Ladies and gentlemen, thank you for standing by and welcome to the Gladstone Commercial Corporation’s First Quarter Earnings Ended March 31, 2020 Earnings Call and Web Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. David Gladstone. Thank you. Please go ahead.

Thank you, Jimmy, for that nice introduction and thanks to all of you for calling in. This is David Gladstone and we do enjoy this time we have with you on the phone. I wish we were doing it more than just once a quarter. All our people here are healthy. We’ve got some people working from home and some here in the office we designated as essential business, so we do have people working here in the office and everything seems to be going fine. So, at this point then, I’ll turn it over to Michael LiCalsi, he is our General Counsel and Secretary. He is going to give you a legal and regulatory matters concerning the call and the report. Michael?

Thanks, David, and good morning. Today's report may include forward-looking statements under the Securities Act of 1933 and Securities Exchange Act of 1934, including those regarding our future performance. These forward-looking statements involve certain risks and uncertainties that are based on our current plans, which we believe to be reasonable. Many factors may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements, including all risk factors that we include in our Forms 10-Q, 10-K, and other documents that we file with the SEC. You can find these on our website, specifically on the Investor Relations page or on the SEC's website. We undertake no obligation to publicly update or revise any of these forward-looking statements whether as a result of new information, future events, or otherwise except as required by law. Today, we will discuss FFO, which stands for funds from operations. FFO is a non-GAAP accounting term defined as net income, excluding the gains or losses from the sale of real estate and any impairment losses on property, plus depreciation and amortization of real estate assets. We'll also discuss FFO as adjusted for comparability and core FFO, which are generally FFO adjusted for certain other non-recurring revenue and expenses. We believe these metrics are a better indication of our operating results and allow better comparability of our period-over-period performance. We ask everyone to take the opportunity to visit our website once again, please sign up for our e-mail notification service there. You can also find us on Facebook. The keyword there is The Gladstone Companies. And our Twitter handle is @GladstoneComps. Today's call is simply an overview of our results so we ask that you review our press release and Form 10-Q issued yesterday for more detailed information. Again, you can find them on the Investor Relations page of our website. With that, I'll hand the baton back to Gladstone Commercial's President, Bob Cutlip.

