[PART I – FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) This section provides the unaudited financial statements, management's analysis, market risk disclosures, and internal controls [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements and notes, highlighting Q1 2023 financial performance [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific dates | Metric | March 31, 2023 (in Thousands) | December 31, 2022 (in Thousands) | Change (in Thousands) | Percentage Change | | :----------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------------------ | | Total Assets | $1,186,583 | $1,201,509 | $(14,926) | (1.24)% | | Total Liabilities | $825,914 | $826,883 | $(969) | (0.12)% | | Total Equity | $190,628 | $204,570 | $(13,942) | (6.82)% | | Real estate, net | $990,766 | $1,000,303 | $(9,537) | (0.95)% | | Cash and cash equivalents | $14,286 | $11,653 | $2,633 | 22.60% | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) This section outlines the company's financial performance over a period, showing revenues, expenses, and net income | Metric | Three months ended March 31, 2023 (in Thousands) | Three months ended March 31, 2022 (in Thousands) | Change (in Thousands) | Percentage Change | | :------------------------------------------------------------------ | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | :------------------ | | Lease revenue | $36,554 | $35,531 | $1,023 | 2.9% | | Total operating expenses | $25,434 | $25,658 | $(224) | (0.9)% | | Interest expense | $(8,828) | $(6,586) | $(2,242) | 34.0% | | Net income | $2,397 | $3,391 | $(994) | (29.3)% | | Net (loss) income (attributable) available to common stockholders | $(729) | $322 | $(1,051) | (326.4)% | | (Loss) income per weighted average share of common stock - basic & diluted | $(0.02) | $0.01 | $(0.03) | (300.0)% | | Incentive fee | $0 | $1,340 | $(1,340) | (100.0)% | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section details the cash inflows and outflows from operating, investing, and financing activities | Cash Flow Activity | Three months ended March 31, 2023 (in Thousands) | Three months ended March 31, 2022 (in Thousands) | Change (in Thousands) | | :----------------------------------------------- | :----------------------------------------------- | :----------------------------------------------- | :-------------------- | | Net cash provided by operating activities | $14,919 | $17,187 | $(2,268) | | Net cash provided by (used in) investing activities | $674 | $(17,571) | $18,245 | | Net cash (used in) provided by financing activities | $(12,794) | $1,866 | $(14,660) | | Net increase in cash, cash equivalents, and restricted cash | $2,799 | $1,482 | $1,317 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed consolidated financial statements [1. Organization, Basis of Presentation and Significant Accounting Policies](index=8&type=section&id=1.%20Organization,%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) This section describes the company's structure, financial statement preparation basis, and key accounting policies - Gladstone Commercial Corporation is a real estate investment trust (REIT) focused on acquiring, owning, and managing primarily office and industrial properties[17](index=17&type=chunk) - The company is externally managed by Gladstone Management Corporation and administrative services are provided by Gladstone Administration, LLC, both affiliates[17](index=17&type=chunk) - No material changes to critical accounting policies occurred during the three months ended March 31, 2023[21](index=21&type=chunk) [2. Related-Party Transactions](index=9&type=section&id=2.%20Related-Party%20Transactions) This section details transactions with affiliated entities, including management and administration fees | Fee Type | Three months ended March 31, 2023 (in Millions) | Three months ended March 31, 2022 (in Millions) | | :---------------- | :---------------------------------------------- | :---------------------------------------------- | | Base Management Fee | $1.6 | $1.5 | | Incentive Fee | $0 | $1.3 | | Administration Fee| $0.6 | $0.5 | - The incentive fee was contractually eliminated for the quarters ending March 31, 2023, and June 30, 2023[26](index=26&type=chunk) - Gladstone Securities acts as the exclusive dealer manager for the Series F Preferred Stock offering, receiving selling commissions (**6.0%**) and a dealer manager fee (**3.0%**) on primary offering sales[34](index=34&type=chunk) [3. (Loss) Earnings Per Share of Common Stock](index=11&type=section&id=3.%20(Loss)%20Earnings%20Per%20Share%20of%20Common%20Stock) This section presents the basic and diluted earnings per share calculations for common stock | Metric | Three months ended March 31, 2023 | Three months ended March 31, 2022 | | :------------------------------------------------------------------ | :-------------------------------- | :-------------------------------- | | Basic (loss) earnings per share of common stock | $(0.02) | $0.01 | | Diluted (loss) earnings per share of common stock | $(0.02) | $0.01 | | Denominator for basic weighted average shares of common stock | 39,922,359 | 37,902,653 | [4. Real Estate and Intangible Assets](index=12&type=section&id=4.%20Real%20Estate%20and%20Intangible%20Assets) This section details the company's real estate and lease intangible assets, including acquisition and revenue specifics | Metric | March 31, 2023 (in Thousands) | December 31, 2022 (in Thousands) | | :--------------------- | :---------------------------- | :------------------------------- | | Real estate, net | $990,766 | $1,000,303 | | Lease intangibles, net | $107,778 | $111,622 | - No properties were acquired during the three months ended March 31, 2023, compared to two industrial properties acquired for **$13.463 million** in the same period of 2022[40](index=40&type=chunk) | Lease Revenue Type | Three months ended March 31, 2023 (in Thousands) | Three months ended March 31, 2022 (in Thousands) | $ Change | % Change | | :----------------- | :----------------------------------------------- | :----------------------------------------------- | :------- | :------- | | Fixed lease payments | $32,141 | $31,332 | $809 | 2.6% | | Variable lease payments | $4,413 | $4,199 | $214 | 5.1% | | Total lease revenue | $36,554 | $35,531 | $1,023 | 2.9% | [5. Real Estate Dispositions, Held for Sale and Impairment Charges](index=15&type=section&id=5.