In This Article:
Please note that the limited information that follows in this press release is not adequate to make an informed investment judgment.
MCLEAN, VA / ACCESS Newswire / February 18, 2025 / Gladstone Commercial Corporation (Nasdaq:GOOD) ("Gladstone Commercial" or the "Company") today reported financial results for the fourth quarter and year ended December 31, 2024. A description of funds from operations, or FFO, FFO as adjusted for comparability, and Core FFO, all three 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 and Non-controlling OP Units, unless otherwise noted. For further detail, please also refer to both the quarterly financial supplement and the Company's Annual Report on Form 10-K, which can be found on the Investors section of our website at www.gladstonecommercial.com.
Summary Information (dollars in thousands, except per share data):
| As of and for the three months ended | ||||||||||||||||||
| December 31, 2024 | September 30, 2024 | $ Change | % Change | |||||||||||||||
| Operating Data: | ||||||||||||||||||
| Total operating revenue | $ | 37,375 | $ | 39,235 | $ | (1,860 | ) | (4.7 | )% | |||||||||
| Total operating expenses | (24,974 | ) | (1) | (28,546 | ) | (4) | 3,572 | (12.5 | )% | |||||||||
| Other (expense) income, net | (5,208 | ) | (2) | 1,032 | (5) | (6,240 | ) | (604.7 | )% | |||||||||
| Net income | $ | 7,193 | $ | 11,721 | $ | (4,528 | ) | (38.6 | )% | |||||||||
| Less: Dividends attributable to preferred stock | (3,106 | ) | (3,106 | ) | - | - | % | |||||||||||
| Less: Dividends attributable to senior common stock | (104 | ) | (106 | ) | 2 | (1.9 | )% | |||||||||||
| Less/Add: (Loss) gain on extinguishment of Series F preferred stock, net | (9 | ) | 2 | (11 | ) | (550.0 | )% | |||||||||||
| Net income available to common stockholders and Non-controlling OP Unitholders | $ | 3,974 | $ | 8,511 | $ | (4,537 | ) | (53.3 | )% | |||||||||
| Add: Real estate depreciation and amortization | 13,102 | 13,343 | (241 | ) | (1.8 | )% | ||||||||||||
| Add: Impairment charge | 1,780 | 4,549 | (2,769 | ) | (60.9 | )% | ||||||||||||
| Less: Gain on sale of real estate, net | (3,674 | ) | (10,319 | ) | 6,645 | (64.4 | )% | |||||||||||
| Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic | $ | 15,182 | $ | 16,084 | $ | (902 | ) | (5.6 | )% | |||||||||
| Add: Convertible senior common distributions | 104 | 106 | (2 | ) | (1.9 | )% | ||||||||||||
| Funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted | $ | 15,286 | $ | 16,190 | $ | (904 | ) | (5.6 | )% | |||||||||
| Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic | $ | 15,182 | $ | 16,084 | $ | (902 | ) | (5.6 | )% | |||||||||
| Add: Asset retirement obligation expense | 34 | 33 | 1 | 3.0 | % | |||||||||||||
| Add: Realized loss on interest rate hedging instruments | - | 51 | (51 | ) | (100.0 | )% | ||||||||||||
| Core funds from operations available to common stockholders and Non-controlling OP Unitholders - basic | $ | 15,216 | $ | 16,168 | $ | (952 | ) | (5.9 | )% | |||||||||
| Add: Convertible senior common distributions | 104 | 106 | (2 | ) | (1.9 | )% | ||||||||||||
| Core funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted | $ | 15,320 | $ | 16,274 | $ | (954 | ) | (5.9 | )% | |||||||||
| Share and Per Share Data: | ||||||||||||||||||
| Net income available to common stockholders and Non-controlling OP Unitholders - basic and diluted | 0.09 | 0.20 | (0.11 | ) | (55.0 | )% | ||||||||||||
| FFO available to common stockholders and Non-controlling OP Unitholders - basic | 0.35 | 0.38 | (0.03 | ) | (7.9 | )% | ||||||||||||
