Q3 2023 Global Net Lease Inc Earnings Call

Participants

Christopher J. Masterson; CFO; Global Net Lease, Inc.

Edward Michael Weil; Co-CEO & Director; Global Net Lease, Inc.

Jordyn Schoenfeld

Barry Paul Oxford; MD & Senior Research Analyst; Colliers Securities LLC, Research Division

Bryan Anthony Maher; MD; B. Riley Securities, Inc., Research Division

Mitchell Bradley Germain; MD & Equity Research Analyst; JMP Securities LLC, Research Division

Todd Michael Thomas; MD & Senior Equity Research Analyst; KeyBanc Capital Markets Inc., Research Division

Presentation

Operator

Good afternoon, and welcome to the Global Net Lease Third Quarter 2023 Earnings Conference Call. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Jordyn Schoenfeld, associate at Global Net Lease. Please, go ahead.

Jordyn Schoenfeld

Thank you. Good afternoon, everyone, and thank you for joining us for GNL's Third Quarter 2023 Earnings Call.
Joining me today on the call are Mike Weil and Jim Nelson, GNL's Co-Chief Executive Officer; and Chris Masterson, GNL's Chief Financial Officer.
The following information contains forward-looking statements, which are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, actual results may differ materially from those expressed or implied by the forward-looking statements. We refer all of you to our SEC filings, including the Form 10-K for the year ended December 31, 2022, filed on February 23, 2023, and all other filings with the SEC after that date for a more detailed discussion of the risk factors that could cause these differences.
Any forward-looking statements provided during this conference call are only made as of the date of this call. As stated in our SEC filings, GNL disclaims any intent or obligation to update or revise these forward-looking statements, except as required by law. Any statements referring to the future value of an investment in GNL including any adjustments giving effect to the recently completed merger with The Necessity Retail REIT Inc. defined as RTL and the subsequent internalization of both GNL and RTL's advisory and property management functions as well as any projections about any potential success following the merger and internalization are also forward-looking statements.
There are a number of risks associated with the merger internalization, including, but not limited to, our ability to integrate the operations of RTL and the other entities acquired in the merger and internalization. We may not realize the anticipated synergies and other benefits of the merger or the internalization or do so within our anticipated time frame.
Also, during today's call, we will discuss non-GAAP financial measures, which we believe can be useful in evaluating the company's financial performance. These measures should not be considered in isolation or as a substitute for our financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measure is available in our earnings release and supplement, which are posted to our website. Please also refer to our earnings release for more information about what we consider to be implied investment-grade tenants, a term we will use throughout today's call.
I'll now turn the call over to our Co-CEO, Mike Weil. Mike?

