Hello, this is David Gladstone, and we don't have an introduction because they're having some kind of fire at the place that's handling this, but Sydney was on and she's very good at giving introductions and we always enjoy this time that we have with you guys and wish there were more times to talk like this. We're going to start-off with Michael LiCalsi, our General Counsel and Secretary, who give the legal and regulatory matters concerning this call. Michael?

Thanks, David, and good morning. Today's report may include forward-looking statements under the Securities Act of 1933, the Securities Exchange Act of 1934, including those regarding our future performance. These forward-looking statements involve certain risks and uncertainties that are based on 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 you can find in our Forms 10-Q, 10-K and other documents that we file with the SEC.Those can found on our website, specifically the Investor Relations page www.gladstonecommercial.com or on the SEC's Web site, which is www.sec.gov, and 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. And 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 adjust FFO for certain other non-recurring revenues and expenses. We believe this is a better indication of our operating results and allows better comparability of our period-over-period performance.Please take the opportunity to visit our website, once again, gladstonecommercial.com, sign up for email notification service. It can also be found on Facebook, at keyword the Gladstone Companies, and on Twitter to handle there is @gladstonecomps. Today's call is simply an overview of our results, so we ask that you review our press release and Form 10-Q, both of which were issued yesterday for more detailed information. Again you can find those on the Investor Relations page of our Web site.With that, I'll hand the presentation back over to Gladstone Commercial's President, Bob Cutlip. Bob?

Thanks, Michael, and good morning, everyone.During the second quarter, we acquired a two-building 383,000 square foot industrial portfolio in Ocala, Florida, acquired a 54,400 square foot industrial property in Columbus, Ohio, acquired a 676,000 square foot industrial property in Tifton, Georgia. Executed a lease amendment to expand our anchor tenant in an Indianapolis office property, resulting in a fully leased building, executed both our lease amendment with our existing tenant and a new lease in Salt Lake City, increasing the occupancy of the office property of 100%, held 16 meetings every week with investors, coverage analysts and lenders. Refinanced $21.5 million in mortgage debt and approached our long term leverage target with our book leverage totaling 45.6%.Subsequent to the end of the quarter, we acquired 78,500 square foot industrial property in Denton, Texas. We catch company's line of credit and term loan and entered due diligence for the acquisition of a 211,000 square foot industrial property in Denton, Texas. As these activities reflect our team had a very busy second quarter. As noted on our first quarter call we're beginning to enjoy the benefits of our team's focused efforts across all functions to improve operating results. This has been accomplished through three major activities; number one we acquired accretive assets. During the period from 2012 through 2018 the average GAAP cap rate on acquisitions of approximately $105 million per year was 8.7% with mortgage debt placed at a 4.6% interest rate. Number two, we renewed expiring leases and we re-leased vacant space. We maintained occupancy greater than 96% during the highest leases expiration period in company history. And number three, we refinanced maturing mortgages at lower leverage levels. We've lowered our leverage from a high of 63% in 2013 to 45.6% as of the end of the second quarter.The results…

Good morning. I'll start by reviewing our operating results for the second quarter of 2019.Our per share numbers I referenced are based on fully diluted weighted average common shares. FFO and core FFO available to common stockholders were both $0.38 per share for the second quarter and $0.77 and $0.78 per share respectively for the first half of 2019. This performance demonstrates the accretive yet prudent growth of the company has completed in recent years, as well as the performance of the in-place portfolio inclusive of maintaining 99% occupancy. In addition to these accretive deals, our same-store cash rent growth was 2% in the second quarter of 2019 as compared to the second quarter of 2018. As Bob mentioned prior to 2018, core FFO hovered in the $1.50 to $1.54 per share range for the past number of years. As we de-levered the balance sheet and addressed lease rollover. 2018 results demonstrated our highest core FFO per share in the company's history and we intend to continue to grow profitability for our shareholders, as well as increasing the industrial allocation of the portfolio. Our second quarter results reflect an increase in total operating revenues to $28.2 million as compared to total operating expenses of $19.1 million for the period.Now let's take a look at our debt activity and capital structure. We continue to enhance our strong balance sheet as we grow our assets and focus on decreasing our leverage, reduced our debt-to-gross assets by nearly 15% to 45.6% over the past five years, through refinancing maturing debt and financing new acquisitions at lower leverage levels. We believe that we are 1% to 2% away from our target leverage level, which means that nearly all raised equity going forward will be allocated to a creative acquisitions.As we've discussed this with analysts,…

