 million, net of $68.2 million as ofdeferred financing costs. During the nine months ended September 30, 20192020, we borrowed an additional $227.0 million and was originally scheduled to mature in October 2019. However, we negotiated an extension ofrepaid approximately $161.3 million under the maturity date to December 2019, to coincide with the expected closing date of the dispositions. However, there can be no assurance the pending disposition will be completed on its current terms, or at all.Revolving Credit Facility.
Credit Facility
On July 24, 2017, we, through the OP, entered into our Credit Facility with KeyBank National Association, and on August 1, 2019, we amended and restated our Credit Facility pursuant to the Credit Facility Amendment. Based on USD equivalents at the closing of the Credit Facility Amendment, theThe aggregate total commitments under the Credit Facility were increased toare $1.235 billion, from approximately $906.2 million. As of June 30, 2019, we had an outstanding balance of $259.5 million under the Revolving Credit Facility and an outstanding balance of $277.4 million under the Term Loan, net of deferred financing costs. Following the closing of the Credit Facility Amendment, the entire €359.6 million ($400.0 million based on the USD equivalents)

total commitment with the respect to the Term Loan component was outstanding, and $170.7 million of the $835.0 million total commitment with the respect to the Revolving Credit Facility component was outstanding. Basedequivalent on USD equivalents, this represented an increase of $39.4 million in the aggregate amount outstanding under the Credit Facility. Additionally, during the third quarter of 2019, we repaid an additional $70.0 million outstanding under the Revolving Credit Facility with proceeds from our Common Stock ATM Program. As of September 30, 2019, we had an outstanding balance of $101.4 million under the Revolving Credit Facility and an outstanding balance of $389.9 million under the Term Loan, net of deferred financing costs.
Following the Credit Facility Amendment, upon2020. Upon our request, subject in all respects to the consent of the lenders in their sole discretion, these aggregate total commitments may be increased up to an aggregate additional amount of approximately $515.0 million, allocated to either or among both components of the Credit Facility, with total commitments under the Credit Facility not to exceed $1.75 billion, increased from a maximum of $950.0 million prior to thebillion.
The Credit Facility Amendment. Prior to the Credit Facility Amendment, theconsists of two components, a Revolving Credit Facility was scheduled to mature on July 24, 2021, subject to one one-year extension at our option, and thea Term Loan, was scheduled to mature on July 24, 2022. Following the Credit Facility Amendment, theboth of which are interest-only. The Revolving Credit Facility now matures on August 1, 2023, subject to two six-month extensions at our option subject to certain conditions, and the Term Loan now matures on August 1, 2024. Borrowings under the Credit Facility bear interest at a variable rate per annum based on an applicable margin that varies based on the ratio of consolidated total indebtedness and our consolidated total asset value including our subsidiaries plus either (i) LIBOR, as applicable to the currency being borrowed, or (ii) a “base rate” equal to the greatest of (a) KeyBank’s “prime rate,” (b) 0.5% above the Federal Funds Effective Rate, or (c) 1.0% above one-month LIBOR. Prior to the Credit Facility Amendment, the range of applicable interest rate margins was from 0.60% to 1.20% per annum with respect to base rate borrowings and 1.60% to 2.20% per annum with respect to LIBOR borrowings. Following the Credit Facility Amendment, theThe applicable interest rate margin is based on a range from 0.45% to 1.05% per annum with respect to base rate borrowings under the Revolving Credit Facility, 1.45% to 2.05% per annum with respect to LIBOR borrowings under the Revolving Credit Facility, 0.40% to 1.00% per annum with respect to base rate borrowings under the Term Loan and 1.40% to 2.00% per annum with respect to LIBOR borrowings under the Term Loan. The Credit Facility Amendment also added terms governing the establishment of a replacement index to serve as an alternative to LIBOR, if necessary. As of September 30, 2019,2020, the Credit Facility had a weighted-average effective interest rate of 2.2%2.5% after giving effect to interest rate swaps in place.
It is anticipated that LIBOR will only be available in substantially its current form until the end of 2021. To transition from LIBOR under the Credit Facility, we anticipate that we will either utilize the Base Rate or negotiate a replacement reference rate for LIBOR with the lenders in accordance with the terms of the Credit Facility.
Our Credit Facility requires us, through the OP, to pay an unused fee per annum of 0.25% of the unused balance of the Revolving Credit Facility if the unused balance exceeds or is equal to 50% of the total commitment or a fee per annum of 0.15% of the unused balance of the Revolving Credit Facility if the unused balance is less than 50% of the total commitment. From and after the time we obtain an investment grade credit rating, the unused fee will be replaced with a facility fee based on the total commitment under the Revolving Credit Facility multiplied by 0.30%, decreasing asif our credit rating increases.
The availability of borrowings under the Revolving Credit Facility is based on the value of a pool of eligible unencumbered real estate assets owned by us and compliance with various ratios related to those assets, and the Credit Facility Amendment also included amendments to provisions governing the calculationassets. As of the value of the borrowing base.
We may reduce the amount committedSeptember 30, 2020, approximately $92.0 million was available for future borrowings under the Revolving Credit Facility and repay outstandingFacility. Any future borrowings undermay, at our Credit Facility,option be denominated in wholeUSD, EUR, Canadian Dollars, GBP or Swiss Francs. Amounts borrowed may not, however, be converted to, or repaid in, part, at any time without premium or penalty, other than customary “breakage” costs payable on LIBOR borrowings. In the event of a default, the lenders have the right to terminate their obligations under the Credit Facility agreement and to accelerate the payment on any unpaid principal amount of all outstanding loans. Our Credit Facility also imposes certain affirmative and negative covenants on us including restrictive covenants with respect to, among other things, liens, indebtedness, investments, distributions, mergers and asset sales, as well as financial covenants requiring the OP to maintain, among other things, ratios related to leverage, secured leverage, fixed charge coverage and unencumbered debt services, as well as a minimum consolidated tangible net worth.another currency once borrowed. The Term Loan is denominated in EUR.
Loan Obligations
Our loan obligations generally require us to pay principal and interest on a monthly or quarterly basis with all unpaid principal and interest due at maturity. Our loan agreements (including our Credit Facility) stipulate compliance with specific reporting covenants. Our mortgage notes payable agreements require compliance with certain property-level financial covenants including debt service coverage ratios. As
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During the three months ended September 30, 2019,2020, the borrower entities under the mortgage loan secured by all our properties located in the United Kingdom did not maintain the required loan-to-value ratios with respect to the mortgaged properties, and, as a result, a cash trap event under the loan occurred which was immediately cured when we wereexecuted, as required by the terms of the loan, an unsecured corporate guaranty of the borrower entities’ obligations under the loan. The guaranty remains in compliance witheffect and contains a covenant that requires us to maintain unrestricted cash and cash equivalents (or amounts available for future borrowings under credit facility, such as the covenantsCredit Facility) in an amount sufficient to meet its actual and contingent liabilities under our Credit Facilitythe guaranty. The Company is not required to maintain any unrestricted cash and mortgage notes payable agreements.cash equivalents pursuant to the guaranty at this time.
Non-GAAP Financial Measures
This section includesdiscusses the non-GAAP financial measures we use to evaluate our performance including Funds from Operations (“FFO”), Core Funds from Operations (“Core FFO”) and Adjusted Funds from Operations (“AFFO”). A description of these non-GAAP measures and reconciliations to the most directly comparable GAAP measure, which is net income, is provided below.
Caution on Use of Non-GAAP Measures
FFO, Core FFO, and AFFO 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 FFO, Core FFO and AFFO measures. Other REITs may not define FFO in accordance with the current 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.
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.
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, the National Association of Real Estate Investment Trusts (“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. Our FFO calculation complies with NAREIT’s definition.
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, especially if not adequately maintained or repaired and renovated as required by relevant circumstances or as requested or required by lessees for operational purposes in order to maintain the value disclosed.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
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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 acquisition, transaction and other costs, as well as certain other costs that are considered to be non-core, such as debt extinguishment costs, fire loss and other costs related to damages at our properties. 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 derived fromof the investment. We also add back non-cash write-offs of deferred financing costs and prepayment penalties incurred with the early extinguishment 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.
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 that are not a fundamental attribute of our business plan. These items include early extinguishment of debt (adjustment

