Gladstone Commercial Corporation (NASDAQ:GOOD), or the Company,
today reported financial results for the fourth quarter and year
ended December 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. For further detail, please
also refer to both the quarterly financial supplement and the
Company’s Annual Report on Form 10-K which can be retrieved 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 December 31,
2015 |
|
As of and for the three months ended September 30,
2015 |
|
Change |
|
% Change |
|
|
Operating Data: |
|
|
|
|
|
|
|
|
|
Total
operating revenue |
$ |
21,823 |
|
|
$ |
21,375 |
|
|
$ |
448 |
|
|
|
2.1 |
% |
|
|
Total
operating expenses |
|
(12,970 |
) |
|
|
(13,643 |
) |
|
(1 |
) |
|
673 |
|
|
|
-4.9 |
% |
|
|
Other
expense |
|
(6,286 |
) |
|
|
(7,828 |
) |
|
|
1,542 |
|
|
|
-19.7 |
% |
|
|
Net
income (loss) |
$ |
2,567 |
|
|
$ |
(96 |
) |
|
$ |
2,663 |
|
|
|
2,774.0 |
% |
|
|
Dividends attributable to preferred stock |
|
(1,025 |
) |
|
|
(1,023 |
) |
|
|
(2 |
) |
|
|
0.2 |
% |
|
|
Dividends attributable to senior common stock |
|
(259 |
) |
|
|
(263 |
) |
|
|
4 |
|
|
|
-1.5 |
% |
|
|
Net
income (loss) available (attributable) to common stockholders |
$ |
1,283 |
|
|
$ |
(1,382 |
) |
|
$ |
2,665 |
|
|
|
192.8 |
% |
|
|
Real estate
depreciation and amortization |
|
9,128 |
|
|
|
9,006 |
|
|
|
122 |
|
|
|
1.4 |
% |
|
|
Gain on sale of real
estate |
|
(1,538 |
) |
|
|
- |
|
|
|
(1,538 |
) |
|
NM |
|
(4 |
) |
Impairment charge |
|
- |
|
|
|
622 |
|
|
|
(622 |
) |
|
|
-100.0 |
% |
|
|
Funds from operations
available to common stockholders |
$ |
8,873 |
|
|
$ |
8,246 |
|
|
$ |
627 |
|
|
|
7.6 |
% |
|
|
Acquisition related
expenses |
|
33 |
|
|
|
138 |
|
|
|
(105 |
) |
|
|
-76.1 |
% |
|
|
Core funds from
operations available to common stockholders |
$ |
8,906 |
|
|
$ |
8,384 |
|
|
$ |
522 |
|
|
|
6.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share and Per Share Data: |
|
|
|
|
|
|
|
|
|
Net
income (loss) available (attributable) to common stockholders -
basic & diluted |
$ |
0.06 |
|
|
$ |
(0.06 |
) |
|
$ |
0.12 |
|
|
|
200.0 |
% |
|
|
FFO
available to common stockholders - basic |
$ |
0.40 |
|
|
$ |
0.39 |
|
|
$ |
0.01 |
|
|
|
2.6 |
% |
|
|
FFO
available to common stockholders - diluted |
$ |
0.39 |
|
|
$ |
0.37 |
|
|
$ |
0.02 |
|
|
|
5.4 |
% |
|
|
Core FFO
available to common stockholders - basic |
$ |
0.40 |
|
|
$ |
0.39 |
|
|
$ |
0.01 |
|
|
|
2.6 |
% |
|
|
Core FFO
available to common stockholders - diluted |
$ |
0.39 |
|
|
$ |
0.38 |
|
|
$ |
0.01 |
|
|
|
2.6 |
% |
|
|
Weighted
average shares outstanding-basic |
|
22,165,654 |
|
|
|
21,403,808 |
|
|
|
761,846 |
|
|
|
3.6 |
% |
|
|
Weighted
average shares outstanding-diluted |
|
22,976,182 |
|
|
|
22,232,251 |
|
|
|
743,931 |
|
|
|
3.3 |
% |
|
|
Cash
dividends declared per common share |
$ |
0.375 |
|
|
$ |
0.375 |
|
|
$ |
- |
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Position: |
|
|
|
|
|
|
|
|
|
Real
estate, before accumulated depreciation |
$ |
782,276 |
|
|
(2 |
) |
$ |
780,729 |
|
|
(3 |
) |
$ |
1,547 |
|
|
|
0.2 |
% |
|
|
Total
assets |
$ |
833,322 |
|
|
$ |
838,483 |
|
|
$ |
(5,161 |
) |
|
|
-0.6 |
% |
|
|
Mortgage notes payable, term preferred stock, term loan facility
& line of credit |
$ |
569,570 |
|
|
$ |
576,912 |
|
|
$ |
(7,342 |
) |
|
|
-1.3 |
% |
|
|
Total
stockholders’ equity |
$ |
233,871 |
|
|
$ |
230,427 |
|
|
$ |
3,444 |
|
|
|
1.5 |
% |
|
|
Properties owned |
|
