GOOD - Earnings call transcript Q4 2021 | Gladstone Commercial Corporation

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Operator

Greetings and welcome to Gladstone Commercial's Corporation’s Fourth Quarter and Year-End Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions].

As a reminder, this conference is being recorded. to conference like host, to now Mr. would turn over the your I Executive Gladstone, Officer. David Chief and to you, Thank over you, sir.

David Gladstone

We calling Thank introduction. you, the a to this phone for more we you it’s once talk And nice time morning. in time thanks to and quarter. have Peter, all of on for with enjoy the that with had but we wish you you,

General concerning Counsel legal Now call and to let’s LiCalsi, hear a matters from give and Mike? our regulatory this Michael report. you Secretary

Michael LiCalsi

Thanks, good statements Act our and the of morning David, regarding may everybody. Exchange include under XXXX Today's forward-looking of Securities Act those performance. report XXXX, including the Securities future and

we risks uncertainties from we And involve Factors these reasonable. the implied in our based our believe many other including statements factors Now XX-Q, forward-looking with may which and results Risk results future that by different to and documents materially SEC. forward-looking these to file be statements, XX-K cause be on certain or are expressed actual any plans, our Forms current all

on no Investors update revise You website, or them as whether on new any future is except these of SEC's information, which we can find the Also, events publicly otherwise, find page them the website, of required which And forward-looking statements, www.sec.gov. is obligation can law. to gladstonecommercial.com. undertake our you of by or a result as

from which FFO, Funds discuss Operations. also is we’ll today, Now,

non-recurring for expenses. operating period-over-period results which and adjusted FFO plus performance. our amortization Now real from income, revenues these a sale any we also and the accounting We'll on impairment estate, better adjusted is excluding the depreciation FFO, defined believe FFO our of core is FFO certain of comparability, a or and are losses assets. non-GAAP better allow of of are metrics property, as gains term comparability estate and indication generally mention And net real as losses for other

to opportunity again, visit for the notification gladstonecommercial.com, take sign-up e-mail you that ask our that’s once our we Now website, service.

The keyword @GladstoneComps. The You Twitter can on is also Companies find on and Facebook. there Gladstone this at

is more so you call of website an Again, those. for release review both yesterday detailed today's find Now where of ask you our page and information. we Form our issued our Investors can that overview XX-K, press results,

Now the I'll over Commercial's call Gladstone Bob hand Cutlip. to Co-President,

Bob Cutlip

you, Thank morning good Mike. And everyone.

of a a industrial the $XX.X removing with in January During foot industrial through foot quarter. of property million during rate on for allocation industrial plant our foot in square we Acquired has of the rate Recent XXXX ending Richmond, our facility Vance, focus strong. Pennsylvania, while remaining fourth and property quite square acres Atlanta, facility cash foot operations XX,XXX and cap square and quarter XX the Benz million foot of our XX X.X tenant foot MSA improving rate We’ve These XXXX GAAP a for industrial for foot X.X%. term square GAAP Syracuse, square XX.X X.X%. Carolina, in facility industrial XXX,XXX XXXX. XXX,XXX $XX industrial XX,XXX Redding, and cap and extended years acres XX, story industrial lease in X.X acquisitions base and non-core rents single acquired at collected XX,XXX XXX,XXX releasing million through Georgia office been GAAP at a and remaining term to acquisition $XX lease the activity on improve further XXX% a increase facility our and acres Tennessee investments Mercedes XX.X of the lease a Crossville, years suburb, remaining sold Virginia, square the New in Leased of our reinforce Acquired lease continued years term of with in in fourth with of in assets. extended activity XXX,XXX of strategy on on Charlotte through renewed our assembly operations. XXXX, cap X.X%. of square York, North XXXX, Alabama Monroe, We a a June portfolio’s lease May property

GAAP The fourth and $XX.X million with quarter volume totaled third investment All industrial. rate properties of X.XX%. a cap were

and XXXX $XXX term under been full industrial invested and the cap in just of all million, average acquisition lease assets a XX.X we rate since of GAAP For years. year weighted is million $XXX approaching an and X% The have nature. average volume

objective within this term industrial Our period, next during is XX% allocation to to XX% our reach XX months. XX% and the has near to from increased XX

the on to focus. and has this we with range, expect XXX,XXX industrial square in success acquisition XX,XXX continue foot been candidates side to Our the