includedand other items excluded in Core FFO) andFFO 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 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. By providing AFFO, we believe we are presenting useful information that can be used to better assess the sustainability of our ongoing operating performance without the impact of transactions or other items that are not related to the ongoing performance of our portfolio of properties. AFFO presented by us may not be comparable to AFFO reported by other REITs that define AFFO differently.
In calculating AFFO, we exclude certain expenses which under GAAP are characterized as operating expenses in determining operating net income. All paid and accrued merger, acquisition, transaction and other costs (including prepayment penalties for debt extinguishments) and certain other expenses negatively impact our operating performance during the period in which expenses are incurred or properties are acquired will also have negative effects on returns to investors, but are not reflective of 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. WeBy providing AFFO, we believe we are presenting useful information that can be used to better assess the sustainability of our ongoing operating performance without the impact of transactions or other items that are not related to the ongoing performance of 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) as 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.

Accounting Treatment of Rent Deferrals
All of the concessions granted to our tenants as a result of the COVID-19 pandemic are rent deferrals with the original lease term unchanged and collection of deferred rent deemed probable (see the “Overview - Management Update on the Impacts of the COVID-19 Pandemic” section of this Management’s Discussion and Analysis of Financial Condition and Results of Operations for additional information on second quarter rent deferrals). As a result of relief granted by the FASB and SEC related to lease modification accounting, rental revenue used to calculate Net Income and NAREIT FFO has not been significantly impacted by deferrals we have entered into. In addition, since we currently believe that these amounts are collectible, we have excluded from the increase in straight-line rent for AFFO purposes the amounts recognized under GAAP relating to rent deferrals. For a detailed discussion of our revenue recognition policy, including details related to the relief
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granted by the FASB and SEC, see Note 2 — Summary of Significant Accounting Policies to our consolidated financial statements included in the Quarterly Report on Form 10-Q.
The table below reflects the items deducted from or added to net income attributable to common stockholders in our calculation of FFO, Core FFO and AFFO for the periods indicated. Adjustments for unconsolidated partnerships and joint ventures are calculated to reflect the proportionate share of adjustments for non-controlling interest to arrive at FFO, Core FFO and AFFO, as applicable.
Three Months Ended September 30,Nine Months Ended September 30,
(In thousands)2020201920202019
Net income (loss) attributable to common stockholders (in accordance with GAAP)$(502)$6,860 $5,502 $25,272 
Impairment charges— 6,375 — 6,375 
Depreciation and amortization35,049 31,620 102,566 94,007 
Loss on dispositions of real estate investments— (6,977)153 (14,792)
FFO (as defined by NAREIT) attributable to common stockholders34,547 37,878 108,221 110,862 
Acquisition, transaction and other costs75 192 388 1,301 
Loss on extinguishment of debt— 563 309 1,328 
Core FFO attributable to common stockholders34,622 38,633 108,918 113,491 
Non-cash equity-based compensation2,479 2,501 7,480 7,039 
Non-cash portion of interest expense2,075 1,906 5,732 4,825 
Amortization of above- and below- market leases and ground lease assets and liabilities, net198 341 634 1,022 
Straight-line rent(1,879)(1,506)(6,434)(5,063)
Straight-line rent (rent deferral agreements) (1)
320 — 1,828 — 
Unrealized income on undesignated foreign currency advances and other hedge ineffectiveness— — — (76)
Eliminate unrealized losses (gains) on foreign currency transactions (2)
3,061 (1,670)2,304 (1,673)
Amortization of mortgage discounts and premiums, net and mezzanine discount— 30 13 232 
AFFO attributable to common stockholders$40,876 $40,235 $120,475 $119,797 
Summary
FFO (as defined by NAREIT) attributable to common stockholders$34,547 $37,878 $108,221 $110,862 
Core FFO attributable to common stockholders$34,622 $38,633 $108,918 $113,491 
AFFO attributable to common stockholders$40,876 $40,235 $120,475 $119,797 
  Three Months Ended September 30, Nine Months Ended September 30,
(In thousands) 2019 2018 2019 2018
Net income attributable to common stockholders (in accordance with GAAP) $6,860
 $177
 $25,272
 $7,826
Impairment charges 6,375
 —
 6,375
 —
Depreciation and amortization 31,620
 30,195
 94,007
 89,504
(Gain) loss on dispositions of real estate investments (6,977) 1,933
 (14,792) 5,751
FFO (as defined by NAREIT) attributable to common stockholders (1)
 37,878
 32,305
 110,862
 103,081
Acquisition, transaction and other costs (2)
 192
 2,804
 1,301
 5,243
Loss on extinguishment of debt (3)
 563
 2,612
 1,328
 3,897
Fire recovery —
 31
 —
 (49)
Core FFO attributable to common stockholders (1)
 38,633
 37,752
 113,491
 112,172
Non-cash equity-based compensation 2,501
 2,053
 7,039
 1,198
Non-cash portion of incentive fee —
 180
 —
 180
Non-cash portion of interest expense 1,906
 1,339
 4,825
 3,739
Amortization of above- and below- market leases and ground lease assets and liabilities, net 341
 488
 1,022
 1,540
Straight-line rent (1,506) (1,492) (5,063) (4,828)
Unrealized income on undesignated foreign currency advances and other hedge ineffectiveness —
 (108) (76) (18)
Eliminate unrealized gains on foreign currency transactions (4)
 (1,670) (1,215) (1,673) (4,921)
Amortization of mortgage discounts and premiums, net and mezzanine discount 30
 601
 232
 1,131
AFFO attributable to common stockholders (1)
 $40,235
 $39,598
 $119,797
 $110,193
         