Edward Michael Weil

Thanks, Jordyn, and good afternoon, everyone.
Welcome to our first earnings call following the merger with The Necessity Retail REIT and corresponding internalization transaction. We recognize how vital our shareholders are to our continued success, and we appreciate the great conviction our investors demonstrated in support of the merger and internalization. The success of the merger and internalization has created the third largest publicly traded net lease REIT with a global presence based on gross asset value as well as corporate governance in line with our internalized peers.
The foundation of our global presence is a diversified portfolio of high-quality tenants, which gives us the flexibility to focus on attractive opportunities in multiple markets that will contribute to long-term shareholder value. Our recently completed merger and internalization creates the path for GNL to trade up to our net lease peer multiples. We believe we are clearly undervalued on an AFFO multiple basis compared to the other internalized REITs, even though the quality of our rental income and investment grade-worthy tenants are substantially higher than the average in our industry.
We closed the merger and the internalization transaction on September 12. Accordingly, the third quarter financial results reflect 73 days of stand-alone pre-merger GNL and only 19 days of post-merger internalized GNL and RTL results. The company is currently on track to achieve the $75 million of annualized cost savings we anticipated in conjunction with the merger and internalization.
To this point, based on 19 days of lower-than-expected G&A expenses, GNL has exceeded the projected synergies by $2 million, capturing $56 million of annualized synergies, and we remain on track to capture the $75 million worth of total synergies with a projected 6% G&A operating expense by Q3 2024. In addition, GNL reduced its quarterly dividend per share from $0.40 premerger to $0.354 as part of the merger, reducing the amount of cash needed to fund the dividends by approximately $42 million on an annualized per share basis as of September 30, 2023. Together, without the assumption of any incremental acquisitions or external growth, GNL expects to reduce its payout ratio and continue to execute on its current business plan, including leasing, renewals and strategic disposition initiatives.
Our leading portfolio of over 1,300 properties spans nearly 67 million square feet, and we had a gross asset value of $9.2 billion at quarter end. The diverse makeup of our net lease portfolio is unmatched, whether measured by geography, asset type, tenant or industry, which positions GNL well to navigate external macro challenges as we move ahead. The portfolio is over 96% leased with a weighted average remaining lease term of 6.9 years. Geographically, 81% of our straight-line rent is earned in North America, while 19% comes from Europe. Additionally, the portfolio includes contractual rent increases with an average annual rental increase of 1.3%. The portfolio also features a stable tenant base with an industry-leading 58% receiving an investment-grade or implied investment-grade credit rating.
I also want to highlight the strong asset management capabilities we demonstrated while continuing to succeed with leasing and renewal activity. In particular, our third quarter leasing and renewal activity included 1.8 million square feet across the entire portfolio. Leasing spreads on renewals were 5% higher than the expiring rent.
Our largest segment is industrial and distribution with 218 properties that span over 33.6 million square feet and contributed $229 million to annualized straight-line rent. 93% of the leases in this portfolio include favorable rent escalations with an average annual rental increase of 1.6%, positioning the portfolio to benefit from annual rental income while having 8-year weighted average lease term.
Our single-tenant retail segment is the largest by property count with 886 properties that span over 7.9 million square feet and contributed $153 million to annualized straight-line rent. The single-tenant retail segment comprises 69% investment-grade or implied investment-grade rated tenants and features an 8.4 year weighted average lease term.
The multi-tenant suburban retail segment includes 109 properties that span over 16.4 million square feet and contributed $199 million in annualized straight-line rent. The portfolio has a weighted average remaining lease term of 5.1 years and includes 21% of grocery-anchored centers, which are 91.3% leased. This segment is predominantly comprised of triple-net leases with incremental lease-up potential and attractive leasing spreads, with 61% of the straight-line rent in this portfolio coming from the Sunbelt markets, which continue to grow and have favorable demographic tailwinds.
Our smallest segment, single-tenant office includes 91 properties that span 8.9 million square feet, contributed $146 million to annualized straight-line rent and has a 5.1-year weighted average lease term. One of the metrics that differentiates the single-tenant office portfolio is that it consists of 71% mission-critical facilities, which we define as headquarters, lab or R&D facilities and feature 70% investment-grade or implied investment-grade tenants, which we believe provides rent stability and low level of default risk.
Given GNL's successful track record of lease renewals, the single-tenant office segment also includes limited near-term lease maturities, minimizing the risk of vacancy. An additional hallmark of our total portfolio strategy is the mitigation of concentration risk. Our top 10 tenants collectively account for only 21% of annual straight-line rent with our largest tenant accounting for only 3.1% of our total portfolio. This high-quality tenant roster provides a highly predictable base of rental income on which to build our future as our tenants provide stability and durability to our business.
Our leasing results continue to illustrate the quality of our assets, driving leasing rates higher even in the current environment. The single-tenant segment completed 8 new leases and renewals and showcased a positive 7% renewal leasing spread, demonstrating the strong renewal demand for our mission-critical assets while adding $5 million to net straight-line rent.
The multi-tenant segment completed 92 new leases and renewals, resulting in a positive 4.1% renewal spread, consistent with the high demand we're experiencing at our suburban shopping centers, which increased net straight-line rent by $11.8 million. Our executed leases at the end of the third quarter 2023, combined with our leasing pipeline as of November 1, 2023, will raise occupancy in our multi-tenant portfolio to 92.9%, up from 89.5% of actual occupancy at the end of June 30, 2023, at RTL.
Turning to the balance sheet. Although only 18% of our debt is variable, the volatile interest rate environment we're currently experiencing does temporarily impact the portion of our debt that is not fixed or swapped. Prior to the 100 basis point increase in the 10-year treasury rate since September, we secured a $500 million increase to our credit facility through our accordion, bringing the facility to $1.95 billion. Additionally, prior to the completion of the merger, RTL completed a $260 million commercial mortgage-backed security loan encumbered by 29 multi-tenant properties that we assumed as part of the merger. The loan has a 10-year term and is interest only at an attractive rate of 6.45%. We're pleased to be able to achieve this by utilizing a SOFR swap lock of 3.54% that RTL put in place prior to closing the loan before the merger. This CMBS loan contributes to our increased weighted average debt maturity while lowering our cost of capital and further increasing the percentage of fixed rate to over 82%. These transactions have further enhanced our balance sheet flexibility.
We'll continue to focus on opportunities that will help us achieve our financial goals, which include reducing net debt to adjusted EBITDA and organically increasing NOI through lease-up and contractual embedded rent growth. This will also be accomplished in the near term through strategic dispositions and the continued success of our asset management platforms, leasing and renewal activity. The strategic dispositions will be intended to delever our balance sheet as we intend to use the proceeds to pay down additional variable rate debt that currently has a blended average rate of 7.2%.
GNL will continue to evaluate the market for accretive acquisitions, but we believe current risk-adjusted returns need to improve for the company to be more active. We'll continue reviewing and monitoring our portfolio for strategic dispositions that can create incremental proceeds to help us accomplish our near-term financial goals.
Our global portfolio will continue to deliver value, allowing us to take advantage of opportunities in the U.S. or Europe and transact on assets that are mispriced or that require expertise in more than one asset class. We believe our global and increased diversification will prove to be a competitive advantage as we move ahead, and our successful lease renewals speak to the mission-critical nature of the properties that we own, where the weighted average remaining lease term is 7 years. Now that GNL is an internally managed REIT, we expect to trade more in line with our internalized net lease peers on an AFFO multiple basis, given the diversification, quality of income and superior investment grade-worthy tenants in our portfolio.
I'll turn the call over to Chris to walk through the financial results in more detail. Chris?

