10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM                      TO                     

COMMISSION FILE NUMBER: 001-33097

GLADSTONE COMMERCIAL CORPORATION

(Exact name of registrant as specified in its charter)

MARYLAND	02-0681276
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1521 WESTBRANCH DRIVE, SUITE 100 MCLEAN, VIRGINIA	22102
(Address of principal executive offices)	(Zip Code)

(703) 287-5800

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and formal fiscal year, if changed since last report)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	x
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

The number of shares of the registrant’s Common Stock, $0.001 par value, outstanding as of August 3, 2015 was 21,358,465.

GLADSTONE COMMERCIAL CORPORATION

FORM 10-Q FOR THE QUARTER ENDED

JUNE 30, 2015

TABLE OF CONTENTS

		PAGE
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014		3
	Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014		4
	Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014		5
	Notes to Condensed Consolidated Financial Statements		6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		40
Item 4.	Controls and Procedures		41
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings		42
Item 1A.	Risk Factors		42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		42
Item 3.	Defaults Upon Senior Securities		42
Item 4.	Mine Safety Disclosures		42
Item 5.	Other Information		42
Item 6.	Exhibits		42
SIGNATURES			45

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Gladstone Commercial Corporation

Condensed Consolidated Balance Sheets

(Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

	June 30, 2015			December 31, 2014
ASSETS
Real estate, at cost	$	763,831		$	722,565
Less: accumulated depreciation		102,243			92,133
Total real estate, net		661,588			630,432
Lease intangibles, net		106,893			98,814
Real estate and related assets held for sale, net		2,235			—
Mortgage note receivable		5,900			5,600
Cash and cash equivalents		3,297			8,599
Restricted cash		4,347			3,547
Funds held in escrow		12,377			11,096
Deferred rent receivable, net		24,992			21,728
Deferred financing costs, net		6,212			6,213
Other assets		2,499			1,765
TOTAL ASSETS	$	830,340		$	787,794
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Mortgage notes payable	$	487,339		$	459,299
Borrowings under line of credit		45,200			43,300
Series C mandatorily redeemable preferred stock, par value $0.001 per share; $25 per share liquidation preference; 1,700,000 shares authorized; and 1,540,000 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		38,500			38,500
Deferred rent liability, net		9,278			8,594
Asset retirement obligation		3,749			3,616
Accounts payable and accrued expenses		5,925			8,285
Liabilities related to assets held for sale		93			—
Due to Adviser and Administrator (1)		1,683			916
Other liabilities		7,699			7,612
Total Liabilities	$	599,466		$	570,122
Commitments and contingencies (2)
STOCKHOLDERS’ EQUITY
Series A and B redeemable preferred stock, par value $0.001 per share; $25 per share liquidation preference; 2,300,000 shares authorized and 2,150,000 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively	$	2		$	2
Senior common stock, par value $0.001 per share; 7,500,000 shares authorized and 995,852 and 809,411 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		1			1
Common stock, par value $0.001 per share, 38,500,000 shares authorized and 21,143,986 and 19,589,606 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		21			20
Additional paid in capital		399,420			369,748
Notes receivable - employee		—			(375	)
Distributions in excess of accumulated earnings		(168,570	)		(151,724	)
Total Stockholders’ Equity		230,874			217,672
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	830,340		$	787,794

⁽¹⁾  Refer to Note 2 “Related-Party Transactions”

⁽²⁾  Refer to Note 9 “Commitments and Contingencies”

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Gladstone Commercial Corporation

Condensed Consolidated Statements of Operations

(Dollars in Thousands, Except Share and Per Share Data)

(Unaudited)

	For the three months ended June 30,						For the six months ended June 30,
	2015			2014			2015			2014
Operating revenues
Rental revenue	$	20,012		$	17,620		$	39,300		$	34,205
Tenant recovery revenue		394			770			718			1,321
Interest income from mortgage note receivable		282			—			549			—
Total operating revenues		20,688			18,390			40,567			35,526
Operating expenses
Depreciation and amortization		8,947			6,871			17,154			13,591
Property operating expenses		1,178			1,302			2,139			2,632
Acquisition related expenses		255			859			451			970
Base management fee (1)		866			666			1,717			1,291
Incentive fee (1)		1,760			1,527			3,433			2,767
Administration fee (1)		366			485			728			977
General and administrative		539			490			1,229			957
Impairment charge		—			—			—			13,958
Total operating expenses before credit to incentive fee		13,911			12,200			26,851			37,143
Credit to incentive fee (1)		(1,316	)		(957	)		(2,500	)		(2,162	)
Total operating expenses		12,595			11,243			24,351			34,981
Other income (expense)
Interest expense		(6,999	)		(6,509	)		(13,770	)		(12,784	)
Distributions attributable to Series C mandatorily redeemable preferred stock		(686	)		(686	)		(1,372	)		(1,372	)
Gain on sale of real estate		—			1,240			—			1,240
Other income		23			27			51			74
Total other expense		(7,662	)		(5,928	)		(15,091	)		(12,842	)
Net income (loss)		431			1,219			1,125			(12,297	)
Distributions attributable to Series A and B preferred stock		(1,023	)		(1,023	)		(2,047	)		(2,047	)
Distributions attributable to senior common stock		(261	)		(110	)		(485	)		(210	)
Net (loss) income (attributable) available to common stockholders	$	(853	)	$	86		$	(1,407	)	$	(14,554	)
(Loss) income per weighted average share of common stock - basic & diluted
(Loss) income (attributable) available to common shareholders	$	(0.04	)	$	0.01		$	(0.07	)	$	(0.90	)
Weighted average shares of common stock outstanding
Basic		20,833,787			16,547,793			20,524,101			16,149,467
Diluted		20,833,787			16,894,973			20,524,101			16,149,467
Earnings per weighted average share of senior common stock	$	0.26		$	0.26		$	0.52		$	0.52
Weighted average shares of senior common stock outstanding - basic		995,852			421,312			928,323			404,243

⁽¹⁾  Refer to Note 2 “Related-Party Transactions”

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Gladstone Commercial Corporation

Condensed Consolidated Statements of Cash Flows

(Dollars in Thousands)

(Unaudited)

	For the six months ended June 30,
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	1,125		$	(12,297	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		17,154			13,591
Impairment charge		—			13,958
Gain on sale of real estate		—			(1,240	)
Amortization of deferred financing costs		878			795
Amortization of deferred rent asset and liability, net		(270	)		(178	)
Amortization of discount and premium on assumed debt		(154	)		(114	)
Asset retirement obligation expense		76			(137	)
Increase in other assets		(538	)		(372	)
Increase in deferred rent receivable		(1,843	)		(1,778	)
Increase (decrease) in accounts payable, accrued expenses, and amount due Adviser and Administrator		1,021			(1,004	)
(Decrease) increase in other liabilities		(683	)		585
Leasing commissions paid		(291	)		(765	)
Net cash provided by operating activities		16,475			11,044
Cash flows from investing activities:
Acquisition of real estate and related intangible assets		(58,248	)		(64,764	)
Improvements of existing real estate		(3,072	)		(2,934	)
Proceeds from sale of real estate		—			11,162
Issuance of mortgage note receivable		(300	)		—
Receipts from lenders for funds held in escrow		642			1,287
Payments to lenders for funds held in escrow		(1,924	)		(5,445	)
Receipts from tenants for reserves		2,037			1,519
Payments to tenants from reserves		(1,308	)		(3,423	)
(Increase) decrease in restricted cash		(800	)		1,935
Deposits on future acquisitions		(1,600	)		(1,500	)
Deposits applied against acquisition of real estate investments		1,400			1,300
Net cash used in investing activities		(63,173	)		(60,863	)
Cash flows from financing activities:
Proceeds from issuance of equity		30,363			36,042
Offering costs paid		(742	)		(2,028	)
Borrowings under mortgage notes payable		51,819			27,535
Payments for deferred financing costs		(883	)		(633	)
Principal repayments on mortgage notes payable		(23,625	)		(4,182	)
Principal repayments on employee notes receivable		375			—
Borrowings from line of credit		56,400			44,250
Repayments on line of credit		(54,500	)		(43,000	)
Increase (decrease) in security deposits		108			(31	)
Distributions paid for common, senior common and preferred stock		(17,919	)		(14,313	)
Net cash provided by financing activities		41,396			43,640
Net decrease in cash and cash equivalents		(5,302	)		(6,179	)
Cash and cash equivalents, beginning of period		8,599			8,546
Cash and cash equivalents, end of period	$	3,297		$	2,367
NON-CASH INVESTING AND FINANCING INFORMATION
Increase in asset retirement obligation	$	56		$	—
Fixed rate principal debt assumed in connection with acquisition	$	—		$	10,147
Senior common dividend issued in the dividend reinvestment program	$	52		$	87
Capital improvements included in accounts payable and accrued expenses	$	2,922		$	5,521

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Gladstone Commercial Corporation

Notes to Condensed Consolidated Financial Statements (Unaudited)

1. Organization, Basis of Presentation and Significant Accounting Policies

Gladstone Commercial Corporation is a real estate investment trust, or REIT, that was incorporated under the General Corporation Laws of the State of Maryland on February 14, 2003, primarily for the purpose of investing in and owning net leased industrial, commercial and retail real property and selectively making long-term industrial and commercial mortgage loans. Subject to certain restrictions and limitations, our business is managed by Gladstone Management Corporation, a Delaware corporation, or the Adviser, and administrative services are provided by Gladstone Administration, LLC, a Delaware limited liability company, or the Administrator, each pursuant to a contractual arrangement with us. Our Adviser and Administrator collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. Gladstone Commercial Corporation conducts substantially all of its operations through a subsidiary, Gladstone Commercial Limited Partnership, a Delaware limited partnership, or the Operating Partnership.

All further references herein to “we,” “our,” “us” and the “Company” mean Gladstone Commercial Corporation and its consolidated subsidiaries, except where it is made clear that the term means only Gladstone Commercial Corporation.

Interim Financial Information

Our interim financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and pursuant to the requirements for reporting on Form 10-Q and in accordance with Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data presented herein was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of our management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair presentation of financial statements for the interim period, have been included. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the U.S. Securities and Exchange Commission on February 18, 2015. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Critical Accounting Policies

The preparation of our financial statements in accordance with Generally Accepted Accounting Principles in the U.S., or GAAP, requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and as a result, actual results could differ materially from these estimates. A summary of all of our significant accounting policies is provided in Note 1 to our condensed consolidated financial statements included in our 2014 Form 10-K. There were no material changes to our critical accounting policies during the six months ended June 30, 2015.

