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Supplemental Financial & Operating Information for the Quarter Ended December 31, 2019
1

Legal disclaimer
Forward-Looking Statements: This presentation may include forward-looking statements within the meaning of the Securities Act of 1933 or the Securities Exchange Act of 1934. Forward-looking statements are typically identified by words such as "estimate," "may," "might," "believe," "will," "provided," "anticipate," "future," "could," "growth," "plan," "project," "intend," "expect," "should," "would," "if," "seek," "possible," "potential," "likely" or the negative or variations of such terms or comparable terminology. These forward-looking statements include comments with respect to our objectives and strategies, and the future results of our operations and our business. By their nature, these forward-looking statements involve numerous assumptions, uncertainties and descriptions of opportunities, both general and specific. The risk exists that these statements may not be fulfilled. We caution readers of this presentation not to place undue reliance on these forward-looking statements as a number of factors could cause our future results to differ materially from these statements. Any results or performance implied by forward-looking statements may be influenced by certain factors including, but not limited to, fluctuations in interest rates and stock indices, the effects of competition in the areas in which we operate, and changes in economic, political, regulatory and technological conditions as well as those factors delineated under the caption "Risk Factors" in our Forms 10-Q and Form 10-K, and other documents we file with the SEC from time to time. Therefore, we caution that the foregoing list is not exhaustive. Investors should not rely on forward-looking statements to make decisions and should carefully consider the aforementioned factors as well as other uncertainties and events. We undertake no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised to consult any additional disclosures that we may make directly to you or through reports that we have filed or in the future may file with the SEC, including subsequent annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
Past or Present Performance Disclaimer: This presentation includes information regarding past or present performance of the Company. Please note, past or present performance is not a guarantee of future performance or future results.
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Table of contents
About Gladstone Commercial Corporate overview Portfolio and financial overview Q4 2019 highlights (unaudited)
Financial overview
Condensed consolidated statements of operations Funds from Operations (FFO) Consolidated balance sheets Capital structure Liquidity and debt overview Debt summary Select corporate covenants Portfolio Overview Portfolio overview
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4 5 6
8 9 10 11 12 13 14
16-19

Corporate overview

Part of a two office building portfolio located in an Orlando, Florida submarket

Corporate Headquarters 1521 Westbranch Drive Suite 100 McLean, VA 22102 703-287-5800 www.gladstonecommercial.com

Investor Relations 703-287-5893 commercial@gladstonecompanies.com

About Gladstone Commercial
Gladstone Commercial (Nasdaq: GOOD) is an established real estate investment trust (REIT) that invests in single tenant and anchored multi-tenant net leased assets. As of December 31, 2019, we owned approximately 14.2 million square feet of primarily office and industrial real estate nationwide. We partner with a variety of tenants--from middle market private businesses to investment grade rated companies. We acquire properties through third party purchases, sale leaseback transactions, and by partnering with developers in build-to-suit transactions.
As of December 31, 2019, total assets were approximately $1,039.5 million, representing investments in 118 properties. Our properties are leased to 103 tenants who represent 19 diversified industries across 28 states.
At December 31, 2019, our leases had an average remaining term of 7.3 years. In addition, approximately 63% of our tenants have an investment grade or investment grade equivalent credit rating.

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Portfolio and financial overview

Portfolio data1
Total assets ($mm) Properties Tenants Industries States Average remaining lease term (years) Occupancy Square footage owned (mm)
Capitalization ($mm)1
Equity market capitalization2 Preferred equity Total debt Total capitalization Less: Cash and cash equivalents Total enterprise value
Net total debt / enterprise value Net total debt + preferred / enterprise value Net total debt / gross assets

$ 1,039.5 118 103 19 28 7.3 97.0% 14.2

$

727

157

627

$ 1,511

(7)

$ 1,504

41.2% 51.7% 46.1%

Top 5 tenants1

% of rent % of SF

4%

2%

3%

1%

3%

7%

3%

1%

3%

Top 5 Tenants total

16%

Top 5 Tenants average remaining lease term

Portfolio average remaining lease term

1%
12% 5.2 years 7.3 years

Corporate liquidity ($mm)1
Cash and Cash Equivalents Availability Under Revolving Credit Facility3 Total

$

6.8

20.5

$

27.3

1 As of 12/31/2019. 2 Based on closing common stock price per share on December 31, 2019 of $21.86. Includes OP units and senior common shares convertible into shares of common stock. 3 As of February 12, 2020, approximately $34.6 million is available under the Company's revolving credit facility.
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Q4 2019 highlights (unaudited)

FFO1, FFO as adjusted for comparability2, and Core FFO3:

Generated FFO, FFO as adjusted for comparability, and core FFO of $10.1 million, $12.7 million and $13.2 million, or $0.30, $0.39 and $0.40 per diluted share, respectively.

