Good day, ladies and gentlemen, and welcome to the Gladstone Commercial Corporation Second Quarter Ended June 30, 2014, Earnings Conference Call. [Operator Instructions] As a reminder, this conference call may be recorded. I would now like to introduce your host for today's conference, David Gladstone. Please go ahead, sir.

All right. Thank you, Charlotte, for that nice introduction, and thank you, all, for calling in. As you know, we all enjoy these times that we have with you on the phone, and wish we had a lot more time to talk to you at various points in the year. But we only do this 4 times a year. So please, if you're in this DC area, come by and say hello. We are in McLean, Virginia. It's a suburb of Washington, D.C. As always, you have an open invitation to stop by and see us and say hello. And you'll see a great team here. There is a number of people here. I think there is about 60 total in the company now, and so we're no longer small. Michael LiCalsi, he is our General Counsel and our Secretary. He also serves as President of the Administrator and does a great job of keeping us on the straight and narrow. Michael?

Good morning, everyone. This report that is about to be given may include statements that may constitute 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 company's Form 10-Q and 10-K filings that we filed with the SEC. Those 10-Q and 10-K filings can be found on our website at www.gladstonecommercial.com, and on the SEC's website, www.sec.gov. The company undertakes no obligation to publicly update or revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In our talk today, we plan to speak about funds from operations, or FFO. And since FFO is a non-GAAP accounting term, I need to define FFO 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. The National Association of REITs, or NAREIT, has endorsed FFO as one of the nonaccounting standards that we can use in our 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 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 website to get updates by e-mail on the latest news involving Gladstone Commercial and the other Gladstone publicly traded funds. You can follow us on: Twitter, user name GladstoneComps; and on Facebook, keyword, The Gladstone Companies. And can you go to our general website 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, which is our quarterly report for the quarter ended June 30, 2014. You can find both of these on our website, www.gladstonecommercial.com, and on the SEC's website. Now we will begin our presentation from our president, Bob Cutlip.

Thanks, Michael. Good morning, everyone. During the second quarter, we acquired 4 properties, assuming debt on one, issuing new debt on 2, and funded the fourth property with equity. We sold one of our properties at a nice profit, issued additional common equity through an overnight offering, and extended the leases of 2 properties that are set to expire in 2015. Subsequent to the end of the quarter, we also acquired an additional property using equity proceeds, extended another one of our leases that was set to expire in 2015, and funded the loan for a build-to-suit project that is pre-leased upon construction completion to a tenant with its 15-year lease. We had a great quarter, as we continue to increase our asset base by acquiring new properties. This was our 11th consecutive quarter of closing new acquisitions. We are extremely pleased with our activity and consistency over the last several months, and we continue to have a strong pipeline of acquisitions. Now for some details. During the quarter ended June 30, we acquired 4 additional properties. The first property is a 62,000 square foot office building located in a Sacramento, California, submarket. The purchase price was $8.2 million, with an average cap rate of 8.5% over the life of the lease. We've funded this acquisition with cash on hand and the issuance of $4.9 million of new mortgage debt at a 4.9% interest rate. Barco is the tenant in this property and has a leased the property for 10 years. Barco is a global technology company that designs, develops and manufactures visualization solutions, including video projectors, LED displays, digital lighting and lighting controls. This was our first acquisition in California, and it's in line with our strategic expansion into the Western United States. The second property was a 22,000…

Thanks, Bob, and good morning, everybody. We continued our goal of consistently growing our asset and equity base in the second quarter. Total assets increased to $735 million this quarter, which was an 8.3% increase from last quarter. Our total equity also increased over 12% from last quarter, as a result of our latest equity raise. We are in a growth mode and expect to continue this throughout 2014. The amounts outstanding under our long-term mortgages and our line of credit also increased to $480 million, as a result of the funding of our new acquisitions. Reviewing our upcoming long-term debt maturities, we do have mortgage debt in the aggregate principal amount of $20.8 million payable during the remainder of 2014 and $42.7 million payable during 2015. The 2014 principal amounts payable includes both amortizing principal payments and a balloon principal payment that was due in June of this year of $17.5 million on a property that we impaired this year. We are currently in conversations with the lender to return the property via deed in lieu, which we anticipate to happen this quarter. We intend to pay the remaining 2014 debt amortization payments from operating cash flow and borrowings under our line of credit. The 2015 principal amounts payable include balloon principal payments due on 3 mortgages that mature in the second half of 2015, and we do anticipate being able to refinance these mortgages with the new [ph] mortgage debt. We intend to decrease the leverage on these refinancings in order to continue our strategy of reducing our overall leverage. Debt financing does continue to be available from multiple sources. We have seen interest rates decline since the beginning of the year, as the yields on U.S. Treasury Securities have stabilized with the Federal Reserve's guidance that it…

