Greetings, and welcome to the Gladstone Commercial quarter ending March 31, 2024 conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone wants to require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David Gladstone, Chief Executive Officer. Please proceed. Well, thank you, Latonya. Again, you do a nice introduction, and we thank all of you for calling in this morning to hear what we've been doing. We enjoy the time we have with you, and wish we had a lot more time to talk back and forth, but we don't. First, we're gonna hear from Erich Hellmold, and he's our Deputy General Counsel to give you the legal and regulatory matters concerning the call and report today. Erich, go for it. Thank you, and good morning. Today's report may include forward-looking statements under the Securities Act of 1933 and the Securities Exchange Act of 1934, including those regarding our future performance. These forward-looking statements involve certain risks and uncertainties that are based upon 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 in our Forms 10-Q, 10-K, and other documents we file with the SEC. Those can be found on our website, www.gladstonecommercial.com, specifically the Investors section, or on the SEC's website at www.sec.gov. 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 is 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 core FFO, which is generally FFO adjusted for certain other non-recurring revenues and expenses. We believe these metrics are a better indication of our operating results and allow better comparability of our period-over-period performance. Please visit our website, www.gladstonecommercial.com, and sign up for our email notification service. Also, find us on Facebook, keyword Gladstone Companies, and Twitter, @GladstoneComps. Today's call is an overview of our results, so we ask that you review our press release and Form 10-Q issued yesterday for more detailed information. Now I'll turn it over to Gladstone Commercial's President, Buzz Cooper. Thank you, Eric, and thank you all for calling in. Today, we will discuss our operations and topics that are top of mind. Interest rates continue to have outsized impacts on capital markets and real estate. Last quarter, we noted that the ten-year U.S. Treasury had declined from 5% in October 2023 to 4.3% as of February 2024. After a couple hot CPI prints, the ten-year increased again to nearly 4.7% as of April 2024, and as of yesterday, closed at a 4.49% number. This volatility has impacted the net lease investment volume across the industry. According to CBRE, net lease investment volume fell 51% year-over-year for full year 2023. Total commercial real estate volume fell by 52%. Sale leasebacks, which are a hallmark of our value proposition, focusing on tenant credit, performed relatively better than traditional third-party acquisitions. Compared to a 52% decline in total commercial real estate volume, sale leaseback volume fell by 21% in 2023, according to CBRE. We plan to continue leveraging our credit underwriting expertise to capitalize sale leaseback opportunities through the remainder of 2024. In terms of specific asset classes, industrial real estate continues to perform and now accounts for 60% of our annualized straight-line rent. According to CBRE, average industrial asking rents in Q4 2023 rose 6% year over year, and the industrial vacancy rate at the end of the year was 4.8%. Vacancy is left, particularly in the manufacturing sector, where we see demand driven by nearshoring and reshoring initiatives and tenant stickiness. Any softness in fundamentals... Excuse me, industrial fundamentals is driven by record lease to big box distribution centers, a sub-asset class that we largely avoid. Moving on to office, the broader market continues to struggle with early signs of bottoming out. According to JLL, office groundbreaking in Q1 2024 declined below 300,000 sq ft, the lowest volume on record. We made tremendous progress through 2023 of delivering on our current core strategies, divesting non-core office assets, acquiring mission-critical industrial assets in the path of growth markets, renewing expiring leases, and diligently underwriting our tenants' credit. We exited seven non-core markets and properties located in and completed nearly $30 million in new acquisitions and increased portfolio industrial concentration from 56% to annualized straight-line rent as of December 2022 to 60% as of December 2023. Currently, we have multiple actionable opportunities in the pipeline and one opportunity under contract for closing this month. These opportunities include lease renewals with increased rent and added term, as well as potential dispositions. We remain disciplined, particularly on tenant credit. While we've seen a number of opportunities this year, we believe that many credits are too risky in these economic times. In addition to new acquisition, our asset management team led more than 1.4 million sq ft of leases, resulting in a more than 1.26 million, or 13%, net increase in same-store GAAP rent. The annualized straight-line rent of these transactions totaled $10.7 million in 2023. In the first quarter of 2024, we continued to reposition our portfolio with the sale of 3 non-core office properties, and subsequent to the end of the quarter, we sold an additional non-core office. Also, subsequent to the end of the quarter, we renewed 3 leases with a weighted average term of 6.4 years, an additional straight-line rent of $681,000. While we cannot control the Fed or predict exactly where interest rates may go, we remain confident that all of our developments have better positioned our portfolio for 2024 and beyond. Portfolio occupancy was at 98.9% as of March 31, 2024, and we collected 100% of cash base rent since