GLADSTONE COML(US:GOODO)2025-05-07 20:01PART I Item 1. Financial Statements (Unaudited) The unaudited Q1 2025 financial statements show total assets increased to $1.16 billion, net income rose to $5.1 million, and operating cash flow was $17.7 million, driven by real estate acquisitions and new financing Condensed Consolidated Balance Sheets As of March 31, 2025, total assets increased to $1.16 billion driven by real estate acquisitions, while total liabilities rose to $807.1 million due to increased borrowings, and total equity grew to $183.4 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total real estate, net | $950,090 | $892,147 | | Cash and cash equivalents | $10,383 | $10,956 | | TOTAL ASSETS | $1,160,443 | $1,094,348 | | Mortgage notes payable, net | $267,326 | $269,579 | | Borrowings under Revolver | $51,300 | $1,900 | | TOTAL LIABILITIES | $807,050 | $753,006 | | TOTAL EQUITY | $183,352 | $171,301 | Condensed Consolidated Statements of Operations and Comprehensive Income For Q1 2025, total operating revenues increased by 5.0% to $37.5 million, leading to a significant rise in net income to $5.1 million and net income available to common stockholders of $1.9 million, or $0.04 per share Statement of Operations Highlights (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Lease revenue | $37,501 | $35,721 | | Total operating expenses | $23,858 | $23,315 | | Net income | $5,136 | $3,526 | | Net income available to common stockholders | $1,915 | $304 | | Income per share (basic & diluted) | $0.04 | $0.01 | Condensed Consolidated Statements of Cash Flows In Q1 2025, net cash from operating activities increased to $17.7 million, while investing activities used $75.6 million primarily for real estate acquisitions, and financing activities provided $58.2 million through equity and borrowings Cash Flow Summary (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $17,684 | $15,023 | | Net cash (used in) provided by investing activities | $(75,644) | $18,468 | | Net cash provided by (used in) financing activities | $58,247 | $(34,708) | | Net increase (decrease) in cash | $287 | $(1,217) | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, related-party transactions, debt, and equity, highlighting $73.7 million in Q1 2025 property acquisitions, $740.7 million total debt, and $27.7 million from common stock sales, plus subsequent property dispositions - The company operates as a single reporting segment: Real Estate Rental Operations23 Related-Party Fees (Q1 2025, in millions) | Fee Type | Amount | | :--- | :--- | | Base Management Fee | $1.6 | | Incentive Fee | $0.6 | | Administration Fee | $0.6 | - Acquired six industrial properties for an aggregate purchase price of $73.7 million during Q1 20254546 - As of March 31, 2025, total debt outstanding was $740.7 million, with a weighted average interest rate of 5.28%. This includes mortgage notes, the Credit Facility, and senior unsecured notes6364 - Raised approximately $27.7 million in net proceeds from the sale of 1,770,581 shares of common stock under the 2024 Common Stock Sales Agreement during Q1 202588 - Subsequent to quarter-end, the company sold a property in Hickory, NC for $5.1 million and a property in Tifton, GA for $18.5 million9697 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's strategy of acquiring industrial and office properties, highlighting 100% rent collection, $73.7 million in Q1 2025 property acquisitions, 5.0% operating revenue growth, and $80.5 million in available liquidity - The company's strategic focus is on acquiring, owning, and managing primarily industrial and office properties in secondary growth markets102103 - Collected 100% of all outstanding base rents for the three months ended March 31, 2025, demonstrating tenant strength109 - Acquired six industrial properties for $73.7 million in Q1 2025, with a weighted average remaining lease term of 10.8 years118 Q1 2025 vs Q1 2024 Operating Results (in thousands) | Metric | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Lease revenue | $37,501 | $35,721 | $1,780 | 5.0% | | Total operating expenses | $23,858 | $23,315 | $543 | 2.3% | | Net income | $5,136 | $3,526 | $1,610 | 45.7% | | FFO per share (diluted) | $0.34 | $0.34 | $— | —% | - Same-store property lease revenue increased by 6.6% year-over-year, primarily due to higher recovery revenue and increased rental rates from recent leasing activity148 - As of March 31, 2025, available liquidity was $80.5 million, comprising $10.4 million in cash and $70.1 million in borrowing capacity under the Credit Facility156 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk from variable-rate debt, mitigated by derivatives, with a 1% SOFR increase estimated to decrease annual net income by approximately $0.6 million - The primary market risk exposure is interest rate risk, mainly from the variable-rate Credit Facility179 Annual Impact of SOFR Changes on Net Income (as of March 31, 2025, in thousands) | Interest Rate Change | Net increase (decrease) to Net Income | | :--- | :--- | | 3% Decrease to SOFR | $1,779 | | 1% Decrease to SOFR | $593 | | 1% Increase to SOFR | $(593) | | 3% Increase to SOFR | $(1,779) | - The fair value of the company's mortgage debt was $255.9 million as of March 31, 2025. A 1% increase in interest rates would decrease this fair value by $7.0 million183 Item 4. Controls and Procedures Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of March 31, 2025187 - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2025, that have materially affected, or are reasonably likely to materially affect, internal controls188 PART II OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any material legal proceedings, nor is it aware of any material legal proceedings being threatened against it - As of the report date, the company is not a party to any material legal proceedings191 Item 1A. Risk Factors There have been no material changes to the risk factors associated with the company's business or investment in its securities from those previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors from the Annual Report on Form 10-K for the year ended December 31, 2024192 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities and no issuer purchases of its equity securities during the period - There were no sales of unregistered securities or issuer purchases of equity securities during the quarter193 Item 3. Defaults Upon Senior Securities The company reported no defaults upon its senior securities during the period - None194 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable195 Item 5. Other Information The company reported no other material information, and no officer or director adopted or terminated any Rule 10b5-1 trading arrangement during the quarter - No other information to report. No officer or director adopted or terminated a Rule 10b5-1 trading plan196 Item 6. Exhibits This section provides an index of all exhibits filed with the Form 10-Q, including articles of incorporation, bylaws, forms of certificates, and certifications by the CEO and CFO - Lists all exhibits filed with the report, including CEO/CFO certifications (31.1, 31.2, 32.1, 32.2) and iXBRL data files197198199