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GOOD Gladstone Commercial

Participants
David Gladstone Chief Executive Officer
Michael LiCalsi General Counsel and Secretary
Bob Cutlip President
Mike Sodo Chief Financial Officer
Gaurav Mehta National Securities
Rob Stevenson Janney
John Massocca Ladenburg Thalmann
Craig Kucera B. Riley FBR
Call transcript
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Operator

Ladies and gentlemen, thank you for standing by and welcome to the Gladstone Commercial Corporation’s Second Quarter Ending June 30, 2020 Earnings Call and Webcast. At this time, all participants’ lines are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, David Gladstone. ahead. go Please

David Gladstone

times Sarah. to all you, end. to nice and enjoy we and enjoy introduction about the questions you Well, and the with phone calling That’s you in. you wish these still we for estate, more time the have It’s thank with real on time thank have but a we talk an at talk certainly interesting and

give us we’ll that and will Now Michael? from Secretary. the concerning our Michael we’ve yesterday. report and Counsel General legal call hear LiCalsi, in the matters regulatory He and given

Michael LiCalsi

may Thanks forward-looking reasonable. risk of good file XX-Q, or Today's XXXX statements and uncertainties involve materially other future forward-looking we our with based from be XXXX any include Act Exchange Many to documents XX-K, David, Securities regarding and of forward-looking the certain our believe we Act including our risks report these under which factors be to may are our current plans and that actual including Forms that Securities These different morning. listed in by statements, on expressed results performance. results the and cause those statements SEC. implied factors future all

FFO real from the or And non-GAAP losses FFO is defined a any income, events, as or the on discuss website as information, You generally statements gladstonecommercial.com The term and FFO, sale property, estate new operating otherwise FFO, our for SEC's We'll revise for revenue comparability and website e-mail publicly better believe performance. Sign whether we Operations. amortization for metrics gains except assets. the depreciation our indication period-over-period website take Company certain these results From to also of We again, can at real expenses. of which non-recurring required as Please result notification of Funds future adjusted undertakes comparability our better which which as up FFO and are core by a these adjusted law. forward-looking other our or plus any are find once excluding or is visit update www.sec.gov. and and on a gladstonecommercial.com. allow discuss of to is today, estate on service. the losses no obligation impairment our accounting opportunity of will net

also call @GladstoneComps. own Facebook. can our that’s The The there Companies. and Twitter overview on find us keyword is is Today's Gladstone even We handle results. our an You of have

review information. XX-Q, you for release of both can Relations With more Form website. page Gladstone Bob on be the Bob? yesterday President, Commercial's that press to ask our and turn Cutlip. the Investor we presentation our over I'll issued detailed So Again, that, those found

Bob Cutlip

everyone. Michael. Thanks morning, you, Good

a executed June. tenant office to XX% through income of months Subsequent a extend Tree and a XX,XXX $XX.X $X.X sold a lease April, income executed in foot XXXX, office of a amendment with the a through XX,XXX gain we XX,XXX XXX,XXX XXXX, resulting square extended foot extended a expiration square Columbus, XX,XXX in in to date XX,XXX quarter, industrial December office in lease Ohio property we the expand collected Green and May executed of scheduled of quarter Heights, July. collected lease square XXXX, During square extend XXXX, X,XXX feet of capital we North in through tenant net million a Raleigh, XX% second square Maple in tenant square a a by foot extended to square tenant Raleigh Pennsylvania amendment foot XXXX, and through in scheduled lease in XXXX, rental Carolina a foot our foot tenant we office through rental Richmond million industrial for Minneapolis Ohio for end, to in