Thank you, Mike. That was a good report and good report from Bob and Michael LiCalsi as well. So we've informed our shareholders very well. This is a very, very nice quarter. A lot of things going on. We acquired a portfolio in Ocala, Florida and got a nice industrial property in Columbus, Ohio, and another one in Tifton, Georgia. And thank all of the lease amendments that are going on now, Indianapolis, for example, is resulted in a fully-leased building in both of the -- executing both of these lease amendments with our tenants and new leases in Salt Lake City, that means that one is now fully leased refinance $21.5 million and mortgage debt. I think a very important event happened this quarter, we have a new line of credit for the business now. And the significance here is not so much the rates, it's the strength of the liquidity that we have in places, all of you know, when a recession hits liquidity is the key topic. So now we have some protection there.We continue to believe that we have a good list of quality properties, good tenants, expected number of acquisitions over the next two to three quarters. We've reached a point which is a significant one, that we've now reduced the leverage in the portfolio to a point that we don't need to use new money or money coming in to reduce our leverage further. So we're in a position to put all of our new equity into new tenants and new properties. And I think that's a significant change in the marketplace.Middle market businesses today. As many of you know, the tenants are doing fine, tenants are paying their rents and the middle market of the United States is very strong. In July, the…

Yes, of course. Thank you. [Operator Instructions] And our first question comes from Barry Oxford with D.A. Davidson. Your line is open.

Great. Thanks, guys. You guys were moving along it from an acquisitions side very slow pace. But then this quarter, you know, again, a very nice pace. And then when you guys talk about the future again, you know what you guys done subsequent to the quarter and what's in the pipeline. So I guess my question really revolves kind of what's changed kind of in the last 90 days that you guys are seeing in the marketplace?

Well, the year started off very, very slow, we could not find deals that made any sense at all. The buyer seller disconnect was pretty strong. Second quarter beginning at the end of the first quarter into the beginning of the second quarter, we saw a lot more listings. I think it was just a delay from just the listing standpoint. As you saw there, you know, we think we've got a pretty strong pipeline right now, but it's still very competitive. I mean, in reading from RCA Real Capital Analytics, they've indicated that during the first six months of this year, the industrial listings are down compared to the same period last year. But they still say that, you know, overall, 2019 should be like 2018.So we're just cautiously encouraged that we're going to continue to see these deals. And as you know, our deals really run more from $5 million to $20 million, not the larger deals. We think, we can compete so much better there in our market. So hopefully this will continue.

Great. And then with the ATM and the pipeline, $250 million that you alluded to. Is the ATM enough to keep you guys at a leverage neutral basis?

Yes, Barry, I think for the normal ones and twos and those acquisitions that are sub $25 million to $30 million , the ATM is sufficient that I have visibility as they come down the pike to source the requisite equity to fund those deals, you know, to the extent we contemplate any acquisitions north of that level or if we have multiple acquisitions that hit within a 30 to 45 day window, then subject to where the share prices, we would contemplate optionality via overnight or follow on. But, you know, we can course correct as we go in terms of whether that's fully ATM or bifurcated between ATM any type of offering activity.

Got you. Perfect. I appreciate that, Mike. I'll yield the floor. Thanks so much.

Thank you. Next question.

Thank you. And our following question comes from Robert Stevenson with Janney. Your line is now open.

Good morning, guys. Can you talk a little bit about the where for the 11 leases that you have expiring over the next 18 months where the expiring rent is versus market. And is there any of those leases that the triple net lease on our ending basis is going to be materially above market?