Christopher J. Masterson

Thanks, Mike.
Before getting into the detail, a reminder that the third quarter results reflect only 19 days of the combined GNL and RTL portfolio. Our cost savings, internalized management structure and many nonrecurring expenses related to the merger. Outside of the last couple of weeks prior to the completion of the merger and internalization transaction, results for the 3- and 9-month period ended September 30, 2023, reflect the legacy GNL results and the external management structure. That said, for the third quarter of 2023, we recorded revenue of $118.2 million and a net loss attributable to common stockholders of $142.5 million. Core FFO was $31.5 million or $0.24 per share and AFFO was $46.9 million or $0.36 per share.
Typically, we provide a year-over-year comparison. However, that would not be meaningful this quarter given only 19 days of the quarter reflects combined results of GNL and RTL as an internalized company. We intend to provide formal 2024 guidance around the time of our upcoming 10-K, which will provide investors with increased transparency regarding our financial goals and projections. As expected, FFO in the third quarter was impacted by many onetime items related to the merger and internalization transaction, including $14.6 million of settlement costs, $10.4 million of equity-based compensation and $43.8 million of transaction costs that are added back to AFFO. As always, a reconciliation of GAAP net income to the non-GAAP measures can be found in our earnings release, which is posted on our website.
Given the timing of the transaction, some balance sheet metrics also do not fully reflect the benefit of the merger. Specifically, our net debt to adjusted EBITDA ratio this quarter does not reflect the full quarter benefit of adjusted EBITDA from RTL and the internalization, but our total debt reflects the full impact of the transaction, making this ratio not meaningful for the quarter. Moving forward, this net debt to adjusted EBITDA ratio will be part of the fourth quarter disclosure, and we anticipate it to be approximately 7.6x.
We ended the quarter with net debt of $5.2 billion at a weighted average interest rate of 4.7% and had liquidity of $319.4 million, including $133.4 million of cash and cash equivalents and $186 million of availability under the company's revolving credit facility. The weighted average debt maturity at the end of the third quarter 2023 was 3.4 years with minimal debt maturity due in 2024.
Our debt comprises $1 billion in senior notes, $1.6 billion on the multicurrency revolving credit facility and $2.7 billion of outstanding gross mortgage debt. Our debt was 82% fixed rate, which includes floating rate debt with in-place interest rate swaps, and our interest coverage ratio was 2.5x. As of September 30, 2023, we had approximately 230.8 million common shares outstanding. On a weighted average basis, there are approximately 130.8 million shares outstanding, which is calculated based on the 73 days stand-alone pre-merger GNL and 19 days of post-merger GNL.
As always, I'm available to answer any questions you may have on this quarter after the call. I'll now turn the call back to Mike for some closing remarks.

