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), or the Company,
today reported financial results for the third quarter ended
September 30, 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 |
As of and for the |
|
|
|
three months ended |
three months ended |
|
|
|
September 30, 2015 |
June 30, 2015 |
Change |
% Change |
Operating Data: |
|
|
|
|
Total operating revenue |
$ 21,375 |
$ 20,688 |
$ 687 |
3.3% |
Total operating expenses |
(13,643) (1) |
(12,595) |
(1,048) |
8.3% |
Other expense |
(7,828) |
(7,662) |
(166) |
2.2% |
Net (loss) income |
$ (96) |
$ 431 |
$ (527) |
-122.3% |
Dividends attributable to preferred
stock |
(1,023) |
(1,023) |
-- |
0.0% |
Dividends attributable to senior common
stock |
(263) |
(261) |
(2) |
0.8% |
Net loss attributable to common
stockholders |
$ (1,382) |
$ (853) |
$ (529) |
62.0% |
Real estate depreciation and
amortization |
9,006 |
8,947 |
59 |
0.7% |
Impairment charge |
622 |
-- |
622 |
NM (2) |
Funds from operations available to common
stockholders |
$ 8,246 |
$ 8,094 |
$ 152 |
1.9% |
Acquisition related expenses |
138 |
255 |
(117) |
-45.9% |
Core funds from operations available to
common stockholders |
$ 8,384 |
$ 8,349 |
$ 35 |
0.4% |
|
|
|
|
|
|
|
|
|
|
Share and Per Share
Data: |
|
|
|
|
Net loss attributable to common stockholders
- basic & diluted |
$ (0.06) |
$ (0.04) |
$ (0.02) |
50.0% |
FFO available to common stockholders -
basic |
$ 0.39 |
$ 0.39 |
$ -- |
0.0% |
FFO available to common stockholders -
diluted |
$ 0.37 |
$ 0.37 |
$ -- |
0.0% |
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 |
21,403,808 |
20,833,787 |
570,021 |
2.7% |
Weighted average shares
outstanding-diluted |
22,232,251 |
21,664,386 |
567,865 |
2.6% |
Cash dividends declared per common share |
$ 0.375 |
$ 0.375 |
$ -- |
0.0% |
|
|
|
|
|
|
|
|
|
|
Financial Position: |
|
|
|
|
Real estate, before accumulated
depreciation |
$ 780,729 (3) |
$ 766,626 (4) |
$ 14,103 |
1.8% |
Total assets |
$ 838,483 |
$ 830,340 |
$ 8,143 |
1.0% |
Mortgage notes payable, term preferred stock
and borrowings under the line of credit |
$ 576,912 |
$ 571,039 |
$ 5,873 |
1.0% |
Total stockholders' equity |
$ 230,427 |
$ 230,874 |
$ (447) |
-0.2% |
Properties owned |
101 (3) |
100 (4) |
1 |
1.0% |
Square feet owned |
11,064,555 (3) |
10,986,404 (4) |
78,151 |
0.7% |
Square feet leased |
97.9% |
97.9% |
0.0% |
0.0% |
|
|
|
|
|
(1) Includes a $0.6 million
impairment charge recognized on our Dayton, Ohio property during
the three months ended September 30, 2015 |
(2) NM = Not meaningful |
(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) Includes one property
classified as held for sale as of June 30, 2015. Includes real
estate, held for sale of $2.8 million and 39,000 square feet. |
Third Quarter Activity:
- Acquired property: Purchased one
fully-occupied property consisting of 78,151 square feet for $13.0
million at an average cap rate of 9.9%;
- Issued new debt: Issued $7.5 million in
mortgage debt collateralized by one property acquired this quarter
at a fixed interest rate of 4.53%;
- Refinanced mortgages: Refinanced $11.3 million
in mortgage debt originally scheduled to mature in 2015 at a
variable interest rate equal to LIBOR + 2.25% (with a 3.0% LIBOR
cap);
- Leased vacant property: Executed leases at our
Raleigh, North Carolina and our Baytown, Texas properties (the
Raleigh, North Carolina property is now 93% leased, and the
Baytown, Texas property is now 57% leased);
- Modified lease: Modified lease with a tenant
in Indianapolis, Indiana, that extended the lease for three years,
and expanded their occupancy in the building, so that the building
is now 100% occupied;
- Issued common stock: Issued 600,000 shares of
common stock through our At The Market Program, resulting in net
proceeds of $9.0 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, $0.4453125 per
share on our Series C Term Preferred Stock and $0.2625 per share on
our senior common stock.
Third Quarter 2015 Results: Core FFO available
to common stockholders for the three months ended September 30,
2015, was $8.4 million, or $0.38 per share, a 0.4% increase when
compared to the three months ended June 30, 2015. Total Core FFO
increased primarily due to the increase in operating revenues
derived from the acquisition this quarter, coupled with an increase
in revenue from leasing vacant properties, partially offset by a
full quarter of property operating expenses from properties with
second quarter 2015 lease terminations.
Net loss attributable to common stockholders for the three
months ended September 30, 2015, was ($1.4) million, or ($0.06) per
share, compared to net loss attributable to common stockholders for
the three months ended June 30, 2015, of ($0.9) million, or
($0.04) per share. A reconciliation of Core FFO to net income for
the three months ended September 30, 2015 and June 30, 2015, 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 one
lease that was set to expire in 2015;
- Acquired property: Purchased one
fully-occupied property consisting of 90,626 square feet for $6.6
million at an average cap rate of 9.2%;
- Issued new debt: Issued $3.8 million in
mortgage debt collateralized by one property acquired subsequent to
the end of the quarter at a fixed interest rate of 4.59%;
- 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; and
- Declared Distributions: Declared monthly cash
distributions for October, November and December 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, as well as our ability to execute leases on vacant
properties. The cap rate on our acquisition during the third
quarter of 2015 was 9.9% and it was financed at a very attractive
interest rate, resulting in a highly accretive investment. We have
successfully increased our asset base for 16 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 deals on a consistent basis over
the next 12 months, market conditions permitting. We 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 2016."
Conference Call: The Company will hold a
conference call on Wednesday, October 28, 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 November 28, 2015. To hear the replay, please dial
(855) 859-2056 and use conference number 61147413. 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 December
28, 2015.
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 September 2015, the
Company has paid 129 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 117 consecutive monthly cash
distributions on its Series A Preferred Stock, 108 consecutive
monthly cash distributions on its Series B Preferred Stock and 44
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 and the Company's
Form 10-Q for the quarter ended June 30, 2015, as filed with the
SEC on August 3, 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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