Thanks, Michael. Good morning, everyone. During the first quarter, we acquired a 65,000 square foot industrial property in Indianapolis; acquired a 321,000 square foot three-building industrial portfolio in Houston, St. Louis, and Charlotte; acquired a 504,000 square foot industrial building in Chatsworth, Georgia; executed a lease amendment to extend a 100,000 square foot tenant in Denver, Colorado; extended the lease for a 78,000 square foot tenant in Springfield, Missouri; extended the lease for a 54,000 square foot tenant in Delaware, Ohio; and sold a non-core office property in North Carolina. As noted on our fourth quarter call, our investment strategy is emphasizing an increase in our portfolio's industrial allocation, which we believe will improve our property operating efficiencies, reduce capital expenditure levels, and potentially result in improved valuation over time. To that end, our industrial allocation was 33% on January 1, 2019 and has increased to 41% as of March 31, 2020. From January 2019 through March 2020, our investment volume was $201 million, all of which were industrial properties providing further evidence of this commitment, and our intent is to continue to overweight industrial acquisitions, market conditions permitting, of course, in the developed submarkets of our targeted locations. Our primary focus has been and will be acquisition candidates ranging in size from 50,000 to 300,000 square feet. During the quarter, our investment in asset management activities continued to generate positive momentum for our operations. We acquired five properties, all industrial equating to $72 million in investment volume. The transactions included a 65,000 square foot property in Indianapolis for $5.2 million with an average remaining lease term of approximately seven years and a GAAP cap rate of 7.2%; a 321,000 square foot three-building portfolio in Houston, St. Louis, and Charlotte for $34.6 million with a lease expiration date of January 31, 2040 and a GAAP cap rate of 7.6%; and a 504,000 square foot cross-dock facility in Chatsworth, Georgia for $31.9 million with a lease expiration date of August 31, 2030 and a GAAP cap rate of 6.9%. The first quarter investment volume is consistent with our strategy to continue to increase our industrial allocation and the 65,000 square foot property also adds to our Indianapolis concentration. The three-building 20-year sale-leaseback transaction is in markets we wish to increase our presence and the Chatsworth property is at an Inland Port location in Northwest Georgia, which aligns with our desire to acquire industrial properties at these Class I railroad terminal locations in the eastern half of the United States. Our asset management team continues to deliver on improving our same-store operations. Our South Central team extended the lease for our Springfield, Missouri 78,000 square foot office tenant through May of 2026. The tenant improvement package was $5 per square foot. Our Mountain West team extended the lease for our 100,000 square foot Denver office tenant through December of 2026. The tenant improvement allowance is $15 per square foot. And our Midwest team extended the lease for our 54,000 square foot Delaware, Ohio industrial tenant through February 2028 and no tenant improvement allowance was required. These combined efforts serve to increase the weighted average lease term on our entire portfolio. From an operational standpoint, our team is implementing energy savings improvements at three office locations in Ohio and Indiana. These programs required no capital expenditures by Gladstone, lower energy consumption in the states, upgrade building equipment, and lower going forward operating costs for our tenants. We plan to implement these energy savings projects at other locations as appropriate. The onset of the COVID-19 virus has required increased emphasis on portfolio management. The company has successfully implemented a work-from-home arrangement for employees. However, our active tenant engagement program continues and is delivering positive results. With an emphasis on tenant credit, we have always engaged our tenants quarterly to discuss their recent financial performance and this strategy has established strong ties with each of them. During this pandemic, we have appropriately increased our connections with our tenants. Some interesting and favorable characteristics of our tenant profile were included in our business update press releases. First, 84% of tenant revenue is from tenants who on average contribute 1% or less of company revenue; and the hospitality, oil and gas, and airline industries comprise just 2.4% of annual revenue. The challenges arising as a result of the virus prompted us to immediately connect with all of our tenants, which we have completed. There have been and we expect there will be requests from tenants for rent deferral and we will address them as we are notified by the respective tenant. Our strategy is to offer rent deferral, not rent abatement, to limit the deferral to a one-month to three-month period if at all possible and to require repayment of the deferred rent over a six-month to twelve-month period. We will also attempt to include lease extensions and rental rate increases in the agreements. Now there is no doubt that each agreement will have unique business terms. However, the key objectives are to maintain or increase core FFO per share and to return cash flow to the proper previous level as soon as possible. Specific noteworthy highlights of our team's rent collection performance through April are as follows: All cash-based rent from March was paid as scheduled and approximately 98% of April scheduled based rent has been paid. The company granted rent deferrals to three tenants in April representing approximately 2% of total monthly rental income. These tenants continue to pay partial rent, the deferrals ranged from 1.5 to 3 months and the payback period ranges from 6 months to 9 months. We continue to be in conversation with other tenants requesting short-term concessions and we will report the results of those conversations as they evolve. A number of tenants are taking advantage of the federal programs available to them and we're hopeful of positive outcomes on their applications. Anticipating that many on the call are interested in lease expirations through the beginning of 2021, I wanted to summarize the team's thoughts in our current activities. At lease expiration on March 31, 2020, a tenant vacated a 74,000 square foot multi-story office building in Fridley, Minnesota, a suburb of Minneapolis. We have leased 50% of that building for a 10-year lease term with occupancy that commenced on April 1. We also have two 10,000 square foot prospects for the balance of the vacant space. We have lease amendments out for signature with our Raleigh, North Carolina tenant who occupies two adjacent properties: 100% of a 58,000 square foot office building and 20% of a 115,000 square foot industrial building. The balance of the industrial building is occupied by a single tenant under a long-term lease. The office lease will be extended for five years and the industrial lease for one year. No tenant improvements are required for the lease extensions. As noted last quarter, GM is expected to vacate our Austin, Texas property at the end of August. Our active marketing of the property with the assistance from the local chamber of commerce has resulted in two prospects for the entire building and two additional prospects each for approximately one-third of the building. It’s interesting to note that our GAAP rent at the property of $14.50 per square foot compares very favorably in the submarket with current space offerings in the low-to-mid $20 per square foot on a triple net basis. And for the balance of the expiring tenants for the first quarter of 2021, we are in active conversations and are hopeful of positive outcomes. Market conditions are worthy of comment, particularly with the adverse effects from the onset of the COVID-19 virus. Economic forecasters are estimating that second quarter GDP may drop by double-digit numbers. This slowdown in economic activity will certainly impact our industry. Real capital analytics and noted national research firms stated that the buyer pool is shrinking for commercial properties during the first quarter. From 2016 to 2019, the U.S. market saw on average 2,100 unique buyers each month. This number reduced during the first quarter and is estimated at 790 buyers in March. This will almost certainly have a dampening effect short-term on investment sales volume as we enter the second quarter. In addition, conversations with investment sales professionals indicate that cap rates for industrial and office properties appear to be expanding in a number of markets, which could be positive long-term for everyone. East coast ports have reported that they are expecting import volumes for the first half of 2020 to be as much as 10% below the levels for the same period in 2019. They are expecting import volumes to expand in the third and fourth quarters. We will continue to monitor the evolving market conditions and will adjust our strategy accordingly. As it relates to growth opportunities, investment sales listings have moderated, driven primarily by the effects of the virus. Our current pipeline of acquisition candidates is approximately $255 million in volume, representing 18 properties, 16 of which are industrial. Because of the stay-at-home directives in many states, a number of these properties are currently in a hold position, but with some of the states opening up soon, we believe that that hold position will move to more positive conditions soon. Our team is staying actively engaged in the markets as we do believe acquisition opportunities will arise and we can and will pursue. So in summary, as one may conclude, our entire team across all our disciplines is contributing to our success and overall stability. Our first quarter activities reflected strong acquisition results and leasing success, refinanced maturing mortgages, issued common equity through our ATM program, and collectively positions us well to pursue growth opportunities. Now, let’s turn it over to Mike for a report on the financial results.

