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GOOD Gladstone Commercial

Participants
David Gladstone Chairman & CEO
Mike Sodo CFO
Bob Cutlip President
Rob Stevenson Janney Montgomery Scott
David Corak B. Riley FBR
Laura Engel Stonegate Capital
John Massocca Ladenburg Thalmann
Jeff Rudner UBS
Rick Murray Sorin Capital
Call transcript
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Operator

Good day, ladies and gentlemen and welcome to the Gladstone Commercial Fourth Quarter and Year Ended December 31, 2017 Earnings Call and Webcast. At this time, all participants are in a listen-only mode.

Following management's prepared remarks, we'll host a question-and-answer session and our instructions will be given at that time. [Operator Instructions] As a reminder, this conference call may be recorded. It is now my pleasure to hand the conference over to Mr. Gladstone. David begin. may you Sir,

David Gladstone

us we right. Thank all as and to and Nice mentioned Please of come and are see invitation open area. you, Washington in you for Brian. to by and hope in calls of visit if DC in you located this an these We're if always you time introduction called suburb have have calling you us more are the McLean, the every them. area. thanks enjoy Virginia and stop All can in. we We

at You'll see a great team work.

As have the before XX team members mentioned in we still here. over

South Now well, how Florida. before you're to -- are say hear sad wanted going from we we begin in about to just all shootings the

wish in people see We those to heart and just events. our have such properties all breaks Florida

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Unidentified Company Representative

of different be we risk statements, law. SEC. XXXX Thanks, XX-Q, the the required statements forward-looking under plans, except risks be be forms to obligation any forward-looking these with undertake found and FFO income which SEC's of accounting by factors, include other materially is funds to believe any based any on reasonable. real as our from results we can from Today www.sec.gov. David. and Securities are new operations. Today's assets. documents our results as upon of expressed cause forward-looking Many FFO, XX-K, in may information, performance. all Those morning, Securities or net regarding publicly the and website, website, current we implied the actual future factors on Act and including which excluding or otherwise, Exchange statements a as of from statements, by from file or depreciation non-GAAP We losses our Good events may a the the our those future estate of involve certain everybody. report XXXX, Act of future forward-looking including estate and defined These uncertainties real to losses update no these sale specifically whether impairment is revise result gains will Investor property, plus Relations or or www.gladstonecommercial.com discuss page amortization our that term the

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Bob Cutlip

Eric. Thanks Good morning, everyone.

Vance, an for quarter, of $X.X office in property fourth under million Lake capacity, executed property property loan, $XX.X in the to acquired our Ohio, our Subsequent Texas During cost. a Alabama. the expanded acquire credit We stock industrial roadshows Utah, executed analysts $X.X City, resulting acquired Maple the Tewksbury, and by in Massachusetts multiple Arlington, for common million of two a plant million maturing note in in a $XX.X Columbus, XX,XXX mortgage coverage. $XX quarter, in $XX.X our agreement to preferred initiated extended million, Boston term January held Repaid property our and we sell an that non-deal Ohio our recently lower million the line conducted executed adjacent million Salt feet hosted in to in the office and industrial that Heights, including and million, stock increased programs research end borrowing were leased and maturities property and ATM X. $X.X property agreement extended significantly an and to a issued Mercedes-Benz square of we to agreement effective assembly Los Angeles sell

rate an loan and renewed We office Texas. single contribution Houston, North property markets. in property five We of property during tenants of GAAP worthy lower industrial highlights that seven property year We invested include at revolver full $XXX costs the we XXXX. million the at an rental noted and and leases rates. impact interest fully and investment, average be only over extended asset as of accretive December acquisitions leverage in extended four these cap completed per $XX.X square resulted in yield acquisitions Raleigh, the exited three one to transactions ended XX and a capital non-core our maturing XXXX lower The lease is average and and For of of us months an of the project of increase Carolina recast of the to felt some at mortgages in management at term up and refinanced to in foot rate these income four X.X%, X.X%. million of note term or expansion expected timing

you XXXX. member can from As this contributed across overview, all to successful see a team functions every

year-end, were XX% occupied. As properties of our

healthy be to a We our pipeline have acquisition with activity of properties. and pleased continue

standpoint. than The volume XX%, the started at most have at current and slower the cycle sales As peaking quarterly overall but rise Prices published listing sales forecast types, overall in somewhere trending a ninth the the recent with volume exception XXXX. the much industry than of much continue researchers that year the pace noted market industrial to reflect noted for of properties. reports XXXX. year by between normal. Completing maybe last Investment for compared maybe to volume X% from reducing our during investment product as call, cycle, a most lower sales a rate was the slower year for

to volume investment forecasting XXXX XXXX. are firms similar be for could overall research that However,