The Our square team expanded of to improvement transactions foot. improving straight tenant management store an December line Year-to-date of of same straight lease tenants $XX.X extended had or continued X%. covering X.X million rent feet, operations. of $X.XX approximately our deliver totals XX, we lease just team weighted with an a annualized and per and in our million line ended asset years X.X average allowance term these square on and increase the rent XX

Some of who current of expansion our important XX% office through The follows. leases the our entire annual These from line rent Tulsa, calendar occupied line received Port operating the the XX% will year, tenant industrial straight rental the leasing us prior building. our the property highlights foot portfolio. property approximately leased, in extended of of was equating Carolina foot and quite through income as XXXX. are square Austin approximately performance. in directly XXX,XXX enable the in foot And for will MSA $X.X Catoosa XXXX annual leased Detroit the lease entirety building the straight to we team transactions their the square our an the property XXXX. emphasis extended manageable million. December current and lease North through vacant have the rental will Raleigh, to is of about industrial The basis X.X% of at square our lead XXX,XXX tenant tenant property Oklahoma expiring in expanded which XXX,XXX The XXXX into benefit our entire through in top-line on of be during was and on continue growth our

Our rent be paid. continues fourth cash strong. collections XXX% quarter to were collection of rent experience

XXX% all rent In of were XXXX. fact, for our collections

Investment my the of forward. are would us this some We've very enjoyed intention was the of year. for and the their support and pinnacle to we minute At my of everyone our is going retire Chief portfolio with journey and I've decisions delivered I have every David announced on thank truly And David, has do. of to It with to with Co-President I We XX just June our to have pleased best all team. XX. here very team. great recently and, these on been promoted together, I business, this not metrics announced said the tenants' the what been career, succession Cooper, and wish grown team guidance. been same my a about that during we on again our of course, improved for Buzz want and you for my performance and that my family time, January today, time as planning I Officer, the industries. times wife assessment. with or challenging highlight important

Buzz say the during shows IPO since improve in He all our than to to will all our of I Gary, forward us and to can has lead and has Buzz comments us and suggestions company. with team been as we investors times go to the I leader commercial Our our visits. the investors in more culture assets And strategy. other communicated managed understands next how ahead. acquired operations. road and Buzz level and virtual any that of our appreciate and your that our have

with leadership You my He him will quite knows upon our the and Gary, regional of management leaders assistance regional and assistance strategy Gary's approve get the soon. to asset and know teams. that with will and

like Buzz acquisition opportunities. current of summarize I'd pipeline assessment to conditions Now our ask to and market our

Buzz Cooper

are the company look express appreciation our have placing wish place you, performance to you, Bob. gratitude to and David And provide for I I as board me. we in strong the and talent shareholders. my the trust forward past upon believe now and Thank and that I growth to building for the in faith

part comment, office research both particularly of Bob As the and for latter continued continued results the worthy anticipated production and the improvements the by reports and XXXX and in reflects are fourth of is of reinforced review this with to challenges. COVID-XX stated, of industrial for quarter statistics conditions Market A effects XXXX. early virus. relating

XXXX First, exceeded CBRE. Investment the all by volume XX.X% the for for property Property year and with since quarter upon vacancy according $XXX strong Prices research level, be square XXXX feet million approximately XXX the Real to per billion types XXXX. construction. increased property square million in over for types is Net XXX overall Industrial report. under all to the Analytics. activity and to year and highest the X.X% continues was is sales absorption feet at depending X% for

product and the saw sector. and logistics creating all challenges in XXXX Although to increase is an sectors, quarter the industrial for in continue e-commerce supply vacancy demand. drive disruption demand chain Office fourth of

include totaled vacancy fourth The points to first basis This absorption absorption is quarters. prior a compared significant XX.X% space since XX.X net on overall first and six to drop quarter vacancy square level mid-XXXX feet the sublease in not national in does million XX rates CBRE, the dropping For vacancy quarter-over-quarter. positive with available basis. the

has availability. continues feet New materials in under and created their chain is an construction. caused cost million supply Supply square just XXX strain a on increase activity have as under for issues

growth increase we listings. it opportunities, As our investment are an to sale relates seeing in

