Gladstone mercial (GOOD) - 2025 Q2 - Quarterly Results

Financial Highlights 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] - 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] - 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] Operational Highlights 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 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] - 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] - 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] - Paid monthly cash distributions totaling $0.30 per common share for the quarter[9] Subsequent Events (Post-Quarter End) 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] - Leased or renewed 143,844 square feet at two properties with remaining lease terms ranging from 5.3 to 11.4 years[15] - Issued 50,540 shares of common stock under the ATM program for net proceeds of $0.7 million[15] - Declared monthly cash distributions for July, August, and September 2025, totaling $0.30 per common share[15] Management Commentary 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] - Management expressed confidence in the tenant base's ability to navigate economic challenges, citing 100% cash rent collection through July 2025[11] - The company expects same-store rents, which have increased by 2% annually in recent years, to continue rising as the portfolio grows[11] Non-GAAP Financial Measures 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] - 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] Forward-Looking Statements 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]