%20Real%20Estate%20Dispositions,%20Held%20for%20Sale%20and%20Impairment%20Charges) This section reports on property sales, assets classified as held for sale, and any impairment charges recognized - No properties were sold during the three months ended March 31, 2023 or 2022[49](index=49&type=chunk) - Two properties were classified as held for sale at March 31, 2023 (Columbia, SC and Baytown, TX), up from one at December 31, 2022 (Columbia, SC)[50](index=50&type=chunk) | Metric | March 31, 2023 (in Thousands) | December 31, 2022 (in Thousands) | | :---------------------- | :---------------------------- | :------------------------------- | | Total Assets Held for Sale | $4,722 | $3,013 | - No impairment charges were recognized during the three months ended March 31, 2023 or 2022[52](index=52&type=chunk) [6. Mortgage Notes Payable and Credit Facility](index=16&type=section&id=6.%20Mortgage%20Notes%20Payable%20and%20Credit%20Facility) This section details the company's mortgage debt, credit facility borrowings, and associated interest rates and derivatives | Debt Type | March 31, 2023 (in Thousands) | December 31, 2022 (in Thousands) | | :---------------------------- | :---------------------------- | :------------------------------- | | Mortgage notes payable, net | $354,556 | $359,389 | | Borrowings under Revolver | $26,250 | $23,250 | | Borrowings under Term Loan A, B, C, net | $366,740 | $366,567 | | Total mortgage notes payable and credit facility | $747,546 | $749,206 | - The weighted average interest rate on all debt outstanding as of March 31, 2023, was approximately **5.33%**[55](index=55&type=chunk) - The Credit Facility (Revolver, Term Loan A, B, C) had **$396.3 million** outstanding at a weighted average interest rate of approximately **6.32%** as of March 31, 2023[67](index=67&type=chunk) - The maximum additional amount drawable under the Credit Facility was **$77.5 million** at March 31, 2023, decreasing to **$75.0 million** by May 3, 2023[67](index=67&type=chunk)[161](index=161&type=chunk) | Derivative Instrument | March 31, 2023 Fair Value (in Thousands) | December 31, 2022 Fair Value (in Thousands) | | :-------------------- | :--------------------------------------- | :------------------------------------------ | | Interest rate caps | $3,264 | $4,629 | | Interest rate swaps | $5,741 (net) | $11,996 (net) | [7. Commitments and Contingencies](index=20&type=section&id=7.%20Commitments%20and%20Contingencies) This section outlines the company's contractual obligations, including ground lease payments and outstanding letters of credit | Commitment Type | Total Anticipated Payments (in Thousands) | | :-------------------- | :---------------------------------------- | | Ground Lease Payments | $8,660 | - As of March 31, 2023, there was **$14.4 million** outstanding under letters of credit[71](index=71&type=chunk) [8. Equity and Mezzanine Equity](index=20&type=section&id=8.%20Equity%20and%20Mezzanine%20Equity) This section details changes in stockholders' equity and mezzanine equity, including stock issuances and proceeds | Metric | March 31, 2023 (in Thousands) | December 31, 2022 (in Thousands) | | :---------------------- | :---------------------------- | :------------------------------- | | Total Stockholders' Equity | $188,987 | $202,780 | | Total Mezzanine Equity | $170,041 | $170,056 | - During Q1 2023, the company sold **0.2 million** shares of common stock, raising **$4.0 million** in net proceeds under its At-the-Market (ATM) Equity Offering Sales Agreement[75](index=75&type=chunk) - A new 2023 Common Stock Sales Agreement was entered into on March 3, 2023, for the offer and sale of up to **$250.0 million** of common stock[76](index=76&type=chunk) - The company sold **22,256** shares of Series F Preferred Stock, raising **$0.5 million** in net proceeds during Q1 2023[82](index=82&type=chunk) [9. Subsequent Events](index=23&type=section&id=9.%20Subsequent%20Events) This section reports significant events occurring after the balance sheet date, such as distributions and property transactions - Declared monthly distributions for April, May, and June 2023 for common, senior common, and preferred stocks[85](index=85&type=chunk)[86](index=86&type=chunk)[87](index=87&type=chunk) - Subsequent to March 31, 2023, and through May 3, 2023, the company raised an additional **$0.3 million** in net proceeds from the sale of **13,172** shares of Series F Preferred Stock[88](index=88&type=chunk) - On April 14, 2023, the company purchased a **76,089 square foot** industrial property in Riverdale, Illinois for **$5.3 million**[89](index=89&type=chunk) - On April 6, 2023, the company repaid **$2.7 million** of fixed rate debt at an interest rate of **4.16%**[90](index=90&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's Q1 2023 financial condition, operational results, business environment, and key developments [General](index=25&type=section&id=General) This section provides an overview of the company's business as an externally advised REIT and its property portfolio - Gladstone Commercial Corporation is an externally advised REIT focused on acquiring, owning, and managing primarily office and industrial properties with net leases[94](index=94&type=chunk) - As of May 3, 2023, the company