In its most significant step in transforming into a pure-play, single-tenant net lease company, Global Net Lease Inc. has agreed to sell 100 non-core retail properties to a subsidiary of RCG Ventures Holdings LLC, for approximately $1.8 billion.
The deal calls for RCG to pay cash after the assumption of $470 million in pre-existing debt. GNL received a $25 million non-refundable deposit from the Atlanta-based real estate investment firm at the signing of the binding agreement.
GNL, a New York-based REIT, expects to use the net proceeds from the multi-tenant portfolio sale to significantly reduce the outstanding balance on its revolving credit facility. Strategic benefits of the portfolio sale cited by GNL include reducing leverage, improving its liquidity position and boosting occupancy to 98 percent, among other key portfolio metrics.
The transaction is expected to close in three phases with the sale of 59 unencumbered properties set to close by the end of the first quarter. The sale of 41 properties with loan assumptions is anticipated to close by the end of the second quarter.
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Including the completion of the multi-tenant portfolio sale, GNL expects to have completed nearly $3 billion in dispositions by the end of the year. The portfolio, which is 91.6 percent leased, comprises assets in 28 states totaling 14.7 million square feet. The portfolio’s composition is 61 percent power centers, 22 percent grocery-anchored and 17 percent anchored centers. The top five tenants are: Petsmart, 4.9 percent; Dick’s, 4.5 percent; Kohl’s, 3.8 percent; Best Buy, 3.2 percent and Michael’s, 3.1 percent.
The portfolio covers most of the Northeast, Mid-Atlantic, Southeast, Midwest and Southwest, including Texas. The farthest west the portfolio goes is Nevada. Some of the properties in the planned deal are Fountain Square, a 166,346-square-foot center with tenants including Michael’s, Petsmart and Golf Galaxy, in Brookfield, Wis., and Centrum Shopping Center in Pineville, N.C., a 122,256-square-foot center with tenants including Home Depot, Best Buy and Super G Mart, an international supermarket.
Advisors for the transaction include BofA Securities serving as GNL’s exclusive financial advisor for the sale and BMO Capital acting as an advisor. Paul, Weiss, Rifkind, Wharton & Garrison LLP is providing legal counsel to GNL. Truist Securities served as a financial advisor to RCG Ventures and provided committed financing for the transaction. McGuireWoods LLP is providing legal counsel to RCG Ventures for real estate acquisition and financing matters. King & Spalding LLP is providing legal counsel to RCG Ventures for fund formation and transaction-related matters. Gibson Avenue Capital LLC is serving as an advisor to RCG Ventures.
Transforming GNL
The New York-based REIT launched its strategic disposition plan in 2024, with the objective of reducing debt, enhancing financial flexibility and lowering the cost of capital as it transitioned to a pure-play, single-tenant net lease company.
In August, GNL sold The Plant, a 367,000-square-foot super-regional retail center in San Jose, Calif., to a partnership between Arc Capital Partners and Milan Capital Management for $95 million. Completed in 2008, The Plant has 17 buildings across 45 acres. Tenants include Best Buy, Ulta Beauty, Ross Dress for Less, Petsmart, Game Stop, Applebee’s, McDonald’s and Starbucks.
GNL took ownership of the shopping center following a 2023 merger with The Necessity Retail REIT, which had purchased the asset in 2022.
Also, during the summer, GNL sold a 366,000-square-foot office property in Shinfield Park, Reading, U.K., for more than $27 million. GNL had owned the Foster Wheeler office property for about eight years.
In June, GNL sold a portfolio of nine cold storage properties to Americold Realty Trust, which had been leasing the assets, for $170 million. GNL had paid $153.4 million for the cold storage portfolio.
RCG Ventures growth
The planned deal with GNL continues a late-year shopping spree for RCG Ventures, which acquired two retail centers in two separate deals in December. The firm, founded in 2003, has acquired more than $1.6 billion in retail assets and managed as much as 14 million square feet of retail real estate.
RCG Ventures picked up Pinnacle Nord du Lac, a 215,058-square-foot retail center in Covington, La., for $27 million from Cypress Equities in mid-December. Pinnacle Nord du Lac was 96 percent leased at the time of sale. Tenants include Hobby Lobby, Academy Sports & Outdoors and Petco.
A few days earlier, the company purchased Oakland Plaza, a 167,000-square-foot shopping center in Troy, Mich., from Continental Realty Corp., on behalf of its Continental Realty Opportunistic Retail Fund I LP, for $25.6 million. The retail center was 97 percent leased when sold with tenants including Kids Empire, Rally House and several restaurants.