Edward Michael Weil

Thanks, Chris.
We remain excited about the future of the internalized Global Net Lease. We're on a strong growth trajectory with nearly 100% retention rate of GNL's newly hired employees, combined with our competitive advantage of owning one of the largest, most diversified global net lease portfolios in the country and the fact that almost 1/3 of the portfolio's NOI is derived from industrial and distribution properties leased to creditworthy tenants with long-term leases.
Now that GNL is an internally managed REIT, we believe we'll close the trading gap relative to our peers, given the quality of our portfolio and the attractiveness of our creditworthy tenants. This will allow us to unlock significant value in the coming quarters for all shareholders as we continue our work to become the preeminent net lease company in the future.
Lastly, I want to mention that there's a lot of valuable data in the publicly filed investor deck, and we want to ensure that the deck is being utilized to gain a better understanding of GNL's exciting growth prospects. And of course, management is available for any follow-ups.
Operator, please open the line for questions.

Question and Answer Session

Operator

(Operator Instructions)
And our first question comes from Bryan Maher from B. Riley.

Bryan Anthony Maher

A couple of quick questions for me, maybe not so quick. The historical data that you guys provided, the annualized stuff on Slide 14, broken out by segment. That's pretty helpful from a modeling standpoint. But maybe for Chris, do you suspect we'll be able to get that breakout as we see it there on a historical basis to kind of fine tune our models a little bit?

Christopher J. Masterson

We'll have to get back to you on that one. We don't have anything in that regard other than the pro formas that we've put out, but we'll have to get back to you.

Edward Michael Weil

Bryan, It's Mike. What would be easiest for you?

Bryan Anthony Maher

Yes. It would be interesting to see, and I know this is annualized data. But if we were to take the SLR for each of these segments and divided by the square feet outstanding to kind of see what it is per, it would be interesting to see, unless you guys tell us it's useless what the trends have been kind of up to this point in time. When we build our models, we look back at history and see the ups and downs and what impacted those. It would be helpful to see that if it's not too much trouble.

Edward Michael Weil

Well, Chris and I will get together and see what we can come up with.

Bryan Anthony Maher

Okay. And then when we think about those 4 different sectors, is there meaningful differences in the rent escalators for each?

Edward Michael Weil

When you think of it in terms of the 1.3% annualized that the portfolio averages, no, there's not. They're slightly different, but all in that vicinity.

Bryan Anthony Maher

Okay. And then when we think about asset sales going forward, are there particular sectors or geographies that you're leaning into more than others?

Edward Michael Weil

It won't be geography driven. It will be a number of other analysis that we will be looking at, including where we see the deepest buyer pools, and where we see the biggest benefit to the overall impact to the go-forward portfolio. So it could be if there is an upcoming debt maturity and it's an asset that we think is valuable for redevelopment or repositioning that there are a lot of factors that will go into it to maximize the result.

Bryan Anthony Maher

Okay. And then when I look at Slide 18, how you break out the multi-tenant retail between power, anchored and grocery. Can you maybe rank, Michael, where you're seeing the most in leased strength in each of those segments?