Summary        
FFO (as defined by NAREIT) attributable to common stockholders $37,878
 $32,305
 $110,862
 $103,081
Core FFO attributable to common stockholders $38,633
 $37,752
 $113,491
 $112,172
AFFO attributable to common stockholders $40,235
 $39,598
 $119,797
 $110,193
_________

(1)Represents the amount of deferred rent pursuant to lease negotiations which qualify for FASB relief for which rent was deferred but not reduced. These amounts are included in the straight-line rent receivable on our balance sheet but are considered to be cash, for purposes of AFFO, that is expected to be collected.
(2)For AFFO purposes, we adjust for unrealized gains and losses. For the three months ended September 30, 2020, loss on derivative instruments were $2.5 million, which consisted of unrealized losses of $3.1 million and realized gains of $0.6 million. For the nine months ended September 30, 2020 gains on derivative instruments were $0.4 million, which consisted of unrealized losses of $2.3 million and realized gains of $2.7 million. For the three months ended September 30, 2019, gains on derivative instruments were $3.0 million, which consisted of unrealized gains of $1.7 million and realized gains of $1.3 million. For the nine months ended September 30, 2019, gains on derivative instruments were $4.7 million, which consisted of unrealized gains of $1.7 million and realized gains of $3.0 million.
(1)
For the three and nine months ended September 30, 2018 includes income from a lease termination fee of $3.0 million, which is recorded in rental income in the unaudited consolidated statements of operations, related to a real estate asset sold during the three months ended September 30, 2018.
(2)
For the three and nine months ended September 30, 2019, acquisition and transaction fees primarily related to litigation costs resulting from the termination of the Former Service Provider. For the three and nine months ended September 30, 2018, acquisition and transaction fees primarily related to litigation costs resulting from the termination of the Former Service Provider and costs to refinance foreign debt.
(3)
For the three and nine months ended September 30, 2019, primarily includes non-cash write-off of deferred financing costs. For the three months ended September 30, 2018, includes non-cash write-off of deferred financing costs of $1.5 million and prepayment penalties paid on early extinguishment of debt of $1.1 million. For the nine months ended September 30, 2018, includes non-cash write-off of deferred financing costs of $1.5 million and prepayment penalties paid on early extinguishment of debt of $2.4 million.
(4)
For AFFO purposes, we adjust for unrealized gains and losses. For the three months ended September 30, 2019, gains on derivative instruments were $3.0 million, which consisted of unrealized gains of $1.7 million and realized gains of $1.3 million. For the nine months ended September 30, 2019, gains on derivative instruments were $4.7 million, which consisted of unrealized gains of $1.7 million and realized gains of $3.0 million. For the three months ended September 30, 2018, gains on derivative instruments were $1.3 million, which consisted of unrealized gains of $1.2 million and realized gains of $0.1 million. For the nine months ended September 30, 2018, gains on derivative instruments were $4.7 million, which were comprised of unrealized gains of $4.9 million and realized losses of $0.2 million.
Dividends
Historically, and through March 31, 2019, we generally paid dividends on our Common Stock on the 15th day of each month (or, if not a business day, the next succeeding business day) to common stockholders of record on the applicable record date during the month at an annualized rate of $2.13 per share, or $0.1775 per share on a monthly basis. Prior to July 2018, the record date for our regular monthly dividend was generally the 8th day of the applicable month. On April 5, 2019, our board of directors approved a change in our Common Stock dividend policy. Accordingly, consistent with our peers, we anticipate paying future dividends authorized by our board of directors on shares of our Common Stock on a quarterly basis in arrears on the 15th day of the first month following the end of each fiscal quarter (unless otherwise specified) to common stockholders of record on the record date for such payment. This change affects the frequency of dividend payments only, and does not impact our annualized

dividend rate on our Common Stock of $2.13. The amount of dividends payable to our common stockholders is determined by our board of directors and is dependent on a number of factors, including funds available for dividends, our financial condition, provisions in our Credit Facility or other agreements that may restrict our ability to pay dividends, capital expenditure requirements, as applicable, requirements of Maryland law and annual distribution requirements needed to maintain our status as a REIT.
Through March 31, 2020, we paid dividends on Common Stock at an annualized rate of $2.13 per share or $0.5325 per share on a quarterly basis. In March 2020, our board of directors approved a change in the dividend to an annual rate of $1.60 per share or $0.40 per share on a quarterly basis, which was effective beginning in the second quarter of 2020 with our April 1, 2020 dividend declaration. Dividends authorized by our board of directors and declared by the Company are paid on a quarterly basis in arrears on the 15th day of the first month following the end of each fiscal quarter (unless otherwise specified) to
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common stockholders of record on the record date for such payment.
Dividends on our Series A Preferred Stock accrue in an amount equal to $0.453125 per share per quarter to Series A Preferred Stock holders, which is equivalent to 7.25% of the $25.00 liquidation preference per share of Series A Preferred Stock per annum. Dividends on our Series B Preferred Stock accrue in an amount equal to $0.429688 per share per quarter to Series B Preferred Stock holders, which is equivalent to 6.875% of the $25.00 liquidation preference per share of Series B Preferred Stock per annum. Dividends on the Series A Preferred Stock and Series B Preferred Stock are payable quarterly in arrears on the 15th day of January, April, July and October of each year (or, if not on a business day, on the next succeeding business day) to holders of record on the close of business on the record date set by our board of directors, which must be not more than 30 nor fewer than 10 days prior to the applicable payment date.directors. Any accrued and unpaid dividends payable with respect to the Series A Preferred Stock and Series B Preferred Stock become part of the liquidation preference thereof.
Dividend payments are dependent on the availability of funds. Our board of directors may alter the amount of dividends paid or suspend dividend payments at any time priorPursuant to declaration and therefore dividend payments are not assured. There is no assurance that we will continue to declare and pay dividends at the current rates. Provisions in our Credit Facility restrict our ability to pay distributions, including cash dividends or other distributions payable with respect to Series A Preferred Stock and Common Stock.
Under the terms of our Credit Facility, we may not pay distributions, including cash dividends payable with respect to Common Stock, Series A Preferred Stock, Series B Preferred Stock, or any other classesclass or series of preferred stock that we may issue in athe future, offering, or redeem or otherwise repurchase shares of our capital stock, Common Stock, Series A Preferred Stock, Series B Preferred Stock, or any other classesclass or series of preferred stock we may issue in athe future offering, based on a threshold levelthat exceed 100% of our Adjusted FFO as defined in our Credit Facility. Pursuant to the Credit Facility Amendment,(which is different from AFFO disclosed in this maximum threshold was increased from 95% to 100% of Adjusted FFOQuarterly Report on Form 10-Q) for any period of four consecutive fiscal quarters, except in limited circumstances, including that for one fiscal quarter in each calendar year, we may pay cash dividends and other distributions and make redemptions and makeother repurchases in an aggregate amount equal to no more than 100% of Adjusted FFO prior to the Credit Facility Amendment and 105% of our Adjusted FFO after the Credit Facility Amendment. Following the Credit Facility Amendment, from and after the time we obtain and continue to maintain an investment grade rating, the limitation on distributions discussed above will not be applicable.
In November 2018, the lenders under our Credit Facility consented to an increase in the maximum amount we could use to pay cash distributions for the quarter ended December 31, 2018. During 2019, weFFO. We used the applicable exception to pay dividends that were between 95%100% of Adjusted FFO to 100%105% of Adjusted FFO during the quarter ended on March 31, 2019. There can be no assurance that the lenders under our Credit Facility will agree to any amendments to the covenant impacting our ability to pay distributions.June 30, 2020.
Our ability to complypay dividends in the future and maintain compliance with the restrictions on the payment of distributionsdividends in our Credit Facility depends on our ability to operate profitably and to generate sufficient cash flows from the operations of our existing properties and through acquisitions or otherwise such that our cash flows in the applicable periods exceed the level of Adjusted FFO required by these restrictions, among other things, thereany properties we may acquire. There can be no assurance that we will complete acquisitions and other investments on a timely basis or on acceptable terms and conditions, if at all. See “Item 1A. Risk Factors - If we fail to do so (and we are not otherwise able to increase the amount of cash we have available to pay dividends including through additional cash flows we expectand other distributions), our ability to generate from completing acquisitions, we may have to reduce dividend payments or identify other financing sources to fundcomply with the restrictions on the payment of dividends at their current levels.”in our Credit Facility may be adversely affected, and we might be required to reduce the amount of dividends we pay. In the past, the lenders under our Credit Facility have consented to increase the maximum amount of our Adjusted FFO we may use to pay cash dividends and other distributions and make redemptions and other repurchases in certain periods, most recently in connection with the amendment and restatement of our Credit Facility in August 2019. There can be no assurance that they will do so again in the future.


