Gladstone Commercial Corporation Reports Results for the Fourth Quarter and Year Ended December 31, 2024

Rhea-AI Summary

Gladstone Commercial (GOOD) reported its Q4 and full-year 2024 financial results. For Q4 2024, the company reported net income of $7.2 million, with FFO of $15.3 million ($0.35 per share). Full-year 2024 net income was $24.0 million, with FFO of $59.7 million ($1.41 per share).

Key 2024 highlights include: acquisition of seven fully-occupied properties for $26.8 million at a 10.99% cap rate; sale of seven non-core properties for $39.0 million; 100% collection of base rent; issuance of $53.5 million in common stock; and issuance of $75.0 million in senior unsecured notes at 6.47%. The company maintained a high occupancy rate of 98.7% and renewed leases totaling 1.1 million square feet.

Positive

• 100% collection of 2024 base rent
• High occupancy rate of 98.7%, up from 96.8% in 2023
• Acquired 7 properties at attractive 10.99% cap rate
• Successfully leased 1.8 million square feet of vacant space
• Net income increased to $24.0 million in 2024 from $4.9 million in 2023

Negative

• Q4 FFO decreased 5.6% quarter-over-quarter to $15.3 million
• Total operating revenue declined 4.7% in Q4 to $37.4 million
• Recorded $6.8 million in impairment charges on three properties in 2024
• Core FFO per share decreased to $1.42 in 2024 from $1.47 in 2023

Please note that the limited information that follows in this press release is not adequate to make an informed investment judgment.

MCLEAN, VA / ACCESS Newswire / February 18, 2025 / Gladstone Commercial Corporation (Nasdaq:GOOD) ("Gladstone Commercial" or the "Company") today reported financial results for the fourth quarter and year ended December 31, 2024. A description of funds from operations, or FFO, FFO as adjusted for comparability, and Core FFO, all three non-GAAP (generally accepted accounting principles in the United States) financial measures, are located at the end of this press release. All per share references are to fully-diluted weighted average shares of common stock and Non-controlling OP Units, unless otherwise noted. For further detail, please also refer to both the quarterly financial supplement and the Company's Annual Report on Form 10-K, which can be found on the Investors section of our website at www.gladstonecommercial.com.

Summary Information (dollars in thousands, except per share data):

