Gladstone Commercial Corp. (NASDAQ:GOOD) (the “Company”) today reported financial results for the quarter ended June 30, 2008. A description of FFO, a relative non–GAAP (“Generally Accepted Accounting Principles in the United States”) financial measure, is located at the end of this news release. All per share references are to fully-diluted weighted average common shares, unless otherwise noted.

Net income available to common stockholders for the quarter ended June 30, 2008 was approximately $0.2 million, or $0.02 per share, compared to approximately $0.5 million, or $0.06 per share, for the same period one year ago. Net income available to common stockholders for the six months ended June 30, 2008 was approximately $0.6 million, or $0.07 per share, compared to approximately $1.0 million, or $0.12 per share, for the same period one year ago. Net income results when compared to the same period last year were negatively affected by increased interest expense from the growing number of properties which have long-term financing, coupled with the increase in the outstanding balance on the Company’s line of credit, and were partially offset by the increase in the Company’s portfolio of investments in the past year and the corresponding increase in its revenues. Net income results were also affected by a partial waiver of the incentive fee for the three and six months ended June 30, 2008 of approximately $0.2 million and $0.7 million, respectively, compared to net income results for the three and six months ended June 30, 2007, which included a full waiver of the incentive fee of approximately $0.6 million and $1.2 million, respectively, from the Company’s adviser, Gladstone Management Corporation.

FFO for the quarter ended June 30, 2008 was approximately $3.4 million, or $0.39 per share, compared to approximately $3.2 million, or $0.37 per share, for the same period one year ago, an increase of approximately 6.7%. FFO for the six months ended June 30, 2008 was approximately $6.8 million, or $0.79 per share, compared to approximately $6.0 million or $0.70 per share, for the same period one year ago, an increase of approximately 12.4%. A reconciliation of net income, which the Company believes is the most directly comparable GAAP measure to FFO, is set forth below:

At June 30, 2008, the Company owned 57 properties totaling approximately 6.0 million square feet, and had one mortgage loan outstanding for a total net investment of approximately $396.7 million. Currently, all of the Company’s properties are fully leased and all tenants and its borrower are paying as agreed.

Second quarter highlights:

• Purchased one fully-occupied property comprised of approximately 75,000 square feet for a purchase price of approximately $3.9 million;
• Extended the terms on three leases for additional periods ranging from three to five years; and
• Declared monthly cash dividends of $0.125 per share on the common stock, $0.1614583 per share on the Series A Preferred Stock, and $0.15625 per share on the Series B Preferred Stock, for each of the months of April, May and June of 2008.

“Although our second quarter results were positively impacted by the four transactions completed thus far in 2008, we are disappointed by the current pace of acquisitions. Our pipeline continues to be stronger than ever, but because of the instability of the financial markets, transactions are taking longer than expected to close. The credit markets continue to be tumultuous, but given our visibility into current opportunities, we are confident that we will be able to continue to grow our portfolio this year with solid, long-term investments and secure alternative sources of financing. We remain optimistic about the prospects for the remainder of the year,” said Chip Stelljes, President and Chief Investment Officer.

Subsequent to quarter end, the Company:

• Declared monthly cash dividends of $0.125 per share on the common stock, $0.1614583 per share on the Series A Preferred Stock, and $0.15625 per share on the Series B Preferred Stock, for each of the months of July, August and September 2008.

The financial statements attached below are without footnotes so readers should obtain and carefully review the Company’s Form 10-Q for the quarter ended June 30, 2008, including the footnotes to the financial statements contained therein. The Company has filed the Form 10-Q today with the Securities and Exchange Commission (“SEC”) and the Form 10-Q can be retrieved from the SEC’s website at www.sec.gov or the Company’s website at www.GladstoneCommercial.com.

The Company will hold a conference call on Wednesday, August 6, 2008 at 8:30 a.m. ET to discuss its earnings results. Please call (877) 407-8031 to enter the conference. An operator will monitor the call and set a queue for the questions.

The conference call replay will be available two hours after the call and will be available through September 6, 2008. To hear the replay, please dial (877) 660-6853, access playback account 286 and use ID code 292109.

Gladstone Commercial Corporation is a publicly traded real estate investment trust (“REIT”) that focuses on investing in and owning triple-net leased industrial, commercial and retail real estate properties and selectively making long-term mortgage loans. Additional information can be found at www.GladstoneCommercial.com.

For further information, contact Kerry Finnegan at 703-287-5893.

NON-GAAP FINANCIAL MEASURE

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 (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 and should not be considered an alternative to net income as an indication of the Company’s 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. To learn more about FFO please refer to the Form 10-Q for the quarter ended June 30, 2008, as filed with the SEC today.

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, the closing of any transaction and the Company’s ability to secure alternative sources of financing. Words such as “may,” “continue,” “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, 2007, as filed with the SEC on February 27, 2008 and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, as filed on August 5, 2008 . The risk factors set forth in the Form 10-K and Form 10-Q under the caption “Risk Factors” are specifically incorporated by reference 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.