Third Quarter 2026
Filed Nov 3, 2026Gladstone Commercial reported third-quarter net loss attributable to common stockholders and Non-controlling OP Unitholders of $5.2 million and Core FFO of $16.9 million, while collecting 100% of cash rents and acquiring one fully occupied industrial property.
Rent collection, occupancy and leasing activity remained strong, but total operating revenue, FFO and Core FFO declined sequentially, and the company recorded a net loss that included a $6.5 million impairment charge.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total operating revenue, three months ended September 30, 2026GAAP | $42.42M | (3.6) % | – |
| Total operating expenses, three months ended September 30, 2026GAAP | (32,915) | 25.5 % | – |
| Other expense, net, three months ended September 30, 2026GAAP | (11,567) | 22.0 % | – |
| Net (loss) income, three months ended September 30, 2026GAAP | −$2.06M | (124.9) % | – |
| Dividends attributable to preferred stock, three months ended September 30, 2026GAAP | (3,032) | (0.1) % | – |
| Dividends attributable to senior common stock, three months ended September 30, 2026GAAP | (100) | 1.0 % | – |
| Gain (loss) on extinguishment of Series F preferred stock, net, three months ended September 30, 2026GAAP | 2 | (128.6) % | – |
| Net (loss) income attributable available to common stockholders and Non-controlling OP Unitholders, three months ended September 30, 2026GAAP | −$5.19M | (201.3) % | – |
| Real estate depreciation and amortization, three months ended September 30, 2026GAAP | 15,435 | 3.2 % | – |
| Impairment charge, three months ended September 30, 2026GAAP | 6,518 | 100.0 % | – |
| Gain on sale of real estate, net, three months ended September 30, 2026GAAP | — | (100.0) % | – |
| Funds from operations available to common stockholders and Non-controlling OP Unitholders, basic, three months ended September 30, 2026non-GAAP | $16.76M | (7.9) % | – |
| Funds from operations available to common stockholders and Non-controlling OP Unitholders, diluted, three months ended September 30, 2026non-GAAP | $16.86M | (7.8) % | – |
| Asset retirement obligation expense, three months ended September 30, 2026non-GAAP | 39 | 5.4 % | – |
| Core funds from operations available to common stockholders and Non-controlling OP Unitholders, basic, three months ended September 30, 2026non-GAAP | $16.80M | (7.8) % | – |
| Core funds from operations available to common stockholders and Non-controlling OP Unitholders, diluted, three months ended September 30, 2026non-GAAP | $16.90M | (7.8) % | – |
| Net (loss) income attributable available to common stockholders and Non-controlling OP Unitholders per share, basic and diluted, three months ended September 30, 2026GAAP | $(0.11) | (200.0) % | – |
| FFO available to common stockholders and Non-controlling OP Unitholders per share, basic, three months ended September 30, 2026non-GAAP | $0.35 | (7.9) % | – |
| FFO available to common stockholders and Non-controlling OP Unitholders per share, diluted, three months ended September 30, 2026non-GAAP | $0.35 | (7.9) % | – |
| Core FFO available to common stockholders and Non-controlling OP Unitholders per share, basic, three months ended September 30, 2026non-GAAP | $0.35 | (7.9) % | – |
| Core FFO available to common stockholders and Non-controlling OP Unitholders per share, diluted, three months ended September 30, 2026non-GAAP | $0.35 | (7.9) % | – |
| Weighted average shares of common stock and Non-controlling OP Units outstanding, basic, three months ended September 30, 2026other | 48,507,694 | 0.1 % | – |
| Weighted average shares of common stock and Non-controlling OP Units outstanding, diluted, three months ended September 30, 2026other | 48,829,501 | 0.1 % | – |
| Cash dividends declared per common share and Non-controlling OP Unit, three months ended September 30, 2026other | $0.30 | — % | – |
| Real estate, before accumulated depreciation, as of September 30, 2026GAAP | $1.43B | 0.6 % | – |
| Total assets, as of September 30, 2026GAAP | $1.25B | 0.2 % | – |
| Mortgage notes payable, net, borrowings under revolver, borrowings under term loan, net, and senior unsecured notes, net, as of September 30, 2026GAAP | $858.3M | 0.7 % | – |
| Total equity and mezzanine equity, as of September 30, 2026GAAP | $318.1M | (2.9) % | – |
| Properties owned, as of September 30, 2026other | 152 | 0.7 % | – |
| Square feet owned, as of September 30, 2026other | 17,816,521 | 0.8 % | – |
| Square feet leased, as of September 30, 2026other | 99.3 % | 0.6 % | – |
Amounts quoted below without a unit are in thousands, as in the filing’s tables. Per-share figures are as printed.
Capital returns
- Issued 168,868 shares of common stock under the ATM program for net proceeds of $2.2 million.
- Paid monthly cash distributions for the quarter totaling $0.30 per share on common stock and Non-controlling OP Units, $0.414063 per share on Series E Preferred Stock, $0.375 per share on Series F Preferred Stock, $0.375 per share on Series G Preferred Stock, and $0.2625 per share on senior common stock.