Acquisition Activity:

Purchased a 231,509 square foot property in Indianapolis, Indiana for $8.2 million with a 13.5 year remaining lease term. Purchased a 241,000 square foot property in Jackson, Tennessee for $9.1 million with a 9.7 year remaining lease term. Purchased a 117,000 square foot property in Carrollton, Georgia for $8.1 million with a 12.0 year remaining lease term. Purchased a 509,211 square foot, six property portfolio for $37.6 million with a remaining lease term of 10.0 years at each property.

Dividends:

Paid monthly common stock dividends totaling $0.375 per common share, or an annualized $1.50 per common share, as well as continued payments of monthly Series D preferred dividends and prorated Series A, Series B, and Series E preferred dividends based upon applicable redemption/issuance dates.

Equity Issuances:

Issued common equity for net proceeds of $24.0 million through our ATM program. Issued 2,760,000 shares of newly designated 6.625% Series E Preferred Stock, raising net proceeds of $66.6 million.

Equity Redemptions:

Redeemed all 7.75% Series A and 7.50% Series B Preferred Stock for a total redemption payment of $56.9 million.

Debt Activity:

Issued a $4.8 million mortgage note collateralized by our Jackson, Tennessee property acquired during December 2019 with a seven year remaining term and a 3.97% fixed rate. Issued a $4.2 million mortgage note collateralized by our Carrollton, Georgia property acquired during December 2019 with a seven year remaining term and a 3.97% fixed rate. Issued a $19.5 million mortgage note collateralized by our six property portfolio acquired during December 2019 with an eight year remaining term and a 3.75% fixed rate.

Select Expenditure Activity:

Paid $1.6 million related to capital expenditures and $0.3 million related to leasing commissions.

1 FFO is calculated as net income (computed in accordance with GAAP), excluding gains or losses from sales of property and impairment losses on property, plus depreciation and
amortization of real estate assets, which we believe to be consistent with the NAREIT definition. FFO does not represent cash flows from operating activities in accordance with GAAP.
FFO should not be considered an alternative to net income as an indication of our performance or to cash flows from operations as a measure of liquidity or ability to make distributions. 2 FFO as adjusted for comparability is FFO adjusted for certain items that are not indicative of the results provided by the Company's operating portfolio and affect the comparability of
the Company's period-over-period performance. These items include the adjustment for non-recurring expense adjustments related to the write off of offering costs pertaining to
redeemed securities. 3Core FFO is FFO adjusted for gains from early extinguishment of debt and any other non-routine revenue or expense adjustments.

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Condensed consolidated statements of operations

($ in thousands, except per share amounts)
Operating revenues Lease revenue Total operating revenues

For the three months ended (unaudited) 12/31/2019 9/30/2019 12/31/2018

For the twelve months ended

12/31/2019

12/31/2018

$ 29,386 $ 28,667 $ 27,261 $ $ 29,386 $ 28,667 $ 27,261 $

114,387 $ 114,387 $

106,798 106,798

Operating expenses Depreciation and amortization Property operating expenses Base management fee Incentive fee Administration fee General and administrative Impairment charge Total operating expenses

$ 13,428 $ 12,979 $ 12,454 $

3,262

3,202

3,212

1,322

1,292

1,257

968

965

828

469

411

418

1,200

596

602

1,813

--

--

$ 22,462 $ 19,445 $ 18,771 $

52,039 $ 12,592
5,174 3,688 1,690 3,235 1,813 80,231 $

47,620 11,458
5,054 3,042 1,605 2,358
-- 71,137

Other (expense) income Interest expense Gain on sale of real estate Other income Total other expense, net

$ (6,873) $ (7,170) $ (6,897) $

--

--

919

421

139

5

$ (6,452) $ (7,031) $ (5,973) $

(28,279) $ 2,952 712
(24,615) $

(26,172) 2,763 72
(23,337)

