Exhibit 99.1
Gladstone Commercial Corporation Announces Financial Results for the
Second Quarter Ended June 30, 2005
| * | Net income available to common stockholders increased to $1.15 million or $0.15 per diluted common share |
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| * | Funds from Operations (FFO) increased to $1.85 million or $0.24 per diluted common share |
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| * | Company acquired four properties for a total investment of $28.6 million, and extended one mortgage loan in the amount of $10.0 million |
MCLEAN, Va., Aug. 2 /PRNewswire-FirstCall/ -- Gladstone Commercial Corp. (Nasdaq: GOOD) (the “Company”) today reported financial results for the quarter ended June 30, 2005. Net income for the quarter ended June 30, 2005 was $1,149,531, or $0.15 per basic and diluted weighted average common share, compared to $132,275 or $0.02 per basic and diluted weighted average common share for the second quarter one year ago. For the six months ended June 30, 2005 net income was $1,684,715 or $0.22 per basic and diluted share, compared to a net loss for the six months ended June 30, 2004 of $61,029 or a loss of $0.01 per share.
Funds from Operations (“FFO”) for the quarter ended June 30, 2005 was $1,846,507 or $0.24 per diluted weighted average common share, compared to $259,047 or $0.03 per diluted weighted average common share for the same period one year ago. For the six months ending June 30, 2005 FFO was $2,919,446 or $0.38 per diluted weighted average common share, compared to $145,072 or $0.02 per diluted weighted average common share for the same period one year ago.
In the second quarter of 2005, the Company added four additional properties to its portfolio, for an aggregate purchase price of approximately $28.6 million. In April, the Company also extended a mortgage loan in the amount of $10.0 million on an office building.
Subsequent to the end of the quarter, the Company acquired three additional properties for an aggregate purchase price of approximately $33.0 million. The Company also amended its line of credit to increase the maximum availability under the line from $50 million to $60 million. As of August 2, 2005, the Company had aggregate borrowings outstanding of $49.4 million and has available borrowing capacity of $58.3 million under the line of credit. Following the end of the quarter, the Company also entered into two separate long-term notes that are collateralized by its Canadian properties. These notes both accrue interest at an interest rate of 5.22% per year, based upon a twenty-five year term, with both principal and interest being paid each month. The Company used the proceeds from the notes to pay down the line of credit.
“The second quarter was very productive, resulting in the acquisition of four additional properties for $28.6 million and a mortgage loan for $10.0 million. An additional three properties were also acquired subsequent to the end of the quarter for a total of $33.0 million. We believe that the addition of these investments should produce long-term growth for the company and our shareholders. We anticipate continued dividend and portfolio growth as we seek select opportunities,” said Chip Stelljes, Executive Vice President and Chief Investment Officer.
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 |
| For the |
| For the |
| For the |
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Net income (loss) |
| $ | 1,149,531 |
| $ | 132,275 |
| $ | 1,684,715 |
| $ | (61,029) |
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Real estate depreciation and amortization |
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| 696,976 |
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| 126,772 |
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| 1,234,731 |
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| 206,101 |
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Funds from operations |
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| 1,846,507 |
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| 259,047 |
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| 2,919,446 |
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| 145,072 |
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Weighted average shares outstanding - diluted |
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| 7,692,639 |
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| 7,695,134 |
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| 7,715,100 |
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| 7,764,732 |
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Diluted net income (loss) per weighted average common share |
| $ | 0.15 |
| $ | 0.02 |
| $ | 0.22 |
| $ | (0.01) |
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Diluted funds from operations per weighted average common share. |
| $ | 0.24 |
| $ | 0.03 |
| $ | 0.38 |
| $ | 0.02 |
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To learn more about our FFO please refer to our Quarterly Report on Form 10-Q for the quarter ended June 30, 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 June 30, 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, August 3, 2005. To enter the call please dial 888-413-5357 and use the confirmation code 745631. 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 745631.
Gladstone Commercial Corporation is a publicly traded real estate investment trust that focuses on investing in and owning triple-net leased industrial and commercial real estate properties through sale/leaseback transactions and selectively making long-term mortgage loans. Additional information can be found at http://www.GladstoneCommercial.com.
For further information contact our Investor Relations Manager, Kelly Sargent at 703-287-5835.