| FFO available to common stockholders and Non-controlling OP Unitholders - diluted | 0.35 | 0.38 | (0.03 | ) | (7.9 | )% | ||||||||||||
| Core FFO available to common stockholders and Non-controlling OP Unitholders - basic | 0.35 | 0.38 | (0.03 | ) | (7.9 | )% | ||||||||||||
| Core FFO available to common stockholders and Non-controlling OP Unitholders - diluted | 0.35 | 0.38 | (0.03 | ) | (7.9 | )% | ||||||||||||
| Weighted average shares of common stock and Non-controlling OP Units outstanding - basic | 43,963,909 | 42,830,159 | 1,133,750 | 2.6 | % | |||||||||||||
| Weighted average shares of common stock and Non-controlling OP Units outstanding - diluted | 44,294,365 | 43,169,458 | 1,124,907 | 2.6 | % | |||||||||||||
| Cash dividends declared per common share and Non-controlling OP Unit | $ | 0.30 | $ | 0.30 | $ | - | - | % | ||||||||||
| Financial Position | ||||||||||||||||||
| Real estate, before accumulated depreciation | $ | 1,219,918 | (3) | $ | 1,238,271 | (6) | $ | (18,353 | ) | (1.5 | )% | |||||||
| Total assets | $ | 1,094,348 | $ | 1,096,315 | $ | (1,967 | ) | (0.2 | )% | |||||||||
| Mortgage notes payable, net, borrowings under revolver, borrowings under term loan, net, and senior unsecured notes, net | $ | 693,385 | $ | 692,647 | $ | 738 | 0.1 | % | ||||||||||
| Total equity and mezzanine equity | $ | 341,342 | $ | 339,087 | $ | 2,255 | 0.7 | % | ||||||||||
| Properties owned | 135 | (3) | 135 | (6) | - | - | % | |||||||||||
| Square feet owned | 16,899,887 | (3) | 16,849,547 | (6) | 50,340 | 0.3 | % | |||||||||||
| Square feet leased | 98.7 | % | 98.5 | % | 0.2 | % | 0.2 | % | ||||||||||
| (1) Includes a $1.8 million impairment charge recognized on one property during the three months ended December 31, 2024. | ||||||||||||||||||
| (2) Includes a $3.7 million gain on sale, net, from the sale of one property and a selling profit from sales-type leases, during the three months ended December 31, 2024. | ||||||||||||||||||
| (3) Includes two properties classified as held for sale of $8.1 million and 736,031 square feet, in the aggregate. | ||||||||||||||||||
| (4) Includes a $4.5 million impairment charge recognized on one property during the three months ended September 30, 2024. | ||||||||||||||||||
| (5) Includes a $10.3 million gain on sale, net, from the sale of two properties during the three months ended September 30, 2024. | ||||||||||||||||||
| (6) Includes two properties classified as held for sale of $24.0 million and 750,191 square feet, in the aggregate. | ||||||||||||||||||
| As of and for the year ended | ||||||||||||||||||
| December 31, 2024 | December 31, 2023 | $ Change | % Change | |||||||||||||||
| Operating Data: | ||||||||||||||||||
| Total operating revenue | $ | 149,388 | $ | 147,584 | $ | 1,804 | 1.2 | % | ||||||||||
| Total operating expenses | (102,808 | ) | (1) | (116,103 | ) | (4) | 13,295 | (11.5 | )% | |||||||||
| Other expense, net | (22,540 | ) | (2) | (26,559 | ) | (5) | 4,019 | (15.1 | )% | |||||||||
| Net income | $ | 24,040 | $ | 4,922 | $ | 19,118 | 388.4 | % | ||||||||||
| Less: Dividends attributable to preferred stock | (12,440 | ) | (12,285 | ) | (155 | ) | 1.3 | % | ||||||||||
| Less: Dividends attributable to senior common stock | (420 | ) | (430 | ) | 10 | (2.3 | )% | |||||||||||
| Less: Loss on extinguishment of Series F preferred stock | (14 | ) | (11 | ) | (3 | ) | 27.3 | % | ||||||||||
| Add: Gain on repurchase of Series G preferred stock | - | 3 | (3 | ) | (100.0 | )% | ||||||||||||
| Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders | $ | 11,166 | $ | (7,801 | ) | $ | 18,967 | (243.1 | )% | |||||||||
