Exhibit 99.1
Gladstone Commercial Corporation
Announces 2005 Year End Financial Results
MCLEAN, Va.--(BUSINESS WIRE)--February 28, 2006--Gladstone Commercial
Corporation (NASDAQ:GOOD):
-- Net income increased to $3,601,945 or $0.47 per diluted common
share, a 124% per share increase over 2004
-- Funds from Operations ("FFO") increased to $7,253,064 million
or $0.94 per diluted common share, an increase of 179% per
share over 2004
-- Acquired 18 properties, for a total investment of $116.8
million
Gladstone Commercial Corp. (NASDAQ:GOOD) (the "Company") today
reported financial results for the quarter and year ended December 31,
2005. A description of Funds from Operations, or "FFO" a non -
Generally Accepted Accounting Principles in the United States ("GAAP")
financial measure, is located at the end of this news release. All per
share references are based on diluted weighted average common share
unless otherwise noted.
Net income for the year ended December 31, 2005 was $3,601,945 or
$0.47 per share, compared to $1,623,928 or $0.21 per share one year
ago. For the quarter ended December 31, 2005 net income was $1,049,819
or $0.14 per share, compared to net income for the quarter ended
December 31, 2004 of $999,920 or $0.13 per share.
FFO for the year ended December 31, 2005 was $7,253,064 or $0.94
per share, compared to $2,597,273 or $0.34 per share for the same
period one year ago. For the quarter ended December 31, 2005 FFO was
$2,326,024 or $0.30 per share, compared to $1,454,132 or $0.19 per
share for the same period one year ago. 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 months three months For the year For the year
ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2005 2004 2005 2004
------------ ------------ ------------ ------------
Net income $ 1,049,819 $ 999,920 $ 3,601,945 $ 1,623,928
Real estate
depreciation and
amortization 1,276,207 454,212 3,651,119 973,345
------------ ------------ ------------ ------------
Funds from
operations 2,326,026 1,454,132 7,253,064 2,597,273
------------ ------------ ------------ ------------
Weighted average
shares outstanding
- basic 7,672,000 7,667,000 7,670,219 7,649,855
Weighted average
shares outstanding
- diluted 7,737,297 7,725,434 7,723,220 7,708,534
Basic net income
per weighted
average common
share $ 0.14 $ 0.13 $ 0.47 $ 0.21
============ ============ ============ ============
Diluted net income
per weighted
average common
share $ 0.14 $ 0.13 $ 0.47 $ 0.21
============ ============ ============ ============
Basic funds from
operations per
weighted average
common share $ 0.30 $ 0.19 $ 0.95 $ 0.34
============ ============ ============ ============
Diluted funds from
operations per
weighted average
common share $ 0.30 $ 0.19 $ 0.94 $ 0.34
============ ============ ============ ============
For the year ended December 31, 2005, the Company recorded a
realized foreign currency loss of $6,278 and unrealized depreciation
on the translation of assets and liabilities of $212,279 or $0.03 per
basic and diluted share per basic and diluted share. There were no
realized or unrealized foreign currency gains or losses during the
year ended December 31, 2004. The unrealized depreciation was
primarily a result of the valuation of the mortgage notes payable for
the two properties located in Canada, 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 December
31, 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 fourth quarter of 2005, the Company added 5 additional
properties with 774,539 square feet for an aggregate purchase price of
approximately $36.6 million.
Subsequent to December 31, 2005, the Company:
-- acquired 3 properties with 617,802 square feet for an
aggregate purchase price of approximately $48.3 million;
-- assumed 2 existing mortgage notes for approximately $30.0
million;
-- completed a public offering of 1,000,000 shares of a 7.75%
Series A Cumulative Redeemable Preferred Stock, at a price of
$25.00 per share, under the Company's shelf registration
statement on Form S-3, and pursuant to the terms set forth in
the Company's prospectus dated October 24, 2005, as
supplemented by the prospectus supplement dated January 18,
2006. Net proceeds of the offering, after underwriting
discounts and offering expenses, were approximately $23.8
million, which were used to repay outstanding indebtedness
under the Company's line of credit. The offering closed on
January 26, 2006, and the stock is traded on the Nasdaq
National Market under the trading symbol "GOODP";
-- declared monthly cash dividends on its common stock of $0.12
per common share for each of the months of January, February
and March of 2006; and
-- declared monthly cash dividends on its Series A preferred
stock of $0.0215278 per share for the month of January 2006
and $0.1614583 per share for each of the months of February
and March 2006.
"We are very proud of our team's 2005 accomplishments and
financial results," said Chip Stelljes, Executive Vice President and
Chief Investment Officer. "Our solid achievements are evidenced by the
100% per share growth in the annual dividend, 179% FFO per share
growth and the 137% portfolio growth. 2006 has started well and we
hope to continue to post strong results."