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Recently Issued Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, “Amendments to the Consolidation Analysis” (“ASU-2015-02”), which amends or supersedes the scope and consolidation guidance under existing GAAP. The new standard changes the way a reporting entity evaluates whether a) limited partnerships and similar entities should be consolidated, b) fees paid to decision makers or service provides are variable interests in a variable interest entity, or VIE, and c) variable interests in a VIE held by related parties require the reporting entity to consolidate the VIE. ASU 2015-02 also eliminates the VIE consolidation model based on majority exposure to variability that applied to certain investment companies and similar entities. We are currently assessing the impact of ASU 2015-02, which is effective for annual and interim reporting periods beginning after December 15, 2015. Early adoption is permitted.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU-2015-03”), which simplifies the presentation of debt issuance costs. We are currently assessing the impact of ASU 2015-03 and do not anticipate a material impact on our financial position, results of operations or cash flows from adopting this standard. ASU 2015-03 is effective for annual and interim reporting periods beginning after December 15, 2015. Early adoption is permitted.

2. Related-Party Transactions

Gladstone Management and Gladstone Administration

We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator, which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. Both our Adviser and Administrator are affiliates of ours, as their parent company is controlled by Mr. David Gladstone, our chairman and chief executive officer. We have an advisory agreement with our Adviser, and an administration agreement with our Administrator, or the Administration Agreement. The management and administrative services and fees under the advisory agreement and Administration Agreement are described below. At June 30, 2015 and December 31, 2014, $1.7 million and $0.9 million, respectively, was collectively due to our Adviser and Administrator.

Base Management Fee

On July 24, 2015, we entered into an amended and restated advisory agreement, or the Amended Advisory Agreement, with the Adviser. Our entrance into the agreement was approved unanimously by our Board, including separate and unanimous approval by the independent directors on our Board.

Prior to its amendment and restatement on July 24, 2015, our then-existing advisory agreement with the Adviser, or the Former Advisory Agreement, provided for an annual base management fee equal to 2.0% of our common stockholders’ equity, which is our total stockholders’ equity, less the recorded value of any preferred stock and adjusted to exclude the effect of any unrealized gains, losses, or other items that do not affect realized net income (including impairment charges). Under the Former Advisory Agreement, for the three and six months ended June 30, 2015, we recorded a base management fee of $0.9 million and $1.7 million, respectively, and for the three and six months ended June 30, 2014, we recorded a base management fee of $0.7 million and $1.3 million, respectively.

Pursuant to the terms of the Amended Advisory Agreement, effective July 1, 2015, the calculation of the annual base management fee shall equal 1.5% of our adjusted total stockholders’ equity, which is our total stockholders’ equity (before giving effect to the base management fee and incentive fee), adjusted to exclude the effect of any unrealized gains or losses that do not affect realized net income (including impairment charges) and adjusted for any one-time events and certain non-cash items (the later to occur for a given quarter only upon the approval of our Compensation Committee). The fee is calculated and accrued quarterly as 0.375% per quarter of such adjusted total stockholders’ equity figure.

Incentive Fee

The incentive fee under the Former Advisory Agreement rewarded the Adviser in circumstances where our quarterly FFO, before giving effect to any incentive fee, or pre-incentive fee FFO, exceeded 1.75%, or

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7.0% annualized, or the hurdle rate, of common stockholders’ equity. Funds from operations, or FFO, included any realized capital gains and capital losses, less any distributions paid on preferred stock and Senior Common Stock, but FFO did not include any unrealized capital gains or losses (including impairment charges). The Adviser received 100.0% of the amount of the pre-incentive fee FFO that exceeded the hurdle rate, but was less than 2.1875% of our common stockholders’ equity. The Adviser also received an incentive fee of 20.0% of the amount of our pre-incentive fee FFO that exceeded 2.1875% of common stockholders’ equity.

For the three and six months ended June 30, 2015, pursuant to the terms of the Former Advisory Agreement we recorded an incentive fee of $1.8 million and $3.4 million, respectively, offset by credits related to unconditional, voluntary and irrevocable waivers issued by the Adviser of $1.3 million and $2.5 million, respectively, resulting in a net incentive fee for the three and six months ended June 30, 2015, of $0.5 million and $0.9 million, respectively. For the three and six months ended June 30, 2014, we recorded an incentive fee of $1.5 million and $2.8 million, respectively, offset by credits related to unconditional, voluntary and irrevocable waivers issued by the Adviser of $1.0 million and $2.2 million, respectively, resulting in a net incentive fee for the three and six months ended June 30, 2014, of $0.5 million and $0.6 million, respectively. Our Board of Directors accepted the Adviser’s offer to waive, on a quarterly basis, a portion of the incentive fee for the three and six months ended June 30, 2015, and 2014, in order to support the current level of distributions to our stockholders. This waiver cannot be recouped by the Adviser in the future.

Under the Amended Advisory Agreement, effective July 1, 2015, the calculation of the incentive fee was revised to reward the Adviser in circumstances where our quarterly Core FFO (defined below), before giving effect to any incentive fee, or pre-incentive fee Core FFO, exceeds 2.0%, or 8.0% annualized, of adjusted total stockholders’ equity (after giving effect to the base management fee but before giving effect to the incentive fee), or the new hurdle rate. The Adviser will receive 15.0% of the amount of our pre-incentive fee Core FFO that exceeds the new hurdle rate. However, in no event shall the incentive fee for a particular quarter exceed by 15.0% (the cap) the average quarterly incentive fee paid by us for the previous four quarters (excluding quarters for which no incentive fee was paid). Core FFO is defined as GAAP net income (loss) available to common stockholders, excluding the incentive fee, depreciation and amortization, any realized and unrealized gains, losses or other non-cash items recorded in net income (loss) available to common stockholders for the period, and one-time events pursuant to changes in GAAP.

Capital Gain Fee

Under the Amended Advisory Agreement, effective July 1, 2015, we will pay to the Adviser a capital gains-based incentive fee that will be calculated and payable in arrears as of the end of each fiscal year (or upon termination of the agreement). In determining the capital gain fee, we will calculate aggregate realized capital gains and aggregate realized capital losses for the applicable time period. For this purpose, aggregate realized capital gains and losses, if any, equals the realized gain or loss calculated by the difference between the sales price of the property, less any costs to sell the property and the current gross value of the property (which is calculated as the original acquisition price plus any subsequent non-reimbursed capital improvements). At the end of the fiscal year, if this number is positive, then the capital gain fee payable for such time period shall equal 15.0% of such amount.

Termination Fee

The Amended Advisory Agreement includes a termination fee where, in the event of our termination of the agreement without cause (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to two times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24-month period prior to such termination. A termination fee is also payable if the Adviser terminates the agreement after the Company has defaulted and applicable cure periods have expired. The agreement may also be terminated for cause by us (with 30 days’ prior written notice and the vote of at least two-thirds of our independent directors), with no termination fee payable. Cause is defined in the agreement to include if the Adviser breaches any material provisions of the agreement, the bankruptcy or insolvency of the Adviser, dissolution of the Adviser and fraud or misappropriation of funds.

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Administration Agreement

Pursuant to the Administration Agreement, we pay for our allocable portion of the Administrator’s expenses in performing services to us, including, but not limited to, rent and the salaries and benefits of its personnel, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president), and their respective staffs. Prior to July 1, 2014, our allocable portion was generally derived by multiplying that portion of the Administrator’s expenses allocable to all funds managed by the Adviser by the percentage of our total assets at the beginning of each quarter in comparison to the total assets of all funds managed by the Adviser. As approved by our Board of Directors, effective July 1, 2014, our allocable portion of the Administrator’s expenses is derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under contractual agreements. For the three and six months ended June 30, 2015, we recorded an administration fee of $0.4 million and $0.7 million, respectively, and for the three and six months ended June 30, 2014, we recorded an administration fee of $0.5 million and $1.0 million, respectively.

Gladstone Securities

Gladstone Securities, LLC, or Gladstone Securities, is a privately held broker dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is controlled by Mr. David Gladstone, our chairman and chief executive officer. Mr. Gladstone also serves on the board of managers of Gladstone Securities.

Dealer Manager Agreement

In connection with the offering of our Senior Common Stock (see Note 10, “Stockholders’ Equity,” for further details) we entered into a Dealer Manager Agreement, dated March 25, 2011, or the Dealer Manager Agreement, with Gladstone Securities pursuant to which Gladstone Securities agreed to act as our exclusive dealer manager in connection with the offering. The Dealer Manager Agreement terminated according to its terms on March 28, 2015, requiring us to write-off $0.1 million of deferred offering costs to general and administrative expense. Pursuant to the terms of the Dealer Manager Agreement, Gladstone Securities was entitled to receive a sales commission in the amount of 7.0% of the gross proceeds of the shares of Senior Common Stock sold, plus a dealer manager fee in the amount of 3.0% of the gross proceeds of the shares of Senior Common Stock sold. Gladstone Securities, in its sole and absolute discretion, was permitted to re-allocate all of its selling commissions attributable to a participating broker-dealer and also re-allocate a portion of its dealer manager fee earned in respect of the proceeds generated by the participating broker-dealer to any participating broker-dealer as a non-accountable marketing allowance. In addition, we agreed to indemnify Gladstone Securities against various liabilities, including certain liabilities arising under the federal securities laws. We made approximately $0.3 million of payments during the three months ended March 31, 2015 and we made approximately $0.1 million of payments during both the three and six months ended June 30, 2014, respectively, to Gladstone Securities pursuant to this agreement. All such payments are reflected as a component of Senior Common Stock costs as reflected in footnote 10.

Mortgage Financing Arrangement Agreement

We also entered into an agreement with Gladstone Securities, effective June 18, 2013, for it to act as our non-exclusive agent to assist us with arranging mortgage financing for properties we own. In connection with this engagement, Gladstone Securities may from time to time solicit the interest of various commercial real estate lenders or recommend to us third party lenders offering credit products or packages that are responsive to our needs. We pay Gladstone Securities a financing fee in connection with the services it

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provides to us for securing mortgage financing on any of our properties. The amount of these financing fees, which are payable upon closing of the financing, are based on a percentage of the amount of the mortgage, generally ranging from 0.15% to a maximum of 1.0% of the mortgage obtained. The amount of the financing fees may be reduced or eliminated, as determined by us and Gladstone Securities, after taking into consideration various factors, including, but not limited to, the involvement of any third party brokers and market conditions. We paid financing fees to Gladstone Securities of $0.1 million and $0.2 million during the three and six months ended June 30, 2015, which are reflected as deferred financing costs in the condensed consolidated balance sheets, on total mortgages secured of $40.5 million and $55.1 million, or 0.3%. We paid financing fees of $0.1 million during the three and six months ended June 30, 2014, on total mortgages secured of $27.5 million, or 0.3%. The agreement is scheduled to terminate on August 31, 2016, unless renewed or earlier terminated pursuant to the provisions contained therein.

3. (Loss) Earnings per Share of Common Stock

The following tables set forth the computation of basic and diluted (loss) earnings per share of common stock for each of the three and six months ended June 30, 2015 and 2014, respectively. We computed basic (loss) earnings per share for the three and six months ended June 30, 2015 and 2014, respectively, using the weighted average number of shares outstanding during the periods. Diluted (loss) earnings per share for the three and six months ended June 30, 2015 and 2014, reflects additional shares of common stock related to our convertible Senior Common Stock (if the effect would be dilutive), that would have been outstanding if dilutive potential shares of common stock had been issued, as well as an adjustment to net income available to common stockholders as applicable to common stockholders that would result from their assumed issuance (dollars in thousands, except per share amounts).