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Cash used to pay dividends and distributions during the nine months ended September 30, 2020, was generated from cash flows from operations and cash available on hand, consisting of proceeds from borrowings. The following table shows the sources for the payment of dividends to holders of Common Stock, Series A Preferred Stock, Series B Preferred Stock and distributions:distributions to holders of LTIP Units for the periods indicated:
Three Months EndedNine Months Ended September 30, 2020
March 31, 2020June 30, 2020September 30, 2020
(In thousands)Percentage of DividendsPercentage of DividendsPercentage of DividendsPercentage of Dividends
Dividends and Distributions:
Dividends to holders of Common Stock$47,638 $35,784 $35,793 $119,215 
Dividends to holders of Series A Preferred Stock3,081 3,082 3,080 9,243 
Dividends to holders of Series B Preferred Stock577 1,482 1,482 3,541 
Distributions to holders of LTIP Units135 99 103 337 
Total dividends and distributions$51,431 $40,447 $40,458 $132,336 
Source of dividend and distribution coverage:
Cash flows provided by operations$41,895 81.5 %$40,447 100.0 %$40,458 100.0 %$132,336 (1)100.0 %
Available cash on hand
9,536 18.5 %— — %— — %— (1)— %
Total sources of dividend and distribution coverage$51,431 100.0 %$40,447 100.0 %$40,458 100.0 %$132,336 100.0 %
Cash flows provided by operations (GAAP basis)$41,895 $47,819 $46,614 $136,328 
Net income (loss) attributable to common stockholders (in accordance with GAAP)$5,038 $966 $(502)$5,502 
  Three Months Ended Nine Months Ended September 30, 2019
  March 31, 2019 June 30, 2019 September 30, 2019 
(In thousands)   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends   Percentage of Dividends
Dividends:                
Dividends to holders of Common Stock $43,270
   $14,883
   $44,988
   $103,141
  
Dividends to holders of Series A Preferred Stock 2,455
   2,485
   2,706
   7,646
  
Distributions to holders of LTIP Units 134
   136
   135
   405
  
Total dividends and distributions $45,859
   $17,504
   $47,829
   $111,192
  
                 
Source of dividend and distribution coverage:                
Cash flows provided by operations $24,751
 54.0% $17,504
 100.0% $26,605
 55.6% $97,849
(1) 
88.0%
Available cash on hand 
 21,108
 46.0% —
 —% 21,224
 44.4% 13,343
(1) 
12.0%
Total sources of dividend and distribution coverage $45,859
 100.0% $17,504
 100.0% $47,829
 100.0% $111,192
 100.0%
                 
Cash flows provided by operations (GAAP basis) $24,751
   $46,493
   $26,605
   $97,849
  
                 
Net income attributable to common stockholders (in accordance with GAAP) $5,791
   $12,621
   $6,860
   $25,272
  

______
(1) Year-to-date totals domay not equal the sum of the quarters. Each quarter and year-to-date period is evaluated separately for purposes of this table.
Foreign Currency Translation
Our reporting currency is the USD. The functional currency of our foreign investments is the applicable local currency for each foreign location in which we invest. Assets and liabilities in these foreign locations (including intercompany balances for which settlement is not anticipated in the foreseeable future) are translated at the spot rate in effect at the applicable reporting date. The amounts reported in the consolidated statements of operations are translated at the average exchange rates in effect during the applicable period. The resulting unrealized cumulative translation adjustment is recorded as a component of accumulated other comprehensive income (loss) in the consolidated statements of changes in equity. We are exposed to fluctuations in foreign currency exchange rates on property investments in foreign countries which pay rental income, incur property related expenses and hold debt instruments in currencies other than our functional currency, the USD. We have used and may continue to use foreign currency derivatives including foreign currency put options, foreign currency forward contracts and cross-currencycross currency swap agreements to manage our exposure to fluctuations in foreign currency exchange rates, such as the GBP-USD and EUR-USD exchange rates (see Note 7 — Derivatives and Hedging Activities to our consolidated financial statements in this Quarterly Report on Form 10-Q for further discussion).
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Contractual Obligations
Except as set forth in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” there were no material changes in our contractual obligations at September 30, 20192020 as compared to those reported in our Annual Report on Form 10-K for the year ended December 31, 2018.2019.
Election as a REIT 
We elected to be taxed as a REIT under Sections 856 through 860 of the Code, commencing witheffective for our taxable year ended December 31, 2013. CommencingWe believe that, commencing with such taxable year, we werehave been organized and operatehave operated in such a manner as toso that we qualify for taxation as a REIT under the Code and we believe we have so qualified.Code. We intend to continue to operate in such a manner to qualify for taxation as a REIT, but can provide no assurance can be givenassurances that we will operate in a manner so as to remain qualified as a REIT. In order toTo continue to qualify for taxation as a REIT, we must among other things, distribute annually at least 90% of our REIT taxable income. REITs are subject toincome (which does not equal net income as calculated in accordance with GAAP), determined without regard for the deduction for dividends paid and excluding net capital gains, and must comply with a number of other organizational and operational requirements. If we continue to qualify for taxation as a REIT, we generally will not be subject to federal corporate income tax on the portion of our REIT taxable income that we distribute to our stockholders. Even if we continue to qualify for taxation as a REIT, we may be subject to certain federal, state local and foreignlocal taxes on our income and assets,properties, as well as federal income and excise taxes on anyour undistributed income and state, local or foreign income, franchise, property and transfer taxes. Any of these taxes decrease our earnings and our available cash.

