Exhibit 99.1
Gladstone Commercial Corporation Announces Financial Results
for the Third Quarter Ended September 30, 2005
MCLEAN, Va.--(BUSINESS WIRE)--October 31, 2005--Gladstone
Commercial Corp. (NASDAQ:GOOD):
-- Net income increased to $867,411 or $0.11 per diluted common
share
-- Funds from Operations ("FFO") increased to $2.0 million or
$0.26 per diluted common share
-- The Company completed five acquisitions, consisting of seven
properties, for total investment of $39.5 million
Gladstone Commercial Corp. (NASDAQ:GOOD) (the "Company") today
reported financial results for the quarter ended September 30, 2005.
Net income for the quarter ended September 30, 2005 was $867,411, or
$0.11 per basic and diluted weighted average common share, compared to
$685,038, or $0.09 per basic and diluted weighted average common share
for the third quarter one year ago. For the nine months ended
September 30, 2005 net income was $2,552,128 or $0.33 per basic and
diluted weighted average common share, compared to net income for the
nine months ended September 30, 2004 of $624,009, or $0.08 per basic
and diluted weighted average common share.
Funds from Operations ("FFO") for the quarter ended September 30,
2005 was $2,007,592 or $0.26 per diluted weighted average common
share, compared to $998,070 or $0.13 per diluted weighted average
common share for the same period one year ago. For the nine months
ending September 30, 2005 FFO was $4,927,040 or $0.64 per diluted
weighted average common share, compared to $1,143,142 or $0.15 per
diluted weighted average common share for the same period one year
ago.
For the three and nine months ended September 30, 2005, $3,007 and
$5,943, respectively, was recorded as a realized foreign currency loss
and, $221,562 or $0.03 per basic and diluted share and $224,562 or
$0.03 per basic and diluted share respectively, was recorded as
unrealized depreciation on translation of assets and liabilities. The
unrealized depreciation was primarily a result of the valuation of the
mortgage notes payable for two Canadian held properties, due to a
decrease in the value of the US dollar relative to the Canadian dollar
by approximately 5% between the date the notes were issued, July 19,
2005, and September 30, 2005. The unrealized depreciation on
translation of assets and liabilities is not deductible for income tax
purposes and these amounts must be distributed to stockholders or the
Company could be subject to federal corporate income tax on these
losses.
In the third quarter of 2005, the Company added seven additional
properties with 696,523 square feet for an aggregate purchase price of
approximately $39.5 million. The Company also entered into long-term
notes, collateralized by seven of its properties, for a total of
approximately $39.0 million, the proceeds of which were used to pay
down the Company's line of credit.
Subsequent to the end of the quarter, the Company acquired two
properties; a 70,598 square foot industrial building purchased for
$7.8 million and a 291,142 square foot industrial building purchased
for $5.2 million.
Subsequent to the end of the quarter, on October 3, 2005, the
Company filed a shelf registration statement on Form S-3 (the
"Registration Statement") with the U.S. Securities and Exchanges
Commission (the "SEC") to allow the Company to issue additional equity
securities in one or more offerings up to an aggregate dollar amount
of $75 million. The Registration Statement was declared effective by
the SEC on October 24, 2005. The registration statement provides for
the issuance of both common stock and preferred stock, the terms of
which would be determined in the future by the Company's board of
directors. The Company has no current plans to conduct an offering
under the registration statement. The Company expects to use the net
proceeds from any offerings pursuant to the shelf registration
statement to make additional investments and fund its continuing
operations. To read the Registration Statement in its entirety please
visit the SEC filings page on our website at
www.gladstonecommercial.com.
"Our third quarter results were lower than expected due to the
loss from foreign currency translations. This loss is a non-cash loss
based on the dollar currency conversion from the Canadian dollar and
does not impact dividends," said Chip Stelljes, Executive Vice
President and Chief Investment Officer. "During the quarter, we were
very successful in growing our portfolio with the addition of seven
new properties for an aggregate investment of $39.5 million and we
believe that we will continue building upon our portfolio performance.
As of the end of the quarter, all tenants were paying as agreed and
all portfolio properties were 100% occupied."
