EXHIBIT 99.1
MCLEAN, Va., Feb. 24, 2010 (GLOBE NEWSWIRE) -- Gladstone Commercial Corp. (Nasdaq:GOOD) (the "Company") today reported financial results for the quarter and year ended December 31, 2009. A description of FFO, a relative non–GAAP (generally accepted accounting principles in the United States) financial measure, is located at the end of this news release. All per share references are to fully-diluted weighted average common shares, unless otherwise noted.
FFO for the three months ended December 31, 2009 was approximately $3.4 million, or $0.39 per share, which remained constant as compared to the same period one year ago. FFO for the year ended December 31, 2009 was approximately $13.5 million, or $1.58 per share, which also remained constant as compared to the same period one year ago. The Company's results reflect an increase in rental revenues as a result of acquisitions completed during 2008 that were held for the full period in 2009, partially offset by an increase in legal and other professional fees relating to ongoing lease renegotiations and reviews of legal work with existing tenants, coupled with increased interest expenses due to a larger number of properties which had long-term financing during 2009. The amount of the incentive fee paid to the Company's external adviser, Gladstone Management Corporation (the "Adviser"), increased during the three months and year ended December 31, 2009, as compared to the same periods in 2008, as a result of the increase in revenues, coupled with a reduction in the voluntary waiver issued by the Adviser.
Net income available to common stockholders for the three months and year ended December 31, 2009 was approximately $94,000 and $509,000, or $0.01 per share and $0.06 per share, respectively, compared to approximately $111,000 and $819,000, or $0.01 per share and $0.10 per share, respectively, for the same periods one year ago. A reconciliation of net income, which the Company believes is the most directly comparable GAAP measure to FFO, is set forth below:
| For the three months ended December 31, 2009 | For the three months ended December 31, 2008 | Year Ended December 31, 2009 | Year Ended December 31, 2008 | |
| Net income | $ 1,117,553 | $ 1,135,241 | $ 4,603,048 | $ 4,912,947 |
| Less: Distributions attributable to preferred stock | (1,023,439) | (1,023,439) | (4,093,750) | (4,093,750) |
| Net income available to common stockholders | 94,114 | 111,802 | 509,298 | 819,197 |
| Add: Real estate depreciation and amortization, including discontinued operations | 3,286,133 | 3,268,961 | 13,171,703 | 12,704,641 |
| Less: Gain on sale of real estate | -- | -- | (160,038) | -- |
| FFO available to common stockholders | $ 3,380,247 | $ 3,380,763 | $ 13,520,963 | $ 13,523,838 |
| Weighted average shares outstanding - basic & diluted | 8,563,264 | 8,564,807 | 8,563,264 | 8,565,149 |
| Basic & diluted net income per weighted average common share | $ 0.01 | $ 0.01 | $ 0.06 | $ 0.10 |
| Basic & diluted FFO per weighted average common share | $ 0.39 | $ 0.39 | $ 1.58 | $ 1.58 |
At December 31, 2009, the Company owned 64 properties totaling approximately 6.3 million square feet, and had one mortgage loan outstanding for a total net investment of approximately $394.8 million. Currently, all of the Company's properties are fully leased and all of its tenants and its borrower are current and paying in accordance with their leases and loan.
The Company has $48.0 million of balloon principal payments due under one of its long-term mortgages in 2010, however the mortgage has three annual extension options through 2013, which the Company currently intends to exercise. The Company has no other balloon principal payments due under any of its mortgages until 2013.
The Company's line of credit matures in December 2010 and we intend to negotiate a renewal of the facility or find replacement financing for the line of credit during 2010.
The Company has three leases that expire in 2010, which total approximately 3.4% of total annualized rental income. The Company has been notified that two of the tenants under these leases, totaling approximately 2.6% of total annualized rental income, will not renew. The Company is currently seeking new tenants for these two properties and is hopeful that it will re-lease these properties in the near future.
Highlights of 2009, the Company:
"We maintained a conservative acquisition pace in past years and executed thorough due diligence processes, and as a result we are benefiting today, as all of our properties remain fully leased and all of our tenants and borrower are current and paying as agreed," said Chip Stelljes, President and Chief Investment Officer. "We continue to review and consider extensions of some existing leases in cases where we believe a modification will add value for our stockholders. We are also selectively making capital improvements to certain of our properties. During 2009, we remained on the sidelines, preferring to avoid the market's unprecedented economic headwinds to focus on adding value to our existing portfolio. Our patience has paid off as we are seeing improved pricing returning to certain markets. We are currently reviewing several potential acquisitions and are considering raising additional equity and mortgage debt during 2010 to grow our portfolio."
