Global Net Lease Inc. (NYSE: GNL) and The Necessity Retail REIT Inc. (NASDAQ: RTL) with the REIT’s external manager, AR Global, announced that they have entered into a cooperation agreement with Blackwells Capital.
As The DI Wire previously reported, GNL and RTL entered into a definitive merger agreement in May 2023.
After extensive disagreements and lawsuits, under the terms of the cooperation agreement, the Blackwells parties will withdraw their nomination notices and proposals at both GNL and RTL and have agreed to vote in favor of the share issuances for the previously announced merger of GNL and RTL and internalization transactions at the GNL special meeting.
Under terms of the settlement agreement, GNL will pay or otherwise irrevocably deliver or transfer a settlement fee comprised of 495,000 newly issued shares of GNL common stock in the aggregate (valued by the parties at $10.97 per share) to Blackwells Capital.
Additionally, Blackwells has been engaged by GNL to provide “consulting services,” for which they will be paid: 1.6 million shares of GNL common stock upon the closing of the proposed merger between GNL and RTL; 533,333 shares of GNL common stock in the event the merger agreement is terminated pursuant to Section 8.1(b)(iii) of the merger agreement, or 1,066,667 shares of GNL common stock if the merger agreement is terminated for other reasons.
“We are pleased to have reached an agreement with Blackwells that we believe is in the best interests of the Global Net Lease and The Necessity Retail REIT shareholders,” said Michael Weil, chief executive officer of RTL, and James Nelson, chief executive officer of GNL. “The combination of GNL and RTL will create a leading global net lease REIT that is positioned for long-term growth and potential trading multiple expansion comparable to other net lease REITs of this size and scale. The combined entity will be internally managed, resulting in significant cost savings, and will adopt enhanced corporate governance practices that will ensure the combined company operates in the best interests of all current and future investors. We are pleased to have Blackwells’ support of the Merger and internalization transaction and look forward to working with Blackwells to create value on behalf of all shareholders.”
Jason Aintabi, chief investment officer of Blackwells, said, “We are pleased to have aligned with the boards of GNL and RTL on a constructive path forward following the significant governance and structural changes that have occurred over the course of the last year. The merger of GNL and RTL creates a new company of scale in the sector that can be singularly focused on creating value for all public shareholders. With our support for the transaction now in place, we look forward to the completion of the merger and lend Mr. Weil and the leadership team our full support, as we believe investors will see great success following the internalization and merger.”
Pursuant to the agreement, the parties have agreed to release all claims arising prior to the settlement and dismiss their respective actions in Maryland state court and New York federal court.
The Blackwells parties have agreed to abide by certain standstill and voting commitments in connection with the cooperation agreement.
Blackwells Capital was founded in 2016 by Jason Aintabi and invests in public securities, ranging property development and management to REITs and adjacent real estate activities, including financing, origination, and managing real estate backed securities, including direct mezzanine and equity investments.
As of Dec. 31, 2022, Global Net Lease Inc. owned 309 properties consisting of 39.2 million rentable square feet, which were 98.0% leased, with a weighted-average remaining lease term of 8.1 years.
As of Dec. 31, 2022, Necessity Retail REIT Inc. owned 1,044 properties, comprised of 27.9 million rentable square feet, which were 93.7% leased, including 935 single-tenant net leased commercial properties, 897 of which are retail properties, and 109 multi-tenant retail properties.