As time. which our an all emphasizing improved of levels, improve through industrial believe increase on our and of investment January in our quarter will call, June valuation portfolio allocation, $XXX our of expenditure potentially is reduce industrial noted further we of capital strategy investment property our first operating million, this XXXX, was From over volume which providing XXXX, properties commitment. result in evidence were efficiencies,

an has achieving of the to months. January next XX% XX% XX within allocation in industrial to Our from XX% objective allocation increased XXXX a today XX with

of limited due During quarter. We quarter, during investment our any the second effects acquire didn’t COVID-XX. to were the opportunities the properties

time, with Xst. have the foot a Indianapolis listings due cap of approximately sales a the lease square process. million XX is we and total in closing $XX.X increased I-XX property However fact XXX,XXX date in Corridor remaining The recently GAAP year The diligence rate a this X%. industrial is term have at of September in and numbers in cost that’s expected

team continued management to deliver same-store asset Our our operations. on improving

virus and these properties tenant now the approximately of XX% our in entire associated their lease approximately During with property of In also requirements. XX,XXX with our Ohio year, weighted office extensions which six office the feet portfolio in work straight-line XXXX company transactions with no no from of months Richmond approximately XXX,XXX the properties square arrangement successfully required quarter, foot, lease the opinion square X% totaling average of reconfirming number totaling percentage X.X The The eight very the years. to has occupy the properties improvements. COVID-XX objective were Columbus team lease a the employees. executed by improvement XX,XXX allowance transactions, overall second term rent increased multi-tenant weighted of was foot These lease average and transactions implemented anchored a feet. leasing $X square the end subsequent per emphasis through The increased improvement completed our completed. one our the for Virginia a And rent extensions, program. of in tenant the The the larger seven all building extended over the on four by team property these terms. industrial quarter, the home square In office feet a were has XXX,XXX combination, tenant square favorable on expanded reflecting with three tenant required straight-line tenant is first office and industrial our extended which of increased the versus that by onset office anchored management. team they

tenants each them. However, tenant recent discuss emphasis continues engaged results. strategy our tenant financial to have program their with strong an performance quarterly always has and credit, positive of engagement is With active and on our ties delivering this we established

increased with we pandemic, this connections our have During appropriately tenants. our

characteristics included press with update hospitality, to were of as releases, we the tenant. immediately to and of do. as at only from tenants deferral connect contribute in our challenges are and we is been onset of be who airline prompted will There we the notified virus address revenue. has from a tenants less Some the oil and average tenant interesting result or us arising tenant of profile the expect rent and tenants In have there business respective of will them by and of we’ll company The we requests all which industries X% our and continue completed for comprise XX% annual X.X% favorable revenue gas our revenue. on

to to Our their repayment unique period. a rent deferred to period six will the terms. that during portion a of at not period limit all three rent to a possible, to tenants and rent offer of business pay if have month deferral, strategy deferral no rent is to month abatement, the is continue the one deferral have to doubt require twelve over agreement There each to

rental to deferrals maintain payback continued months our tenants of quarter. throughout to XXXX. currently flow March second in soon to and monthly ranges The end core The scheduled key April from X X the to approximately However, proper X and rent. X.X increased per granted partial possible. These ranged period rent to company pay share level as income months representing are three the months to to months return in the objectives from cash deferrals X% the to total tenants FFO previous as

place. tenants have them to programs we to summarize wanted call expect their applications. in of tenants Anticipating We requesting are hopeful those the and short-term federal our the taking take thoughts other report interested we of beyond, a of results with are teams’ on and concessions they conversations that are And advantage continue many and of our conversations on the as to I positive XXXX will the available current outcomes lease to and number expirations through activities.

been now in Austin, vacate year-end and end call, of between not GM Texas has with that first that I lease indicated and lease our have the will August. they as quarter is negotiated, We at our property one expiring

rent mid-$XX net to prospects current continues eliminated Austin square foot be to Unfortunately, in GAAP nearly XXX,XXX Chamber assistance is foot report which per with property in a of square property from they the current of the Commerce of in compares ranging marketing entire from unless feet, low virtual. to sub-market $XX.XX the active the has basis. are our has favorably feet triple and the square net offerings of per resulted space eleven It local that note building. at property the the in XX,XXX building on to square triple course interesting with COVID-XX Our tours for

the our Tesla’s our stable connection virtual as and virus our effect year. XXXX drops virus. are on We tour property conditions projected of impact our through ranging and authorities and adverse sales risk lease estimates volumes prospect, positive patient from have And comment, a enabling had the certainly June a average a of approximately be impacts. I and ongoing remain compared onset for interest Economic a XXXX to particularly with build with recent overall with chamber expect course XXXX. to last from both the slowdown Chicago, second Austin Therefore, compared expirations must but of April created income. their port brokers’ container same in as from growth. volume investment third we to West believe should and reported about industry economic on and well the decision Coast performance based GDP With as and that activity do focus are in to X% and that with our on same-store were effects limited considerable XX%, COVID-XX are and prospects. dampening XX% outcome, it for volume are flow fact, to as maybe the May using Long-term, will cash the rental periods team in and negative, we the the estimating there, and worthy This positive with persistent large quarter has forecasters vary. Market gigafactory down