Good morning. I’ll start by reviewing our operating results for the first quarter of 2020. All per share numbers I reference are based on fully diluted weighted average common shares. FFO and core FFO available to common stockholders were both $0.39 and $0.40 per share respectively. This performance demonstrates the accretive yet prudent growth that the company has completed in recent years, as well as the performance of the portfolio in place. In addition to these accretive deals, our same-store cash rent continues to grow at 2% on an annualized basis. With the number of years of improving the balance sheet behind us, including deleveraging the portfolio and substantial acquisitions both at the end of 2019 and early part of 2020, we’re excited about the prospects to grow profitability for our shareholders, as well as increasing the industrial allocation of the portfolio. As Bob laid-out, our team is actively engaged with every tenant of ours to the intent to maximize shareholder value through and beyond the COVID-19 pandemic. We’re pleased with the team's and portfolio's performance through April, but these are unchartered times which we will continue to navigate together. Our first quarter results reflect an increase in total operating revenues to $33.6 million as compared to total operating expenses of $24.1 million for the period. We continue to enhance our strong balance sheet as we grow our assets and focus on decreasing our leverage. We have reduced our debt to gross assets by nearly 15% to 46% over the past five years through refinancing maturing debt and financing new acquisitions at lower leverage levels. We believe that we are 1% to 2% away from our target leverage level, which means that nearly all raised equity will go toward accretive acquisitions. We continue to primarily use long-term mortgage debt to make acquisitions as we grow through disciplined investments, we'll also look to expand our unsecured property pool with additional high-quality assets. Over time, we expect this will increase our financing alternatives. As we continue to manage our balance sheet, we’ve repaid $53 million of debt over the past 24 months often with new long-term variable rate mortgages at interest rates equal to the one-month LIBOR plus a spread ranging from 2.5% to 2.75%. We have placed interest rate caps on all new variable rate loans. We also added some of these properties to our unencumbered pool under our line of credit whether in advance of permanent debt placement, disposition or in an effort to provide more flexibility in the future by increasing the size of our total unencumbered assets. Looking at our debt profile, 2020 and 2021 loan maturities are very manageable with only $7 million and $21 million coming due respectively. A number of these loans have extension options. We have continued to proactively manage and improve our liquidity and maturity profile over time. We continue to minimize our exposure to rising interest rates with over 90% of our existing debt being fixed rate or hedged to fixed through interest rate swaps and caps. We’ve also been extremely active in issuing our common stock using our ATM program during the first quarter and net of issuance costs, we opportunistically raised $28 million through common stock sales at an average net share price of $21.22. This meaningful and extremely cost-efficient means of raising capital demonstrates investor demand for our stock in normalized economic times and was extremely well-timed prior to the outbreak of COVID-19. All the equity was raised in January, which is of note as it resulted in a one-time drag on core FFO of nearly $100,000 as it supported all first quarter acquisitions, including the March $32 million acquisition in Georgia. This drag clearly will not exist in the second quarter and forward. In total, our fourth quarter and first quarter ATM equity raises support the nearly $135 million of acquisitions we’ve made between November 1 and mid-March. Also, as mentioned on our last call, we did successfully issue our Series E 6.625% perpetual preferred on October totaling $69 million outstanding using the proceeds to redeem our previously existing Series A and Series B preferreds. The dividend savings from redeeming securities equates to an excess of $400,000 a year. We believe these capital market transactions continue to speak to the growth of the company and balance sheet enhancements that have been achieved, as well as long-term prospects for further prosperity with incremental bank backing going forward and access to more efficient capital. As of today, we have $3 million in cash and $29.5 million of availability under our line of credit. With our credit availability and the strong performance of our portfolio, and our access to our ATM programs, we believe that we have significant incremental flexibility to fund our current operations in near and long-term properties we are underwriting, and any known upcoming improvements at our properties. We encourage you to also review our quarterly financial supplement posted on our website, which provides more detailed financial and portfolio information for the quarter. We feel good about continuing to execute our business plan as we continue to manage our existing portfolio, increase our high-quality asset base and continue to improve our methods. We’re focused on maintaining our high occupancy with strong credit and real estate. Institutional ownership of our stock has increased over time to 56% as of March 31. Bob and I continue to be very active in meeting with current and potential investors, portfolio managers, coverage analysts, investment banks and the like. We look forward to establishing new relationships as the company moves forward to its next chapter. Regarding our common stock dividend, we did increase it in the first quarter and while the increase was small, we have also announced that we are leaving the dividend as is in the second quarter. We have not touched or suspended the dividend since our IPO in 2003. Our stocks closed yesterday at $15.05. The distribution yield on the stock is currently 9.4%. Many REITs are trading at much lower dividend yields.