99 |
|
|
(2 |
) |
|
101 |
|
|
(3 |
) |
|
(2 |
) |
|
|
-2.0 |
% |
|
|
Square
feet owned |
|
11,039,454 |
|
|
(2 |
) |
|
11,064,555 |
|
|
(3 |
) |
|
(25,101 |
) |
|
|
-0.2 |
% |
|
|
Square
feet leased |
|
97.4 |
% |
|
|
97.9 |
% |
|
|
-0.5 |
% |
|
|
-0.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes a $0.6 million impairment charge recognized on our Dayton,
Ohio property during the three months ended September 30,
2015. |
(2)
Includes one property classified as held for sale as of December
31, 2015. Includes real estate, held for sale of $1.9 million and
60,000 square feet. |
(3)
Includes five properties classified as held for sale as of
September 30, 2015. Includes real estate, held for sale of $19.3
million and 311,000 square feet. |
(4)
NM = Not meaningful |
|
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|
|
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|
|
|
|
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|
As of and for the year ended December 31, 2015 |
|
As of and for the year ended December 31, 2014 |
|
Change |
|
% Change |
|
Operating Data: |
|
|
|
|
|
|
|
|
Total
operating revenue |
$ |
83,766 |
|
|
$ |
73,756 |
|
|
$ |
10,010 |
|
|
|
13.6 |
% |
|
Total
operating expenses |
|
(50,965 |
) |
|
(1 |
) |
|
(57,406 |
) |
|
(3 |
) |
|
6,441 |
|
|
|
-11.2 |
% |
|
Other
expense |
|
(29,205 |
) |
|
|
(22,252 |
) |
|
(4 |
) |
|
(6,953 |
) |
|
|
31.2 |
% |
|
Net
income (loss) |
$ |
3,596 |
|
|
$ |
(5,902 |
) |
|
$ |
9,498 |
|
|
|
160.9 |
% |
|
Dividends attributable to preferred stock |
|
(4,094 |
) |
|
|
(4,094 |
) |
|
|
- |
|
|
|
0.0 |
% |
|
Dividends attributable to senior common stock |
|
(1,007 |
) |
|
|
(542 |
) |
|
|
(465 |
) |
|
|
85.8 |
% |
|
Net loss
attributable to common stockholders |
$ |
(1,505 |
) |
|
$ |
(10,538 |
) |
|
$ |
9,033 |
|
|
|
-85.7 |
% |
|
Real estate
depreciation and amortization |
|
35,288 |
|
|
|
28,864 |
|
|
|
6,424 |
|
|
|
22.3 |
% |
|
Gain on sale of real
estate |
|
(1,538 |
) |
|
|
(1,240 |
) |
|
|
(298 |
) |
|
|
24.0 |
% |
|
Impairment charge |
|
622 |
|
|
|
14,238 |
|
|
|
(13,616 |
) |
|
|
-95.6 |
% |
|
Funds from operations
available to common stockholders |
$ |
32,867 |
|
|
$ |
31,324 |
|
|
$ |
1,543 |
|
|
|
4.9 |
% |
|
Acquisition related
expenses |
|
622 |
|
|
|
1,438 |
|
|
|
(816 |
) |
|
|
-56.7 |
% |
|
Gain on
debt satisfaction |
|
- |
|
|
|
(5,274 |
) |
|
|
5,274 |
|
|
|
-100.0 |
% |
|
Core funds from
operations available to common stockholders |
$ |
33,489 |
|
|
$ |
27,488 |
|
|
$ |
6,001 |
|
|
|
21.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share and Per Share Data: |
|
|
|
|
|
|
|
|
Net loss
attributable to common stockholders - basic and diluted |
$ |
(0.07 |
) |
|
$ |
(0.61 |
) |
|
$ |
0.54 |
|
|
|
-88.5 |
% |
|
FFO
available to common stockholders - basic |
$ |
1.55 |
|
|
$ |
1.82 |
|
|
$ |
(0.27 |
) |
|
|
-14.8 |
% |
|
FFO
available to common stockholders - diluted |
$ |
1.50 |
|
|
$ |
1.77 |
|
|
$ |
(0.27 |
) |
|
|
-15.3 |
% |
|
Core FFO
available to common stockholders - basic |
$ |
1.58 |
|
|
$ |
1.59 |
|
|
$ |
(0.01 |
) |
|
|
-0.6 |
% |
|
Core FFO
available to common stockholders - diluted |
$ |
1.53 |
|
|
$ |
1.55 |
|
|
$ |
(0.02 |
) |
|
|
-1.3 |
% |
|
Weighted
average shares outstanding-basic |
|
21,159,597 |
|
|
|
17,253,503 |
|
|
|
3,906,094 |
|
|
|
22.6 |
% |
|
Weighted
average shares outstanding-diluted |
|
21,942,554 |
|
|
|
17,682,012 |
|
|
|
4,260,542 |
|
|
|
24.1 |
