Portfolio Overview - As of June 30, 2025, Gladstone Commercial owned approximately 17 million square feet of primarily industrial and office real estate nationwide[8] - Total assets were approximately $1.21 billion, representing investments in 143 properties leased to 107 tenants across 27 states[9, 11] - The company's leases had an average remaining term of 7.1 years, with approximately 51% of tenants having an investment-grade or equivalent credit rating[9] - The portfolio's occupancy rate was 98.7%[11] Financial Highlights - For Q2 2025, Gladstone Commercial generated Funds From Operations (FFO) of $15.4 million, or $0.33 per diluted share, and Core FFO of $16.1 million, or $0.35 per diluted share[16] - The company purchased a 303,991 square foot industrial property in Germantown, Wisconsin for $62.7 million with a 19.4-year lease term, and a 215,102 square foot, three-property industrial portfolio in Harrison Township, Michigan for $16.3 million with a 10.0-year lease term[16] - The company paid monthly common stock dividends totaling $0.30 per common share for the quarter, or an annualized $1.20 per common share[16] - As of June 30, 2025, the company's total capitalization was $1.663 billion, with net total debt at $794 million, resulting in a net total debt to enterprise value ratio of 47.4%[12] Capital Structure - As of June 30, 2025, the implied common equity market capitalization was $672 million, based on a closing stock price of $14.33 per share[12, 31] - The company's net mortgage debt was $246.222 million, with a weighted average interest rate of 4.22%[31] - The company had $38.7 million in corporate liquidity, including $11.7 million in cash and cash equivalents and $27.0 million available under the revolving credit facility[13]

Core Viewpoint - Gladstone Commercial reported quarterly funds from operations (FFO) of $0.35 per share, matching the Zacks Consensus Estimate, but down from $0.36 per share a year ago [1] - The company posted revenues of $39.53 million for the quarter ended June 2025, exceeding the Zacks Consensus Estimate by 4.42% and up from $37.06 million year-over-year [2] Financial Performance - FFO for the last quarter was $0.34 per share, consistent with expectations, and the company has surpassed consensus FFO estimates only once in the last four quarters [1] - The revenue growth of 6.3% year-over-year indicates a positive trend, as the company has topped consensus revenue estimates three times in the last four quarters [2] Stock Performance - Gladstone Commercial shares have declined approximately 18.5% since the beginning of the year, contrasting with the S&P 500's gain of 7.1% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it is expected to perform in line with the market in the near future [6] Future Outlook - The consensus FFO estimate for the upcoming quarter is $0.36 on revenues of $38.32 million, while the estimate for the current fiscal year is $1.41 on revenues of $152.02 million [7] - The outlook for the REIT and Equity Trust - Other industry is favorable, ranking in the top 40% of Zacks industries, which historically outperforms the bottom 50% by a significant margin [8]

