GOOD - Earnings call transcript Q4 2024 | Gladstone Commercial Corporation

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Operator

Greetings. Welcome to Gladstone Commercial Corporation Year-End Earnings Call. [Operator Instructions] A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

pleasure Mr. my now is to introduce It David Executive Officer. Gladstone, Chief Thank you. begin. may you Sir,

David Gladstone

morning. time thank a on time you talk all this was Sherry. the for to enjoy introduction, in Well, we That to to phone nice and you, had with we that have and wish thanks calling you. We you the more of

your matters Now turn. report. you the give and Secretary, we'll to this hear from of and Michael concerning regulatory LiCalsi, Michael, call our it's General Counsel the legal

Michael LiCalsi

good materially and Thanks, report actual XXXX, include and many believe our website the implied we statements, Exchange our and risks future find our these Today's David, at forward-looking morning, Act reasonable, uncertainties factors be certain or website, may results you any may to our cause involve them our Investors of and can to SEC's forward-looking SEC, on to gladstonecommercial.com, everybody. www.sec.gov. current Securities performance. that the plans, of Act statements based and These including regarding XX-Q, page, which expressed the statements the under which those in XXXX forward-looking be and to future file go Securities the results on with by documents factors we the Forms all is different including and from specifically risk other XX-K are

update revise by of of any required or publicly these whether to except obligation future information, new result no events as statements, undertake a we or Now law. as forward-looking otherwise,

We'll gains sale estate and real core plus amortization as of is net also FFO, which revenues generally or nonrecurring funds the FFO operations. term for certain is from defined which non-GAAP losses And depreciation on will excluding the is expenses. property, a of estate from and losses adjusted any discuss so, FFO discuss we real impairment The other FFO, income, and accounting assets.

comparability of operating of notification our visit please e-mail our that's metrics our better service. and a period-over-period again, better for website, results these allow believe we up indication once performance. are our And sign gladstonecommercial.com,

You can results, now Comps. and you X find is there yesterday we an the press our for review of ask Twitter, issued Facebook. Gladstone on keyword our Today's us that Form XX-K, also Gladstone call overview which so and Companies is is detailed at The more both information. release

with that, Buzz? Buzz Commercial's Gladstone it hand to over Cooper. Now I'll President,

Arthur Cooper

on environment. you, portfolio results, you Michael, updating you year-end office Thank Last for thank and our XXXX look be a the the policy joining to thereafter, and and the in Donald goals but call. Reserve forward still current today's month, Trump training economic announced all toward the of and quarter broader administration, cuts X% the focusing first assumed long-term yields our We length outlook, volatile. to new meantime, agenda. pause Shortly after is inflation rate U.S. treasury target pause Federal progress The stalled. economic interest in remain the determined, us

including inflation continued back XXXX, disputes. rate and estate Looking industrial labor to interest spite real in of headwinds, numerous volatility, outperform on

feet for may slowest square year rose future. of forecast. in This to increase in vacancy XXXX According QX the signaling points pace industrial X.X. the that basis million X peak near absorption XXX totaled par net & years, on Wakefield, to XXX the we vacancy was Cushman with by approach

levels post in high online coming supply and we interest in mid-XXXX, fell the new driven and by excess rates deliveries to new QX Finally, XXXX lowest the COVID. saw

return. capital fundamentals markets have yet up fully to during year, see While industrial the we held

same by estate commercial over for According $XX.X volume to XXXX, XX, the X.X%. the to increased period December CBRE, X.X% Total rate single asset investment volume year-end year-over-year by increased real billion.

Moving on to our portfolio.

heading again confident and quarter. new We year into the once very are

square acquired industrial million square feet. campus collected of X.X or During of concentration than a we annualized more at rent. in straight-line feet totaling as rents, increase leases net in $X.X renewed to X,XX,XXX cash-based GAAP Increased extended rent for portfolio XX%, million of XXXX, XXX% XX million properties a percentage resulting $XX.X properties

X office occupancies properties. medical notes. We of million properties and increased of senior office X of and XX, closed as consisting on XX.X% we sold placement X portfolio private a December $XX XXXX, We unsecured

at standards industrial While we increasing the our to our underwriting not achieve remain near term, in on this focused compromise to concentration least will we goal. XX%

of in inflation underwrote numerous or increases and the hundreds saw did rate criteria. the year, purchasers. eager that or our that showed past with of Over real many estate overpriced was face cracks meet not which of we We reviewed opportunities opportunities forget to credits due

confident not value will are loosen those assets, private we evidenced long-term placement will did approach December. our close and acquire drive our in We underwriting as we by disciplined to the standards

$XX cash to Looking positioned well we With forward than to deploy we and well believe opportunities positioned XXXX, capital hand, on we million of coming regardless with expected exclusivity line currently into via credit availability closing the firmly opportunities environment. in or in months. capitalize to Several are our acquisitions. more of right industrial the economic that contract on accretive under remain are the

