 Please note that the limited information that follows in this press release is not adequate to make an informed investment judgment. MCLEAN, Va., July 27, 2020 GLOBE NEWSWIRE -- Gladstone Commercial Corporation Nasdaq: GOOD Gladstone Commercial today reported financial results for the second quarter ended June 30, 2020. A description of funds from operations, or FFO, and Core FFO, both non-GAAP generally accepted accounting principles in the United States financial measures, are located at the end of this press release. All per share references are to fully-diluted weighted average shares of common stock and Non-controlling OP Units, unless otherwise noted. For further detail, please also refer to both Gladstone Commercials quarterly financial supplement and Quarterly Report on Form 10-Q, each of which are available on the Investor Relations section of our website at Information dollars in thousands, except share and per share data: As of and for the three months ended June 30, 2020 March 31, 2020 Change Change Operating Data: Total operating revenue 33,525 33,619 94 0.3 Total operating expenses 25,853124,092 1,761 7.3 Other expense, net 6,707 7,269 562 7.7 Net income 965 2,258 1,293 57.3 Less: Dividends attributable to preferred stock 2,688 2,678 10 0.4 Less: Dividends attributable to senior common stock 204 208 4 1.9 Net loss attributable to common stockholders and Non-controlling OP Unitholders 1,927 628 1,299 206.8 Add: Real estate depreciation and amortization 14,182 14,096 86 0.6 Add: Impairment charge 1,721 1,721 100.0 Add: Loss on sale of real estate 12 12 100.0 Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic 13,976 13,480 496 3.7 Add: Convertible senior common distributions 204 208 4 1.9 Funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted 14,180 13,688 492 3.6 Funds from operations available to common stockholders and Non-controlling OP Unitholders - basic 13,976 13,480 496 3.7 Add: Acquisition related expenses 8 7 1 14.3 Add: PACE financing amortization, net 31 31 100.0 Add: Asset retirement obligation expense 31 41 10 24.4 Core funds from operations available to common stockholders and Non-controlling OP Unitholders - basic 14,015 13,559 456 3.4 Add: Convertible senior common distributions 204 208 4 1.9 Core funds from operations available to common stockholders and Non-controlling OP Unitholders - diluted 14,219 13,767 452 3.3 Share and Per Share Data: Net loss attributable to common stockholders and Non-controlling OP Unitholders - basic and diluted 0.06 0.02 0.04 200.0 FFO available to common stockholders and Non-controlling OP Unitholders - basic 0.41 0.39 0.02 5.1 FFO available to common stockholders and Non-controlling OP Unitholders - diluted 0.40 0.39 0.01 2.6 Core FFO available to common stockholders and Non-controlling OP Unitholders - basic 0.41 0.40 0.01 2.5 Core FFO available to common stockholders and Non-controlling OP Unitholders - diluted 0.41 0.40 0.01 2.5 Weighted average shares of common stock and Non-controlling OP Units outstanding - basic 34,442,859 34,136,179 306,680 0.9 Weighted average shares of common stock and Non-controlling OP Units outstanding - diluted 35,092,914 34,791,121 301,793 0.9 Cash dividends declared per common share and Non-controlling OP Unit 0.37545 0.37545 Financial Position Real estate, before accumulated depreciation 1,124,478 21,123,644 834 0.1 Total assets 1,086,051 1,098,825 12,774 1.2 Mortgage notes payable, net, borrowings under revolver, net and borrowings under term loan, net 666,883 666,194 689 0.1 Total equity and mezzanine equity 362,773 375,657 12,884 3.4 Properties owned 122 2122 Square feet owned 15,067,996 215,067,996 Square feet leased 95.5 96.6 1.1 1.1 1Includes a 1.7 million impairment charge recognized on one property during the three months ended June 30, 2020. 2Includes two properties classified as held for sale of 18.2 million and 372,448 square feet. Second Quarter Activity: Collected 98 of cash rents owed during the second quarter: We collected 98 of cash rents due during April, May and June during the COVID-19 global pandemic; remaining 2 of cash rents were rent deferrals to be paid in full no later than March 2021; Renewed leases: Renewed four leases totaling 113,000 square feet with remaining lease terms ranging from 1.3 to 11.6 years; Leased vacant space: Leased 17,000 vacant square feet to our anchor tenant in one of our Columbus, Ohio properties; Repaid debt: Repaid 5.9 million in fixed rate mortgage debt with an interest rate of 6.00 and repaid 12.1 million of variable rate mortgage debt at a weighted average