Exhibit 99.1 Gladstone Commercial Corporation Announces the Financial Results for the Second Quarter Ended June 30, 2004 MCLEAN, Va., Aug. 4 /PRNewswire-FirstCall/ -- Gladstone Commercial Corp. (Nasdaq: GOOD) (the "Company") reported today financial results for the second quarter ended June 30, 2004. Net income for the period was $132,275, or $0.02 per basic and diluted weighted average common share, compared to a net loss for the second quarter ended June 30, 2003 of $105, or $0.00 per basic and diluted weighted average common share. For the six months ended June 30, 2004 the net loss was $61,029, or $0.01 per basic and diluted weighted average common share, compared to a net loss for the period from February 14, 2003 (inception) through June 30, 2003 of $10,654, or $0.20 per basic and diluted weighted average common share. Our initial public offering took place in August of 2003 and therefore, the financial statements for the corresponding periods of 2003 do not provide an accurate basis for comparison. Total assets were $104,404,705 as of June 30, 2004 as compared to $105,061,370 at December 31, 2003. The National Association of Real Estate Investment Trusts (NAREIT) developed Funds from Operations, ("FFO"), as a relative non-GAAP (Generally Accepted Accounting Principles in the United States) financial measure of performance and liquidity 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 (loss) (computed in accordance with GAAP), excluding gains (or losses) from sales of property, plus depreciation and amortization of real estate assets, and after adjustments for unconsolidated partnerships and joint ventures. FFO for the second quarter ended June 30, 2004 was $259,047, or $0.03 per diluted weighted average common share. A reconciliation of FFO to net income is set forth below: Three months Six months ended June 30, ended June 30, 2004 2004 Net income (loss) $ 132,275 $ (61,029) Real estate depreciation and amortization 126,772 206,101 Funds from operations 259,047 145,072 Weighted average shares outstanding - diluted 7,764,734 7,695,132 Diluted net income (loss) per weighted average common share $ 0.02 $ (0.01) Diluted funds from operations per weighted average common share $ 0.03 $ 0.02 To learn more about our FFO please refer to the Quarterly Report on the Form 10-Q for the quarter ended June 30, 2004 filed with the Securities and Exchange Commission ("SEC") today. "In the second quarter we added two properties for an aggregate purchase price of $18.6 million to our portfolio. At June 30, 2004, we had approximately $39.2 million invested from our initial public offering in four real properties and one mortgage loan. Subsequent to June 30, 2004, we have also acquired one property for $5.2 million. Once the proceeds from our initial public offering have been substantially or fully invested, we intend to obtain and use a line of credit to continue to make investments," said a spokesperson for the Company. The financial statements below are without footnotes so readers should obtain and carefully review our Form 10-Q for the period ended June 30, 2004, including the footnotes to the financial statements contained therein. We have filed the Form 10-Q today with the SEC and the Form 10-Q can be retrieved at the SEC website at www.SEC.gov or the website for Gladstone Commercial at http://www.GladstoneCommercial.com. Gladstone Commercial will have a conference call at 10:30 am EDT, August 5, 2004. To enter the call please dial 866-818-1395 and use the confirmation code 530364. An operator will monitor the call and set a queue for questions. To hear the replay please dial 888-266-2081 and use the confirmation code 530364. The replay will be available until September 4, 2004. For further information contact our Chief Financial Officer, Harry Brill or Skye Breeden, Director of Shareholder Relations at 703-286-7000. This press release may include statements that may constitute "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, including statements with regard to the future performance of the Company and the closing of any transaction. Words such as "believes," "intend," "expects," "projects" and "future" or similar expressions are intended to identify forward-looking statements. These forward-looking statements inherently involve certain risks and uncertainties, although they are based on the Company's current plans that are believed to be reasonable as of the date of this press release. Factors that may cause the Company's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements include, among others, those factors listed under the caption "Risk factors" of the Company's Annual Report on Form 10-K for the year