To learn more about our FFO please refer to our Annual Report on
Form 10-K for the fiscal year ended December 31, 2005, as filed with
the Securities and Exchange Commission ("SEC") today.
The financial statements attached below are without footnotes so
readers should obtain and carefully review our Form 10-K for the year
ended December 31, 2005, including the footnotes to the financial
statements contained therein. We have filed the Form 10-K today with
the SEC and the Form 10-K 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,
March 1, 2006. To enter the call, please dial (877) 407-8031. An
operator will monitor the call and set a queue for questions. To hear
the replay of the call, please dial (877) 660-6853, access playback
account 286 and use the confirmation code 193236. 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 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.
NON-GAAP FINANCIAL MEASURES
Funds from Operations
The National Association of Real Estate Investment Trusts (NAREIT)
developed FFO, as a relative non-GAAP 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 determined 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.
The Company believes that FFO per share provides investors with a
further context for evaluating the Company's financial performance and
as a supplemental measure to compare the Company to other REITs;
however, comparisons of the Company's FFO to the FFO of other REITs
may not necessarily be meaningful due to potential differences in the
application of the NAREIT definition used by such other REITs.
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 "may," "will," "believes," "anticipates,"
"intends," "expects," "projects," "estimates" 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,
expectations and beliefs 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, 2005, as filed with the
Securities and Exchange Commission on February 28, 2006. The risk
factors set forth in the Form 10-K under the caption "Risk Factors"
are specifically incorporated by references into this press release.
All forward-looking statements are based on current plans,
expectations and beliefs and speak only as of the date of such
statements. 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
December 31, December 31,
2005 2004
------------- -------------
ASSETS
Real estate, net of accumulated
depreciation of $3,408,878 and $785,125,
respectively $161,634,761 $ 60,466,330
Lease intangibles, net of accumulated
amortization of $1,221,413 and $194,047,
respectively 13,947,484 3,230,146
Mortgage notes receivable 21,025,815 11,107,717
Cash and cash equivalents 1,740,159 28,754,289
Restricted cash 1,974,436 1,460,675
Funds held in escrow 1,041,292 -
Interest receivable - mortgage note 70,749 64,795
Interest receivable - employees - 4,792
Deferred rent receivable 2,590,617 210,846
Deferred financing costs, net of
accumulated amortization of $260,099 and
$0, respectively 1,811,017 50,000
Prepaid expenses 385,043 170,685
Deposits on real estate 600,000 50,000
Accounts receivable 225,581 14,819
------------- -------------
TOTAL ASSETS $207,046,954 $105,585,094
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Mortgage notes payable $ 61,558,961 $ -
Borrowings under line of credit 43,560,000 -
Accounts payable and accrued expenses 493,002 168,389
Dividends payable - 920,040
Due to Adviser 164,155 129,231
Rent received in advance, security
deposits and funds held in escrow 2,322,300 1,674,741
------------- -------------
Total Liabilities 108,098,418 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 (432,282) (375,000)
Distributions in excess of accumulated
earnings (6,129,398) (2,367,523)
------------- -------------
Total Stockholders' Equity 98,948,536 102,692,693
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $207,046,954 $105,585,094
============= =============
Gladstone Commercial Corporation
Consolidated Statements of Operations
For the year For the year
ended ended
Dec. 31, Dec. 31,
2005 2004
------------ ------------
Operating revenues
Rental income $11,437,731 $ 3,331,215
Interest income from mortgage notes
receivable 1,915,795 981,187
Tenant recovery revenue 111,808 -
------------ ------------
Total operating revenues 13,465,334 4,312,402
------------ ------------
Operating expenses
Depreciation and amortization 3,651,119 973,345
Management advisory fee 2,118,040 1,187,776
Professional fees 585,571 448,969
Taxes and licenses 249,249 13,603
Insurance 274,166 250,816
General and administrative 466,868 428,624
------------ ------------
Total operating expenses 7,345,013 3,303,133
------------ ------------
Other income (expense)
Interest income from temporary investments 126,826 608,617
Interest income - employee loans 21,041 6,042
Interest expense (2,447,686) -
------------ ------------
Income before realized and unrealized
losses 3,820,502 1,623,928
------------ ------------
Realized and unrealized loss from foreign
currency
Net realized loss from foreign currency
transactions (6,278) -
Net unrealized depreciation on translation
of assets and liabilities in a foreign
currency (212,279) -
------------ ------------
Total net realized and unrealized loss