		As of and for the three months ended
		December 31, 2024					September 30, 2024					$ Change				% Change
Operating Data:
Total operating revenue		$	37,375				$	39,235				$	(1,860	)			(4.7	)%
Total operating expenses			(24,974	)	(1)			(28,546	)	(4)			3,572				(12.5	)%
Other (expense) income, net			(5,208	)	(2)			1,032		(5)			(6,240	)			(604.7	)%
Net income		$	7,193				$	11,721				$	(4,528	)			(38.6	)%
Less: Dividends attributable to preferred stock			(3,106	)				(3,106	)				-				-	%
Less: Dividends attributable to senior common stock			(104	)				(106	)				2				(1.9	)%
Less/Add: (Loss) gain on extinguishment of Series F preferred stock, net			(9	)				2					(11	)			(550.0	)%
Net income available to common stockholders and Non-controlling OP Unitholders		$	3,974				$	8,511				$	(4,537	)			(53.3	)%
Add: Real estate depreciation and amortization			13,102					13,343					(241	)			(1.8	)%
Add: Impairment charge			1,780					4,549					(2,769	)			(60.9	)%
Less: Gain on sale of real estate, net			(3,674	)				(10,319	)				6,645				(64.4	)%
Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic		$	15,182				$	16,084				$	(902	)			(5.6	)%
Add: Convertible senior common distributions			104					106					(2	)			(1.9	)%
Funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted		$	15,286				$	16,190				$	(904	)			(5.6	)%
Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic		$	15,182				$	16,084				$	(902	)			(5.6	)%
Add: Asset retirement obligation expense			34					33					1				3.0	%
Add: Realized loss on interest rate hedging instruments			-					51					(51	)			(100.0	)%
Core funds from operations available to common stockholders and Non-controlling OP Unitholders - basic		$	15,216				$	16,168				$	(952	)			(5.9	)%
Add: Convertible senior common distributions			104					106					(2	)			(1.9	)%
Core funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted		$	15,320				$	16,274				$	(954	)			(5.9	)%
Share and Per Share Data:
Net income available to common stockholders and Non-controlling OP Unitholders - basic and diluted			0.09					0.20					(0.11	)			(55.0	)%
FFO available to common stockholders and Non-controlling OP Unitholders - basic			0.35					0.38					(0.03	)			(7.9	)%
FFO available to common stockholders and Non-controlling OP Unitholders - diluted			0.35					0.38					(0.03	)			(7.9	)%
Core FFO available to common stockholders and Non-controlling OP Unitholders - basic			0.35					0.38					(0.03	)			(7.9	)%
Core FFO available to common stockholders and Non-controlling OP Unitholders - diluted			0.35					0.38					(0.03	)			(7.9	)%
Weighted average shares of common stock and Non-controlling OP Units outstanding - basic			43,963,909					42,830,159					1,133,750				2.6	%
Weighted average shares of common stock and Non-controlling OP Units outstanding - diluted			44,294,365					43,169,458					1,124,907				2.6	%
Cash dividends declared per common share and Non-controlling OP Unit		$	0.30				$	0.30				$	-				-	%
Financial Position
Real estate, before accumulated depreciation		$	1,219,918		(3)		$	1,238,271		(6)		$	(18,353	)			(1.5	)%
Total assets		$	1,094,348				$	1,096,315				$	(1,967	)			(0.2	)%
Mortgage notes payable, net, borrowings under revolver, borrowings under term loan, net, and senior unsecured notes, net		$	693,385				$	692,647				$	738				0.1	%
Total equity and mezzanine equity		$	341,342				$	339,087				$	2,255				0.7	%
Properties owned			135		(3)			135		(6)			-				-	%
Square feet owned			16,899,887		(3)			16,849,547		(6)			50,340				0.3	%
Square feet leased			98.7	%				98.5	%				0.2	%			0.2	%
(1) Includes a $1.8 million impairment charge recognized on one property during the three months ended December 31, 2024.
(2) Includes a $3.7 million gain on sale, net, from the sale of one property and a selling profit from sales-type leases, during the three months ended December 31, 2024.
(3) Includes two properties classified as held for sale of $8.1 million and 736,031 square feet, in the aggregate.
(4) Includes a $4.5 million impairment charge recognized on one property during the three months ended September 30, 2024.
(5) Includes a $10.3 million gain on sale, net, from the sale of two properties during the three months ended September 30, 2024.
(6) Includes two properties classified as held for sale of $24.0 million and 750,191 square feet, in the aggregate.