Net income

$

472 $ 2,191 $ 2,517 $

9,541 $

12,324

Net income attributable to non-controlling interests

100

16

(4)

87

(4)

Net income attributable to the company

$

572 $ 2,207 $ 2,513 $

9,628 $

12,320

Distributions attributable to Series A, B, D, and E preferred stock Series A and B preferred stock offering costs write off Distributions attributable to senior common stock Net (loss) income (attributable) available to common stockholders

(2,986)

(2,612)

(2,613)

(2,674)

--

--

(217)

(226)

(231)

$ (5,305) $

(631) $

(331) $

(10,822) (2,674) (892) (4,760) $

(10,416) --
(931) 973

Weighted average common shares outstanding and Non-controlling OP Units Basic and diluted

32,332,114 31,775,739 29,611,130

31,396,826

28,804,167

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Funds from Operations (FFO)

($ in thousands, except per share amounts)

For the three months ended (unaudited)

12/31/2019

9/30/2019

12/31/2018

For the twelve months ended

12/31/2019

12/31/2018

Net income

$

Less: Distributions attributable to preferred and senior common stock

Net (loss) income (attributable) available to common stockholders and Non-controlling OP Unitholders

$

Adjustments:

Add: Real estate depreciation and amortization

$

Add: Impairment charge

Less: Gain on sale of real estate, net

FFO available to common stockholders and Non-controlling OP Unitholders - basic

$

Add: Convertible senior common distributions

FFO available to common stockholders and Non-controlling OP Unitholders - diluted

$

Add: Series A and B preferred stock offering costs write off

FFO available to common stockholders and Non-controlling OP Unitholders - diluted, as

adjusted for comparability

$

472 $ (5,877) (5,405) $
13,428 $ 1,813 -- 9,836 $ 217
10,053 $ 2,674
12,727 $

2,191 $ (2,838)
(647) $
12,979 $ -- --
12,332 $ 226
12,558 $ --
12,558 $

2,517 $ (2,844)
(327) $
12,454 $ --
(919) 11,208 $
231 11,439 $
--
11,439 $

9,541 $ (14,388)
(4,847) $
52,039 $ 1,813 (2,952)
46,053 $ 892
46,945 $ 2,674
49,619 $

12,324 (11,347)
977
47,620 --
(2,763) 45,834
931 46,765
--
46,765

FFO available to common stockholders and Non-controlling OP Unitholders - basic

$

Add: Acquisition related expenses

Add: Write off of deferred financing fees

Add: Write off shelf registration statement costs and prepaid ATM costs

Add: Asset retirement obligation expense

Add: Bad debt write off

Add: Write off prepaid offering costs

Less: Write off of debt discount

Core FFO available to common stockholders and Non-controlling OP Unitholders - basic

$

Add: Convertible senior common distributions

Core FFO available to common stockholders and Non-controlling OP Unitholders - diluted

$

9,836 $ 204 -- 82 42 152
2,674 --
12,990 $ 217
13,207 $

12,332 $ (6) 61 -- 32 -- -- --
12,419 $ 226
12,645 $

11,208 $ 69 -- -- 31 -- -- --
11,308 $ 231
11,539 $

46,053 $ 326 344 100 137 152
2,674 --
49,786 $ 892
50,678 $

45,834 174 6 -- 121 -- -- (49)
46,086 931
47,017

Weighted average common shares outstanding and Non-controlling OP Units - basic Weighted average common shares outstanding and Non-controlling OP Units - diluted

32,332,144 33,006,755

31,775,739 32,485,645

29,611,130 30,355,466

31,396,826 32,071,437

28,804,167 29,528,503

FFO per weighted average share of common stock and Non-controlling OP Unit - basic

$

FFO per weighted average share of common stock and Non-controlling OP Unit - diluted

$

FFO per weighted average share of common stock and Non-controlling OP Unit - diluted, as

adjusted for comparability

$

0.30 $ 0.30 $
0.39 $

0.39 $ 0.39 $
0.39 $

0.38 $

1.47 $

1.59

0.38 $

1.46 $

1.58

0.38 $

1.55 $

1.58

Core FFO per weighted average share of common stock and Non-controlling OP Unit - basic $ Core FFO per weighted average share of common stock and Non-controlling OP Unit - diluted $

