Exhibit 99.1
Gladstone Commercial Corporation Announces Financial Results for the Quarter Ended March 31, 2005: Net Income of $0.07 per Weighted Average Common Share and Funds from Operations of $0.14 per Diluted Weighted Average Common Share
MCLEAN, Va., May 4 /PRNewswire-FirstCall/ -- Gladstone Commercial Corp. (Nasdaq: GOOD) (the “Company”) today reported financial results for the quarter ended March 31, 2005. Net income for the quarter ended March 31, 2005 was $535,184, or $0.07 per basic and diluted weighted average common share, compared to a net loss for the quarter ended March 31, 2004 of $193,305, or $0.03 per basic and diluted weighted average common share. Funds from Operations (“FFO”) for the quarter ended March 31, 2005 was $1,072,939 or $0.14 per diluted weighted average common share, compared to a loss from operations for the quarter ended March 31, 2004 of $113,975 or $0.01 per diluted weighted average common share.
In the first quarter of 2005, the Company added two additional properties to its portfolio, for an aggregate purchase price of approximately $12.4 million. At March 31, 2005, the Company had approximately $88.3 million invested from its initial public offering in fourteen real properties and one mortgage loan. The Company also entered into a line of credit with a syndicate of banks with up to $50 million of financing, and borrowed $3.1 million pursuant to a long-term note payable, which was collateralized by a security interest in its Canton, North Carolina property.
Subsequent to March 31, 2005, the Company acquired a property for $7.1 million, and extended a mortgage loan for $10.0 million.
The Company had a number of non-recurring expenses that were recorded in the first quarter of 2005. The Company had higher than usual professional fees in the first quarter which was primarily a result of the increased accounting fees related to the audit of our internal controls performed in order to comply with The Sarbanes-Oxley Act of 2002. The Company also paid higher franchise fees in several states, which the Company expects to reduce next year by restructuring the entities in these specific states.
“During the first quarter the Company showed positive growth and results, and the Company expects to continue to grow during 2005. The Company has a backlog of new purchases that will permit the Company to increase future dividends. The Company expects to use its existing line of credit to buy additional properties and expects to pay down the line of credit by placing long-term mortgages on some of the properties. The line of credit and long- term mortgages should allow the portfolio to grow by an additional $100 million,” said a spokesperson for the Company.
The National Association of Real Estate Investment Trusts (NAREIT) developed FFO, as a relative non-GAAP (Generally Accepted Accounting Principles) 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 (loss) (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 in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income (loss)), and should not be considered an alternative to either net income (loss) as an indication of our performance or to cash flow from operations as a measure of liquidity or ability to make distributions.
A reconciliation of net income, which we believe is the most directly comparable GAAP measure, to FFO is set forth below:
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For the three |
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For the three |
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||
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|
|
|
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|
|
|
Net income (loss) |
|
$ |
535,184 |
|
$ |
(193,305 |
) |
|
Real estate depreciation and amortization |
|
|
537,755 |
|
|
79,330 |
|
|
Funds from operations |
|
|
1,072,939 |
|
|
(113,975 |
) |
|
Weighted average shares outstanding - diluted |
|
|
7,733,335 |
|
|
7,642,000 |
|
|
Diluted net income (loss) per weighted average common share |
|
$ |
0.07 |
|
$ |
(0.03 |
) |
|
Diluted funds from operations per weighted average common share |
|
$ |
0.14 |
|
$ |
(0.01 |
) |
To learn more about our FFO please refer to our Quarterly Report on Form 10-Q for the quarter ended March 31, 2005 filed with the Securities and Exchange Commission (“SEC”) today and on our web site at http://www.GladstoneCommercial.com.
The financial statements attached below are without footnotes so readers should obtain and carefully review our Form 10-Q for the quarter ended March 31, 2005, including the footnotes to the financial statements contained therein. We have filed the Form 10-Q today with the SEC and the Form 10-Q can be retrieved at the SEC website at http://www.SEC.gov or the website for Gladstone Commercial at http://www.GladstoneCommercial.com.
Gladstone Commercial will have a conference call at 9:30 am EDT, May 5, 2005. To enter the call please dial 866-818-1223 and use the confirmation code 694253. An operator will monitor the call and set a queue for questions. To hear the replay of the call please dial 888-266-2081 and use the confirmation code 694253. The replay will be available until June 5, 2005.