[Financial Highlights](index=1&type=section&id=Financial%20Highlights) Gladstone Commercial reported a 5.4% sequential increase in total operating revenue to **$39.5 million**, with Core FFO growing 5.4% to **$16.1 million** or **$0.35 per share**, despite a 24.0% decrease in net income to **$1.5 million** Q2 2025 Key Financial Metrics (vs. Q1 2025) | Metric | Q2 2025 (USD) | Q1 2025 (USD) | Change (USD) | % Change | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenue | $39,533,000 | $37,501,000 | $2,032,000 | 5.4% | | Net Income to Common Stockholders | $1,457,000 | $1,917,000 | ($460,000) | (24.0)% | | FFO per Share (diluted) | $0.33 | $0.34 | ($0.01) | (2.9)% | | Core FFO per Share (diluted) | $0.35 | $0.34 | $0.01 | 2.9% | | Dividends Declared per Common Share | $0.30 | $0.30 | $0.00 | 0.0% | - Core FFO increased by **5.4%** quarter-over-quarter to **$16.1 million**, primarily due to higher revenues from recent acquisitions and a lower net incentive fee, partially offset by increased interest expense from higher variable rate debt[7](index=7&type=chunk) - Net income available to common stockholders was **$1.5 million** (**$0.03 per share**) for Q2 2025, a decrease from **$1.9 million** (**$0.04 per share**) in Q1 2025[8](index=8&type=chunk) - As of June 30, 2025, the company owned **143 properties** with a portfolio lease rate of **98.7%**, a slight increase from **98.4%** in the prior quarter[4](index=4&type=chunk) [Operational Highlights](index=2&type=section&id=Operational%20Highlights) The company maintained 100% rent collection, executed strategic property acquisitions and dispositions, and continued capital raising and debt management activities both during and after the quarter [Second Quarter 2025 Activity](index=2&type=section&id=Second%20Quarter%202025%20Activity) The company achieved **100% cash rent collection**, acquired two properties for **$79.3 million**, sold two non-core assets for **$23.6 million**, raised **$10.4 million** via ATM, and repaid **$7.2 million** in variable rate debt - Collected **100%** of cash rents due for April, May, and June[9](index=9&type=chunk) - Acquired two fully-occupied facilities for **$79.3 million** at a weighted average cap rate of **8.88%**, and sold one non-core office property for **$5.1 million** and one non-core industrial property for **$18.5 million**[9](index=9&type=chunk) - Issued **750,426 common shares** under the ATM program for net proceeds of **$10.4 million**, and repaid **$7.2 million** in variable rate mortgage debt[9](index=9&type=chunk) - Paid monthly cash distributions totaling **$0.30 per common share** for the quarter[9](index=9&type=chunk) [Subsequent Events (Post-Quarter End)](index=4&type=section&id=Subsequent%20Events%20(Post-Quarter%20End)) Post-quarter, the company maintained **100% July rent collection**, executed new leases for **143,844 square feet**, raised **$0.7 million** via ATM, and declared Q3 2025 monthly distributions - Collected **100%** of cash rents due in July[15](index=15&type=chunk) - Leased or renewed **143,844 square feet** at two properties with remaining lease terms ranging from **5.3 to 11.4 years**[15](index=15&type=chunk) - Issued **50,540 shares** of common stock under the ATM program for net proceeds of **$0.7 million**[15](index=15&type=chunk) - Declared monthly cash distributions for July, August, and September 2025, totaling **$0.30 per common share**[15](index=15&type=chunk) [Management Commentary](index=4&type=section&id=Management%20Commentary) Management emphasized consistent performance, strong rent collection, and a capital recycling strategy focused on de-levering and reinvesting in industrial properties within target growth markets, anticipating continued same-store rent increases - The company's capital recycling program involves selling non-core assets to de-lever the portfolio and redeploy proceeds into stronger target growth markets, with a specific focus on industrial investment opportunities[11](index=11&type=chunk) - Management expressed confidence in the tenant base's ability to navigate economic challenges, citing **100%** cash rent collection through July 2025[11](index=11&type=chunk) - The company expects same-store rents, which have increased by **2% annually** in recent years, to continue rising as the portfolio grows[11](index=11&type=chunk) [Non-GAAP Financial Measures](index=4&type=section&id=Non-GAAP%20Financial%20Measures) This section defines FFO as a NAREIT-standardized measure adjusting net income for real estate depreciation and property sales, and Core FFO as a company-specific adjustment for non-recurring items to enhance comparability - **FFO (Funds from Operations):** Defined by NAREIT as net income excluding gains/losses from property sales and impairment losses, plus real estate depreciation and amortization, serving as a supplemental measure of a REIT's operating performance[14](index=14&type=chunk) - **Core FFO:** Defined as FFO adjusted for certain non-recurring items such as acquisition-related expenses or gains/losses from early debt extinguishment, intended to reflect the results of the core operating portfolio[16](index=16&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) The report contains forward-looking statements regarding income stability, re-leasing, and portfolio growth, which are subject to inherent risks and uncertainties detailed in SEC filings - Statements regarding the stability of income, ability to re-lease properties, and portfolio growth are considered "forward-looking statements" and involve inherent risks and uncertainties[18](index=18&type=chunk)