	For the three months ended June 30,					For the six months ended June 30,
	2015			2014		2015			2014
Calculation of basic (loss) earnings per share of common stock:
Net (loss) earnings (attributable) available to common stockholders	$	(853	)	$	86	$	(1,407	)	$	(14,554	)
Denominator for basic weighted average shares of common stock		20,833,787			16,547,793		20,524,101			16,149,467
Basic (loss) earnings per share of common stock	$	(0.04	)	$	0.01	$	(0.07	)	$	(0.90	)
Calculation of diluted (loss) earnings per share of common stock:
Net (loss) earnings (attributable) available to common stockholders	$	(853	)	$	86	$	(1,407	)	$	(14,554	)
Add: Income impact of assumed conversion of senior common stock (1)		—			110		—			—
Net (loss) earnings (attributable) available to common stockholders plus assumed conversions	$	(853	)	$	196	$	(1,407	)	$	(14,554	)
Denominator for basic weighted average shares of common stock		20,833,787			16,547,793		20,524,101			16,149,467
Effect of convertible senior common stock (1)		—			347,180		—			—
Denominator for diluted weighted average shares of common stock		20,833,787			16,894,973		20,524,101			16,149,467
Diluted (loss) earnings per share of common stock	$	(0.04	)	$	0.01	$	(0.07	)	$	(0.90	)

(1) We excluded convertible senior common shares of 830,600 and 775,002 from the calculation of diluted earnings per share for the three and six months ended June 30, 2015, respectively, because it was anti-dilutive. We also excluded 332,608 convertible senior common shares from the calculation of diluted earnings per share for the six months ended June 30, 2014, because it was anti-dilutive.

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4. Real Estate and Intangible Assets

Real Estate

The following table sets forth the components of our investments in real estate as of June 30, 2015 and December 31, 2014 (dollars in thousands):

	June 30, 2015 (1)			December 31, 2014
Real estate:
Land	$	95,948		$	88,394
Building and improvements		620,924			593,155
Tenant improvements		46,959			41,016
Accumulated depreciation		(102,243	)		(92,133	)
Real estate, net	$	661,588		$	630,432

⁽¹⁾ Does not include real estate held for sale as of June 30, 2015.

Real estate depreciation expense on the building and tenant improvement assets was $5.5 million and $10.7 million for the three and six months ended June 30, 2015, respectively, and $4.6 million and $9.0 million for the three and six months ended June 30, 2014, respectively.

2015 Real Estate Activity

During the six months ended June 30, 2015, we acquired four properties, which are summarized below (dollars in thousands):

Location	Acquisition Date		Square Footage (unaudited)		Lease Term		Renewal Options		Total Purchase Price		Acquisition Expenses		Annualized GAAP Rent		Debt Issued
Richardson, TX (1)		3/6/2015		155,984		9.5 Years		2 (5 years each)	$	24,700	$	104	$	2,708	$	14,573
Birmingham, AL		3/20/2015		30,850		8.5 Years		1 (5 years)		3,648		71		333		N/A
Columbus, OH		5/28/2015		78,033		15.0 Years		2 (5 years each)		7,700		72		637		4,466
Salt Lake City, UT (1)		5/29/2015		86,409		6.5 Years		1 (5 years)		22,200		144		2,411		13,000
Total				351,276					$	58,248	$	391	$	6,089	$	32,039

⁽¹⁾ The tenant occupying this property is subject to a gross lease.

In accordance with Accounting Standards Codification, or ASC, 805, “Business Combinations,” we determined the fair value of the acquired assets related to the four properties acquired during the six months ended June 30, 2015, as follows (dollars in thousands):

	Land		Building		Tenant Improvements		In-place Leases		Leasing Costs		Customer Relationships		Above Market Leases		Below Market Leases			Total Purchase Price
Richardson, TX	$	2,709	$	12,503	$	2,761	$	2,046	$	1,791	$	1,915	$	975	$	—		$	24,700
Birmingham, AL		650		1,683		351		458		146		360		—		—			3,648
Columbus, OH		1,338		3,511		1,547		1,144		672		567		—		(1,079	)		7,700
Salt Lake City, UT		3,248		11,861		1,268		2,396		981		1,678		821		(53	)		22,200
	$	7,945	$	29,558	$	5,927	$	6,044	$	3,590	$	4,520	$	1,796	$	(1,132	)	$	58,248

Below is a summary of the total revenue and earnings recognized on the four properties acquired during the six months ended June 30, 2015 (dollars in thousands):

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			For the three months ended June 30,					For the six months ended June 30,
			2015					2015
Location	Acquisition Date		Rental Revenue		Earnings (1)			Rental Revenue		Earnings (1)
Richardson, TX		3/6/2015	$	657	$	90		$	839	$	328
Birmingham, AL		3/20/2015		83		(22	)		94		106
Columbus, OH		5/28/2015		67		149			67		149
Salt Lake City, UT		5/29/2015		207		278			207		278
			$	1,014	$	495		$	1,207	$	861

⁽¹⁾ Earnings is calculated as net income exclusive of both interest expense and acquisition related costs that are required to be expensed under ASC 805.

Pro Forma

The following table reflects pro-forma consolidated statements of operations as if the properties acquired during the three and six months ended June 30, 2015 and the twelve months ended December 31, 2014, respectively were acquired as of January 1, 2014. The pro-forma earnings for the three and six months ended June 30, 2015 and 2014 were adjusted to assume that acquisition-related costs were incurred as of the previous period (dollars in thousands, except per share amounts):

	For the three months ended June 30, (unaudited)						For the six months ended June 30, (unaudited)
	2015			2014			2015			2014
Operating Data:
Total operating revenue	$	21,122		$	21,938		$	42,114		$	43,395
Total operating expenses		(12,697	)		(13,033	)		(25,113	)		(25,851	)
Other expenses		(7,775	)		(6,860	)		(15,495	)		(28,907	) (1)
Net income (loss)		650			2,045			1,506			(11,363	)
Dividends attributable to preferred and senior common stock		(1,284	)		(1,133	)		(2,532	)		(2,257	)
Net loss attributable to common stockholders	$	(634	)	$	912		$	(1,026	)	$	(13,620	)
Share and Per Share Data:
Basic (loss) earnings per share of common stock - pro forma	$	(0.03	)	$	0.06		$	(0.05	)	$	(0.84	)
Diluted (loss) earnings per share of common stock - pro forma	$	(0.03	)	$	0.05		$	(0.05	)	$	(0.84	)
Basic (loss) earnings per share of common stock - actual	$	(0.04	)	$	0.01		$	(0.07	)	$	(0.90	)
Diluted (loss) earnings per share of common stock - actual	$	(0.04	)	$	0.01		$	(0.07	)	$	(0.90	)
Weighted average shares outstanding-basic		20,833,787			16,547,793			20,524,101			16,149,467
Weighted average shares outstanding-diluted		20,833,787			16,894,973			20,524,101			16,149,467

(1) $14.0 million of other expenses relates to the impairment charge recorded in operating expenses during the six months ended June 30, 2014.

Significant Real Estate Activity on Existing Assets

On April 28, 2015, we modified the lease with the tenant occupying one of our properties located in Austin, Texas. The modification provided the tenant a termination option, which allows the tenant to terminate its lease effective December 31, 2017, upon paying a termination penalty of approximately $1.1 million on or before March 31, 2017. The lease is scheduled to otherwise terminate in June 2022. As a result of the modification, the tenant forfeited its right to $0.5 million in tenant improvement allowance, provided in an earlier amendment. All other terms and conditions of the lease remain in full force and effect.

On April 29, 2015, we modified the lease with the anchor tenant occupying one of our properties located in Columbus, Ohio. The anchor tenant is currently occupying 92.0% of the property and the modification allows the anchor tenant to expand into the remaining space, currently occupied by another tenant through November 30, 2016. The lease term for the expansion space is coterminous with their current lease, and both leases expire on December 2023. In connection with the expansion of the lease and modification of certain terms of the lease, we provided approximately $0.1 million in tenant improvements.

2014 Real Estate Activity

During the six months ended June 30, 2014, we acquired six properties, which are summarized in the table below (dollars in thousands):

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Location	Acquisition Date		Square Footage		Lease Term		Renewal Options		Total Purchase Price		Acquisition Expenses		Annualized GAAP Rent		Debt Issued & Assumed
Allen, TX		3/27/2014		21,154		12 Years		4 (5 years each)	$	5,525	$	29	$	570	$	3,481
Colleyville, TX		3/27/2014		20,355		12 Years		4 (5 years each)		4,523		29		467		2,849
Rancho Cordova, CA		4/22/2014		61,358		10 Years		1 (5 year)		8,225		65		902		4,935
Coppell, TX		5/8/2014		21,171		12 Years		4 (5 years each)		5,838		22		601		3,816
Columbus, OH		5/13/2014		114,786		9.5 Years		N/A		11,800		65		1,278		N/A
Taylor, PA		6/9/2014		955,935		10 Years		4 (5 years each)		39,000		714		3,400		22,600
Total				1,194,759					$	74,911	$	924	$	7,218	$	37,681

In accordance with ASC 805, we determined the fair value of the acquired assets related to the six properties acquired during the six months ended June 30, 2014 as follows (in thousands):

	Land		Building		Tenant Improvements		In-place Leases		Leasing Costs		Customer Relationships		Above Market Leases		Below Market Leases			Premium on Assumed Debt			Total Purchase Price
Allen, TX	$	874	$	3,509	$	125	$	598	$	273	$	218	$	—	$	—		$	(72	)	$	5,525
Colleyville, TX		1,277		2,307		117		486		220		181		—		(6	)		(59	)		4,523
Rancho Cordova, CA		752		5,898		278		473		546		278		—		—			—			8,225
Coppell, TX		1,448		3,221		128		636		293		230		—		—			(118	)		5,838
Columbus, OH		990		6,080		1,937		823		719		990		261		—			—			11,800
Taylor, PA		3,102		24,449		956		6,171		1,452		2,870		—		—			—			39,000
	$	8,443	$	45,464	$	3,541	$	9,187	$	3,503	$	4,767	$	261	$	(6	)	$	(249	)	$	74,911

Below is a summary of the total revenue and earnings recognized on the six properties acquired during the three and six months ended June 30, 2014 (dollars in thousands):

			For the three months ended June 30,				For the six months ended June 30,
	Acquisition Date		2014				2014
Location			Rental Revenue		Earnings (1)		Rental Revenue		Earnings (1)
Allen, TX		3/27/2014	$	142	$	81	$	150	$	86
Colleyville, TX		3/27/2014		117		67		123		71
Rancho Cordova, CA		4/22/2014		173		65		173		65
Coppell, TX		5/8/2014		89		52		89		52
Columbus, OH		5/13/2014		167		68		167		68
Taylor, PA		6/9/2014		208		98		208		98
			$	896	$	431	$	910	$	440

(1) Earnings is calculated as net income exclusive of both interest expense and acquisition related costs that are required to be expensed under ASC 805.