rate of LIBOR plus 2.25; Issued common stock under ATM program: Issued 25,800 shares for net proceeds of 0.5 million; Issued Series E Preferred Stock under ATM program: Issued 86,600 shares for net proceeds of 1.9 million; and Paid distributions: Paid monthly cash distributions for the quarter totaling 0.37545 per share on our common stock, 0.4374999 per share on our Series D Preferred Stock, 0.414063 per share on our Series E Preferred Stock, and 0.2625 per share on our senior common stock.Second Quarter 2020 Results: Core FFO available to common shareholders and Non-controlling OP Unitholders for the three months ended June 30, 2020, was 14.2 million, or 0.41 per share, a 3.3 increase when compared to the three months ended March 31, 2020. Core FFO increased primarily due to a decrease in interest expense from the debt repaid during Q2 2020 as well as a decrease in the LIBOR rate. This was partially offset by a decrease in rental income from properties that went vacant after Q1 2020.Net loss attributable to common stockholders and Non-controlling OP Unitholders for the three months ended June 30, 2020 and the three months ended March 31, 2020, was 1.9 million and 0.6 million, or 0.06 and 0.02 per share, respectively. A reconciliation of Core FFO to net loss for the three months ended June 30, 2020 and March 31, 2020, which we believe is the most directly comparable GAAP measure to Core FFO, and a computation of basic and diluted Core FFO per weighted average share of common stock and Non-controlling OP Unit and basic and diluted net loss per weighted average share of common stock and Non-controlling OP Unit is set forth in the Summary Information table above.Subsequent to the end of the quarter: Collected 99 of July cash rent: Collected 99 of July cash rent owed; Renewed leases: Renewed the lease in our Richmond, Virginia building for an additional six years, with a new lease expiration date of September 30, 2026; Sold properties: Sold our Maple Heights, Ohio property as part of our capital recycling strategy for 11.4 million, resulting in a net gain of 1.2 million; Repaid debt: Repaid the 4.0 million variable rate debt on our Maple Heights, Ohio property; Issued common stock under ATM program: Issued 85,000 shares for net proceeds of 1.6 million; Issued Series E Preferred Stock under ATM program: Issued 67,200 shares for net proceeds of 1.5 million; and Declared distributions: Declared monthly cash distributions for July, August and September 2020 totaling 0.37545 per share on our common stock, 0.4374999 per share on our Series D Preferred Stock, 0.414063 per share on our Series E Preferred Stock, 0.375 per share on our Series F Preferred Stock, and 0.2625 per share on our senior common stock.Comments from Gladstone Commercials President, Bob Cutlip: Our financial results reflect consistent performance and stabilized revenues from our tremendous same store property occupancy, rent collection and growth, accretive real estate investments made during 2019 and the first half 2020, and our ability to renew tenants as well as our deleveraging and capital recycling programs. We had an outstanding start to 2020, by investing 71.7 million in five industrial assets in our target markets at accretive cap rates, building off the momentum of the fourth quarter 2019 where we invested 62.4 million in nine industrial assets. We have continued our capital recycling program, whereby we have sold non-core assets and used the proceeds to de-lever our portfolio as well as acquire properties in our target growth markets. We have successfully exited two non-core assets so far during 2020, recognizing a net capital gain of 1.2 million. We will continue to opportunistically sell non-core assets and redeploy the proceeds into stronger target growth markets. While we expect to face challenges due to the COVID-19 pandemic, we feel strongly about the depth of our tenant credit underwriting. We have collected over 98 of second quarter cash rents and 99 of July cash rents. We anticipate our tenants will successfully navigate the current economic climate and will be able to continue operating successfully when operating restrictions are lifted and economic normalcy improves. We are in good standing on our Credit Facility and expect to continue to have access to the debt and equity markets, as necessary, for added liquidity. We are extremely pleased with our solid performance over the last several years. We believe our same store rents, which have increased by 2 annually in recent years, should be stable and rising as we continue our growth. 