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GNL to Acquire RTL in a Surprising Move Brief clip from JMP Securities.... an agreement to merge with The Necessity Retail REIT (NYSE: RTL, MP). Both GNL and RTL had been in an ongoing proxy battle with an activist investor, Blackwells Capital, and the REITs were at risk of losing some board representation at each respective company; both REITs recently postponed their respective annual meetings as proxy advisory firms sided with the activist. The merger, along with a planned internalization, is expected to produce significant cost savings and some positive governance enhancements, while leverage is expected to decline as the main consideration is in the form of stock. That said, the surviving $9.6B portfolio lacks continuity, with a mix of multi- and single-tenant properties across asset sectors, along with a global footprint. We maintain our Market Perform ratings on both GNL and RTL until we have time to digest this news, analyze the changes from financial and governance perspectives, and gain insight from management on this strategic shift. We make no model changes until the deal receives shareholder and lender approval. Management is hosting a call this morning (May 24) at 11 a.m. ET to discuss the merger; dial-in (877) 407-0792 |
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