For further information contact our Chief Financial Officer, Harry Brill, at 703-287-5850.
This press release may include statements that may constitute “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, including statements with regard to the future performance of the Company and the closing of any transaction. Words such as “believes,” “intend,” “expects,” “projects” and “future” or similar expressions are intended to identify forward-looking statements. 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 the Company’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements include, among others, those factors listed under the caption “Risk factors” of the Company’s Annual Report on Form 10-K for the year ended, December 31, 2004, as filed with the Securities and Exchange Commission on March 8, 2005. 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
(Unaudited)
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March 31, 2005 |
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December 31, 2004 |
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ASSETS |
|
|
|
|
|
|
|
|
Real estate, net |
|
$ |
71,226,016 |
|
$ |
60,466,330 |
|
|
Mortgage note receivable |
|
|
11,081,931 |
|
|
11,107,717 |
|
|
Cash and cash equivalents |
|
|
18,059,875 |
|
|
29,153,987 |
|
|
Funds held in escrow |
|
|
744,129 |
|
|
1,060,977 |
|
|
Interest receivable - mortgage note |
|
|
71,109 |
|
|
64,795 |
|
|
Interest receivable - employees |
|
|
4,685 |
|
|
4,792 |
|
|
Deferred rent receivable |
|
|
697,210 |
|
|
210,846 |
|
|
Deferred financing costs |
|
|
663,134 |
|
|
— |
|
|
Prepaid expenses |
|
|
203,026 |
|
|
170,685 |
|
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Other assets |
|
|
216,649 |
|
|
114,819 |
|
|
Lease intangibles, net of accumulated amortization of $308,159 and $194,047, respectively |
|
|
4,023,315 |
|
|
3,230,146 |
|
|
TOTAL ASSETS |
|
|
106,991,079 |
|
|
105,585,094 |
|
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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LIABILITIES |
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|
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|
|
|
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Due to Adviser |
|
|
142,598 |
|
|
129,231 |
|
|
Accounts payable and accrued expenses |
|
|
417,464 |
|
|
168,389 |
|
|
Dividends payable |
|
|
— |
|
|
920,040 |
|
|
Mortgage note payable |
|
|
3,150,000 |
|
|
— |
|
|
Rent received in advance, security deposits and funds held in escrow |
|
|
1,432,991 |
|
|
1,674,741 |
|
|
Total Liabilities |
|
|
5,143,053 |
|
|
2,892,401 |
|
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STOCKHOLDERS’ EQUITY |
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|
|
|
|
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Common stock, $0.001 par value, 20,000,000 shares authorized and 7,667,000 shares issued and outstanding |
|
|
7,667 |
|
|
7,667 |
|
|
Additional paid in capital |
|
|
105,427,549 |
|
|
105,427,549 |
|
|
Notes receivable - employees |
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|
(374,792 |
) |
|
(375,000 |
) |
|
Distributions in excess of accumulated earnings |
|
|
(3,212,398 |
) |
|
(2,367,523 |
) |
|
Total Stockholders’ Equity |
|
|
101,848,026 |
|
|
102,692,693 |
|
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
$ |
106,991,079 |
|
$ |
105,585,094 |
|
Gladstone Commercial Corporation
Consolidated Statements of Operations
(Unaudited)
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For the three |
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For the three |
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OPERATING REVENUES |
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Rental income |
|
$ |
1,847,007 |
|
$ |
197,773 |
|
|
Interest income from mortgage note receivable |
|
|
295,583 |
|
|
133,419 |
|
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Tenant recovery revenue |
|
|
2,043 |
|
|
— |
|
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Total operating revenues |
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2,144,633 |
|
|
331,192 |
|
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OPERATING EXPENSES |
|
|
|
|
|
|
|
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Depreciation and amortization |
|
|
537,755 |
|
|
79,330 |
|
|
Management advisory fee |
|
|
471,861 |
|
|
229,416 |
|
|
Professional fees |
|
|
331,244 |
|
|
208,457 |
|
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Taxes and licenses |
|
|
128,273 |
|
|
10,320 |
|
|
Insurance |
|
|
70,383 |
|
|
64,487 |
|
|
Interest |
|
|
36,219 |
|
|
— |
|
|
General and administrative |
|
|
132,828 |
|
|
104,949 |
|