		As of and for the year ended
		December 31, 2024					December 31, 2023					$ Change				% Change
Operating Data:
Total operating revenue		$	149,388				$	147,584				$	1,804				1.2	%
Total operating expenses			(102,808	)	(1)			(116,103	)	(4)			13,295				(11.5	)%
Other expense, net			(22,540	)	(2)			(26,559	)	(5)			4,019				(15.1	)%
Net income		$	24,040				$	4,922				$	19,118				388.4	%
Less: Dividends attributable to preferred stock			(12,440	)				(12,285	)				(155	)			1.3	%
Less: Dividends attributable to senior common stock			(420	)				(430	)				10				(2.3	)%
Less: Loss on extinguishment of Series F preferred stock			(14	)				(11	)				(3	)			27.3	%
Add: Gain on repurchase of Series G preferred stock			-					3					(3	)			(100.0	)%
Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders		$	11,166				$	(7,801	)			$	18,967				(243.1	)%
Add: Real estate depreciation and amortization			55,786					57,856					(2,070	)			(3.6	)%
Add: Impairment charge			6,822					19,296					(12,474	)			(64.6	)%
Less: Gain on sale of real estate, net			(14,229	)				(7,737	)				(6,492	)			83.9	%
Less: Gain on debt extinguishment, net			(300	)				(2,830	)				2,530				(89.4	)%
Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic		$	59,245				$	58,784				$	461				0.8	%
Add: Convertible senior common distributions			420					430					(10	)			(2.3	)%
Funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted		$	59,665				$	59,214				$	451				0.8	%
Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic		$	59,245				$	58,784				$	461				0.8	%
Add: Write off shelf registration statement costs and prepaid ATM costs			183					110					73				66.4	%
Add: Asset retirement obligation expense			133					126					7				5.6	%
Add: Bad debt write off			64					-					64				100.0	%
Add: Loan defeasance costs			-					130					(130	)			(100.0	)%
Add: Realized loss on interest rate hedging instruments			132					326					(194	)			(59.5	)%
Core funds from operations available to common stockholders and Non-controlling OP Unitholders - basic		$	59,757				$	59,476				$	281				0.5	%
Add: Convertible senior common distributions			420					430					(10	)			(2.3	)%
Core funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted		$	60,177				$	59,906				$	271				0.5	%
Share and Per Share Data:
Net income (loss) available (attributable) to common stockholders and Non-controlling OP Unitholders - basic & diluted			0.27					(0.19	)				0.46				(242.1	)%
FFO available to common stockholders and Non-controlling OP Unitholders - basic			1.41					1.46					(0.05	)			(3.4	)%
FFO available to common stockholders and Non-controlling OP Unitholders - diluted			1.41					1.46					(0.05	)			(3.4	)%
Core FFO available to common stockholders and Non-controlling OP Unitholders - basic			1.43					1.47					(0.04	)			(2.7	)%
Core FFO available to common stockholders and Non-controlling OP Unitholders - diluted			1.42					1.47					(0.05	)			(3.4	)%
Weighted average shares of common stock and Non-controlling OP Units outstanding - basic			41,923,423					40,325,730					1,597,693				4.0	%
Weighted average shares of common stock and Non-controlling OP Units outstanding - diluted			42,253,879					40,670,862					1,583,017				3.9	%
Cash dividends declared per common share and Non-controlling OP Unit		$	1.2000				$	1.2000				$	-				-	%
Financial Position
Real estate, before accumulated depreciation		$	1,219,918		(3)		$	1,261,715		(6)		$	(41,797	)			(3.3	)%
Total assets		$	1,094,348				$	1,133,471				$	(39,123	)			(3.5	)%
Mortgage notes payable, net, borrowings under revolver, borrowings under term loan, net, and senior unsecured notes, net		$	693,385				$	738,861				$	(45,476	)			(6.2	)%
Total equity and mezzanine equity		$	341,342				$	324,307				$	17,035				5.3	%
Properties owned			135		(3)			135		(6)			-				-	%
Square feet owned			16,899,887		(3)			17,059,269		(6)			(159,382	)			(0.9	)%
Square feet leased			98.7	%				96.8	%				1.9	%			2.0	%
(1) Includes a $6.8 million impairment charge recognized on three properties during the year ended December 31, 2024.
(2) Includes a $14.2 million gain on sale, net, from seven property sales and a selling profit from sales-type leases, and a $0.3 million gain on debt extinguishment, net, during the year ended December 31, 2024.
(3) Includes two properties classified as held for sale of $8.1 million and 736,031 square feet, in the aggregate.
(4) Includes a $19.3 million impairment charge recognized on five properties during the year ended December 31, 2023.
(5) Includes a $7.7 million gain on sale, net, from seven property sales and a $2.8 million gain on debt extinguishment, net, during the year ended December 31, 2023.
(6) Includes three properties classified as held for sale of $40.4 million and 946,801 square feet.