anywhere is a however, no related industrial their nature sale in underwriting However, e-commerce feet. are resulted to several for and square those XXX,XXX particularly rates to smaller middle reinvest leaseback more expansion this has companies strength, the particularly in There in select to that cap some this in continued cap type in in transactions type properties, for non-rated product manufacturing matches that capital here markets interest in our from in properties of our markets. market product for rates increase for sizes are interest particularly And XX,XXX seeking is the business. and

adjust primarily evolving strategy We have by to And as opportunities, driven listing and the conditions moderated will continue of effect to growth it the relates monitor virus. investment the sales accordingly. our

are the in of XX balance XX properties letter several properties, home pipeline of are initial the of would volume what are in intent are stay-at-home is pipeline stage Of one the in property representing all I candidates the $XXX the position. diligence, many review. a and in of of states, is in under directives industrial. the due call, Because Our acquisition million two approximately which current properties,

actively however can these arise opportunities is Our believe we and staying we pursue. team we engaged as that acquisition will markets in will

continued activities identify our rental to positions strong to industrial collectively and opportunities. acquisition success, pursue So in and opportunities summary, reflected leasing growth second us engagement well collection quarter active

for let’s over to partner including my activities. our Now Mike markets on report results, a turn capital the financial

Mike Sodo

quarter reference I fully were morning, our and operating good quarter everyone. respectively. shares. core available the based FFO and I’ll diluted common reviewing for all second by per XXXX, share Bob of and are results common share per numbers $X.XX $X.XX the on to average weighted start FFO for Thanks, stockholders

that $X.XX core were common the months per rounding the FFO of to performance $X.XX.X the growth to demonstrates year. both as six in $X.XX. for years, This portfolio. was accretive, yet share core the available well completed and up share recent of Specifically, the performance has stockholders first the FFO in-place per as FFO company prudent

on X% grow to rent deals, addition same-store basis. In accretive at these cash an continues our annualized to

revenues operating one of period total quarter excluding for property $XX.X total Our reflected million charge. impairment results second expenses to of operating million stable, as the compared $XX.X

laid as intend pandemic. Bob to of through with every tenant value maximize team actively is engaged shareholder COVID-XX beyond out, ours As the our and we

through team’s pleased we’ve are but the are believe unchartered We will continue with these exceptionally, we and navigate together. which performed times July portfolio’s performance to and

debt at leverage acquisitions raised We level nearly strong our and to to years debt-to-gross enhance that our we assets and maturing decreasing We’ve XX% to all away from five through our new continue accretive means reduced equity leverage financing toward go refinancing XX.X% sheet are believe will lower levels. balance our we We past acquisitions. the X% long-term, as focus target leverage. nearly assets by that over our which X% on grow

our grow through assets. pool expand unsecured financing investments continue time, Over primarily We expect mortgage increase additional high-quality that also use this our to to we will alternatives. debt property we long-term as with look disciplined while acquisitions to make

debt our only at XXXX $XX coming as our and maturities profile, due manageable XXXX today, million million $X very Looking are and of respectively. loan with

We manage have continued to improve maturity and profile time. over liquidity and our proactively

our fix through with continue rising over being XX% of rate swaps or our to interest to We fixed existing interest exposure rate and minimize hedged debt to rates caps.