owned **138 properties** totaling **17.3 million square feet** across **27 states**, with an occupancy rate of **96.0%** and an average remaining lease term of **6.9 years**[98](index=98&type=chunk) [Business Environment](index=26&type=section&id=Business%20Environment) This section analyzes the current market conditions impacting the company, including industrial demand, office trends, and interest rates - Demand for industrial space remains strong due to e-commerce and manufacturing onshoring, but faces inflation, supply chain disruptions, and labor shortages[99](index=99&type=chunk) - The office sector is experiencing softening fundamentals, with expectations for increased vacancy rates and lower renewal rates over the next **36 months**[100](index=100&type=chunk) - Interest rates are volatile and expected to continue rising, potentially leading to global recessionary conditions[101](index=101&type=chunk) - The company collected **100%** of all outstanding cash rents for calendar year 2022 and believes it has adequate liquidity and is in compliance with all debt covenants as of March 31, 2023[102](index=102&type=chunk)[103](index=103&type=chunk) - The company is transitioning its variable rate debt from LIBOR to SOFR, with all variable rate debt based on SOFR as of March 31, 2023, except for **$20.7 million** of hedged LIBOR-based mortgages[105](index=105&type=chunk) [Recent Developments](index=27&type=section&id=Recent%20Developments) This section highlights recent acquisitions, leasing activities, debt repayments, and equity offerings impacting the company - On April 14, 2023, the company purchased a **76,089 square foot** industrial property in Riverdale, Illinois for **$5.3 million**[110](index=110&type=chunk) - During and subsequent to Q1 2023, **six leases** were executed, totaling **717,513 square feet** with a weighted average remaining lease term of **7.3 years**[111](index=111&type=chunk) - On April 6, 2023, **$2.7 million** of fixed rate debt was repaid at an interest rate of **4.16%**[112](index=112&type=chunk) - In Q1 2023, **$4.0 million** in net proceeds were raised from common stock sales and **$0.5 million** from Series F Preferred Stock sales[113](index=113&type=chunk)[118](index=118&type=chunk) - A new At-the-Market Equity Offering Sales Agreement was entered into on March 3, 2023, for up to **$250.0 million** of common stock[114](index=114&type=chunk) [Diversity of Our Portfolio](index=29&type=section&id=Diversity%20of%20Our%20Portfolio) This section illustrates the company's diversified tenant base and property distribution across various industries and states - The company's largest tenant comprised only **4.3%** of total lease revenue for the three months ended March 31, 2023, reflecting a diversified tenant base[121](index=121&type=chunk) | Industry Classification | Q1 2023 Lease Revenue (in Thousands) | Q1 2023 Percentage of Lease Revenue | | :------------------------------ | :----------------------------------- | :---------------------------------- | | Automotive | $5,140 | 14.2% | | Telecommunications | $4,940 | 13.5% | | Diversified/Conglomerate Services | $4,529 | 12.4% | | State | Q1 2023 Lease Revenue (in Thousands) | Q1 2023 Percentage of Lease Revenue | | :------------- | :----------------------------------- | :---------------------------------- | | Texas | $4,781 | 13.1% | | Florida | $4,117 | 11.3% | | Pennsylvania | $3,736 | 10.2% | [Our Adviser and Administrator](index=30&type=section&id=Our%20Adviser%20and%20Administrator) This section describes the external management structure provided by affiliated entities - The company is externally managed by Gladstone Management Corporation (Adviser) and Gladstone Administration, LLC (Administrator), both controlled by Mr. David Gladstone, the company's chairman and chief executive officer[122](index=122&type=chunk)[124](index=124&type=chunk) - The Adviser and Administrator also provide services to other affiliated publicly-traded companies, including Gladstone Capital Corporation, Gladstone Investment Corporation, and Gladstone Land Corporation[123](index=123&type=chunk) [Advisory and Administration Agreements](index=30&type=section&id=Advisory%20and%20Administration%20Agreements) This section details the terms of the agreements governing management and administration fees, including incentive fee elimination - The base management fee is calculated at an annual rate of **0.425%** of the prior calendar quarter's 'Gross Tangible Real Estate'[126](index=126&type=chunk) - The payment of the incentive fee was contractually eliminated for the quarters ending March 31, 2023, and June 30, 2023[129](index=129&type=chunk) - The Advisory Agreement includes a termination fee clause, payable under specific conditions such as termination without cause[131](index=131&type=chunk) [Significant Accounting Policies and Estimates](index=31&type=section&id=Significant%20Accounting%20Policies%20and%20Estimates) This section confirms the adherence to GAAP and the absence of material changes to critical accounting policies - The financial statements are prepared in conformity with GAAP, requiring management to make judgments and estimates[133](index=133&type=chunk) - There were no material changes to critical accounting policies or estimates during the three months ended March 31, 2023[134](index=134&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including revenues, expenses, and net income for the period | Metric | Q1 2023 (in Thousands) | Q1 2022 (in Thousands) | $ Change | % Change | | :------------------------------------------------------------------ | :--------------------- | :--------------------- | :------- | :------- | | Total operating revenues | $36,554 | $35,531 | $1,023 | 2.9% | | Total operating expenses | $25,434 | $25,658 | $(224) | (0.9)% | | Interest expense | $(8,828) | $(6,586) | $(2,242) | 34.0% | | Net income | $2,397 | $3,391 | $(994) | (29.3)% | | Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders | $(736) | $324 | $(1,060) | (327.2)% | - The weighted average yield on the total portfolio increased to **7.9%** as of March 31, 2023, from **7.4%** as of March 31, 2022[135](index=135&type=chunk) [Same Store Analysis](index=33&type=section&id=Same%20Store%20Analysis) This section defines and analyzes the performance of properties consistently owned and operated over comparative periods - Same store properties are defined as properties owned as of January 1, 2022, which have not been subsequently vacated or disposed of[137](index=137&type=chunk) [Operating Revenues](index=33&type=section&id=Operating%20Revenues_MD%26A) This section breaks down lease revenues by property category, explaining changes in same store and vacant property income | Lease Revenues Category | Q1 2023 (in Thousands) | Q1 2022 (in Thousands) | $ Change | % Change | | :-------------------------- | :--------------------- | :--------------------- | :------- | :------- | | Same Store Properties | $29,891 | $28,253 | $1,638 | 5.8% | | Acquired & Disposed Properties | $2,142 | $1,918 | $224 | 11.7% | | Properties with Vacancy | $4,521 | $5,360 | $(839) | (15.7)% | | Total | $36,554 | $35,531 | $1,023 | 2.9% | - Increase in same store properties lease revenues primarily due to income from tenant-funded improvement projects and higher variable lease payments[138](index=138&type=chunk) - Decrease in lease revenues for properties with vacancy due to accelerated rent recognized in Q1 2022 from early lease terminations[138](index=138&type=chunk) [Operating Expenses](index=33&type=section&id=Operating%20Expenses_MD%26A) This section details the company's operating expenses, including depreciation, property costs, and management fees | Expense Category | Q1 2023 (in Thousands) | Q1 2022 (in Thousands) | $ Change | % Change | | :-------------------------- | :--------------------- | :--------------------- | :------- | :------- | | Depreciation and amortization | $15,474 | $14,689 | $785 | 5.3% | | Property operating expenses | $6,727 | $6,623 | $104 | 1.6% | | Base management fee | $1,605 | $1,547 | $58 | 3.7% | | Incentive fee | $0 | $1,340 | $(1,340) | (100.0)% | | Administration fee | $565 | $462 | $103 | 22.3% | | General and administrative | $1,063 | $997 | $66 | 6.6% | - Property operating expenses for same store properties increased by **9.8%** due to increased on-site employee requirements and general inflationary cost increases[140](index=140&type=chunk) - The incentive fee decreased by **100%** due to its contractual elimination for the quarter ended March 31, 2023[143](index=143&type=chunk) [Other Income and Expenses](index=35&type=section&id=Other%20Income%20and%20Expenses) This section presents non-operating income and expenses, primarily focusing on interest expense fluctuations | Metric | Q1 2023 (in Thousands) | Q1 2022 (in Thousands) | $ Change | % Change | | :-------------- | :--------------------- | :--------------------- | :------- | :------- | | Interest expense| $(8,828) | $(6,586) | $(2,242) | 34.0% | | Other income | $105 | $104 | $1 | 1.0% | - The significant increase in interest expense was primarily a result of higher interest costs on variable rate debt due to rising global interest rates[144](index=144&type=chunk) [Net (Loss) Income (Attributable) Available to Common Stockholders and Non-controlling OP Unitholders](index=35&type=section&id=Net%20(Loss)%20Income%20(Attributable)%20Available%20to%20Common%20Stockholders%20and%20Non-controlling%20OP%20Unitholders) This section analyzes the net income attributable to common stockholders and non-controlling interests, explaining changes year-over-year | Metric | Q1 2023 (in Thousands) | Q1 2022 (in Thousands) | $ Change | % Change | | :------------------------------------------------------------------ | :--------------------- | :--------------------- | :------- | :------- | | Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders | $(736) | $324 | $(1,060) | (327.2)% | - The decrease was primarily due to increased interest expense from higher borrowing costs on variable rate debt, partially offset by increased operating revenues from asset acquisition activity[145](index=145&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses the company's ability to meet short-term and long-term obligations and fund growth initiatives - Available liquidity as of March 31, 2023, was **$91.8 million**, comprising **$14.3 million** in cash and cash equivalents and **$77.5 million** in available borrowing capacity under the Credit Facility[146](index=146&type=chunk) - The company plans to use cash flows from operations, Credit Facility borrowings, and equity issuances to fund distributions, debt service, and portfolio growth[147](index=147&type=chunk)[148](index=148&type=chunk) - As of March 31, 2023, the company had **$357.0 million** in mortgage notes payable, with **$64.5 million** due in the remainder of 2023 and **$20.5 million** due in 2024[153](index=153&type=chunk)[155](index=155&type=chunk) | Contractual Obligation | Total (in Thousands) | Less than 1 Year (in Thousands) | 1-3 Years (in Thousands) | 3-5 Years (in Thousands) | More than 5 Years (in Thousands) | | :--------------------- | :------------------- | :------------------------------ | :----------------------- | :----------------------- | :------------------------------- | | Debt Obligations | $753,284 | $70,286 | $113,754 | $480,027 | $89,217 | | Interest on Debt Obligations | $162,118 | $38,287 | $71,019 | $46,194 | $6,618 | | Operating Lease Obligations | $8,660 | $492 | $987 | $1,008 | $6,173 | | Purchase Obligations | $7,222 | $5,244 | $0 | $1,978 | $0 | [Funds from Operations](index=38&type=section&id=Funds%20from%20Operations) This