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Total operating expenses |
|
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1,708,563 |
|
|
696,959 |
|
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Income (loss) from operations |
|
|
436,070 |
|
|
(365,767 |
) |
|
Interest income from temporary investments |
|
|
94,521 |
|
|
172,462 |
|
|
Interest income - employee loans |
|
|
4,685 |
|
|
— |
|
|
Loss on foreign currency translation |
|
|
(92 |
) |
|
— |
|
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Other income |
|
|
99,114 |
|
|
172,462 |
|
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NET INCOME (LOSS) |
|
$ |
535,184 |
|
$ |
(193,305 |
) |
|
Earnings (loss) per weighted average common share |
|
|
|
|
|
|
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Basic |
|
$ |
0.07 |
|
$ |
(0.03 |
) |
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Diluted |
|
$ |
0.07 |
|
$ |
(0.03 |
) |
|
Weighted average shares outstanding |
|
|
|
|
|
|
|
|
Basic |
|
|
7,667,000 |
|
|
7,642,000 |
|
|
Diluted |
|
|
7,733,335 |
|
|
7,642,000 |
|
Gladstone Commercial Corporation
Consolidated Statements of Cash Flows
(Unaudited)
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For the three |
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For the three |
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Cash flows from operating activities: |
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|
|
|
|
|
|
|
Net income (loss) |
|
$ |
535,184 |
|
$ |
(193,305 |
) |
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
|
|
|
|
|
|
|
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Depreciation and amortization |
|
|
537,755 |
|
|
79,330 |
|
|
Changes in assets and liabilities: |
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|
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Amortization of deferred financing costs |
|
|
16,246 |
|
|
— |
|
|
Amortization of deferred rent asset |
|
|
6,136 |
|
|
— |
|
|
Increase in mortgage interest receivable |
|
|
(6,314 |
) |
|
(68,261 |
) |
|
Decrease in employee interest receivable |
|
|
107 |
|
|
— |
|
|
(Increase) decrease in prepaid expenses |
|
|
(32,341 |
) |
|
40,620 |
|
|
Decrease (increase) in other assets |
|
|
48,170 |
|
|
(18,266 |
) |
|
Increase in deferred rent receivable |
|
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(97,499 |
) |
|
(13,764 |
) |
|
Increase in accounts payable and accrued expenses |
|
|
249,075 |
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|
102,266 |
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|
Increase in due to Adviser |
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13,367 |
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|
356,115 |
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Increase in rent received in advance and security deposits |
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|
75,098 |
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|
210,767 |
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Net cash provided by operating activities |
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1,344,984 |
|
|
495,502 |
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Cash flows from investing activities: |
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Acquisition of real estate |
|
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(12,485,610 |
) |
|
(3,650,000 |
) |
|
Issuance of mortgage note receivable |
|
|
— |
|
|
(11,170,000 |
) |
|
Deposit on future acquisition |
|
|
(200,000 |
) |
|
— |
|
|
Principal repayments on mortgage note receivable |
|
|
25,786 |
|
|
— |
|
|
Net cash used in investing activities |
|
|
(12,659,824 |
) |
|
(14,820,000 |
) |
|
Cash flows from financing activities: |
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|
|
|
|
|
|
Offering costs |
|
|
— |
|
|
(7,730 |
) |
|
Proceeds from borrowings under mortgage note payable |
|
|
3,150,000 |
|
|
— |
|
|
Principal repayments on employee loans |
|
|
208 |
|
|
— |
|
|
Payments for deferred financing costs |
|
|
(629,380 |
) |
|
— |
|
|
Dividends paid |
|
|
(2,300,100 |
) |
|
(76,420 |
) |
|
Net cash provided by (used in) financing activities |
|
|
220,728 |
|
|
(84,150 |
) |
|
Net decrease in cash and cash equivalents |
|
|
(11,094,112 |
) |
|
(14,408,648 |
) |
|
Cash and cash equivalents, beginning of period |
|
|
29,153,987 |
|
|
99,075,765 |
|
|
Cash and cash equivalents, end of period |
|
$ |
18,059,875 |
|
$ |
84,667,117 |
|
SOURCE Gladstone Commercial Corporation
-0- 05/04/2005
/CONTACT: Harry Brill, Chief Financial Officer of Gladstone Commercial Corporation, +1-703-287-5850/
/Web site: http://www.gladstonecommercial.com/
_