Gladstone Commercial Corporation (Nasdaq:GOOD), or the Company,
today reported financial results for the fourth quarter and year
ended December 31, 2014. 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 Annual Report on Form
10-K, 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
December 31, 2014 |
As of and for the three months ended
September 30, 2014 |
Change |
% Change |
Operating Data: |
|
|
|
|
Total operating revenue |
$ 19,216 |
$ 19,014 |
$ 202 |
1.1% |
Total operating expenses |
(10,970) |
(11,457) |
487 |
-4.3% |
Other expense |
(2,082) |
(7,328) |
5,246 |
-71.6% |
Net income |
$ 6,164 |
$ 229 |
$ 5,935 |
2591.7% |
Dividends attributable to preferred
stock |
(1,023) |
(1,023) |
-- |
0.0% |
Dividends attributable to senior common
stock |
(197) |
(137) |
(60) |
43.8% |
Net income (loss) available (attributable) to
common stockholders |
$ 4,944 |
$ (931) |
$ 5,875 |
-631.0% |
Real estate depreciation and
amortization |
7,758 |
7,516 |
242 |
3.2% |
Impairment charge |
-- |
280 |
(280) |
NM(1) |
Funds from operations available to common
stockholders |
$ 12,702 |
$ 6,865 |
$ 5,837 |
85.0% |
Acquisition related expenses |
235 |
233 |
2 |
0.9% |
Gain on debt extinguishment |
(5,274) |
-- |
(5,274) |
NM(1) |
Core funds from operations available to
common stockholders |
$ 7,663 |
$ 7,098 |
$ 565 |
8.0% |
|
|
|
|
|
|
|
|
|
|
Share and Per Share
Data: |
|
|
|
|
Net (loss) income (attributable) available to
common stockholders - basic & diluted |
$ 0.36 |
$ (0.05) |
$ 0.41 |
-820.0% |
FFO available to common stockholders -
basic |
$ 0.67 |
$ 0.39 |
$ 0.28 |
71.8% |
FFO available to common stockholders -
diluted |
$ 0.65 |
$ 0.38 |
$ 0.27 |
71.1% |
Core FFO available to common stockholders -
basic |
$ 0.40 |
$ 0.40 |
$ -- |
0.0% |
Core FFO available to common stockholders -
diluted |
$ 0.39 |
$ 0.39 |
$ -- |
0.0% |
Weighted average shares
outstanding-basic |
18,939,994 |
17,739,084 |
1,200,910 |
6.8% |
Weighted average shares
outstanding-diluted |
19,557,493 |
18,168,757 |
1,388,736 |
7.6% |
Cash dividends declared per common share |
$ 0.375 |
$ 0.375 |
$ -- |
0.0% |
|
|
|
|
|
|
|
|
|
|
Financial Position: |
|
|
|
|
Real estate, before accumulated
depreciation |
$ 722,565 |
$ 700,574 |
$ 21,991 |
3.1% |
Total assets |
$ 787,794 |
$ 759,407 |
$ 28,387 |
3.7% |
Mortgage notes payable, term preferred stock
and borrowings under the line of credit |
$ 541,099 |
$ 544,458 |
$ (3,359) |
-0.6% |
Total stockholders' equity |
$ 217,672 |
$ 189,196 |
$ 28,476 |
15.1% |
Properties owned |
96 |
93(2) |
3 |
3.2% |
Square feet owned |
10,633,474 |
9,771,283(2) |
862,191 |
8.8% |
Square feet leased |
99.5% |
99.9% |
-0.4% |
-0.4% |
|
|
|
|
|
(1) NM = Not meaningful |
(2) Does not include
Roseville, Minnesota property that was transferred to lender via a
deed in lieu of foreclosure during the quarter ended December 31,
2014. |
|
|
|
|
|
|
As of and for the year ended December
31, 2014 |
As of and for the year ended December
31, 2013 |
Change |
% Change |
Operating Data: |
|
|
|
|
Total operating revenue |
$ 73,756 |
$ 61,343 |
$ 12,413 |
20.2% |
Total operating expenses |
(57,406) |
(32,823) |
(24,583) |
74.9% |
Other expense |
(22,252) |
(26,993) |
4,741 |
-17.6% |
Net (loss) income |
$ (5,902) |
$ 1,527 |
$ (7,429) |
-486.5% |
Dividends attributable to preferred
stock |
(4,094) |
(4,094) |
-- |
0.0% |
Dividends attributable to senior common
stock |
(542) |
(300) |
(242) |
80.7% |
Net loss attributable to common
stockholders |
$ (10,538) |
$ (2,867) |
$ (7,671) |
267.6% |
Real estate depreciation and
amortization |
28,864 |
22,827 |
6,037 |
26.4% |
Gain on sale of real estate |
(1,240) |
-- |
(1,240) |
NM(1) |
Impairment charge |
14,238 |
-- |
14,238 |
NM(1) |
Funds from operations available to common
stockholders |
$ 31,324 |
$ 19,960 |
$ 11,364 |