Of XX $XXX balance of stage, initial in and with X Our are in approximately review. due balance XX one totaling are $XX million million. And being representing office is the $XXX properties, XX of letter candidates totaling of diligence under is acquisition properties, current which the pipeline properties properties industrial. the volume, million. X the

will believe team engaged as in and we the continue we staying arise them. actively markets as can pursue acquisition Our is opportunities pursue to

engagement year leasing acquisition well quarter collectively positions continued opportunities activities reflected in us summary, rental and our identify So and pursue industrial fourth and success, growth to collection strong full opportunities. active to

Now turn a to our for markets report activities. it including Gary? financial over Gary the me capital let on results,

Gary Gerson

I I'll stockholders per are diluted you, and the on both And share our quarter Buzz. of numbers were results reference weighted FFO and everyone. reviewing respectively. based my common common XXXX remarks fully FFO were FFO start FFO stockholders and morning, for $X.XX shares. during All available core available average during share quarter $X fourth per XXXX. stockholders $X.XX Adjusted and to $X.XX FFO for FFO the quarter good stockholders to were to $X.XX per for $X.XX operating for core and Thank common to per by fourth year and year respectively. respectively. available of full XX, share core comparability $X.XX XXXX and for were XXXX the common the FFO share full common respectively. comparability the adjusted available FFO core

year same-store XXXX over year rent in XXXX. at Our grew X.X% the the cash full full overall

of total revenues operating Our to compared fourth in reflected of quarter million of $XX.X of same operating with operating $XX.X $XX.X expenses results period. $XX.X million as million, the and operating revenues expenses million

We reducing our on focus grow sheet strong we to assets continue as balance to our our enhance leverage. and continue

at reduced believe our to XX% new leverage levels. from and over leverage We away X% past level. over acquisitions six X% assets are have we target through years lower refinancing to XX.X% maturing to We the debt our by gross financing leverage

primarily debt acquisitions. continue make We to long-term use mortgage to

property continue also expect pool we Overtime, investments, to increase expand financing disciplined through with our options. unsecured debt additional will assets. our we high grow this we quality As

revolving our and fixed majority of the XX% floating rate, at X% is borrowings facility. is which rate our floating credit XX% are under rate is debt Looking profile, hedged

and loan million are XXXX due our today, million $XX coming XXXX XXXX due XXXX. of $XX with As and in coming manageable maturities in

the these time. We will refinance appropriate amounts at

borrowings $XX.X revolving As end outstanding. we the of had of the quarter, million of

program. entering fourth equity in sufficient been we've with the liquidity, the quarter through market While or our at issuing active ATM

During the through and year we’ve stock full XXXX common million sales. costs, raised $XX.X net issuance of

equity to activity that sufficient we liquidity have manage capital We upcoming continue our for requirements. ensure to

time financial website, significant provides million $XX.X long-term. performance strong XX. our the has portfolio to our in on incremental credit. our for you current of current program, information our flexibility and availability, line posted as detailed operations availability that of believe today, under With ATM of over we and our As fund and quarterly to access cash approximately have more near Institutional have we of review we to portfolio ownership our to quarter. and the We our encourage which XX.X% financial stock increased also supplement December of

investment and coverage as potential meeting analysts to be We banks. current with and active investors, company relationships We continue establishing portfolio new very look managers, to in our grows. forward

our per per year. common to dividend raised share stock or quarter $X.XXXX per have $X.XXX We

dividend not since We suspended the IPO in cut in or have our XXXX.

yield Many yesterday common much closed trading our yields. at I'll Tuesday, on Our the REITs is on stock distribution at to are David. And stock back The night turn $XX.XX. lower now at X.XX%. program