Highlights of Fiscal Year 2024:

• Acquired properties: Purchased seven fully-occupied properties, with an aggregate of 316,727 square feet of rental space, for $26.8 million, at a weighted average cap rate of 10.99%;

• Sold properties: Sold seven non-core properties as part of our capital recycling strategy for $39.0 million;

• Collected 100% of 2024 base rent: Collected 100% of 2024 base rental charges owed to us throughout the year;

• Issued common stock under ATM Program: Issued 3.7 million shares of common stock for net proceeds of $53.5 million;

• Issued Series F Preferred Stock: Issued 47,328 shares of our 6.00% Series F Preferred Stock for net proceeds of $1.1 million;

• Issued new debt: Borrowed $15.2 million in fixed rate mortgage debt at a weighted average interest rate of 5.60%, all with maturity dates of August 31, 2029;

• Issued senior unsecured notes: Issued $75.0 million in senior unsecured notes in a private placement at a fixed interest rate of 6.47% and a maturity date of December 18, 2029;

• Repaid debt: Repaid $32.5 million in fixed rate mortgage debt, with a weighted average interest rate of 4.59%, with cash on hand and borrowings from our line of credit;

• Extended mortgage debt maturity date: Extended the maturity date of a $7.4 million fixed rate note for an additional 1.3 years. As part of the extension, the interest rate became variable at SOFR + 2.25%;

• Leased vacant space: Leased 1,798,984 square feet of previously vacant space with lease terms ranging from 0.7 years to 7.2 years at three of our properties;

• Renewed leases: Renewed 1,141,225 square feet with remaining lease terms ranging from 5.3 years to 13.8 years at nine of our properties; and

• Paid distributions: Paid monthly cash distributions for the year totaling $1.20 per share on our common stock and Non-controlling OP Units, $1.656252 per share on our Series E Preferred Stock, $1.50 per share on our Series F Preferred Stock, $1.50 per share on our Series G Preferred Stock, and $1.05 per share on our senior common stock.

Fourth Quarter 2024 Results: FFO available to common shareholders and Non-controlling OP Unitholders for the quarter ended December 31, 2024, was $15.3 million, a 5.6% decrease when compared to the quarter ended September 30, 2024, equaling $0.35 per share. Core FFO available to common shareholders and Non-controlling OP Unitholders for the quarter ended December 31, 2024, was $15.3 million, a 5.9% decrease when compared to the quarter ended September 30, 2024, equaling $0.35 per share. Core FFO decreased primarily due to a settlement received during the quarter ended September 30, 2024 at one of our properties related to deferred maintenance.

Fiscal Year 2024 Results: FFO available to common stockholders and Non-controlling OP Unitholders for the year ended December 31, 2024, was $59.7 million, a 0.8% increase when compared to the year ended December 31, 2023, equaling $1.41 per share. Core FFO available to common stockholders and Non-controlling OP Unitholders for the year ended December 31, 2024, was $60.2 million, a 0.5% increase when compared to the year ended December 31, 2023, equaling $1.42 per share. Core FFO increased primarily due leasing activity during the year with significant increases in rental rates, a reduction to property operating expenses due to selling vacant properties, and a reduction to legal fee expense. This was partially offset by recognizing an Incentive Fee during 2024, which was contractually eliminated for all quarters in 2023.

Net income available to common stockholders and Non-controlling OP Unitholders for the three months and year ended December 31, 2024 was $4.0 million and $11.2 million, or $0.09 and $0.27 per share, respectively, compared to net income (loss) available (attributable) to common stockholders for the three months ended September 30, 2024 and year ended December 31, 2023 of $8.5 million and $(7.8) million, or $0.20 and $(0.19) per share, respectively. A reconciliation of Core FFO to net income (loss) for the three months ended December 31, 2024 and September 30, 2024 and the years ended December 31, 2024 and 2023, which we believe is the most directly comparable GAAP measure to Core FFO, and a computation of basic and diluted Core FFO per weighted average share of common stock and Non-controlling OP Unit and basic and diluted net income per weighted average share of common stock and Non-controlling OP Unit is set forth in the Summary Information table above.