Edward Michael Weil

So all 3 of those segments, Bryan, have equal strength in the new leasing and renewal. They all are critical to the suburban communities where they're based. And we just wanted to really highlight the fact that our multi-tenant retail fits clearly in these 3 very similar buckets. So it's really what we don't have. We wanted to make sure that everybody was clear. There are no strip centers along the side of the highway. These power centers, anchor centers and grocery centers, the anchors tend to be investment grade. They tend to be national tenants. Many of them have the investment-grade or implied investment-grade rating. And most importantly, they tend to have net lease leases on these large anchors. So this is where we have found the greatest value. This is where the communities shop on a regular basis. And we just wanted to clear up any questions that people might have of how this portfolio looks on a deeper dive.

Bryan Anthony Maher

And just one last quick one for me. I think, Chris, you said that the net debt to EBITDA, we know it's used for the third quarter, but for the fourth quarter, I want to make sure I got this right. Did you say 7.6x?

Christopher J. Masterson

Yes. 7.6x is what we've been disclosing as the projected amount.

Bryan Anthony Maher

And how does that compare to the premerger estimate? And Michael, where would you like to see that go over the next 12 to 18 months?

Christopher J. Masterson

Well, just in terms of the premerger, that is improvement. So it would lower the net debt to adjusted EBITDA. Yes.

Edward Michael Weil

So as Chris says, the merger was deleveraging in target at 7.6x net debt to EBITDA. So we think that's a good start. It's a little bit hard right now, Bryan, without being in a position to give the guidance that we intend to give when we file the K. But I have continued to say that we are focused and it's kind of a midterm goal. I don't know that it can happen in just a couple of quarters, but we will continue to drive net debt to EBITDA down. We think that we need to be under 6.5x to really have a conversation about what an investment-grade balance sheet would look like. And that is where we continue to focus.

Operator

And our next question comes from Mitch Germain from JMP Securities.

Mitchell Bradley Germain

I really appreciate the enhanced disclosure. It was really helpful. There were 2 acquisitions that -- or deals that were highlighted prior filing, I think it was dated in September right around the closing of the transaction. It seems like both are falling out. Is that a safe assumption that they're no longer under contract? Or I'd love to just gain some insight. I think one was [Tyler Carl Wash] and one was a bigger retail portfolio.

Edward Michael Weil

Mitch, thank you for the question. Yes, we made the decision as we were in due diligence that we didn't want to move forward with those acquisitions. As we said in the commentary before the Q&A, we don't think that the markets are quite matched up yet with the risk-adjusted returns, the cost of debt, et cetera. And we didn't see meaningful benefit in moving forward. So we notified the sellers that we would be terminating.

Mitchell Bradley Germain

Great. Okay. That's super helpful. On the asset sales side, obviously, $185 million was done year-to-date. I know there was a $50 million deal done in the quarter. Can you guys just remind me how much of that activity stems to the third quarter, please?

Edward Michael Weil

I'll give you, yes -- 8, 9 -- roughly $15 million in the third quarter.

Mitchell Bradley Germain

Okay. So the third quarter dispositions were just 1 asset in -- on the West Coast. Is that the way to think about it?

Christopher J. Masterson

Mitch, I think you're referring to the vacant property for the $50 million. That one we expect to close in 2024. That one is under...

Mitchell Bradley Germain

The press release just says that it was under contract. Is that -- okay.

Christopher J. Masterson

That is correct. That one is under contract, and we expect to close in 2024.

Mitchell Bradley Germain

Okay. So then I just -- I think Mike will answer, but it was a little bit broken up. How much of the -- how much of the $185 million stems to the third quarter, please?

Edward Michael Weil

It's about $15 million. A little less than $15 million.

Mitchell Bradley Germain

$15 million. 50 and 15 got me confused. I apologize.

Edward Michael Weil

Very -- fourth quarter that we don't want to get into right now as far as the details of it, but we're very confident in the $383 million for 2023.

Mitchell Bradley Germain

So that includes the other $190 million or so that is under contract. Is that the way to think about it?

Edward Michael Weil

That is correct.

