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) today reported
financial results for the first quarter ended March 31, 2016.
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 Quarterly Report on Form
10-Q which can be retrieved from 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 March 31,
2016 |
|
As of and for the three months ended December 31,
2015 |
|
Change |
|
% Change |
|
|
Operating Data: |
|
|
|
|
|
|
|
|
|
Total
operating revenue |
$ |
21,527 |
|
|
$ |
21,823 |
|
|
$ |
(296 |
) |
|
|
-1.4 |
% |
|
|
Total
operating expenses |
|
(13,257 |
) |
|
(1 |
) |
|
(12,970 |
) |
|
|
(287 |
) |
|
|
2.2 |
% |
|
|
Other
expense |
|
(7,417 |
) |
|
|
(6,286 |
) |
|
(2 |
) |
|
(1,131 |
) |
|
|
18.0 |
% |
|
|
Net
income |
$ |
853 |
|
|
$ |
2,567 |
|
|
$ |
(1,714 |
) |
|
|
-66.8 |
% |
|
|
Less:
Dividends attributable to preferred stock |
|
(1,027 |
) |
|
|
(1,025 |
) |
|
|
(2 |
) |
|
|
0.2 |
% |
|
|
Less:
Dividends attributable to senior common stock |
|
(252 |
) |
|
|
(259 |
) |
|
|
7 |
|
|
|
-2.7 |
% |
|
|
Net
(loss) income (attributable) available to common stockholders |
$ |
(426 |
) |
|
$ |
1,283 |
|
|
$ |
(1,709 |
) |
|
|
-133.2 |
% |
|
|
Add: Real estate
depreciation and amortization |
|
9,133 |
|
|
|
9,128 |
|
|
|
5 |
|
|
|
0.1 |
% |
|
|
Add: Impairment
charge |
|
43 |
|
|
|
- |
|
|
|
43 |
|
|
NM |
|
(6 |
) |
Less: Gain on sale of
real estate |
|
- |
|
|
|
(1,538 |
) |
|
|
1,538 |
|
|
|
-100.0 |
% |
|
|
Funds from
operations available to common stockholders - basic |
$ |
8,750 |
|
|
$ |
8,873 |
|
|
$ |
(123 |
) |
|
|
-1.4 |
% |
|
|
Add: Convertible senior
common distributions |
|
252 |
|
|
|
259 |
|
|
|
(7 |
) |
|
|
-2.7 |
% |
|
|
Funds from
operations available to common stockholders - diluted |
$ |
9,002 |
|
|
$ |
9,132 |
|
|
(3 |
) |
$ |
(130 |
) |
|
|
-1.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Funds from operations
available to common stockholders - basic |
$ |
8,750 |
|
|
$ |
8,873 |
|
|
$ |
(123 |
) |
|
|
-1.4 |
% |
|
|
Add: Acquisition
related expenses |
|
9 |
|
|
|
33 |
|
|
|
(24 |
) |
|
|
-72.7 |
% |
|
|
Add: Write-off of
offering costs |
|
65 |
|
|
|
- |
|
|
|
65 |
|
|
NM |
|
(6 |
) |
Core funds from
operations available to common stockholders - basic |
$ |
8,824 |
|
|
$ |
8,906 |
|
|
$ |
(82 |
) |
|
|
-0.9 |
% |
|
|
Add: Convertible senior
common distributions |
|
252 |
|
|
|
259 |
|
|
|
(7 |
) |
|
|
-2.7 |
% |
|
|
Core funds from
operations available to common stockholders - diluted |
$ |
9,076 |
|
|
$ |
9,165 |
|
|
(3 |
) |
$ |
(89 |
) |
|
|
-1.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share and Per Share Data: |
|
|
|
|
|
|
|
|
|
Net
(loss) income (attributable) available to common stockholders -
basic & diluted |
$ |
(0.02 |
) |
|
$ |
0.06 |
|
|
$ |
(0.08 |
) |
|
|
-133.3 |
% |
|
|
FFO
available to common stockholders - basic |
$ |
0.39 |
|
|
$ |
0.40 |
|
|
$ |
(0.01 |
) |
|
|
-2.5 |
% |
|
|
FFO
available to common stockholders - diluted |
$ |
0.39 |
|
|
$ |
0.40 |
|
|
$ |
(0.01 |
) |
|
|
-2.5 |
% |
|
|
Core FFO
available to common stockholders - basic |
$ |
0.39 |
|
|
$ |
0.40 |
|
|
$ |
(0.01 |
) |
|
|
-2.5 |
% |
|
|
Core FFO
available to common stockholders - diluted |
$ |
0.39 |
|
|
$ |
0.40 |
|