Subsequent to the end of the quarter:

• Issued common stock under ATM Program: Issued 205,651 shares of common stock for net proceeds of $3.3 million;

• Issued Series F Preferred Stock: Issued 6,500 shares of our 6.00% Series F Preferred Stock for net proceeds of $0.1 million; and

• Declared distributions: Declared monthly cash distributions for January, February, and March 2025, totaling $0.30 per share on our common stock and Non-controlling OP Units, $0.414063 per share on our Series E Preferred Stock, $0.375 per share on our Series F Preferred Stock, $0.375 per share on our Series G Preferred Stock, and $0.2625 per share on our senior common stock.

Comments from Gladstone Commercial's President, Buzz Cooper: "Our financial results reflect consistent performance and stabilized revenues from our tremendous same store property occupancy, rent collection and growth, accretive real estate investments made during 2024 and 2023, and our ability to renew tenants, as well as our deleveraging and capital recycling programs. We believe we had an excellent 2024, by investing $26.8 million in seven assets, all industrial, in our target markets at accretive cap rates. We have continued our capital recycling program, whereby we have sold non-core assets and used the proceeds to de-lever our portfolio, as well as acquire properties in our target growth markets. We successfully exited seven non-core assets during 2024, recognizing a capital gain of $10.3 million, and we have additional non-core assets we anticipate selling over the next one to two years that we believe will result in capital gains. We will continue to opportunistically sell non-core assets and redeploy the proceeds into stronger target growth markets with a focus on industrial investment opportunities. While we expect to face challenges due to the lingering effects of the pandemic, significant inflation with a corresponding increase in interest rates, and the geo-political and economic issues arising from international wars, we feel strongly about the depth of our tenant credit underwriting. We have collected 100% of 2024 cash rents. We anticipate our tenants will successfully navigate the current economic climate and will be able to continue operating successfully when economic normalcy returns fully. Despite economic uncertainty, during 2024, we were able to lease nearly 1.8 million vacant square feet with three tenants and renew more than 1.1 million square feet with nine tenants. We are actively marketing our remaining vacant space and currently anticipate positive outcomes. We expect to continue to have access to the debt and equity markets, as necessary, for added liquidity. We believe our same store rents, which have increased by approximately 2% annually in recent years, should continue to rise as we grow, and we will continue to primarily focus on investing in our target markets, with an emphasis on industrial properties and actively managing our portfolio."

Conference Call: Gladstone Commercial will hold a conference call on Wednesday, February 19, 2025, at 8:30 a.m. Eastern Time to discuss its earnings results. Please call (866) 424-3437 (or (412) 902-1027) to enter the conference call. An operator will monitor the call and set a queue for questions. A conference call replay will be available beginning one hour after the call and will be accessible through February 26, 2025. To hear the replay, please dial (877) 660-6853 (or (201) 612-7415) and use playback conference number 13750256. The live audio broadcast of the Company's quarterly conference call will also be available on the investors section of our website, www.gladstonecommercial.com.

About Gladstone Commercial: Gladstone Commercial Corporation is a real estate investment trust focused on acquiring, owning, and operating net leased industrial and office properties across the United States. Including payments through January 2025, Gladstone Commercial has paid 241 consecutive monthly cash distributions on its common stock. Prior to paying distributions on a monthly basis, Gladstone Commercial paid five consecutive quarterly cash distributions. Gladstone Commercial has never skipped or deferred a distribution since its inception in 2003. Further information can be found at www.gladstonecommercial.com.

About the Gladstone Companies: Information on the business activities of all the Gladstone family of funds can be found at www.gladstonecompanies.com.

Investor Relations: For Investor Relations inquiries related to any of the monthly distribution-paying Gladstone family of funds, please visit www.gladstonecompanies.com.

