Please note that the limited information that follows in this
press release is not adequate to make an informed investment
judgment.
Gladstone Commercial Corporation (NASDAQ:GOOD) ("Gladstone
Commercial") today reported financial results for the second
quarter ended June 30, 2018. A description of funds from
operations ("FFO") and Core FFO, both non-GAAP (generally accepted
accounting principles in the United States) financial measures, are
located at the end of this press release. All per share
references are to fully-diluted weighted average shares of common
stock, unless otherwise noted. For further detail, please
also refer to Gladstone Commercial's quarterly financial supplement
and Quarterly Report on Form 10-Q, each of which are available on
the Investor Relations section of our website at
www.GladstoneCommercial.com.
Summary Information (dollars in thousands,
except share and per share data):
|
|
As of and for the three months ended |
|
|
|
June 30, 2018 |
|
March 31, 2018 |
|
$ Change |
|
% Change |
Operating Data: |
|
|
|
|
|
|
|
|
Total
operating revenue |
|
$ |
26,593 |
|
|
$ |
26,353 |
|
|
$ |
240 |
|
|
0.9 |
% |
Total
operating expenses |
|
(17,542 |
) |
|
(17,402 |
) |
|
(140 |
) |
|
0.8 |
% |
Other
expense, net |
|
(6,526 |
) |
|
(4,346 |
) |
(1) |
(2,180 |
) |
|
50.2 |
% |
Net
income |
|
$ |
2,525 |
|
|
$ |
4,605 |
|
|
$ |
(2,080 |
) |
|
(45.2 |
)% |
Less:
Dividends attributable to preferred stock |
|
(2,609 |
) |
|
(2,582 |
) |
|
(27 |
) |
|
1.0 |
% |
Less:
Dividends attributable to senior common stock |
|
(233 |
) |
|
(232 |
) |
|
(1 |
) |
|
0.4 |
% |
Net (loss)
income (attributable) available to common stockholders |
|
$ |
(317 |
) |
|
$ |
1,791 |
|
|
$ |
(2,108 |
) |
|
(117.7 |
)% |
Add: Real
estate depreciation and amortization |
|
11,773 |
|
|
11,586 |
|
|
187 |
|
|
1.6 |
% |
Less: Gain
on sale of real estate |
|
— |
|
|
(1,844 |
) |
|
1,844 |
|
|
100.0 |
% |
Funds from operations available to common stockholders -
basic |
|
$ |
11,456 |
|
|
$ |
11,533 |
|
|
$ |
(77 |
) |
|
(0.7 |
)% |
Add:
Convertible senior common distributions |
|
233 |
|
|
232 |
|
|
1 |
|
|
0.4 |
% |
Funds from operations available to common stockholders -
diluted |
|
$ |
11,689 |
|
|
$ |
11,765 |
|
|
$ |
(76 |
) |
|
(0.6 |
)% |
|
|
|
|
|
|
|
|
|
Funds from
operations available to common stockholders - basic |
|
11,456 |
|
|
11,533 |
|
|
(77 |
) |
|
(0.7 |
)% |
Add:
Acquisition related expenses |
|
67 |
|
|
19 |
|
|
48 |
|
|
252.6 |
% |
Add:
Write-off of deferred financing fees |
|
— |
|
|
6 |
|
|
(6 |
) |
|
(100.0 |
)% |
Less: Write
off of debt discount |
|
— |
|
|
(49 |
) |
|
49 |
|
|
100.0 |
% |
Core funds from operations available to common stockholders
- basic |
|
$ |
11,523 |
|
|
$ |
11,509 |
|
|
$ |
14 |
|
|
0.1 |
% |
Add:
Convertible senior common distributions |
|
233 |
|
|
232 |
|
|
1 |
|
|
0.4 |
% |
Core funds from operations available to common stockholders
- diluted |
|
$ |
11,756 |
|
|
$ |
11,741 |
|
|
$ |
15 |
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
|
Share and Per Share Data: |
|
|
|
|
|
|
|
|
Net (loss)
income (attributable) available to common stockholders - basic and
diluted |
|
(0.01 |
) |
|
0.06 |
|
|
(0.07 |
) |
|
(116.7 |
)% |
FFO
available to common stockholders - basic |
|
0.40 |
|
|
0.41 |
|
|
(0.01 |
) |
|
(2.4 |
)% |
FFO
available to common stockholders - diluted |
|
0.40 |
|
|
0.40 |
|
|
— |
|
|
— |
% |
Core FFO
available to common stockholders - basic |
|
0.41 |
|
|
0.40 |
|
|
0.01 |
|
|
2.5 |
% |
Core FFO
available to common stockholders - diluted |
|
0.40 |
|
|
0.40 |
|
|
— |
|
|
— |
% |
Weighted
average shares of common stock outstanding - basic |
|
28,437,852 |
|
|
28,420,995 |
|
|
16,857 |
|
|
0.1 |
% |
Weighted
average shares of common stock outstanding - diluted |
|
29,182,179 |
|
|
29,165,995 |
|
|
16,184 |
|
|
0.1 |
% |
Cash
dividends declared per common share |
|
$ |
0.375 |
|
|
$ |
0.375 |
|
|
$ |
— |
|
|
— |
% |
|
Financial Position |
|
|
|
|
|
|
|
|
Real
estate, before accumulated depreciation |
|
$ |
907,636 |
|
(2) |
$ |
906,971 |
|
(2) |
$ |
665 |
|
|
0.1 |
% |
Total
assets |
|
$ |
912,008 |
|
|
$ |
923,106 |
|
|
$ |
(11,098 |
) |
|
(1.2 |
)% |
Mortgage
notes payable, net, borrowings under revolver, net & borrowings
under term loan, net |
|
$ |
542,461 |
|
|
$ |
544,328 |
|
|
$ |
(1,867 |
) |
|
(0.3 |
)% |
Total
stockholders' and mezzanine equity |
|
$ |
336,814 |
|
|