Our team will conditions location and growth acquire credit, and market asset measured tenant we investigate are opportunities to promote monitor and our the -- monitor accretive strategy. properties and when returns will continue actively

counterparts building for day our some briefly X. to possessing sale Ohio and two the The the properties a The office Utah. same our significant located credit executed We in properties A improvements Assembly with property and year-end the completed seller we the tenant been leads the their each is their or $XX two West The industrial the Stanley our were since for is Alabama. the on same teams details. target lease December Now properties, There's agreement Morgan team City, the million. of Columbus, the Ohio company-specific also us yield million Wealth summarize Mercedes-Benz a tenant, Vance, Salt the To bank in property. occupying all. who listing the has design average cap Management who quarter. and Plant in X.X%. agreement at term and are and and grade transaction and multistory prior Salt was $XX.X acquisitions the diligently second average acquire regional and relationships, is region, our region transaction with investment the markets, to X. rate in Lake to is to said million invested closed Tucker the has our the win-win seller and with and availability investment December White, XXXX of in worked the closed created same transactions, the personally complete Columbus, the investment in We X.X to Columbus during the tenant acquisitions agent Andrew at a as and location. $XX.X an to approximately November and years about purchase lot Matt adjacent Midwest on both of knowledge City executed is acquisitions XX% capital, unexpired in our requirement transactions average who seller markets property of These our the sale approach leads the broker both these Lake of

next has transaction, tenant We invested phase this XX million for recently and The lease the an due $XX The million term is the promote lease will years. of increasing $XX.X permitting. constructed the years, and market of average automated our cap X.X%. course the this of is are expected few assembly system industrial term property an Closing The March. in over price with was acquisition in manufacturing buildings closing strategy facility. the diligence allocation to currently in conditions rate our just-in-time

Of industrial. the the is million initial stage, Our which XX this of team is acquisition is pipeline Letter million properties, seven $XX.X in Intent million candidates balance of continues $XXX due to in in of and stage review. are a have exceeding the total, diligence $XX under volume in strong

Our management has team ensure portfolio continued managing to strong our performance. asset

our partially and earlier, XX,XXX X noted we of feet of leased occupied are As in Ohio properties vacant Heights, two Houston, as January Raleigh and property. Maple our now fully square Texas, in

sell determine proceeds XXXX the strategy before The January. the property contract of to one recognize our Our date foot fully for quarter sale expirations the further market X,XXX vacated for we the with quarter. property the this we this at acquire Massachusetts, first the due one vacant what tenant no square balance only the a and the tenant million were property the the in asset XXXX, end We are in under and for expirations March. end an that believe in and of $X.X scheduled of redeploy target one end with year. news elected expected the on Of Tewksbury, impairment to fourth renewed, closing inferior better is of tenant markets. an expected characteristics currently before that have better to lease date That's three is

capital the because fact in or as The retain growth an tenant during do for majority of we needing our Our expiring contractual tenants capital space deficits. of the significant majority with just either to is tenants of our fund to engaging commissions re-lease will improvements already approximately availability XXXX. and be is expiring to represent or leasing rent more of leases leases those not leases vacant opportunities pursue of for and or same This XXXX their used shareholders our operating XX% our period. of anticipate end the important have as X% peers team

lower This capital properties non-core more and selective of annual expirations redeployment on properties our to capital sale those emphasize growth. manageable opportunities of improving gives the combination cost and standpoint, ahead limited of the our structure, think continue lower from us debt important lower lease level. to it's that years maturing proceeds I and structure and of the at to our is note debt a very a loan-to-value and in our costs annual refinancings amount

So, success, and activities our continued fourth year-to-date quarter in and our summary, refinanced credit maturing acquisition facility and our leasing extended loans.

candidates continues that strong only team with in of pipeline to Our growth a to accretive have our strategy acquisition and our adhere creditworthy operations. we'll of markets tenants acquiring to properties are

turn it to the Mike financial over report on a for Now let's results.

Mike Sodo

of or million I'll morning. respectively and shares. All totaling and FFO half $XX.X from operating growth available going and for FFO Good quarter basis is core end year $X.XXX in and core Bob. on other X% a the is On for and FFO and and $X.X core mentioned. and to basis, the share the million quarter common $XX.X from these $XX are full are the rents year the FFO us the profitability $X.XXX for reference well or given FFO earnings share contributed at weighted increase, FFO I based latter quarter the full this two forward On quarter. reviewing Thanks prior over per available a prior were respectively core in stockholders our approximately core third the an of XX% million the respectively anticipated acquisitions and to properties million to totaling the office common as start as five $X.XX fully Bob share $XX.X quarter. properties results. million per year. as second increase, between per help XXXX. participation $XXX,XXX We their diluted from FFO December common numbers increase stockholders were completed acquired The year. of $X.XX by fourth property approximately this average to

million to fourth Our revenues compared results impairment operating period. total $XX.X total excluding in $XX.X reflected to expenses of as million quarter operating increase the an losses for

debt and a let's Now structure. capital take look at activity our

the assets our to beginning enhance acquisitions of XX% sheet gross we debt leverage leverage. continue We to by at on strong our debt levels. our decreasing through focus lower balance We've as refinancing reduced assets to grow financing XXXX, XX% since maturing our and new and generally

expect leverage the XX next continue over We to to gradually XX decrease our months. to

us this we proper leverage discussed the various forward we As this investors lenders, and put with believe going at will analysts, long-term. level

to mortgage make to term continue We use acquisitions. long debt primarily

As investments, we'll assets high-quality to this additional we with our funding Over grow through look time, pool will increase property disciplined our as expand unsecured alternatives. well.

