Gladstone Commercial Corporation (Nasdaq:GOOD), or the Company,
today reported financial results for the first quarter ended March
31, 2015. A description of funds from operations, or 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.
Please read the Company's Quarterly Report on Form 10-Q, filed
today with the U.S. Securities and Exchange Commission, or the SEC,
which can be retrieved from the SEC's website at www.sec.gov or
from the Company's website at www.GladstoneCommercial.com.
Summary Information (dollars in thousands,
except share and per share data):
|
As of and for the three months ended
March 31, 2015 |
As of and for the three months ended
December 31, 2014 |
Change |
% Change |
Operating Data: |
|
|
|
|
Total operating revenue |
$ 19,880 |
$ 19,216 |
$ 664 |
3.5% |
Total operating expenses |
(11,757) |
(10,970) |
(787) |
7.2% |
Other expense |
(7,429) |
(2,082) (3) |
(5,347) |
256.8% |
Net income |
$ 694 |
$ 6,164 |
$ (5,470) |
-88.7% |
Dividends attributable to preferred
stock |
(1,023) |
(1,023) |
-- |
0.0% |
Dividends attributable to senior common
stock |
(224) |
(197) |
(27) |
13.7% |
Net (loss) income (attributable) available to
common stockholders |
$ (553) |
$ 4,944 |
$ (5,497) |
-111.2% |
Real estate depreciation and
amortization |
8,207 |
7,758 |
449 |
5.8% |
Funds from operations available to common
stockholders |
$ 7,654 |
$ 12,702 |
$ (5,048) |
-39.7% |
Acquisition related expenses |
196 |
235 |
(39) |
-16.6% |
Gain on debt extinguishment |
-- |
(5,274) |
5,274 |
NM (1) |
Write-off of senior common offering
costs |
107 |
-- |
107 |
NM (1) |
Core funds from operations available to
common stockholders |
$ 7,957 |
$ 7,663 |
$ 294 |
3.8% |
|
|
|
|
|
|
|
|
|
|
Share and Per Share
Data: |
|
|
|
|
Net (loss) income (attributable) available to
common stockholders - basic & diluted |
$ (0.03) |
$ 0.36 |
$ (0.39) |
-108.3% |
FFO available to common stockholders -
basic |
$ 0.38 |
$ 0.67 |
$ (0.29) |
-43.3% |
FFO available to common stockholders -
diluted |
$ 0.37 |
$ 0.65 |
$ (0.28) |
-43.1% |
Core FFO available to common stockholders -
basic |
$ 0.39 |
$ 0.40 |
$ (0.01) |
-2.5% |
Core FFO available to common stockholders -
diluted |
$ 0.38 |
$ 0.39 |
$ (0.01) |
-2.6% |
Weighted average shares
outstanding-basic |
20,210,975 |
18,939,994 |
1,270,981 |
6.7% |
Weighted average shares
outstanding-diluted |
20,934,606 |
19,557,493 |
1,377,113 |
7.0% |
Cash dividends declared per common share |
$ 0.375 |
$ 0.375 |
$ -- |
0.0% |
|
|
|
|
|
|
|
|
|
|
Financial Position: |
|
|
|
|
Real estate, before accumulated
depreciation |
$ 740,842 (2) |
$ 722,565 |
$ 18,277 |
2.5% |
Total assets |
$ 807,282 |
$ 787,794 |
$ 19,488 |
2.5% |
Mortgage notes payable, term preferred stock
and borrowings under the line of credit |
$ 548,848 (2) |
$ 541,099 |
$ 7,749 |
1.4% |
Total stockholders' equity |
$ 227,157 |
$ 217,672 |
$ 9,485 |
4.4% |
Properties owned |
97 (2) |
96 |
1 |
1.0% |
Square feet owned |
10,781,308 (2) |
10,633,474 |
147,834 |
1.4% |
Square feet leased |
99.5% |
99.5% |
0.0% |
0.0% |
|
|
|
|
|
(1) NM = Not meaningful |
(2) Does not include real
estate held for sale as of March 31, 2015. |
(3) We realized a $5.3
million gain on debt satisfaction upon conveyance of our Roseville,
MN property in a deed-in-lieu transaction completed during the
quarter ended December 31, 2014. |
First Quarter Activity:
- Acquired properties: Purchased 2
fully-occupied properties consisting of a total of 186,834 square
feet for an aggregate purchase price of $28.3 million at a weighted
average cap rate of 8.4%;
- Issued Debt: Issued $14.6 million in mortgage
debt collateralized by one property acquired this quarter at a
fixed interest rate of 3.86%;
- Issued common stock: Issued 870,000 shares of
common stock through our ATM Program, resulting in net proceeds of
$15.1 million;
- Extended leases: Extended the term of two
leases that were set to expire in 2015, and one lease that was set
to expire in 2016;
- 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, $0.4453125 per
share on our Series C Term Preferred Stock and $0.2625 per share on
our senior common stock.