$ |
343,399 |
|
|
$ |
(6,585 |
) |
|
(1.9 |
)% |
Properties
owned |
|
98 |
|
(2) |
98 |
|
(2) |
— |
|
|
— |
% |
Square feet
owned |
|
11,413,403 |
|
(2) |
11,413,403 |
|
(2) |
— |
|
|
— |
% |
Square feet
leased |
|
99.1 |
% |
|
99.1 |
% |
|
— |
% |
|
— |
% |
- Includes a $1.8 million gain on sale of real estate from two
property sales.
- Includes one property classified as held for sale of $2.3
million, which totals 150,000 square feet.
Second Quarter Activity:
- Extended mortgage debt maturity date: Extended
the maturity date on two variable rate mortgage notes totaling
$13.0 million from July 2018 to July 2020;
- Issued stock under ATM programs: Issued
154,073 shares of common stock for net proceeds of $2.9 million and
50,124 shares of our Series D Preferred Stock for net proceeds of
$1.2 million; and
- Paid distributions: Paid monthly cash
distributions for the quarter totaling $0.375 per share on our
common stock, $0.4843749 per share on our Series A Preferred Stock,
$0.46875 per share on our Series B Preferred Stock, $0.4375 per
share on our Series D Preferred Stock, and $0.2625 per share on our
senior common stock.
Second Quarter 2018 Results: Core FFO available
to common shareholders for the three months ended June 30, 2018,
was $11.8 million, or $0.40 per share, a 0.1% increase when
compared to the three months ended March 31, 2018. Core FFO
increased primarily due to an increase in rental income and tenant
recovery revenues from our 2017 and 2018 acquisitions, partially
offset by an increase in interest expense due to the increasing
interest rate environment.
Net loss attributable to common stockholders for the three
months ended June 30, 2018, was $(0.3) million, or $(0.01) per
share, compared to net income available to common stockholders for
the three months ended March 31, 2018, of $1.8 million, or
$0.06 per share. A reconciliation of Core FFO to net (loss) income
for the three months ended June 30, 2018 and March 31,
2018, which we believe is the most directly comparable GAAP measure
to Core FFO, and a computation of basic and diluted Core FFO per
weighted average share of common stock and basic and diluted net
(loss) income per weighted average share of common stock is set
forth in the Summary Information table above.
Subsequent to the end of the quarter:
- Extended mortgage debt maturity date: Extended
the maturity date on one variable rate mortgage note totaling $4.0
million from September 2018 to September 2019;
- Entered acquisition negotiations: Entered
contract negotiations to acquire a 156,000 square foot industrial
property in the Columbus, Ohio market;
- Issued stock under ATM programs: Issued 83,430
shares of common stock for net proceeds of $1.6 million; and
- Declared distributions: Declared monthly cash
distributions for July, August and September 2018 totaling $0.375
per share on our common stock, $0.4843749 per share on our Series A
Preferred Stock, $0.46875 per share on our Series B Preferred
Stock, $0.4375 per share on our Series D Preferred Stock, and
$0.2625 per share on our senior common stock.
Comments from Gladstone Commercial’s President, Bob
Cutlip: "Our financial results reflect consistent
performance and stabilized revenues from our high same store
property occupancy and the real estate investments made during 2017
and 2018, our ability to lease previously vacant space, and our
deleveraging and capital recycling programs. We have continued our
capital recycling program, whereby we have sold non-core assets and
used the proceeds to de-lever our portfolio as well as acquire
properties in our target growth markets. We have successfully
exited two non-core assets so far during 2018, including our only
fully vacant asset, recognizing a net capital gain of $1.8 million.
We will continue to opportunistically sell non-core assets and
redeploy the proceeds into stronger target growth markets. Year to
date, we have invested $14.3 million in an industrial property near
the Mercedes-Benz assembly plant in Alabama. We are extremely
pleased with our solid performance over the last several years, and
we believe our same store rents should be stable and rising as we
continue our growth. We will continue to primarily focus on
investing in new properties as we only have 3.5% of forecasted
rental income expiring through 2019. We are looking forward to
continued growth and success for our shareholders."
