Gladstone Commercial Corporation Price & Performance (GOOD)

Yes. Our next question is from John Massocca with B. Riley Securities. Please proceed. Good morning. [indiscernible] Let me starting off with the balance sheet. Given the private placement and security issuance you've recently completed. I mean is that kind of how we should expect funding to go forward? I guess that pricing kind of the correct Pricing at least in the current market in terms of interest rate? John, this is Gary. I think we expect that to be not our primary mode of financing. Obviously, we have the line of credit, we have bank term loans. But yes, we intend to continue on with private placements. The market willing that the interest rate we got, we thought was pretty strong for a first time issuer. So it might hopefully indicative and hopefully maybe even less in the future.

That's helpful. And then on the leasing front, can you just provide a little color on leasing activity in 4Q? I know you gave kind of numbers in industrial assets office properties and kind of maybe headed rents trend versus what was in place before Renewal or releasing? They were both office and industrial. Majority was industrial. They also were plus ups as it relates to industrial, but also in the office. The office deals were mostly on five years.

We see that trend [indiscernible] As we look to renew current office buildings and then on the industrial side various Pac around the country. And again, we did see a large one last year up in Pennsylvania.

We are seeing a plus up in rents as it relates to those renewals.

Okay.

And then know you guys talked about it in the last earnings call, but maybe more in the context of 2025, just broad strokes, what's kind of the CapEx expectations? Just balancing the relatively small amount of leases expiring in the current year versus maybe some more meaningful lease expirations in 2026 and 2027. Just trying to think about how spending there might go in the current year?

Obviously, CapEx that we have been spending on renewals is what I'll term positive CapEx for us. Both with the retention of the tenancy, but it does bring an increase in rent So we don't have a lot of expense from a capital exposure point within our buildings. The majority of it is leasing expenses and improvements to the buildings. Of that, have it budgeted. We are it's very manageable. Again, a majority of it has been and will be here in the certainly next nine months going to be for those dollars that we had to spend in leasing commissions in order to have the nice plus up that we had coming out of 2024. [indiscernible] That's helpful. And that's great. Thank you.

Okay. Do we have any other questions today?

Yes, we do. Our next question is from Dave Storms with Stonegate Capital. Please proceed.

Good morning.

Good morning, David.

Just hoping to sense of around the timing [indiscernible] As to timing, one is going to be in the April 1, per contract, we don't see a reason for that not to occur. And the other would be in the second quarter. I think early early April most likely.

And then just as it relates to the recycling program, Is there any sense of what you're seeing in the spread in cap rates between maybe those held for sale assets and what you might have in the acquisition pipeline?

Dave, I'm not sure I understand that question unless you're asking the cap rate difference between sale to acquisition. Yes, essentially.

Okay.

So obviously on the acquisition side, we are seeing cap rates need to play in an area of 7.5% to eight going in basis. Our sales are probably somewhat a little bit higher than that just because their office but not dramatically so.

Because we don't have the pressure to other than within the industry to get off our books, we can be selective.

Understood. That's very helpful. Thank you. And then just one more for me.

Are you seeing any early impacts from some of the rhetoric around tariffs implementation of those tariffs.

Yes. Thank you for that. We've canvassed our [indiscernible] do not see an immediate impact as it relates to the potential threat of tariffs. Of course, we've got to see where they who and where they hit. But our tendency currently does not has not expressed any such fear We are looking for that it may help create more industrial opportunities with re shoring, onshoring. So we are not currently see a great deal of stress as a result Thank you.

Okay. Do we have any other questions today?

Yes. Our final question is from Craig Cuthiero with Lucid Capital Markets. Please proceed.

Yes. Hey, good morning, guys. Just following up on some of the discussion on capital recycling. Can you give us a sense broadly of the dollar amount of what you might be acquiring and selling? In your as you're reviewing things?

On the acquisition side, I'm hoping that it is a good bit more than what we had in 2024. We're looking forward to getting back to our what I'll call what I think is more normal production of $100,000,000 a year. So I'm hopeful for that. I think we have a pretty good pipeline going in. They're not all booked obviously. And as it relates to dispositions, that will allow us to be more discerning in our dispositions looking to get rid of some of the office assets that we feel might be problematic down the road. As it relates to what people are looking for in the marketplace. We've been, I think, pleasantly surprised with some of our dispositions creative activity of the buyers, either turning it into pickle balls, turning it into single family and apartments, And again, just to remind, we don't have properties in CBDs So as a result, some local buyers that find some of our properties attractive to reposition.

Okay, great. You mentioned you had the North Carolina asset, I think it was an office asset expiring at end of this quarter, which you expected to sell. But for the remaining twenty twenty five expirations, are those office or industrial? One is an industrial that is again under a lease with a purchase option, which we believe will get exercised.

And two others are office of which we do have and that's approximately one hundred thousand hundred and ten thousand square feet. We do have exchange paper as it relates to renewals.

Got it. And just one more for me. You did reclass a lease as a sales type this quarter. Is that going to still be a component of the base management fee calculation?

Yes, that will be. It's an odd it's an odd kind of addition to the accounting, the ASC eight forty two. This is the property, the industrial property that Buzz mentioned and when they entered into the lease in November with our expectation of a sale, We had to be given the guidance. Reclassified as a sales type lease. It's kind of an odd deal that one of the reasons we have that large gain on sale, on our balance, on our income statement. And so but yes, to answer your question, we are accounting for that as part of the base management fee. It's still a piece of real estate on our real estate.

Got it. That's what I figured. I just wanted to double check. Thank you. That's all for me.

Okay. Any more questions today?

There are no further questions.

Well, that was a little bit better than last quarter in terms of number of questions, but we'd love to have more questions So next quarter, hope you guys get all tuned up and ask us lots of questions because we enjoy answering them and I know our audience likes to hear All right. That's the end of this presentation. And so we'll take it bye until next quarter.

Thank you. This will conclude today's