Good day ladies and gentlemen, and welcome to the Gladstone Commercial Corporation Third Quarter ended September 30, 2014 Earnings Call. (Operator Instructions). As a reminder, this conference is being recorded. And I would now like to introduce your host for today's conference, David Gladstone, Chairman. You may begin.

All right. Thank you, Sam. That was nice introduction and thank all of you for calling in. We really enjoy this time on the phone, and we wish there was more time to talk, but we just do this once a quarter. If you are ever in the Washington D.C. area, we are in a suburb called McLean, Virginia and you have an open invitation to stop by and see us here. You will see some of the people, many of them on the road, and we have about 60 people now, so we are no longer small. And some of the folks do bring their dogs to work. We are a dog friendly environment. So now let’s start with Michael LiCalsi, he is our General Counsel, he is our Secretary, also serves as the President of Administration. Michael?

Good morning everyone. The report that you are about to hear may include forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, including statements with regard to the future performance of the company. These forward-looking statements involve certain risks and uncertainties that are based on our current plans, which we believe to be reasonable. There are many factors that may cause our actual results to be materially different from any future results expressed or implied by these forward-looking statements, including all those factors listed under the caption Risk Factors of our Forms 10-K and 10-Q that we filed with the Securities and Exchange Commission. They can be found on our web site at www.gladstonecommercial.com, and on the SEC's web site, www.sec.gov. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. And in report today, we plan to speak about funds from operations, or FFO, and since FFO, which 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 from property, plus depreciation and amortization of real estate assets. And the National Association of REITs, or NAREIT, has endorsed FFO as one of the non-accounting standards that we can use in discussion of REITs. Please see our Form 10-Q, filed yesterday with the SEC, and our financial statements for a detailed description of FFO. We also plan to discuss core FFO today, which is our FFO adjusted for property acquisition costs. We believe that this is a better indication of our operating results of our portfolio and allows comparability of period-over-period performance. To stay up-to-date, you can sign up on our web site to get updates by e-mail on the latest news involving Gladstone Commercial and our other Gladstone publicly traded funds and you can follow us on Twitter, user name GladstoneComps; and on Facebook, keyword, The Gladstone Companies. And can you go to our general web site to see more information about our companies at www.gladstone.com. The presentation today is an overview, and we ask you to read our press release issued yesterday and also review our Form 10-Q, for the quarter ended September 30, 2014. You can find both on our web site and on the SEC's web site. And now we will begin with the presentation today, by hearing from our president, Bob Cutlip.

Thanks Michael. Good morning everyone. During the third quarter, we acquired two properties, we issued new debt on one, and we funded the other property with equity. We funded a loan for a build-to-suit project, that is pre-leased upon construction completion to a tenant with a 15-year lease. Entered into a new $100 million ATM program with Cantor and issued additional common equity through this program, [indiscernible] the impaired Roseville, Minnesota property and receivership and agreed to a deed in lieu transaction, that should finalize in the next few weeks, and extended the lease of a property that was set to expire in 2015. Subsequent to the end of the quarter, we also extended another one of our leases that was set to expire in 2015 and leased one of our vacant properties in Richmond, Virginia to a new tenant with a three year lease, and completed the expansion of our property in Canton, North Carolina, an industrial property, and extended that lease until 2034. We had a great quarter, as we continue to increase our asset base by acquiring new properties. For the year, we have enlisted nearly $104 million in 11 properties at an average cap rate of 9.2%. This is our 12th consecutive quarter of closing new acquisitions. We are extremely pleased with our activity, and the consistency over last several months, and we continue to have a strong pipeline of acquisitions and expect to close several more prior to the end of the year. Now for some details; during the quarter ended September 30, we acquired two properties. The first property is 125 square foot industrial building, located in a suburb of Denver, Colorado, and the price was $8.3 million and has an average cap rate of 9.3% over the life the 15 year lease. We…