Subsequent to quarter end, the Company:
Declared monthly cash distributions of $0.125 per share on the common stock, $0.1614583 per share on the Series A Preferred Stock, and $0.15625 per share on the Series B Preferred Stock, for each of the months of January, February and March 2010.
The financial statements attached below are without footnotes so readers should obtain and carefully review the Company's Form 10-K for the year ended December 31, 2009, including the footnotes to the financial statements contained therein. The Company has filed the Form 10-K today with the Securities and Exchange Commission ("SEC") and the Form 10-K can be retrieved from the SEC's website at www.sec.gov or the Company's website at www.GladstoneCommercial.com.
The Company will hold a conference call on Thursday, February 25, 2010 at 8:30 a.m. ET to discuss its earnings results. Please call (877) 407-8031 to enter the conference. An operator will monitor the call and set a queue for the questions.
The conference call replay will be available two hours after the call and will be available through March 25, 2010. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 342047.
The live audio broadcast of Gladstone Commercial's quarterly conference call will be available online at www.GladstoneCommercial.com and www.investorcalendar.com. The event will be archived and available for replay on the Company's website through May 25, 2010.
Gladstone Commercial Corporation is a publicly traded real estate investment trust ("REIT") that focuses on investing in and owning triple-net leased industrial and commercial real estate properties and selectively making long-term mortgage loans. Additional information can be found at www.GladstoneCommercial.com.
For further information, contact Investor Relations at 703-287-5839.
NON-GAAP FINANCIAL MEASURE - 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, 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 the Company's 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 a further context for evaluating the Company's financial performance and as a supplemental measure to compare the Company to other REITs; however, comparisons of the Company's 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. To learn more about FFO please refer to the Form 10-K for the year ended December 31, 2009, as filed with the SEC today.
The statements in this press release regarding the Company's ability to renew its line of credit or obtain replacement financing for the line of credit, the extension of the maturity of any of its long-term mortgages, future growth in the Company's portfolio and FFO, plans to renegotiate leases and make capital improvements to certain of the Company's properties, and the Company's ability to raise capital 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, among others, the results of appraisals of its properties at the time of extension of its line of credit, its ability to raise capital, the duration of, or further downturns in, the current economic environment, the performance of its tenants and borrower and significant changes in interest rates. Additional factors that could cause actual results to differ materially from those stated or implied by the Company's forward-looking statements are disclosed under the caption "Risk factors" of the Company's Form 10-K for the fiscal year ended December 31, 2009, as filed with the SEC on February 24, 2010. 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.
| Gladstone Commercial Corporation | ||
| Consolidated Balance Sheets | ||
| December 31, 2009 | December 31, 2008 | |
| ASSETS | ||
| Real estate, at cost | $ 390,753,892 | $ 390,562,138 |
| Less: accumulated depreciation | 34,111,952 | 24,757,576 |
| Total real estate, net | 356,641,940 | 365,804,562 |
| Lease intangibles, net | 28,177,461 | 31,533,843 |
| Mortgage note receivable | 10,000,000 | 10,000,000 |