from foreign currency (218,557) -
------------ ------------
Net income $ 3,601,945 $ 1,623,928
============ ============
Earnings per weighted average common share
Basic $ 0.47 $ 0.21
============ ============
Diluted $ 0.47 $ 0.21
============ ============
Weighted average shares outstanding
Basic 7,670,219 7,649,855
============ ============
Diluted 7,723,220 7,708,534
============ ============
Gladstone Commercial Corporation
Consolidated Statements of Operations
For the three For the three
months ended months ended
Dec. 31, Dec. 31,
2005 2004
------------- -------------
Operating revenues
Rental income $ 3,901,708 $ 1,663,677
Interest income from mortgage notes
receivable 564,598 284,128
Tenant recovery revenue 42,000 -
------------- -------------
Total operating revenues 4,508,306 1,947,805
------------- -------------
Operating expenses
Depreciation and amortization 1,276,207 454,212
Management advisory fee 553,214 344,416
Professional fees 137,769 135,165
Taxes and licenses 58,137 -
Insurance 66,518 62,262
General and administrative 129,146 76,538
------------- -------------
Total operating expenses 2,220,991 1,072,593
------------- -------------
Other income (expense)
Interest income from temporary
investments 9,020 119,916
Interest income - employee loans 5,558 4,792
Interest expense (1,260,888) -
------------- -------------
Income before realized and unrealized
losses 1,041,005 999,920
------------- -------------
Realized and unrealized loss from foreign
currency
Net realized loss from foreign currency
transactions (335) -
Net unrealized appreciation on
translation of assets and liabilities
in a foreign currency 9,149 -
------------- -------------
Total net realized and unrealized
loss from foreign currency 8,814 -
------------- -------------
Net income $ 1,049,819 $ 999,920
============= =============
Earnings per weighted average common share
Basic $ 0.14 $ 0.13
============= =============
Diluted $ 0.14 $ 0.13
============= =============
Weighted average shares outstanding
Basic 7,672,000 7,667,000
============= =============
Diluted 7,737,297 7,725,434
============= =============
Gladstone Commercial Corporation
Consolidated Statements of Cash Flows
For the For the
year ended year ended
December 31, December 31,
2005 2004
-------------- --------------
Cash flows from operating activities:
Net income $ 3,601,945 $ 1,623,928
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization 3,651,119 973,345
Amortization of deferred financing
costs 260,099 -
Amortization of deferred rent
receivable 178,070 -
Unrealized depreciation on the
translation of assets and
liabilities in a foreign currency 212,279 -
Changes in assets and liabilities:
Increase in mortgage interest
receivable (5,954) (64,795)
Decrease (increase) in employee
interest receivable 4,792 (4,792)
(Increase) decrease in prepaid
expenses (214,358) 20,747
Increase in accounts receivable (210,762) (14,819)
Increase in deferred rent
receivable (565,017) (210,846)
Increase in accounts payable and
accrued expenses 324,613 168,389
Increase (decrease) in due to
Adviser 34,924 (105,064)
Increase in rent received in
advance and security deposits 488,913 214,066
Payments to lenders for operating
reserves held in escrow (275,383) -
Increase in operating reserves from
tenants 72,837 -
-------------- --------------
Net cash provided by operating
activities 7,558,117 2,600,159
-------------- --------------
Cash flows from investing activities:
Real estate investments (117,531,731) (58,875,648)
Increase in restricted cash (513,761) -
Receipts from tenants for capital
reserves 1,015,069 -
Payments to tenants from capital
reserves (929,260) -
Payments to lenders for capital
reserves held in escrow (1,065,909) -
Receipts from lenders for capital
reserves held in escrow 300,000 -
Deposits on future acquisitions (2,686,000) (775,000)
Refund of deposit on real estate 150,000 -
Deposits applied against real
estate investments 1,986,000 725,000
Principal repayments on mortgage
loans 81,902 62,283
Issuance of mortgage loan (10,000,000) (11,170,000)
-------------- --------------
Net cash used in investing
activities (129,193,690) (70,033,365)
-------------- --------------
Cash flows from financing activities:
Proceeds from share issuance - -
Offering costs - (7,730)
Borrowings under mortgage note
payable 61,419,179 -
Principal repayments on mortgage
note payable (70,479) -
Borrowings from line of credit 85,460,000 -
Repayments on line of credit (41,900,000) -
Principal repayments on employee
loans 17,718 -
Payments for deferred financing
costs (2,021,115) (50,000)
Dividends paid (8,283,860) (2,830,540)
-------------- --------------
Net cash provided by (used in)
financing activities 94,621,443 (2,888,270)
-------------- --------------
Net decrease in cash and cash
equivalents (27,014,130) (70,321,476)
Cash and cash equivalents, beginning
of period 28,754,289 99,075,765
-------------- --------------
Cash and cash equivalents, end of
period $ 1,740,159 $ 28,754,289
============== ==============
Cash paid during period for interest $ 2,014,236 $ -
-------------- --------------
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