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,” “anticipates”, “intends,” “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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| June 30, |
| December 31, |
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ASSETS |
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Real estate, net |
| $ | 94,245,941 |
| $ | 60,466,330 |
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Mortgage note receivable |
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| 21,064,861 |
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| 11,107,717 |
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Cash and cash equivalents |
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| 216,434 |
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| 29,153,987 |
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Funds held in escrow |
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| 1,284,350 |
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| 1,060,977 |
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Interest receivable - mortgage note |
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| 67,619 |
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| 64,795 |
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Interest receivable - employees |
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| 5,236 |
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| 4,792 |
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Deferred rent receivable |
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| 4,293,573 |
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| 210,846 |
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Deferred financing costs |
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| 990,340 |
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| — |
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Prepaid expenses |
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| 101,677 |
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| 170,685 |
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Deposits on real estate |
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| 550,000 |
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| 50,000 |
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Other assets |
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| 5,304 |
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| 64,819 |
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Lease intangibles, net of accumulated amortization of $457,151 and $194,047, respectively |
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| 5,362,850 |
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| 3,230,146 |
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TOTAL ASSETS |
| $ | 128,188,185 |
| $ | 105,585,094 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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LIABILITIES |
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Due to Adviser |
| $ | 124,171 |
| $ | 129,231 |
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Accounts payable and accrued expenses |
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| 280,920 |
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| 168,389 |
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Dividends payable |
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| — |
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| 920,040 |
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Mortgage note payable |
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| 3,137,529 |
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| — |
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Borrowings under line of credit |
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| 22,010,000 |
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| — |
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Rent received in advance, security deposits and funds held in escrow |
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| 1,462,886 |
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| 1,674,741 |
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Total Liabilities |
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| 27,015,506 |
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| 2,892,401 |
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STOCKHOLDERS’ EQUITY |
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Common stock, $0.001 par value, 20,000,000 shares authorized and 7,672,000 and 7,667,000 shares issued and outstanding, respectively |
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| 7,672 |
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| 7,667 |
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Additional paid in capital |
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| 105,502,544 |
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| 105,427,549 |
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Notes receivable - employees |
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| (433,789 | ) |
| (375,000 | ) |
Distributions in excess of accumulated earnings |
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| (3,903,748 | ) |
| (2,367,523 | ) |
Total Stockholders’ Equity |
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| 101,172,679 |
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| 102,692,693 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
| $ | 128,188,185 |
| $ | 105,585,094 |
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Gladstone Commercial Corporation
Consolidated Statements of Operations
(Unaudited)
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| For the |
| For the |
| For the |
| For the |
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OPERATING REVENUES |
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Rental income |
| $ | 2,235,241 |
| $ | 403,690 |
| $ | 4,082,248 |
| $ | 601,463 |
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Interest income from mortgage note receivable |
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| 501,645 |
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| 278,980 |
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| 797,228 |
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| 412,400 |
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Tenant recovery revenue |
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| 39,557 |
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| — |
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| 41,600 |
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| — |
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Total operating revenues |
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| 2,776,443 |
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| 682,670 |
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| 4,921,076 |
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| 1,013,863 |
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OPERATING EXPENSES |
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Depreciation and amortization |
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| 696,976 |
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| 126,772 |
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| 1,234,731 |
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| 206,101 |
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Management advisory fee |
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| 483,794 |
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| 280,122 |
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| 955,655 |
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| 509,538 |
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Professional fees |
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| 16,759 |
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| 66,973 |
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| 348,003 |
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| 275,430 |
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Taxes and licenses |
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| 25,441 |
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| 2,250 |
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| 153,714 |
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| 12,570 |
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Insurance |
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| 67,021 |
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| 64,488 |
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| 137,404 |
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| 128,975 |
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Interest |
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| 254,803 |
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| — |
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| 291,022 |
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| — |
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General and administrative |
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| 97,836 |
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| 172,313 |
