Exhibit 99.1 Gladstone Commercial Corporation Announces Financial Results for the Third Quarter Ended September 30, 2004: Net Income of $0.09 Per Weighted Average Common Share and Funds From Operations of $0.13 Per Diluted Weighted Average Common Share MCLEAN, Va., Nov. 3 /PRNewswire-FirstCall/ -- Gladstone Commercial Corp. (Nasdaq: GOOD) (the "Company") reported today financial results for the third quarter ended September 30, 2004. Net income for the three months ended September 30, 2004 was $685,038, or $0.09 per basic and diluted weighted average common share, compared to a net loss for the three months ended September 30, 2003 of $104,208, or $0.03 per basic and diluted weighted average common share. For the nine months ended September 30, 2004, net income was $624,009, or $0.08 per basic and diluted weighted average common share, compared to a net loss for the period from February 14, 2003 (inception) through September 30, 2003 of $114,862, or $0.08 per basic and diluted weighted average common share. Total assets were $105,113,407 as of September 30, 2004 as compared to $105,061,370 as of December 31, 2003. "In the third quarter we added four additional properties to our portfolio, for an aggregate purchase price of approximately $23.3 million. At September 30, 2004, we had approximately $62.5 million invested from our initial public offering in eight real properties and one mortgage loan. Subsequent to September 30, 2004, we acquired four properties for an aggregate cost of $12.8 million. The third quarter showed positive growth and results for us. We look forward to closing out our first full fiscal year ending December 31, 2004 with a strong portfolio, good backlog and a consistent dividend," said a spokesperson for the Company. The National Association of Real Estate Investment Trusts (NAREIT) developed Funds from Operations, ("FFO"), as a relative non-GAAP (Generally Accepted Accounting Principles) 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. For the three months ended September 30, 2004, FFO was $998,070, or $0.13 per diluted weighted average common share. For the nine months ended September 30, 2004, FFO was $1,143,142, or $0.15 per diluted weighted average common share. A reconciliation of net income to FFO is set forth below: Three months ended Nine months ended September 30, 2004 September 30, 2004 Net income $ 685,038 $ 624,009 Real estate depreciation and amortization 313,032 519,133 Funds from operations 998,070 1,143,142 Weighted average shares outstanding - diluted 7,697,079 7,703,504 Diluted net income per weighted average common share $ 0.09 $ 0.08 Diluted funds from operations per weighted average common share $ 0.13 $ 0.15 To learn more about our FFO please refer to the Quarterly Report on the Form 10-Q for the quarter ended September 30, 2004 filed with the Securities and Exchange Commission ("SEC") today. The financial statements below are without footnotes so readers should obtain and carefully review our Form 10-Q for the period ended September 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 http://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 EST, November 4, 2004. To enter the call please dial 866-219-5268 and use the confirmation code 589810. An operator will monitor the call and set a queue for questions. To hear the replay of the call please dial 888-266-2081 and use the confirmation code 589810. The replay will be available until December 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) September 30, December 31, 2004 2003 ASSETS Real estate, net $ 48,784,959 $ 5,436,153 Mortgage note receivable 11,131,050 - Cash and cash equivalents 41,349,714 99,075,765 Funds held in escrow 983,501 - Interest receivable - mortgage note 61,840 - Interest receivable - officers 1,250 - Deferred rent receivable 100,110 - Prepaid expenses 228,725 191,432 Other assets 225,319 - Lease intangibles, net of accumulated amortization of $98,755 and $1,208, respectively 2,246,939 358,020 TOTAL ASSETS $ 105,113,407 $ 105,061,370 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Due to Adviser $ 109,639 $ 234,295 Accounts payable and accrued expenses 11,898 - Dividends payable 920,040 76,420 Rent received in advance, security deposits and funds held