Let me address the largest one first. GM, as I indicated, our current GAAP capital -- our current rent GAAP rent is $14.50 a square foot and deals have been done in the market in the mid-20s on a net basis. And so I think, we're still going to be waiting until we will hear from GM. But in that case, I think without a doubt we would have an uptick in the rental rate. When I think about the others it's interesting, this year so far we have had a flat renewal, all of our renewal stayed at the same kind of GAAP rental rate. Last year we had a 6% increase over the expiring rents. So, if I had to handicap this, I would say that we are probably looking at no more than probably, let's say minus 3% to plus 3% on the GAAP rent over the next 12 to 18 months. We do have one lease, though, that I think, and I will address that one. That's the one at the end of the year, which is at that Tulsa Inland port where I think we may have as much as an 8% to 10% reduction in the cash rent, which will probably turn out to be about 3% to 4% maybe 5% reduction in the GAAP rent.

Okay. And then how are you guys thinking about the office portfolio as a potential source of capital going forward? I mean, is that your intent at this point to, sell selectively, sell in greater chunks, maintain it. I mean, how should we be thinking about that and how are you guys sort of evaluating the potential of asset sales versus raises under the ATM?

I think any dispositions at this point are going to be really selective and they're going to be focused as much as we've talked in the past on single property markets that are more, let's say, tertiary in nature whether it's office or industrial. We're not going to abandon the office market. You know, our intent is to increase the allocation to industrials so that we get actually a swap to where we are today. We're at maybe 65%, 35% and we'd like to change that around, and it's going to take us probably three years or so. But I think in the markets where we attack and we acquire, which are not -- aren't those fully developed submarkets. I think we'll be successful.

Okay. And then lastly, on the Austin industrial field, that you are under due diligence, I mean, that's a pretty hot industrial market. I mean, was this something that you guys sourced, you know, through relationships or something that's allowing you to get to a cap rate that makes sense for you guys versus what one of the bigger players or a private equity could wind up paying?

It was through a broken relationship with Buzz Cooper, who runs our South Central region. And this is a manufacturing facility and it just still happens. And I think this goes back to our history of working with PE companies. We came to know this PE company quite well and even through our other sister funds and talking with other people, we got very comfortable with the owner as well as with the tenant in the long term viability of the deal. And so -- and manufacturing is probably also moves a little bit towards a higher cap rate -- fewer distribution place.

Okay. Thanks, guys. Appreciate it.

Thank you. Other question.

And our following question comes from Henry Coffey with Wedbush. Your line is open.

Yes. Good morning, everyone. Would that potential headwind in terms of the impact on GAAP rents that you discussed. What are the real drivers to getting FFO up over $0.40, which obviously would be a big part of being able to increase the dividend? Is it the other -- is it going to be more properties and better leverage and essentially accretive acquisitions? Are there other aspects on the property management cost that you can better leverage and improve efficiency there? Or is there contrary to what you said -- are the new assets you're going to have room for rental increases? What are the -- what's the equation that gets us over $0.40?

I think it's accretive acquisitions just what transpired during this quarter. The acquisitions that we did equate to about $3.3 million in annual rent, but a lot of that occurred near the end of the quarter. And with the pipeline, the way it's set up and I think if interest rates continue to stay in, as Mike indicated, the high 3s to mid 4s on margin and we can continue to do 8% to 8.3%, 8.4% GAAP rent. That's what's going to deliver the increased FFO per share. I think one of the characteristics of the net lease business is, when you're doing seven to 10 year leases, you typically are going to be going through a recession. And if you have contractual rent increases as we do, which is 2% to 3%. If you go through a recession. There's going to be some discount to the market rent in some markets, but that's why we're focusing right now all of our acquisitions and growth markets, because with growth markets, you still have a much more stabilized situation. So, Henry, I think the focus primarily is accretive acquisitions at our lower debt costs, which I think improve our margins.

When we read this one other question, when we read real capital analytics as well as we did actually did a virtual call -- conference call on this with a couple of commercial real estate broker originators. Everybody sees industrial as just a hot -- hot area, lots of transaction, lots of activity. Is that an opportunity for you all? Or do you see that more as a problem that the supposed enthusiasm over industrial properties?