| Add: Real estate depreciation and amortization | 55,786 | 57,856 | (2,070 | ) | (3.6 | )% | ||||||||||||
| Add: Impairment charge | 6,822 | 19,296 | (12,474 | ) | (64.6 | )% | ||||||||||||
| Less: Gain on sale of real estate, net | (14,229 | ) | (7,737 | ) | (6,492 | ) | 83.9 | % | ||||||||||
| Less: Gain on debt extinguishment, net | (300 | ) | (2,830 | ) | 2,530 | (89.4 | )% | |||||||||||
| Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic | $ | 59,245 | $ | 58,784 | $ | 461 | 0.8 | % | ||||||||||
| Add: Convertible senior common distributions | 420 | 430 | (10 | ) | (2.3 | )% | ||||||||||||
| Funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted | $ | 59,665 | $ | 59,214 | $ | 451 | 0.8 | % | ||||||||||
| Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic | $ | 59,245 | $ | 58,784 | $ | 461 | 0.8 | % | ||||||||||
| Add: Write off shelf registration statement costs and prepaid ATM costs | 183 | 110 | 73 | 66.4 | % | |||||||||||||
| Add: Asset retirement obligation expense | 133 | 126 | 7 | 5.6 | % | |||||||||||||
| Add: Bad debt write off | 64 | - | 64 | 100.0 | % | |||||||||||||
| Add: Loan defeasance costs | - | 130 | (130 | ) | (100.0 | )% | ||||||||||||
| Add: Realized loss on interest rate hedging instruments | 132 | 326 | (194 | ) | (59.5 | )% | ||||||||||||
| Core funds from operations available to common stockholders and Non-controlling OP Unitholders - basic | $ | 59,757 | $ | 59,476 | $ | 281 | 0.5 | % | ||||||||||
| Add: Convertible senior common distributions | 420 | 430 | (10 | ) | (2.3 | )% | ||||||||||||
| Core funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted | $ | 60,177 | $ | 59,906 | $ | 271 | 0.5 | % | ||||||||||
| Share and Per Share Data: | ||||||||||||||||||
| Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders - basic & diluted | 0.27 | (0.19 | ) | 0.46 | (242.1 | )% | ||||||||||||
| FFO available to common stockholders and Non-controlling OP Unitholders - basic | 1.41 | 1.46 | (0.05 | ) | (3.4 | )% | ||||||||||||
| FFO available to common stockholders and Non-controlling OP Unitholders - diluted | 1.41 | 1.46 | (0.05 | ) | (3.4 | )% | ||||||||||||
| Core FFO available to common stockholders and Non-controlling OP Unitholders - basic | 1.43 | 1.47 | (0.04 | ) | (2.7 | )% | ||||||||||||
| Core FFO available to common stockholders and Non-controlling OP Unitholders - diluted | 1.42 | 1.47 | (0.05 | ) | (3.4 | )% | ||||||||||||
| Weighted average shares of common stock and Non-controlling OP Units outstanding - basic | 41,923,423 | 40,325,730 | 1,597,693 | 4.0 | % | |||||||||||||
| Weighted average shares of common stock and Non-controlling OP Units outstanding - diluted | 42,253,879 | 40,670,862 | 1,583,017 | 3.9 | % | |||||||||||||
| Cash dividends declared per common share and Non-controlling OP Unit | $ | 1.2000 | $ | 1.2000 | $ | - | - | % | ||||||||||
| Financial Position | ||||||||||||||||||
| Real estate, before accumulated depreciation | $ | 1,219,918 | (3) | $ | 1,261,715 | (6) | $ | (41,797 | ) | (3.3 | )% | |||||||
| Total assets | $ | 1,094,348 | $ | 1,133,471 | $ | (39,123 | ) | (3.5 | )% | |||||||||
| Mortgage notes payable, net, borrowings under revolver, borrowings under term loan, net, and senior unsecured notes, net | $ | 693,385 | $ | 738,861 | $ | (45,476 | ) | (6.2 | )% | |||||||||
| Total equity and mezzanine equity | $ | 341,342 | $ | 324,307 | $ | 17,035 | 5.3 | % | ||||||||||
| Properties owned | 135 | (3) | 135 | (6) | - | - | % | |||||||||||
| Square feet owned | 16,899,887 | (3) | 17,059,269 | (6) | (159,382 | ) | (0.9 | )% | ||||||||||
| Square feet leased | 98.7 | % | 96.8 | % | 1.9 | % | 2.0 | % | ||||||||||