in escrow 1,459,016 - Total Liabilities $ 2,500,593 $ 310,715 STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 20,000,000 shares authorized and 7,667,000 and 7,642,000 shares issued and outstanding, respectively $ 7,667 $ 7,642 Additional paid in capital 105,427,549 105,060,304 Notes receivable - employees (375,000) - Distributions in excess of accumulated earnings (2,447,402) (317,291) Total Stockholders' Equity $ 102,612,814 $ 104,750,655 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 105,113,407 $ 105,061,370 Gladstone Commercial Corporation Consolidated Statements of Operations (Unaudited) For the three months For the three months ended September 30, ended September 30, 2004 2003 OPERATING REVENUES Rental income $ 1,066,076 $ - Interest income from mortgage note receivable 284,659 - Total operating revenues 1,350,735 - OPERATING EXPENSES Management advisory fee 333,825 124,096 Depreciation and amortization 313,032 - General and administrative 173,806 71,644 Total operating expenses 820,663 195,740 Net income (loss) from operations 530,072 (195,740) Interest income from temporary investments 153,716 91,532 Interest income - employee loans 1,250 - NET INCOME (LOSS) $ 685,038 $ (104,208) Earnings (loss) per weighted average common share Basic $ 0.09 $ (0.03) Diluted $ 0.09 $ (0.03) Weighted average shares outstanding Basic 7,648,250 3,547,297 Diluted 7,697,079 3,547,297 For the period For the nine February 14, 2003 months ended (inception) through September 30, 2004 September 30, 2004 OPERATING REVENUES Rental income $ 1,667,538 $ - Interest income from mortgage note receivable 697,059 - Total operating revenues 2,364,597 - OPERATING EXPENSES Management advisory fee 843,360 124,096 Depreciation and amortization 519,133 - General and administrative 868,046 82,298 Total operating expenses 2,230,539 206,394 Net income (loss) from operations 134,058 (206,394) Interest income from temporary investments 488,701 91,532 Interest income - employee loans 1,250 - NET INCOME(LOSS) 624,009 (114,862) Earnings (loss) per weighted average common share Basic $ 0.08 $ (0.08) Diluted $ 0.08 $ (0.08) Weighted average shares outstanding Basic 7,644,099 1,448,482 Diluted 7,703,504 1,448,482 Gladstone Commercial Corporation Consolidated Statement of Cash Flows (Unaudited) For the period For the nine February 14, 2003 months ended (inception) through September 30, 2004 September 30, 2004 Cash flows from operating activities: Net income (loss) $ 624,009 $ (114,862) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 519,133 - Changes in assets and liabilities: Increase in mortgage interest receivable (61,840) - Increase in employee interest receivable (1,250) - Increase in prepaid expenses (37,293) (267,058) Increase in other assets (25,319) - Increase in deferred rent receivable (100,110) - Increase in accounts payable and accrued expenses 11,898 - (Decrease) increase in due to Adviser (124,656) 41,203 Increase in rent received in advance and security deposits 475,515 - Net cash provided by (used in) operating activities 1,280,087 (340,717) Cash flows from investing activities: Acquisition of real estate (45,756,858) - Mortgage note receivable (11,170,000) - Deposit on future acquisition (200,000) - Principal repayments on mortgage note receivable 38,950 - Net cash used in investing activities (57,087,908) - Cash flows from financing activities: Proceeds from share issuance - 105,233,148 Offering costs (7,730) - Dividends paid (1,910,500) - Net cash (used in) provided by financing activities (1,918,230) 105,233,148 Net (decrease) increase in cash and cash equivalents (57,726,051) 104,892,431 Cash and cash equivalents, beginning of period 99,075,765 - Cash and cash equivalents, end of period $ 41,349,714 $ 104,892,431 Non-cash financing activities: Notes receivable issued in exchange for common stock associated with the exercise of employee stock options $ 375,000 $ - SOURCE Gladstone Commercial Corporation -0- 11/03/2004 /CONTACT: Harry Brill, Chief Financial Officer, or Skye Breeden, Director of Shareholder Relations, of Gladstone Commercial Corporation, +1-703-286-7000/ /Web site: http://www.gladstonecommercial.com / (GOOD) CO: Gladstone Commercial Corporation ST: Virginia IN: FIN RLT SU: CCA ERN