Gladstone Commercial Corporation - Real Estate Investment Trust · NASDAQ:GOOD
Gladstone Commercial Corporation - Real Estate Investment Trust — Gladstone Commercial — IPO Roadshow (May 2016)
36 slides from Gladstone Commercial Corporation - Real Estate Investment Trust's IPO roadshow presentation, May 17, 2016
Slide 1: Series D Preferred Offering Issuer Free Writing Prospectus
Series D Preferred Offering Issuer Free Writing Prospectus Dated May 17, 2016 Filed Pursuant to Rule 433 Registration Statement No. 333-208953 Relating to Preliminary Prospectus Supplement Filed with the SEC May 16, 2016 to Prospectus Dated February 1, 2016
Slide 2: Legal Disclaimer
Legal Disclaimer Forward-Looking Statements: This presentation may include forward-looking statements within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934. These forward-looking statements include comments with respect to our objectives and strategies, and the futu
Slide 3: Gladstone Commercial Corporation
Gladstone Commercial Corporation [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC]
Slide 4: Offering Summary
Offering Summary Securities:Series D Cumulative Redeemable Preferred Stock Liquidation Preference:$25.00 Dividend Rate:6.75% - 7.00% Dividend Frequency:Declared Quarterly and Payable Monthly Listing:NASDAQ Global Select Market (“NASDAQ”) (Expected) Symbol:"GOODM" (Expected) Issue Rating:BBB (1) Use
Slide 5: Company Overview
Company Overview Gladstone Commercial Corporation (“Gladstone” or the “Company”) is a publicly owned Real Estate Investment Trust (“REIT”) having completed its IPO in 2003 and listed on the NASDAQ (Ticker: GOOD) The Company invests in single tenant and anchored multi-tenant net leased assets Gladsto
Slide 6: Gladstone Commercial's Investment Philosophy
Gladstone Commercial’s Investment Philosophy Gladstone Commercial Investment strategy Portfolio Financial performance Management Conclusion Overview Acquire single-tenant, or anchored multi-tenant, NNN office and industrial properties Create stabilized income streams in favorable growth markets Acti
Slide 7: Gladstone Commercial Overview
Gladstone Commercial Overview IPO: 2003 (NASDAQ:GOOD) BBB+ Company credit rating(1) Market Capitalization: $344mm(2) Enterprise Value: $951mm(3) Offices: DC (headquarters) and LA Common stock annual distribution per share: $1.50 Monthly distributions No missed or cut cash distributions since incepti
Slide 8: NNN Leases Minimize Landlord's Expense Exposure
NNN Leases Minimize Landlord’s Expense Exposure Annual rent increases and reimbursed expenses minimize inflation risk Consistent cash flows Yields are higher than comparable bonds of tenants and residual value of the asset adds benefit Most net leased properties are 100% occupied by a single tenant,
Slide 9: Significant Growth & Diversification Since 2010
Significant Growth & Diversification Since 2010 12/31/10 3/31/16 Variance Total assets ($mm) $411 $811 $400 Properties 65 99 34 Tenants 52 86 34 Square feet (mm) 6.8 11.0 4.2 Occupancy 97.2% 97.5% 0.3% Rental Revenue From Top 5 tenants ($mm) $10.0 $15.9(1) $5.9 % of Total Rental Revenue 24.2% 19.3%
Slide 10: Investment Strategy
Investment Strategy [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC]
Slide 11: Proven Strategy of Underwriting Real Estate and Tenant Strength
Proven Strategy of Underwriting Real Estate and Tenant Strength Tenant strength Tenants come from diverse array of industries Each tenant’s credit underwritten to Gladstone standards, developed over decades of middle market corporate lending, investing and buyouts through affiliated funds Emphasis o
Slide 12: Gladstone Has Achieved Consistent and Disciplined Growth
Gladstone Has Achieved Consistent and Disciplined Growth Historical Investment Volume ($000) JCIM – industrial ViaSat – office Delta Credit Union - office 536K SF Monroe, MI Acquired 12/14 GAAP cap rate: 8.2% 100K SF Englewood, CO Acquired 12/13 GAAP cap rate: 8.2% 78K SF Atlanta, GA Acquired 7/15 G
Slide 13: Portfolio Overview
Portfolio Overview [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC]
Slide 14: Portfolio Overview
Portfolio Overview Geographic diversity 99 properties across the U.S. located in 24 states Focus on secondary growth markets with higher yields Current occupancy 97.5% 4% of projected rents expiring from 2016-2019 Only one credit loss since inception High occupancy Tenant and property diversity Dive
Slide 15: Diversified Portfolio
Diversified Portfolio Note: As of 3/31/16 Geographic diversification (by rent) Property type diversification (by rent) 99 properties spread across 24 states GOOD Properties Target Markets Gladstone Commercial Investment strategy Portfolio Financial performance Management Conclusion Overview
Slide 16: High Quality, Diversified Portfolio
High Quality, Diversified Portfolio Industry diversification (based on rent) Top tenants % of rent % of SF 6% 3% 4% 9% 3% 1% 3% 1% 3% 5% 3% 1% All other tenants 78% 80% Note: As of 3/31/16 Portfolio is diversified across industries Gladstone Commercial Investment strategy Portfolio Financial perform