| (1) Includes a $6.8 million impairment charge recognized on three properties during the year ended December 31, 2024. | ||||||||||||||||||
| (2) Includes a $14.2 million gain on sale, net, from seven property sales and a selling profit from sales-type leases, and a $0.3 million gain on debt extinguishment, net, during the year ended December 31, 2024. | ||||||||||||||||||
| (3) Includes two properties classified as held for sale of $8.1 million and 736,031 square feet, in the aggregate. | ||||||||||||||||||
| (4) Includes a $19.3 million impairment charge recognized on five properties during the year ended December 31, 2023. | ||||||||||||||||||
| (5) Includes a $7.7 million gain on sale, net, from seven property sales and a $2.8 million gain on debt extinguishment, net, during the year ended December 31, 2023. | ||||||||||||||||||
| (6) Includes three properties classified as held for sale of $40.4 million and 946,801 square feet. | ||||||||||||||||||
Highlights of Fiscal Year 2024:
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Acquired properties: Purchased seven fully-occupied properties, with an aggregate of 316,727 square feet of rental space, for $26.8 million, at a weighted average cap rate of 10.99%;
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Sold properties: Sold seven non-core properties as part of our capital recycling strategy for $39.0 million;
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Collected 100% of 2024 base rent: Collected 100% of 2024 base rental charges owed to us throughout the year;
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Issued common stock under ATM Program: Issued 3.7 million shares of common stock for net proceeds of $53.5 million;
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Issued Series F Preferred Stock: Issued 47,328 shares of our 6.00% Series F Preferred Stock for net proceeds of $1.1 million;
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Issued new debt: Borrowed $15.2 million in fixed rate mortgage debt at a weighted average interest rate of 5.60%, all with maturity dates of August 31, 2029;
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Issued senior unsecured notes: Issued $75.0 million in senior unsecured notes in a private placement at a fixed interest rate of 6.47% and a maturity date of December 18, 2029;
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Repaid debt: Repaid $32.5 million in fixed rate mortgage debt, with a weighted average interest rate of 4.59%, with cash on hand and borrowings from our line of credit;
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Extended mortgage debt maturity date: Extended the maturity date of a $7.4 million fixed rate note for an additional 1.3 years. As part of the extension, the interest rate became variable at SOFR + 2.25%;
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Leased vacant space: Leased 1,798,984 square feet of previously vacant space with lease terms ranging from 0.7 years to 7.2 years at three of our properties;
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Renewed leases: Renewed 1,141,225 square feet with remaining lease terms ranging from 5.3 years to 13.8 years at nine of our properties; and
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Paid distributions: Paid monthly cash distributions for the year totaling $1.20 per share on our common stock and Non-controlling OP Units, $1.656252 per share on our Series E Preferred Stock, $1.50 per share on our Series F Preferred Stock, $1.50 per share on our Series G Preferred Stock, and $1.05 per share on our senior common stock.