income.
In addition, our international assets and operations, including those owned through direct or indirect subsidiaries that are disregarded entities for U.S. federal income tax purposes, continue to be subject to taxation in the foreign jurisdictions where those assets are held or those operations are conducted.
Inflation
We may be adversely impacted by inflation on any leases that do not contain an indexed escalation provisions.provision. In addition, we may be required to pay costs for maintenance and operation of properties which may adversely impact our results of operations due to potential increases in costs and operating expenses resulting from inflation.
Related-Party Transactions and Agreements
See Note 10 — Related Party Transactions to our consolidated financial statements included in this Quarterly Report on Form 10-Q for a discussion of the various related party transactions, agreements and fees.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have had or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There has been no material change in our exposure to market risk during the nine months ended September 30, 2019.2020. For a discussion of our exposure to market risk, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.2019.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
In accordance with Rules 13a-15(b) and 15d-15(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), we, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q and determined that our disclosure controls and procedures are effective.
Changes in Internal Control Over Financial Reporting
During the quarter ended September 30, 2019,2020, there were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION
Item 1. Legal Proceedings.
Former Service Provider ComplaintNone.
Reference is made to the information disclosed under Part II, Item 1 — Legal Proceedings in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2019.
Item 1A. Risk Factors.
ThereExcept as set forth below, there have been no material changes to the risk factors disclosed in Part I, Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2018, except as set forth below.
If2019, and we direct your attention to those risk factors, in addition to the new summary section we are including below, and our risk factor on COVID-19 and other similar disruptions.
Summary Risk Factors
The following is a summary of some of the risks and uncertainties, although not ableall risks and uncertainties, that could cause our actual results to differ materially from those presented in our forward-looking statements, and represent a summary of the principal factors that make an investment in us speculative or risky:
•All of our executive officers are also officers, managers, employees or holders of a direct or indirect controlling interest in the Advisor and other entities affiliated with AR Global. As a result, our executive officers, the Advisor and its affiliates face conflicts of interest, including significant conflicts created by the Advisor’s compensation arrangements with us and other investment programs advised by AR Global affiliates and conflicts in allocating time among these investment programs and us. These conflicts could result in unanticipated actions.
•Because investment opportunities that are suitable for us may also be suitable for other investment programs advised by affiliates of AR Global, the Advisor and its affiliates face conflicts of interest relating to the purchase of properties and other investments and these conflicts may not be resolved in our favor.
•We are obligated to pay fees which may be substantial to the Advisor and its affiliates.
•We depend on tenants for our rental revenue and, accordingly, our rental revenue is dependent upon the success and economic viability of our tenants.
•Increases in interest rates could increase the amount of our debt payments.
•We may be unable to repay, refinance, restructure or extend our indebtedness as it becomes due.
•Adverse changes in exchange rates may reduce the net income and cash we have availableflow associated with our properties located outside of the U.S.
•The Advisor may not be able to pay dividends, including throughidentify a sufficient number of property acquisitions satisfying our investment objectives on a timely basis and on acceptable terms and prices, or at all.
•We may be unable to continue to raise additional cash flows we expect to generate from completing acquisitions, we may have to reduce dividend paymentsdebt or identify otherequity financing sources to fund the payment of dividendson attractive terms, or at their current levels.
We cannot guarantee thatall, and there can be no assurance we will be able to fund future acquisitions.
•Provisions in our Credit Facility may limit our ability to pay dividends on a regular basis with respectCommon Stock, Series A Preferred Stock, Series B Preferred Stock, or any other stock we may issue.
•We may be unable to pay or maintain cash dividends or increase dividends over time.
•We may not generate cash flows sufficient to pay dividends to our stockholders or fund operations, and, as such, we may be forced to borrow at unfavorable rates to pay dividends to our stockholders or fund our operations.
•Any dividends that we pay on our Common Stock, our Series A Preferred Stock, our Series B Preferred Stock, or any other classes or series of preferred stock we may issue, may exceed cash flows from operations, reducing the amount of capital available to invest in properties.
•We are subject to risks associated with our international investments, including risks associated with compliance with and changes in foreign laws, fluctuations in foreign currency exchange rates and inflation.
•We are subject to risks associated with a future offering. Decisionspandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, including negative impacts on whether, whenour tenants and their respective businesses.
•We are subject to risks associated with any dislocations or liquidity disruptions that may exist or occur in what amountsthe credit markets of the U.S., Canada and Europe from time to pay any future dividends will remain at all times entirely attime, including disruptions and dislocations caused by the discretionongoing COVID-19 pandemic.
•We may fail to continue to qualify as a REIT, which would result in higher taxes, may adversely affect operations, and would reduce the trading price of our board of directors, which reserves the right to change our dividend policy at any time and for any reason. Any accrued and unpaid dividends payable with respect to our Series A Preferred Stock become part of the liquidation preference thereof.
Pursuant to our Credit Facility, we may not pay distributions, including cash dividends payable with respect to Common Stock, Series A Preferred Stock and Series B Preferred Stock, and our cash available for dividends or other distributions.
•We may be exposed to risks due to a lack of tenant diversity, investment types and geographic diversity.
•We are exposed to changes in general economic, business and political conditions, including the possibility of intensified international hostilities, acts of terrorism, and changes in conditions of U.S. or international lending, capital and financing markets, including as a result of the U.K.’s withdrawal from the European Union or any other classesevents that create, or seriesgive the impression they could create, economic or political instability in Europe,which may cause the revenue derived from, and the market value of, preferred stock weproperties located in the United Kingdom and continental Europe to decline.
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We are subject to risks associated with a pandemic, epidemic or outbreak of a contagious disease, such as the ongoing global COVID-19 pandemic, which has caused severe disruptions in the U.S., Canadian, European and global economy and financial markets and has already had adverse effects and may issueworsen.
The COVID-19 pandemic has had, and another pandemic in the future could have, repercussions across many sectors and areas of the global economy and financial markets, leading to significant adverse impacts on economic activity as well as significant volatility and negative pressure in financial markets.
The impact of the COVID-19 pandemic has been rapidly evolving. In many geographic locations where our tenants operate their businesses and where our properties are located, preventative measures have been taken to alleviate the public health crisis, including “shelter-in-place” or “stay-at-home” orders issued by relevant governmental authorities and social distancing measures that have resulted in closure and limitations on the operations of many businesses. Recently, as cases have surged in some countries, these types of orders have been reimplemented. For example, during October 2020, relevant governmental authorities in the United Kingdom, France and Germany have issued new orders which limit access to, and require closure of, certain non-essential businesses. A number of our tenants operate businesses that require in-person interactions. Even for businesses that have not closed or have closed and reopened, concern regarding the transmission of COVID-19 has impacted, and will likely continue to impact, the willingness of persons to engage in in-person commerce which has and may continue to impact the revenues generated by our tenants which may further impact the ability of our tenants to pay their rent obligations to us when due. For our office tenants, limitations on in-person work environments could lead to a sustained shift away from in-person work environments and have an adverse effect on the overall demand for office space across our portfolio in the event a significant number of businesses determine to continue to utilize large-scale work-from-home policies as the COVID-19 pandemic continues and thereafter. This could make it difficult for us to renew or re-lease our properties at rental rates equal to or above historical rates. We could also incur more significant re-leasing costs, and the re-leasing process with respect to both anticipated and unanticipated vacancies could take longer.
The COVID-19 pandemic has triggered a decrease in global economic activity. While economies have begun to reopen, many of the circumstances that arose or became more pronounced after the onset of the COVID-19 pandemic continue to persist. A sustained downturn in the U.S., Canadian and European economies due to the prolonged and continuing existence and threat of the COVID-19 pandemic could impact the ability of our tenants to pay their rent when due. Our ability to lease space and negotiate and maintain favorable rents could also be negatively impacted by a prolonged recession in these economies. Moreover, a significant downturn in the U.S., Canadian and European economies and resulting job losses could substantially reduce the demand for leasing space in our properties which could result in a future offering, or redeem or otherwise repurchase sharesdecline in our occupancy percentage and reduction in rental revenues.
In addition, the COVID-19 pandemic has also led to disruptions in operations at manufacturing facilities and distribution centers in many countries, which could impact supply chains and the operations of certain of our capital stock, Common Stock, Series A Preferred Stock, or any other classes or series of preferred stock we may issue in a future offering, that exceed 100% of our Adjusted FFO as defined in the Credit Facility (which is different from AFFO as discussedtenants, further impacting their revenues and analyzed in this Quarterly Report on Form 10-Q) for any period of four consecutive fiscal quarters, except in limited circumstances, including that for one fiscal quarter in each calendar year, we may pay cash distributions, make redemptions and make repurchases in an aggregate amount equal to no more than 105% of our Adjusted FFO.
In November 2018, the lenders under our Credit Facility consented to an increase in the maximum amount we could use to pay cash distributions for the quarter ended December 31, 2018, and, in August 2019, the lenders under our Credit Facility agreed to the Credit Facility Amendment, an amendment and restatement of our Credit Facility that, among other things, increased the maximum amount we may use to pay cash distributions. There can be no assurance that the lenders under our Credit Facility will agree to any amendments to the covenant impacting our ability to pay distributions.rent when due.
Our ability to pay dividendstenants may also be negatively impacted if the outbreak of COVID-19 occurs within their workforce or otherwise disrupts their management. Further, certain of our U.S. tenants may not have been eligible for or may not have been successful in securing stimulus funds under the Coronavirus Aid, Relief, and Economic Security Act of 2020, and may similarly be unsuccessful in securing funds under any other government stimulus programs in the future.