Mitchell Bradley Germain

One follow-up on that, though, Michael, does that include -- the under contract includes the $50 million office building that's going to be sold in 2024? That 190...

Edward Michael Weil

I'm sorry. Yes, I think I'm confusing things. So let me just break it down.

Mitchell Bradley Germain

I think we are confusing. So it sounds like -- it sounds like around $200 million total $150 million hopefully by year-end and that other asset built other assets on the West Coast probably sometime in '24. Is that the way to think about it?

Edward Michael Weil

Yes. Chris, would you say it any differently? The $50 million will close -- is scheduled to close in 2024, and the majority of everything else will be closed in year-end.

Christopher J. Masterson

Yes, that is correct.

Mitchell Bradley Germain

That's super helpful. And last one for me. I wanted to just get a clarification about the additional synergies that you talked about. So you originally said $54 million with another $21 million to be realized over a 12- or 18-month period. And I apologize if I'm a little off on that time frame.

Edward Michael Weil

No, that's exactly right.

Mitchell Bradley Germain

Okay. Great. So now you're talking about $56 million.

Edward Michael Weil

We achieved a -- yes.

Mitchell Bradley Germain

Okay. But -- and you're still saying $21 million over time? So is it $75 million or $77 million. I'm just trying to understand kind of how much is left to be realized. Was $2 million just accelerated from the back end? Or -- and there's only $19 million left? Or is there really $21 million left, which would mean that your synergies are in excess of the $75 million that you guys originally stated.

Edward Michael Weil

So yes, go ahead, Chris.

Christopher J. Masterson

Sure. So I was going to say, Mitch, the way that you should look at it is the $56 million that we referenced, that is comparable to the $54 million. So that is effectively from day 1, we took our actual results for those 19 days, and we were able to annualize them. And our expenses ended up coming in a little bit lower than we had estimated. So that's where you're seeing the $54 million project to the $56 million now. The separate $21 million, that is something that we will be over as we mentioned in the next 12 months, realizing that that relates to some other inflective costs, whether it's legal, audit, things like that, and that is not impacted at this point. So you look at the $56 million and the $21 million.

Mitchell Bradley Germain

So that was $77 million.

Christopher J. Masterson

Correct.

Mitchell Bradley Germain

Okay. Not $75 million.

Operator

And now we are going to take a question from Todd Thomas from KeyBanc Capital Markets.

Todd Michael Thomas

Just following up on the synergies from the merger. The $21 million of synergies on that side. Is that to be achieved on sort of a ratable basis over the next 12 months? Or will that be a little bit more lumpy? Maybe you can just talk about the expected timeline to actually realize those cost savings.

Christopher J. Masterson

Sure. So I would say that would be something we would realize over time. And as we get towards the third quarter of '24, effectively, we should have all of those synergies in place where if you were able to annualize the numbers, it would be reflected in there.

Edward Michael Weil

And Todd, it's not going to be ratable over the next few quarters. Some of it will be and some of it is lumpy by event. So that's...

Todd Michael Thomas

Okay. And then I appreciate the color on the synergies and some of the updates here. When you initially announced the merger, you talked about 9% accretion on an AFFO basis. And I was just wondering if you could comment on whether you're on track to achieve that in the fourth quarter on an annualized basis. I think it was relative to the first quarter. And if there are any additional considerations for us as we look ahead?

Edward Michael Weil

Yes, that is -- that will -- that is what the merger anticipated results are, 9% accretion. And that is going to be further addressed in our guidance that we're going to be giving. We've been executing. The synergies have gone very well. So the thing that is slightly different from the time of the merger is the increase in interest cost with the change in markets. We're starting to see that come back down. So I'm not sure that that changed impact will be significant, but that is what we're looking at right now.
And with the end of the third quarter and the 19 days of the merger, as you can imagine, there was a lot of very important work that needed to be done right up until the close of the quarter and through this period so that Chris and the accounting team could get everything together for the 10-Q. And one of the things that we were also very pleased with was, as you saw, all of the debt from RTL was able to transfer. It came over at par, no penalties, no -- it didn't have to be paid off and reissued. So that was a very important part of what was accomplished in this period.

