Exhibit 99.1 GLADSTONE COMMERCIAL CORPORATION ANNOUNCES FINANCIAL RESULTS FOR THE YEAR ENDED DECEMBER 31, 2004: NET INCOME OF $0.21 PER WEIGHTED AVERAGE COMMON SHARE AND FUNDS FROM OPERATIONS OF $0.34 PER DILUTED WEIGHTED AVERAGE COMMON SHARE MCLEAN, Va., March 8 /PRNewswire-FirstCall/ -- Gladstone Commercial Corp. (Nasdaq: GOOD) (the "Company") reported today financial results for the quarter and year ended December 31, 2004. Net income for the year ended December 31, 2004 was $1,623,928, or $0.21 per basic and diluted weighted average common share, compared to a net loss for the period from February 14, 2003 (inception) through December 31, 2003 of $240,871, or $0.07 per basic and diluted weighted average common share. Funds from Operations ("FFO") for the year ended December 31, 2004 was $2,597,273 or $0.34 per diluted weighted average common share. Net Income for the three months ended December 31, 2004 was $999,920, or $0.13 per basic and diluted weighted average common share, compared to a net loss of $126,009, or $0.02 per basic and diluted weighted average common share for the three months ended December 31, 2003. FFO for the three months ended December 31, 2004 was $1,454,132 or $0.19 per diluted weighted average common share. In the fourth quarter of 2004, the Company added four additional properties to its portfolio, for an aggregate purchase price of approximately $12.8 million. At December 31, 2004, the Company had approximately $75.8 million invested from its initial public offering in twelve real properties and one mortgage loan. Subsequent to December 31, 2004, the Company acquired two properties for an aggregate cost of $12.4 million. Also subsequent to the year end the company announced that it had arranged a warehouse line of credit with BB&T Bank for up to $50 million. "The fourth quarter showed positive growth and results for the Company, and we look forward to 2005. We have a backlog of new purchases that we believe will permit us to increase our future dividend. We also expect to receive long-term mortgages on some of our investments and expect to begin using our new warehouse line of credit to make new investments," said a spokesperson for the Company. The National Association of Real Estate Investment Trusts (NAREIT) developed FFO, as a relative non-GAAP (Generally Accepted Accounting Principles) 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 (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 does not represent cash flows from operating activities in accordance with GAAP (which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income (loss)), and should not be considered an alternative to either net income (loss) as an indication of our performance or to cash flow from operations as a measure of liquidity or ability to make distributions. A reconciliation of net income, which we believe is the most directly comparable GAAP measure, to FFO is set forth below:
For the period February 14, Year ended 2003 through (inception) December 31, December 31, 2004 2003 ------------ ------------ Net income $ 1,623,928 $ (240,871) Real estate depreciation and amortization 973,345 5,827 Funds from operations 2,597,273 (235,044) Weighted average shares outstanding - diluted 7,708,534 3,229,119 Diluted net income (loss) per weighted average common share $ 0.21 $ (0.07) Diluted funds from operations per weighted average common share $ 0.34 $ (0.07)
For the three For the three months ended months ended December 31, December 31, 2004 2003 ------------- ------------- Net income (loss) $ 999,920 $ (126,009) Real estate depreciation and amortization 454,212 5,827 Funds from operations 1,454,132 (120,182) Weighted average shares outstanding - diluted 7,725,434 7,674,455 Diluted net income (loss) per weighted average common share $ 0.13 $ (0.02) Diluted funds from operations per weighted average common share $ 0.19 $ (0.02)
To learn more about our FFO please refer to our Annual Report on Form 10-K for the year ended December 31, 2004 filed with the Securities and Exchange Commission ("SEC") today and on our web site at http://www.GladstoneCommercial.com. The financial statements attached below are without footnotes so readers should obtain and carefully review our Form 10-K for the year ended December 31, 2004, including the footnotes to the financial statements contained therein. We have filed the Form 10-K today with the SEC and the Form 10-K 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, March 9, 2005. To enter the call please dial 866-244-4526 and use the confirmation code 658722. 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 658722. The replay will be available until April 9, 2005. For further information contact our Chief Financial Officer, Harry Brill, 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, 2004, as filed with the Securities and Exchange Commission on March 8, 2005. 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 Sheets
