MCLEAN, Va., Aug. 2 /PRNewswire-FirstCall/ -- Gladstone Commercial Corp. (Nasdaq: GOOD) (the 'Company') today reported financial results for the quarter ended June 30, 2005 . Net income for the quarter ended June 30, 2005 was $1,149,531 , or $0.15 per basic and diluted weighted average common share, compared to $132,275 or $0.02 per basic and diluted weighted average common share for the second quarter one year ago. For the six months ended June 30, 2005 net income was $1,684,715 or $0.22 per basic and diluted share, compared to a net loss for the six months ended June 30, 2004 of $61,029 or a loss of $0.01 per share.
Funds from Operations ('FFO') for the quarter ended June 30, 2005 was $1,846,507 or $0.24 per diluted weighted average common share, compared to $259,047 or $0.03 per diluted weighted average common share for the same period one year ago. For the six months ending June 30, 2005 FFO was $2,919,446 or $0.38 per diluted weighted average common share, compared to $145,072 or $0.02 per diluted weighted average common share for the same period one year ago.
In the second quarter of 2005, the Company added four additional properties to its portfolio, for an aggregate purchase price of approximately $28.6 million . In April, the Company also extended a mortgage loan in the amount of $10.0 million on an office building.
Subsequent to the end of the quarter, the Company acquired three additional properties for an aggregate purchase price of approximately $33.0 million . The Company also amended its line of credit to increase the maximum availability under the line from $50 million to $60 million . As of August 2, 2005 , the Company had aggregate borrowings outstanding of $49.4 million and has available borrowing capacity of $58.3 million under the line of credit. Following the end of the quarter, the Company also entered into two separate long-term notes that are collateralized by its Canadian properties. These notes both accrue interest at an interest rate of 5.22% per year, based upon a twenty-five year term, with both principal and interest being paid each month. The Company used the proceeds from the notes to pay down the line of credit.
'The second quarter was very productive, resulting in the acquisition of four additional properties for $28.6 million and a mortgage loan for $10.0 million . An additional three properties were also acquired subsequent to the end of the quarter for a total of $33.0 million . We believe that the addition of these investments should produce long-term growth for the company and our shareholders. We anticipate continued dividend and portfolio growth as we seek select opportunities,' said Chip Stelljes, Executive Vice President and Chief Investment Officer.
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 For the For the
three three six six
months months months months
ended June ended June ended June ended June
30, 2005 30, 2004 30, 2005 30, 2004
Net income (loss) $1,149,531 $132,275 $1,684,715 $(61,029)
Real estate depreciation
and amortization 696,976 126,772 1,234,731 206,101
Funds from operations 1,846,507 259,047 2,919,446 145,072
Weighted average shares
outstanding - diluted 7,692,639 7,695,134 7,715,100 7,764,732
Diluted net income (loss)
per weighted average common
share $0.15 $0.02 $0.22 $(0.01)
Diluted funds from
operations per weighted
average common share $0.24 $0.03 $0.38 $0.02
To learn more about our FFO please refer to our Quarterly Report on Form 10-Q for the quarter ended June 30, 2005 filed with the Securities and Exchange Commission ('SEC') today and on our web site at http://www.GladstoneCommercial.com.
The financial statements attached below are without footnotes so readers should obtain and carefully review our Form 10-Q for the quarter ended June 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 at the SEC website at http://www.SEC.gov or the website for Gladstone Commercial at http://www.GladstoneCommercial.com.
Gladstone Commercial will have a conference call at 9:30 am EDT , August 3, 2005 . To enter the call please dial 888-413-5357 and use the confirmation code 745631. 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 745631.
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 http://www.GladstoneCommercial.com.