We've made a commitment that our size range for industrial properties is going to be somewhere between 50,000 and 300,000 square feet. And if you look at a lot of the national brokerage firms as to what has been the largest amount of transaction velocity, it has been in the under 200,000 square foot range. The big boxes have kind of slowed a bit. And because of our ability to go into these developed submarkets whereby there's very limited land. Most of these properties are 24 to 28 foot clear the real load. Some of them are cross stock and front loader. But a lot of them are middle market tenants. And that's where our strength plays. And I think in reading a lot of research about what's going to happen with home delivery. I mean, one research report indicated that home delivery could increase as much as 50% to 70% over the next three to four years. That only means more interest in that last mile type of industrial property and that's where we can play. We're not going to be playing in the 600 to 1 [ph] million square footers for the most part. We're going to be playing in those more developed markets where we have the credit underwriting capability and now also the real estate knowledge to buy in the right locations with the right configurations.

Great. Thank you very much.

I'm encouraged about it. I think we have a great long term play in that size of the industrial market.

Thanks, everyone.

Keep telling David, you want to stay conservative on the dividend. And David, keep telling the guys you want to see them grow the FFO and we'll all succeed. So great quarter. Thank you.

Thank you.

Thank you. And our following question comes from Craig Kucera with B Riley FBR. Your line is open.

Good morning. I wanted to circle back to get a little more detail on the lease expirations that you're aware of over the next couple of years. Is the building in Tulsa, I guess first, what is the square footage of the rent currently at that building. And is that an office building? Or some other type of a building?

It's at the -- the port there in Tulsa, it's an industrial building and we're working with the port authority there. In fact, we have two very strong prospects for the entire building. It's over 300,000 square feet. I don't have the market rent right now, but I believe it's about its north [ph]. Anthony, you might correct me, is a little over $7 a square foot. But since there are very, very few, there's no other building at the port that has 100,000 square feet of availability. And so that's encouraging to Buzz Cooper, who's leading that region, as well as Perry Finney, who's his Senior Asset Manager on the deal. So we're cautiously encouraged that we're going to be able to lease that. But as I indicated, I think, I think the rents good could drop 5% to 10%. I mean, I'm just being transparent about what I think the market conditions are.

Got it. And who is the current tenant there, that it's vacating?

[Indiscernible].

And just so I understand, based on your commentary on renewals, the lease expansions you had this quarter, were those effectively at flat rents with where the existing tenants were at?

Yes. The new lease in at Morgan Stanley, that Morgan Stanley building in Salt Lake City. That new lease is at about a $1.5 below where the original rent was. What transpired is that which is amazing is that Morgan Stanley came to us. They had a right to terminate part of their lease. They vacated 24,000 square feet. So we then put it on the market. And then when we started getting walk-throughs in the building, they came back and said that they wanted to take back 17,000 square feet. And so they took this 17,000 square feet back. And, but then -- other tenant, which was 6,000 square feet, their rent is about a $1.50 to $2 per square foot, less on 6,000 square feet.

But I think a real takeaway there, Craig, is that 23,000 square feet did not participate in Core FFO during the second quarter, so 17,000 of that, is going back online and being released in third quarter in July. And then the remaining 6,000 that David [ph] mentioned to; they are occupying in September.

Got it. And as far as the leases expiring next year, I think you mentioned two of eight where you'd already been notified excluding GM. Can you give us a sense of the size of those, whether it's the rents or the square footage that you're aware of that's expiring next year?

I can give you the building size. I can probably also give you the rent on their both office buildings. The rent on a 90,000 square foot office building is $16 a square foot and then on a 74,000 square foot building. The rent is $10.95 [ph].

Yes, so we're pretty encouraged we're starting to see a number of prospects for both of these properties. And they're both in Minneapolis.

Great. And one more for me, I think, you know, we were looking for you guys to close on about one $150 million of acquisitions for the year, you had a pretty nice step up here in the second quarter. Are you feeling like that's a pretty reasonable assumption for the year? Or is that, you know, given the size your pipeline make you feel differently about what you might close in the second half of the year?