section presents Funds from Operations (FFO), a key non-GAAP metric for REIT performance, and its per-share impact - Funds from Operations (FFO) is a non-GAAP supplemental measure of operating performance, defined by NAREIT[164](index=164&type=chunk) | Metric | Q1 2023 (in Thousands) | Q1 2022 (in Thousands) | $ Change | % Change | | :------------------------------------------------------------------ | :--------------------- | :--------------------- | :------- | :------- | | FFO available to common stockholders and Non-controlling OP Unitholders - basic | $14,738 | $15,013 | $(275) | (1.8)% | | Basic FFO per weighted average share of common stock and Non-controlling OP Unit | $0.37 | $0.39 | $(0.02) | (5.1)% | | Diluted FFO per weighted average share of common stock and Non-controlling OP Unit | $0.37 | $0.39 | $(0.02) | (5.1)% | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section details the company's exposure to market risks, primarily interest rate fluctuations, and its mitigation strategies - The primary market risk is interest rate risk, impacting variable-rate debt and lease escalations[169](index=169&type=chunk) - The company uses interest rate cap agreements and interest rate swap agreements to mitigate interest rate risk[169](index=169&type=chunk)[175](index=175&type=chunk) | Interest Rate Change | Net increase (decrease) to Net Income (in Thousands) | | :------------------- | :------------------------------------------------- | | 3% Decrease to SOFR | $2,012 | | 2% Decrease to SOFR | $532 | | 1% Decrease to SOFR | $266 | | 1% Increase to SOFR | $(266) | | 2% Increase to SOFR | $(532) | | 3% Increase to SOFR | $(798) | - The fair value of mortgage debt outstanding was **$329.6 million** as of March 31, 2023[173](index=173&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) Management confirms the effectiveness of disclosure controls and procedures, with no material changes to internal controls during the quarter - Disclosure controls and procedures were evaluated and deemed effective as of March 31, 2023, providing reasonable assurance for timely and accurate reporting[177](index=177&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[178](index=178&type=chunk) [PART II – OTHER INFORMATION](index=42&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) The company reports no material legal proceedings currently active or threatened against it - The company is not currently subject to any material legal proceedings, nor are any material legal proceedings threatened against it[181](index=181&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) The company confirms no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K - There are no material changes to risks associated with the company's business or investment in its securities from those previously set forth in the Annual Report on Form 10-K for the year ended December 31, 2022[182](index=182&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=42&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered equity sales or issuer repurchases of its own equity securities - No unregistered sales of equity securities occurred[183](index=183&type=chunk) - No issuer purchases of equity securities occurred[183](index=183&type=chunk) [Item 3. Defaults Upon Senior Securities](index=42&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company confirms no defaults occurred on its senior securities during the reporting quarter - No defaults upon senior securities occurred[184](index=184&type=chunk) [Item 4. Mine Safety Disclosures](index=42&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This disclosure item is not applicable to the company's business operations - This item is not applicable[184](index=184&type=chunk) [Item 5. Other Information](index=42&type=section&id=Item%205.%20Other%20Information) No additional information is reported under this section - No other information is reported[184](index=184&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section provides a comprehensive list of all exhibits filed with the Form 10-Q, including key agreements and certifications - The exhibit index includes Articles of Restatement, Bylaws, Articles Supplementary for various preferred stocks, Investment Advisory Agreement, Dealer Manager Agreement, At-the-Market Equity Offering Sales Agreement, and certifications[186](index=186&type=chunk)[188](index=188&type=chunk) - Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 and 906 of the Sarbanes-Oxley Act of 2002 are filed/furnished[188](index=188&type=chunk) - iXBRL Instance Document and Taxonomy Extension Schema, Calculation, Label, and Presentation Linkbase Documents are attached as Exhibit 101[191](index=191&type=chunk) [SIGNATURES](index=46&type=section&id=SIGNATURES) This section contains the official signatures of the company's authorized officers, certifying the report's accuracy - The report was signed by Gary Gerson, Chief Financial Officer, and David Gladstone, Chief Executive Officer and Chairman of the Board of Directors, on May 3, 2023[195](index=195&type=chunk)

Gladstone Commercial Corporation (NASDAQ:GOOD) Q4 2022 Earnings Conference Call February 23, 2023 8:30 AM ET Company Participants David Gladstone - CEO Michael LiCalsi - General Counsel and Secretary Buzz Cooper - President Gary Gerson - CFO Conference Call Participants Gaurav Mehta - EF Hutton James Allen Villard - Ladenburg Thalmann Craig Kucera - B. Riley Operator Greetings. Welcome to Gladstone Commercial Corporation's Year End Conference Call. [Operator Instructions] Please note that this conference is ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ____________________________________________________________________ FORM 10-K ____________________________________________________________________ (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Comm ...