over We we have with our we loans. placed months spread manage of interest debt million all to at XX of the variable ranging long-term As on primarily balance new rate caps X.XX% from repaid sheet, interest rate plus $XXX one-month LIBOR the to X.XX%. a past rates equal mortgages these

I'll these X% X% refinancing amend, a this through mortgages future. refinance in facility permanent the totaling as our a average credit further Prior of debt credit success well credit of million, extend our in of new in fully combined disposition properties credit the revolving our our and upsized and tremendous through we as We upsize unencumbered decreasing prospects were loan facility $XX October and to facility. $XX facility is XXXX. prior us the October an weighted refinancings, a extended been close, for than which more loan for was advanced the with of previous term doing of expense new effort XXXX. flexibility these placement, rate term undrawn of did million The leaving term facility some to out extended At October our combined through loan. an all credit also whether added with $XX XXXX with termed efforts to or deleveraging four-year line revolving have The The enhanced discuss borrowings, by versus credit approximately provide XXXX had We interest interest October. which larger revolving term of million capacity a an has further.

the rate outstanding on place in of all interest We caps have term debt.

upsizing pricing, over to revolving the prudently important business. extending both improve facility debt, believe We improved provide continue opportunities this successfully addition on credit and In as our to pursue maturing facility increase loan execution significantly as XX points. liquidity well pool profile, also maturity we as term by operate unencumbered and the the the the was basis we the address time our to to necessary pricing asset

and cost-effective seeing important years. our the with the low With leverage to that acquisitions and lease, remain acquisitions continue related with interest be From Interest a in try from term are of debt in to generally all after of the manageable rates experienced of of on recent interest this years. treasuries. in XX-year rates match actively with to debt several issuances in factors, range due. only next very less at perspective $XX refinance, location, the X.X%. Looking X.X% terms have higher of amount long-term including attractively tenant's U.S. maturities $XX In a we high our recent the X% debt coming volatile have and X% to to each million profile, from the mortgage property-type, continue Further year, perspective, loans Depending debt. the credit, been we're available rate XXXX still fixed-rate loan four we'll million rates very loan, than maturing at rise XXXX, in our mortgages said, we've range. historical on the than this particularly rates but the on to rates

remain XX% in interest being additional and common to fixed Series rising programs. stock through hedged existing to D being stock both rate preferred our minimize our XX% our rates and swaps active continue exposure and issuing using our caps. with rate of interest We We an debt our ATM

stock During the issuance and Series net of raised common D fourth million of $XX.X stock. we preferred quarter cost and $X.X million of

attractive We ATM and efficient efficient fund continue equity view way acquisitions. the an extremely to raise as to --

enough to $XX.X availability current believe have $X any our current credit. and and line of we are As our access upcoming and our our of in known we improvements to at fund we million availability ATM have properties reviewing our we today, liquidity operations cash that With million programs, under properties. of

over to encourage our about engaging been is of on year-end. Index to included a and function have past like. with increase XX% analysts, to RMZ as good estate. banks the more detailed occupancy has as executing portfolio to new but which institutional financial increased forward base look provides strong and relationships by maintaining you investment and we base, also feel coverage asset our supplement improve the December and We our this in our but high-quality and Bob the leverage. establishing during XX% its current We're to continue in I ownership metrics of managers, information review portfolio quarterly website, posted potential company forward focused with to meeting credit also Certainly, active We XX financial in only our XXXX, being quarter. of our very with continue for plan investor on our the We months lenders including business and existing chapter. as XXXX to some the not real further Institutional high in of next continue our and investors, stock moves

it back to David. turn Now I'll

David Gladstone

you money of common. million of line and year sold clicking two in last and we the the combined office That place assets and marked preferred We new as is that's to forward. and a over in during amount about months good three should was well, go good We the progress and occupied. making last ones say ourselves as add Eric everything the $XX.X buildings building well report, keeping and as three high-quality bottom Mike good the from along, All as right well. can Bob months as good

executed buildings leased So, two now for your weren't the there agreements our up. XXXX, XXX% extensions the equity quarter executed up to is going that's sales four are that's on build that non-core during us help to of assets first lease of two We of total on before, year.

everything is should growth. So, this continued place. position into great falling the there working for a team company We got and

worse the can people to I going is recession. P&L the many monthly because of and balance time a bring their back distributions to story went one I think through we problems about its when to And and and recession to our that cut through very with kind and going to cash are you position our last bring and their be each cut company any able recovered distributions that up of of was during I substantial know, companies get things them all skids a dividend again. talking we quite the As original they sheet level. keep success say good go and to come is most some in didn't not we're hits great to never the watched their have if have of compete That have