Okay. Thank you, Mike. It was a good report and Bob – you and Michael LiCalsi did a good report too. I think we have not been hurt much by all the government regulations on this new virus that’s out there. We had a nice quarter after all and I think the quarter ending June 30 would be a good quarter as well. Heard a lot today, the team is hard at work and acquired five industrial properties with good credit tenants that collected all of the rents that were due in the first quarter and 98% of the April rents are in. We’ve got a few negotiated short-term rental deferrals. I think we will collect those and we’ve executed on several leasing initiatives which I think will be strengths going forward because they are good for us. The commercial team is growing the real estate assets in the company at a really good pace. As you saw, we did a lot in this quarter just ending. The team is doing a great job of managing the properties that the company owns. Our team has some very strong professionals and they continue to pursue valuable properties on the list of acquisitions that they’re reviewing. The acquisition team is seeking strong credit tenants; I know great tenants make excellent investments. Our asset managers are actively managing. We’re developing a good group of asset managers and it’s just a different environment now, but quite frankly this seems like an excellent buying opportunity. So, we're looking at everything that we see with the idea that in six months we’ll all be looking back and wish we’ve done this or that. So, we're making our statements now. The middle market businesses, like many of our tenants and our buildings, are challenged with the government restrictions related to the new virus that we have, but the tenants are paying their rents or committing to pay us. If we deferred a little bit of it, these are times that have never been seen before, but our team is just first-class and I think they will do a good job for us. So, I'm going to stop here and Jimmy, would you come on and moderate so we can get some questions from the people out there listening to this.

