[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]

Property Management - As of November 7, 2022, the company owned 137 properties totaling 17.2 million square feet of rentable space, with an occupancy rate of 96.3%[117] - The company has seven partially vacant buildings and three fully vacant buildings, with available vacant space representing 3.1% of total square footage[125] - The annual carrying costs on the vacant space are approximately $3.8 million[125] - The company continues to focus on re-leasing vacant space and renewing upcoming lease expirations[124] - The company acquired 11 industrial properties during the same period, totaling 1,105,006 square feet with a weighted average lease term of 13.8 years and an aggregate purchase price of $98.276 million[130] - Texas generated $15.97 million in lease revenue, representing 14.3% of total lease revenue for the nine months ended September 30, 2022[147] Financial Performance - Total lease revenue for the nine months ended September 30, 2022, was $111.8 million, compared to $102.4 million for the same period in 2021, reflecting a year-over-year increase[147] - Lease revenue for Q3 2022 was $39,834,000, an increase of 16.0% from $34,334,000 in Q3 2021[161] - Total operating revenues for Q3 2022 were $39,834,000, up by $5,500,000 or 16.0% compared to Q3 2021[161] - Total operating revenues for the nine months ended September 30, 2022, increased by $9,383 thousand, or 9.2%, to $111,764 thousand compared to $102,381 thousand in 2021[163] - Net income for Q3 2022 was $2,497,000, a decrease of 44.5% from $4,498,000 in Q3 2021[161] - Net income for the nine months ended September 30, 2022, was $7,459 thousand, an increase of $802 thousand, or 12.0%, compared to $6,657 thousand in 2021[163] Debt and Financing - During the nine months ended September 30, 2022, the company repaid 13 mortgages totaling $97.843 million at an average interest rate of 4.75%[133] - The company issued five mortgages totaling $41.313 million during the same period, with a weighted average interest rate of 4.39%[134] - The company increased its Credit Facility Revolver from $100.0 million to $125.0 million and added a new Term Loan C of $150.0 million, with a maturity date of February 18, 2028[139] - The company has approximately $636.5 million reserved for the sale of its 6.00% Series F Cumulative Redeemable Preferred Stock under its 2020 Universal Shelf[141] - The company had 44 mortgage notes payable totaling $370.3 million with a weighted average interest rate of 4.19% as of September 30, 2022[180] - As of September 30, 2022, the company had $377.8 million outstanding under its Credit Facility at a weighted average interest rate of approximately 4.43%[188] Funds from Operations (FFO) - Funds from Operations (FFO) available to common stockholders and Non-controlling OP Unitholders for Q3 2022 was $16,976,000, a 4.7% increase from $16,220,000 in Q3 2021[161] - FFO available to common stockholders and Non-controlling OP Unitholders plus assumed conversions for the nine months ended September 30, 2022, was $47,416,000, compared to $42,488,000 for the same period in 2021, indicating a year-over-year increase of 11.4%[197] - Basic FFO per weighted average share of common stock for the three months ended September 30, 2022, was $0.43, slightly down from $0.44 in the same period of 2021[197] Expenses and Impairments - Total operating expenses increased by 46.9% to $37,448,000 in Q3 2022 from $25,498,000 in Q3 2021[161] - Total operating expenses for the nine months ended September 30, 2022, increased by $13,544 thousand, or 17.5%, to $90,932 thousand compared to $77,388 thousand in 2021[163] - The company recorded an impairment charge of $12,092 thousand during the nine months ended September 30, 2022, due to properties being valued below their carrying amount[170] - Impairment charge for Q3 2022 was $10,718,000, representing a 100.0% increase from no impairment charge in Q3 2021[161] Interest Rates and Risk Management - The company aims to limit the impact of interest rate changes on earnings and cash flows by primarily borrowing at fixed rates or variable rates with the lowest margins available[205] - The company has entered into derivative contracts to cap interest rates for variable rate notes payable and has implemented interest rate swaps to manage interest rate risk[199] - A 1% increase in SOFR would result in a net decrease in net income of $1,561,000, while a 2% increase would decrease net income by $1,482,000[202] - A 2% decrease in SOFR would result in a net income increase of $4,720 thousand, while a 1% decrease would increase net income by $2,638 thousand[202] - The company is monitoring the transition from LIBOR to SOFR and believes there may be minimal impact on its variable rate debt[205] Liquidity and Capital - Available liquidity as of September 30, 2022, was $69.5 million, consisting of approximately $13.5 million in cash and cash equivalents and $56.0 million in available borrowing capacity under the Credit Facility[175] - The company has the ability to raise up to $648.3 million in additional equity capital through the 2020 Universal Shelf, with $621.3 million reserved for Series F Preferred Stock sales[179] - The company anticipates being able to refinance $66.1 million of mortgage debt due in 2023 with new mortgage debt and additional equity securities[181] Management and Controls - As of September 30, 2022, the company's disclosure controls and procedures were evaluated as effective by management[207] - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended September 30, 2022[208]

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 ...