Our portfolio to sustainable generate flow. continues cash

not interest seen more We credit higher of deteriorate rates. face tenant XX, longer in for occupied are we as XX% our of than the and December quality have

job superb to and Our continue a last of will dispose done assets. management consistently team over year has noncore the portfolio office

sheet the the follow-on Finally, future. placement with our by potential private offerings is balance the in strengthened for further

overall We our our will leverage mindful assets. portfolio grow of sheet continue as we balance and to mission-critical of be

our Gary? the to I Gary for liquidity review will results financial position. the turn quarter and over now call to

Gary Gerson

fourth share. share our FFO share are reviewing numbers of our results average and available FFO FFO period morning, core regarding XX stockholders results for core and $X.XX the and $X.XX weighted for stockholders quarter operating for respectively. share, to start were All my everyone. I'll common were FFO this per remarks both XXXX you, per available FFO XXXX, the during financial morning core FFO to the $X.XX and of based and Buzz, the December quarter both share, diluted FFO share common XX same XXXX. months fully and FFO $X.XX good by quarter. shares. per core on $X.XX common Thank referenced per the per and respectively. fourth for per in $X.XX ended were

properties. Same-store associated rents increased revenue by months the X ended and X X% due period over in and of rent XXXX XX rates increased December in the straight-line recovery same our with to

in terminated Our settlement properties property same-store period related in to operating our expenses rent December of offset revenue of the by increased an attributable over period, at maintenance ended time one the XXXX to deferred period. the accelerated current year due to a X.X% the for in recovery from increase a received during lease by and prior partially same XXXX rent

to to operating by XXXX rates Expenses expenses were one rental and results revenues quarter associated in compared total straight-line million of due increased as in $XX.X Operating revenues the charges $XX.X to the were and higher million XXXX expenses fourth Our XXXX. million of period, operating $XX.X impairment revenues with reflected $XX in revenue recovery higher mainly for proper same offset of [indiscernible] operating in user property and with due in of XXXX. of million, expenses operating higher operating period our properties.

and note. drawn and Looking is X% floating mortgage on is at is fixed credit amount facility revolving XX% floating our rate, the rate, our one debt profile, XX% rate which hedged

As X.XX%. of average December [indiscernible] effective XX, rate was

outstanding with of the rate and with million caps. are interest term loans Our interest bank hedged swaps $XXX rate remainder

closely hedging continue strategy We needed. as update to and monitor interest our rates

are maturities at XXXX loan manageable our As of today, million. $XX.X

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

XXXX Buzz of XXXX, we've debt to we from from long-term total a placement a from issued year-end We with reduced new senior to XX.X%. million million. debt And $XXX.X of XX% assets XX% secured We unsecured our industrial XX% gross million market million and of $XXX.X XX.X% raising increased mortgage million debt in from to net reduced notes from capital. as XX%. institutional entering $XX percentage and overall investors our private to Comparing office to mentioned, for to leverage reduced reduced net $XXX.X $XXX.X

the we and stock December shares common ATM net program, XX, XXX raising sold XXXX, During under our proceeds million. $XX.X ended year X,XXX of of

of proceeds through December million sales net F received Series preferred of XX. $X.X stock also in the We our

to to have we for held continue liquidity and requirements manage sale. new capital equity upcoming ensure that X acquisition. for properties sufficient We our we have activity present, At

website, today, we of $XX line $X cash of information and credit. We more in and our review portfolio for retail provides our As approximately quarter. detail to which under have availability supplement million the on million posted our you quarterly financial financial encourage of

dividend per Our $X.XX common $X.XX share or stock per quarter per year. is

$XX.XX with a at of yesterday closed stock approximately Our X.X%. yield

David. to return And now back I'll the program

David Gladstone

quarter. team The a was good one Overall, and Gary That well. now and very too. a we've very is good Buzz a from nice Michael got report. performing that

heard Missouri and acquired in about fourth Clair, quarter, an we facility during St. summary, doing spent today $X.X that. You million the we in industrial

we gone. that's our So of the one And renewed this some properties. did sold the so quarter. that's have in we month, of that property, last may we nonperforming leases but one X core more we

So shape. good we are still in very

the team commercial doing job own challenging The own, pace, during that parties a team we managing partnership these that great times. growing is at the we is the the a especially -- good real and estate

tenants The into the we're Our the to properties quality that acquisitions always are pursue team that's grow potential business. strong team who to the credit talk we strong acquisition and location, how being is do is about people location, nicely. continues seeking professionals team of of list continues reviewing location, running

Okay.

and of some for questions here lot on come ask this stop good our operator, help and Let's listeners if a you'll of time.