As a result of these and other factors, certain tenants have been, or may be in the future, is dependentunwilling or unable to pay rent in full or on our abilitya timely basis due to operate profitably and to generatebankruptcy, lack of liquidity, lack of funding, operational failures, or for other reasons. We collected approximately 97% of the original cash flows from our operations. Our cash flows provided by operations were $97.8 millionrent due for the nine months ended September 30, 2019. Duringthird quarter of 2020 under our various leases. The impact of the nine months ended September 30, 2019, we paid dividends of $111.2 million, which includes payments to holders of our Common Stock and Series A Preferred Stock and distributions to holders of LTIP Units. Of these payments, $97.8 million, or 88.0%, was funded from cash flows provided by operations after payment of preferred dividends and $13.3 million was funded from cashCOVID-19 pandemic on hand, consisting of proceeds from borrowings. During April 2019, we changed our dividend policy so that we now pay dividends quarterly instead of monthly. While this change did not impact our annualized dividend rate on our Common Stock of $2.13, it did reduce the amount of dividendscash rent that we paid, and the cash needed to fund those payments, during the three months ended June 30, 2019 compared to prior quarters. Our dividend payments,collect going forward cannot be determined at present and the amount of cash needed to fund them, increasedrent collected for the three months ended September 30, 2019.
Our ability to comply with the restrictions on the paymentsecond and third quarter 2020 may not be indicative of distributions in our Credit Facility depends on our ability to generate sufficient cash flows from our existing properties and through acquisitions or otherwise such that our cash flows in the applicable periods that exceed the level of Adjusted FFO required by the restrictions. There can beany future period. In addition, there is no assurance that we will be able to do socollect the cash rent that is due in future months including the deferred 2020 rent amounts due during 2021 under deferral agreements we have entered into with our tenants.
The impact of the COVID-19 pandemic on our tenants and thus our ability to collect rent in future periods cannot be determined at present. We may face defaults and additional requests for rent deferrals or that we will complete acquisitionsabatements or other investmentsallowances.Furthermore, if we declare any tenants in default for non-payment of rent or other potential breaches of their leases with us, we might not be able to fully recover and may experience delays and additional costs in enforcing our rights as landlord to recover amounts due to us. Our ability to recover amounts under the terms of our leases may also be restricted or delayed due to moratoriums imposed by various jurisdictions in light of the COVID-19 pandemic on landlord-initiated commercial eviction and collection actions. If any of our tenants, or any guarantor of a tenant’s lease obligations files for bankruptcy proceedings pursuant to Title 11 of the United States Code, or an insolvency or bankruptcy regime in a foreign jurisdiction, we could be further adversely affected. due to loss of revenue but also because the bankruptcy may make it more difficult for us to lease the remainder of the property or properties in which the bankrupt tenant operates.
Because substantially all of our income is derived from rentals of commercial real property, our business, income, cash flow, results of operations, financial condition, liquidity, prospects, our ability to service our debt obligations, our ability to
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consummate future property acquisitions and our ability to pay dividends and other distributions to our stockholders would be adversely affected if a significant number of tenants are unable to meet their obligations to us.
In addition to the impacts on us related to the impacts on our tenants described above, the COVID-19 pandemic has also impacted us in other ways and could have a significant adverse effect on our business, financial condition and results of operations and our ability to pay dividends and other distributions to our stockholders due to, among other factors:
•difficulty accessing debt and equity capital on favorable terms, or at all, due to the severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our access to capital, or increase the cost of capital, necessary to fund the purchase of properties and meet other capital requirements, such as refinancing maturing liabilities on a timely basis, or at all, and paying dividends, and may have similar effects on acceptable termsour tenants and their ability to fund their business operations and meet their obligations to us;
•disruption and instability in the global financial markets or deteriorations in credit and financing conditions if at all. If we fail to do so (and we are not otherwise able to increasecould have an impact on the overall amount of cashcapital being invested in real estate and could result in price or value decreases for real estate assets, which could negatively impact the value of our assets and may result in future acquisitions generating lower overall economic returns;
•the volatility in the global stock markets caused by the COVID-19 pandemic and its effects on our stock price could dilute our stockholders’ interest in us if we have availablesell additional equity securities at prices less than the prices our stockholders paid for their shares;
•we may reduce the number of properties we seek to pay dividends and distributions), our ability to comply withacquire in the restrictions on the payment of distributions in our Credit Facility may be adversely affected.future;
If•if we are not able to generate sufficient cash from operations, or otherwise maintain compliance with our Credit Facility, we may have to further reduce the amount of dividends we pay or identify other financing sources, to fund the payment of dividends at their current levels. Thereand there can be no assurance that other sources will be available on favorable terms, or at all. Fundingall;
•our dependence on maintaining sufficient availability under our Credit Facility to fund the purchase of properties and meet other capital requirements and maintain compliance with restrictions on the payment of dividends in our Credit Facility, which may be adversely affected to the extent the decreases in cash rent collected from our tenants cause a decrease in availability of future borrowings restrictsunder our Credit Facility;
•if we are unable to comply with financial covenants and other obligations under of our Credit Facility and other debt agreements, including restrictions on the amountpayment of dividends under our Credit Facility, we cancould default under those agreements which could potentially result in an acceleration of our indebtedness or foreclosure on our properties and could otherwise negatively impact our liquidity;
•we may recognize impairment charges on our assets;
•one or more counterparties to our derivative financial instruments could default on their obligations to us or could fail, increasing the risk that we may not realize the benefits of utilizing these instruments;
•with respect to our leases, we may be required to record reserves on previously accrued amounts in cases where it is subsequently concluded that collection is not probable;
•difficulties completing capital improvements at our properties on a timely basis, on budget or at all, could affect the value of our properties;
•our ability to ensure business continuity in the event our Advisor’s continuity of operations plan is not effective or is improperly implemented or deployed during a disruption;
•increased operating risks resulting from changes to our Advisor’s operations and remote work arrangements, including the potential effects on our financial reporting systems and internal controls and procedures, cybersecurity risks and increased vulnerability to security breaches, information technology disruptions and other similar events; and
•complying with REIT requirements during a period of reduced cash flow could cause us to liquidate otherwise attractive investments or borrow funds on unfavorable conditions.
The extent to which the COVID-19 pandemic, or a future pandemic, impacts our operations and those of our tenants will depend on future developments, including the scope, severity and duration of the pandemic, one or more resurgences of the virus which could result in further government restrictions, the efficacy of any vaccines or other remedies developed, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others, which are highly uncertain and cannot be predicted with confidence but could be material. The situation is rapidly changing and additional impacts to the business may arise that we are not aware of currently. The rapid development and fluidity of this situation precludes any prediction as to the full adverse impact of the COVID-19 pandemic, but a prolonged or resurgent outbreak as well as related mitigation efforts could continue to have a material impact on our revenues and could materially and adversely affect our business, results of operations and financial condition. In addition to the risk factors contained herein, many risk factors set forth in our Annual Report on Form 10-K for property acquisitionsthe year ended December 31, 2019.
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The stockholder rights plan adopted by our board of directors may which may discourage a third party from acquiring us in a manner that might result in a premium price to our stockholders
In April 2020, our board of directors adopted a stockholder rights plan and investments. Using proceeds fromauthorized a dividend of one preferred share purchase right that will expire April 2021 for each outstanding share of our Common Stock. If a person or entity, together with its affiliates and associates, acquires beneficial ownership of 4.9% or more of our then outstanding Common Stock, subject to certain exceptions, each right would entitle its holder (other than the sale of assets or the issuanceacquirer, its affiliates and associates) to purchase additional shares of our Common Stock Series A Preferredat a substantial discount to the public market price. In addition, under certain circumstances, we may exchange the rights (other than rights beneficially owned by the acquirer, its affiliates and associates), in whole or in part, for shares of Common Stock on a one-for-one basis. The stockholder rights plan could make it more difficult for a third party to acquire us or other equity securities to fund dividends rather than investa large block of our Common Stock without the approval of our board or directors, which may discourage a third party from acquiring us in assets will likewise reduce the amount available to invest. Funding dividends from the sale of additional securities could alsoa manner that might result in a dilutionpremium price to our stockholders.
Our bylaws designate the Circuit Court for Baltimore City, Maryland as the sole and exclusive forum for certain actions and proceedings that may be initiated by our stockholders.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Circuit Court for Baltimore City, Maryland, or, if that court does not have jurisdiction, the United States District Court for the District of Maryland, Northern Division, is the sole and exclusive forum for (a) any derivative action or proceeding brought on our behalf,
other than actions arising under federal securities laws, (b) any Internal Corporate Claim, as such term is defined in the Maryland General Corporation Law (the “MGCL”), or any successor provision thereof, including, without limitation, (i) any
action asserting a claim of breach of any duty owed by any of our stockholders’ investment.director, officer or other employee to us or to our
stockholders or (ii) any action asserting a claim against us or any of our director or officer or other employee arising pursuant
to any provision of the MGCL, our charter or our bylaws, or (c) any other action asserting a claim against us or any of our
director or officer or other employee that is governed by the internal affairs doctrine. Our officersbylaws also provide that, unless we
consent in writing, none of the foregoing actions, claims or proceedings may be brought in any court sitting outside the State of
Maryland and directors face conflicts of interest relatedthe federal district courts are, to the positions they hold with related parties.fullest extent permitted by law, the sole and exclusive forum for the

