The investment firm nominated the same two director candidates at each company and also wants the firms to make sweeping governance reforms and even consider selling themselves, the sources said.

Blackwells wants both companies to replace AR Global, the company that owns and operates properties on behalf of others. To ratchet up the pressure even more, Blackwells plans to nominate two more directors at GNL and Necessity Retail REIT in 2024, the people said.

Blackwells founder Jason Aintabi has said the proxy fights will show how a conflicted group of operators have harmed shareholders and that the only way forward is to replace the outside manager, fix corporate governance and adopt proper commercial practices, according to the people.

He has blamed the connection with AR Global, the external manager, for high costs and poor performance at both companies, the people said.

Representatives for GNL, Necessity Retail and AR Global did not immediately respond to emailed requests for comment.

At GNL, where Blackwells is a top five shareholder, Aintabi reached out to the board last month but has not had any meaningful engagement with the company, the people said. At Necessity Retail REIT Blackwells owns only 100 shares.

GNL is valued at $1.14 billion while Necessity Retail REIT is valued at roughly $840 million. Each has seen its share price tumble roughly 30% since January.

Over the last five years, GNL and Necessity Retail REIT have lost about half of their value, with Necessity Retail's stock price down 54% and GNL's stock price off 49%.

By comparison, the benchmark Vanguard Real Estate Index Fund ETF lost 32% this year but is off only 5% over the last five years.

STRATEGIC ALTERNATIVES

In addition to terminating AR Global, Blackwells wants GNL's and Necessity Retail REIT's boards to consider strategic alternatives and introduce sweeping governance changes.

It wants all board members to stand for election annually. And Aintabi wants each board to form a strategic review committee to consider hiring financial advisers to weigh selling the companies, the people said.

GNL's board currently has eight directors while Necessity Retail REIT has five.

Blackwells is nominating the same directors at each company. Richard O'Toole, a tax lawyer, is an executive at real estate firm The Related Companies and James Lozier, who founded Goldman Sachs Realty Management, has experience as a director at a publicly traded company.

At GNL, Blackwells hopes to replace directors James Nelson and Edward Weil. Nelson is GNL's chief executive while Weil is CEO of AR Global. At Necessity Retail, Blackwells is also targeting Weil, who is board chair there, and Stanley Perla.

If elected at next year's annual meeting, the two new directors would work to roll back the companies' anti-takeover measures, the people said.

Blackwells made headlines this year by pushing for the ouster of Peloton co-founder and CEO John Foley but is better known in the real estate industry for pushing for changes at Colony Capital and Monmouth Real Estate Investment Corp.

Blackwells and Colony settled for board seats and Tom Barrack, a billionaire friend of former President Donald Trump, stepped down sooner than expected as CEO of the company.

(Reporting by Svea Herbst-Bayliss; Editing by Muralikumar Anantharaman)

By Svea Herbst-Bayliss