Financial Data and Key Metrics Changes - Funds from operations (FFO) available to common stockholders was $0.23 per share for Q3 2022, compared to $0.44 per share in Q3 2021, while core FFO was $0.44 per share in Q3 2022, up from $0.39 per share in Q3 2021 [30] - Total operating revenues for Q3 2022 were $39.8 million, an increase from $34.3 million in Q3 2021, while operating expenses rose to $37.4 million from $25.5 million in the same period [32] - Year-to-date same-store cash rent increased by 0.2% over the first three quarters of 2021 [31] Business Line Data and Key Metrics Changes - The company acquired a total of four industrial assets during the quarter for $46.1 million, while selling three office buildings, reinforcing its strategy to increase industrial allocation [46] - Industrial allocation increased from 32% to 54% since July 2021, with a target to reach 60% within the next 12 to 18 months [16] Market Data and Key Metrics Changes - National industrial market fundamentals remain strong, with net absorption exceeding 100 million square feet for the eighth consecutive quarter, driving vacancy down to 3.2% [21] - Average industrial asking rates increased by 22% year-over-year, marking the strongest growth rate ever recorded [22] - The office market continues to face challenges, with a net negative absorption of 18.5 million square feet in Q3 2022 [25] Company Strategy and Development Direction - The company is focused on industrial acquisitions and improving operations, with a strategy to increase its portfolio's industrial allocation while reducing office property holdings [10][14] - The company aims to continue capital recycling efforts to redeploy sale proceeds into industrial assets, benefiting both current and future operating performance [17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges from rising inflation, interest rates, and supply chain disruptions but expressed confidence in the portfolio's performance and tenant rent payments [49][50] - The company is actively managing lease expirations and is optimistic about re-leasing efforts, particularly for properties with upcoming expirations [52][54] Other Important Information - The company amended and extended its syndicated revolving credit and term loan facility from $325 million to $495 million, using net proceeds to pay down mortgage loans [10] - Institutional ownership of the stock increased to 46.6% as of September 30, indicating growing investor confidence [41] Q&A Session Summary Question: Can you provide details on lease expirations and management strategies? - Management is actively monitoring one lease expiring in Q4 2022 in South Carolina and is exploring options for re-leasing or selling the property [52][54] Question: What are the expectations for acquisition cap rates moving forward? - The company noted that the higher cap rate on recent acquisitions reflects market conditions and the need for sellers to adjust expectations due to rising interest rates [56] Question: How is the company addressing the slowdown in deal volume? - Management acknowledged a slowdown in opportunities but emphasized a continued focus on off-market sale-leaseback transactions and a discerning approach to acquisitions [64][66] Question: What is the outlook for refinancing and cost of debt in 2023? - The company expects interest rates to rise, impacting refinancing costs, but believes its current debt profile is manageable [67][70] Question: Are there signs of stress among tenants due to rising input costs? - Management indicated that cash flows are generally stable, and the company has chosen strong tenants, although rising interest rates pose challenges for new transactions [80][82]

1.87.148 200.201.204 7.161.142 210.189.154 114.95.164 224.224.13 247.82.73 200.201.204 1 Supplemental Financial & Operating Information for the Quarter Ended June 30, 2022 1.87.148 Legal disclaimer 200.201.204 7.161.142 210.189.154 114.95.164 224.224.13 247.82.73 200.201.204 Forward-Looking Statements: This presentation may include forward-looking statements within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934. Forward-looking statements are typically identified by words s ...

Gladstone Commercial Corporation (NASDAQ:GOOD) Q2 2022 Earnings Conference Call August 2, 2022 8:30 AM ET Company Participants David Gladstone - Chief Executive Officer Michael LiCalsi - General Counsel and Secretary Buzz Cooper - President Gary Gerson - Chief Financial Officer Conference Call Participants Gaurav Mehta - EF Hutton Craig Kucera - B. Riley James Allen Villard - Ladenburg Thalmann Operator Greetings and welcome to the Gladstone Commercial Corporation Second Quarter Earnings Conference Call. [O ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 001-33097 GLADSTONE COMMERCIAL CORPORATION (Exact name of registrant as specified in its charter) Maryland 02-0681276 (State or other jurisdiction o ...

Gladstone Commercial Corporation (NASDAQ:GOOD) Q1 2022 Earnings Conference Call May 5, 2022 8:30 AM ET Company Participants David Gladstone - Chairman and Chief Executive Officer Gary Gerson - Chief Financial Officer Michael LiCalsi - General Counsel and Secretary Robert Cutlip - President Buzz Cooper - Co-President, Chief Investment Officer, and Executive Vice President Conference Call Participants Rob Stevenson - Janney Montgomery Scott Craig Kucera - B. Riley Securities Brian Hollenden - Aegis Capital Ja ...