We due coming a are do until many XXXX. because have position leases we today in good not

on spending improvements. tenant low expect We

We leases We're our are that refinance fixed have with due continue most asset into to up and the come. long-term long-term at to buildings fixed up with these building loans purchases rates. match base that that debt of more new with are really now coming have and going rates

and is indication problem is I base, last the or team strong if a sheet size doubling a which our built a is I is there the great ready our very It's years, balance what We recession really think in five here. equity of assets the strong. over battle think our marketplace.

and stock that Series and see, stock yield. of the With stock that's the website redeem raising three We're webpage It's cannot safe the a increase People a which now. hope X% help extremely preferred in about this the explains buyers want right I price to should stock. we low of to years. the is hopefully We who our that preferred D, more at stock. have see into yield and the growth on the come do the We one think in very for another think www.gladstonecommercial.com best. new

we that sheet. So, normally our of consider. even stock its very We're moving balance investor preferred from some our friendly. Not

We a continue quality to properties we're have potential in acquiring. list of promising that interested

portfolio even XXXX. to in expect grow to We more continue the

portfolio With the the in diversification more believe we and comes predictable earnings. of increase properties greater

good and high for good prices that is very buildings note relatively please yields However, with tenants are low.

half our ones the the have to of this dozen buy buildings around we that to of base properties, we we have fit tenants shop steady. Much have mode and businesses industrial and very just and office of operation. afternoon So, rent out can't that go the in we a industrial remain the make like and sure buildings

a considering more As credit kept underwriting I future terrific you XXXX. know, our of strong this think tenants record we since is their paying track and underwrites that have company and occupied the XX% tenants bright. group a than underwriting rents, it the has It's

of While in and of they've our I'm company its team the acquisitions as Bob cautious past continue years. will his and optimistic future, done fine to be

in than XX a have all receiving cash working power not common We going look share part perfect our know reduction and their increases of very a so buying an We Now of amount which run maintain REIT voted per in need is we're it well-managed we individuals now. a know can $X.XXX dividends look more have years. some at and inflation, and that year. as the take on January, for monthly rate is to dividends. monthly dividend the the paid the at say believe yes, distributions, well want I the now to This $X.XX to distribution small of like have rate stock FFO a is common to I annual This when of fun increases, per keep XXX we'll December, in we're March. you stockholders increase that's Board to for and income is ahead their consecutive the attractive want do February distribution that ours, they're for

this real record track another how company I here's the can strong just Because be speaks estate volumes about is. and think one. depreciated, a it's wonderful

that's of return return capital like that I that the in of are as to on since and XX.X% a the in depreciation building Depreciation other wonderful still earnings is you income is real since estate a depreciation been depreciation. items is of due of end know a to and personal low The FFO period, estate the my building depreciation and to adds opinion and we capital for of is stock XX% shelter the good that's it This pay always in talk a at the account my able We core about FFO standing has my company. because mainly fiction accounts the common mind in after sheltered. XXXX. don't was usually this one of tax-friendly caused is for personal about assets in it the is tenant why I remain because the real taxes The it. back all the stock and

that's IRA you or a depreciation means taxes by pay having as an stock capital. considered return to as the That nonretirement it's a part plan. of The retirement accounts nonevent. opposed don't is sheltered on So, it's

yield created a However, at there X.XX% at has on distribution after The give sell as now REITs you some Monday but purchases. new is buy about brokers when lower our I recent not Stock hope this us call all $XX.XX. and much at your closed tax you yields. cost yield. trading have may you'll some lower is market a trading time have so like X.XX%. to NNN equity great are the looks stock. generally our about laws some stock yesterday get the well. closed Index will REIT The downdraft of stock some you taxes basis the Many Monday, benefit This in do on stock,

at was our trading would that $XX.XX. about So, today, price if stock be

REITs a about the the closer there industry's XX% and of of the is expansion price on increase out as that's to to My stock XX% for a REIT. high managed, quite the with years. room price to there see being the are line managed There stock yield, allows lot credit a given discount So, the about underwriters this being in other team today. -- I for discover track complain criticized any access no and familiarize to that's are hours guess reason two a of with the other company, the and about we'll low like XX% our externally bring for lease at folks, be is us but of the REIT average us. that the unlike externally record next to such continue for in always managed themselves being investors turnover that of simply internally trade yield

occupancy we that is this access have. a to high Our testament level

get that make that the our we're estate at We REITs can also the looks tenant, are whereas of a to paid make first location. location, REIT location, sure tenant, many about the going and to rent. always of We're at just the always sure rent, they pay talk look real about talking tenant, tenant,

our do on this many internally an anymore. we're line what salaries We analysis while equity of We've when leveraged, of question, the ours. they performed asked level every methodically addition, many there Bob dedicated debt they're our Mike capital, a We doing put the road leverage will that near REIT mortgages. a cost higher current of quarter. not and resources out than also on refinance get to pull conservative. properties. on team people lower have right up to is been get us Mike nothing the paid the look that on have every of that solely we equity used Bob end numbers been external together whole Gladstone and REITs heavily in leverage and such of and using little know this lower Equity managed but putting of over criticized the were get We've Commercial our show our the publish allows obviously day. we're when new and exactly we quite In we as we out are at people the with slides we work This and I cost the and more REITs by being we for amounts more operating be decreasing are. we're time And some and not and by of that but advisor, the are people

of So, to so money equity we'll doing the properties, always have see to to a spend pay raise that's raising that debt, us to not down ratio buy that. new money debt but something lot I our want these money