First Quarter 2015 Results: Core FFO available
to common stockholders for the three months ended March 31, 2015,
was $8.0 million, or $0.38 per share, a 3.8% increase when compared
to the three months ended December 31, 2014. Total Core FFO
increased primarily due to the increase in operating revenues
derived from the two acquisitions this quarter, coupled with a
decrease in general and administrative expenses due to a one time
deferred rent adjustment recorded in fourth quarter 2014, partially
offset by an increase in interest expense from the mortgage debt
issued in 2015 and fourth quarter 2014.
Net loss attributable to common stockholders for the three
months ended March 31, 2015, was ($0.6) million, or ($0.03) per
share, compared to net income available to common stockholders for
the three months ended December 31, 2014, of $4.9 million, or $0.36
per share. A reconciliation of Core FFO to net (loss) income for
the three months ended March 31, 2015 and December 31, 2014, which
the Company believes 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
income per weighted average share of common stock is set forth in
the Summary Information table above.
Subsequent to the end of the quarter:
- Issued Loan: Issued a $0.3 million real estate
interim financing loan, at an interest rate of 22.0%;
- Signed Term Sheet: Signed a term sheet to
refinance $22.0 million of mortgage debt on three properties that
are maturing in 2015; and
- Declared Distributions: Declared monthly cash
distributions for April, May and June 2015 totaling $0.375 per
share on its common stock, $0.4843749 per share on our Series A
Preferred Stock, $0.46875 per share on our Series B Preferred
Stock, $0.4453125 per share on our Series C Term Preferred Stock
and $0.2625 per share on our senior common stock.
Comments from the Company's President, Bob
Cutlip: "Our results for the quarter reflect an increase
in revenues from our real estate investments made during the past
two quarters. The weighted average cap rate on our invested capital
during the first quarter of 2015 was 8.4% and we financed one of
these properties at a very attractive interest rate, resulting in
highly accretive investments. We have successfully increased our
total assets for 14 consecutive quarters and are extremely pleased
with our activity, high occupancy and consistency over the last
several years. We have a very strong pipeline today and expect to
close a substantial amount of deals during the remainder of 2015.
We also continue to focus on our portfolio, working with our
existing tenants to extend leases scheduled to expire in the
remainder of 2015 and 2016, and to re-lease our space that remains
vacant. We are looking forward to a successful 2015."
Conference Call: The Company will hold a
conference call on Tuesday, May 5, 2015, 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 any questions. A conference call replay will be
available beginning one hour after the call and will be accessible
through June 5, 2015. To hear the replay, please dial (855)
859-2056 and use conference number 17273472. The live audio
broadcast of the Company's quarterly conference call will also be
available online at the Company's website,
www.GladstoneCommercial.com. The event will also be archived
and available for replay on the Company's website through July 5,
2015.
About Gladstone Commercial: Gladstone
Commercial Corporation is a real estate investment trust that
invests in and owns net leased industrial, commercial and retail
real property and selectively makes long-term industrial and
commercial mortgage loans. Including payments through March
2015, the Company has paid 123 consecutive monthly cash
distributions on its common stock. Prior to paying
distributions on a monthly basis, the Company paid 5 consecutive
quarterly cash distributions. The Company has also paid 111
consecutive monthly cash distributions on its Series A Preferred
Stock, 102 consecutive monthly cash distributions on its Series B
Preferred Stock and 38 consecutive monthly cash distributions on
its Series C Term Preferred Stock. The Company has never
skipped, reduced or deferred a distribution since its inception in
2003. Further information on the Company can be found at
www.gladstonecommercial.com.
About the Gladstone Companies: Information on
the business activities of all the Gladstone funds can be found at
www.gladstonecompanies.com.
Investor Relations: For Investor Relations
inquiries related to any of the monthly dividend paying Gladstone
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. The
Company 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 the
Company's operating portfolio and affect the comparability of the
Company's period-over-period performance. These items include the
adjustment for property acquisitions costs, gains or losses from
early extinguishment of debt and any other non-recurring expense
adjustments. Although the Company'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.
The Company'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 Company's
ability, plans or prospects to re-lease its unoccupied properties,
grow its portfolio, and negotiate to extend leases 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 the Company'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, the Company'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,
2014, as filed with the SEC on February 18, 2015. The
Company cautions readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made.
The Company 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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