utilizing quarter with the entering common stock E and second Series modestly While in our active our been stock liquidity sufficient preferred programs. ATM we’ve issuing

stock $XXX,XXX and stock net During quarter, the through $X.X issuance sales. we second through of million opportunistically costs raised preferred common sales

for that manage capital sheet continue ensure liquidity and sufficient We balance have requirements. to upcoming liquidity the to we

in $XX million credit. and line million of availability $X have cash of we our today, of under As

more continuing to continue improve for on to we operations the With of We our the believe and detailed supplement plan long-term properties that and we continue high-quality access improvements existing current portfolio portfolio base current execute review manage properties. near to our significant ATM programs, we metrics. financial to and have are We our availability, website, strong to flexibility business quarterly incremental financial posted you performance the provides our fund at in quarter. our our our we which the information good known about that encourage feel to increase underwriting portfolio, as asset upcoming also our our

credit the banks and forward in relationships focused a Bob very to and its We’re Institutional over potential high our and forward managers, on four maintaining coverage chapter. active increased as XX, alike. years. of to nearly strong XX% I establishing continue estate. occupancy increase time June real has to be stock and XX% with meeting investors, over past look We our ownership to as portfolio with investment analysts, current new the moves company of next

common while quarter. increase did we first have as in we are small, third increase the we the is and again quarter it stock that in the was leaving announced dividend, the Regarding the dividend also

We XXXX. have not in suspended the cut since our nor dividend IPO

multiples. stock lower and is higher Our stock at closed yields yield The trading Many REITs are on much on Monday our distribution about dividend at $XX.XX. X.X%.

turn back to I’ll it Now, David.

David Gladstone

was Michael. job, Okay. and Cutlip one did Bob good Thank so good you, a did Mike. a It

and problem the well performed little government’s U.S. to part virus. virus local bit think will a idea has team is, government no react governments the the we are reaction. we I today the of or either have The how hurt the and by the real very

were above leases and heard We’ve the So about and during there. there second there. in due shape We’ve We’ve rents that one of of our numbers next during to are are unknown collected new is first there. and sell big The We but going quarter, Ohio. got a lot may team just strong. impressive. problems that’s transactions we executed is goal good here. quarters a today the we out Heights, Maple on is building all strong the all in keep the that few a that of extensions owned lease ourselves more We rid

professional are credit can We tenants. the and strength businesses many the truly most some properties that’s market strong financial these of have at for with been a somebody acquisitions. it They were and whole team tenants. The the collapse. investments pursuing place it all you a working hear list get good we excellent looking going in not and tenants in a that with of But of has are and of great tenants was market his economy almost that middle career financing middle of us like to part and is quality at

as are bank. We are of fear of underwrite middle that are been not we We’ve got were if up in to status we times seen big them most from of the a companies that the before. them making few tenants. a These loan have but those, never a market

middle the best here if and on time. answer stop are smarter are this get of smart questions please doing a think. some to And at we I out questions than you will people am recession we in let come to pretty there. are those do going we in fantastic that ask I a But am the some Operator, job, can We them. people from strong point and and let’s I will

Operator

[Operator Instructions] National the Mehta from of line question with Our Gaurav first comes Securities.

is now open. line Your

Gaurav Mehta

thanks. Good morning. Okay,

Bob Cutlip

morning. Good

David Gladstone

Good morning, Gaurav.

Gaurav Mehta

Good morning.

First question you think the if also on I I a maybe you your you and expectation, sell hoping is color next quarter. provide have on could made that was some in I on property few comment some more you sold dispositions. the the

think provide your some on color maybe So, about dispositions and it? how on view should we

Bob Cutlip

elected number in to location so a the not Certainly. it is irregular, out and building. by They configuration Gaurav. and to years bit converted move It’s let’s This occupied property high, property velocity was that ago a acquired we and we a transaction of of say Pennzoil. multi-tenant a

it I we it non-core to will the we use of in but believe in property be we and do this disposition over so. are really are short-term I time that that exit properties that are, number proceeds and this targeting at to to million redeploy do to we And office came try as was other out these us that part $XX times single we opportunity our look capital we properties am then since to to at not of getting to exiting year reinvest if office any opportunistically stay and as Ohio property forward, trying to our we’ve looking as non-core for can properties thing properties, new a with that said the industrial, see that to a they and those going storey a we what when can Mike but wanted identify at teams and believe best continue the been the not call, looking felt out we properties markets, markets want in the particularly we single have I industrial of proceeds. of that on our under, fortunately, few recently. have redeploy we portfolio our storey, single say to list, gain so, to expand are product And do would a million $XX capital move let’s exit did I and really selectively exit but primarily. in of industrial anyhow

David Gladstone

Any other question?