|
$ |
(0.01 |
) |
|
|
-2.5 |
% |
|
|
Weighted
average shares outstanding-basic |
|
22,545,285 |
|
|
|
22,165,654 |
|
|
|
379,631 |
|
|
|
1.7 |
% |
|
|
Weighted
average shares outstanding-diluted |
|
23,345,402 |
|
|
|
22,976,182 |
|
|
|
369,220 |
|
|
|
1.6 |
% |
|
|
Cash
dividends declared per common share |
$ |
0.375 |
|
|
$ |
0.375 |
|
|
$ |
- |
|
|
|
0.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial Position: |
|
|
|
|
|
|
|
|
|
Real
estate, before accumulated depreciation |
$ |
782,558 |
|
|
(4 |
) |
$ |
782,276 |
|
|
(5 |
) |
$ |
282 |
|
|
|
0.0 |
% |
|
|
Total
assets |
$ |
811,461 |
|
|
$ |
827,184 |
|
|
$ |
(15,723 |
) |
|
|
-1.9 |
% |
|
|
Mortgage notes payable, term preferred stock, term loan facility
& line of credit, net |
$ |
556,204 |
|
|
$ |
563,432 |
|
|
$ |
(7,228 |
) |
|
|
-1.3 |
% |
|
|
Total
stockholders’ equity |
$ |
227,558 |
|
|
$ |
233,871 |
|
|
$ |
(6,313 |
) |
|
|
-2.7 |
% |
|
|
Properties owned |
|
99 |
|
|
(4 |
) |
|
99 |
|
|
(5 |
) |
|
- |
|
|
|
0.0 |
% |
|
|
Square
feet owned |
|
11,039,454 |
|
|
(4 |
) |
|
11,039,454 |
|
|
(5 |
) |
|
- |
|
|
|
0.0 |
% |
|
|
Square
feet leased |
|
97.5 |
% |
|
|
97.4 |
% |
|
|
0.1 |
% |
|
|
0.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Includes a $0.04 million impairment charge recognized on our
Dayton, Ohio property during the three months ended March 31,
2016. |
|
|
(2)
Includes $1.5 million gain on sale from three properties sold
during the three months ended December 31, 2015. |
|
|
(3) Diluted FFO available to common stockholders was not
previously adjusted for the income impact of the assumed conversion
of senior common stock, in accordance with ASC 260 ("Earnings per
Share"). |
|
|
(4)
Includes four properties classified as held for sale as of March
31, 2016. Includes real estate, held for sale of $5.6 million and
214,000 square feet. |
|
|
(5)
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. |
|
|
(6) NM = Not
meaningful |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter Activity:
- 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;
- Amended Common Stock ATM Program: Amended
common stock ATM program with Cantor Fitzgerald to increase
capacity to $160.0 million;
- Entered into a New Preferred Stock ATM
Program: Entered into a $40.0 million preferred stock ATM
program with Cantor Fitzgerald;
- Issued Stock under ATM Programs: Issued 65,000
shares of common stock, for net proceeds of $0.9 million and issued
74,000 shares of preferred stock for net proceeds of $1.8
million;
- Refinanced Debt: Refinanced $21.2 million in
mortgage debt originally scheduled to mature during second quarter
2016 at a weighted average interest rate of 6.14% with $18.5
million of mortgage debt at a weighted average interest rate of
2.78%;
- Leased Vacant Space: Executed a 7-year lease
for 13,800 square feet in our Bolingbrook, Illinois property;
and
- Paid Distributions: Paid monthly cash
distributions for the quarter totaling $0.375 per share on its
common stock, $0.4843749 per share on its Series A Preferred Stock,
$0.46875 per share on its Series B Preferred Stock, $0.4453125 per
share on its Series C Term Preferred Stock and $0.2625 per share on
its senior common stock.