Certainly. Our first question comes from Gaurav Mehta with National Securities. Your line is now open.

Yes, good morning. Thanks for taking my question. First question on your tenants, I was hoping if you could break down what you're seeing or hearing from your office versus industrial tenants?

We’re – I mean the comments and the receipt of requests have been more from the office side. What’s interesting is that we’re receiving requests that I think are valid requests from some of our more middle-market companies who are needing it, but we’re also receiving what I would call opportunistic requests from very, very strong tenants. One of them told us that they’ve sent this formal letter up to 90 landlords, and of course a multi-billion dollar company with over $1 billion in cash, we’re not going to address those, but, Gaurav, we have received more from the office as compared to industrial. I don’t know if that’s going to change going forward, but we really have received nominal requests at this point.

Okay.

Another question, Gaurav?

No, that’s – I had a follow-up on GM, I think you talked about having multiple prospects for that building, are those the same prospects that you were talking to on the last earnings call? Or are these new guys that you’re talking to?

There’s – two of them are the same and two of them are new. We did have a couple of, let’s say, smaller tenants that were interested. They’ve gone quiet on us. One of the larger tenants is in Austin and the other one is in California, a well-known name. In talking with the chamber and with our investment sales broker, if Governor Abbott does open up the state here soon, they expect to see activity pick up.

Okay, thank you. That’s all I had.

Okay, next question?

Thank you. Our next question comes from Rob Stevenson with Janney. Your line is now open.

Good morning, guys. Bob, are you getting any additional term or rate or something else from the tenants in exchange for the deferrals not only the couple that you’ve done thus far, but any as going forward?

We have been in negotiations with people who have wanted rent abatement and for those we have required extensions. Fortunately, the request was withdrawn. What we prefer if we can is to maintain the core FFO per share and to get the cash back as soon as possible. Many of the tenants are not really interested in doing extensions at this time, but if in fact any rent abatement is requested, there will be an extension so that we will maintain our FFO per share. I may have loved to do extensions. We have asked on each case, but you know, with the three that we've done so far, they’re just – you know they’re repaying within six to nine months and that is acceptable to us and we’ll see how it goes forward, Rob.

Is there an interest charge on that six to nine months?

No.

Okay. Mike, when you look at the cash and debt capacity, what’s the liquidity today, you know, a month after the balance sheet numbers and how much of that are you guys willing to deploy into acquisitions in the next quarter or two given the likely state of the U.S. economy?

Sure. Rob, with respect to liquidity, as I may have mentioned, on our revolver we have $29.5 million of availability. We also typically carry $2 million to $5 million of cash. Today, we have $3 million, so we’re in excess of $30 million of availability. As we think about obligations specific to the cash flow. As I may have mentioned, we did repay mortgage subsequent to quarter-end. So we only had $7 million of mortgages coming due in 2020, so we certainly can cover that. As to deploying capital into potential acquisitions, that’s largely subject on cost of capital. Today, with our stocks trading north of a high price, as you know, we are generally doing deals at roughly 50% loan-to-value. There are pockets of debt capital that are still free, but with the uncertainty that’s challenging. So, you know, what we’ve been guiding to is with optimism that we get to the back half of the second quarter with much more normalized environment both personally and professionally, as well as from a stock market perspective. So, we real time assess what makes sense for us from an investment strategy perspective really on a daily basis.

Okay. And then, the covenant page in the supplemental was very helpful. So, the tightest one looks to be the dividend payout, is that covenant on a trailing 12 months measurement?

That’s correct. The trailing 12-month measurement has been slightly below the 95, so as we look at Q2 and Q3, we will have the benefit of six months of activity below 95%, but you know our operations are good. We continue to improve that number over time.