Thanks Bob and good morning everybody. We continued our goal of consistently growing our asset and equity base in the third quarter. Our total assets increased to $759 million this quarter, which was a 3.2% increase from total assets last quarter. We are also focused on decreasing our leverage and divested and we implemented a new $100 million ATM program during the quarter with Cantor Fitzgerald to help achieve this goal. We continue to be a growth mode and expect to continue to grow into their [indiscernible] here in 2015. The amounts outstanding under long term mortgages and our line of credit increased to $506 million, as a result of the funding of both of our new acquisitions and the mortgage loan during the quarter. To-date, we have raised over $20 million in common equity under our new ATM program at Cantor, and have used these funds to reduce the outstanding balance under our line of credit. Reviewing our upcoming long term debt maturity, we have mortgage debt in the aggregate amount of $18.9 million payable during the remainder of this year, and $42.7 million payable during 2015. The 2014 principal amounts include both amortizing principal payments and the balloon principal payment that was due in June of this year of $17.5 million on the property that we impaired earlier this year. As Bob mentioned, we are in process of returning this property via deed in lieu transaction which will happen this quarter. We intend to pay the remaining 2014 debt amortization payments from available cash on hand. The 2015 principal payments payable, include balloon principal payments due in three mortgages that mature on the second half of 2015, and we anticipate being able to refinance these mortgages with the new mortgage debt. We intend to decrease the leverage on…

All right. That was a good report. Thank you, Danielle; and a good one from Bob Cutlip and Michael LiCalsi too. I think the main report for this quarter is that two properties we purchased for $18.8 million and the mortgage on one of the properties was $6.1 million, extending the lease on the one property that was originally scheduled to expire in 2015, that was nice and then of course finally leasing the property in Richmond, Virginia, we only have the one vacant property down there in Richmond and that puts us up to 99% occupied. We have continued to add great new properties to the portfolio, and that's short off the existing investments with more assets on the books and more cash flow coming in. As we continue to grow the market capitalization increases, and we hope that that will indicate higher trading volumes in our stock, as we become a larger company. As many of you know, this company didn't cut its dividend during the recession, that was quite a success story. I mentioned last time, and I can mention again, that one of the companies here in town, in 2008 had a dividend of $1.36 per share, it's now $0.60, a 56% decrease. Then there is another one in New York in 2008, the dividend was $1.17 per share; the dividend's now $0.68 per share, 42% decrease. Another one in New York 2008, $1.25; dividend's now $0.14 or an 89% decrease and then one of the companies that Bob used to work for, dividend in 2008 was $2.88 per share, dividend is now $0.41 per share, an 86% decrease and then another trust, and all of these are companies that are touted by a lot of the folks out there that write on these, and that…

(Operator Instructions). Our first question comes from John Roberts with Hilliard Lyons. Your line is now open.

Good morning David.

Good morning John.

Bob mentioned that one of the tenants is vacating next year, the one in Chicago I think it was. You couldn't accommodate the tenant on an expansion, why was that?

They vacated really, John, at the end of last year, and our facility is 55,000 square feet and they needed to double in size. So they went into another building that's 110,000-115,000 square feet. But as part of their agreement to release them from the lease, based on the provisions of the lease, they agreed to escrow the balance of the rent and the operating expenses through the end of the lease term which is December of this year.

Okay. So really you couldn't accommodate -- it was a building that couldn't be expanded then?

That is correct. That we couldn't expand it, we didn't have any additional land on site.

Okay. That clears it up. And also the property that you placed in receivership, is that going to have a negative impact on FFO?

No, we are actually expecting a little bit of an uptick in FFO, because the property operating expenses we are incurring to run the property were greater than the rental income after we are paying the debt service on the property. So we actually expect to have a little bit of an uptick this next quarter.

Okay. But you're going to lose title to that property, I assume?

That's correct.

Okay. And as far as the deed in lieu property goes, that still is going to have a positive impact on FFO?

That's the same property.

Oh it’s the same property? Okay.

That's the same property.

Okay. So do you have -- the only vacant property you have now is the one in Houston?

That's correct.

All right. Thanks.

Next question please?

(Operator Instructions).

Well it sounds like Sam, that nobody is going to ask any more questions, and that means there won't be any answers until next quarter.

It does look like we have no more questions at this time.

All right. Well thank you all for calling in. Hopefully we answered your questions. If not, you can always email us, and we will try to do that over the email. That's the end of this conference.

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