Business Context and Reporting Period
This Form 8-K Current Report was filed by Gladstone Commercial Corporation on December 21, 2005. The filing details a significant capital transaction involving the acquisition of a commercial real estate asset and the securing of long-term financing to fund the purchase and reduce existing debt.
Key Financial Metrics
- Debt Issuance: The Company obtained a long-term note payable totaling $19,456,000.
- Interest Rate: The note accrues interest at 5.7107% per annum.
- Maturity Date: December 8, 2015.
- Acquisition Cost: Approximately $13.6 million in cash (including transaction costs) for the Maple Heights, Ohio property.
- Collateral: The debt is secured by three properties: Maple Heights, OH ($10,896,000), Columbus, OH ($2,800,000), and Snyder Township, PA ($5,760,000).
- Asset Size: The acquired property is a 347,218 square foot office building.
Material Changes
On December 21, 2005, the Company completed the acquisition of a fully occupied, single-tenant office building in Maple Heights, Ohio. Concurrently, the Company entered into a direct financial obligation with Countrywide Commercial Real Estate Finance, Inc. The proceeds from the new $19.456 million note were utilized to fund the $13.6 million acquisition and to pay down the Company's existing line of credit with the remaining funds.
Outlook, Risks, and Unusual Items
The filing does not provide forward-looking guidance, management commentary on future performance, or specific risk factors beyond the terms of the new debt agreement. The debt instrument includes a prepayment restriction, allowing repayment without penalty only three payment dates prior to maturity or anytime after September 8, 2015. The filing text does not provide clear values for revenue, profit, cash flow, or margins as this is a transaction-specific report rather than a periodic financial statement.
Investor Verification Checklist
- Verify the impact of the new $19.456 million debt on the Company's leverage ratios and debt service coverage.
- Confirm the terms of the lease assigned to the Maple Heights property, including duration and tenant creditworthiness.
- Assess the reduction in the existing line of credit resulting from the transaction proceeds.
- Review the prepayment restrictions to understand refinancing flexibility prior to September 2015.