And how challenging is it in your conversations with the lender to get a temporary way around that if it was needed for a quarter or something like that or two?

Sure. We are very fortunate to have through April a highly performing office and industrial portfolio, so I would not say those are top-of-mind discussions, but I will say that we are talking to the entire lending group made up of six banks that have now gone from four to six just last year that refinanced. As we look back, it was a fantastic way for us to avoid any type of distress. I can’t ever promise the future, but I think our lending group has been supportive in very challenging times in the past at higher leverage levels, and buyers do continue to be supportive if we need any type of modification, but to be fair, they’re doing a lot more hand-to-hand combat with, you know, retail and hospitality, etcetera.

Okay. And then, last one from me, have you guys issued anything under the Series F at this point?

Not to date. I would say, Rob, from a long-term perspective, we do not have significant desire to massively overweight on preferreds, although we will issue preferred traded, as well as potentially non-traded. As you think about today, the common stock yield of 9.4% compares favorably with the Series F comps at 8.1%, so if there was a need for incremental capital, you know, we could consider it, but we have not to date.

Okay, thanks guys. Appreciate it.

Okay, next question?

Thank you. Our next question comes from Barry Oxford with D.A. Davidson. Your line is now open.

Great, thanks guys. Just to build on Rob's question regarding the dividend, especially if you’re pushing up against covenants and you have a high payout ratio and a high yield at 9%, arguably, maybe you’re not getting full credit in the marketplace, why not make an adjustment to that dividend, and David, if you want to comment too that would be great?

We don’t cut the dividend. I own a lot of stock and I like my dividend.

Barry, see, specific covenant package as well as getting a credit in the marketplace, to be fair, we are not really any tighter than we have been during my 3.5-year tenure. So, these numbers do not reflect anything that has been adversely impacted based upon the portfolio performance because again we’ve been highly performing. You know I think, again, we can never predict the future, but the aspirations are when we all get out from underneath this pandemic that in a normalized environment, people will appreciate that we continue to be trading at a relatively significant discount even as compared to our peer set and we will see a recovery in the share price. So, you know, today, we are pleased with the performance. It was just a matter of a few weeks ago where we had Board meetings and concurred to leave the dividend as is. You’ve heard David’s comments as well. So, understanding there are other people out there that out of need or strategically that are making cuts, that is not top of mind to us.

To add another comment to that, in conversations with some of my colleagues in Tier 1 banks who have been with me since I joined the company in 2012 and have seen how we have evolved through the years, they said, based on your history and what you have done, we don't think it’s wise at this point for you to lower the dividend. And they said if the economy completely falls apart, then you’ll go with other people as they lower their dividend. But they’re telling me, Bob, you know, you guys have come a long way. You're in a great position. The next couple years ahead, if you look very, very good, why would you do that? So, as David has said and Mike has reconfirmed, that's why at the last Board meeting, we decided we're just holding the dividend.

Right. No, I can appreciate all that. Bob, switching gears just a little bit to acquisitions, you mentioned or you feel like that cap rate, you know, kind of have backed up a little bit. Do you know, is it more in the 25 basis points or 50 basis points range?

What we're hearing from investment salespeople is that industrial is anywhere from 15 basis points to maybe 25 basis points, and office anywhere from 30 basis points to 50 basis points, and that is predominantly more in the Midwest as compared to some of the Southern markets. Of course, we're not actively pursuing the West Coast acquisition, so those expansions don't apply to the West Coast.

Got you. Appreciate it, guys.

Thanks, Barry.

Okay, next question please?

Thank you. Our next question comes from Henry Coffey with Wedbush. Your line is now open.

Yes. Good morning, everyone and thank you for taking my question. What are the bright spots and the dark spots inside this equation? Are there other areas of your portfolio where because of shop-at-home as opposed to stay-at-home and the like and potential shortening of the supply chain, we're seeing some big positive moves? Other areas, obviously, of your portfolio where there may be some clients that are going to suffer permanent impairment here?