resolution of any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions may
Certainlimit a stockholder’s ability to bring a claim in a judicial forum that the stockholder believes is favorable. Alternatively, if a
court were to find these provisions of our executive officers, including James Nelson, chief executive officer and president, and Christopher Masterson, chief financial officer, treasurer and secretary, also are officersbylaws inapplicable to, or unenforceable in respect of, one or more of the Advisor and the Property Manager. Mr. Masterson also serves as the chief financial officer and treasurerspecified
types of New York City REIT, Inc., a non-listed REIT sponsored and advised by affiliates of AR Global, as well as its advisor and property manager. Our directors also are directors of other REITs sponsored directly or indirectly by the parent of AR Global. As a result, these individuals owe fiduciary duties to these other entities which may conflict with the duties that they owe to us.
These conflicting duties could result in actions or inactions that are detrimental to our business. Conflictsproceedings, we may incur additional costs associated with our business and interests are most likely to arise from involvementresolving these matters in activities related to (a) allocation of new investments and management time and services between us and the other entities, (b) our purchase of properties from, or sale of properties, to entities sponsored by or affiliated with AR Global, (c) the timing and terms of the investment in or sale of an asset, (d) development of our properties by affiliates of AR Global, (e) investments with affiliates of the Advisor, and (f) compensation to the Advisor and its affiliates, including the Property Manager.jurisdictions.
Moreover, involvement in the management of multiple REITs by certain of the key personnel of the Advisor may significantly reduce the amount of time they are able to spend on activities related to us, which may cause our operating results to suffer.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds of Registered Securities.
Recent Sale of Unregistered Securities
There were no recent sales of unregistered securities.
Purchases of Equity Securities by the Issuer and Related Purchasers
There were no recent repurchases of our equity securities.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
On November 8, 2019, we delivered a notice to Ladenburg Thalmann & Co. Inc., BMO Capital Markets Corp., B. Riley FBR, Inc. and D.A. Davidson & Co., the agents under the Preferred Stock ATM Program, terminating the equity distribution agreement related to the Preferred Stock ATM Program, effective on November 12, 2019.None.
Ladenburg Thalmann & Co. Inc., BMO Capital Markets Corp., B. Riley FBR, Inc. and D.A. Davidson & Co. BMO Capital Markets Corp. acted as joint lead arranger and bookrunner for, and an affiliate of BMO Capital Markets Corp. is an administrative agent and lender under, our Credit Facility. Ladenburg Thalmann & Co. Inc., BMO Capital Markets Corp., and B. Riley FBR, Inc. or their affiliates are agents under the Common Stock ATM Program.
Item 6. Exhibits.
The exhibits listed on the Exhibit Index (following the signatures section of this report) are included, or incorporated by reference, in this Quarterly Report on Form 10-Q.
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SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Global Net Lease, Inc.
By:/s/ James L. Nelson
James L. Nelson
Chief Executive Officer and President
(Principal Executive Officer)
Global Net Lease, Inc.
By:By:/s/ James L. Nelson
James L. Nelson
Chief Executive Officer and President
(Principal Executive Officer)
By:/s/ Christopher J. Masterson
Christopher J. Masterson
Chief Financial Officer, Treasurer, and Secretary
(Principal Financial Officer and Principal Accounting Officer)