1.87.148 200.201.204 7.161.142 210.189.154 114.95.164 224.224.13 247.82.73 200.201.204 1 Supplemental Financial & Operating Information for the Quarter Ended March 31, 2022 1.87.148 Legal disclaimer 200.201.204 7.161.142 210.189.154 114.95.164 224.224.13 247.82.73 200.201.204 Forward-Looking Statements: This presentation may include forward-looking statements within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934. Forward-looking statements are typically identified by words ...

[PART I - FINANCIAL INFORMATION](index=4&type=section&id=PART%20I%20-%20FINANCIAL%20INFORMATION) This section presents the unaudited condensed consolidated financial statements for Gladstone Commercial Corporation as of March 31, 2022, and for the three months then ended [Item 1. Financial Statements (Unaudited)](index=4&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements for Gladstone Commercial Corporation as of March 31, 2022, and for the three months then ended [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of March 31, 2022, total assets were $1.15 billion, a slight increase from $1.14 billion at year-end 2021 Condensed Consolidated Balance Sheets (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Total real estate, net | $964,316 | $958,586 | | Cash and cash equivalents | $9,585 | $7,956 | | **TOTAL ASSETS** | **$1,154,409** | **$1,143,352** | | Mortgage notes payable, net | $446,720 | $449,944 | | Borrowings under Revolver | $34,550 | $33,550 | | **TOTAL LIABILITIES** | **$769,578** | **$770,529** | | **TOTAL EQUITY** | **$214,570** | **$202,562** | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) For the three months ended March 31, 2022, the company reported a net income of $3.4 million, a substantial improvement from $38 thousand in the same period of 2021 Q1 2022 vs Q1 2021 Operations (in thousands, except per share data) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Lease revenue | $35,531 | $34,677 | | Total operating expenses | $25,658 | $26,904 | | Net income | $3,391 | $38 | | Net income (loss) available to common stockholders | $322 | $(2,955) | | EPS - basic & diluted | $0.01 | $(0.08) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For Q1 2022, net cash from operating activities was stable at $17.2 million, with financing activities providing $1.9 million due to equity issuance Q1 2022 vs Q1 2021 Cash Flows (in thousands) | Cash Flow Activity | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $17,187 | $16,879 | | Net cash used in investing activities | $(17,571) | $(6,526) | | Net cash provided by (used in) financing activities | $1,866 | $(11,824) | | **Net increase (decrease) in cash** | **$1,482** | **$(1,471)** | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, related-party transactions, real estate, debt, and equity, including Q1 2022 property acquisitions and equity raises - In Q1 2022, the company acquired two properties for an aggregate purchase price of **$13.5 million**[42](index=42&type=chunk) - No properties were sold during Q1 2022, in contrast to two non-core properties sold in Q1 2021[50](index=50&type=chunk) - The company raised **$20.3 million** in net proceeds from selling **0.9 million shares** of common stock through its At-the-Market (ATM) program during Q1 2022[79](index=79&type=chunk) - Subsequent to quarter-end, on May 4, 2022, the company acquired a two-property portfolio for **$19.3 million** and issued **$10.0 million** of fixed-rate debt[88](index=88&type=chunk)[89](index=89&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the business environment, including strong industrial demand, rising interest rates, and the impact of COVID-19, with FFO per share at $0.39 [Business Environment and COVID-19 Impact](index=28&type=section&id=Business%20Environment%20and%20COVID-19%20Impact) The business environment features strong industrial demand offsetting weaker office demand, with the company maintaining 100% rent collection and adequate liquidity - Demand for industrial space continues to be strong due to e-commerce growth, while the office sector experiences negative absorption and downward pressure on rental rates[97](index=97&type=chunk) - As of May 4, 2022, the company has collected **100%** of all outstanding rent for calendar year 2021 and the first quarter of 2022[101](index=101&type=chunk) - The company is monitoring the transition from LIBOR to SOFR for its variable rate debt, anticipated to be phased out by June 2023[106](index=106&type=chunk) [Recent Developments](index=29&type=section&id=Recent%20Developments) During Q1 2022 and subsequently, the company acquired properties, executed new leases, and raised $20.3 million via its common stock ATM program Q1 2022 Acquisition Activity (in thousands) | Aggregate Square Footage | Weighted Average Remaining Lease Term | Aggregate Purchase Price | Annualized GAAP Fixed Lease Payments | | :--- | :--- | :--- | :--- | | 136,000 | 10.2 years | $13,463 | $876 | - During and subsequent to Q1 2022, the company executed four leases totaling **257,978 sq. ft.