Operator

Gaurav first Our question Instructions] [Operator Global with Mehta Partners. is Alliance from

Gaurav Mehta

was some your wanted expectations. on balance your you get ask I more hoping to color leverage on I sheet. to

and XX.X% or it's a to if sheet, debt what to between close your were go just expect I balance as target to expectations I on you capital you structure? also to XQ. hear as that's over your learn mix then within number unsecured your and think of -- the wanted And your follow-up secured said wanted leverage

Gary Gerson

probably to We'd XXs. as down. -- an absolute that as down And We're at as Our proportion far goal basis. to then to the is delever to debt, on lower an getting decrease like that we secured get our XX.X%. continue continue debt further, of in overall

the that. less sheet. where with get going going on debt balance really but the -- unsecured and overall, debt up We're that's to on we're So build

Gaurav Mehta

And the year? that Okay. focus, this on follow-up in industrial to expect your near I you said you think term. a Do then XX% achieve XX%

Arthur Cooper

combination we're relates dispositions. that. to it's straight-line very of that believe going it of in well as the to as will to Obviously, as relative percentage we acquisitions rent. Gaurav, I be hopeful But

David Gladstone

another we question, operator? Do have

Operator

Montgomery. Stevenson Our next from Rob question with is Janney

Robert Stevenson

transactions the your you the the ago office Are the sell on next to acquisition for pricing can days having months depth today like to the sort what that X, these given market about and office over assets looks XX the of to commentary, XX side? Buzz, relative XX you talk want months? XX,

Arthur Cooper

we've Rob. selective And know, our on very Thanks, Sure. sales. you been as

looking just not sell We to are to sell.

portfolio as time, as be losing opportunistic of office we with make a going look at that industrial that may point to this Our in want backfill it's sell, has that X%. But we we factor as vacancy to sure be well we to income income.

or sales sell again, continue will But opportunistically would portfolio. important side, performing. that that So X know to the the something relative here on to it's reiterate, year. I We during it office will I office we identify is But we take if it. down will think see we drive X

Robert Stevenson

that basis points for aggregated the XXX is vacancy selling 'XX? of Okay. Is those in more in or the what's prospects assets today? And re-leasing and where

Arthur Cooper

a of from The Carolina a in is that's at in that vacancy X the end March of going property expiring fall rents assets, X expiration which occupancy will me, the of lease. off here, -- couple at of the instance, for excuse that books the majority to or

an that those to about. place X or worry option year, So have as or be is assets. or coming to X we have due Majority that But of have the leases X approximately to a end sold have of in purchase. office X% make are overall over it relates we properties lease concerns up that re-lease that won't they property our have this to to

The response others turned that we have on have extending X office, rating proposals the of we leases. those and our specific to to buildings

Robert Stevenson

days? waivers one in flips That's incentive 'XX? back our to How fee a How we paying about fundamentally XXXX look And thinking to few something higher thinking there about commercial over we 'XX goes incentive fee should helpful. did likely year? Is David. Okay. how you forward? it like that models then this the that lot you, next be we million and be play should the the as in Is going with for

Unknown Executive

everybody original. go As like to the you back to can imagine, here would

at don't company. going in working position. stronger say a projections in to they're first hard shareholders. here. not and know It's I have get employees But the don't fill well much wish yet this I in knew to order good be pay job enough need Rob, mind back when We think where to to shareholders we'll they we're last you that I than And this ourselves year I a in, But our to you to the it fill payment to were to date we're that. be back a year. stronger we so our to doing for

doing hopefully, a So that you what we're gives here. of security about feeling

David Gladstone

more have any you Do questions?

Operator

Yes.

next is B. John with Securities. from Our question Massocca Riley

John Massocca

balance sheet. the with starting Maybe off

that how expect kind of guess at current in issuance least placement and the pricing, terms the in is forward. kind correct Given of to pricing the fund recently And go of mean, I completed, should I rate? we interest that private market security

Gary Gerson

Gary. it's John,

I be not that placements of Obviously, that think we issuer. to we expect continue credit, interest line financing. rate we private our yes, thought we intend willing we with first-time for pretty we loans. should have the mode was market term But a strong the on bank to the got, primary have of

hopefully less in future. So hopefully and it even maybe indicative might the

John Massocca

But the helpful. maybe kind you a place those what on before That's and on activity know properties did renewal front, little how in then I you assets, and And kind industrial XQ. just in of versus rents office provide numbers re-leasing? trend or of leasing metrics. gave color leasing was can were

Arthur Cooper

and both to industrial mostly office years. office. X -- relates were was see plus We also industrial, also in They and office industrial it were deals really the ups they but on renew The pockets Pennsylvania. again, as then as that trend various last the current industrial up in did around And on one country. year look the to we see large buildings. office side, And we continuing a were