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Intangible Assets

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of June 30, 2015 and December 31, 2014 respectively (in thousands):

	June 30, 2015 (1)					December 31, 2014
	Lease Intangibles		Accumulated Amortization			Lease Intangibles		Accumulated Amortization
In-place leases	$	65,177	$	(19,997	)	$	59,233	$	(17,379	)
Leasing costs		42,083		(13,038	)		38,305		(11,411	)
Customer relationships		45,777		(13,109	)		41,243		(11,177	)
	$	153,037	$	(46,144	)	$	138,781	$	(39,967	)
	Deferred Rent Receivable/(Liability)		Accumulated Amortization			Deferred Rent Receivable/(Liability)		Accumulated Amortization
Above market leases	$	9,548	$	(6,194	)	$	8,314	$	(6,384	)
Below market leases		17,071		(7,793	)		15,939		(7,345	)
	$	26,619	$	(13,987	)	$	24,253	$	(13,729	)
Total	$	179,656	$	(60,131	)	$	163,034	$	(53,696	)

⁽¹⁾ Does not include real estate held for sale as of June 30, 2015.

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $3.4 million and $6.4 million for the three and six months ended June 30, 2015, respectively, and $2.3 million and $4.7 million for the three and six months ended June 30, 2014, respectively, and is included in depreciation and amortization expense in the condensed consolidated statement of operations.

Total amortization related to above-market lease values was $0.1 million and $0.2 million, for the three and six months ended June 30, 2015, respectively, and $0.1 million, for both the three and six months ended June 30, 2014. Total amortization related to below-market lease values was $0.2 million and $0.4 million for the three and six months ended June 30, 2015, respectively, and $0.2 million and $0.3 million for the three and six months ended June 30, 2014, respectively.

The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the six months ended June 30, 2015 and 2014, respectively, were as follows:

Intangible Assets & Liabilities	2015		2014
In-place leases		10.9		10.7
Leasing costs		10.9		10.7
Customer relationships		15.6		15.6
Above market leases		18.9		8.2
Below market leases		12.4		11.9
All intangible assets & liabilities		12.5		12.2

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5. Real Estate Held for Sale

Real Estate Held for Sale

As of June 30, 2015, we classified one of our properties located in Columbus, Ohio as held for sale under the provisions of ASC 360-10, “Property, Plant, and Equipment,” which requires that the assets and liabilities of any such properties, be presented separately in our condensed consolidated balance sheet in the current period presented. We executed a purchase and sale agreement with the third party purchaser, and we anticipate the sale to close during the fourth quarter of 2015. The agreed upon purchase price, net of expected costs to sell, is in excess of the carrying value of the property as of June 30, 2015, and thus the property was measured at its carrying value in our condensed consolidated balance sheet as of June 30, 2015 in accordance with ASC 360-10.

The table below summarizes the components of income from real estate and related assets held for sale (dollars in thousands):

	For the three months ended June 30,				For the six months ended June 30,
	2015		2014		2015		2014
Operating revenue	$	86	$	77	$	169	$	154
Operating expense		9		20		23		43
Other expense		39		40		79		80
Income from real estate and related assets held for sale	$	38	$	17	$	67	$	31

The table below summarizes the components of the assets and liabilities held for sale reflected on the accompanying condensed consolidated balance sheet (dollars in thousands):

	June 30, 2015
ASSETS HELD FOR SALE
Real estate, at cost	$	2,795
Less: accumulated depreciation		(615	)
Total real estate held for sale, net		2,180
Lease intangibles, net		17
Deferred rent receivable, net		30
Deferred financing costs, net		5
Other assets		3
TOTAL ASSETS HELD FOR SALE	$	2,235
LIABILITIES HELD FOR SALE
Other liabilities		93
TOTAL LIABILITIES HELD FOR SALE	$	93

6. Mortgage Note Receivable

On April 14, 2015, we closed a $0.3 million interim financing loan for the acquisition of land to be used for continuing development of a medical center campus in Phoenix, Arizona. This loan is collateralized by proceeds from the future sale of the transitional care facility for which we provided a mortgage development loan on July 25, 2014. We will earn interest of 22.0% per annum through the maturity date, with all accrued interest and principal payable upon maturity. This loan matures upon the earlier of April 2016 or the sale of the transitional care facility, which is anticipated to occur in October 2015. We have recognized approximately $0.01 million in interest revenue during the three months ended June 30, 2015.

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7. Mortgage Notes Payable and Line of Credit

Our mortgage notes payable and line of credit as of June 30, 2015 and December 31, 2014 are summarized below (dollars in thousands):

			Carrying Value at
	Encumbered properties at June 30, 2015		June 30, 2015		December 31, 2014		Stated Interest Rates at June 30, 2015 (4)			Scheduled Maturity Dates at June 30, 2015
Mortgage and Other Secured Loans:
Fixed rate mortgage loans		73	$	458,806	$	450,392		(1	)		(2	)
Variable rate mortgage loans		7		27,980		8,200		(3	)		(2	)
Premiums and discounts (net)		N/A		553		707		N/A			N/A
Total Mortgage Notes Payable		80	$	487,339	$	459,299
Variable rate Line of Credit		19		45,200		43,300		LIBOR + 2.75	% (3)		8/1/2017
Total Mortgage Notes Payable and Line of Credit		99	$	532,539	$	502,599

⁽¹⁾ Interest rates on our fixed rate mortgage notes payable vary from 3.75% to 6.80%.

⁽²⁾ We have 44 mortgage notes payable with maturity dates ranging from 9/1/2015 through 1/6/2039.

⁽³⁾ Interest rates on our variable rate mortgage notes payable vary from one month LIBOR + 2.15% to one month LIBOR + 2.25%. At June 30, 2015, one month LIBOR was approximately 0.19%.

⁽⁴⁾ The weighted average interest rate on all debt outstanding at June 30, 2015, was approximately 4.93%.

N/A - Not Applicable

Mortgage Notes Payable

As of June 30, 2015, we had 44 mortgage notes payable, collateralized by a total of 80 properties with a net book value of $692.0 million. Gladstone Commercial Corporation has limited recourse liabilities that could result from any one or more of the following circumstances: a borrower voluntarily filing for bankruptcy, improper conveyance of a property, fraud or material misrepresentation, misapplication or misappropriation of rents, security deposits, insurance proceeds or condemnation proceeds, or physical waste or damage to the property resulting from a borrower’s gross negligence or willful misconduct. We will also indemnify lenders against claims resulting from the presence of hazardous substances or activity involving hazardous substances in violation of environmental laws on a property. The weighted-average interest rate on the mortgage notes payable as of June 30, 2015 was 5.11%.

During the six months ended June 30, 2015, we issued four long-term mortgages, collateralized by five properties, which are summarized below (dollars in thousands):

Date of Issuance	Issuing Bank	Debt Issued		Interest Rate			Maturity Date			Amortization Period (months)
3/6/2015	PNC Bank, NA	$	14,573		3.86	%		4/1/2025			300
5/28/2015	FC Bank		4,466		3.75	%		6/1/2022			85
6/16/2015	Guggenheim Partners		13,000		3.99	%		7/1/2045
6/29/2015	Synovus Bank		19,780		LIBOR + 2.25	%		7/1/2018	(1)
		$	51,819

⁽¹⁾ We refinanced maturing debt on our Duncan, South Carolina and Charlotte, North Carolina properties which had aggregate balloon principal payments of $19.1 million. We completed this refinance on June 29, 2015.

We made payments of $0.4 million and $0.9 million for deferred financing costs during the three and six months ended June 30, 2015, respectively, and payments of $0.4 million and $0.8 million during the three and six months ended June 30, 2014, respectively.

Scheduled principal payments of mortgage notes payable for the remainder of 2015, and each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands):

16

Year	Scheduled Principal Payments
Six Months ending December 31, 2015	$	19,282	(1)
2016		100,110
2017		68,873
2018		39,205
2019		35,603
2020		7,688
Thereafter		216,025
	$	486,786	(2)

⁽¹⁾ This figure includes two balloon principal payments that mature in the second half of 2015. We refinanced one of these mortgages subsequent to June 30, 2015, using a combination of new mortgage debt and equity, repaying $11.3 million of principal.

⁽²⁾  This figure is exclusive of premiums and discounts (net) on assumed debt, which were $553,000 as of June 30, 2015.

Refinancing

On June 29, 2015, through a wholly-owned subsidiary, we refinanced our $19.1 million mortgage loan, originally set to mature on September 1, 2015. This note had an original interest rate of 5.3% and was collateralized by security interests in our Charlotte, North Carolina and Duncan, South Carolina properties. We borrowed $19.8 million in the refinancing pursuant to a long-term note payable from Synovus Bank. The new loan is variable rate, in which the interest rate resets monthly and is calculated as the one month London Interbank Offered Rate, or LIBOR, plus a margin of 2.25%. Subsequent to the end of the quarter, we entered into an interest rate cap agreement with Synovus Bank, which caps LIBOR at 3.0%. As of June 30, 2015, one month LIBOR was 0.19%. The new note has a maturity date of July 1, 2018, with one, two-year extension option.

Interest Rate Cap

We have entered into an interest rate cap agreement with Wells Fargo that caps the interest rate on the note payable for our Champaign, Illinois property at a certain interest rate when one-month LIBOR is in excess of 3.0%. The fair value of the interest rate cap agreement is recorded in Other assets on our accompanying condensed consolidated balance sheets. We record changes in the fair value of the interest rate cap agreement quarterly based on the current market valuations at quarter end as Other income (loss) on our accompanying condensed consolidated statements of operations. Generally, we will estimate the fair value of our interest rate cap using estimates of value provided by the counterparty and our own assumptions in the absence of observable market data, including estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar securities as of the measurement date. At June 30, 2015 and December 31, 2014, our interest rate cap agreement was valued using Level 3 inputs. The following table summarizes the key terms of each interest rate cap agreement (dollars in thousands):

								As of June 30, 2015				As of December 31, 2014
Interest Rate Cap	Notional Amount		LIBOR Cap			Maturity Date		Cost		Fair Value		Cost		Fair Value
November 26, 2013	$	8,200		3.00	%		Dec-16	$	31	$	—	$	31	$	4

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Fair Value

The fair value of all mortgage notes payable outstanding as of June 30, 2015 was $498.6 million, as compared to the carrying value stated above of $486.8 million. The fair value is calculated based on a discounted cash flow analysis, using interest rates based on management’s estimate of market interest rates on long-term debt with comparable terms and loan to value ratios. The fair value was calculated using Level 3 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.”

Line of Credit

In August 2013, we procured a $60.0 million senior unsecured revolving credit facility, or the Line of Credit, which was expanded to $75.0 million in November 2014, with KeyBank National Association (serving as a revolving lender, a letter of credit issuer and an administrative agent) and added Citizens Bank of Pennsylvania and Comerica Banks as additional lenders.