February 2022. This is a testament to the mission-critical nature of our assets and quality credits for our tenants, both of which position us to weather any economic storm we may face. In addition, we believe there are other levers which we have yet to fully realize. Most of our industrial assets have fixed annual escalations in the 1.5-3.5 range. Industrial rent growth over the last few years has exceeded these escalation rates, resulting in rents that are below market for us and valuable upon lease renewal. Our balance sheet is healthy and flexible, positioning us to continue deploying capital into industrial deals at accretive cap rates as seller expectations normalize. Since January 1, 2022, we've repaid net $174 million of mortgage debt and grown our unencumbered asset base by over 60%. Only 6 office mortgages remain, and the first maturity of these is in 2026. We have $56.1 million in available liquidity via our revolving credit facility and cash on hand, and remain below 50% levered as of March 31, 2024. We cannot predict the short-term course of interest rates, but we can expect some sort of normalization with time. As that normalization happens, we expect we will be well-positioned to capitalize on the accretive new opportunities. We expect sale-leasebacks, in particular, to be a primary source of new deals. Sale-leasebacks provide additional credit, diligence, and term, both hallmarks of our value proposition. Our balance sheet is flexible, driven by more than $174 million of net mortgage debt reduction since January 2022. Again, we have more than $56 million of liquidity on hand to continue growing our industrial base. Since 2019, our industrial concentration as a percentage of annualized straight-line rent has increased from 32% to 60%, and we expect to further increase this concentration in the next 6-12 months. I will now turn the call over to Gary Gerson, our CFO, to review our financial results for quarter and liquidity position. Thank you, Buzz. I'll start my remarks regarding our financial results this morning by reviewing our operating results for the first quarter of 2024. All per share numbers referenced are based on fully diluted weighted average common shares. FFO and core FFO per share available to common stockholders were both $0.34 per share for the quarter. FFO and core FFO available to common stockholders during the first quarter of 2023 were both $0.37 per share. FFO per share was lower in Q1 2024 versus Q1 2023 due to lower revenues in Q1 2024, attributable to leases expiring prior to Q1 2024, and additional expenses in Q1 2024, attributable to increases in interest rates. Our same store cash rent in the first quarter of 2024 increased by 0.8% over the same period in 2023. This was mostly due to increases in rental rates from leasing activity subsequent to Q1 of 2023. Our first quarter results reflected total operating revenues of $35.7 million, with operating expenses of $23.3 million, as compared to operating revenues of $36.6 million and operating expenses of $34.7 million for the same period in 2023. Looking at our debt profile, 38% is fixed rate, 51% is hedged floating rate, and 11% is floating rate, which is the amount drawn on a revolving credit facility. As of March 31st, our effective average SOFR was 5.34%. Our outstanding bank term loans are hedged with $310 million of interest rate swaps and the remainder with interest rate caps. We continue to monitor interest rates closely and update our hedging strategy as needed. As of today, our 2024 loan maturities are manageable, with $7.4 million due, which encumbers one property held for sale. As of the end of the quarter, we had $75.9 million of revolver borrowings outstanding. We had no common stock sales this quarter. We received net proceeds of $200,000 from sales of our Series F Preferred Stock. We continue to manage our equity activity to ensure that we have sufficient liquidity for upcoming capital requirements and new acquisitions. Presently, we have three properties held for sale. ...As of today, we have approximately $56 million in cash and availability under our line of credit. We encourage you to also review our quarterly financial supplement, posted on the investor section of our website, which provides more detailed financial and portfolio information for the quarter. Our common stock dividend is $0.30 per share per quarter, or $1.20 per year. Now I'll turn the program back to David. Okay, thank you. That was a good report, Gary, and a good one from Buzz and Michael. Not Michael. Michael's not here. He's home with a stomach flu. So our team has really performed very well. Overall, a very nice quarter, and we see this as continuing to add to our records of doing good things for our shareholders. During the first quarter, as you heard, we sold 3 office properties, so we're out of those. Subsequent to the end of the quarter, we sold an additional office property and renewed 3 leases while we were working on that. And since January of 2023, we've sold 11 office properties and presently have... Is it 2 or 3 for sale, Buzz? Um, two. Just two. Okay. I thought you had another one. We have become an industrial real estate company. We're away from the office properties that we had, sold most of those and still kind of working those off. And the commercial team is growing the real estate we own at a good pace, and the team is doing a great job managing the properties we own. Somebody asked me if the Fed was going to cut interest rate this year, and I said, "It doesn't make much difference. If they cut a quarter in July, what's that going to do for us? Not much." So our team is strong professionals. They continue to pursue properties that fit into what we're looking for, which is industrial properties. Our acquisition