David Gladstone

you. your Thank telling we've Bob was LiCalsi a made good first and good That and Michael reactions right. for a report, world the All Welcome to also good hurt government contribution from Buzz buyers. much the well, various and one performed has team Gary, Buzz certainly board, very through. to on Cooper. by time and the been very, the not from

guys. quarter, nice So

based cash the about And the a XXX% it heard today quarter. of have You leases lot impressive. new We've collected the number for of is rents. and transactions

enterprise quarter think total $XX.X The January $XX.X is growing. is of strong. at outlook, the to And The lease it this own acquired behind we quarter, rents. fourth XXXX. we're representing year, XX a professionals January executed the properties for and I of two about company it. Commercial real million the in During million, a of and industrial during extended strong. estate industrial are of assets investment adding is leases X pace, The straight transactions team good we we

tenants. our strong So at team seeking credit time, acquisition more in this point is

what tenant-oriented real for investments. to is it in we And are oriented. the We okay. usually time excellent means And marketplace. as the and real tenant shoot the We that the of that's there we're estate make tenant know out every if pay, quality estate the can opposed everything

other. actively but middle we're is the today and those environment for The are grow we business is the managers continue we the value. in market It's team asset properties many Our managing a that own challenge. to up like in different today, just

been and government continue they're chain related a times have Our have tenants and our that to But have we their previous disruptions. supply challenges. been with restrictions future pay never inflation, team challenged are But a before, viruses, there be will These job. doing to tenants fantastic rents. first-class seen

you'll from if questions in. we'll now, on those are Paul, Okay. calling some come who answer

Operator

this The Stevenson session. first Please Thank Rob a Instructions] conducting is time, be we you. question-and-answer Janney. [Operator question go will with At ahead. from

Rob Stevenson

how or think acquisitions? You million Hi. guys. that acquisitions morning, under the pipeline? be of Any intent? Bob should about current Buzz, we year. Good in or is letter what's the thinking $XXX contract last acquisition How to won't XXXX XXXX the And much reason did be same ballpark?

Bob Cutlip

two what probably a that quarters. that is think we need convert and probably last going Rob, Buzz contract I'll $XXX what's under of that's is million to We another I letter really indicated, he diligence. think of it. to million the look $XX will in stage, start. And the add to due we're one intent then $XXX to Because expecting a the Buzz of got in contract. every We've as in on markets. That's our like, understands within at next days. third about, And to XX million got

I what's and as indicated million. million. right our team growth of are That's third connected $XX got we fourth is now really in well really secondary Buzz the And acquired The transpired annualized in who great has I a that $XXX about an markets. place think quarter,

looking be have million. I basis, what we we a would expect for calendar well so will year And $XXX of right now with that north

rates now, for through But to conservative think if because cash Now bets us. flow are about care interest and I are off, we go all it's if conservative, we be improving have and right roof the stability.

expand upon So that? even why Buzz, all don't you

Buzz Cooper

thing that cross hopefully to us we opportunities, discussions over and have thank from these are do a and in note process have do million Denver. the diligence and point, Bob's and believe thing legal you, and portion in $XXX in on Thank into of we tenancy through all. regional $XX the And is if is, LOI. Southeast the One that also taking forward, that that, note we move West, One I some will would the not Florida reports. in million to third-party that into deep Rob, are I underwriting you. Bob. Behind that we great of

team strong. little is traditional it a the marketplace are we've to say consideration. it actively seen an out perhaps But relates for the more So pipeline I'll And us creative here the as what as our looking acquisitions. to opportunities for is and properties uptick relates for

So we going feel forward. very confident

Rob Stevenson

about thinking Okay. are this And dispositions you how guys year?

Bob Cutlip

the million been we'd limit most to I on like million to calls stating of our that year. $XX to have dispositions per and $XX Gary

we capital depending redeploy we to it very $XX now, see two increase million. on go -- kind years something million to But And our we're to could long-term. make upon for out. gain us But that we proceeds. that higher if of $XX let's three that significant estimating is It crazy receive can going that basis, when million. $XX an a average that's increase be still cash in we offers than the sense However, say, look could any right

Rob Stevenson

And about this at asset how point? thinking you the office Austin are

Bob Cutlip

let And I'm upon Because expand upon that and was Buzz him going that. that. we there expand right responsible to in the have Buzz for team. let his now tenant