The Line of Credit initially matures in August 2017; however, we have a one-year extension option subject to the payment of an extension fee equal to 25 basis points on the initial maturity date and certain other customary conditions.

As of June 30, 2015, there was $45.2 million outstanding under our Line of Credit at an interest rate of approximately 2.94% and $3.9 million outstanding under letters of credit at a weighted average interest rate of 2.75%. As of August 3, 2015, the maximum additional amount we could draw was $9.2 million. We were in compliance with all covenants under the Line of Credit as of June 30, 2015.

8. Mandatorily Redeemable Preferred Stock

In February 2012, we completed a public offering of 1,540,000 shares of 7.125% Series C Cumulative Term Preferred Stock, par value $0.001 per share, or the Term Preferred Stock, at a public offering price of $25.00 per share. Gross proceeds of the offering totaled $38.5 million and net proceeds, after deducting offering expenses borne by us, were $36.7 million. On or after January 31, 2016, we may redeem the shares at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends to and including the date of redemption. The shares of the Term Preferred Stock have a mandatory redemption date of January 31, 2017.

The fair value of our Term Preferred Stock as of June 30, 2015, was $39.3 million, as compared to the carrying value stated above of $38.5 million. The fair value is calculated based on the closing share price as of June 30, 2015 of $25.52. The fair value was calculated using Level 1 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.”

9. Commitments and Contingencies

Ground Leases

We are obligated as lessee under four ground leases. Future minimum rental payments due under the terms of these leases for the remainder of 2015 and each of the five succeeding years and thereafter, are as follows (dollars in thousands):

			For the year ended December 31,
Location	Lease End Date		2015		2016		2017		2018		2019		2020		Thereafter
Tulsa, OK		Apr-21	$	85	$	169	$	169	$	169	$	169	$	169	$	85
Dartmouth, MA		May-36		87		174		174		174		174		174		3,126
Springfield, MA		Feb-30		43		86		89		90		90		90		884
Salt Lake City, UT		Nov-40		14		30		30		31		32		33		853
			$	229	$	459	$	462	$	464	$	465	$	466	$	4,948

Expenses recorded in connection to rental expense incurred for the properties listed above during both the three months ended June 30, 2015 and 2014 and the six months ended June 30, 2015 and 2014 were $0.1 million, and $0.2 million, respectively. Rental expenses are reflected in property operating expenses on the condensed consolidated statements of operations.

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10. Stockholders’ Equity

The following table summarizes the changes in our stockholders’ equity for the six months ended June 30, 2015 (dollars in thousands):

																		Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity
	Shares Issued												Additional Paid in Capital		Notes Receivable from Employees
	Preferred Stock		Senior Common Stock		Common Stock		Preferred Stock		Senior Common Stock		Common Stock
Balance at December 31, 2014		2,150,000		809,411		19,589,606	$	2	$	1	$	20	$	369,748	$	(375	)	$	(151,724	)	$	217,672
Issuance of senior common stock and common stock, net		—		186,441		1,554,380		—		—		1		29,672		—			—			29,673
Distributions declared to common, senior common and preferred stockholders		—		—		—		—		—		—		—		—			(17,971	)		(17,971	)
Principal repayments of employee notes receivable		—		—		—		—		—		—		—		375			—			375
Net income		—		—		—		—		—		—		—		—			1,125			1,125
Balance at June 30, 2015		2,150,000		995,852		21,143,986	$	2	$	1	$	21	$	399,420	$	—		$	(168,570	)	$	230,874

Distributions

Our Board of Directors declared the following distributions per share for the three and six months ended June 30, 2015 and 2014:

	For the three months ended June 30,				For the six months ended June 30,
	2015		2014		2015		2014
Common Stock	$	0.375	$	0.375	$	0.75	$	0.75
Senior Common Stock		0.2625		0.2625		0.525		0.525
Series A Preferred Stock		0.4843749		0.4843749		0.9687498		0.9687498
Series B Preferred Stock		0.4688		0.4688		0.9375		0.9375
Series C Preferred Stock		0.4453		0.4453		0.8906		0.8906

ATM Program

On September 2, 2014 we entered into an open market sale agreement, or the ATM Program, with Cantor Fitzgerald & Co., or Cantor Fitzgerald, pursuant to which we may, from time to time, offer to sell shares of our common stock with an aggregate sales price of up to $100.0 million on the open market through Cantor Fitzgerald, acting as sales agent and/or principal. During the six months ended June 30, 2015, we raised approximately $27.2 million in net proceeds under the ATM Program. As of June 30, 2015, under the existing program, we have sold a total of 3.4 million shares with aggregate gross proceeds of $60.1 million, and have a remaining capacity to sell up to $39.9 million of common stock under the ATM Program with Cantor Fitzgerald.

Senior Common Program

In March 2011, we commenced an offering of an aggregate of 3,500,000 shares of our Senior Common Stock, par value $0.001 per share, at a price to the public of $15.00 per share, of which 3,000,000 shares were intended to be offered pursuant to the primary offering and 500,000 shares were intended to be offered pursuant to our senior common distribution reinvestment plan, or the DRIP. We elected not to extend this offering, which terminated according to its terms on March 28, 2015. During the three months ended March 31, 2015, we sold 189,052 shares of our Senior Common Stock at $15.00 per share and issued 5,134 shares of our Senior Common Stock under the Dividend Reinvestment Plan, or DRIP, program. The

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net proceeds, after deducting the underwriting discount and commission, were $2.6 million. At the conclusion of the offering on March 28, 2015, we had sold 927,994 shares of Senior Common Stock, for gross proceeds of $13.9 million, and issued an additional 27,038 shares of Senior Common Stock under the DRIP program.

Note to Employee

The following table is a summary of the note issued to an employee of the Adviser for the exercise of stock options (dollars in thousands). The note, and all corresponding interest, was repaid in full on May 7, 2015:

Date Issued	Outstanding Balance of Employee Loan at June 30, 2015		Outstanding Balance of Employee Loan at December 31, 2014		Maturity Date of Note		Interest Rate on Note
Nov 2006	$	—	$	375		Nov 2015		8.15	%

The employee stock option program terminated in 2006. In accordance with ASC 505-10-45-2, “Equity,” receivables from employees for the issuance of capital stock to employees prior to the receipt of cash payment should be reflected in the balance sheet as a reduction to stockholders’ equity. Therefore, this note was recorded as a full recourse loan to the employee and is included in the equity section of the accompanying condensed consolidated balance sheets.

11. Subsequent Events

On July 1, 2015, through a wholly-owned subsidiary, we repaid our $11.3 million mortgage on our Canton, Dayton, and Akron, Ohio properties. The mortgage was originally set to mature on September 1, 2015. We borrowed $1.7 million pursuant to a long-term note payable from Synovus bank to refinance a portion of this debt. The new loan is variable rate and we entered into an interest rate cap with Synovus Bank to hedge against the variability of the LIBOR rate, at a cost of approximately $0.07 million through July 1, 2018. We will receive payments from Synovus Bank if the one month LIBOR rate increases above 3.0%.

On July 13, 2015 we executed a lease with a new tenant in our Raleigh, North Carolina property to occupy 86,886 square feet, 75.0% of the total square footage. The current tenant will retain 18.0% of the space and the building will be approximately 93.0% occupied. The lease will commence on August 1, 2015 and will expire on December 31, 2027. The new lease provides for prescribed rent escalations over its life, with annualized straight line rents of approximately $0.5 million. The lease grants the tenant two extension options for an additional five years each. In connection with the execution of the lease, we will pay $0.8 million in tenant improvements, and anticipate paying $0.4 million in leasing commissions.

On July 14, 2015, our Board of Directors declared the following monthly distributions:

Record Date	Payment Date	Common Stock Distributions per Share		Series A Preferred Distributions per Share		Series B Preferred Distributions per Share		Series C Preferred Distributions per Share
July 24, 2015	August 4, 2015	$	0.125	$	0.1614583	$	0.15625	$	0.1484375
August 20, 2015	August 31, 2015		0.125		0.1614583		0.15625		0.1484375
September 21, 2015	September 30, 2015		0.125		0.1614583		0.15625		0.1484375
Total		$	0.375	$	0.4843749	$	0.46875	$	0.4453125

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Senior Common Stock Distributions
Payable to the Holders of Record During the Month of:	Payment Date	Distribution per Share
July	August 7, 2015	$	0.0875
August	September 8, 2015		0.0875
September	October 7, 2015		0.0875
Total		$	0.2625

On July 15, 2015 we acquired a 78,151 square foot single-tenant, office building located in Atlanta, Georgia for $13.0 million, excluding related acquisition expenses of $0.1 million. We funded this acquisition with existing cash on hand and the issuance of $7.5 million of mortgage debt on the property. The tenant leased 54,836 square feet of the property for 7 years, and the remaining 23,315 square feet for 15 years. The tenant has 2 options to renew both leases for an additional 5 years each. The lease provides for prescribed rent escalations over its life with annualized straight line rents of $1.3 million. The average cap rate on this acquisition is 9.9%.

On July 24, 2015, we entered into the Amended Advisory Agreement, which revised the calculation of the annual base management and annual incentive fee and also added a capital gains fee and a termination fee, effective July 1, 2015. Please refer to footnote 2 for a detailed explanation of these changes.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

All statements contained herein, other than historical facts, may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements may relate to, among other things, future events or our future performance or financial condition. In some cases, you can identify forward-looking statements by terminology such as “may,” “might,” “believe,” “will,” “provided,” “anticipate,” “future,” “could,” “growth,” “plan,” “intend,” “expect,” “should,” “would,” “if,” “seek,” “possible,” “potential,” “likely” or the negative of such terms or comparable terminology. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our business, financial condition, liquidity, results of operations, funds from operations or prospects to be materially different from any future business, financial condition, liquidity, results of operations, funds from operations or prospects expressed or implied by such forward-looking statements. For further information about these and other factors that could affect our future results, please see the captions titled “Forward-Looking Statements” and “Risk Factors” in this report and in our Annual Report on Form 10-K for the year ended December 31, 2014. We caution readers not to place undue reliance on any such forward-looking statements, which are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, after the date of this Quarterly Report on Form 10-Q.

All references to “we,” “our,” “us” and the “Company” in this Report mean Gladstone Commercial Corporation and its consolidated subsidiaries, except where the context indicates that the term means only Gladstone Commercial Corporation.

General

We are an externally-advised real estate investment trust, or REIT, that was incorporated under the General Corporation Law of the State of Maryland on February 14, 2003, primarily for the purpose of investing in and owning net leased industrial, commercial and retail real property and selectively making long-term industrial and commercial mortgage loans. Our portfolio of real estate is leased to a wide cross section of tenants ranging from small businesses to large public companies, many of which are corporations that do not have publicly-rated debt. We have historically entered into, and intend in the future to enter into, purchase agreements for real estate having triple net leases with terms of approximately 10 to 15 years and built in rental rate increases. Under a triple net lease, the tenant is required to pay all operating, maintenance and insurance costs and real estate taxes with respect to the leased property. We actively communicate with buyout funds, real estate brokers and other third parties to locate properties for potential acquisition or to provide mortgage financing in an effort to build our portfolio. We currently own 101 properties totaling 11.1 million square feet, which have a total gross and net carrying value, including intangible assets and properties held for sale, of $945.9 million and $796.7 million, respectively. We also currently have two mortgage loan receivables outstanding for an aggregate of $5.9 million.

