Gladstone Commercial Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Real Estate and Intangible Assets (Tables)

Real Estate and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2012

Real Estate and Intangible Assets [Abstract]

Company's investments in real estate, including capitalized leases


	June 30, 2012			December 31, 2011
Real estate:
Land	$	65,099		$	60,602
Building and improvements		394,903			367,605
Tenant improvements		18,408			14,314
Accumulated depreciation		(59,433	)		(53,784	)

Real estate, net	$	418,977		$	388,737

Company allocated the purchase price of the properties acquired


Location	Acquisition Date		Square Footage		Lease Term	Renewal Options	Total Purchase Price		Acquistion Expenses		Annualized Straight Line Rent		Debt Issued
Ashburn, VA		1/25/2012		52,130	15 years	2 (5 years each)	$	10,775	$	102	$	989		N/A
Ottumwa, IA		5/30/2012		352,860	11.5 years	3 (5 years each)		7,100		47		684		5,000
New Albany, OH		6/5/2012		89,000	10.5 years	2 (5 years each)		13,333		188		1,361		N/A
Columbus, GA		6/21/2012		32,000	11.5 years	2 (5 years each)		7,320		126		656		4,750
Columbus, OH		6/28/2012		31,293	10 years	N/A		4,037		59		342		N/A

In accordance with ASC 805, we determined the fair value of acquired assets and liabilities assumed related to the properties acquired during the six months ended June 30, 2012 as follows:


	Land		Building		Tenant Improvements		In-place Leases		Leasing Costs		Customer Relationships		Above Market Leases		Below Market Leases			Total Purchase Price
Ashburn, VA	$	706	$	6,551	$	1,307	$	804	$	908	$	499	$	—	$	—		$	10,775
Ottumwa, IA		212		4,743		329		940		484		499		—		(107	)		7,100
New Albany, OH		1,658		7,511		1,235		1,122		857		903		47		—			13,333
Columbus, GA		1,378		3,894		626		574		473		375		—		—			7,320
Columbus, OH		542		1,856		597		391		213		325		113		—			4,037

Below is a summary of the total revenue and net income recognized on the properties acquired during the six months ended June 30, 2012:


			Rental Revenue				Net Income
Location	Acquisition Date		For the three months ended June 30, 2012		For the six months ended June 30, 2012		For the three months ended June 30, 2012⁽¹⁾		For the six months ended June 30, 2012⁽¹⁾
Ashburn, VA		1/25/2012	$	247	$	431	$	147	$	262
Ottumwa, IA		5/30/2012		61		61		30		30
New Albany, OH		6/5/2012		98		98		51		51
Columbus, GA		6/21/2012		18		18		11		11
Columbus, OH		6/28/2012		3		3		3		3

⁽¹⁾	Does not include interest expense or acquisition related costs that are required to be expensed under ASC 805.

Pro-forma earnings


	For the three months ended June 30,						For the six months ended June 30,
	2012			2011			2012			2011
Operating Data:
Total operating revenue	$	13,071		$	11,905		$	26,073		$	23,512
Total operating expenses		(6,036	)		(5,924	)		(12,273	)		(12,036	)
Other expense		(5,658	)		(4,413	)		(10,837	)		(8,735	)

Net income		1,377			1,568			2,963			2,741
Dividends attributable to preferred and senior common stock		(1,046	)		(1,039	)		(2,088	)		(2,078	)

Net income available to common stockholders	$	331		$	529		$	875		$	663

Share and Per Share Data:
Basic earnings per share of common stock	$	0.03		$	0.05		$	0.08		$	0.07
Diluted earnings per share of common stock	$	0.03		$	0.05		$	0.08		$	0.07
Weighted average shares outstanding-basic		10,945			9,782			10,945			9,522
Weighted average shares outstanding-diluted		10,945			9,834			11,011			9,574

Weighted average amortization period for intangible assets acquired


Intangible assets & liabilities	Years
In-place leases		11.0
Leasing costs		11.0
Customer relationships		15.2
Above market leases		10.4
Below market leases		11.6

All intangible assets & liabilities		12.4

Future operating lease payments from tenants under non-cancelable leases


Year	Tenant Lease Payments
Six months ending December 31, 2012	$	24,342
2013		45,352
2014		42,167
2015		38,279
2016		33,733
2017		31,701
Thereafter		202,159

Value of intangible assets and the accumulated amortization


	June 30, 2012					December 31, 2011
	Lease Intangibles		Accumulated Amortization			Lease Intangibles		Accumulated Amortization
In-place leases	$	28,449	$	(11,087	)	$	24,620	$	(10,181	)
Leasing costs		19,085		(6,303	)		15,013		(5,663	)
Customer relationships		23,327		(7,545	)		20,725		(6,844	)

	$	70,861	$	(24,935	)	$	60,358	$	(22,688	)

Estimated aggregate amortization expense


Year	Estimated Amortization Expense
Six months ending December 31, 2012		3,400
2013		5,495
2014		4,910
2015		4,508
2016		3,907
2017		3,739
Thereafter		19,967

- Definition

Tabular disclosure of a lessee's leasing arrangements including: (1) the basis on which contingent rental payments are determined, (2) the existence and terms of renewal or purchase options and escalation clauses, (3) restrictions imposed by lease arrangements, such as those concerning dividends, additional debt, and further leasing, (4) rent holidays, rent concessions, or leasehold improvement incentives and unusual provisions or conditions. Disclosure may also include the specific period used to amortize material leasehold improvements made at the inception of the lease or during the lease term. Additionally, for operating leases having initial or remaining noncancelable lease terms in excess of one year: (a) future minimum rental payments required as of the date of the latest balance sheet presented, in the aggregate and for each of the five succeeding fiscal years, (b) the total of minimum rentals to be received in the future under noncancelable subleases as of the date of the latest balance sheet presented, and (c) for all operating leases, rental expense for each period for which an income statement is presented, with separate amounts for minimum rentals, contingent rentals, and sublease rentals. Rental payments under leases with terms of a month or less that were not renewed need not be included.

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