| Cash and cash equivalents | 3,096,598 | 4,503,578 |
| Restricted cash | 2,633,538 | 2,677,561 |
| Funds held in escrow | 2,487,680 | 2,150,919 |
| Deferred rent receivable | 8,975,196 | 7,228,811 |
| Deferred financing costs, net | 3,136,055 | 4,383,446 |
| Due from adviser | -- | 108,898 |
| Prepaid expenses and other assets | 1,716,905 | 707,167 |
| TOTAL ASSETS | $ 416,865,373 | $ 429,098,785 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| LIABILITIES | ||
| Mortgage notes payable | $ 252,761,651 | $ 255,111,173 |
| Short-term loan and borrowings under line of credit | 33,200,000 | 31,500,000 |
| Deferred rent liability | 3,213,195 | 3,147,472 |
| Asset retirement obligation liability | 2,305,644 | 2,190,192 |
| Accounts payable and accrued expenses | 2,086,741 | 2,673,787 |
| Due to adviser | 1,213,640 | -- |
| Obligation under capital lease | 247,686 | 235,378 |
| Rent received in advance, security deposits and funds held in escrow | 3,386,274 | 3,745,523 |
| Total Liabilities | 298,414,831 | 298,603,525 |
| STOCKHOLDERS' EQUITY | ||
| Redeemable preferred stock, $0.001 par value; $25 liquidation preference; | ||
| 2,300,000 shares authorized and 2,150,000 shares issued and outstanding | 2,150 | 2,150 |
| Common stock, $0.001 par value, 47,700,000 shares authorized and 8,563,264 | ||
| shares issued and outstanding | 8,563 | 8,563 |
| Additional paid in capital | 170,622,581 | 170,622,581 |
| Notes receivable - employees | (2,304,999) | (2,595,886) |
| Distributions in excess of accumulated earnings | (49,877,753) | (37,542,148) |
| Total Stockholders' Equity | 118,450,542 | 130,495,260 |
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 416,865,373 | $ 429,098,785 |
| Gladstone Commercial Corporation | ||||
| Consolidated Statements of Operations | ||||
|
For the three months ended December 31, 2009 |
For the three months ended September 30, 2009 |
For the three months ended June 30, 2009 |
For the three months ended March 31, 2009 |
|
| Operating revenues | ||||
| Rental income | $ 10,363,559 | $ 10,383,002 | $ 10,379,172 | $ 10,388,244 |
| Interest income from mortgage notes receivable | 191,667 | 191,667 | 189,583 | 187,500 |
| Tenant recovery revenue | 86,952 | 82,425 | 82,734 | 82,432 |
| Total operating revenues | 10,642,178 | 10,657,094 | 10,651,489 | 10,658,176 |
| Operating expenses | ||||
| Depreciation and amortization | 3,286,133 | 3,284,723 | 3,282,629 | 3,307,802 |
| Property operating expenses | 227,986 | 219,537 | 230,785 | 236,812 |
| Due diligence expense | 24,141 | -- | 6,886 | 9,547 |
| Base management fee | 328,361 | 342,743 | 357,650 | 372,648 |
| Incentive fee | 804,689 | 835,003 | 812,653 | 786,289 |
| Administration fee | 241,059 | 293,075 | 257,207 | 224,354 |
| Professional fees | 183,035 | 105,368 | 125,965 | 235,198 |
| Insurance | 56,122 | 50,757 | 48,125 | 48,678 |
| Directors fees | 49,335 | 49,459 | 50,386 | 49,702 |
| Stockholder related expenses | 31,354 | 32,914 | 88,245 | 83,647 |
| Asset retirement obligation expense | 36,646 | 36,060 | 35,476 | 34,907 |
| General and administrative | 17,241 | 19,643 | 15,453 | 10,549 |
| Total operating expenses before credit from Adviser | 5,286,102 | 5,269,282 | 5,311,460 | 5,400,133 |
| Credit to incentive fee | (161,480) | (200,264) | (129,623) | (235,081) |
| Total operating expenses | 5,124,622 | 5,069,018 | 5,181,837 | 5,165,052 |
| Other expense | ||||
| Interest income from temporary investments | 2,759 | 524 | 184 | 17,281 |
| Interest income - employee loans | 46,472 | 48,130 | 48,862 | 48,886 |
| Other income | 1,658 | -- | 11,320 | -- |
| Interest expense | (4,451,130) | (4,521,848) | (4,433,998) | (4,487,560) |
| Total other expense | (4,400,241) | (4,473,194) | (4,373,632) | (4,421,393) |
| Income from continuing operations | 1,117,315 | 1,114,882 | 1,096,020 | 1,071,731 |
| Discontinued operations | ||||