0.40 $ 0.40 $

0.39 $ 0.39 $

0.38 $

1.59 $

1.60

0.38 $

1.58 $

1.59

Distributions declared per share of common stock and Non-controlling OP Unit

$

0.375 $

0.375 $

0.375 $

1.500 $

1.500

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Consolidated balance sheets
($ in thousands) ASSETS
Real estate, at cost Less: accumulated depreciation Total real estate, net Lease intangibles, net Real estate and related assets held for sale, net Cash and cash equivalents Restricted cash Funds held in escrow Right-of-use assets from operating leases Deferred rent receivable, net Other assets TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES
Mortgage notes payable, net Borrowings under revolver and term loan, net Deferred rent liability, asset retirement obligation and other liabilities, net TOTAL LIABILITIES
MEZZANINE EQUITY Series D and E redeemable preferred stock, net
TOTAL MEZZANINE EQUITY
STOCKHOLDERS' EQUITY Series A and B redeemable preferred stock Senior common stock Common stock Additional paid in capital Accumulated other comprehensive income Distributions in excess of accumulated earnings
TOTAL STOCKHOLDERS' EQUITY OP Units held by Non-controlling OP Unitholders TOTAL EQUITY
TOTAL LIABILITIES, MEZZANINE EQUITY AND EQUITY
10

12/31/2019

12/31/2018

$

1,056,978 $

207,523

849,455

115,465

3,990

6,849

4,639

7,226

5,794

37,177

8,913

$

1,039,508 $

946,649 178,257 768,392 111,448
4,151 6,591 2,491 6,010
-- 34,771
4,921 938,775

$

453,739 $

172,855

49,724

$

676,318 $

$

152,153 $

$

152,153 $

$

--$

1

32

571,205

(2,126)

(360,978)

$

208,134 $

2,903

$

211,037 $

$

1,039,508 $

441,346 124,713
32,699 598,758
85,598 85,598
2 1 29 559,977 (148) (310,117) 249,744 4,675 254,419
938,775

Capital structure

Current capital structure as of 12/31/2019 ($000)
$1,500,000

$1,250,000 $1,000,000

Common Equity1, 48.4%

$750,000

Preferred Equity, 10.4%

Capital Structure Details
(Dollars in $000s, except stock price)
Mortgage Notes Payable, Net Less: Cash & Cash Equivalents Net Mortgage Debt
Line of Credit Term Note Line of Credit and Term Loan
Total Debt, Net
Series D - Preferred Series E - Preferred Total Preferred Equity
Diluted Common Shares Outstanding Stock Price Implied Common Equity1 Market Capitalization
Enterprise Value

Wtd. Average Rate 4.49%
L+1.65% L+1.60%
7.000% 6.625%

12/31/2019

$

453,739

(6,849)

$

446,890

$

51,579

121,276

$

172,855

$

619,745

87,739

69,000

$

156,739

33,268,262

$

21.86

$

727,244

$ 1,503,728

$500,000

Line of Credit & Term Loan, 11.5%

Institutional Stock Ownership 2

$250,000 $0

Net Mortga$g4e79,000 Debt, 29.7%48% Total = $1,504mm

60% 50% 40% 30% 20%

55.3% 55.1% 50.8%
37.8% 32.6% 26.8%

2013 2014 2015 2016 2017 2018

1 Common Equity is based on the closing common stock price per share as of December 31, 2019 of $21.86 and includes effect of OP units and convertible senior common stock. 2 Source: Nasdaq Online.

57.0% 2019

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Liquidity and debt overview

Reducing Leverage1

Fixed vs. Floating Debt1

80% 70% 60% 50% 40% 30% 20%

63.2% 59.3% 58.1% 56.9% 48.6% 47.0% 46.8% 46.1%
2012 2013 2014 2015 2016 2017 2018 2019

Net Debt/Gross Assets
Debt maturity schedule1 ($000)