ended, December 31, 2003, as filed with the Securities and Exchange Commission on March 10, 2004. The Company undertakes no obligation to publicly update or revise any forward- looking statements, whether as a result of new information, future events or otherwise. Gladstone Commercial Corporation Consolidated Balance Sheet (Unaudited) June 30, December 31, 2004 2003 ASSETS Real estate, net $26,863,418 $5,436,153 Mortgage note receivable 11,150,787 - Cash and cash equivalents 65,016,018 99,075,765 Funds held in escrow 187,234 - Interest receivable - mortgage note 61,950 - Deferred rent receivable 41,535 - Prepaid expenses 68,932 191,432 Other assets 25,000 - Lease intangibles, net of accumulated amortization of $38,979 and $1,208, respectively 989,831 358,020 TOTAL ASSETS $104,404,705 $105,061,370 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Due to Adviser $103,210 $234,295 Accounts payable 41,594 - Dividends payable 917,040 76,420 Accrued expenses 14,220 - Rent received in advance, security deposits and funds held in escrow 480,826 - Total Liabilities 1,556,890 310,715 STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 20,000,000 shares authorized, 7,642,000 shares issued and outstanding 7,642 7,642 Additional paid-in capital 105,052,573 105,060,304 Distributions in excess of accumulated earnings (2,212,400) (317,291) Total Stockholders' Equity 102,847,815 104,750,655 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $104,404,705 $105,061,370 Gladstone Commercial Corporation Consolidated Statements of Operations (Unaudited) For the Three For the Three Months Ended Months Ended June 30, June 30, 2004 2003 OPERATING REVENUES: Rental income $403,690 $- Interest income from mortgage note receivable 278,980 - Total operating revenues 682,670 - OPERATING EXPENSES: Management advisory fee 280,122 - Depreciation and amortization 126,772 - General and administrative 306,024 105 Total operating expenses 712,918 105 Net loss from operations (30,248) (105) Interest income from temporary investments 162,523 - NET INCOME (LOSS) $132,275 $(105) Earnings (loss) per weighted average common share Basic $0.02 $- Diluted $0.02 $- Weighted average shares outstanding Basic 7,642,000 52,000 Diluted 7,695,134 52,000 For the Period For the Six February 14, 2003 Months Ended (Inception) to June 30, June 30, 2004 2003 OPERATING REVENUES: Rental income $601,463 $- Interest income from mortgage note receivable 412,400 - Total operating revenues 1,013,863 - OPERATING EXPENSES: Management advisory fee 509,538 - Depreciation and amortization 206,101 - General and administrative 694,238 10,654 Total operating expenses 1,409,877 10,654 Net loss from operations (396,014) (10,654) Interest income from temporary investments 334,985 - NET LOSS $(61,029) $(10,654) Loss per weighted average common share Basic $(0.01) $(0.20) Diluted $(0.01) $(0.20) Weighted average shares outstanding Basic 7,642,000 52,000 Diluted 7,764,732 52,000 Gladstone Commercial Corporation Consolidated Statement of Cash Flows For the Period (Unaudited) For the Six February 14, 2003 Months Ended (Inception) to June 30, June 30, 2004 2003 Cash flows from operating activities: Net loss $(61,029) $(10,654) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 206,101 - Changes in assets and liabilities: Increase in mortgage interest receivable (61,950) - Decrease in prepaid expenses 122,500 - Increase in other assets (25,000)- Increase in deferred rent receivable (41,535) - Increase in accounts payable 41,594 10,654 Decrease in due to Adviser (131,085) - Increase in accrued expenses 14,220 - Increase in rent received in advance and security deposits 293,592 - Net cash provided by operating activities 357,408 - Cash used in investing activities: Acquisition of real estate (22,265,178) - Mortgage note receivable (11,170,000) - Principal repayments on mortgage note receivable 19,213 - Net cash used in investing activities (33,415,965) - Cash flow from financing activities: Proceeds from share issuance - 52,000 Payments for deferred offering costs - (22,385) Offering costs (7,730) - Dividends paid (993,460) - Net cash (used in) provided by financing activities (1,001,190) 29,615 Net (decrease) increase in cash and cash equivalents (34,059,747) 29,615 Cash and cash equivalents, beginning of period 99,075,765 - Cash and cash equivalents, end of period $65,016,018 $29,615 SOURCE Gladstone Commercial Corp. -0- 08/04/2004 /CONTACT: Harry Brill, Chief Financial Officer, or Skye Breeden, Director of Shareholder Relations, both of Gladstone Commercial Corp., +1-703-286-7000/ /Web site: http://www.gladstonecommercial.com / (GOOD) CO: Gladstone Commercial Corp. ST: Virginia IN: FIN RLT SU: ERN CCA