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| 230,664 |
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| 277,263 |
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Total operating expenses |
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| 1,642,630 |
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| 712,918 |
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| 3,351,193 |
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| 1,409,877 |
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Income (loss) from operations |
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| 1,133,813 |
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| (30,248 | ) |
| 1,569,883 |
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| (396,014 | ) |
Interest income from temporary investments |
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| 13,192 |
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| 162,523 |
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| 107,713 |
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| 334,985 |
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Interest income - employee loans |
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| 5,236 |
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| — |
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| 9,921 |
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| — |
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Loss on foreign currency translation |
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| (2,710 | ) |
| — |
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| (2,802 | ) |
| — |
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Other income |
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| 15,718 |
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| 162,523 |
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| 114,832 |
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| 334,985 |
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NET INCOME (LOSS) |
| $ | 1,149,531 |
| $ | 132,275 |
| $ | 1,684,715 |
| $ | (61,029 | ) |
Earnings (loss) per weighted average common share |
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Basic |
| $ | 0.15 |
| $ | 0.02 |
| $ | 0.22 |
| $ | (0.01 | ) |
Diluted |
| $ | 0.15 |
| $ | 0.02 |
| $ | 0.22 |
| $ | (0.01 | ) |
Weighted average shares outstanding |
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Basic |
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| 7,669,802 |
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| 7,642,000 |
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| 7,668,409 |
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| 7,642,000 |
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Diluted |
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| 7,692,639 |
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| 7,695,134 |
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| 7,715,100 |
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| 7,764,732 |
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Gladstone Commercial Corporation
Consolidated Statements of Cash Flows
(Unaudited)
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| For the six months |
| For the six months |
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Cash flows from operating activities: |
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Net income (loss) |
| $ | 1,684,715 |
| $ | (61,029 | ) |
Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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| 1,234,731 |
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| 206,101 |
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Changes in assets and liabilities: |
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Amortization of deferred financing costs |
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| 74,836 |
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| — |
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Amortization of deferred rent asset |
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| 93,385 |
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| — |
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Increase in mortgage interest receivable |
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| (2,824 | ) |
| (61,950 | ) |
Increase in employee interest receivable |
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| (444 | ) |
| — |
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Decrease in prepaid expenses |
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| 69,008 |
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| 122,500 |
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Decrease (increase) in other assets |
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| 59,515 |
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| (25,000 | ) |
Increase in deferred rent receivable |
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| (206,246 | ) |
| (41,535 | ) |
Increase in accounts payable and accrued expenses |
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| 112,530 |
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| 55,814 |
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Decrease in due to Adviser |
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| (5,060 | ) |
| (131,085 | ) |
(Decrease) increase in rent received in advance and security deposits |
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| (435,228 | ) |
| 293,592 |
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Net cash provided by operating activities |
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| 2,678,918 |
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| 357,408 |
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Cash flows from investing activities: |
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Acquisition of real estate |
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| (41,116,911 | ) |
| (22,265,178 | ) |
Issuance of mortgage note receivable |
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| (10,000,000 | ) |
| (11,170,000 | ) |
Deposit on future acquisition |
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| (550,000 | ) |
| — |
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Principal repayments on mortgage note receivable |
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| 42,856 |
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| 19,213 |
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Net cash used in investing activities |
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| (51,624,055 | ) |
| (33,415,965 | ) |
Cash flows from financing activities: |
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Offering costs |
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| — |
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| (7,730 | ) |
Proceeds from borrowings under mortgage note payable |
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| 3,150,000 |
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| — |
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Principal repayments on mortgage note payable |
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| (12,471 | ) |
| — |
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Borrowings from line of credit |
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| 22,010,000 |
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| — |
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Principal repayments on employee loans |
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| 16,211 |
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| — |
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Payments for deferred financing costs |
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| (1,015,176 | ) |
| — |
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Dividends paid |
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| (4,140,980 | ) |
| (993,460 | ) |
Net cash provided by (used in) financing activities |
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| 20,007,584 |
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| (1,001,190 | ) |
Net decrease in cash and cash equivalents |
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| (28,937,553 | ) |
| (34,059,747 | ) |
Cash and cash equivalents, beginning of period |
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| 29,153,987 |
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| 99,075,765 |
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Cash and cash equivalents, end of period |
| $ | 216,434 |
| $ | 65,016,018 |
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NON-CASH FINANCING ACTIVITIES |
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Cash paid during period for interest |
| $ | 128,878 |
| $ | — |
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Notes receivable issued in exchange for common stock associated with the exercise of employee stock options |
| $ | 75,000 |
| $ | — |
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CONTACT: Kelly Sargent, Investor Relations Manager of Gladstone
Commercial Corp., +1-703-287-5835/
Web site: http://www.gladstonecommercial.com /