** with a weighted average lease term of **10.6 years**[112](index=112&type=chunk) - In Q1 2022, the company sold **0.9 million shares** of common stock, raising **$20.3 million** in net proceeds under its ATM program[116](index=116&type=chunk) [Portfolio Diversity](index=32&type=section&id=Portfolio%20Diversity) The company's portfolio is diversified by tenant, industry, and geography to mitigate risk, with no single tenant exceeding 4.4% of lease revenue Top 5 Industries by Lease Revenue (Q1 2022) | Industry Classification | Lease Revenue (in thousands) | Percentage of Revenue | | :--- | :--- | :--- | | Telecommunications | $5,609 | 15.8% | | Automotive | $4,636 | 13.0% | | Diversified/Conglomerate Services | $4,537 | 12.8% | | Healthcare | $3,984 | 11.2% | | Diversified/Conglomerate Manufacturing | $2,626 | 7.4% | [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Total operating revenues increased by 2.5% to $35.5 million in Q1 2022, driven by acquisitions, while net income available to common stockholders significantly improved Lease Revenue by Property Type (in thousands) | Property Type | Q1 2022 | Q1 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Same Store Properties | $29,258 | $30,163 | $(905) | (3.0)% | | Acquired & Disposed Properties | $1,842 | $528 | $1,314 | 248.9% | | Properties with Vacancy | $4,431 | $3,986 | $445 | 11.2% | | **Total** | **$35,531** | **$34,677** | **$854** | **2.5%** | - Depreciation and amortization decreased by **$2.0 million (12.1%)** YoY, mainly due to accelerated depreciation related to two early lease terminations in Q1 2021[139](index=139&type=chunk) - Interest expense decreased by **8.1%** YoY, primarily due to costs incurred to repay outstanding mortgage debt in Q1 2021[143](index=143&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) As of March 31, 2022, the company had $35.2 million in available liquidity and anticipates refinancing $101.7 million in mortgage debt maturing in 2022 - Available liquidity as of March 31, 2022, was **$35.2 million**, consisting of **$9.6 million** in cash and **$25.6 million** of availability under the Credit Facility[147](index=147&type=chunk) - As of May 4, 2022, the company had the ability to raise up to **$669.3 million** of additional equity capital under its 2020 Universal Shelf registration[153](index=153&type=chunk) Contractual Obligations as of March 31, 2022 (in thousands) | Obligation Type | Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | | :--- | :--- | :--- | :--- | :--- | :--- | | Debt Obligations | $708,956 | $121,447 | $310,385 | $164,437 | $112,687 | | Interest on Debt | $75,199 | $21,516 | $30,194 | $15,613 | $7,876 | | Operating Lease Obligations | $9,152 | $491 | $986 | $994 | $6,681 | | Purchase Obligations | $8,109 | $4,337 | $3,772 | — | — | [Funds from Operations (FFO)](index=40&type=section&id=Funds%20from%20Operations%20(FFO)) Basic FFO available to common stockholders and OP unitholders for Q1 2022 was $15.0 million, or $0.39 per share, a slight decrease from the prior year FFO Reconciliation and Per Share Data (in thousands, except per share amounts) | Metric | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Net income (loss) available to common stockholders and Non-controlling OP Unitholders | $324 | $(2,996) | | Add: Real estate depreciation and amortization | $14,689 | $16,710 | | Add: Loss on sale of real estate, net | — | $882 | | **FFO available - basic** | **$15,013** | **$14,596** | | **Basic FFO per share/unit** | **$0.39** | **$0.40** | | **Diluted FFO per share/unit** | **$0.39** | **$0.40** | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate risk on variable-rate debt, mitigated by derivatives, with a 1% LIBOR increase decreasing annual net income by $2.8 million Annual Impact of LIBOR Increase on Net Income (in thousands) | Interest Rate Change | Increase to Interest Expense | Net decrease to Net Income | | :--- | :--- | :--- | | 1% Increase to LIBOR | $2,795 | $(2,795) | | 2% Increase to LIBOR | $5,024 | $(5,024) | | 3% Increase to LIBOR | $5,740 | $(5,740) | - The company's primary market risk exposure is to interest rate changes, mitigated by derivative instruments including interest rate caps and swaps[173](index=173&type=chunk) [Item 4. Controls and Procedures](index=44&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of March 31, 2022, with no material changes to internal control over financial reporting - Management concluded that disclosure controls and procedures were effective as of March 31, 2022[181](index=181&type=chunk) - No changes occurred in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[182](index=182&type=chunk) [PART II - OTHER INFORMATION](index=45&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and exhibits [Item 1. Legal Proceedings](index=45&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings, nor is it aware of any material threats - The company is not currently subject to any material legal proceedings[185](index=185&type=chunk) [Item 1A. Risk Factors](index=45&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2021 - There are no material changes to risk factors from those set forth in the Annual Report on Form 10-K for the year ended December 31, 2021[186](index=186&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=45&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered sales of equity securities and no issuer purchases of equity securities during the period - There were no unregistered sales of equity securities or issuer purchases of equity securities in the period[187](index=187&type=chunk) [Item 3. Defaults Upon Senior Securities](index=45&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon senior securities - None[188](index=188&type=chunk) [Item 4. Mine Safety Disclosures](index=45&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[188](index=188&type=chunk) [Item 5. Other Information](index=45&type=section&id=Item%205.%20Other%20Information) The company reports no other information for this item - None[188](index=188&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with or furnished as part of the quarterly report, including certifications and XBRL data files - Lists exhibits filed with the Form 10-Q, including CEO/CFO certifications and XBRL interactive data files[190](index=190&type=chunk)[192](index=192&type=chunk)