Gladstone Commercial Corporation — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total operating revenue was $42.4 million for the three months ended September 30, 2026, a 3.6% decrease from $44.0 million in the prior quarter.
• Total operating expenses were $32.9 million, a 25.5% increase from $26.2 million in the prior quarter, primarily due to a $6.5 million impairment charge recognized on one property.
• Other expense, net was $11.6 million, a 22.0% increase from $9.5 million in the prior quarter.
• Net loss attributable to common stockholders and Non-controlling OP Unitholders was $5.2 million ($0.11 per share), compared to net income of $5.1 million ($0.11 per share) in the prior quarter.
• Funds from operations (FFO) available to common stockholders and Non-controlling OP Unitholders was $16.8 million ($0.35 per share), a 7.9% decrease from $18.3 million ($0.38 per share) in the prior quarter.
• Core FFO available to common stockholders and Non-controlling OP Unitholders was $16.9 million ($0.35 per share), a 7.8% decrease from $18.3 million ($0.38 per share) in the prior quarter.
• Core FFO decreased primarily due to higher property expenses, higher interest expense from rising SOFR rates, and a lease termination fee recognized on a property sold in the previous period, partially offset by lower general and administrative expenses and a lower net incentive fee.
• Real estate, before accumulated depreciation, increased to $1.43 billion from $1.42 billion in the prior quarter.
• Total assets were $1.25 billion, a 0.2% increase from the prior quarter.
• Total debt (mortgage notes payable, revolver, term loan, and senior unsecured notes) was $858.3 million, a 0.7% increase from $852.1 million in the prior quarter.
• Total equity and mezzanine equity decreased to $318.1 million from $327.5 million in the prior quarter.

Guidance and Future Outlook:

• Management anticipates same-store rents will continue to rise, having increased by 2% or greater annually in recent years.
• The company expects to continue having access to debt and equity markets as necessary for added liquidity.
• Management plans to continue its capital recycling program, selling non-core assets to de-lever the portfolio and acquire properties in target growth markets.
• The company will focus on opportunistic sales of non-core assets and redeployment of proceeds into stronger target growth markets with an emphasis on industrial investment opportunities.
• Management expects tenants to successfully navigate the current economic climate and continue operating successfully when economic normalcy returns.

Business Segments and Product Lines:

• Acquired one fully-occupied industrial property with 146,650 square feet for $6.6 million at a cap rate of 9.16%.
• Leased or renewed 502,557 square feet at four properties during the quarter, with remaining lease terms ranging from 5.5 to 20.0 years.
• Subsequent to the quarter, renewed 522,521 square feet at three properties with remaining lease terms ranging from 3.6 to 5.1 years.
• Issued 168,868 shares of common stock under the at-the-market (ATM) program for net proceeds of $2.2 million.
• Repaid $10.2 million in fixed-rate mortgage debt at an interest rate of 4.25% subsequent to the quarter end.
• Properties owned increased to 152 from 151 in the prior quarter.
• Square feet owned increased to 17.8 million from 17.7 million in the prior quarter.
• Square feet leased occupancy was 99.3% as of September 30, 2026, compared to 98.7% in the prior quarter.

Market and Competitive Landscape:

• The company collects 100% of cash rents due, having collected 100% for July, August, September, and October.
• Through the third quarter of 2026, the company leased or renewed 1,468,614 square feet with 12 tenants.
• Management is actively marketing remaining vacant space and anticipates positive outcomes.
• The company faces challenges due to inflation, increasing interest rates, and various geo-political and economic issues.
• Management expresses strong confidence in the depth of its tenant credit underwriting.

Risks and Challenges:

• Forward-looking statements involve risks including the ability to raise additional capital and the availability and terms of capital and financing.
• Risks include downturns in the current economic environment, tenant performance, competition affecting lease renewals or re-leasing, and significant changes in interest rates.
• Actual results may differ materially from forward-looking statements regarding income stability, re-leasing unoccupied properties, and portfolio growth.

Management Commentary and Tone:

• CEO Buzz Cooper stated that financial results reflect consistent performance and stabilized revenues driven by high occupancy, rent collection, growth, accretive investments, and tenant renewals.
• Management expressed confidence in the company's ability to navigate economic uncertainty through strong tenant credit underwriting.
• The tone indicates a strategic focus on capital recycling, de-leveraging, and investing in target industrial markets despite macroeconomic headwinds.

Other Key Points:

• Monthly cash distributions of $0.30 per share on common stock and Non-controlling OP Units were paid for the quarter and declared for October, November, and December 2026.
• Distributions were also paid on preferred stock: $0.414063 per share (Series E), $0.375 per share (Series F), $0.375 per share (Series G), and $0.2625 per share (senior common stock).
• A conference call was held on November 4, 2026, at 8:30 a.m. Eastern Time to discuss results.
• The company is a REIT focused on acquiring, owning, and operating net leased industrial and office properties across the United States.