Property Management and Occupancy - As of March 31, 2025, the company owned 139 properties totaling 16.5 million square feet of rentable space, with an occupancy rate of 98.7%[105] - The company collected 100% of all outstanding base rents for the three months ended March 31, 2025, demonstrating strong credit underwriting and asset management[109] - The company has a manageable lease expiration schedule for the remainder of 2025, equating to 2.5% of lease revenue as of March 31, 2025[114] - The largest tenant contributed only 5.4% of total lease revenue for the three months ended March 31, 2025, indicating a diversified tenant base[128] - The breakdown of total lease revenue by industry classification shows that the Automotive sector generated $5,532,000 (14.7%) in 2025, compared to $5,302,000 (14.8%) in 2024[128] - Texas was the leading state for lease revenue, contributing $5,328,000 (14.2%) in 2025, up from $4,526,000 (12.7%) in 2024[128] Financial Performance - For the three months ended March 31, 2025, total lease revenue was $37,501,000, an increase from $35,721,000 in the same period of 2024, representing a growth of 5.0%[128] - Total operating revenues for the three months ended March 31, 2025, increased to $37,501,000, a 5.0% increase from $35,721,000 in 2024[146] - Lease revenues from same store properties rose to $32,007,000, reflecting a 6.6% increase from $30,039,000 in the prior year[148] - Net income available to common stockholders and Non-controlling OP Unitholders surged to $1,917,000, a 526.5% increase from $306,000 in the same period last year[146] - Funds from Operations (FFO) available to common stockholders and Non-controlling OP Unitholders increased to $15,160,000, an 11.9% rise from $13,542,000 in 2024[146] - Basic FFO per share for the three months ended March 31, 2025, was $0.34, consistent with the same period in 2024[178] Property Acquisitions and Sales - The company acquired six industrial properties during the three months ended March 31, 2025, with a total aggregate purchase price of $73.725 million and a weighted average remaining lease term of 10.8 years[118] - The company sold a 60,000 square foot property in Hickory, North Carolina for $5.1 million, realizing a gain of $0.4 million on the sale[116] - Property acquisitions since the beginning of 2020 have totaled $472.7 million, primarily in the industrial sector, with a weighted average lease term of 13.6 years[114] Debt and Liquidity - The weighted average interest rate of the company's mortgage debt was 4.23% as of March 31, 2025, with a weighted average remaining term of 3.3 years[105] - The company has adequate liquidity to cover near-term debt obligations and operating expenses, with cash on hand and availability on its Credit Facility[110] - Available liquidity as of March 31, 2025, was $80.5 million, consisting of $10.4 million in cash and cash equivalents and $70.1 million in borrowing capacity[156] - As of March 31, 2025, the company had mortgage notes payable totaling $269.1 million, with a weighted-average interest rate of 4.29%[161] - The company had mortgage debt totaling $17.5 million due in 2025 and $35.4 million due in 2026, with plans to refinance the 2026 mortgages through various financing options[162] - The company has contractual obligations totaling $884.1 million as of March 31, 2025, with $59.98 million due within one year[170] Capital Raising - The company raised approximately $27.7 million in net proceeds from the sale of 1,770,581 shares of common stock during the three months ended March 31, 2025[123] - The company raised net proceeds of $27.7 million from common equity during the three months ended March 31, 2025[159] Management and Governance - The company has a management team with extensive experience in real estate and mortgage loans, led by Mr. David Gladstone[129] - The Advisory Agreement was renewed for an additional year through August 31, 2025, during the July 2024 board meeting[132] - The base management fee is calculated at an annual rate of 0.425% of the prior calendar quarter's Gross Tangible Real Estate[133] - The company is externally managed, with all personnel employed by its Adviser and Administrator, which are controlled by Mr. David Gladstone[131] Operating Expenses - Property operating expenses totaled $6,900,000, a 17.3% increase from $5,884,000 in the previous year, primarily due to inflationary cost increases[150] - Interest expense decreased to $9,138,000, a 3.8% reduction from $9,497,000 in the prior year[146] Cash Flow Activities - Net cash provided by operating activities for the three months ended March 31, 2025, was $17.7 million, an increase from $15.0 million for the same period in 2024, primarily driven by lease revenues[163] - Net cash used in investing activities for the three months ended March 31, 2025, was $75.6 million, mainly due to six property acquisitions and capital improvements, compared to $18.5 million provided in the same period in 2024[165] - Net cash provided by financing activities for the three months ended March 31, 2025, was $58.2 million, primarily from the issuance of $28.4 million in equity and net borrowings on the credit facility[166] Market and Risk Factors - The primary market risk faced by the company is interest rate risk, which is mitigated through interest rate swaps and caps[179] - As of March 31, 2025, the effective average SOFR was 4.41%[181] - A 3% decrease in SOFR would result in a net income increase of $1.779 million, while a 3% increase would lead to a net income decrease of $1.779 million[182] - The fair value of the company's outstanding mortgage debt was $255.9 million as of March 31, 2025[183] - A 1% increase in interest rates would decrease the fair value of debt instruments by $7.0 million, while a 1% decrease would increase it by $7.2 million[183] - The company aims to manage interest rate risk by primarily borrowing at fixed rates or variable rates with the lowest margins available[185] - The company may utilize derivative financial instruments such as interest rate swaps and caps to mitigate interest rate risk[185] - The value of the company's real estate is subject to fluctuations based on local and regional economic conditions[186] - Changes in the creditworthiness of lessees and borrowers may affect the company's ability to refinance debt[186]
Gladstone Commercial Corporation(GOODN) - 2025 Q1 - Quarterly Report