Gaurav Mehta

Yes.

charge? provide As on in a property there some the second a impairment was that quarter. Can charge follow-up, you color

Mike Sodo

to leasing discussions of target And million it bought Sure, of assets Gaurav, ago. disposition, a of as having would that we currently of sales on legacy vacant, again assets was handful will something are years would it non-core the of prospects is that have be contemplating would are seven and dispositions. that to be of that but the $XX view it’s we our potentially both scenarios, we – million one one remainder up we fill assets, that $XX office that something

Gaurav Mehta

Okay. you. Thank

Mike Sodo

you. Thank

David Gladstone

questions? Other you. Thank

Gaurav Mehta

you. all. Thank That’s

David Gladstone

Gaurav. Thanks,

Operator

Thank you.

line Our Stevenson comes of next Rob from with question the Janney.

open. is line now Your

Rob Stevenson

morning the retenant? what’s to the level needs Good of Bob, GM that TIs property guys. order in

Bob Cutlip

me it and two it approach Let look at ways.

low like provider and As really be We out rent there. cost I’ve indicated, can is probably our current GAAP will at a $XX.XX. be

$XX. are I range, between, to to fact rents $XX be in around the that say let’s in the close TI our $XX if So, will anticipate to $XX somewhere

high now. lot upper are per more between high authority you with and the we’ve guidance of get and and in as brokers the low at are kind even CBD seeking. the foot. rental what TI, they from and $XX. into the it you mid chamber to so. other to from XXs When That’s standpoint, the people as rate But go as going the what leases domain, are further $XX at longer-term locations looking to and from square we XXs further received rents our could development That’s the are a with look right However, in the then to a $XX like and be mid

enables we’ll bit of to city good very about be more the next us a number this the some we where feel open going kind believe – property little I get and Once over So, once more tours. months. virus up that of

Rob Stevenson

$XX mean, is need of what’s be in sometime year we XXXX be you mid there? A or start ready sort able this the And months, six $XX that to to the is that until the process year-end long got. occupy sort you – is if that how mean, even going of fully to tenant work get I TIs have occupancy first going are it How to to to of the end of months? or Is to I a you are situation a quarter or by timeframe, extensive able you few are you’ve do in that at not out $XX August. building. it parts a of to GM moving going are or of deploy of

Bob Cutlip

triangle. through and that actually properties Michael after it walked developing XXXXs having as I really was the Dell. specific floor, research you with great were did it has in tenant. to depends raised When walk has, of right ceilings, foot that it I having and completed it, look after a constructing think has we free. ten building really walked building job in the similar that creating GM office it it designing having, creative team column us space mean Dell’s on at building it’s allowed

floor XX,XXX square two have You foot plates.

enter the wings access are have have building You their elevator. private and the each own but elevator. that you immediately of feet square elevators, their to have own $XX,XXX service They

So, is column building for and is team floor And positive. are free very his plates that, social really column really the flexibility I – that Michael as distancing. put indicated, great Dell free into

Now, I have say probably entire four that looking of we that I’ve would once backlog building. very months we we tours get with building, the as period to are can to that are three have eight the we actual the interested, very, and indicated, at a six for

We feet, we either forma going indicated now, prospects to strong or XXX,XXX XXX tenant. tenants of but multi-tenant XX,XXX square that from Right are building. have to size from to full the really that pro the the single are a range do there I

be But to going days. the six to that next the get time into XX months to XX with we can’t the think that within still I it’s can going eight be probably That’s going really to what’s virus. go whole. which to I actively hopefully So, on from building drive is this

David Gladstone

to to to point, it take occupied. But multi-tenant the were in your to fully go, we scenario, would a the way that’s six if building have eight Bob, months

Bob Cutlip

Correct.