Okay, thanks. That was good, Danielle. And we had good one -- good reports from Bob Cutlip and Michael LiCalsi, too. We encourage all our listeners to read our press releases and our quarterly report that was filed yesterday with the SEC, called Form 10-Q. There is a lot of good material in those documents. You can find them all on our website at www.gladstonecommercial.com, and also on the SEC website. I think the main news to report this quarter is that we are able to acquire 4 additional properties, raised equity, issue a long-term financing on the properties. So we continue to add quality real estate to the portfolio, shore up our existing investments and grew the asset base. As we continue to grow, our market capitalization will increase and we hope to see a higher trading volume in our stock and also see a corresponding uptick in the stock price, because the yield today is very high. I have some things to discuss here. As many of you know, the company did not cut its dividend, lower its dividend, stop its dividend during the recession, and I think that was quite a success story. But we watched some of the very good companies cut their dividends, and here is a couple of examples of REITs. And I'm not going to name their names even though I have them here. Company A had a dividend in 2008 of $1.36, dividend is now $0.60, and that's a 56% decrease. Company B: dividend in 2008 was $1.17; dividend is now $0.66, and that's 44% decrease. Company C: dividend, 2008, was $1.25; dividend now is $0.14, it's an 89% decrease. And Company D: dividend, 2008, $2.88 per share; dividend now 41%, so an 86% decrease. And then Company E: dividend, 2008, was…

[Operator Instructions] Our first question comes from the line of John Roberts from Hilliard Lyons.

I guess, you haven't read my report. I talk about you not cutting the dividend in every report.

Well, thank you for doing that. Have you mentioned how many others that are selling at higher price than us that are selling at a much better multiple of earn -- of yields?

That I haven't done. I'm only covering you, David. I'm not covering all the other ones. Bob, can you run the pipeline numbers again? I'm sorry. I was writing them down as quick as I could, but I missed some of them.

Sure. What we have right now in due diligence that we have, $32 million in due diligence and we have $31 million in the letter of intent stage. And one of those is industrial and 4 of them are office.

Very good. David, can you discuss a little the acquisition-related expenses? They've bumped up pretty significantly this time, and I was just wondering -- sort of a typical run rate on them.

Danielle is the lady with numbers, so she'll give you that.

They were a little bit higher this quarter. It was from the $39 million acquisition we acquired in Pennsylvania, and Pennsylvania just has very high transfer taxes, and so it just -- that was probably a one-time anomaly. A lot of times it's state-specific. We usually see it about 1% of purchase price, depending -- that was a higher purchase price. But it really just had to do with Pennsylvania state taxes this time.

Okay. So normally, you see about 1% of purchase price?

Usually, about average.

We have a question from the line of Daniel Donlan from Ladenburg Thalmann. John J. Massocca - Ladenburg Thalmann & Co. Inc., Research Division: This is actually John Massocca on for Daniel. Could you just walk us maybe through the potential for the BTS project in Phoenix? Do you think you have -- kind of an estimate of what you think the final cost will be, given that you have a first look at that building?

Yes, we've seen all the numbers. We are actually participating in negotiation of the lease. The property is going to kind of guaranteed maximum price, total development cost, just over $18 million. So it already has the construction lender in place. We are in place. We closed that this week -- excuse me, last week, last week. Closed it last week. And so we're very excited about it. We've been working on this project for -- or jeez, I think, over 8 months, with a developer out in Phoenix. And we are so pleased that Kindred Healthcare is the tenant, and the general contractor is Whyte's [ph] Construction, which does a lot of medical development in [ph] general contracting. So we're very pleased with the opportunity here. John J. Massocca - Ladenburg Thalmann & Co. Inc., Research Division: Is this an opportunity that you guys think you could see more of in the future? It's obviously a very attractive yield. Is this something you guys expect [ph] to do more in terms of business loan -- in terms of construction loans that could possibly lead to acquisitions?

Yes, I'm glad you brought that up. I mean, each of 3 leaders in our regions, Matt Tucker, Buzz and Andrew, they are seeking partners with developers, who are more merchant developers, who in the markets that we want to have sizable presence can pursue these deals. We are talking with another developer right now about a similar opportunity in the Southeast. John J. Massocca - Ladenburg Thalmann & Co. Inc., Research Division: All right, great. And then in terms of the quarter in general, just more broad strokes. $64.9 million was a great acquisition quarter. Is that more of some kind of one-time stuff, or is that something you think you're going see more of in terms of a larger number of acquisitions?

At our size, we still try to be in the $5 million to $30 million range. I think the teams have done just a tremendous job over the last 6 months. We think our current annual run rate should be about $120 million to $150 million, so that we don't get out over, what I would call, "the tips of our skis." But we're not going to walk away from a very good accretive deal. And the teams have been able to acquire properties in, what I believe, are very strong secondary markets. When you think about the closings we've done this year, Sacramento, Phoenix, Denver, Dallas, Columbus, and now in due diligence and letter of intent, the Northeast Corridor, I really like the I-81 corridor. I think that's a great distribution location for the Northeast. And credit is king for us, and that's what's really stood the test of time. But we also want to make sure that we're acquiring assets that we know are releasable. We know that a tenant may at some point want to leave. And the team has done a really good job of focusing on those secondary markets that they really believe are good growth markets.

[Operator Instructions]

Well, Charlotte, it sounds like we don't have any more questions. So this is the end of the report. And we thank you, all, for listening, and we'll see you next quarter.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone, have a great day.