Buzz Cooper

rental receiving time live the cash over you that, if rate the the gives we've left. will asset refilled approximately I approximately -- that that tenant asset. it, that half Austin off has breathe us to we building that XX% It obviously, in of at and were a of at

the we've if did some had hit in Texas as you looks. will. go through, We have the virus increase

been XX quiet, out Year forth. past so New the the and have days coming of So relatively

However, recently, there in has interest. uptick been an

as in and trying both down relates Texas team to internationally to also bring leasing actively but aggressive Our it tenancy. is nationally

being tower where seems Austin know, TikTok a to be day, Every built space. it is tenants such coming new exploding. taking As bit either a is is to town, you as announced large of may new

activity life also across actually it Parmer. from We -- some of relates our from concrete sciences, saw announcements, nothing tenancy building on as to our

feel They very various I'm had that a strong very are We've a well confident exited traded have come we calls, that's out, soon. we've fruition paper couple we historically. going But previously on where rental sure with. we pointed hits rate get some relatively So we reasons. as to for GM of here to north people not with have

it have there's hope we upside soon. relatively good believe So to and there filled

Rob Stevenson

one preferred you just then fourth year that but in The common XXXX what on me. the capital And full and had information, issued the Okay. quarter? one quarterly the last the was maintenance for see Gary, I release preferred. issuance common and didn't the

Gary Gerson

I a minute. believe me -- give

Rob Stevenson

whatever. We can email, be up could follow off-line. It

Gary Gerson

I'm release, follow in have sure but we on you. I'll it our up

Rob Stevenson

right. time. All the Thanks, guys. Appreciate

Gary Gerson

please. Next question,

Operator

Thank John from go question Ladenburg ahead. Please Thalmann. you. is The next with Massocca

John Massocca

morning, Good everybody.

Gary Gerson

Good John. morning,

John Massocca

back I there in Or So in overall in a the little shift given it's going recently? any rate XQ? bit. has was shift pipeline some the early comparable pipeline? What's rate are for closed the Is acquisitions kind to changes of potential the any that cap with what here it of outlook in days, rates interest in been cap but the know rate? cap

Bob Cutlip

you the the XXXX, months. looking at configuration. we're Well, that least cap looking cap really John. now on it depends depends is that's industrial to short have XX the rate. and the And X%. office staying are see in upon the it product on level, we well that term, term XX in I what higher. as from at to about we're at expand think going closing of and credit here I us And what at then Buzz, three course, a long-term standpoint looking want it was might in from X to next And we as at market, the depends to anywhere rate X.XX is But average that as points on basis

Buzz Cooper

higher, rates accomplished And to getting opportunities, these a to Because are in cap are little we of longer average Bob's works point, rate we is which there the benefit. term. And our cross the with consistent what regional cap XXXX.

So to in were similar expect them be where very XXXX. I would to we

effect. rate close where pretty But to if factors I that interest think the into be not will today, Of coming new we'll deals course, have are we there's better. an

Bob Cutlip

John, ahead. go I -- think

John Massocca

No, pick it up.

Bob Cutlip

past, I costs. was very as his debt of is. to well stay Gary our we've as close in capital as as cost based noted equity of changes going I to And team what that the on course, say, to true we think varies and

And not And have will our we with basis have forward spread to so that that going go and capital. religiously we done unless a to point just XX anything do over XX of tend forward. cost we

John Massocca

to that or the maybe side it's looking its the And a non-Austin little own of and sale lease at in-place Okay. for let's putting portfolio the thing. call some the bit What's Austin of up because then outlook specific it vacancy? remaining,

Buzz Cooper

the this next -- year? you Are referring within calendar to

John Massocca

X%, of Just of vacant know you number. Austin the that little less not that's let's resolution huge I any or general. kind have Austin between not I what's X% vacancy it's the rough a just somewhere building. mean a still building I numbers, And say, portfolio maybe going of for and But X%, to forward? vacancy mean, the X% kind outlook the that's the the in remaining than