Slide 17: Consistent High Occupancy
Consistent High Occupancy Note: As of 3/31/16 Gladstone Commercial Investment strategy Portfolio Financial performance Management Conclusion Overview
Slide 18: Limited Near-Term Renewal Risk
Limited Near-Term Renewal Risk Note: As of 3/31/16 Lease Expiration Schedule $ in thousands (Existing Portfolio) Year of Lease Expiration SF of Leases Expiring Number of Expiring Leases Q1 2016 Base Rental Revenue % of Base Revenue 2016 2,914 1 $26 0.1% 2017 402,357 7 476 2.3% 2018 354,133 3 341 1.6
Slide 19: Lowest Future Turnover Among Competitors
Portfolio average lease term is 8.3 years Lowest Future Turnover Among Competitors % of Total Annualized Rental Revenue Expiring Within 4 Years $368,000 37% $479,000 48% Source: Public filings. Gladstone Commercial Investment strategy Portfolio Financial performance Management Conclusion Overview
Slide 20: Financial Performance
Financial Performance [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC]
Slide 21: Summary Historical Performance
Summary Historical Performance Total Revenue ($ in millions) Funds from Operations (Per Share)(1)(2) Total Distributions ($ in millions) Total Gross Assets ($ in millions) Includes a $5.3 million gain (or $0.30 per share) on debt extinguishment as a result of our Roseville, Minnesota deed-in-lieu tr
Slide 22: Strong Record of Regular Distributions
Strong Record of Regular Distributions Historical Annual Common Dividend per Share Gladstone Commercial Investment strategy Portfolio Financial performance Management Conclusion Overview
Slide 23: Sound Capital Structure and Liquidity
Sound Capital Structure and Liquidity Current Capital Structure as of 3/31/2016 ($000) Liquidity Debt Maturity Schedule $110mm credit facility comprised of $85mm line of credit and $25mm term loan Minimal interest rate exposure because debt is either fixed rate or floating rate with a cap Reduced le
Slide 24: Summary Historical Leverage Metrics
Summary Historical Leverage Metrics Net Debt / Enterprise Value Net Debt Plus Preferred / Enterprise Value Fixed Charge Coverage(2) Net Debt / EBITDA (1) Note: Common Equity uses annual average closing prices and includes effect of convertible securities. (1) See the reconciliation of EBITDA to Net
Slide 25: Improving capital structure over time
Improving capital structure over time Total Enterprise Value ($000) 45.2% 34.9% 52.5% 65.0% 66.7% 58.9% 55.3% 56.7% 53.1% 52.9% 52.9% 37.0% CAGR N/A LTV (%) N/A 54.0% Note: Common Equity uses annual average closing prices and includes effect of convertible securities. Gladstone Commercial Investment
Slide 26: Management
Management [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC] [PIC]
Slide 27: Experienced Leadership Team
Experienced Leadership Team David Gladstone, Chairman and CEO 25 years of experience Current Chairman and CEO of all four Gladstone funds, public companies #7, #8, #9 and #10 in his career Former Chairman of Allied Capital Commercial (REIT), Allied Capital and American Capital Former board member of
Slide 28: Experienced Leadership Team (cont'd)
Experienced Leadership Team (cont’d) Buzz Cooper, Senior Managing Director, South and Southeast Regions 25 years of experience Manages regional acquisition and asset management activities; over 14 years with Gladstone Former Principal of Allied Commercial Corporation REIT, where his responsibilities
Slide 29: Gladstone
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Slide 30: Summary Highlights
Summary Highlights Significant cash flow coverage of preferred stock distributions Strengthened credit profile with leverage down to 54% and fixed charge coverage at 2.1x Credit neutral transaction as new preferred stock will be used to redeem existing issues Highly diversified portfolio across prop
Slide 31: Gladstone
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Slide 32: Funds From Operations
Funds From Operations Funds from operations (“FFO”), as defined by The National Association of Real Estate Investment Trusts (NAREIT), is calculated to be equal to net income (loss) applicable to common shareholders, as defined by U.S. GAAP, excluding extraordinary items as defined by U.S. GAAP, gai
Slide 33: EBITDA
EBITDA Investors and analysts utilize earnings before interest, taxes, depreciation and amortization (“EBITDA”) as a supplemental measure for assessing and evaluating operating performance. While we believe net income available to common stockholders, as defined by accounting principles generally ac
Slide 34: Condensed Balance Sheet
Condensed Balance Sheet $ in thousands (3/31/2016 Unaudited)
Slide 35: P livin
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Slide 36: Registration statement and prospectus notice
Gladstone Commercial Corporation has filed a registration statement (File No. 333-208953) (including a prospectus dated February 1, 2016 and a preliminary prospectus supplement dated May 16, 2016) with the SEC for the offering to which this communication relates. Before you invest, you should read t