Business Environment

The strength of the global economy and the U.S. economy in particular, continues to be uncertain and volatile, and we remain cautious about a sustained long-term economic recovery. Vacancy rates have decreased for both office and industrial properties in most markets as increased user demand with restrained new construction activity has led to improved conditions. In fact, vacancy rates in many markets have been reduced to levels seen at the latest peak before the recession and rental rates have increased in many primary and secondary markets. Construction activity, particularly for industrial properties, is on the rise as a result of increased demand for facilities to satisfy the increased demand in the e-commerce sector. However, vacancy rates in certain secondary markets are still higher than pre-recession levels, as job growth has yet to return to all areas of the country even though the national unemployment rate has dropped over the past 12 months. Interest rates have increased since the beginning of the year, but still remain at historic lows. This continued low interest rate environment is leading to increasing competition

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for new acquisitions. In addition, the uncertainty surrounding the ability of the federal government to address its fiscal condition in both the near and long term as well as international geo-political issues has increased domestic and global economic instability. These developments and our government’s credit concerns in general, could cause interest rates and borrowing costs to rise, which may negatively impact our ability to access both the debt and equity markets on favorable terms. In addition, a further decrease to the U.S. credit rating could create broader financial turmoil and uncertainty, which may weigh heavily on our stock price. Continued adverse economic conditions could have a material adverse effect on one or more of our tenants, or our business, financial condition and results of operations.

We continue to focus on re-leasing vacant space, renewing upcoming lease maturities and acquiring additional properties. Currently, we have three fully vacant buildings located in Baytown, Texas, Newburyport, Massachusetts, and Dayton, Ohio and two partially vacant buildings located in Bolingbrook, Illinois and Burnsville, Minnesota. Our Baytown, Texas tenant vacated upon its lease termination in April 2013, our Newburyport, Massachusetts tenant vacated upon its lease termination in April 2015, and our Dayton, Ohio tenant vacated upon its lease termination in June 2015. Our Bolingbrook, Illinois tenant vacated upon their lease termination in December 2014 and we have a partial space tenant for this property, which took occupancy in December 2014. We originally had 12 leases expiring in 2015, and we have successfully extended the leases for 7 of these tenants, 1 is in negotiation with the current tenant, and 1 in which we agreed to sell the property to a third party. The Newburyport, Massachusetts, and Dayton, Ohio tenants have vacated, per the discussion above, and we have been notified that the remaining tenant in our Maple Heights, Ohio property will leave at the end of this year. We are in direct lease negotiations with a sub-tenant in the Maple Heights, Ohio property for a significant percentage of the building. We are aggressively pursuing new tenants for all of these properties, which comprise less than 3% of our projected 2015 rental income, 50% of which does not terminate until December 2015. While we originally had 12 leases expiring in 2015, we only have 3 leases expiring in 2016, 6 in 2017 and 4 in 2018, which are each less than 2% of annualized rents for each respective year.

Our available vacant space at June 30, 2015 comprises less than 3.0% of our total square footage and the annual carrying costs, including real estate taxes and property operating expenses, are approximately $0.7 million. We continue to actively seek new tenants for these properties.

Our ability to make new investments is highly dependent upon our ability to procure external financing. Our principal sources of external financing generally include the issuance of equity securities, long-term mortgage loans secured by properties and borrowings under our line of credit, or the Line of Credit. Long-term mortgages are readily obtainable. The collateralized mortgage backed securities, or CMBS, market remains very active but uncertainty with regard to interest rates together with the inability to enter into early interest rate lock agreements makes the CMBS market less predictable. We continue to look to regional banks, insurance companies and other non-bank lenders, in addition to the CMBS market to issue mortgages to finance our real estate activities.

In addition to obtaining funds through borrowing, we have been active in the equity markets during 2015. We have issued shares of common stock through our at-the-market program, or ATM Program, pursuant to our open market sale agreement with Cantor Fitzgerald & Co., or Cantor Fitzgerald, discussed in more detail below.

Recent Developments

Q2 2015 Investment Activity

Phoenix, Arizona: On April 14, 2015, we closed a $0.3 million interim financing loan for the acquisition of land to be used for continuing development of a medical center campus in Phoenix, Arizona. This loan is collateralized by proceeds from the future sale of the transitional care facility for which we provided a mortgage development loan on July 25, 2014. We will earn interest of 22.0% per annum through the maturity date, with all accrued interest and principal payable upon maturity. This loan matures upon the earlier of April 2016 or the sale of the transitional care facility, which we anticipate to occur in October 2015.

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Columbus, Ohio: On May 28, 2015, we acquired a 78,033 square foot office building located in Columbus, Ohio for $7.7 million, excluding related acquisition expenses of $0.1 million. We funded this acquisition with existing cash on hand and the issuance of $4.5 million of mortgage debt on the property. The tenant has leased the property for 15 years and has 2 options to renew the lease for an additional 5 years each. The lease provides for prescribed rent escalations over its life, with annualized straight line rents of $0.64 million. The average cap rate on this acquisition is 8.3%.

Salt Lake City, Utah: On May 29, 2015, we acquired an 86,409 square foot office building located in Salt Lake City, Utah for $22.2 million, excluding related acquisition expenses of $0.1 million. We funded this acquisition with existing cash on hand, and the issuance of $13.0 million of mortgage debt on the property. The tenant has leased the property for 6.5 years and has 1 option to renew the lease for an additional 5 years. The lease provides for prescribed rent escalations over its life, with annualized straight line gross rents of $2.4 million. The average cap rate on this acquisition is 8.0%.

Atlanta, Georgia: On July 15, 2015 we acquired a 78,151 square foot office building located in Atlanta, Georgia for $13.0 million, excluding related acquisition expenses of $0.1 million. We funded this acquisition with existing cash on hand and the issuance of $7.5 million of mortgage debt on the property. The tenant has leased 54,836 square feet for 7 years, and 23,315 square feet for 15 years. The tenant has 2 options to renew both leases for an additional 5 years each. The lease provides for prescribed rent escalations over its life with annualized straight line rents of $1.3 million. The average cap rate on this acquisition is 9.9%.

2015 Sale Activity

Columbus, Ohio: On February 20, 2015, we entered into a purchase and sale agreement with a third party to acquire our Columbus, Ohio property for $2.8 million, an amount greater than the current carrying value of the property. The lease on this property is scheduled to terminate in October 2015 and the current tenant has notified us of its plan to vacate. We anticipate the sale to be completed in November 2015. We considered this asset to be non-core to our long term strategy, and we will re-deploy the proceeds from this sale into future acquisitions.

Q2 2015 Financing Activity

The following is a summary of our recent financings:

FC Bank: On May 28, 2015, through a wholly-owned subsidiary, we borrowed $4.5 million pursuant to a long-term note payable from FC Bank, a division of CNB Bank. The note accrues interest at a fixed rate of 3.75% per year and has a maturity date of June 1, 2022. The fixed rate resets to the applicable treasury rate index plus 3.0% per year on June 1, 2020 and June 1, 2021. We used the proceeds from the note to acquire the property in Columbus, Ohio described above on the same date.

Guggenheim Partners: On June 16, 2015, through a wholly-owned subsidiary, we borrowed $13.0 million pursuant to a long-term note payable from Guggenheim Partners, which is collateralized by a security interest in our Salt Lake City, Utah property. The note accrues interest at a fixed rate of 3.99% per year and has a maturity date of July 1, 2045. We used the proceeds from the note to repay a portion of outstanding debt on our line of credit.

Synovus Bank: On June 29, 2015, through a wholly-owned subsidiary, we refinanced our $19.1 million mortgage at an interest rate of 5.3% collateralized by security interests in our Charlotte, North Carolina and Duncan, South Carolina properties. That mortgage was originally set to mature on September 1, 2015. We borrowed $19.8 million pursuant to a long-term note payable from Synovus Bank. The new loan is variable rate, in which the interest rate resets monthly and is calculated as the one month London Interbank Offered Rate, or LIBOR, plus a margin of 2.25%. Subsequent to the end of the quarter, we entered into an interest rate cap agreement with Synovus Bank, which caps LIBOR to 3.0%. As of June 30, 2015, one month LIBOR was 0.19%. The new note has a maturity date of July 1, 2018, with one, two-year extension option at the behest of the borrower.

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Synovus Bank: On July 1, 2015, through a wholly-owned subsidiary, we repaid our $11.3 million mortgage on our Canton, Dayton, and Akron, Ohio properties that was originally set to mature on September 1, 2015. We borrowed $1.7 million pursuant to a long-term note payable from Synovus Bank to refinance a portion of this debt. The new loan is variable rate and we entered into an interest rate cap with Synovus Bank to hedge against the variability of the LIBOR rate, at a cost of approximately $0.07 million through July 1, 2018. We will receive payments from Synovus Bank if the one month LIBOR rate increases above 3.0%.

Prudential Mortgage Capital Company: On July 15, 2015, through a wholly-owned subsidiary, we borrowed $7.5 million pursuant to a long-term note payable from Prudential Mortgage Capital Company, which is collateralized by a security interest in our Atlanta, Georgia property. The note accrues interest at a fixed rate of 4.53% per year, and has a maturity date of August 1, 2022. We used the proceeds from the note to acquire the property in Atlanta, Georgia described above on the same date.

Q2 2015 Leasing Activities

Austin, Texas: On April, 28 2015, we modified the lease with the tenant occupying one of our properties located in Austin, Texas. The modification provided the tenant a termination option, which allows the tenant to terminate its lease effective December 31, 2017, upon paying a termination penalty of approximately $1.1 million on or before March 31, 2017. The lease is scheduled to otherwise terminate in June 2022. Under this modification, the tenant forfeited its right to $0.5 million in tenant improvement allowance, provided in an earlier amendment. All other terms and conditions of the lease remain in full force and effect.

Columbus, Ohio: On April 29, 2015, we modified the lease with the anchor tenant occupying one of our properties located in Columbus, Ohio. The anchor tenant is currently occupying 92% of the property and the modification allows the anchor tenant to expand into the remaining space, currently occupied by another tenant through November 30, 2016. The lease term for the expansion space is coterminous with their current lease, and both leases expire on December 2023. In connection with the expansion of the lease and modification of certain terms of the lease, we provided approximately $0.1 million in tenant improvements.