We a are as it to renewals. plus in up those rents seeing relates

John Massocca

earnings leases more CapEx know year then XXXX, balancing small expiring call, expirations last but the in in I And strokes, Okay. I of 'XX and kind amount broad what's the current meaningful just maybe in the versus of lease expectations, of relatively on talked the just some context more maybe 'XX. the

year? spending there think go might the to trying how in current Just about

Arthur Cooper

within we don't that, us, I'll the have have buildings. renewals so but spending an leasing CapEx is of tenancy, a Obviously, positive improvement does lot retention of Of to both of that and expense -- have from term, the been budgeted. with a The capital buildings. on expenses bring it it exposure the we our increase what point is rent it CapEx majority for in we

we in dollars up that X in of again, are to spend have of nice we'll majority We -- plus had to next been, in for leasing commissions very a it it's the here be But has to coming and the certainly XXXX. months manageable. going order we those had out be that

David Gladstone

Do other have any questions we today? Okay.

Operator

is next Storms Capital. with from Yes, we Stonegate Dave Oor do. question

David Storms

maybe the get assets. [indiscernible] X a timing for around there? Anything held-for-sale -- Just sense to the hoping of some

Arthur Cooper

the is be As to to contract. reason occur, second not one be the timing, and see X April the that going We other quarter. don't a in would per to for in

most I April, think likely. early

David Storms

spread the maybe you sense seeing pipeline? what relates acquisition to And in as it have [indiscernible] is what assets and in in any you're of held-for-sale those between rates the then there just cap might

Arthur Cooper

understand asking Dave, acquisition. sale not cap difference the I'm to question unless I sure that rate between you're

David Storms

Yes, essentially.

Arthur Cooper

Okay.

little going as see rates bit to an side, threat than Tenancy office. leads somewhat in higher acquisition to they're cap are X% are potential need So impact our obviously, probably just in immediate basis. on of area a sales do because the an that of in not the we X.X% seeing to play it tariffs.

to got they where not any see fear. our course, currently who we've they tendency has hit. and Of expressed where such But

onshore. industrial with are opportunities We create more help that looking it reshoring may for

are deal as we result. So of currently a not great stress a see

David Gladstone

questions we have other any Do today? Okay.

Operator

Yes.

with from final is Our Lucy question Capital Kucera Craig Markets.

Craig Kucera

sense some of up dollar in capital the on of reviewing give acquiring of as and us you're things? selling your the recycling. following Can you a -- might broadly Just on you be what amount discussion

Arthur Cooper

a call, I'm forward We're that is what year. I On bit it of think is hoping more getting our, the had looking to XXXX. what acquisition back a production normal to than in good side, million we I'll more $XXX

So I'm hopeful for that.

will as I the think us in. obviously. to are that booked have relates the down of And assets that going not looking it the in people some it all as problematic our disposition dispositions a we pretty good office the be for marketplace. rid to be to pipeline feel to road more discerning They're get in allow relates might we of looking what

the turning to We've it been, activity some and pleasantly buyers, turning I of CBDs. don't it properties either in we just with apartments. the single-family remind, dispositions on surprised of our think, Pickleball, again, have And creative into into

there of buyers a attractive some our result, as find are reposition. local properties some that So to

Craig Kucera

Okay. Great.

you North You had the mentioned asset. Carolina

I think this or of which remaining office you expected it those the But sell. office asset for expirations to XXXX an end expiring industrial? are was at quarter, the

Arthur Cooper

XXX,XXX purchase and have, are under industrial X is, which an office, believe we do with it of a have relates exchange get to exercised, we as others is One lease square a option, again, paper will feet. and which that's that renewals. We approximately do

Craig Kucera

X And me. Got it. more for just

the calculation? still sales did be Is to as this component type that a You reclass of fee base a a quarter. going lease management

Gary Gerson

the they when kind your yes, reclassify the we real on of had of But of deal. we accounting estate entered sheet, of we lease be. It's balance answer large even the kind That's as November are it's a estate. balance property, have for addition on an ASC of S&P's mentioned. that expectation management the to our But reasons give sheet. the our -- on odd question, the our guidance piece gain on balance that It's lease. statement. is This of a sales-type to odd our base Yes. one that into still industrial real part It's not with sale our to income the an accounting, And as in XXX. sale, that That fee. this though Buzz will property on the

Craig Kucera

check. double I wanted Got what it. figured. That's to just I

David Gladstone

Okay. Any more questions today?

Operator

further are questions. There no

David Gladstone

bit little of a was that more we'd in Well, than but to have questions. love of terms questions, quarter number better last

quarter, next guys get ask this questions you them. I our audience That's tuned because presentation. hope to All So lots right. of And I all answering hear. and up the we of us know enjoy end likes

And next so goodbye quarter. we'll say until

Operator

will Thank you. This conference. conclude today's

You may participation. and lines your thank disconnect time, at for your you this

Gladstone Commercial (GOOD) 19 Feb 252024 Q4 Earnings call transcript