Dated: November 8, 20196, 2020
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EXHIBITS INDEX



The following exhibits are included, or incorporated by reference, in this Quarterly Report on Form 10-Q for the quarter ended September 30, 20192020 (and are numbered in accordance with Item 601 of Regulation S-K).
Exhibit No.Description
3.13.1 (1)
Articles of Restatement of Global Net Lease, Inc., effective February 26, 2018.
3.2 (2)
Amended and Restated Bylaws of Global Net Lease, Inc.
3.3 (3)
Amendment to Amended and Restated Bylaws of Global Net Lease, Inc.
3.4(4)
Articles Supplementary classifying additional shares of 7.25% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share filed on March 23, 2018.
3.43.5 (1)
Articles of Amendment filed on February 27, 2019.
10.13.6 (4)(5)
First Amended and Restated Credit Agreement,Articles Supplementary relating to the designation of shares of 6.875% Series B Cumulative Redeemable Perpetual Preferred Stock dated as of August 1, 2019, by and among the Global Net Lease Operating Partnership, L.P., as borrower, the lenders party thereto and KeyBank National Association, as agent.November 22, 2019.
10.23.7 (4)(6)
First Amended and Restated Guaranty, dated asArticles of August 1, 2019, by the Company, ARC Global Holdco, LLC, Global II Holdco, LLC and the other subsidiary parties thereto for the benefit of KeyBank National Association and the other lender parties thereto.Amendment filed on December 13, 2019.
10.33.8 (4)(6)
First Amended and Restated Contribution Agreement, dated asArticles Supplementary classifying additional shares of August 1, 2019, by and among the Company, Global Net Lease Operating Partnership, L.P., ARC Global Holdco, LLC, ARC Global II Holdco, LLC, the other subsidiary parties thereto.6.875% Series B Cumulative Redeemable Perpetual Preferred Stock, $0.01 par value per share filed on December 13, 2019.
10.43.9 (5)(3)
Loan Agreement, dated as of September 12, 2019, by and among the borrowers party thereto, and KeyBank National Association, as lender.Articles Supplementary for Series C Preferred Stock.
Form of Promissory Note, dated as of September 12, 2019, by the borrowers party thereto in favor of KeyBank National Association, as lender.
10.6(5)
Guaranty Agreement, dated as of September 12, 2019, by Global Net Lease Operating Partnership, L.P. in favor of KeyBank National Association, as lender.
10.7(5)
Environmental Indemnity Agreement, dated as of September 12, 2019, by the borrowers party thereto and Global Net Lease Operating Partnership, L.P. in favor of KeyBank National Association, as indemnitee.
10.8(5)
Property Management and Leasing Agreement, dated as of September 12, 2019 among the entities listed on Exhibit A attached thereto and Global Net Lease Properties, LLC.
31.1 *
Form of Restricted Share Award Agreement.
Certification of the Principal Executive Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Principal Financial Officer of the Company pursuant to Securities Exchange Act Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 *
Written statements of the Principal Executive Officer and Principal Financial Officer of the Company pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS *Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH *Inline XBRL Taxonomy Extension Schema Document.
101.CAL *Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104 *Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*Filed herewith
_________
*Filed herewith
(1) Filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 28, 2018.
(2) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on June 3, 2015.
(3) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on March 23, 2018.April 9, 2020.
(4) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on August 6,March 23, 2018.
(5) Filed as an exhibit to our Registration Statement on Form 8-A filed with the SEC on November 22, 2019.
(5)(6) Filed as an exhibit to our Current Report on Form 8-K filed with the SEC on September 18,December 13, 2019.




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