PART I [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Gladstone Commercial Corporation's unaudited condensed consolidated financial statements as of June 30, 2025, detail its financial position, operational performance, and cash flows [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$1.21 billion** by June 30, 2025, driven by real estate acquisitions, while liabilities and equity also saw increases Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total real estate, net** | $1,007,821 | $892,147 | | **Cash and cash equivalents** | $11,660 | $10,956 | | **TOTAL ASSETS** | **$1,209,993** | **$1,094,348** | | **Mortgage notes payable, net** | $257,882 | $269,579 | | **Borrowings under Revolver** | $94,370 | $1,900 | | **TOTAL LIABILITIES** | **$862,631** | **$753,006** | | **TOTAL EQUITY** | **$177,321** | **$171,301** | [Condensed Consolidated Statements of Operations and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income) Net income significantly improved to **$4.6 million** for Q2 2025 and **$9.8 million** for the six-month period, driven by increased lease revenue Statement of Operations Summary (in thousands) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Lease revenue** | $39,533 | $37,057 | $77,034 | $72,779 | | **Total operating expenses** | $25,146 | $25,973 | $49,001 | $49,290 | | **Net income** | $4,634 | $1,600 | $9,773 | $5,125 | | **Net income (loss) available to common stockholders** | $1,456 | $(1,614) | $3,374 | $(1,313) | | **EPS (basic & diluted)** | $0.03 | $(0.04) | $0.07 | $(0.03) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow increased to **$53.5 million**, while significant real estate acquisitions led to **$155.8 million** in cash used for investing, largely funded by **$103.1 million** from financing activities Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $53,532 | $28,626 | | **Net cash (used in) provided by investing activities** | $(155,828) | $5,807 | | **Net cash provided by (used in) financing activities** | $103,122 | $(36,149) | | **Net increase (decrease) in cash** | $826 | $(1,716) | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes disclose accounting policies, related-party transactions, real estate portfolio changes, debt structure, and equity activities, including significant acquisitions and financing events - As of June 30, 2025, the company owned **143 properties** totaling **17.0 million square feet** across 27 states[19](index=19&type=chunk) - During the first six months of 2025, the company acquired **ten industrial properties** for a total purchase price of **$153.1 million**[47](index=47&type=chunk)[48](index=48&type=chunk) - The company sold **one property** for **$5.1 million**, resulting in a net gain of **$377,000**, as part of its capital recycling program[61](index=61&type=chunk) - On May 30, 2025, the Operating Partnership entered into a new **$20.0 million unsecured term loan (Term Loan D)** maturing in 2027[83](index=83&type=chunk) - During the six months ended June 30, 2025, the company sold **2,521,007 shares of common stock**, raising approximately **$38.0 million** in net proceeds under its ATM program[96](index=96&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's strong operational performance, including high occupancy and rent collection, significant industrial property acquisitions, and financing activities, noting a slight decrease in FFO per share - As of August 6, 2025, the company's portfolio of **143 properties** was **98.7% occupied**, with an average remaining lease term of **7.0 years**[111](index=111&type=chunk) - The company collected **100% of all outstanding base rents** for the six months ended June 30, 2025, demonstrating the strength of its tenant base and underwriting[115](index=115&type=chunk) H1 2025 Acquisition Activity (in thousands) | Aggregate Square Footage | Weighted Avg. Remaining Lease Term | Aggregate Purchase Price | Annualized GAAP Fixed Lease Payments | | :--- | :--- | :--- | :--- | | 874,871 | 14.3 years | $153,067 | $13,155 | FFO Reconciliation Summary (in thousands, except per share) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net income (loss) available to common stockholders** | $1,457 | $(1,625) | $3,377 | $(1,322) | | **FFO available to common stockholders - basic** | $15,338 | $14,437 | $30,501 | $27,976 | | **Basic FFO per share** | $0.33 | $0.36 | $0.67 | $0.69 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=50&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% SOFR increase** potentially decreasing annual net income by **$1.57 million** Interest Rate Sensitivity Analysis (Annual Impact, in thousands) | Interest Rate Change | Net increase (decrease) to Net Income | | :--- | :--- | | 3% Decrease to SOFR | $4,695 | | 1% Decrease to SOFR | $1,565 | | 1% Increase to SOFR | $(1,565) | | 3% Increase to SOFR | $(4,695) | [Item 4. Controls and Procedures](index=51&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[198](index=198&type=chunk) - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[199](index=199&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=52&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently subject to any material legal proceedings - The company is not currently subject to any material legal proceedings, nor is any material legal proceeding threatened against it[202](index=202&type=chunk) [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - There are no material changes to risks associated with the business from those previously set forth in the Annual Report on Form 10-K for the year ended December 31, 2024[203](index=203&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no sales of unregistered securities or issuer purchases of its equity securities during the period - There were no sales of unregistered securities or issuer purchases of equity securities[204](index=204&type=chunk) [Item 3. Defaults Upon Senior Securities](index=52&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reports no defaults upon its senior securities - None[205](index=205&type=chunk) [Item 6. Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section provides an index of all exhibits filed with the Form 10-Q, including corporate governance documents, material contracts, and certifications