No, I think Mike and I truly believe we're going to be in the $110 million to $120 million range, maybe peaking at $125 million depending upon what happens over the next 60 days. But I'm encouraged a bit about the listings. We'll just have to see how it plays out over the next 60 to 90 days.

Okay. Thanks.

Thanks, Greg.

Next question.

Thank you. And our following question comes from the line of John [ph] with Ladenburg Thalmann. Your line is now open.

Good morning. Just one kind of quick follow up on the tenant move outs. What's kind of maybe the expected downtime on the 2019 move out that you already know about?

On the 2019 or 2020?

Yes, 2019.

2019 the only, the move out that we have are one that just took place on June 30th, which is a 64,000 square foot office property in Charlotte, and then the other move out is the one at the end of the year with that property in Tulsa, which is the 300,000 square foot industrial property at the port.

And just kind of -- as you look at that, maybe, well, what do you think the downtime could potentially be on both of these assets?

Well, on the office property, you know, if I knew that, I probably would be doing something else. I think on the office property, we're probably looking at a fourth quarter, we have two very strong prospects for the entire building. And then one prospect for half of the building, that's the office property. And we're waiting on feedback from a proposal that we have sent on that property. And then the property at the end of the year Buzz Cooper and his team believes that we really will have limited and maybe no downtime on that property at the end of the year. Right now, we're forecasting that property will be leased during the first quarter of 2020.

Okay. And then in terms of this can maybe as the top line rent number; I was all surprised that rent only increased $60,000 quarter-over-quarter, given the kind of amount of acquisition activity you guys completed in both 1Q and 2Q and the timing, particularly of the Okawa [ph] acquisition. Well there's something that's maybe within that rent number, that we're not seeing today because of the accounting changes that caused 2Q '19 to be lower versus run rate or 1Q '19 to maybe be elevated versus run rate? How should we view is kind of the rent on a go forward basis?

Well, speaking specifically to the only $60,000 top line increase, John, you know taking your point, obviously the signature brands acquisition in April, materially contributed to it -- being a $380,000 to property portfolio, but that was offset by the contract -- the interim contraction at Morgan Stanley. Again, that's not participating in top line revenue at the end of February. So, on that total square foot, is the 23,000 square foot. We locked for the quarter, called $160,000 to $170,000 of rent, and again, that will come back on in Q3 in two different stages. That was also the increase from signature brands has also mitigated by the disposition of our non-core single storey office building, in Maitland, Florida that took place in the first quarter.So, I would say it was more so specific to some acute events and onetime events, but for southwards, going away, appreciating now Morgan Stanley, we'll be back. Signature brands will continue to participate in the fourth quarter. And the audio acquisition we closed on June 18, just didn't have enough time to participate in that top line revenue, but when we get into a full three month cycle in Q3, that $17.5 million acquisition will materially participated in it with a quarterly rent of $400,000.

Very helpful. And then lastly, on the acquisition side of things, within kind of your industrial targeted acquisitions, how are you looking at maybe manufacturing versus warehouse and distribution? And are you seeing any kind of the additional cap rate you can get on manufacturing assets that might make them look relatively attractive?

Yes, I truly believe, John, that we are receiving, you know, a higher cap rate on the manufacturing and its stick your real estate. So we really like that because typically they have invested a lot of money into the property, and with their workforce right around that area, it's unlikely for them to leave. So we you know, if I look at what we have acquired in the last nine months, over two-thirds of that is primarily manufacturing and I like that. I think it's in our business. If I were in the multi-tenant business where I'm, you know, value add I might like distribution more, but I think in our business, we are a long term holder, we like the manufacturing play and we do. We will get -- we do get higher cap rates in manufacturing.

Understood. Thank you. That's it for me.

Next question.

I'm showing no further questions at this time. I would now like to turn the call back to David Gladstone for closing remarks.

Okay. Thank you all for tuning in. Hope you see what a good quarter we've put up for this last quarter. I think the quarter ending September 30 will be another good quarter. So that's the end of this call. I'll turn it back to Sydney.

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.