You know, I think the ones that I would be most concerned with are probably the retail, which is a very small percentage, but we have some daycare centers that – you know those people can't work. I mean, you know, and they are in states where they're shut down right now. So, if I had to think about a dark spot, I think it would be that. I think maybe a great spot that is not really dark, but we've got to watch the automotive industry. We got to see where that goes forward. Fortunately, one of our tenants is connected to the auto industry and is producing PPE equipment as well. That’s encouraging, and two of the tenants are very large and they're stable, but we’ve got to watch that very closely because if it extends for the next two to three months on the auto industry not coming back, then I would be concerned there. On the bright spot, I think, it sounds crazy, but our middle market approach to the business, companies that have been in business a long time, they're not really huge assets; they’re assets on the industrial side that are primarily under 300,000 square feet. Those are good going concerns, and I do believe with now some of the on-shoring of manufacturing, it's not going to happen tomorrow, but we’re starting to see some of these clients pick up more work in the future that is programmed. It's not there now because things have slowed down for everyone. But I'm just cautiously optimistic that for the most part that is going to be a bright spot for us. We believe although it's not a bright spot today, as I've indicated in the past, and I indicated in the call today, we are very interested in the inland port expansion program that is taking place between the ports and the Class 1 railroads with all the deepening of the ports on the East Coast and the shifting of some of the manufacturing from China to Singapore, Vietnam, and India. With the ability to do larger TEU ships up to 14,000, we think that we're going to be able to partner with these ports and Class 1 railroads at these Inland Port locations to acquire properties that are in our size. They're not going to be the large size; they’re going to be transload facilities. There are going to be sale-leaseback opportunities, but that’s kind of a silver lining that I'm looking at, Henry, right now.

Is there anyone in your portfolio who's benefiting from all this shop-at-home and distribution?

Yes, I think it’s – Henry, it's a mixed bag, but some of the people that are in our warehouses are last-mile people as well as on the retail side where stuff comes in and then goes back out to the grocery store or wherever it's going. We've got some that are – if you go to the hardware store today, and it's an independent, it's probably our group that's doing that. So, you know, when you do an underwriting, you trace all the way back where the dollars are going to come from and why they're going to come, so whether you're doing an underwriting for a retail shop, we have, what do we have, two or three – we have two or three Walgreens. I mean Walgreens is performing well; they're not having a big problem because they're getting sales. And we have, as Bob mentioned, a couple of daycare centers, they're closed, so they've got no revenue coming in. One of the reasons they're closed is because the state has closed them, but when they come back up, I don't know exactly what that will look like, but my guess is most families are getting a little tired of work and living together, and the daycare will fill up again. No guarantee of that, of course, but these are temporary things that are going on. You know, we do six weeks or eight weeks of this kind of stuff and then start to open up. I think people are getting bullish enough so those will come back pretty quick. I can't predict the future and neither can anybody, but when we do an underwriting, if it has some question about where the money is coming from, we just don't do it. We're always looking for strength. So, I think we're in good shape and time will tell. We'll see you at the next quarter, and we'll have gone through the most difficult period that is the reopening period that we're going through now, and I think it's going to be pretty good.

Well thank you for your comments and it’s nice being with a company that has your history.

Well, we've been around for a while and we've paid our dividend forever in a day and there's no desire to cut the dividend even if it would make our financial numbers look stronger in a temporary way. We want to stay with our shareholders and pay them dividends. Next question?

Our next question comes from John Massocca with Ladenburg Thalmann. Your line is now open.

Good morning.

Good morning, John.

As you look at kind of the balance of properties that kind of aren’t leased at quarter-end, I mean has the current kind of pandemic and also maybe the, you know, volatility in commodities impacted some of your potential re-leasing operations there?