First Quarter 2016 Results: Core FFO available
to common shareholders for the three months ended March 31, 2016,
was $9.1 million, or $0.39 per share, a 1.0% decrease when compared
to the three months ended December 31, 2015. Core FFO decreased
primarily due to a decrease in operating revenues due to a
non-recurring lease termination fee of $0.2 million, coupled with
increased general and administrative costs resulting from higher
professional fees and fees paid in connection with our annual
report and preparation of our proxy statement.
Net loss attributable to common stockholders for the three
months ended March 31, 2016, was $0.4 million, or ($0.02) per
share, respectively, compared to net income available to common
stockholders for the three months ended December 31, 2015, of $1.3
million, or $0.06 per share. A reconciliation of Core FFO to net
(loss) income for the three months ended March 31, 2016 and
December 31, 2015, 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 income per weighted average share of common stock is
set forth in the Summary Information table above.
Subsequent to the end of the quarter:
- Refinanced Debt: Refinanced $3.7 million in
mortgage debt maturing on one property at an interest rate of 6.25%
with $9.5 million of mortgage debt on this property and two other
previously unsecured properties at a weighted average interest rate
of 3.2%;
- Leased Vacant Space: Agreed to terms on a
13,000 square foot lease for our partially vacant office property
in Minneapolis, Minnesota; and
- Declared Distributions: Declared monthly cash
distributions for April, May and June 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 Gladstone Commercial’s President, Bob
Cutlip: “Our financial results reflect stabilized revenues
from our real estate investments made during the previous year and
our ability to lease previously vacant space. We have
continued to refinance maturing mortgage debt, and we have
successfully negotiated lower interest rates over the past 12
months, with our weighted average interest rate on mortgages
decreasing 37 basis points over this time period. We successfully
expanded our common stock ATM program and launched our preferred
stock ATM program this quarter, which will serve as a supplement to
our capital strategy for the next 24 months. We are extremely
pleased with our activity, high occupancy and consistency over the
last several years, and we believe our same store rents should be
stable and growing over the next four years as we have only 4% of
forecasted rental income expiring through 2019. We are looking
forward to a successful 2016.”
Conference Call: Gladstone Commercial will hold a
conference call on Thursday, April 28, 2016, 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 May 28, 2016. To hear the replay, please dial (855)
859-2056 and use playback conference number 29151894. The
live audio broadcast of the Company’s quarterly conference call
will also be available on our website, www.GladstoneCommercial.com,
and will also be archived and available for replay through June 28,
2016.
About Gladstone Commercial: Gladstone
Commercial Corporation is a real estate investment trust that
invests in net leased industrial, commercial and medical real
property and selectively makes long-term industrial and commercial
mortgage loans. Including payments through April 2016,
Gladstone Commercial has paid 135 consecutive monthly cash
distributions on its common stock. Prior to paying
distributions on a monthly basis, Gladstone Commercial paid 5
consecutive quarterly cash distributions. The company has also paid
123 consecutive monthly cash distributions on its Series A
Preferred Stock, 114 consecutive monthly cash distributions on its
Series B Preferred Stock and 50 consecutive monthly cash
distributions on its Series C Term 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 all 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. 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 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, 2015, as filed with the SEC on
February 17, 2016. 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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