| Income from discontinued operations | 238 | 4,070 | 20,916 | 17,838 |
| Gain on sale of real estate | -- | 160,038 | -- | -- |
| Total discontinued operations | 238 | 164,108 | 20,916 | 17,838 |
| Net income | 1,117,553 | 1,278,990 | 1,116,936 | 1,089,569 |
| Distributions attributable to preferred stock | (1,023,439) | (1,023,437) | (1,023,437) | (1,023,437) |
| Net income available to common stockholders | $ 94,114 | $ 255,553 | $ 93,499 | $ 66,132 |
| Earnings per weighted average common share - basic & diluted | ||||
| Income from continuing operations (net of distributions attributable to preferred stock) | $ 0.01 | $ 0.01 | $ 0.01 | $ 0.01 |
| Discontinued operations | 0.00 | 0.02 | 0.00 | 0.00 |
| Net income available to common stockholders | $ 0.01 | $ 0.03 | $ 0.01 | $ 0.01 |
| Weighted average shares outstanding | ||||
| Basic & Diluted | 8,563,264 | 8,563,264 | 8,563,264 | 8,563,264 |
| Gladstone Commercial Corporation | |||
| Consolidated Statements of Operations | |||
| For the year ended December 31, | |||
| 2009 | 2008 | 2007 | |
| Operating revenues | |||
| Rental income | $ 41,513,977 | $ 39,572,287 | $ 31,365,796 |
| Interest income from mortgage note receivable | 760,417 | 898,573 | 1,013,889 |
| Tenant recovery revenue | 334,543 | 336,637 | 310,353 |
| Total operating revenues | 42,608,937 | 40,807,497 | 32,690,038 |
| Operating expenses | |||
| Depreciation and amortization | 13,161,287 | 12,679,437 | 10,503,258 |
| Property operating expenses | 915,120 | 875,850 | 798,939 |
| Due diligence expense | 40,574 | 1,176,379 | 20,968 |
| Base management fee | 1,401,402 | 1,637,851 | 1,858,120 |
| Incentive fee | 3,238,634 | 2,831,722 | 2,564,365 |
| Administration fee | 1,015,695 | 954,635 | 837,898 |
| Professional fees | 649,566 | 521,410 | 625,349 |
| Insurance | 203,682 | 173,414 | 214,141 |
| Directors fees | 198,882 | 216,851 | 229,000 |
| Stockholder related expenses | 236,160 | 298,384 | 244,629 |
| Asset retirement obligation expense | 143,089 | 131,472 | 114,821 |
| General and administrative | 62,886 | 63,263 | 101,539 |
| Total operating expenses before credit from Adviser | 21,266,977 | 21,560,668 | 18,113,027 |
| Credit to incentive fee | (726,448) | (2,196,945) | (2,321,597) |
| Total operating expenses | 20,540,529 | 19,363,723 | 15,791,430 |
| Other income (expense) | |||
| Interest income from temporary investments | 20,748 | 21,844 | 354,249 |
| Interest income - employee loans | 192,350 | 202,097 | 222,051 |
| Other income | 12,978 | 63,993 | 47,847 |
| Interest expense | (17,894,536) | (16,858,687) | (11,564,541) |
| Total other expense | (17,668,460) | (16,570,753) | (10,940,394) |
| Income from continuing operations | 4,399,948 | 4,873,021 | 5,958,214 |
| Discontinued operations | |||
| Income from discontinued operations | 43,062 | 39,926 | 69,989 |
| Net realized income from foreign currency transactions | -- | -- | 33,359 |
| Gain on sale of real estate | 160,038 | -- | -- |
| Taxes refunded on sale of real estate | -- | -- | 78,667 |
| Total discontinued operations | 203,100 | 39,926 | 182,015 |
| Net income | 4,603,048 | 4,912,947 | 6,140,229 |
| Distributions attributable to preferred stock | (4,093,750) | (4,093,750) | (4,093,750) |
| Net income available to common stockholders | $ 509,298 | $ 819,197 | $ 2,046,479 |
| Earnings per weighted average common share - basic & diluted | |||
| Income from continuing operations (net of distributions attributable to preferred stock) | $ 0.04 | $ 0.09 | $ 0.22 |
| Discontinued operations | 0.02 | 0.01 | 0.02 |
| Net income available to common stockholders | $ 0.06 | $ 0.10 | $ 0.24 |
| Weighted average shares outstanding- basic & diluted | 8,563,264 | 8,565,149 | 8,565,264 |
| Gladstone Commercial Corporation | |||
| Consolidated Statements of Cash Flows | |||
| For the year ended December 31, | |||
| 2009 | 2008 | 2007 | |
| Cash flows from operating activities: | |||
