Global Net Lease's Series A Preferred Shares: A High-Yield REIT Play with Cautionary Caveats

For income-focused investors, real estate investment trusts (REITs) have long been a cornerstone of diversified portfolios, offering a blend of steady dividends and asset appreciation. Among the latest opportunities, Global Net Lease's (GNL) 7.25% Series A Cumulative Redeemable Preferred Shares (GNL.PRA) stand out as a high-yield candidate, trading at a discount to its $25 liquidation preference and offering quarterly dividends of $0.453125 per shareGlobal Net Lease, Inc. Announces Preferred Stock Dividends^[1]. However, the sustainability of this yield hinges on the company's ability to balance its aggressive deleveraging strategy with cash flow constraints—a dynamic that demands closer scrutiny.

The Attraction of GNL.PRA: Yield and Structure

The Series A shares, with their 7.25% annualized yield, represent a compelling proposition in a low-interest-rate environment. As of September 2025, the shares traded at $23.62, a 5.52% discount to their $25 liquidation valueGNL-A $23.60 (0.00%) Global Net Lease Inc Preferred Shares^[2], further enhancing their appeal. The cumulative nature of the dividends ensures that unpaid distributions accrue, reducing the risk of permanent loss for investors. Notably, GNL has maintained an unbroken streak of quarterly dividend declarations for the Series A shares, including recent payments in April, July, and October 2025Global Net Lease, Inc. Declares Quarterly Dividends on Preferred Stock^[3], signaling operational discipline.

Liquidity and Leverage: A Tale of Two Metrics

GNL's financial engineering in 2025 has been nothing short of transformative. By June 2025, the company's liquidity had surged to $1.0 billion, up from $220 million in Q2 2024Global Net Lease Reports Second Quarter 2025 Results^[4], driven by the $1.8 billion sale of its multi-tenant retail portfolio and a refinancing of its revolving credit facility. This refinancing extended the weighted average debt maturity to 3.7 years and slashed the interest rate spread by 35 basis pointsGlobal Net Lease Extends Debt Runway to 2030 with $1.8 Billion ...^[5], providing a buffer against near-term refinancing risks. Additionally, the net debt to adjusted EBITDA ratio improved from 8.1x to 6.6xGNL Q2 2025 Earnings Report on 8/6/2025 - MarketBeat^[6], a move toward more sustainable leverage levels for a REIT.

Yet, cash flow coverage remains a concern. In Q1 2025, operating cash flow of $59 million covered just 79% of total dividendsGlobal Net Lease Cuts Common Stock Dividend by 31% Amidst Cash Flow Decline^[7], a sharp decline from 123% in Q1 2024. While GNL's 31% reduction in its common dividend—cutting it to $0.190 per share—freed up $78 million in annual cash flowGlobal Net Lease Reports First Quarter 2025 Results^[8], the company's AFFO (adjusted funds from operations) also contracted, falling to $53.1 million in Q2 2025 from $76.7 million in the prior-year periodGlobal Net Lease, Inc. (GNL) 10-Q Quarterly Report August 2025^[9]. This raises questions about whether the preferred dividend coverage will stabilize or erode further as asset sales taper.

Strategic Tailwinds and Risks

GNL's pivot to a pure-play net lease REIT—focusing on single-tenant properties with long-term leases—positions it to benefit from the resilience of creditworthy tenants. The company reported 98% occupancy in Q2 2025 and executed over 200,000 square feet of new or renewed leasesGlobal Net Lease, Inc. - Investor - Financials - SEC Filings^[10], suggesting strong tenant demand. Moreover, the sale of its multi-tenant retail portfolio eliminated recurring capital expenditures and G&A expenses, saving $36.5 million annuallyGlobal Net Lease Reports Second Quarter 2025 Results^[11].

However, the absence of granular data on the number of outstanding Series A shares complicates a precise assessment of cash flow per preferred shareGlobal Net Lease Inc | 7.25% Series A Cumulative Redeemable Preferred Stock^[12]. Without this, investors cannot fully quantify the margin of safety for dividend payments. Additionally, while GNL's liquidity is robust, its $1.8 billion credit facility—now maturing in 2029—includes an accordion feature allowing expansion to $3 billionGlobal Net Lease Completes $1.8 Billion Refinancing of Revolving Credit Facility^[13]. This flexibility is a double-edged sword: while it provides growth options, it also exposes the company to potential overleveraging if market conditions deteriorate.

Conclusion: A High-Yield Bet with Prudent Safeguards

For investors seeking income with a moderate risk tolerance, GNL.PRA offers an attractive yield supported by a strengthened balance sheet and disciplined capital structure. The company's liquidity improvements and refinancing success mitigate immediate concerns about dividend sustainability, while the absence of cumulative arrears underscores its commitment to preferred shareholdersGlobal Net Lease, Inc. Announces Preferred Stock Dividends^[14]. That said, the narrowing cash flow coverage and reliance on non-recurring asset sales necessitate caution. Investors should monitor GNL's AFFO trajectory and its ability to maintain occupancy rates as key indicators of long-term stability.