December 31, December 31, 2004 2003 ------------ ------------ ASSETS Real estate, net $ 60,466,330 $ 5,436,153 Mortgage note receivable 11,107,717 - Cash and cash equivalents 29,153,987 99,075,765 Funds held in escrow 1,060,977 - Interest receivable - mortgage note 64,795 - Interest receivable - employees 4,792 - Deferred rent receivable 210,846 - Prepaid expenses 170,685 191,432 Other assets 114,819 - Lease intangibles, net of accumulated amortization of $194,047 and $1,208, respectively 3,230,146 358,020 TOTAL ASSETS 105,585,094 105,061,370 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Due to Adviser 129,231 234,295 Accounts payable and accrued expenses 168,389 - Dividends payable 920,040 76,420 Rent received in advance, security deposits and funds held in escrow 1,674,741 - Total Liabilities 2,892,401 310,715 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 (2,367,523) (317,291) Total Stockholders' Equity 102,692,693 104,750,655 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $105,585,094 $105,061,370
Gladstone Commercial Corporation Consolidated Statements of Operations
For the period February 14, 2003 For the (inception) Year ended through December 31, December 31, 2004 2003 ------------ ------------ OPERATING REVENUES Rental income $ 3,331,215 $ 12,180 Interest income from mortgage note receivable 981,187 - Total operating revenues 4,312,402 12,180 OPERATING EXPENSES Management advisory fee 1,187,776 317,188 Depreciation and amortization 973,345 5,827 Insurance 250,816 111,240 Professional Fees 448,969 39,511 General and administrative 442,227 83,382 Total operating expenses 3,303,133 557,148 Net income (loss) from operations 1,009,269 (544,968) Interest income from temporary investments 608,617 304,097 Interest income - employee loans 6,042 - NET INCOME (LOSS) $ 1,623,928 $ (240,871) Earnings (loss) per weighted average common share Basic $ 0.21 $ (0.07) Diluted $ 0.21 $ (0.07) Weighted average shares outstanding Basic 7,649,855 3,229,119 Diluted 7,708,534 3,229,119
Gladstone Commercial Corporation Consolidated Statements of Operations
For the three For the three months ended months ended December 31, December 31, 2004 2003 ------------- ------------- OPERATING REVENUES Rental income $ 1,663,677 $ 12,180 Interest income from mortgage note receivable 284,128 - Total operating revenues 1,947,805 12,180 OPERATING EXPENSES Management advisory fee 344,416 193,092 Depreciation and amortization 454,212 5,827 Insurance 62,262 60,734 Professional Fees 135,165 29,511 General and administrative 76,538 61,590 Total operating expenses 1,072,593 350,754 Net income (loss) from operations 875,212 (338,574) Interest income from temporary investments 119,916 212,565 Interest income - employee loans 4,792 - NET INCOME (LOSS) $ 999,920 $ (126,009) Earnings (loss) per weighted average common share Basic $ 0.13 $ (0.02) Diluted $ 0.13 $ (0.02) Weighted average shares outstanding Basic 7,667,000 7,642,000 Diluted 7,725,434 7,674,455
Gladstone Commercial Corporation Consolidated Statements of Cash Flows
For the period February 14, 2003 For the (inception) Year ended through December 31, December 31, 2004 2003 ------------ ------------ Cash flows from operating activities: Net income (loss) $ 1,623,928 $ (240,871) Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 973,345 5,827 Changes in assets and liabilities: Increase in mortgage interest receivable (64,795) - Increase in employee interest receivable (4,792) - Decrease (increase) in prepaid expenses 20,747 (191,432) Increase in other assets (64,819) - Increase in deferred rent receivable (210,846) - Increase in accounts payable and accrued expenses 168,389 - (Decrease) increase in due to Adviser (105,064) 234,295 Increase in rent received in advance and security deposits 613,764 - Net cash provided by (used in) operating activities 2,949,857 (192,181) Cash flows from investing activities: Acquisition of real estate (58,875,648) (5,800,000) Issuance of mortgage note receivable (11,170,000) - Deposit on future acquisition (50,000) Principal repayments on mortgage note receivable 62,283 - Net cash used in investing activities (70,033,365) (5,800,000) Cash flows from financing activities: Proceeds from share issuance - 105,067,946 Offering costs (7,730) - Dividends paid (2,830,540) - Net cash (used in) provided by financing activities (2,838,270) 105,067,946 Net (decrease) increase in cash and cash equivalents (69,921,778) 99,075,765 Cash and cash equivalents, beginning of period 99,075,765 - Cash and cash equivalents, end of period $ 29,153,987 $ 99,075,765 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- 03/08/2005 /CONTACT: Harry Brill, Chief Financial Officer of Gladstone Commercial Corporation, +1-703-286-7000/ /Web site: http://www.gladstonecommercial.com/ (GOOD)