Todd Michael Thomas

Okay. And then lastly, you mentioned that the long-term target for leverage still in sort of the 6.5x, maybe sub-6.5x range on a debt-to-EBITDA basis. It's a little ways to go from the 7.6x you've outlined that you expect to be at in the fourth quarter. What's the timeline to ratchet down leverage further? And what sort of the road map look like to get there? How should we think about that?

Edward Michael Weil

I am going to ask that you let us address that next quarter with guidance, Todd. It has not yet been disclosed on a timeline basis. And as you know, it is an important step for the company and one that we continue to be focused on and taking steps to achieve, and we will lay that out...

Operator

(Operator Instructions) And our next question comes from Barry Oxford from Colliers.

Barry Paul Oxford

When I'm looking at the dispositions, I'm assuming that that's going to go towards debt. And you mentioned that your variable rate debt was around 7.2%. When you look at the cap rates that you might achieve, is that going to be a little bit dilutive? Or do you think you can come in below the 7.2% with your dispositions and have it be a little bit accretive?

Edward Michael Weil

We expect it to be accretive.

Barry Paul Oxford

Okay. Okay. Perfect. And then, Mike, on the 92.9% on the multi-tenant, when you look out into '24, how much do you think you could push that? Do you think you can push out another -- percentage another 100 basis points? Or do you feel like maybe we're -- maybe we're at the top end of the range that you feel you can get out of that portfolio?

Edward Michael Weil

So I've always thought that we should be optimizing this portfolio to between 94% and 96% occupancy on the multi-tenant, which will drive the overall GNL higher than the 96% that it is today already. There are always moving pieces in a real estate portfolio like this. So it's obviously challenging to get much above 96%, 97% on a max basis for this type of multi-tenant portfolio. But yes, the markets have been very strong. The interest in the centers. We have a number of national brands that continue to expand their presence in our overall portfolio, enjoying the results of being in our centers.
So I'm very optimistic. I'm really pleased with the work the asset management team continues to do as they've driven this portfolio up. We're getting close to a 10% increase in occupancy in the multi-tenant in a very short time since we acquired that portfolio.

Barry Paul Oxford

Right. No. No, you guys have done a great job. I was just trying to kind of figure out how much more juice there was left and you're saying, look, there's probably -- you're saying, look, there's probably a little bit more to go here.

Edward Michael Weil

Yes, I am. I am.

Barry Paul Oxford

Yes. And then lastly for me, what did you guys like about the CMBS market when you were looking at doing a debt deal?

Edward Michael Weil

Well, it's a very thoughtful question. So thanks. We -- first of all, 10-year money is a very nice profile. IO, CMBF on this portfolio. And frankly, when we look at where the market has gone since, it's pretty attractive on the debt side. I think this is close to the -- where we're going to see some debt for a while. So we were very pleased to come in there. We thought the timing worked out very much in our favor. But it was also very strategic for us at the time, Barry, because we wanted to make sure that we had capacity on the line after the closing of the merger.
So it accomplished a couple of things. It was another piece of fixed rate debt. It extended our weighted -- our remaining term on the debt, and it gave us flexibility for the upcoming year as we take different steps.

Operator

And this concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks, please.

Edward Michael Weil

Great. Well, as always, we thank you for spending the time and listening to the earnings call. I have an echo on my line. I'm sorry.
Jim wanted me to pass along he's under the weather, so that's why you didn't hear from him today. But of course, he will be available to join us on future calls. And if you have any questions, we look forward to any follow-ups that there are. And of course, most importantly, we look forward to continuing to execute and seeing the benefits of what we're very excited about, this internalized structure. We were already starting to see the benefits from a savings on the operational side. The team came over with 100% retention. And we're looking forward to talking to you again with end of year results and some guidance. And in the meantime, we'll take any follow-ups that you have, and thank you again for your time.

Operator

And this concludes the conference. Thank you very much for attending today's presentation, and you may now disconnect.