David Gladstone

footage occupancy But there in requirements be to TI subject and first quarter and fourth would staggered quarter. square

Bob Cutlip

Good point. point. Good

Rob Stevenson

Okay.

more terms substantial in access? but huge less or way TIs range cost not include multi-tenant converting of up point, and doesn’t that what it the maybe set sounds taking $XX a some this at it’s property you So, to $XX for for it’s tenant a already to single that it’s going cost, it there to to multi-tenant? amount But like

Bob Cutlip

the don’t a full I of plate so, think of side or occupy seeing because one floor size the the storeys. we that really tenants of multiple Rob, would are other either

and secure very building my optimistic the because way in the floors efficiently. tenants can positive really the we that what’s and show the institutions or the me each you from of business area your financial very makes that’s very healthcare the bit maybe business can in tech secure both we a and simply that can or So, designed, is perspective

Rob Stevenson

dispositions Okay. relative Mike, also, about about valuation thinking $XX $XX for for And guys? is pipeline how common here actually versus with fund given of the that you increase and acquisitions target stick percentage your bigger trying comments to you of common attractiveness to the million preferred? to an opportunity are as stock $XXX pencils really to a million million dispositions, the there

Mike Sodo

Sure.

I would cover So, guess, backdrop. the I

the our common XX today. have terms over but we’ve through where refresh well. desires something last the of have equity million as million via predominantly done everyone We months $XX almost for in of July in the ATM, of since Xst of overnight, And been issuances neighborhood XXXX, liquidity of $XXX

as at side, at $XX was on $XX. $X.X common we’ve share of we and and preferred the to in an only mean, side and us yield the price div compared point, common pandemic, to the common compared Rob, would done doing the prep dividend preferred our with yield as $XX.XX be On side, of by $XX.XX quarter issuing it $XX.XX during the I are we net time on current the of at that implies as this common million dividend $X.XX if par $XX.XX. was way sensitive redemptions, and done of second done $X.X, weighted at at issued and average million. prep the But a value doing only But $XXX,XXX the with obviously exceptional to demonstrated its a period the your a to yield and doing at the

don’t the more continue common. get we is. price stability, the to ones it is, we So, long because love here toward But share where need overweight heavily to we

we Rob, know, And we as are if isn’t in minorly prep a So, prep, range, contemplate massive as but in into tapping we’ve on to consistently you probably there the will from enterprise XX% to overweight the demonstrated an and value, to messaged nature. aggregate compared appetite even prep load perpetual XX% and

that But liquidity, pipeline not access be able shot. laid Bob we having dispositions, prices. support to will as to as acquisitions get well those share our able with to I caught existing being am I So, to of And think modest programs, ATM the freely, predict industrial out. going some speaking

Rob Stevenson

in Board’s in you’ve depending have Are sort Okay. any a backdrop, ahead of putting And how But raise I more has and cover to of thinking moderate leading Is the is potential of dispositions done that non-core way as there strategies program revenue. you of dividend a about one time? the entering into on the to is that as a thought, of amount selling guys year-end the like are I you talk thinking that How changes know to business to order pertains turns assets to in lot the about and the election David, variability. out at that? a even been the with historically get point political parties XX/XX it potential that the model? this of any at on the

David Gladstone

I the once seems want figure which is to area wants winds to trying the out to are the Rob, open. open way blowing side and the close in problem, big at down political entire side wide it, the with one company think this to other

different be hand always going has figure to I to got upper look at trying this out way. difficult. a is So, the who as

treasury actually like can term, can today, paying hide put months hide but something to You now in in builds. is wrong builds, but your keep you treasury are you money the

the and you and your to of trying big today. making same getting you I ours yield a are problems can This – COVID You different there like the stock a avoid marketplace in way place that and a and any think time has are for money who out pays the money not buy a just go good is something at stay or back. people decent a to

reason on focused every As everybody – knows, our we for that’s living the and sole very day. almost making dividend our payment are

And into something want the Board or I this members I team that the think to any or so, don’t convert of else.

space we just to where and it’s are are we But I because going the think yes, keep are not we right in out going, on and meet some today sell we will want. there it’s it’s to we but dividend, and a more that deliberate, don’t buildings. slower going

to I terms sell are a really big them But were long-term. to of something, this got something to because then we’ve the lot say put money. favorable of as and got place because you that to get agreed of hate are One so, they find hard out good to problems one of paying want toward and somebody, it’s a paying the go in is not they you to of buildings selling

gives is there will in belief we company, that a looking here this COVID-XX. my is But I of corner and something believer everybody My to to it. that out I that seen So, story and doctors, other stop like tight. one doesn’t medical I’ve that’s are personally long on against thing. goal But I the will that’s and turn be the own loves on know it just two have this the the am just balance a in most government there for profession. one ways is continue one action. to on has for hold hydroxychloroquine it the there this