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:
For the For the
three three For the nine For the nine
months ended months ended months ended months ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
------------ ------------ ------------ ------------
Net income $867,411 $685,038 $2,552,128 $624,009
Real estate
depreciation and
amortization 1,140,181 313,032 2,374,912 519,133
------------ ------------ ------------ ------------
Funds from
operations 2,007,592 998,070 4,927,040 1,143,142
------------ ------------ ------------ ------------
Weighted average
shares outstanding
- basic 7,672,000 7,648,250 7,669,619 7,644,099
Weighted average
shares outstanding
- diluted 7,725,667 7,697,079 7,718,441 7,703,504
Basic net income
per weighted
average common
share $0.11 $0.09 $0.33 $0.08
============ ============ ============ ============
Diluted net income
per weighted
average common
share $0.11 $0.09 $0.33 $0.08
============ ============ ============ ============
Basic funds from
operations per
weighted average
common share $0.26 $0.13 $0.64 $0.15
============ ============ ============ ============
Diluted funds from
operations per
weighted average
common share $0.26 $0.13 $0.64 $0.15
============ ============ ============ ============
To learn more about our FFO please refer to our Quarterly Report
on Form 10-Q for the quarter ended September 30, 2005.
The financial statements attached below are without footnotes so
readers should obtain and carefully review our Form 10-Q for the
quarter ended September 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 from the SEC
website at www.SEC.gov or our website at www.GladstoneCommercial.com.
Gladstone Commercial will have a conference call at 9:30 am EST,
November 1, 2005. To enter the call please dial (866) 814-1917 and use
the confirmation code 795651. 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 795561. The conference
call will also be broadcast on the internet through a link on
Gladstone Commercial's web site and at www.InvestorCalendar.com.
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
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 "believe," "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/A for the year ended, December
31, 2004, as filed with the Securities and Exchange Commission on
October 21, 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)
September 30, December 31,
2005 2004
---------------------------
ASSETS
Real estate, net $129,028,346 $60,466,330
Lease intangibles, net of accumulated
amortization of $826,865 and $194,047,
respectively 11,062,110 3,230,146
Mortgage notes receivable 21,047,274 11,107,717
Cash and cash equivalents 364,282 29,153,987
Funds held in escrow 1,723,782 1,060,977
Replacement reserve 1,088,242 -
Interest receivable - mortgage note 67,511 64,795
Interest receivable - employees 4,681 4,792
Deferred rent receivable 2,460,616 210,846
Deferred financing costs 1,486,841 -
Prepaid expenses 234,108 170,685
Deposits on real estate 200,000 50,000
Other assets 78,338 64,819
------------- -------------
TOTAL ASSETS $168,846,131 $105,585,094
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Due to Adviser $164,189 $129,231
Accounts payable and accrued expenses 435,962 168,389
Dividends payable - 920,040
Mortgage notes payable 42,158,247 -
Borrowings under line of credit 23,810,000 -
Rent received in advance, security deposits
and funds held in escrow 2,078,037 1,674,741
------------- -------------
Total Liabilities 68,646,435 2,892,401
------------- -------------
STOCKHOLDERS' EQUITY
Common stock, $0.001 par value, 20,000,000
shares authorized and 7,672,000 and
7,667,000 shares issued and outstanding,
respectively 7,672 7,667
Additional paid in capital 105,502,544 105,427,549
Notes receivable - employees (432,906) (375,000)
Distributions in excess of accumulated
earnings (4,877,614) (2,367,523)
------------- -------------
Total Stockholders' Equity 100,199,696 102,692,693
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $168,846,131 $105,585,094
============= =============
Gladstone Commercial Corporation
Consolidated Statements of Operations
(Unaudited)
For the For the
three three For the nine For the nine
months ended months ended months ended months ended
September September September September
30, 2005 30, 2004 30, 2005 30, 2004
------------ ------------ ------------ ------------
OPERATING REVENUES
Rental income $3,453,777 $1,066,076 $7,536,025 $1,667,538
Interest income
from mortgage
notes
receivable 553,968 284,659 1,351,197 697,059
Tenant recovery
revenue 28,208 - 69,808 -
------------ ------------ ------------ ------------