team is seeking strong credit tenants, so we're doing a good job there. So rather than me continuing to talk, let's get the operator on and get some great questions from the people who follow our company. Latonya? Thank you. We will now conduct a question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we pull for questions. Our first question comes from Gaurav Mehta with Alliance Global Partners. Please proceed. Thank you. Good morning. I wanted to ask you on the transaction market, hoping to get some more color on your acquisition pipeline and what kind of cap rates you're seeing in the market. Morning, Gaurav. We are seeing some deal activity out there, and we know the brokers are doing many B of Vs. What we are seeing, however, currently is as we look at the financials of the opportunities, and again, we're really strictly looking at industrial, they just don't fit our credit profile at this point in time to the level we wish they would. These economic times, we take a close look at to make sure that the tenants will be able to, obviously, pay their rent today and going forward. That being said, we do see many good opportunities. We have a few in the pipeline that we are gonna find actionable. We do have one opportunity that should close this month. And so we do see the volume coming, but it's we need some seller expectations to come in as it relates to us to be able to make accretive deals. That being said, and obviously, it depends on our borrowing cost, but generally, we are looking at deals that end up being on an accretive basis above about an 8.5 cap. Okay. Second question I wanted to ask you was on the incentive fee. There was an incentive fee recorded in this quarter, but there was also an incentive fee given. And so just wanted to get some clarification on what we should expect going forward. Relative to the incentive fee, after discussions between management and the board, the decision was made to begin receiving part of the incentive fee at a reduced capacity. At this point in time, I'm not going to comment on where we might be going forward, due to the fact that obviously, at the end of the quarter here, we will make that determination with the board at the end of the next quarter. Okay. Thank you. Thank you. Latonya, do we have another question? The next question is from Rob Stevenson with Janney Montgomery Scott. Please proceed. Good morning, guys. Can you talk a little bit about the market for well-occupied office assets in your portfolio, if it's got a good tenant and some decent lease term left, and what your thoughts are on accelerating the level of office dispositions in order to redeploy into industrial or reduced leverage, et cetera, these days? Sure. And as mentioned, we do have two held for sale that obviously are office. Rob, we are taking a very disciplined approach as it relates to moving assets. Looking at the market, some are more, ... frothy than others as it relates to opportunities. So that being said, you know, we have more opportunities with some of our office buildings, just as we see on the industrial side in the south, and we are evaluating those. But as it relates to an overall theme within the portfolio, we are being disciplined, because of course, we also want to match up sales with new acquisitions in our recycling program. Okay. And then, Gary, anything other than the incentive fee waiver that, you know, is non-recurring, positive or negative in the first quarter earnings? Or was this a fairly clean quarterly run rate other than whatever goes on with the incentive fee going forward? No, I would say this is a pretty clean, pretty clean quarter. This is, yeah, absolutely. Okay. All right. Thanks, guys. Appreciate the time this morning. Thank you. Okay, Latonya, do we have something else? The next question comes from Dave Storms with Stonegate. Please proceed. Good morning. Just hoping to ask, you're seeing, you know, really strong numbers in occupancy rates and same store numbers. How much ability do you have to continue to push rents? Dave, good morning. We have a couple opportunities as they are coming up for renewal that will allow for such. However, most of our deals do have fixed escalations. However, the opportunity comes when a renewal and we discuss it, the tenant may wish to make improvements or have maybe acquire another company or such. So that gives us the ability then to open the lease, and as referenced in our report, as it relates to industrial rates today versus a few years ago, gives us an opportunity within the portfolio to push those rates up higher than the contractual rent. Very helpful. Thank you. And then just in the acquisition environment, you mentioned credit quality a couple times. Just trying to get a sense of what the delta is between what you're seeing in the market and what your preferred credit quality rate would be, just to try to get a sense of how close those two might be to conversion? As it relates to that, on the credit side, and we do evaluate every credit separately, we have to make sure that it pass our muster first. And if we could get the pricing to offset some of that risk, we would do so. Otherwise, we are going to pass on an opportunity, but we take into consideration all of the factors, both location, building type, functionality, and of course, the credit. Not sure if I specifically answered your question, so if you need to follow up, please. That's, that's very helpful. Thank you for taking my questions. Sure. Just to follow up on what Dave is asking about, the group has a long history of underwriting small and mid-sized businesses, which it turns out, are often the people who are renting our properties. Many times they're doing it because they want to raise some money to buy something else, not another location, but