56.9% |
Acquisition related expenses |
1,438 |
768 |
670 |
87.2% |
Gain on debt satisfaction |
(5,274) |
-- |
(5,274) |
NM(1) |
Core funds from operations available to
common stockholders |
$ 27,488 |
$ 20,728 |
$ 6,760 |
32.6% |
|
|
|
|
|
|
|
|
|
|
Share and Per Share
Data: |
|
|
|
|
Net loss attributable to common stockholders
- basic and diluted |
$ (0.61) |
$ (0.22) |
$ (0.39) |
177.3% |
FFO available to common stockholders -
basic |
$ 1.82 |
$ 1.52 |
$ 0.30 |
19.8% |
FFO available to common stockholders -
diluted |
$ 1.77 |
$ 1.49 |
$ 0.28 |
18.8% |
Core FFO available to common stockholders -
basic |
$ 1.59 |
$ 1.57 |
$ 0.02 |
1.3% |
Core FFO available to common stockholders -
diluted |
$ 1.55 |
$ 1.55 |
$ -- |
0.0% |
Weighted average shares
outstanding-basic |
17,253,503 |
13,164,244 |
4,089,259 |
31.1% |
Weighted average shares
outstanding-diluted |
17,682,012 |
13,402,370 |
4,279,642 |
31.9% |
Cash dividends declared per common share |
$ 1.50 |
$ 1.50 |
$ -- |
0.0% |
|
|
|
|
|
|
|
|
|
|
Financial Position: |
|
|
|
|
Real estate, before accumulated
depreciation |
$ 722,565 |
$ 642,353 |
$ 80,212 |
12.5% |
Total assets |
$ 787,794 |
$ 690,525 |
$ 97,269 |
14.1% |
Mortgage notes payable, term preferred stock
and borrowings under the line of credit |
$ 541,099 |
$ 485,502 |
$ 55,597 |
11.5% |
Total stockholders' equity |
$ 217,672 |
$ 183,146 |
$ 34,526 |
18.9% |
Properties owned |
96 |
87 |
9 |
10.3% |
Square feet owned |
10,633,474 |
9,256,779 |
1,376,695 |
14.9% |
Square feet leased |
99.5% |
96.8% |
2.7% |
2.8% |
|
|
|
|
|
(1) NM = Not meaningful |
|
|
|
|
Highlights of 2014:
- Acquired properties: Purchased 11
fully-occupied properties, comprised of an aggregate of
approximately 2.1 million square feet of rental space, for $134.5
million;
- Expanded property: Expanded 1 existing
property by approximately 150,000 square feet at a total project
cost of $5.6 million, and simultaneously extended the lease with
the existing tenant by 10 years through 2034;
- Sold property: Sold property located in
Sterling Heights, Michigan for $11.4 million, resulting in a gain
of $1.2 million;
- Issued loan: Issued a $5.6 million
construction mortgage loan for a build-to-suit property, where we
collect current interest at a fixed interest rate of
9.0%;
- Amended Line of Credit: Extended the Line of
Credit for 1 year to August 2017 and amended certain terms
including reducing the applicable LIBOR margin by 25 basis points,
increasing the borrowing capacity by $15.0 million to $75.0 million
and increasing the total maximum commitment from $75.0 million to
$100.0 million;
- Issued and assumed debt: Borrowed and
assumed a total of $62.2 million in loans from 4 separate banks,
which are collateralized by 8 properties at a weighted average
fixed interest rate of 4.51% for periods ranging from 2 to 10
years;
- Entered into a New ATM Program: Entered into a
$100.0 million at-the-market, or ATM, common stock issuance and
sale program with Cantor Fitzgerald;
- Issued common stock: Issued an aggregate of
3.9 million shares of common stock through an overnight offering
and our ATM Programs, resulting in aggregate net proceeds of $65.6
million;
- Extended leases: Extended the term of 5
leases that were set to expire in 2015;
- Completed deed-in-lieu transaction: Exchanged
our Roseville, Minnesota property to the lender for satisfaction of
$17.4 million in debt;
- Leased vacant properties: Executed a 3-year
lease on our previously vacant Richmond, Virginia property and
executed a 7-year lease for 38% of our Bolingbrook, Illinois
property, where the original tenant's lease expired on December 31,
2014; 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, $0.4453125 per
share on our Series C Term Preferred Stock and $0.2625 per share on
our senior common stock.