Bob Cutlip

South that And have a about Carolina. of so in told in depart. Lake for one that at in that the three we that. there's we're is us for then prospect building. XX,XXX lease properties of one got the property Okay. expires of and tenants, good All then final we've prospect And And a the July, space. the tenant South with square October, those feet. properties entire that lease are going the take have you end it's one that and leases that to We've strong got Carolina -- at City a the to negotiations John. expiration in in expiring know Salt in But they is June, one this Columbia, October. That's -- year, X three are July in

the of out a of are properties. in those put I those, All office probability very good but on I I future. about to think two if it, three had it's feel

you be to lease Buzz, will the current And want that? particularly aggressive under so upon conditions. space, expand we to

Buzz Cooper

the of all equations are Bob's To on side those point, we working well. aggressively leasing as

coming I shop. little to wish back referenced it or bit, occupy to purchase a a assets, certain user a whether the may relative market, with been it have or there add it's office that inquiries value As

at looking we're alternatives. all So

John Massocca

then side the of financing? refinancing sheet like refinancing Where balance market what outlook is rates And And maturing? how seeing on going the some things, debt does Okay. kind with look that's for for you versus the are mortgages of today? of the unsecured to more

Gary Gerson

Well -- is this Gary.

of that We going up forth. mean, rates the they're little are saying course, are point. seeing rates rates really a I and in we But seeing raise haven't Fed this -- bit. go increased interest is much the March at to so

So I income balance to think that it's forward could to And sheet go be as as you or going referred we hurt really potential to our unsecured, option. don't refinance. our a

going bump we interest So so a seen be a to But significant we far, we're have where things the them they're looking are not looking at at and rates. up to point these problem.

John Massocca

mean say non-accretive that event? Could today? you refinancing, I are refinancing? markets roughly have thinking be another. way to to time it I the kind it accretive by come refinancing, of the a may you potentially about But -- or and understand, moved is had one obviously, you flat How if

Gary Gerson

the my have but don't significantly I -- have due over coming mind now, it's interest rate right in X%. mortgages exact The

accretive mortgages those as So we refinancing a today's right rates. given now, interest see of would

John Massocca

we're And one Bob. That's think to helpful. Congratulations, me. more call, I it have Very Okay. going for Buzz.

you might as if congratulations So save my I congratulations. But not, to well.

Bob Cutlip

John. Thanks,

Gary Gerson

amount the net sold during is proceeds was $XX.X have we from there for quarter. I that full of again. XXXX. the ATM about the And question was the million This fourth Gary equity -- of we a our of sold year million do $XX.X previous that

David Gladstone

Okay.

question? Next

Operator

Kucera is Craig The go question next Riley. from Please with B. ahead.

Craig Kucera

to may missed from was morning, assets? this, the Hi. third the that assets quarter, the quarter in former guys. leased contribution Good but Austin revenue this what GM the I have were

Gary Gerson

quarter that the -- about was fourth the That full quarter first -- asset. quarter, of for which million it's the $X.X

Craig Kucera

Got it.

rent So -- there to no was that correct? free those period tied assets,

Gary Gerson

straight That's line.

Craig Kucera

it. Got

some Okay. the Can had is that And vacancy quarter. I earlier there start to feel you think XXXX? of fourth you paying in paying outlook us year, sort tenant And of Tulsa. give up I like for expected this what and was they're what leased the a sense in

Buzz Cooper

I don't the improvements and I working, good. very off are have producing product my the paying look They've to quarter. rent of going great shop property believe, the the to right currently. start top are head. rental figure end made this their Outlook by is They within of

Craig Kucera

Okay, you. great. That’s it for me. Thank

David Gladstone

Next question?

Operator

gentlemen, to you. the turn Thank David of for and I Ladies And call question-and-answer reached the would session. to the like have end remarks. Mr. back we Gladstone closing .

David Gladstone

the outlook again All end as right. now, we questions. you quarter. well. and call. to and to the of listening. hope next Rob good all good Thank John well. And That's this for And think see you is thanks Craig for And right doing we're I And

Operator

today's concludes conference. This you. Thank

Thank this You your disconnect at you participation. may lines your time. for

Gladstone Commercial (GOOD) 16 Feb 222021 Q4 Earnings call transcript