equipment or just raise money in order not to have so much debt on their balance sheet. We're very mindful of that, and it sounds like a good thing to do when you sell your property and pay off debt. Let's face it, when you enter into a lease, it's almost the same thing as owing money to a bank. From my standpoint, we're still underwriting these things. Buzz has been doing underwriting of smaller businesses for a long, long time, and so have I. I grew up in that part of the business. So we feel comfortable going after some of these businesses. But, let me tell you, that it's still an interesting thing going on in the marketplace, and I really don't expect us to go back anytime soon to really cheap interest rates. We lived for probably seven years with wonderful low interest rate. May not be that way now because the government continues to spend so much money there, pushing up everything that's tied to any kind of interest rate. So as we look at the world going forward, I think we can continue just to go along like this. Hopefully, we can increase our dividend at some point, but it's not dependent on interest rates coming back to where they were. We've got a strong balance sheet, and we've got a good producing of income, so hopefully it just continues on this way and doesn't go into a bust kind of atmosphere. So, Latonya, we have anyone else who wants to ask a question? Yes, the next question comes from John Massocca with B. Riley Securities. Please proceed. Good morning. Good morning. Morning, John. So, can you just provide any update on re-leasing outlook for the three leases that are expiring over the remainder of 2024? Sure. We have one that we are in deep discussions with that will provide a significant upside. It represents, I think approximately of the 4.6 we have that is expiring, it has upwards to 3% of it. So we're looking forward to having that behind us here very quickly. The others are. We have one that's 6,000 sq ft. That's not of a great concern, and we're hopeful the current tenant will take that over. And we have another that we are in talks with as it relates to a lease. So we feel comfortable. We have one other small vacancy of 3,000 sq ft with these leases, obviously very manageable. Again, the majority is going to, hopefully, we'll have something to announce on that in the not-too-distant future as it relates to a nice plus-up and long-term lease. Okay. Then in terms of the incentive fee credit, can you maybe walk us through, you know, how the size of the credit in the quarter was determined? I mean, is there any just. I'm just trying to think of, you know, why that specific number was credited back. Obviously, in discussions, we felt it was a correct number, if you will, as we are aligned with the stockholder, also relative for the company itself and our employees, that it kept us aligned with the stockholder, but it was something that we felt we should do and could do, relative to proceeding with our staff and the stockholder. I guess, was it based on, like, a percentage of, of the incentive fee in the quarter or, a gross number? I'm just trying to think of, you know, why that, why $700-something thousand versus the whole amount, half of it, et cetera. John, I mean, this is Gary. What we're trying to do is, you know, take... We want to turn on the incentive fee, but not to a degree that would significantly affect income and FFO. And so although we're going to look at how much we would take over the next couple of quarters, it's going to be at a reduced capacity, as we've stated, as Buzz has stated. And the idea here being that, you know, although we're gonna take some, it's going to be at a rate that doesn't really, you know, we're trying not to affect FFO, because, again, we understand, you know, we're trying to be in alignment with the shareholder. So we can't give you an exact amount. This amount, I mean, to be quite honest with you, it's not really quite scientific, but we did take, I mean, basically a third this time around, and you know, that's a significant rebate. If we I would assume that going forward, you know, that would be the case in the next quarter or two. Okay. That's very helpful. And then, lastly, I mean, I know you talked a little bit about dispositions and the ability to sell office properties, but maybe looking back on the dispositions that were completed in the first quarter and in quarter to date, I mean, who's maybe the buyer for these assets? Is it more of a redevelopment play? Is it, you know, financial owners? Just trying to get a little color on who's the other counterparty in that market today. Sure. And they don't have to tell us coming in the door, but generally what we have seen and heard is, yes, they're being redeveloped. Some are turning into multifamily apartment types. We've seen one that at least states they're going to turn a office building into a pickleball facility. So it's across the gamut. They're obviously the value add play for them. But honestly, you know, we're as long as they can perform, we're not concerned as much as what they're gonna do with the property. John, some of these people are the tenant, and they're buying the building and getting control of rents for the future. We're happy to do that, of course. Okay, that's very useful. That's it for me. Thank you very much. Thank you. Okay, Latonya, you got any more? There are no further questions in queue at this time. I'll turn it back to you, Mr. Gladstone, for closing comments. Oh, shucks, we wanted some more questions, but we're having fun when we come to these meetings because we have such good shareholders, and we enjoy talking to them as well as the analysts. That is the end of this, and thank you all for calling in. Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.