Fourth Quarter 2014 Results: Core FFO available
to common shareholders for the three months ended December 31,
2014, was $7.7 million, or $0.39 a share, an 8.0% increase when
compared to the three months ended September 30, 2014. Core FFO
increased primarily due to the increase in operating revenues
derived from the three properties acquired this quarter coupled
with lower property operating expenses due to the completion of our
deed-in-lieu transaction on our Roseville, Minnesota property, and
a lower net base management fee, which was partially offset by a
slight increase in general and administrative expenses.
2014 Results: CoreFFO available to common
stockholders for the year ended December 31, 2014, was $27.5
million, or $1.55 per share, a 32.6% increase when compared to the
year ended December 31, 2013. Core FFO increased primarily due to
the increase in operating revenues derived from the 10 acquisitions
this year coupled with increases in recovery revenue from our
tenants subject to gross leases, as well as leasing our vacant
property in Richmond, Virginia, partially offset by an increase in
interest expense from the mortgage debt issued in 2014.
Net income (loss) available (attributable) to common
stockholders for the three months and year ended December 31, 2014,
was $4.9 million and ($10.5) million, or $0.36 and ($0.61) per
share, respectively, compared to net loss available (attributable)
to common stockholders for the three months ended September 30,
2014, and year ended December 31, 2013, of ($0.9) million and
($2.9) million, or ($0.05) and ($0.22) per share. A reconciliation
of Core FFO to net income (loss) for the three months ended
December 31, 2014 and September 30, 2014 and the years ended
December 31, 2014 and 2013, 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:
- Extended Leases: Extended the term of 2 leases
that were set to expire in 2015 and 1 lease that was set to expire
in 2016; and
- Declared Distributions: Declared monthly cash
distributions for January, February and March 2015 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.
Comments from the Company's President, Bob
Cutlip: "Our financial results for the year reflect a
substantial increase in revenues from our real estate investments
made during the year. During 2014, we invested nearly $145.0
million at a weighted average cap rate of 9.0%. That included
10 acquisitions, with each of our regions contributing accretive
transactions, an expansion at one of our properties resulting in a
lease extension, and a straight loan for a build-to-suit with a 15
year lease. These transactions include investments in the
strong markets of Phoenix, Denver, Dallas, Indianapolis, Sacramento
and Columbus, Ohio. This was our 13th consecutive quarter of
closing new acquisitions. We have grown our total assets by
40% in the past two years. We were able to partially fund these
investments with long-term debt and continued to take advantage of
the low interest rate environment. We also continue to focus on our
portfolio, working with existing tenants to extend leases scheduled
to expire within the next two years and to re-lease the 0.5% of our
space that remains vacant. We have a robust pipeline and expect to
close several additional deals during the first quarter of 2015. We
are looking forward to another active year."
Conference Call: The Company will hold a
conference call on Thursday, February 19, 2015, 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 19, 2015. To hear the replay, please dial (855)
859-2056 and use conference number 17267872. 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 19,
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 January
2015, the Company has paid 121 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 109
consecutive monthly cash distributions on its Series A Preferred
Stock, 99 consecutive monthly cash distributions on its Series B
Preferred Stock, 36 consecutive monthly cash distributions on its
Series C Term Preferred Stock and 58 consecutive monthly cash
distributions on its senior common 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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