Raleigh, North Carolina: On July 13, 2015 we executed a lease with a tenant in our Raleigh, North Carolina property to occupy 86,886 square feet, 75% of the total square footage, which the current tenant will vacate on July 31, 2015. The lease will commence on August 1, 2015 and will expire on December 31, 2027. The new lease provides for prescribed rent escalations over its life, with annualized straight line rents of approximately $0.5 million. The lease grants the tenant two options to extend the lease for an additional five years each. In connection with the execution of the lease, we will pay $0.8 million in tenant improvements, and anticipate paying $0.4 million in leasing commissions. The total square footage in this building is 116,129 square feet, and after execution of this lease, the building will be approximately 93% occupied.

2015 Equity Activities

The equity issuances summarized below were issued under our universal shelf registration statement (File No. 333-190931) that was effective and on file with the Securities and Exchange Commission at the time of each respective issuance.

ATM Program: During the six months ended June 30, 2015, we sold 1.6 million shares, raising an aggregate of $27.2 million in net proceeds under our ATM Program with Cantor Fitzgerald. Proceeds from these sales were used to acquire real estate, repay indebtedness and for other general corporate purposes. Under the ATM Program we may, from time to time, offer to sell shares of our common stock with an aggregate sales price of up to $100.0 million on the open market through Cantor Fitzgerald, as agent, or to Cantor Fitzgerald, as principal, based upon our instructions (including any price, time or size limits or other customary parameters or conditions that we may impose). We

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raised $62.7 million in net proceeds under the ATM Program from September 2014 to date. Sales of shares of our common stock through our ATM Program are executed by means of ordinary brokers’ transactions on the NASDAQ Global Select Market, or the NASDAQ, or otherwise at market prices, in privately negotiated transactions, crosses or block transactions, as may be agreed between us and Cantor Fitzgerald, including a combination of any of these transactions. Proceeds from this offering were used to acquire real estate and for general corporate purposes.

Senior Common Program: During the six months ended June 30, 2015, we sold 189,052 shares of our Senior Common Stock at $15.00 per share and issued 5,134 shares of our Senior Common Stock under the associated Dividend Reinvestment Plan, or DRIP, program. The net proceeds, after deducting the underwriting discount and commission, were $2.6 million. This offering terminated according to its terms on March 28, 2015, and we wrote-off $0.1 million of deferred offering costs related to such termination. Proceeds from this offering were used to acquire real estate and for general corporate purposes.

Diversity of Our Portfolio

Our Adviser seeks to diversify our portfolio to avoid dependence on any one particular tenant, industry or geographic market. By diversifying our portfolio, our Adviser intends to reduce the adverse effect on our portfolio of a single under-performing investment or a downturn in any particular industry or geographic market. The table below reflects the breakdown of our total rental income by tenant industry classification for the three and six months ended June 30, 2015 and 2014, respectively (dollars in thousands):

	For the three months ended June 30,										For the six months ended June 30,
	2015					2014					2015					2014
Industry Classification	Rental Income		Percentage of Rental Income			Rental Income		Percentage of Rental Income			Rental Income		Percentage of Rental Income			Rental Income		Percentage of Rental Income
Telecommunications	$	3,200		16.1	%	$	3,269		18.6	%	$	6,329		16.3	%	$	6,338		18.5	%
Healthcare		3,187		15.9			2,037		11.6			5,828		14.8			3,912		11.4
Automobile		2,635		13.2			2,220		12.6			5,270		13.4			4,516		13.2
Personal, Food & Miscellaneous Services		1,576		7.9			1,331		7.6			3,153		8.0			2,663		7.8
Electronics		1,202		6.0			1,377		7.8			2,402		6.1			2,755		8.1
Diversified/Conglomerate Services		1,170		5.8			519		2.9			2,337		5.9			830		2.4
Diversified/Conglomerate Manufacturing		1,010		5.0			1,090		6.2			2,053		5.2			2,006		5.9
Chemicals, Plastics & Rubber		789		3.9			836		4.7			1,578		4.0			1,675		4.9
Machinery		772		3.9			620		3.5			1,544		3.9			1,203		3.5
Beverage, Food & Tobacco		679		3.4			749		4.3			1,427		3.6			1,497		4.4
Personal & Non-Durable Consumer Products		657		3.3			651		3.7			1,316		3.3			1,302		3.8
Childcare		556		2.8			494		2.8			1,112		2.8			654		1.9
Buildings and Real Estate		548		2.7			542		3.1			1,095		2.8			1,084		3.2
Containers, Packaging & Glass		521		2.6			521		3.0			1,042		2.7			1,042		3.0
Printing & Publishing		391		2.0			460		2.6			782		2.0			920		2.7
Oil & Gas		327		1.6			319		1.8			654		1.7			638		1.9
Banking		289		1.4			288		1.6			578		1.5			577		1.7
Information Technology		207		1.0			—		0.0			207		0.5			—		—
Education		164		0.8			164		0.9			328		0.8			328		1.0
Home & Office Furnishings		132		0.7			133		0.8			265		0.7			265		0.8
	$	20,012		100.0	%	$	17,620		100.0	%	$	39,300		100.0	%	$	34,205		100.0	%

The table below reflects the breakdown of total rental income by state for the three and six months ended June 30, 2015 and 2014, respectively (dollars in thousands):

	For the three months ended June 30, 2015							For the three months ended June 30, 2014
State	Rental Revenue		% of Base Rent			Number of Leases		Rental Revenue		% of Base Rent			Number of Leases
Texas	$	3,686		18.4	%		11	$	3,083		17.5	%		10
Ohio		2,563		12.8			17		2,485		14.1			16
Pennsylvania		1,655		8.3			6		1,015		5.8			6
North Carolina		1,308		6.5			7		1,248		7.1			7
South Carolina		1,115		5.6			2		1,116		6.3			2
Michigan		1,074		5.4			4		657		3.7			2
Minnesota		819		4.1			3		1,158		6.6			4
Colorado		813		4.1			3		376		2.1			1
New Jersey		798		4.0			4		794		4.5			4
All Other States		6,181		30.9			37		5,688		32.3			27
Total	$	20,012		100.0	%		94	$	17,620		100.0	%		79

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	For the six months ended June 30, 2015							For the six months ended June 30, 2014
State	Rental Revenue		% of Base Rent			Number of Leases		Rental Revenue		% of Base Rent			Number of Leases
Texas	$	6,896		17.5	%		11	$	5,618		16.4	%		10
Ohio		5,052		12.9			17		4,804		14.0			16
Pennsylvania		3,312		8.4			6		1,821		5.3			6
North Carolina		2,646		6.7			7		2,458		7.2			7
South Carolina		2,231		5.7			2		2,231		6.5			2
Michigan		2,147		5.5			4		1,393		4.1			2
Minnesota		1,637		4.2			3		2,338		6.8			4
Colorado		1,626		4.1			3		752		2.2			1
New Jersey		1,598		4.1			4		1,586		4.6			4
All Other States		12,155		31.0			37		11,204		49.1			27
Total	$	39,300		100.0	%		94	$	34,205		100.0	%		79

Our Adviser and Administrator

Our Adviser is led by a management team with extensive experience purchasing real estate and originating mortgage loans. Our Adviser and Administrator are controlled by Mr. David Gladstone, who is also our chairman and chief executive officer. Mr. Gladstone also serves as the chairman and chief executive officer of both our Adviser and Administrator. Mr. Terry Lee Brubaker, our vice chairman and chief operating officer, is also the vice chairman and chief operating officer of our Adviser. Mr. Robert Cutlip, our president, is also an executive managing director of our Adviser. Gladstone Administration, LLC, or our Administrator, employs our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president) and their respective staffs. Mr. Gladstone is also the chairman and chief executive officer of our Administrator and Mr. Brubaker is the vice chairman and chief operating officer of our Administrator.

Our Adviser and Administrator also provide investment advisory and administrative services, respectively, to certain of our affiliates, including, but not limited to, Gladstone Capital Corporation and Gladstone Investment Corporation, both publicly-traded business development companies, as well as Gladstone Land Corporation, a publicly-traded REIT that primarily invests in farmland. With the exception of Ms. Danielle Jones, our chief financial officer, Mr. Jay Beckhorn, our treasurer, and Mr. Robert Cutlip, our president, all of our executive officers and all of our directors serve as either directors or executive officers, or both, of Gladstone Capital Corporation and Gladstone Investment Corporation, two of our affiliates. In addition, with the exception of our president and our chief financial officer, all of our executive officers and all of our directors, serve as either directors or executive officers, or both, of Gladstone Land Corporation, an affiliate of ours. In the future, our Adviser may provide investment advisory services to other companies, both public and private.

Advisory and Administration Agreements

We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator. Our Adviser and Administrator employ all of our personnel and pay their payroll, benefits and general expenses directly. We have an investment advisory agreement with our Adviser, and an administration agreement with our Administrator, or the Administration Agreement.

Under the terms of the advisory agreement, we are responsible for all expenses incurred for our direct benefit. Examples of these expenses include legal, accounting, interest on short-term debt and mortgages, tax preparation, directors’ and officers’ insurance, stock transfer services, stockholder-related fees, consulting and related fees. In addition, we are also responsible for all fees charged by third parties that are directly related to our business, which include real estate brokerage fees, mortgage placement fees, lease-up fees and transaction structuring fees (although we may be able to pass some or all of such fees on to our tenants and borrowers).

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Advisory Agreement

On July 24, 2015, we entered into an amended and restated advisory agreement, or the Amended Advisory Agreement, with the Adviser. Our entrance into the agreement was approved unanimously by our Board, including separate and unanimous approval by the independent directors on our Board.

The calculation of the annual base management fee was revised to equal 1.5% of our total stockholders’ equity, before giving effect to the base management and incentive fee, adjusted to exclude the effect of any unrealized gains or losses that do not affect realized net income (including impairment charges) and adjusted for any one-time events and certain non-cash items (only after approval of our Compensation Committee), or adjusted total stockholders’ equity. The fee is calculated and accrued quarterly as 0.375% per quarter of such adjusted total stockholders’ equity figure.

The calculation of the annual incentive fee was revised to reward the Adviser if our quarterly Core FFO (defined below), before giving effect to any incentive fee, or pre-incentive fee Core FFO, exceeds 2.0%, or 8.0% annualized, of adjusted total stockholders’ equity (after giving effect to the base management fee but before giving effect to the incentive fee), or the new hurdle rate. The Adviser receives 15% of the amount of our pre-incentive fee Core FFO that exceeds the new hurdle rate. However, in no event shall the incentive fee for a particular quarter exceed the average quarterly incentive fee paid by us for the previous four quarters by greater than 15.0% (excluding quarters for which no incentive fee was paid). Core FFO is defined as GAAP net income (loss) available to common stockholders, excluding the incentive fee, depreciation and amortization, any unrealized gains, losses or other non-cash items recorded in net income (loss) available to common stockholders for the period, and one-time events pursuant to changes in GAAP.

A capital gains-based incentive fee was instituted that is calculated and payable in arrears as of the end of each fiscal year (or upon termination). In determining the capital gain fee, we will calculate aggregate realized capital gains and aggregate realized capital losses for the applicable time period. For this purpose, aggregate realized capital gains and losses, if any, equals the realized gain or loss calculated by the difference between the sales price of the property, less any costs to sell the property and the current gross value of the property (which is calculated as the original acquisition price plus any subsequent non-reimbursed capital improvements). At the end of the fiscal year, if this number is positive, then the capital gain fee payable for such time period shall equal 15.0% of such amount.

