Gladstone Commercial

-4.37%

Certain of our tenants and borrowers may be unable to pay rent or make mortgage payments, which could adversely affect our cash available to make distributions to our stockholders.

We are subject to the credit risk of our tenants, which in the event of bankruptcy, could adversely affect our results of operations

We may be unable to renew leases, lease vacant space or re-lease space as leases expire, which could adversely affect our business and our ability to make distributions to our stockholders

Net leases may not result in fair market lease rates over time, thereby failing to maximize income and distributions to our stockholders

Multi-tenant properties expose us to additional risks

Illiquidity of certain of our real estate investments may make it difficult for us to sell properties in response to market conditions and could harm our financial condition and ability to make distributions to our stockholders

Many of our tenants are lower middle market businesses, which exposes us to additional risks unique to these entities

Our real estate investments have a limited number of tenants and are concentrated in a limited number of industries, which subjects us to an increased risk of significant loss if any one of these tenants is unable to pay or if particular industries experience downturns

The inability of a tenant in a single tenant property to pay rent will reduce our revenues and increase our carrying costs of the building

Liability for uninsured losses or significant increases in our insurance premiums could adversely affect our financial condition

We could incur significant costs related to government regulation and private litigation over environmental matters

We could be exposed to liability and remedial costs related to environmental matters

Our properties may be subject to impairment charges, which could adversely affect our results of operations

Capital markets and economic conditions can materially affect our financial condition and results of operations, the value of our equity securities, and our ability to sustain payment of distributions at current levels

Our Credit Facility contains various covenants which, if not complied with, could accelerate our repayment obligations, thereby materially and adversely affecting our liquidity, financial condition, results of operations and ability to pay distributions to stockholders

Because our business strategy relies on external financing, we may be negatively affected by restrictions on additional borrowings, and the risks associated with leverage, including our debt service obligations

We face risks related to balloon payments and refinancing

We mortgage our properties, which subjects us to the risk of foreclosure in the event of non-payment

We face a risk from the fact that certain of our properties are cross-collateralized

A change in the value of our assets could cause us to experience a cash shortfall or be in default of our loan covenants

Interest rate fluctuations may adversely affect our results of operations

Changes relating to the LIBOR calculation process may adversely affect the value of the LIBOR-indexed, floating-rate debt in our portfolio

We are subject to certain risks associated with real estate ownership and lending which could reduce the value of our investments

Competition for real estate may impede our ability to make acquisitions or increase the cost of these acquisitions

Our ownership of properties through ground leases exposes us to risks which are different than those resulting from our ownership of fee title to other properties

We are dependent upon our key personnel, who are employed by our Adviser or Administrator, as applicable, for our future success, particularly David Gladstone, Terry Lee Brubaker, Robert Cutlip, Arthur Buzz Cooper and Gary Gerson

Our success depends on the performance of our Adviser and if our Adviser makes inadvisable investment or management decisions, our operations could be materially adversely impacted

We may have conflicts of interest with our Adviser and other affiliates

Our Termination of the Advisory Agreement without cause would require payment of a termination fee

Our Adviser is not obligated to provide a waiver of the incentive fee, which could negatively impact our earnings and our ability to maintain our current level of, or increase, distributions to our stockholders

If we fail to qualify as a REIT, our operations and distributions to stockholders would be adversely impacted

We may need to incur additional borrowings to meet the REIT minimum distribution requirement and to avoid excise tax

Complying with the REIT requirements may cause us to forgo otherwise attractive opportunities or liquidate otherwise attractive investments

To the extent that our distributions represent a return of capital for tax purposes, you could recognize an increased capital gain upon a subsequent sale of your stock

We may be subject to adverse legislative or regulatory tax changes that could reduce the market price of our securities

Complying with the REIT requirements may limit our ability to hedge effectively and may cause us to incur tax liabilities

Ownership limitations may restrict or prevent stockholders from engaging in certain transfers of our common stock

We operate as a holding company dependent upon the assets and operations of our subsidiaries, and because of our structure, we may not be able to generate the funds necessary to make dividend payments on our capital stock

The number of shares of preferred stock outstanding may increase as a result of the Series E Preferred ATM Program that we have in place, as well as bimonthly closings related to our Offering of Series F Preferred Stock, which could adversely affect our business, financial condition and results of operations

We are subject to restrictions that may discourage a change of control. Certain provisions contained in our articles of incorporation and Maryland law may prohibit or restrict a change of control

Market conditions could adversely affect the market price and trading volume of our securities

Shares of common and preferred stock eligible for future sale may have adverse effects on the respective share price

Compliance or failure to comply with laws requiring access to our properties by disabled persons could result in substantial cost

Our Board of Directors may change our investment policy without stockholders’ approval

Our rights and the rights of our stockholders to take action against our directors and officers are limited

We may enter into tax protection agreements in the future if we issue OP Units in connection with the acquisition of properties, which could limit our ability to sell or otherwise dispose of certain properties

Our redemption of OP Units could result in the issuance of a large number of new shares of our common stock and/or force us to expend significant cash, which may limit our funds necessary to make distributions on our common stock

Our ability to pay distributions is limited by the requirements of Maryland law

Cybersecurity risks and cyber incidents may adversely affect our business by causing a disruption to our operations, or the operations of businesses in which we invest, a compromise or corruption of our confidential information and/or damage to our business relationships, all of which could negatively impact our business, financial condition and operating results

Legislative or regulatory tax changes related to REITs could materially and adversely affect us

Disruptions in the financial markets and uncertain economic conditions resulting from the ongoing outbreak of COVID-19 and potential emergence of vaccine resistant strains could adversely affect market rental rates, commercial real estate values and our ability to secure debt financing, service future debt obligations, or pay distributions to stockholders

We are exposed to the potential impacts of climate change, which may result in unanticipated losses that could affect our business and financial condition

1. Interest Rate Risk: Gladstone Commercial Corporation operates in an environment of rising and falling interest rates. As a result, the company's revenue and profits may suffer when interest rates increase.

2. Concentration Risk: The majority of Gladstone's investments are concentrated in commercial real estate which could lead to greater volatility if the sector takes a downturn.

3. Regulatory Risk: Gladstone is subject to a number of regulations from both federal and local governments which could lead to increased costs or other risks.

4. Credit Risk: Gladstone is exposed to credit risk when making loans to tenants. It is possible that the tenant may default on their obligations, leaving Gladstone with the risk of not being paid for any money it lent to the tenant.

5. Interest Rate Risk: Gladstone takes on the risk that the loans it provides will be paid back at a lower rate of interest than the rate at which the loan was made. If the rate of interest rises faster than the rate of return of the loans, Gladstone may experience a loss.