| Net income | $ 4,603,048 | $ 4,912,947 | $ 6,140,229 |
| Adjustments to reconcile net income to net cash | |||
| provided by operating activities: | |||
| Depreciation and amortization, including discontinued operations | 13,171,703 | 12,704,641 | 10,528,458 |
| Amortization of deferred financing costs | 1,491,389 | 1,283,956 | 717,195 |
| Amortization of deferred rent asset and liability, net | (532,068) | (532,066) | (532,068) |
| Accretion of obligation under capital lease | 12,309 | 10,311 | -- |
| Asset retirement obligation expense, including discontinued operations | 143,550 | 133,244 | 116,478 |
| Gain on sale of real estate | (160,038) | -- | -- |
| (Increase) decrease in prepaid expenses and other assets | (959,738) | 172,096 | 64,990 |
| Increase in deferred rent receivable and deferred rent liability, net | (1,177,167) | (2,387,509) | (1,741,016) |
| Increase in accounts payable, accrued expenses, and amount due adviser | 735,492 | 1,001,639 | 625,398 |
| (Decrease) increase in rent received in advance | (315,223) | 275,916 | 176,145 |
| Net cash provided by operating activities | 17,013,257 | 17,575,175 | 16,095,809 |
| Cash flows from investing activities: | |||
| Real estate investments | (1,139,711) | (49,359,852) | (105,599,587) |
| Leasing commissions paid | (441,745) | -- | -- |
| Proceeds from sale of real estate | 1,089,269 | -- | -- |
| Receipts from lenders for reserves held in escrow | 1,465,133 | 874,227 | 1,603,309 |
| Payments to lenders for reserves held in escrow | (1,801,894) | (1,623,452) | (1,369,186) |
| Decrease (increase) in restricted cash | 44,023 | (763,494) | (688,905) |
| Deposits on future acquisitions | (250,000) | (1,650,000) | (2,110,000) |
| Deposits refunded or applied against real estate investments | 200,000 | 1,750,000 | 2,110,000 |
| Net cash used in investing activities | (834,925) | (50,772,571) | (106,054,369) |
| Cash flows from financing activities: | |||
| Borrowings under mortgage notes payable | -- | 48,015,000 | 48,521,690 |
| Principal repayments on mortgage notes payable | (2,349,522) | (1,485,901) | (895,657) |
| Principal repayments on employee notes receivable | 290,887 | 155,637 | 431,399 |
| Borrowings from line of credit | 57,600,000 | 76,900,000 | 65,500,000 |
| Repayments on line of credit | (35,900,000) | (69,800,000) | (41,100,000) |
| Repayment of short-term loan | (20,000,000) | -- | -- |
| Receipts from tenants for reserves | 4,454,102 | 2,391,360 | 2,023,019 |
| Payments to tenants from reserves | (4,526,409) | (2,159,671) | (1,710,685) |
| Increase in security deposits | 28,282 | 531,806 | 376,572 |
| Payments for deferred financing costs | (243,999) | (1,262,273) | (1,409,320) |
| Distributions paid for common and preferred | (16,938,653) | (16,941,392) | (16,427,736) |
| Net cash (used in) provided by financing activities | (17,585,312) | 36,344,566 | 55,309,282 |
| Net (decrease) increase in cash and cash equivalents | (1,406,980) | 3,147,170 | (34,649,278) |
| Cash and cash equivalents, beginning of year | 4,503,578 | 1,356,408 | 36,005,686 |
| Cash and cash equivalents, end of year | $ 3,096,598 | $ 4,503,578 | $ 1,356,408 |
| Cash paid during year for interest | $ 16,558,955 | $ 14,337,944 | $ 10,693,440 |
| NON-CASH OPERATING, INVESTING AND FINANCING INFORMATION | |||
| Additions to real estate included in accounts payable, accrued expenses, and amount due adviser | $ -- | $ -- | $ 81,400 |
| Increase in asset retirement obligation | $ -- | $ 245,196 | $ 180,458 |
| Fixed rate debt assumed in connection with acquisitions | $ -- | $ 6,461,603 | $ 4,506,689 |
| Obligation under capital lease | $ -- | $ 225,068 | $ -- |
| Forfeiture of common stock in satisfaction of employee note receivable | $ -- | $ 18,400 | $ -- |
| Reclassificaton of principal on employee note | $ 245,000 | $ -- | $ -- |
CONTACT: Gladstone Commercial Corporation
Investor Relations
703-287-5839