is is then and in that, I but ingrained there don’t says, is just for this this people’s other so, side thousands people than thousands no got the doesn’t hydroxychloroquine hydroxychloroquine something of this mind that setback. know And whether is And matter whether on we’ve other and political is work. a or

and And but that’s slower doing at things the know into here, So, will change come open do what sunshine pace. kind somewhere but finding of that’s don’t clouds the we are and – where problems strong to to I don’t are just we to a I your the if I profession medical is questions, know will we are on more solutions though. really not more along is answering of methodical the through goal these American doing that the know, today.

Rob Stevenson

Thanks Appreciate it. Okay. guys.

David Gladstone

Thanks.

Bob Cutlip

Okay. Thank you.

Mike Sodo

Rob. Thanks,

David Gladstone

Next question.

Operator

Thank you.

with question comes of the Thalmann. next Ladenburg John Massocca from Our line

is now line open. Your

John Massocca

morning. Good

David Gladstone

you? How Good are John. morning,

John Massocca

Good.

or in would bringing to but sort again be GM of Austin, spend, security, can terms of cetera. us remind on provide you the back tax color carrying Austin utilities, property et maybe cost for the So, some in what

be any during X% mean, where period hasn’t the additional GM straight-line kind of tenant what the in? and color I Just know is impact there going to there. but it’s maybe not of I is moved rent,

Mike Sodo

OpEx than But $X the the and don’t information right less now, foot. be. the is John. square I what is It be debt between lot – to that that can with we’ll can be $X to I We the area to because going somewhere just occupancy, the definitely and interest currently you after with typically interest will have spending is a address going OpEx would I a think interest to get me common you not it cost information are internal you you the of money on as to much building. it call. that email the for

John Massocca

to specifically the very in but could the some broadly kind quarter, straight-line detail for was That movements the increases, then, you the with regard looking was some color rent or you perfect. on cash helpful OpEx. re-leasing rent? of in provided some I maybe provide And of no, on No,

Mike Sodo

probably are of to renewals Well, at the to years. most five X%, X% you looking XX% are those race, six a at because

So cash more of maybe X%. X% than anywhere you No that. or looking probably at from increase are to a X% or

John Massocca

then, leasing? market interest can space the the offer, given kind can office of you are you speaking, in maybe COVID of of you looking? Okay. office GM, Or is been broadly all suburban parking And to outside offer, Has leasing that. an more how the impediment seeing

Mike Sodo

one that office that tell just or properties. now for you getting we CBD, property have We on quarter. a one are is tenants, down an office of know property been there outside are the of in competed, I property. under these square the first what of the not I another is Minneapolis now and interest impressed storeys. that strokes tenants. the you, our encouraged of large suburban there final so – And a feet has more think that team it migration, we there reasons not our leased five the right but of and done particularly are that to to our buildings think is types I’ll of six types And CBD believe in with I XX,XXX XX% of in and We’ve with for is

that the attracter not are of of tenant company. type we urban So, type

going are we office at when four it’s renewed to we but straight-line honest some tenants be sheet, of We’ve already, the think we to I, challenge. we got of going maintain least rent. the I have office of tenants. on going, with lease renewal significant. challenge forward, – may going means I look I are a a am on at properties that think mission-critical be of nature and that believe where properties between are the a down, see expirations is mean, I going those here nine. I before those one to we shape be So, and that probably of have But oh, I to be I That with probably, at good there next going I’ve probably to very have, bit we year draw will because not just me the the almost in off think being a there little but started and

John Massocca

in is you still have traditionally early have tenants pandemic of kind seen, know maybe would at in the be in too And it’s who it world? or maybe urban your early office Okay. CBD of days, these looking some interested a I seen any infill you properties of be kind of outlook or

Mike Sodo

good a It’s really John. question,

properties. into just it’s just our out early because, people I a can’t bit think little get

we but really getting have shutdown. vacancies because Ohio getting We that we are these tours currently for are most hits sure, are tours of and vacant. any those are calls cities have telephone on are of we in calls, not of are a and on Illinois in Yes, in course lot we And that getting but not we getting Minneapolis.