Brian, So, get of the point, questions our get shareholders at out company these follow this and from questions. help some of with who let's us come wonderful this through analysts some some and on there please

Operator

our Sir. My the with question [Operator Stevenson Rob of instructions] first Janney. pleasure, from come And line will

is line now Your open.

Rob Stevenson

assets? morning, that? environment guys. left about think if how basically have, asset world, is and balance you current that end persists? it do $XX portfolio and there's guys redeploy it the When How at a some the about think just that call guys of stock into but Is All REIT that's about Good growth look thinking was guys the financing once you obviously capacity preferred you that I sales bottom higher to guys trying are curious exhausted? you acquisitions right. in you sheet

David Gladstone

in all stock going in of always you price finance to figure trying of as REITs the because company it's frankly a Rob the a are price. you're problem quite down know how Yeah, falling out to terms

money course existing redeploy is portfolio to So, as sell of off, something better we a think what were those is our for into long-term. we fit going be sell and of many going we the to us that to look first we want at how

that's first-order the So business. of

we didn't more of was to $X business course at down preferred It sold. last much Second for million worth quarter. order see our stock the preferred if some of preferred ATM can We and program is look sell sell stock. of

and to that to property to in property, yield that's of business. us lower orders look not piece for out that's going So first sell we then much, loss order means stock two go at price much have a that get when a some but to higher we've price. If are, make up we got to are that the help $XX? of the buy okay, And going at we for we stock to in

writing keep we'll to Rob, So, be and all buy I need you recommendations right we think. just

Mike Sodo

more the weighted Today Sorry, activity, modest the on that to obviously cost dividend just stress the the at To deals common of look just point the David's a and the yields little bit, and we’re amount to of do does expand on say the equity of we a we being the with dividend ATM [seeding][ph] common, end in been preferreds. capital. with issued price on [X.X][ph] the an on common, yield would so have that average I put $XX why it more on mentioned availability Bob the been property $X preferred, programs year-to-date. there of phase issue diligent million due the line million downdraft in $XX liquidity cash, for with not and has meaningful in million within individual stock could just requirement. hasn't so really not amounts the ATM potentially

obtain spreads over the So, we common we need just will cost team of to to trading watch deal to weighted deals. pref, stick their do really terms necessary and to the needs it's in capital that the if accretive whether knitting of to average pivot but or

Rob Stevenson

out of call days to it guys you sales, the looking noticeable it environment? at? Has the of beyond you Okay. our going aloud are guys being in in of in rates And figure over of what market and product even any volume started the there properties its XX, to last, at stoppage way points terms size set XX increase out cap for where basis likelihood Has product March get that another in you're your less for been there you that in level, seeing there guys are stopped change out up the type here people sale? for move XX-year fed rate terms the to of then in deal weave sort the XX over in try

Bob Cutlip

Rob, as number of slow, I kind off think of indicated reasons. it's the year started started a for off slow I and

we I be that three saying, the smarter and You two in of we buyer a rising, seller think disconnects, would that because rates are to lot last same are low so over rate been very are is people we've years. about talking happening know cap why well environment which buyers know

that's more the So, starting see us you are lot BOVs, one but being know values have brokers opinion a to requested. off amazing the year now been started think that slower they they and I brokers it's telling of item, that

- the that market think is more I back more activity. come So, to going is there to are where

our compare I but of our say of somewhere is but with bit rates movement hit as between a price cap XXXX yet, the would the majority little happened be in off in dramatically XXXX I third that REITs. as XX the we're not recall, bit primarily to I mid-Atlantic three, if this still and year it’s the in going stock a in have, and to Although what the a was West will think as last because maybe the in challenge we you probably and activity just a the the little activity Midwest seeing

standpoint. wakes we’re the I we until were from we the know going up we to mid-Xs market an same think think cap so, in stability cap and prudent, in flow. be still and portfolio rate had probably still Last and that bought our have and we've was our changed, X.X% in range our we margins average to have general hasn't I average unfortunately And the recognizes. cash got before, you This year

Cutlip so we patient be I you know we just just think, my be to and will of persistent have opportunistic that's says, as have to and be. colleagues what So,