% |
|
Cash
dividends declared per common share |
$ |
1.50 |
|
|
$ |
1.50 |
|
|
$ |
- |
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Position: |
|
|
|
|
|
|
|
|
Real
estate, before accumulated depreciation |
$ |
782,276 |
|
|
(2 |
) |
$ |
722,565 |
|
|
$ |
59,711 |
|
|
|
8.3 |
% |
|
Total
assets |
$ |
833,322 |
|
|
$ |
787,794 |
|
|
$ |
45,528 |
|
|
|
5.8 |
% |
|
Mortgage notes payable, term preferred stock, term loan facility
& line of credit |
$ |
569,570 |
|
|
$ |
541,099 |
|
|
$ |
28,471 |
|
|
|
5.3 |
% |
|
Total
stockholders’ equity |
$ |
233,871 |
|
|
$ |
217,672 |
|
|
$ |
16,199 |
|
|
|
7.4 |
% |
|
Properties owned |
|
99 |
|
|
(2 |
) |
|
96 |
|
|
|
3 |
|
|
|
3.1 |
% |
|
Square
feet owned |
|
11,039,454 |
|
|
(2 |
) |
|
10,633,474 |
|
|
|
405,980 |
|
|
|
3.8 |
% |
|
Square
feet leased |
|
97.4 |
% |
|
|
99.5 |
% |
|
|
-2.1 |
% |
|
|
-2.1 |
% |
|
|
|
|
|
|
|
|
|
|
(1)
Includes a $0.6 million impairment charge recognized on our Dayton,
Ohio property during the year ended December 31, 2015. |
(2)
Includes one property classified as held for sale as of December
31, 2015. Includes real estate, held for sale of $1.9 million and
60,000 square feet. |
(3)
Includes a $14.2 million impairment charge recognized on our
Roseville, Minnesota property during the year ended December 31,
2014. |
(4)
Includes a $5.3 million gain on debt extinguishment from our
Roseville, Minnesota deed in lieu transaction completed during the
year ended December 31, 2014. |
|
|
|
|
|
|
|
|
|
Highlights of 2015:
- Acquired properties: Purchased 6
fully-occupied properties, comprised of an aggregate of
approximately 0.5 million square feet of rental space, for $77.8
million, at a weighted average cap rate of 8.6%;
- Sold properties: Sold 3 properties located in
Birmingham, Alabama, Columbia, Missouri and Columbus, Ohio for $6.9
million, resulting in a gain of $1.5 million;
- Line of Credit expansion and extension:
Expanded line of credit from $75.0 million to $85.0 million,
extended the term for 1-year through 2018 and added a $25.0
million, 5-year term loan facility;
- Issued debt: Borrowed $43.4 million of
debt, collateralized by 5 properties at a weighted average interest
rate of 4.1%, for periods ranging from 7 to 10 years;
- Repaid debt: Repaid $57.5 million of debt at a
weighted average interest rate of 5.5% with proceeds from $25.1
million of variable rate debt (interest rates of LIBOR + 2.25%,
with a 3.0% LIBOR cap). The remaining debt was repaid with cash on
hand;
- Issued common stock: Issued 2.9 million shares
of common stock through our ATM Program, resulting in net proceeds
of $46.7 million;
- Extended leases: Extended the term of 3
leases that were set to expire in 2015, all 5 leases that were set
to expire in 2016, 1 lease that was set to expire in 2018 and 1
lease that was set to expire in 2020. We have successfully
concluded 15 of 17 leases originally set to expire in 2015 and
2016;
- Leased vacant properties: Executed leases for
a portion of our properties located in Baytown, Texas, Raleigh,
North Carolina, Burnsville, Minnesota, and Maple Heights, Ohio;
and
- Paid distributions: Paid monthly cash
distributions for the year totaling $1.50 per share on our common
stock, $1.9374996 per share on our Series A Preferred Stock, $1.875
per share on our Series B Preferred Stock, $1.78125 per share on
our Series C Term Preferred Stock and $1.05 per share on our senior
common stock.
