Gladstone mercial (GOOD)2025-02-18 21:02Debt and Financing - As of December 31, 2024, the fair value of the outstanding mortgage debt was $253.1 million, with interest rate fluctuations potentially affecting its value by $7.3 million if rates increased by 1% and $7.6 million if rates decreased by 1%[296]. - Approximately $339.2 million of the company's debt bore interest at fixed rates as of December 31, 2024, with total debt payments projected at $698.4 million over the next five years[299]. - The company relies on external financing, which may be negatively affected by restrictions on additional borrowings and interest rate fluctuations[15]. - The total mortgage notes payable, credit facility, and senior unsecured notes amounted to $693.4 million, a decrease of approximately 6.1% from $738.9 million as of December 31, 2023[428]. - The company issued $75.0 million in senior unsecured notes at a fixed interest rate of 6.47% on December 18, 2024, with proceeds used to pay down Term Loan B by $20.0 million and the Revolver by $55.0 million[435]. - Scheduled principal payments for mortgage notes payable over the next five years total $271.5 million, with the highest payment of $95.4 million due in 2027[435]. - The company has entered into interest rate cap agreements with a SOFR cap of 5.50% on variable-rate debt, with an aggregate notional amount of $60.0 million[438]. - Interest rate swaps with an aggregate notional amount of $360.5 million were recorded, with a fair value asset of $8.965 million as of December 31, 2024[439]. - As of December 31, 2024, the outstanding amount under the Credit Facility was $351.9 million, with a weighted average interest rate of approximately 5.79%[446]. - The company incurred fees of approximately $4.2 million in connection with extending and upsizing the Credit Facility on August 18, 2022[445]. Financial Performance - Total operating revenues for 2024 were $149.4 million, a slight increase from $147.6 million in 2023, reflecting a growth of about 1.2%[325]. - Net income for 2024 was $24.0 million, a substantial increase from $4.9 million in 2023, representing a year-over-year growth of approximately 387%[325]. - The company reported earnings per share of $0.27 for 2024, compared to a loss of $0.19 per share in 2023, marking a significant turnaround[325]. - The company’s comprehensive income for 2024 was $26.7 million, compared to $0.1 million in 2023, indicating a significant improvement in overall financial performance[325]. - Total liabilities decreased to $753.0 million in 2024 from $809.2 million in 2023, a reduction of approximately 6.9%[323]. - The company’s additional paid-in capital increased to $784.4 million in 2024 from $730.3 million in 2023, reflecting an increase of about 7.4%[323]. - The company recognized an impairment charge of $6.8 million in 2024, compared to $19.3 million in 2023, indicating a significant reduction in impairment losses[325]. - The company’s cash and cash equivalents decreased slightly to $11.0 million in 2024 from $12.0 million in 2023, a decline of about 8.6%[323]. - Cash flows from operating activities totaled $56,953,000 in 2024, compared to $60,367,000 in 2023, indicating a slight decline[331]. - The company reported a net cash used in investing activities of $1,727,000 in 2024, contrasting with a net cash provided of $1,138,000 in 2023[331]. Real Estate and Asset Management - The company's consolidated total real estate, net balance was $892.1 million as of December 31, 2024, down from $921.7 million in 2023, representing a decrease of approximately 3.5%[323]. - The company acquired real estate and related intangible assets for $27,357,000 in 2024, compared to $30,018,000 in 2023[331]. - The company sold seven non-core properties for an aggregate sales price of $39.0 million, resulting in a gain on sale of real estate of $10.3 million[415]. - The total gross cost of land, building improvements, and acquisition costs capitalized for asset acquisitions is $1,219.9 million[477]. - The balance of real estate at the end of 2024 is $1,219,918 thousand, down from $1,261,715 thousand in 2023[478]. - The company continues to expand its real estate portfolio with significant investments in both office and industrial buildings across the United States[475]. - The total cost for the Tulsa, Oklahoma industrial building is $14,744,000, with accumulated depreciation of $7,687,000, leading to a net real estate value of $7,057,000[473]. - The total cost of the office building in Philadelphia, Pennsylvania is $23,606,000, with accumulated depreciation of $7,998,000, resulting in a net real estate value of $15,608,000[474]. Internal Controls and Risk Management - The company maintains effective internal control over financial reporting as of December 31, 2024, as confirmed by independent auditors[306][310]. - The company’s management has assessed the effectiveness of internal controls based on the COSO framework, concluding that controls were effective as of December 31, 2024[305]. - The company is exposed to market risks, primarily interest rate risk, which could materially affect financial condition and results of operations[292]. - Cybersecurity threats may disrupt operations and negatively impact financial condition and operating results[18]. - The company’s business strategy is subject to risks associated with tenant payment defaults, lease renewals, and market conditions affecting cash distributions to stockholders[15]. Shareholder Distributions and Equity - Distributions declared per common share remained stable at $1.20 for both 2024 and 2023[325]. - The company’s total distributions paid for common, senior common, preferred stock, and non-controlling OP unitholders was $62,788,000 in 2024, compared to $60,620,000 in 2023[331]. - Monthly distributions for January, February, and March 2025 are set at $0.10 per share for common stock and $0.125 per share for Series F Preferred Stock[470]. - The total distribution for common stock in the first quarter of 2025 amounts to $0.30 per share[470]. - The company raised approximately $53.5 million in net proceeds from selling 3,699,597 shares of common stock under the 2024 Common Stock Sales Agreement during the year ended December 31, 2024[455]. Accounting and Reporting Standards - The company adopted ASU 2016-13 during the year ended December 31, 2024, which requires more timely recognition of credit losses[353]. - The company adopted ASU 2023-07 for segment reporting, effective for the fiscal year ended December 31, 2024[373]. - The company assesses lease classification at lease commencement to determine whether a lease should be accounted for as an operating, sales-type, or direct finance lease[352].