David Gladstone

get that there like certainty big we're that. competing Rob anything properties kind it, you're going tenants paid. you So, guys on those almost have Remember and who buy those there to add the to just of marketplace on if will up we're where not names to is what with in, IBM XXX% with

years know guys know little they’re tenant. else. on where up somebody doing what of been underwriting bit the everybody these the that the obviously relatively REITs. pride We in I doing see marketplace to the think yields. traded gosh, S&P doesn't I wake a estate ourselves you'd but the that take ratings company by the those that middle-market real now, have about the to does. that we say, other We're underwrite we're low able some people nervous and this being in on get you done would've ought And or So way of XX underwriting And of in kind terms

that We different give So, marketplace. the we've should fund to same be able transactions will kind gotten a before. us we're in of yields that

we're can going is, to get in at to the Our we price Right what do. got money, now order real want do we now, challenge happen. to we equity what where of plenty make these transactions

again. quarter, I to have this end you talk the at the we will next question answer to of think guys when

Bob Cutlip

talking Yes. say deal about stage every right And Rob letter-of-intent comment In one million X or size. our last now is $XX let's million between nearly and $XX million.

think million million markets in have to the as time our the in those middle-market are long ones rate. that growth cap $XX bit the it's well, non-rated them a So, we and not secondary been and get I lot property alluded, we the range a little can companies of can think better and underwrite a in but David $XX

Rob Stevenson

and order level sort Mike And then maintain of the you XXXX? see the you last versus where talked XXXX, about occupancy tenant to CapEx versus XXXX XXXX in overall where be leasing one improvements, roles from of look briefly being given in me. lease in to commissions just

Mike Sodo

role your in To point little very have XXXX. we Sure.

to looking and would that to roughly As $X.X in a range XXXX, ballpark combines perspective, at say then $X top are numbers, we towards the million of and the $X.X million guide from for number on TI's we CapEx a $X.X range. I million million in LC's

top XXXX producing stripped a roughly income the to million on the extension when end that $X.X the probably out million of of improvements number. for which Rob We Lear low like that 'XX was $X.X on improvements, lease will CapEx, be and of you range. were So,

Rob Stevenson

guys. I Perfect. Okay. appreciate it

David Gladstone

Thank you.

Next question.

Operator

Sir. Yes

B. the come question FBR. will line Riley from with next Our of David Corak

is open. now line Your

David Corak

I With it to Mike quarter. I had we exposure? expense than less much related anticipated or higher what bit to a going then was number little triple good were to guys. one-time model leakage mainly And morning, rate is just this items, to how Good wanted operating forward? what's going net items those wondering was Hey. just run

Mike Sodo

Sure.

appreciate Dave the I question. So,

in, revenue in pertaining of the year, net little as deals happening or double more to in think less income. line an as Mainland ADP, taking recorded generically expense property needs with recovery as of we're items form did July the revenue space, multitenant the further tenant guys it I compared in doing that. it XX% actually and anchored the particularly you at of example rental but as that up look property, what's What's a coming we being recovery leases, acquisition year to as to of is be last is operating we're base there triple doing being is

run actual the per revenue, about That statement, per if as but of your expenses defined the form just million is presented recovered what tenant income getting about majority less look two going it of how exercise concept your is item. took to vast the being out be revenue component was and as recovery to rate split $XXX,XXX next actually that's rental QX, doing rental QX. million $X.X of is mathematical quarter tenant to XXXX recognition the property it actually for to recorded So, in a run truly terms years that that now line operating was recovered, coming the of I in out was as of income, there QX rate, statement number, in going at to pretty that particular income went actually you in income was up what the $X.X just increase, the through recovery

what that you So, 'XX. terms I it's not for need our rate leakage back taking that's We've an delta the the number the specific get and is perhaps leakage, is in crucified leakage number. to that exact was. run to not of science just is be two between saying in absolutely

order So, short I'll you I I that back get of to on don't in apologize front have me, in but that?

David Gladstone

under website So, don't can put number. everybody get on question-and-answer? that our to Why we that

Mike Sodo

Great idea. Will do.

David Corak

How sorry…? much of portfolio this point, at the

David Gladstone

ahead. Go

David Corak

is the portfolio much net of How point? this at triple

Mike Sodo

of thirds two least it. At

David Corak

the to talk spreads, specifically maybe can quarter, about kind Okay. the All office question is just this the you and you releasing where year, about and with of Rob's actually this assets, market. up you're of that right just the then spreads on following there stuff portfolio, and transacted there compared some two activity pair and assets are of getting leasing

David Gladstone

Dave XXX,XXX a we Ohio. foot in lease I'm one quarter, square that an the industrial lease. lease during was trying industrial to this It's understand Maple Heights, did

did we building. not, So, it a foot recent a lease in is one up the did square that and small in not not to our do one into lease, space is tenant less the that went most bit property XXXX our that's a believe but because, or anchor -- related we -- who than just tenant by little directly moved a X%, Indianapolis that

just they the same rate. continuation so, of And same rental assume -- the

reading. I more part dicey, at would X% I on more a globally cash looking because just we're office to as increases is starting construction wise little the reports think on is it's no bit but to to bit market compared the little not on what getting to a based X% for office than So, the under absorption where most is research get

foot lower expect We the expired one I we The probably come rental that left anything tenant X,XXX the much in forward, with mentioned, year that have increase is that just the rental there's rates. be going that line going rate. think current I to this So, don't lease to a now. one in rolling square that

it probably So, be will flat.