On the re-leasing side, John, is what you're talking about? Yes, I think – when I think of what we have vacant right now, you know, Central to Northern Ohio has absolutely shut down and we have two properties there that are partially leased because they're multi-tenant buildings, but they're not fully leased and we've seen that activity drop. Minneapolis has come back, and in fact, as I indicated, we’ve re-leased 50% of the building that went vacant at the end of March and with two more prospects for that facility. Then there's another facility there in Minneapolis that the tenants can be vacating in the next, I think, two months, or excuse me, next month, but we have two prospects. One is a charter school, which we're seeing a lot more interest in charter schools in some of these single-story offices that we have, but I think Central and Northern Ohio is going to be a difficult play for us. There's no doubt about it. We, on the other side of it, have a property in Easton Commons, in Columbus and the anchor tenants there – a tenant moved out at the end of last year and the anchor tenant has agreed to take the balance of the building. So, I'm encouraged there. So, it's kind of a mixed bag. It depends upon the specific location of the property. If it's not in a location where you have more of an urban mixed-use area on the office side, we will have difficulties, but as you can see from the ones who are now getting larger activities, if they're in stronger markets, we're seeing activity, and I don't believe we're going to have difficulty. As you know, my big elephant in the room is GM, and we've got to press that to get that to conclusion here over the next several months.

Okay. Just as a reminder, is this – that Tulsa asset still in your hedged portfolio and still vacant?

Yes. We have – that’s the one in Port of Catoosa in Tulsa. Yes, it’s still in our portfolio and we do have a prospect for the entire building. It’s on a shorter-term lease, but we’re expecting RFP for that in the next week or so.

Is that in – no single asset that makes up a big percentage of the vacancy that stands today, right, obviously it depends on that would be a significant portion of it?

Exactly. Every other one is around 1% or so or less.

Okay. Digging a little deeper on the kind of portfolio it stands today on the industrial side, I mean have you seen kind of a difference in impacts within your industrial assets with regards to say manufacturing properties versus what will be kind of categorized distribution assets, had that been reflected in maybe deferral requests or just kind of overall sentiment as you reached out to tenants? And then roughly what is maybe the breakdown between those two categories as it pertains to the size of your portfolio?

I would say one of our deferrals is the manufacture just in time for an assembly plant. And as I indicated, I, depending upon how the auto industry goes, we have one, two, three assets up in the Detroit area that service General Motors and Ford. Those could be question marks for us, but I would say that if I had to split between distribution and manufacturing, I would say that we are probably 40% manufacturing and 60% distribution, and quite frankly we’ve not received much you know very few calls. I mean most of the calls have been more on the office sides than on the industrial side.

Make sense. And then switching gears to the balance sheet, sorry if I may have missed this in the prepared remarks, but what is kind of the availability and maybe pricing on property level debt today that you are seeing?

Yes. Sure. So, single asset financing, you know we have seen as low as the high-two’s to the high-three’s. So, about 100 basis points wider than pre-COVID, 275 to 375 on the type of assets that we have been pursuing. Obviously, there are challenges today from a timing perspective; if not in other ways in terms of giving that type of financing, John, I mean practically speaking it’s a challenge to get an appraiser to do well and look at our property, but single asset financing is very efficient. The dislocation on the equity side is more of the roadblock. I mean, obviously we have our credit facility as well, which is very efficiently priced with material availability, as well as the opportunity that we can go back to our lenders about.

Okay, it sounds a bit like the – any kind of restrictions on property level financing almost more operational rather than a willingness for banks to lend, is that a fair characterization?

CMBS has been shut, but single asset financing does a good job that is out there, and we’ve those conversations it is not our world today, but obviously the investment-grade bond market has been open and been the most efficiently priced market. High yield is there, it is a little expensive, but yes the short answer is there are alternatives and opportunities to borrow.

Alright. Thank you very much. That's it from me.

Thanks John.

Thanks, John.

Next question.

Thank you. And I’m showing no further questions in the queue at this time. I would like to turn the call back to David Gladstone for any closing remarks.

Well thank you all for calling. I think we’re in good shape today. Hopefully our tenants continue to pay. We’ve had good luck with them so far and I think this is a short-term problem, but we will turn around strong as we get into the summer months at the end of this, and thank you all for calling in.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program, and you may now disconnect.