For further information contact our Investor Relations Manager,
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 'believes,' '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 for the year ended, December 31, 2004 , as filed with the Securities and Exchange Commission on March 8, 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)
June 30, 2005 December 31, 2004
ASSETS
Real estate, net $94,245,941 $60,466,330
Mortgage note receivable 21,064,861 11,107,717
Cash and cash equivalents 216,434 29,153,987
Funds held in escrow 1,284,350 1,060,977
Interest receivable - mortgage note 67,619 64,795
Interest receivable - employees 5,236 4,792
Deferred rent receivable 4,293,573 210,846
Deferred financing costs 990,340 -
Prepaid expenses 101,677 170,685
Deposits on real estate 550,000 50,000
Other assets 5,304 64,819
Lease intangibles, net of accumulated
amortization of $457,151 and $194,047,
respectively 5,362,850 3,230,146
TOTAL ASSETS $128,188,185 $105,585,094
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Due to Adviser $124,171 $129,231
Accounts payable and accrued expenses 280,920 168,389
Dividends payable - 920,040
Mortgage note payable 3,137,529 -
Borrowings under line of credit 22,010,000 -
Rent received in advance, security
deposits and funds held in escrow 1,462,886 1,674,741
Total Liabilities 27,015,506 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 (433,789) (375,000)
Distributions in excess of
accumulated earnings (3,903,748) (2,367,523)
Total Stockholders' Equity 101,172,679 102,692,693
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $128,188,185 $105,585,094
Gladstone Commercial Corporation
Consolidated Statements of Operations
(Unaudited)
For the For the For the For the
three three six six
months months months months
ended June ended June ended June ended June
30, 2005 30, 2004 30, 2005 30, 2004
OPERATING REVENUES
Rental income $2,235,241 $403,690 $4,082,248 $601,463
Interest income from
mortgage note receivable 501,645 278,980 797,228 412,400
Tenant recovery revenue 39,557 - 41,600 -
Total operating
revenues 2,776,443 682,670 4,921,076 1,013,863
OPERATING EXPENSES
Depreciation and
amortization 696,976 126,772 1,234,731 206,101
Management advisory fee 483,794 280,122 955,655 509,538
Professional fees 16,759 66,973 348,003 275,430
Taxes and licenses 25,441 2,250 153,714 12,570
Insurance 67,021 64,488 137,404 128,975
Interest 254,803 - 291,022 -
General and administrative 97,836 172,313 230,664 277,263
Total operating
expenses 1,642,630 712,918 3,351,193 1,409,877
Income (loss) from
operations 1,133,813 (30,248) 1,569,883 (396,014)
Interest income from
temporary investments 13,192 162,523 107,713 334,985
Interest income - employee
loans 5,236 - 9,921 -
Loss on foreign currency
translation (2,710) - (2,802) -
Other income 15,718 162,523 114,832 334,985
NET INCOME (LOSS) $1,149,531 $132,275 $1,684,715 $(61,029)
Earnings (loss) per weighted
average common share
Basic $0.15 $0.02 $0.22 $(0.01)
Diluted $0.15 $0.02 $0.22 $(0.01)
Weighted average shares
outstanding
Basic 7,669,802 7,642,000 7,668,409 7,642,000
Diluted 7,692,639 7,695,134 7,715,100 7,764,732
Gladstone Commercial Corporation
Consolidated Statements of Cash Flows
(Unaudited)
For the six months For the six months
ended ended
June 30, 2005 June 30, 2004
Cash flows from operating activities:
Net income (loss) $1,684,715 $(61,029)
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 1,234,731 206,101
Changes in assets and liabilities:
Amortization of deferred
financing costs 74,836 -
Amortization of deferred rent
asset 93,385 -
Increase in mortgage interest
receivable (2,824) (61,950)
Increase in employee interest
receivable (444) -
Decrease in prepaid expenses 69,008 122,500
Decrease (increase) in other
assets 59,515 (25,000)
Increase in deferred rent
receivable (206,246) (41,535)
Increase in accounts payable and
accrued expenses 112,530 55,814
Decrease in due to Adviser (5,060) (131,085)
(Decrease) increase in rent
received in advance and security
deposits (435,228) 293,592
Net cash provided by
operating activities 2,678,918 357,408
Cash flows from investing activities:
Acquisition of real estate (41,116,911) (22,265,178)
Issuance of mortgage note
receivable (10,000,000) (11,170,000)
Deposit on future acquisition (550,000) -
Principal repayments on mortgage
note receivable 42,856 19,213
Net cash used in
investing activities (51,624,055) (33,415,965)
Cash flows from financing activities:
Offering costs - (7,730)
Proceeds from borrowings under
mortgage note payable 3,150,000 -
Principal repayments on mortgage
note payable (12,471) -
Borrowings from line of credit 22,010,000 -
Principal repayments on employee
loans 16,211 -
Payments for deferred financing
costs (1,015,176) -
Dividends paid (4,140,980) (993,460)
Net cash provided by
(used in) financing
activities 20,007,584 (1,001,190)
Net decrease in cash and cash
equivalents (28,937,553) (34,059,747)
Cash and cash equivalents, beginning
of period 29,153,987 99,075,765
Cash and cash equivalents, end of
period $216,434 $65,016,018
NON-CASH FINANCING ACTIVITIES
Cash paid during period for interest $128,878 $-
Notes receivable issued in exchange
for common stock associated with the
exercise of employee stock options $75,000 $-
SOURCE Gladstone Commercial Corp.