David Corak

but and today with how Fair FFO, the a color it dividend to And that target you payout ratio that road, an handle, last FFO, Okay. attractive for you enough. little of like talked kind big yield core think then relates an how coverage would some obviously do about picture? eight get a one or about me, you you bit on the to have down to just

Mike Sodo

REITs David various Bob lead have here. our throughout and and been I tenures obviously

better set I on the it on as to that We're XX% Dave that toward ratio 'XX basis end or way bill AFFO alluded into but a dividend would point run look work to. the An at a rate for we ratio. look bill of I get XXs at those where ranges peer think good point. be the dividend. the payout set, covering at think our for We to of that 'XX in probably cash would David from pragmatically payout we distribution don't at need low the a we'll in basis for out to you to say XX% least we're will be FFO increase on really peers will in think ratable I low the in a to before cash be be encouraged an midpoint state that do generically need distribution, XXs we probably the

David Corak

enough. Okay. Fair Thanks guys.

Mike Sodo

Thank you.

Operator

Thank you.

will Our next Engel question with Stonegate come from Capital. Laura

now line open. is Your

Laura Engel

on strong Congratulations to year. a morning. Good the finish

David Gladstone

you. Thank

Laura Engel

answered, been just have looks it for curious end questions sale quarter. my at held year properties of under contract you line A two could with two, to summarize like the first close

I mentioned how summarize you out versus value online. as think just Can an will far impairment took? as that You cured you charge impairment versus the play think contract out I the

Mike Sodo

be impairment and exact number but property. on going to going Q&A, it indicated, I the number we're impairment was on $X.X The now, right was. with David million you it's that that and what revised sale to right flat of but the get can't as be the the the we'll with pretty get put

expecting gain that Arlington a we property, On the Texas. other capital in are asset on

David Gladstone

portfolio. property is the impaired in only the fully vacant The store

Laura Engel

for congratulations again year. strong a you that thank Well, to the on it. Got finish Okay. and

David Gladstone

you. Thank

question. Next

Operator

instructions] [Operator of line question will the And with next our come John Massocca Ladenburg from Thalmann.

now is line open. Your

John Massocca

Good morning, everyone.

David Gladstone

John. Good morning,

John Massocca

looking of disposition pool be how think levered mentioned guys, assets sell? raising the after have the to is the that you of recycling, maybe deep in terms to with invest pipeline do in used So, you will you primary an at invest non-core to your proceeds you capital available next liquidity terms

Bob Cutlip

smaller paying our I rush am with and renewals they're through John each been with point, the extremely in to no truthful even though at well, of we've tenants this big them, markets be you. with in one

and on we've Mike though past. we're particular when markets think in out it the prior going want with presentations in of that then our the move are point, opportunistic as match which and to selectively I at buys indicated we've to done and we I road those

what one few standpoint, at look but we're tell had just I I in -- -- I if a to over to for to for next assets a of magic say selling. be what just opportunities would a the to There's depend sake if looking So, sell magic the reason three the the type you on have to macro globally macro what years. we going can't redeploy of us on let's probably from the year it, two It's capital. no

John Massocca

Understood.

of on could what rather sell you're kind of it's dry and if in we could of you in of to kind find so out a buy, good deals? that can go so you do opportunistic some let's sell ways have what proceeds, means for assets a So, you hand the more bunch given some than use powder than

Bob Cutlip

That's exactly right, that exactly right.

John Massocca

on more think I side. And acquisition the

what's that mentioned moved would pipelines the that's be changes to transacting think in you that those assets, guys have $XX you with or million they're million, interest now is the deals up marketplace just You $XX rates that's right more yields quicker in smaller because therefore on the do in line and attractive?

Bob Cutlip

to that letter $XX dropped, that's and were end were million team stock we able doing lot million right say assets what the then now. is us I I attractive we and to the it price -- a right buying range our to which of would the $XX bit $XX in the when be same to a more lower before 'XX competitive that, for $XX now the 'XX as was more to million is in and at Prior million the way. alluded are the size, yields that and

job. a think I doing very good

have that that's of million Letter we $XX the Intent, properties. six in actually With

it's require. to us we opportunity margins where really the the get So, for

very has well. the adjusted So, team

John Massocca

you then and was XX% how debt of much split much the And is How guys swaps sense. between on mentioned What's cap. the the more Make of financial that? in capped? that side, of swapped

Mike Sodo

capped Yeah say is I it and would of in about XX% swapped. the John remaining X% numbers round is

John Massocca

there LIBOR, much ballpark have XX-basis of if effect a in move is point that an And probably number. wouldn't

Mike Sodo

right. That's

John Massocca

me. for much. you very it Thank That's

David Gladstone

you. Thank

Next question.