Floating Rate: 8.4%
Hedged Floating Rate: 26.3%

$175,000 $150,000 $125,000 $100,000
$75,000 $50,000 $25,000
$0

4.9%

2020

1 As of 12/31/2019.

Mortgage Maturities

Line of Credit Maturity

Term Loan Maturity

27.0%

16.9%

19.5%

6.1%

2021

2022

2023

2024

12

Fixed Rate: 65.3%
25.6% 2025+

Debt summary

Principal Maturity Date
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2037
Contractual Mortgage Notes Payable:
Premiums (Discounts), net:
Total Mortgage Notes Payable:
Variable-Rate Line of Credit: 2023
Variable-Rate Term Loan Facility: 2024
Total Mortgage Notes Payable and Line of Credit

Weighted Average Interest Rate as of
12/31/2019 3.96% 4.90% 4.80% 4.61% 4.04% 4.03% 4.42% 4.36% 5.32% 4.75% 4.63%
4.49%

($ in thousands)
Principal Balance Outstanding as of
12/31/2019 19,516 27,491
104,809 68,114 44,334 33,597 50,063 86,859 4,634 11,845 6,660

$

457,922

(239)

$

457,683

LIBOR +1.65%

$

52,400

LIBOR +1.60%

$

4.18%

$

122,300 632,383

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Select corporate covenants

Description Consolidated Tangible Net Worth Leverage Ratio Debt Yield Ratio Fixed Charge Coverage Ratio Maximum Dividend Payout (FFO based) Secured Indebtedness

($ in thousands)

Threshold

December 31, 2019

> $494,750

$677,427

< 60%

49%

> 11%

14%

> 1.45

1.76

< 98%

95%

< 45%

35%

Note: Covenants calculated as defined by our Credit Facility, as administered by KeyBank.
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Portfolio overview

Geographic diversity

· 118 properties across the U.S. located in 28 states · Focus on secondary growth markets with higher yields

Tenant and property diversity
High occupancy

· Diverse base of 19 different industries and primarily office and industrial property types
· Focus on mid-size tenants occupying properties ranging from 30-150K SF (office) and 75-500K SF (industrial)
· Occupancy has never fallen below 96%
· Current occupancy 97.0%
· 7.4% of projected rents expiring through the end of 2020
· Of 100+ assets with nearly $1 billion invested since inception, only one tenant default

Periodic capital recycling
Note: As of 12/31/2019

· Sell non-core assets · Exited 12 single property non-core markets since mid-2016 · Re-deploy proceeds in growth markets

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Diversified portfolio
118 properties spread across 28 states

Note: As of 12/31/2019

17

Geographic diversification (by annualized lease revenue)

Northeast 16%

Midwest 27%

Southwest 24%
Southeast 33%
Property type diversification (by annualized lease revenue)
Medical Office 2% Retail 3%

Industrial 38%

Office 57%

High quality, diversified portfolio

Top 5 tenants

% of lease revenue
4%

% of SF 2%

3%

1%

3%

7%

3%

1%

3%

1%

All other tenants

84%

88%

Industry diversification (based on annualized lease revenue)

Publicly-traded vs. privately-held tenants (as % of annualized total lease revenue)

Private 46%

Public 54%

Tenant credit ratings (as % of annualized total lease revenue)

All 13 Others 33%
Information Technology 5% Banking 7%
Note: As of 12/31/2019

Telecommunications 17%
Diversified/ Conglomerate Services 13%
Automobile 13% Healthcare 12%

Not Rated, Non-Investment Grade Equivalent 24%
Rated, NonInvestment Grade
13%

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Rated, Investment Grade 29%
Rated Investment Grade and Non-Rated
Equivalent 63%
Not Rated, Investment Grade Equivalent 34%

Smooth lease rollover

Existing portfolio - contractual expirations

Year of Lease Expiration 2020 2021 2022 2023 2024 2025+ Total

SF of Leases Expiring 806,866 560,223 446,457 1,460,802 1,740,195 8,793,608 13,808,151

Number of Expiring Leases 8 12 8 14 11 69 122

Lease Revenue (in thousands)

$

9,163

9,053

6,646

10,187

12,137

63,544

$

110,730

% of Lease Revenue
8.3% 8.2% 6.0% 9.2% 11.0 % 57.3% 100.0%

Rent expiring

100.0% 80.0% 60.0% 40.0% 20.0% 0.0%

8.3% 2020

Note: As of 12/31/2019

8.2% 2021

6.0%

9.2%

2022

2023

GAAP Rents (Existing Portfolio)

19

11.0% 2024

57.3% 2025+

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