Global Net Lease (GNL): A High-Yield Preferred Stock with Strengthening Balance Sheet and Credit Outlook

In a rising interest rate environment, income investors are increasingly prioritizing securities that balance yield with credit stability. Global Net Lease (GNL) has emerged as a compelling candidate, offering high-yield preferred shares while simultaneously strengthening its balance sheet and credit profile. This strategic positioning makes GNL a unique opportunity for investors seeking both income generation and downside protection.

Strategic Portfolio Optimization and Debt Reduction

GNL’s Q2 2025 results underscore its aggressive debt reduction strategy. The company completed the sale of its multi-tenant retail portfolio, generating $1.8 billion in proceeds and reducing net debt by $748 million in the quarter alone. Since Q2 2024, net debt has declined by $2.0 billion, with the net debt to adjusted EBITDA ratio improving from 8.1x to 6.6x [1]. These actions have directly enhanced liquidity, which now stands at $1.0 billion, up from $220 million in Q2 2024 [1].

The company also executed a $1.8 billion refinancing of its revolving credit facility, lowering the interest rate spread by 35 basis points and extending the weighted average debt maturity to 3.7 years [1]. This refinancing not only reduces near-term interest expenses but also aligns GNL’s capital structure with long-term stability. Analysts have upgraded GNL’s stock rating to “Overweight” with a $9.00 price target, reflecting confidence in its strategic execution [2].

High-Yield Preferred Shares in a Rising Rate Environment

GNL’s preferred stock offerings have become particularly attractive for income investors. The 7.50% Series D cumulative redeemable perpetual preferred stock yields 7.8%, outperforming many investment-grade alternatives in the preferred securities market [2]. This yield is supported by GNL’s upgraded credit profile, including a corporate credit rating of BB+ and investment-grade BBB- on its unsecured notes from S&P Global [1].

The company’s commitment to shareholder returns further enhances its appeal. As of August 1, 2025, GNL has repurchased 10.2 million shares under its buyback program, totaling $76.9 million [1]. These actions signal management’s confidence in the company’s intrinsic value, even as it navigates a challenging macroeconomic landscape.

Credit Outlook and Analyst Confidence

GNL’s credit upgrades and financial discipline have positioned it to weather rising rate scenarios. The company’s interest coverage ratio of 2.7x and a debt-to-equity ratio of 162.2% demonstrate manageable leverage [4]. Analysts have raised the low end of its 2025 AFFO guidance to $0.92–$0.96 per share, reflecting optimism about its ability to maintain distributions despite asset sales [1].

However, risks remain. Some analysts caution about potential interest expense impacts on AFFO and tenant-specific risks, such as property contamination issues [3]. That said, GNL’s proactive approach to portfolio optimization—selling non-core assets and focusing on higher-quality industrial and single-tenant properties—mitigates these concerns [5].

Conclusion

For income investors, GNL’s preferred shares offer a rare combination of high yield and improving credit fundamentals. Its strategic debt reduction, refinancing success, and credit upgrades create a resilient foundation, while its 7.8% yield on Series D shares provides a compelling alternative to traditional fixed-income assets in a rising rate environment. As GNL continues to streamline operations and reduce leverage, it is well-positioned to deliver both capital preservation and income generation for long-term investors.

**Source:[1] Global Net Lease Reports Second Quarter 2025 Results [https://globalnetlease.com/investor-relations/investor-news/news-details/2025/Global-Net-Lease-Reports-Second-Quarter-2025-Results/default.aspx][2] Global Net Lease (NYSE:GNL) Raised to “Overweight” at ... [https://www.marketbeat.com/instant-alerts/global-net-lease-nysegnl-stock-rating-upgraded-by-keycorp-2025-08-19/][3] GNL Stock Forecast: Analyst Ratings, Predictions & Price Target [https://public.com/stocks/gnl/forecast-price-target][4] Global Net Lease (GNL) Balance Sheet & Financial Health ... [https://simplywall.st/stocks/us/real-estate/nyse-gnl/global-net-lease/health]