Operator

Sir. Yes

Rudner question will from come next UBS. Our line with Jeff of

open. is line now Your

Jeff Rudner

Good David. time. you? How been morning, It's a long are long,

David Gladstone

Jeff. Good

Jeff Rudner

further? Commercial. a Good. on I made Could bit missed earlier presentation part at the your reference little that comment you end regarding of the Blackstone you in

David Gladstone

Gladstone Commercial. mean You

Jeff Rudner

Gladstone Commercial, yes.

David Gladstone

to. want didn't I Good.

Jeff Rudner

right. I understand

David Gladstone

the know, world. number example. but because relatively whole many jumping S&P people me I like when We're and the that look and middle today, same and has by tenants. our not out even terms at small or how it Gladstone of not we going I we think wonderful inside we big are firms seems rest do Commercial, around of is what And the are do, market don't and I to on Moody's We you what opportunity love business the this it some area. a so built in underwriting compared for to rated don't these Moody's the them of of better it's know people of actually tenants than do we

And a small good, think job businesses. done so, we've Jeff of good I picking out

similar longer. lease, process loan I've even in their on companies underwriting that on we've have small two companies are even been long. a don't and whether now. underwriting companies very the always last XX to so development do We years me a default the to having it's investment of made this we're them of business do other underwriting so maybe we're and probability or and it to seem probability here know I default for the been or their business

Jeff Rudner

Back to the Capital. Allied days of

David Gladstone

the follow really too got lot you just I way get to are Our and And much institutions logic. there us you're the underwriting of will all that down. skills and I that out know strong other of say come a from income people paying substantially and out in think and your it differentiates don't I

doing better they're never got somebody's payout of pays you've below and than and percentage a If empty something that deals dividends. a XX% pays that going and year out pays where say and predictable. whose every It's different seem base buying larger development drops leasing growing It's our to and business we buildings, up. and refurbishing them it's more get just them asset at and our

So, standpoint, Commercial is from think in I Gladstone that strong just very my area.

Jeff Rudner

dividend made which was certainly you never I I cut. is even are one the that Well important the during crisis, think very and comments appreciate financial also, two

in maintain location, look what more of location your dividend. able you the And be their tenant making the were opposed the $X.XX the might pay rent at to to location, as loans to worth. secondly, You property annual ability

David Gladstone

run estate. and That even in way looking is say, first we tenant. we Why don't at We real at the bother the tenant business. the look the believe the

Jeff Rudner

Good David. much, Thanks Okay. very quarter.

David Gladstone

in. Okay. Call questions? more for calling Good. more in Thank Jeff. you Any often

Operator

question next Sir. with of instructions] Yes Sorin Capital. the [Operator will come our line from And Murray Rick

open. now is line Your

Rick Murray

Good morning.

see wanted I You David bringing was between the to years before. guys the leverage, the over little flow dividend made your progress surprised year have good of question but some a from follow-up Corak's because again and operations this I after the to cash couple in gap down year the bit last improvement widen on out

gap? So dividend operations steps you to Why narrow plan are what to the happen? is and what more growing that that cash from in have your flow causing that than is the the

Mike Sodo

the Thanks same don't for We look the question, way. exact Rick. at

to incremental per we've So, year. is improved but obviously hasn’t as core level notional single not there's FFO from cash available dividend, every the for it's a disclose grown form while per-share pay shares, and the share dividend for obviously our incremental number, distribution a of issued need has but a AFFO been the

we is right on actually for or comments it's XXX% either a range in as as cash to if by dividend. improving XX% 'XX core we the FFO something run been the in and that of where getting has a ratio distribution, around actually basis, covering more historically XX% in made spot that be payout that on And we're had something AFFO/CAD I ratio less had been at the a think I for a think and it, we'll payout north better range believe that see end available place in David, I of now. to So, net terms be mention, something will a of my

remain the has may and little we constant. we improved year-over-year the things, quarter-over-quarter bit think but out So, looking per-share different while earnings be dividends

Rick Murray

$XX cash Right, 'XX your in little was dividend flow your cash if million. a $XX the flow look is I but from over at million, operations statement,

CapEx. any before gap that there's So,

I understand it and you're what So or get it to gap? widened? timing to I'm than cap steps are is trying guess rates are that has the that deals to gap bridge differences, us going because Is doing why to you that needed at

Mike Sodo

which it from payout I number an done analysis correlates to XX cash is terms of a time. as it look versus we weighted improve that upon metrics. or loaded 'XX. doing that directly Historically with the mention XX was at backend available being at based XX in improved I I $XXX made look haven't AFFO which expect those understand and over ratio. improve a XXXX distribution should what XXX% We about point, to that over basis really you're into of we structure, now perspective, time, only in we balance for and acquisitions ou way sheet 'XX has said million to would comparison doing cap

if that at that statement, move cash we the a know numbers So, from AFFO. but is I don't the flow 'XX look we way it as compare

Rick Murray

[indiscernible]

David Gladstone

together. time this …enjoy

next So, call. That's see of end this quarter. you the

Operator

We our this appreciate your conference. gentlemen, Ladies you, Thank Sir. and participation. concludes

disconnect. You can now