Gladstone Commercial Corporation Announces 22% Return from Development Financing for Healthcare Facility in Phoenix, AZ

MCLEAN, Va., Feb. 01, 2016 -- Gladstone Commercial Corporation (NASDAQ:GOOD) (the “Company” or “Gladstone Commercial”) reported today that it successfully exited its $5.9 million second mortgage development loan, which was a portion of the development financing package that funded the construction of an 81,000 square foot, build-to-suit transitional care facility (the “Property”) located on a major hospital campus in Phoenix, Arizona. 

Prior to completion of the Property, the Company elected not to exercise its right to purchase the Property, triggering an exit fee due at sale sufficient to earn an internal rate of return of 22% on the $5.9 million investment.  Over the course of the 18 months that the investment was outstanding, the Company earned a 1.33 multiple on its investment.  

“This successful investment was the first in a new program we created to participate with developers on build-to-suit projects in primary and strong secondary markets nationwide,” said Matt Tucker, Managing Director of Gladstone Commercial. “This investment established our presence in the Phoenix market and as a capital provider for developers looking to complete single tenant build-to-suit office, industrial and healthcare facilities.  This investment provided very good risk adjusted returns to our shareholders.”

“We are excited to announce the successful exit of our first development loan, a program we hope will become an integral part of the Company’s long-term growth strategy. Partnering with developers can lead to additional value creation for our shareholders, either through increasing the Company’s asset base by acquiring these properties, or recognizing above market returns by recognizing an exit fee, upon completion,” said Bob Cutlip, President of Gladstone Commercial.

About Gladstone Commercial Corporation (NASDAQ:GOOD)

Gladstone Commercial is a real estate investment trust focused on acquiring, owning and operating net leased industrial and office properties across the United States. Gladstone Commercial’s real estate portfolio consists of 99 properties located in 24 states, totaling approximately 11.0 million square feet. For additional information please visit www.gladstonecommercial.com.

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All statements contained in this press release, other than historical facts, may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements. Readers should not rely upon forward-looking statements because the matters they describe are subject to known and unknown risks and uncertainties that could cause Gladstone Commercial's business, financial condition, liquidity, results of operations, funds from operations or prospects to differ materially from those expressed in or implied by such statements. Such risks and uncertainties are disclosed under the caption "Risk Factors" of Gladstone Commercial's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, as filed with the SEC on February 18, 2015 and its Form 10-Q for the quarter ended June 30, 2015, as filed with the SEC on August 3, 2015.  Gladstone Commercial cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. Gladstone Commercial undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

For Investor Relations inquiries related to any of the monthly dividend paying Gladstone funds, please visit www.gladstone.com.