Non-GAAP Financial Measures:

FFO: The National Association of Real Estate Investment Trusts ("NAREIT") developed FFO as a relative non-GAAP supplemental measure of operating performance of an equity REIT in order to recognize that income-producing real estate historically has not depreciated on the basis determined under GAAP. FFO, as defined by NAREIT, is net income (computed in accordance with GAAP), excluding gains (or losses) from sales of property and impairment losses on property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. FFO does not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an alternative to net income as an indication of its performance or to cash flow from operations as a measure of liquidity or ability to make distributions. The Company believes that FFO per share and unit provides investors with an additional context for evaluating its financial performance and as a supplemental measure to compare it to other REITs; however, comparisons of its FFO to the FFO of other REITs may not necessarily be meaningful due to potential differences in the application of the NAREIT definition used by such other REITs.

FFO as adjusted for comparability: FFO as adjusted for comparability is FFO adjusted for certain items that are not indicative of the results provided by the Company's operating portfolio and affect the comparability of the Company's period-over-period performance. These items include the adjustment for non-recurring expense adjustments related to the write off of offering costs pertaining to redeemed securities. Although the Company's calculation of FFO as adjusted for comparability differs from NAREIT's definition of FFO and may not be comparable to that of other REITs, the Company believes it is a meaningful supplemental measure of its operating performance. Accordingly, FFO as adjusted for comparability should be considered a supplement to net income computed in accordance with GAAP as a measure of our performance.

Core FFO: Core FFO is FFO adjusted for certain items that are not indicative of the results provided by the Company's operating portfolio and affect the comparability of the Company's period-over-period performance. These items include the adjustment for acquisition related expenses, gains or losses from early extinguishment of debt and any other non-recurring expense adjustments. Although the Company's calculation of Core FFO differs from NAREIT's definition of FFO and may not be comparable to that of other REITs, the Company believes it is a meaningful supplemental measure of its operating performance. Accordingly, Core FFO should be considered a supplement to net income computed in accordance with GAAP as a measure of our performance.

The Company's presentation of FFO, as defined by NAREIT, FFO as adjusted for comparability, or presentation of Core FFO, does not represent cash flows from operating activities determined in accordance with GAAP and should not be considered an alternative to net income as an indication of its performance or to cash flow from operations as a measure of liquidity or ability to make distributions.

The statements in this press release regarding the forecasted stability of Gladstone Commercial's income, its ability, plans or prospects to re-lease its unoccupied properties, and grow its portfolio are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on Gladstone Commercial's current plans that are believed to be reasonable as of the date of this press release. Factors that may cause actual results to differ materially from these forward-looking statements include, but are not limited to, Gladstone Commercial's ability to raise additional capital; availability and terms of capital and financing, both to fund its operations and to refinance its indebtedness as it matures; downturns in the current economic environment; the performance of its tenants; the impact of competition on its efforts to renew existing leases or re-lease space; and significant changes in interest rates.Additional factors that could cause actual results to differ materially from those stated or implied by its forward-looking statements are disclosed under the caption "Risk factors" of its Form 10-K for the fiscal year ended December 31, 2024, as filed with the SEC on February 18, 2025.Gladstone Commercial cautions readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made.Gladstone Commercial undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

CONTACT:
Gladstone Commercial Corporation
(703) 287-5893

SOURCE: Gladstone Commercial Corporation

View the original press release on ACCESS Newswire

FAQ

What was Gladstone Commercial's (GOOD) FFO per share for Q4 2024?

Gladstone Commercial reported FFO of $0.35 per share for Q4 2024.

How many properties did GOOD acquire and sell in 2024?

GOOD acquired seven fully-occupied properties for $26.8 million and sold seven non-core properties for $39.0 million in 2024.

What was GOOD's occupancy rate at the end of 2024?

GOOD's occupancy rate was 98.7% at the end of 2024, an increase from 96.8% in 2023.

How much common stock did GOOD issue under its ATM program in 2024?

GOOD issued 3.7 million shares of common stock for net proceeds of $53.5 million under its ATM program in 2024.

What was GOOD's rental collection rate for 2024?

GOOD achieved a 100% collection rate for 2024 base rental charges.