Fourth Quarter 2015 Results: Core FFO available
to common shareholders for the three months ended December 31,
2015, was $8.9 million, or $0.39 per share, a 6.2% increase when
compared to the three months ended September 30, 2015. Core FFO
increased primarily due to the increase in operating revenues
derived from the two properties acquired in the second half of 2015
coupled with lower property operating expenses and lower general
and administrative expenses.
2015 Results: Core FFO available to common
stockholders for the year ended December 31, 2015, was $33.5
million, or $1.53 per share, a 21.8% increase when compared to the
year ended December 31, 2014. Core FFO increased primarily due to
the increase in operating revenues derived from the six
acquisitions this year, coupled with income derived from our
mortgage note receivable as well as a decrease in our general and
administrative expenses, partially offset by an increase in the
base management and net incentive fees.
Net income (loss) available (attributable) to common
stockholders for the three months and year ended December 31, 2015,
was $1.3 million and ($1.5) million, or $0.06 and ($0.07) per
share, respectively, compared to net loss attributable to common
stockholders for the three months ended September 30, 2015, and
year ended December 31, 2014, of ($1.4) million and ($10.5)
million, or ($0.06) and ($0.61) per share. A reconciliation of Core
FFO to net income (loss) for the three months ended December 31,
2015 and September 30, 2015 and the years ended December 31, 2015
and 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:
- Exited development financing: Received
repayment of a $5.9 million mortgage note, and exit fee sufficient
to earn a 22% return on this investment;
- Filed shelf registration statement: Filed new
shelf registration statement with the U.S. Securities and Exchange
Commission that was declared effective with capacity to raise $500
million; and
- Declared distributions: Declared monthly cash
distributions for January, February and March 2016 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.
Comments from the Company’s President, Bob
Cutlip: “Our financial results reflect a substantial
increase in revenues from our real estate investments made during
the year and our ability to lease previously vacant space. These
transactions include investments in the strong markets of Phoenix,
Atlanta, Dallas, Salt Lake City and Columbus, Ohio. This was
our 17th consecutive quarter of closing new acquisitions and we are
extremely pleased with our activity, high occupancy and consistency
over the last several years. We have successfully resolved 15 of
our 17 leases that were set to expire in 2015 and 2016, and we
believe our same store rents will be stable over the next four
years as we have less than 5% of forecasted rental income expiring
through 2019. We are looking forward to a successful 2016.”
Conference Call: The Company will hold a
conference call on Thursday, February 18, 2016, at 8:30 a.m. EST 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 March 18, 2016. To hear the replay, please dial (855)
859-2056 and use playback conference number 61171739. 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 April 18,
2016.
About Gladstone Commercial: Gladstone
Commercial Corporation is a real estate investment trust that
invests in net leased industrial, commercial and retail real
property and selectively makes long-term industrial and commercial
mortgage loans. Including payments through January 2016, the
Company has paid 132 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 120 consecutive monthly cash
distributions on its Series A Preferred Stock, 111 consecutive
monthly cash distributions on its Series B Preferred Stock, 47
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 acquisition related expenses, 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 forecasted
stability of the Company’s income, the Company’s 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 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, 2015, as filed with the SEC on February 17, 2016. 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.
Source: Gladstone Commercial Corporation, +1-703-287-5893
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