Total
operating
revenues 4,035,953 1,350,735 8,957,030 2,364,597
------------ ------------ ------------ ------------
OPERATING EXPENSES
Depreciation and
amortization 1,140,181 313,032 2,374,912 519,133
Management
advisory fee 609,171 333,825 1,564,826 843,360
Professional fees 99,799 38,373 447,802 313,804
Taxes and
licenses 37,399 973 191,112 13,543
Insurance 70,244 59,579 207,648 188,554
Interest 895,775 - 1,186,798 -
General and
administrative 107,059 74,881 337,722 352,145
------------ ------------ ------------ ------------
Total
operating
expenses 2,959,628 820,663 6,310,820 2,230,539
------------ ------------ ------------ ------------
Income from
operations 1,076,325 530,072 2,646,210 134,058
------------ ------------ ------------ ------------
Interest income
Interest income
from temporary
investments 10,093 153,716 117,806 488,701
Interest income
- employee loans 5,562 1,250 15,483 1,250
------------ ------------ ------------ ------------
Total
interest
income 15,655 154,966 133,289 489,951
Realized and
unrealized loss
from foreign
currency
Net realized loss
from foreign
currency
transactions (3,007) - (5,943) -
Net unrealized
appreciation
(depreciation)
on translation
of assets and
liabilities in a
foreign currency (221,562) - (221,428) -
------------ ------------ ------------ ------------
Total net
realized and
unrealized
loss from
foreign
currency (224,569) - (227,371) -
------------ ------------ ------------ ------------
NET INCOME $867,411 $685,038 $2,552,128 $624,009
============ ============ ============ ============
Earnings per
weighted average
common share
Basic $0.11 $0.09 $0.33 $0.08
============ ============ ============ ============
Diluted $0.11 $0.09 $0.33 $0.08
============ ============ ============ ============
Weighted average
shares outstanding
Basic 7,672,000 7,648,250 7,669,619 7,644,099
============ ============ ============ ============
Diluted 7,725,667 7,697,079 7,718,441 7,703,504
============ ============ ============ ============
Gladstone Commercial Corporation
Consolidated Statements of Cash Flows
(Unaudited)
For the nine For the nine
months ended months ended
September September
30, 2005 30, 2004
------------ ------------
Cash flows from operating activities:
Net income $2,552,128 $624,009
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 2,374,912 519,133
Changes in assets and liabilities:
Amortization of deferred financing costs 158,457 -
Amortization of deferred rent asset 114,700 -
Increase in mortgage interest receivable (2,716) (61,840)
Decrease (increase) in employee interest
receivable 111 (1,250)
Increase in prepaid expenses (63,423) (37,293)
Increase in other assets (13,520) (25,319)
Increase in deferred rent receivable (369,624) (100,110)
Increase in replacement reserve (1,088,242) -
Increase in accounts payable and accrued
expenses 267,574 11,898
Increase (decrease) in due to Adviser 34,958 (124,656)
(Decrease) increase in rent received in
advance and security deposits (259,509) 475,515
------------ ------------
Net cash provided by operating
activities 3,705,806 1,280,087
------------ ------------
Cash flows from investing activities:
Acquisition of real estate (80,763,736) (45,756,858)
Issuance of mortgage note receivable (10,000,000) (11,170,000)
Deposit on future acquisition (200,000) (200,000)
Principal repayments on mortgage note
receivable 60,443 38,950
------------ ------------
Net cash used in investing
activities (90,903,293) (57,087,908)
------------ ------------
Cash flows from financing activities:
Offering costs - (7,730)
Proceeds from borrowings under mortgage
note payable 42,190,283 -
Principal repayments on mortgage note
payable (32,036) -
Borrowings from line of credit 69,410,000 -
Repayments on the line of credit (45,600,000) -
Principal repayments on employee loans 17,094 -
Payments for deferred financing costs (1,595,299) -
Dividends paid (5,982,260) (1,910,500)
------------ ------------
Net cash provided by (used in)
financing activities 58,407,782 (1,918,230)
------------ ------------
Net decrease in cash and cash equivalents (28,789,705) (57,726,051)
Cash and cash equivalents, beginning of
period 29,153,987 99,075,765
------------ ------------
Cash and cash equivalents, end of period $364,282 $41,349,714
============ ============
Cash paid during period for interest $1,028,341 $-
------------ ------------
NON-CASH FINANCING ACTIVITIES
Notes receivable issued in exchange for
common stock associated with the exercise of
employee stock options $75,000 $375,000
------------ ------------
CONTACT: Gladstone Commercial Corporation
Kelly Sargent, 703-287-5835