John Massocca

kind of Okay. there? maybe equity? fee the total what to be your versus quick kind last change provide Can Is some color of decision that’s assets what was kind And one. decision to calculation you drove reasoning on the on of base that based one then, management guys

David Gladstone

talk something John well for I years, shows it’s road out we Well, kicked many, shows. and people around as many like the doing to on it Bob with and yourself, road or we’ve as Sure. are

change in the did we would I average, have company for portfolio. years, made issue size. of XX.X earlier. all the I able quarter are under management base five to deck But this calculation XX to would points a has running say, our did, analysis, terms believe we and of somewhere basis it it, on think average. this about detail in of been there – the managing base ensure think our management we very that basis exceptional increase we some a back concept at pretty as all that if new you to point truly probably of the business rents just the hands was the which go just being to But fee. for fee mean, a in points was that we We but collected we was we noise our COVID, on I equity

REIT all what the was keep on So friendly point the heck neutral concept things look the here just upon the and shareholder And in really that favorably had advised well, for a go-forward is portfolio obviously time. to particular on gone based being and only a Land was either or like our work at to it company, margin sister make is our ago for couple of quarters only Bob my and received. of company, Agricultural I this to understanding externally this concepts works this type

John Massocca

for me. it That’s Okay.

Mike Sodo

much. Thank very you

David Gladstone

Next question.

Operator

you. Thank

B. Craig with next line Riley comes Our the of question Kucera from FBR.

open. is line Your now

Craig Kucera

vacancy being tenants? on second types can talk sort color specifically, any in and Illinois, vacancy sort were tenants, to et those the first but Appreciate Or of the Minneapolis, quarter, tenants? larger about quarter of smaller there sequential from in of were cetera? Ohio you What increase

Bob Cutlip

one park, single the had property in was single our property. that are the same square same hit, Blackstone the three a We It's we've other storeys that related at vacant acquired Mike XX,XXX that has interesting, just end single storey in properties this And that that park that’s That biggest office in just of storey, that quarter. of Craig. impaired go foot Minneapolis first office.

who that somewhat to it's going come park that me Blackstone we on want And encouraging get some the to acquire so, are exit to property. into interest has property, but may are that now to starting and we people that

Craig Kucera

quarter. I looking that supplement, think was at at So, that think your I included first

increase to of in June? from end there incremental was the March So vacancy XX no

Bob Cutlip

No.

Mike Sodo

we parcel which the the sale north are to The failing that us July, Heights – was There down real got occupancy. time recall am asset XX. of in I XX% below of a today, Maple

have might footage, a would that of have Craig, it. been couple been there but So square

Craig Kucera

were anything far like write-offs your revenue expensed or as That's items else that? revenue, tenant rental Okay. as receivable quarter, any maybe there contra And helpful. against this

Mike Sodo

and No as that the on for write-offs. I numbers as for even basis had are covered in revenue less some to analyst GAAP GAAP number us would obviously a and is well that folks advocate every P&L the expenses the will exercise those yourselves to for modification the that enabled see Also, lease at track properties. expenses integration for guidance Again, of net a new say, lease us you your gone have operating guidance. being net dramatically some some property projects now I have a of that comparability. expenses would operating even and up. – look under years, on at like tenant-managed we’ve have triple revenue internally

lessee, a as in and up our that are grossing to nature. have are revenues function that, that some as lumpiness of amounts obligated So now there tenants pay we they statement income the and the recovery

in they that the say rent a from make COGS a of trend. was perspective, million. was $XX.X fluctuate. rent in second from peer-to-peer quarter And and it the an I less cash quarter cash would million may bit absolute little So $XX.X first

the quarter the first acquisitions executed. from right we trending way, So, benefiting that

Craig Kucera

Thanks color. Okay. the for

Mike Sodo

Craig. Thanks,

David Gladstone

questions. Other

Operator

queue We questions at time. in the further this no have

David Gladstone

to calling you very of us you in. this at All good for right. to all we gave you again. any Thank Bob and we thank call. questions answer much with always that certainly Well, end talking the for are and try the you all of enjoyed Michael questions you

Operator

today's Ladies concludes you for and participating. call. conference Thank gentlemen, this

disconnect. now You may