Group 1 - The U.S. accounts for 15% of global manufacturing despite China's dominance in the sector [2] - The service offers a model portfolio with buy/sell alerts, preferred and baby bond portfolios for conservative investors, and regular market updates [2] - The philosophy of the service emphasizes community and education, advocating that no one should invest alone [2] Group 2 - The article mentions the importance of creating a portfolio that generates income without the need for selling assets [1] - The service aims to make retirement investing less stressful and more straightforward [1]

Company Performance - Gladstone Commercial (GOOD) closed at $14.29, down 2.26% from the previous session, underperforming the S&P 500's loss of 0.79% [1] - Over the past month, shares of Gladstone Commercial gained 1.11%, while the Finance sector and S&P 500 gained 4.61% and 5.22%, respectively [1] Earnings Projections - The upcoming earnings report is expected to show earnings of $0.35 per share, reflecting a year-over-year decline of 2.78% [2] - Quarterly revenue is projected at $37.86 million, an increase of 2.16% from the previous year [2] - For the full year, earnings are estimated at $1.41 per share and revenue at $152.02 million, indicating changes of -0.7% and +1.76% from the prior year [3] Analyst Estimates and Valuation - Recent changes in analyst estimates indicate a positive outlook for Gladstone Commercial, suggesting optimism about business and profitability [3] - The Zacks Rank system currently rates Gladstone Commercial at 3 (Hold), with no changes in the consensus EPS estimate over the past month [5] - Gladstone Commercial has a Forward P/E ratio of 10.34, which is lower than the industry average of 11.6, suggesting it is trading at a discount [6] Industry Metrics - The company has a PEG ratio of 1.72, compared to the industry average of 2.44, indicating a favorable valuation relative to expected earnings growth [7] - The REIT and Equity Trust - Other industry is part of the Finance sector and holds a Zacks Industry Rank of 88, placing it in the top 36% of over 250 industries [7][8]

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Group 1 - Gladstone Commercial Corporation is expanding its industrial real estate footprint, supported by funds from operations and profits driven by strong demand for new industrial real estate capacity in the market [1]

Company Performance - Gladstone Commercial (GOOD) stock increased by 1.32% to $14.57, outperforming the S&P 500's gain of 0.96% [1] - Prior to the latest trading session, shares had gained 3.83%, contrasting with the Finance sector's loss of 1.18% and the S&P 500's gain of 0.5% [1] Earnings Estimates - The upcoming earnings release is projected to show earnings per share (EPS) of $0.35, a decrease of 2.78% from the same quarter last year [2] - The Zacks Consensus Estimate for revenue is $37.86 million, reflecting an increase of 2.16% from the previous year [2] Annual Forecast - For the entire year, the Zacks Consensus Estimates forecast earnings of $1.41 per share and revenue of $152.02 million, indicating changes of -0.7% and +1.76% respectively compared to the previous year [3] Analyst Sentiment - Recent changes to analyst estimates for Gladstone Commercial are important, as positive revisions indicate optimism about the business and profitability [3][4] Valuation Metrics - Gladstone Commercial has a Forward P/E ratio of 10.18, which is lower than the industry average Forward P/E of 11.75 [6] - The company has a PEG ratio of 1.7, compared to the industry average PEG ratio of 2.46 [6] Industry Context - The REIT and Equity Trust - Other industry, part of the Finance sector, has a Zacks Industry Rank of 99, placing it in the top 41% of over 250 industries [7] - The top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

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