Conference Call: Gladstone Commercial will hold
a conference call on Tuesday July 31, 2018, at 8:30 a.m. EDT to
discuss its earnings results. Please call (888) 734-0328 to
enter the conference call. An operator will monitor the call
and set a queue for questions. A conference call replay will be
available beginning one hour after the call and will be accessible
through August 7, 2018. To hear the replay, please dial (855)
859-2056 and use playback conference number 2479489. The live audio
broadcast of the quarterly conference call will also be available
on our website, www.GladstoneCommercial.com, and will also be
archived and available for replay through September 30, 2018.
About Gladstone Commercial: Gladstone
Commercial Corporation is a real estate investment trust focused on
acquiring, owning, and operating net leased industrial and office
properties across the United States. Including payments
through July 2018, Gladstone Commercial has paid 162 consecutive
monthly cash distributions on its common stock. Prior to
paying distributions on a monthly basis, Gladstone Commercial paid
five consecutive quarterly cash distributions. The company has also
paid 150 consecutive monthly cash distributions on its Series A
Preferred Stock, 141 consecutive monthly cash distributions on its
Series B Preferred Stock and 26 consecutive monthly cash
distributions on its Series D Preferred Stock. Gladstone Commercial
has never skipped, reduced or deferred a distribution since its
inception in 2003. Further information can be found at
www.GladstoneCommercial.com.
About the Gladstone Companies: Information on
the business activities of the Gladstone family of funds can be
found at www.gladstonecompanies.com.
Investor Relations: For
Investor Relations inquiries related to any of the monthly
distribution-paying Gladstone family of funds, please visit
www.gladstone.com.
Non-GAAP Financial Measures:
FFO: The National Association of Real Estate
Investment Trusts (“NAREIT”) developed FFO as a relative non-GAAP
supplemental measure of operating performance of an equity REIT in
order to recognize that income-producing real estate historically
has not depreciated on the basis determined under GAAP. FFO,
as defined by NAREIT, is net income (computed in accordance with
GAAP), excluding gains (or losses) from sales of property and
impairment losses on property, plus depreciation and amortization
of real estate assets, and after adjustments for unconsolidated
partnerships and joint ventures. FFO does not represent cash
flows from operating activities determined in accordance with GAAP
and should not be considered an alternative to net income as an
indication of its performance or to cash flow from operations as a
measure of liquidity or ability to make distributions.
Gladstone Commercial believes that FFO per share provides investors
with an additional context for evaluating its financial performance
and as a supplemental measure to compare it to other REITs;
however, comparisons of its FFO to the FFO of other REITs may not
necessarily be meaningful due to potential differences in the
application of the NAREIT definition used by such other REITs.
Core FFO: Core FFO is FFO adjusted for certain
items that are not indicative of the results provided by Gladstone
Commercial’s operating portfolio and affect the comparability of
the company’s period-over-period performance. These items include
the adjustment for gains or losses from early extinguishment of
debt and any other non-recurring expense adjustments.
Although Gladstone Commercial’s calculation of Core FFO differs
from NAREIT’s definition of FFO and may not be comparable to that
of other REITs, the company believes it is a meaningful
supplemental measure of its operating performance.
Accordingly, Core FFO should be considered a supplement to net
income computed in accordance with GAAP as a measure of our
performance.
Gladstone Commercial’s presentation of FFO, as defined by
NAREIT, or presentation of Core FFO, does not represent cash flows
from operating activities determined in accordance with GAAP and
should not be considered an alternative to net income as an
indication of its performance or to cash flow from operations as a
measure of liquidity or ability to make distributions.
The statements in this press release regarding the forecasted
stability of Gladstone Commercial’s income, its ability, plans or
prospects to re-lease its unoccupied properties, and grow its
portfolio are “forward-looking statements” within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements inherently involve certain risks and
uncertainties, although they are based on Gladstone Commercial’s
current plans that are believed to be reasonable as of the date of
this press release. Factors that may cause actual results to
differ materially from these forward-looking statements include,
but are not limited to, Gladstone Commercial’s ability to raise
additional capital; availability and terms of capital and
financing, both to fund its operations and to refinance its
indebtedness as it matures; downturns in the current economic
environment; the performance of its tenants; the impact of
competition on its efforts to renew existing leases or re-lease
space; and significant changes in interest rates. Additional
factors that could cause actual results to differ materially from
those stated or implied by its forward-looking statements are
disclosed under the caption "Risk Factors" of its Form 10-K for the
fiscal year ended December 31, 2017, as filed with the SEC on
February 14, 2018, and other reports filed with the SEC. Gladstone
Commercial cautions readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made.
Gladstone Commercial undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new
information, future events or otherwise, except as required by
law.
CONTACT:
Gladstone Commercial Corporation+1-703-287-5893
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