- Declared monthly cash distributions for October, November, and December 2026 totaling $0.30 per share on common stock and Non-controlling OP Units, $0.414063 per share on Series E Preferred Stock, $0.375 per share on Series F Preferred Stock, $0.375 per share on Series G Preferred Stock, and $0.2625 per share on senior common stock.
What drove it
- Collected 100% of cash rents due during July, August, and September, and collected 100% of October cash rents.
- Purchased one fully occupied industrial property with 146,650 square feet of rental space for $6.6 million and 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 years to 20.0 years.
- Core FFO decreased primarily because of higher property expenses, higher interest expense due to the SOFR rate increasing, and a lease termination fee recognized on the property sold during the previous period.
- Lower general and administrative expenses and a lower net incentive fee partially offset the Core FFO decline.
Concerns
- The company recognized a $6.5 million impairment charge on one property during the three months ended September 30, 2026.
- Total operating revenue declined (3.6) % sequentially to $42,419.
- Core FFO available to common stockholders and Non-controlling OP Unitholders, diluted, declined (7.8) % sequentially to $16,899.
- The company cited inflation, corresponding increases in interest rates, geopolitical and economic issues, tenant performance, refinancing availability and significant changes in interest rates as risks.
What to watch
- Execution of the stated capital recycling program, including sales of non-core assets, portfolio deleveraging and redeployment into target growth markets.
- Leasing of remaining vacant space following 99.3 % square feet leased as of September 30, 2026.
- The impact of property expenses and SOFR-driven interest expense on Core FFO.
- Renewal activity after 522,521 square feet were renewed subsequent to quarter-end, with remaining lease terms ranging from 3.6 years to 5.1 years.
Balance sheet and cash flow
- Real estate, before accumulated depreciation was $1,427,631 as of September 30, 2026.
- Total assets were $1,245,747 as of September 30, 2026.
- Mortgage notes payable, net, borrowings under revolver, borrowings under term loan, net, and senior unsecured notes, net were $858,271 as of September 30, 2026.
- Subsequent to quarter-end, the company repaid $10.2 million in fixed rate mortgage debt at an interest rate of 4.25%.
Analysis
Gladstone Commercial reported total operating revenue of $42,419 for the three months ended September 30, 2026, compared with $43,989 for the three months ended June 30, 2026. The company remained operationally well occupied, with 99.3 % of square feet leased, and it collected 100% of cash rents in each month of the quarter and in October. It acquired one fully occupied industrial property with 146,650 square feet of rental space for $6.6 million at a 9.16% cap rate.
Earnings weakened sequentially. Net (loss) income was $(2,063), compared with net income of $8,270 in the prior quarter, while net (loss) income attributable available to common stockholders and Non-controlling OP Unitholders was $(5,193), compared with $5,128. The quarter included a 6,518 impairment charge, described as a $6.5 million impairment charge on one property, while the prior period included a gain on sale of real estate, net of (1,894).
Non-GAAP FFO and Core FFO also declined. Diluted FFO was $16,860 and diluted Core FFO was $16,899, compared with $18,290 and $18,327, respectively, in the three months ended June 30, 2026. Management attributed the Core FFO decrease primarily to higher property expenses, higher interest expense associated with an increase in SOFR, and a lease termination fee recognized on the property sold during the previous period. Lower general and administrative expenses and a lower net incentive fee partially offset those pressures.
Capital activity combined incremental equity issuance, distributions and debt repayment. The company issued 168,868 common shares under its ATM program for net proceeds of $2.2 million and paid quarterly common and Non-controlling OP Unit distributions totaling $0.30 per share. Subsequent to quarter-end, it repaid $10.2 million of fixed rate mortgage debt bearing a 4.25% interest rate. The release did not provide numerical financial guidance, but management stated its intention to recycle capital through non-core asset sales, deleverage the portfolio and pursue target growth markets with an emphasis on industrial properties.
Management, verbatim
Our financial results reflect consistent performance and stabilized revenues from our tremendous same store property occupancy, rent collection and growth, accretive real estate investments, and our ability to renew tenants.
Buzz Cooper, Chief Executive Officer and President
We plan to continue our capital recycling program, whereby we sell non-core assets and use the proceeds to de-lever our portfolio, as well as to acquire properties in our target growth markets.
Buzz Cooper, Chief Executive Officer and President
Despite economic uncertainty, through the third quarter of 2026, we leased or renewed 1,468,614 square feet with 12 tenants.
Buzz Cooper, Chief Executive Officer and President
Not in the filing
stated, not guessed- Prior-year comparable figures and year-over-year changes for reported quarterly operating metrics.
- Gross margin.
- Operating income.
- Income tax expense and tax rate.
- Cash and cash equivalents balance.
- GAAP cash flow from operating activities.
- Free cash flow.
- Numerical forward revenue, expense, margin, tax-rate or earnings guidance.
- Segment revenue disclosures.
- Prior guidance for comparison.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.