Gladstone Commercial Corporation Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Stockholders' and Mezzanine Equity

Stockholders' and Mezzanine Equity

6 Months Ended

Jun. 30, 2017

Equity [Abstract]

Stockholders' and Mezzanine Equity

Stockholders’ and Mezzanine Equity

Stockholders’ Equity

The following table summarizes the changes in our stockholders’ equity for the six months ended June 30, 2017 (dollars in thousands):



	Shares Issued and Retired
	Series A and B Preferred Stock	Common Stock	Senior Common Stock		Series A and B Preferred Stock		Senior Common Stock		Common Stock		Additional Paid in Capital		Other Comprehensive Income		Distributions in Excess of Accumulated Earnings			Total Stockholders' Equity
Balance at December 31, 2016	2,264,000	24,882,758	959,552		$	2	$	1	$	25	$	463,436	$	—	$	(223,587	)	$	239,877
Issuance of Series A and B preferred stock and common stock, net	—	855,238	—		—		—		1		17,886		—		—			17,887
Conversion of senior common stock to common stock	—	16,880	(18,768	)	—		—		—		—		—		—			—
Distributions declared to common, senior common and preferred stockholders	—	—	—		—		—		—		—		—		(24,159		)	(24,159		)
Other comprehensive income	—	—	—		—		—		—		—		179		—			179
Net income	—	—	—		—		—		—		—		—		5,020			5,020
Balance at June 30, 2017	2,264,000	25,754,876	940,784		$	2	$	1	$	26	$	481,322	$	179	$	(242,726	)	$	238,804

Distributions

We paid the following distributions per share for the three and six months ended June 30, 2017 and 2016:



	For the three months ended June 30,					For the six months ended June 30,
	2017			2016		2017			2016
Common Stock	$	0.375		$	0.375	$	0.750		$	0.750
Senior Common Stock	0.2625			0.2625		0.5250			0.5250
Series A Preferred Stock	0.4843749			0.4843749		0.9687498			0.9687498
Series B Preferred Stock	0.4688			0.4688		0.9375			0.9375
Series C Preferred Stock	—		(1)	0.4453		—		(1)	0.8906
Series D Preferred Stock	0.4375			0.1788		0.8750			0.1788


(1)	We fully redeemed our Series C Preferred Stock on August 19, 2016.

Recent Activity

Common Stock ATM Program

In February 2016, we amended our common ATM program with Cantor Fitzgerald (the “Common Stock ATM Program”). The amendment increased the amount of shares of common stock that we may offer and sell through Cantor Fitzgerald, to $160.0 million. All other terms of the Common Stock ATM program remained unchanged. During the six months ended June 30, 2017, we sold 0.9 million shares of common stock, raising $17.9 million in net proceeds under the Common Stock ATM Program. As of June 30, 2017, we had a remaining capacity to sell up to $114.3 million of common stock under the Common Stock ATM Program.

Series A and B Preferred Stock ATM Programs

In February 2016, we entered into an open market sales agreement with Cantor Fitzgerald (the “Series A and B Preferred ATM Program”), pursuant to which we may, from time to time, offer to sell (i) shares of our 7.75% Series A Cumulative Redeemable Preferred Stock (“Series A Preferred”), and (ii) shares of our 7.50% Series B Cumulative Redeemable Preferred Stock (“Series B Preferred”), having an aggregate offering price of up to $40.0 million, through Cantor Fitzgerald, acting as sales agent and/or principal. We did not sell any shares of our Series A Preferred or Series B Preferred during the six months ended June 30, 2017. As of June 30, 2017, we had a remaining capacity to sell up to $37.2 million of preferred stock under the Series A and B Preferred ATM Program.

Mezzanine Equity

The 7.00% Series D Cumulative Redeemable Preferred Stock (“Series D Preferred”), is classified as mezzanine equity in our condensed consolidated balance sheet because it is redeemable at the option of the shareholder upon a change of control of greater than 50% in accordance with ASC 480-10-S99 “Distinguishing Liabilities from Equity,” which requires mezzanine equity classification for preferred stock issuances with redemption features which are outside of the control of the issuer. A change in control of our company outside of our control is only possible if a tender offer is accepted by over 90% of our shareholders. All other change in control situations would require input from our Board of Directors. We will periodically evaluate the likelihood that a change of control greater than 50% will take place, and if we deem this probable, we would adjust the Series D Preferred presented in mezzanine equity to their redemption value, with the offset to gain (loss) on extinguishment. We currently believe the likelihood of a change of control greater than 50% is remote.

In June 2016, we entered into an open market sales agreement with Cantor Fitzgerald (the “Series D Preferred ATM Program”), pursuant to which we may, from time to time, offer to sell shares of our Series D Preferred, having an aggregate offering price of up to $50.0 million, through Cantor Fitzgerald, acting as sales agent and/or principal. During the six months ended June 30, 2017, we sold approximately 0.3 million shares of our Series D Preferred for net proceeds of $6.9 million. As of June 30, 2017, we had a remaining capacity to sell up to $26.7 million of Series D Preferred under the Series D Preferred ATM Program.

Amendment to Articles of Incorporation

On January 11, 2017, we filed with the Maryland State Department of Assessments and Taxation an Articles Supplementary reclassifying the remaining 160,000 authorized but unissued shares of our Series C Preferred Stock, as authorized but unissued shares of our common stock, and made a corresponding amendment to the Operating Partnership’s Partnership Agreement with regard to corresponding units of partnership interest. As a result of the reclassification, there are zero authorized shares of Series C Preferred Stock and zero authorized corresponding units of partnership interest remaining. On the same date, we filed with the Maryland State Department of Assessments and Taxation an Articles of Restatement, restating and integrating into a single instrument all prior Articles Supplementary and amendments thereto.