The Amended Advisory Agreement includes a termination fee where, in the event of a termination without cause (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to two times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24-month period prior to such termination. A termination fee is also payable if the Adviser terminates the agreement after the Company has defaulted and applicable cure periods have expired. The agreement may also be terminated for cause (with 30 days’ prior written notice and the vote of at least two-thirds of our independent directors), with no termination fee payable. Cause is defined in the agreement to include if the Adviser breaches any material provisions of the Agreement, the bankruptcy or insolvency of the Adviser, dissolution of the Adviser and fraud or misappropriation of funds.

Management believes this amendment brings our advisory agreement nearer to the current market practice and expects it will facilitate our growth of FFO and distributions to stockholders in the future. Management also believes that with this advisory agreement, we will become more competitive in sourcing and retaining talented investment and operations professionals at the Adviser.

Administration Agreement

Pursuant to the Administration Agreement, we pay for our allocable portion of our Administrator’s overhead expenses incurred while performing its obligations to us, including, but not limited to, rent and the salaries and benefits expenses of our personnel, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president), and their respective staffs. Prior to July 1, 2014, our allocable portion was generally derived by multiplying that portion of the Administrator’s expenses allocable to all funds managed by the Adviser by the percentage of our total assets at the beginning of each quarter in comparison to the total assets of all funds managed by

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the Adviser. As approved by our Board of Directors, effective July 1, 2014, our allocable portion of the Administrator’s expenses is generally derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under contractual agreements. Management believes that this methodology of allocating the Administrator’s total expenses by approximate percentage of time services were performed among all companies serviced by our Administrator more closely approximates fees paid to actual services performed.

Critical Accounting Policies

The preparation of our financial statements in accordance with Generally Accepted Accounting Principles in the U.S., or GAAP, requires management to make judgments that are subjective in nature in order to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and as a result, actual results could materially differ from these estimates. A summary of all of our significant accounting policies is provided in Note 1 to our consolidated financial statements in our 2014 Form 10-K. There were no material changes to our critical accounting policies during the six months ended June 30, 2015.

Results of Operations

The weighted-average yield on our total portfolio, which was 8.8% and 9.0% as of June 30, 2015 and June 30, 2014, respectively, is calculated by taking the annualized straight-line rents, reflected as rental income on our condensed consolidated statements of operations, of each acquisition as a percentage of the acquisition cost. The weighted-average yield does not account for the interest expense incurred on the mortgages placed on our properties.

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A comparison of our operating results for the three and six months ended June 30, 2015 and 2014 is below (dollars in thousands, except per share amounts):

	For the three months ended June 30,
	2015			2014			$ Change			% Change
Operating revenues
Rental revenue	$	20,012		$	17,620		$	2,392			14	%
Tenant recovery revenue		394			770			(376	)		-49	%
Interest income from mortgage note receivable		282			—			282			NM
Total operating revenues		20,688			18,390			2,298			13
Operating expenses
Depreciation and amortization		8,947			6,871			2,076			30	%
Property operating expenses		1,178			1,302			(124	)		-10	%
Acquisition related expenses		255			859			(604	)		-70	%
Base management fee		866			666			200			30	%
Incentive fee		1,760			1,527			233			15	%
Administration fee		366			485			(119	)		-25	%
General and administrative		539			490			49			10	%
Total operating expenses before credit to incentive fee		13,911			12,200			1,711			14	%
Credit to incentive fee		(1,316	)		(957	)		(359	)		38	%
Total operating expenses		12,595			11,243			1,352			12	%
Other income (expense)
Interest expense		(6,999	)		(6,509	)		(490	)		8	%
Distributions attributable to Series C mandatorily redeemable preferred stock		(686	)		(686	)		—			0	%
Gain on sale of real estate		—			1,240			(1,240	)		-100	%
Other income		23			27			(4	)		-15	%
Total other expense		(7,662	)		(5,928	)		(1,734	)		29	%
Net income		431			1,219			(788	)		-65	%
Distributions attributable to Series A and B preferred stock		(1,023	)		(1,023	)		—			0	%
Distributions attributable to senior common stock		(261	)		(110	)		(151	)		137	%
Net (loss) income (attributable) available to common stockholders	$	(853	)	$	86		$	(939	)		-1092	%
Net loss (income) attributable (available) to common stockholders per weighted average share of common stock - diluted	$	(0.04	)	$	0.01		$	(0.05	)		-962	%
FFO available to common stockholders	$	8,094		$	5,717		$	2,377			42	%
FFO per weighted average share of common stock - diluted	$	0.37		$	0.34		$	0.04			12	%

NM = Not meaningful

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	For the six months ended June 30,
	2015			2014			$ Change			% Change
Operating revenues
Rental revenue	$	39,300		$	34,205		$	5,095			15	%
Tenant recovery revenue		718			1,321			(603	)		-46	%
Interest income from mortgage note receivable		549			—			549			NM
Total operating revenues		40,567			35,526			5,041			14	%
Operating expenses
Depreciation and amortization		17,154			13,591			3,563			26	%
Property operating expenses		2,139			2,632			(493	)		-19	%
Acquisition related expenses		451			970			(519	)		-54	%
Base management fee		1,717			1,291			426			33	%
Incentive fee		3,433			2,767			666			24	%
Administration fee		728			977			(249	)		-25	%
General and administrative		1,229			957			272			28	%
Impairment charge		—			13,958			(13,958	)		-100	%
Total operating expenses before credit to incentive fee		26,851			37,143			(10,292	)		-28	%
Credit to incentive fee		(2,500	)		(2,162	)		(338	)		16	%
Total operating expenses		24,351			34,981			(10,630	)		-30	%
Other income (expense)
Interest expense		(13,770	)		(12,784	)		(986	)		8	%
Distributions attributable to Series C mandatorily redeemable preferred stock		(1,372	)		(1,372	)		—			0	%
Gain on sale of real estate		—			1,240			(1,240	)		-100	%
Other income		51			74			(23	)		-31	%
Total other expense		(15,091	)		(12,842	)		(2,249	)		18	%
Net income (loss)		1,125			(12,297	)		13,422			-109	%
Distributions attributable to Series A and B preferred stock		(2,047	)		(2,047	)		—			0	%
Distributions attributable to senior common stock		(485	)		(210	)		(275	)		131	%
Net loss attributable to common stockholders	$	(1,407	)	$	(14,554	)	$	13,147			-90	%
Net loss attributable to common stockholders per weighted average share of common stock—diluted	$	(0.07	)	$	(0.90	)	$	0.83			-92	%
FFO available to common stockholders	$	15,747		$	11,755		$	3,992			34	%
FFO per weighted average share of common stock—diluted	$	0.74		$	0.71		$	0.03			4	%

Same Store Analysis

For the purposes of the following discussion, same store properties are properties we owned as of January 1, 2014, which have not been subsequently expanded, vacated, or disposed of. Acquired and disposed of properties are properties which were either acquired or disposed of at any point subsequent to December 31, 2013. One property was expanded subsequent to January 1, 2014. Vacant properties are properties that were fully or partially vacant at any point subsequent to January 1, 2014.

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Operating Revenues

	For the three months ended June 30,
	(Dollars in Thousands)
Rental Revenues	2015		2014		$ Change			% Change
Same Store Properties	$	14,808	$	15,261	$	(453	)		-3.0	%
Acquired & Disposed Properties		4,342		1,488		2,854			191.8	%
Expanded Properties		357		205		152			74.1	%
Vacant Properties		505		666		(161	)		-24.2	%
	$	20,012	$	17,620	$	2,392			13.6	%
	For the six months ended June 30,
	(Dollars in Thousands)
Rental Revenues	2015		2014		$ Change			% Change
Same Store Properties	$	29,649	$	30,310	$	(661	)		-2.2	%
Acquired & Disposed Properties		7,858		2,170		5,688			262.1	%
Expanded Properties		714		373		341			91.4	%
Vacant Properties		1,079		1,352		(273	)		-20.2	%
	$	39,300	$	34,205	$	5,095			14.9	%

Rental revenue from same store properties decreased slightly for the three and six months ended June 30, 2015 primarily due to reduced rental rates on lease extensions, modifications to two leases with tenants experiencing operational difficulties, and from two tenants that vacated the premises, one of whom relocated to another state due to economic incentives. Rental revenue increased for acquired properties for the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014, because we acquired eight properties subsequent to June 30, 2014, combined with a full three and six month period of revenue in 2015 for properties acquired during and subsequent to the six months ended June 30, 2014.

	For the three months ended June 30,
	(Dollars in Thousands)
Tenant Recovery Revenue	2015		2014		$ Change			% Change
Same Store Properties	$	201	$	267	$	(66	)		-24.7	%
Acquired & Disposed Properties		180		495		(315	)		-63.6	%
Expanded Properties		2		3		(1	)		-33.3	%
Vacant Properties		11		5		6			120.0	%
	$	394	$	770	$	(376	)		-48.8	%
	For the six months ended June 30,
	(Dollars in Thousands)
Tenant Recovery Revenue	2015		2014		$ Change			% Change
Same Store Properties	$	419	$	362	$	57			15.7	%
Acquired & Disposed Properties		242		945		(703	)		-74.4	%
Expanded Properties		6		3		3			100.0	%
Vacant Properties		51		11		40			363.6	%
	$	718	$	1,321	$	(603	)		-45.6	%

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The decrease in same store tenant recovery revenues for the three months ended June 30, 2015 as compared to the three months ended June 30, 2014 is a result of a one-time adjustment related to a modified gross lease recorded in June 2014, coupled with vacancy settlement recoveries received in June 30, 2014. The increase in same store tenant recovery revenues for the six months ended June 30, 2015 as compared to the six months ended June 30, 2014, is a result of increased recoveries from tenants subject to base year stops on modified gross leases. The adjustment increased both tenant recovery revenues and property operating expenses, resulting in no impact to net income. During the six months ended June 30, 2014, we recovered operating expenses from a tenant which vacated one of our buildings, but continued to pay rent and operating expenses through their lease termination date of June 30, 2015.

Interest income from mortgage notes receivable increased for the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014, because of interest earned on a mortgage development loan issued in July 2014 that was not outstanding during the three and six months ended June 30, 2014.

Operating Expenses

	For the three months ended June 30,
	(Dollars in Thousands)
Depreciation and Amortization	2015		2014		$ Change		% Change
Same Store Properties	$	6,352	$	6,036	$	316		5.2	%
Acquired & Disposed Properties		2,031		530		1,501		283.2	%
Expanded Properties		79		32		47		146.9	%
Vacant Properties		485		273		212		77.7	%
	$	8,947	$	6,871	$	2,076		30.2	%
	For the six months ended June 30,
	(Dollars in Thousands)
Depreciation and Amortization	2015		2014		$ Change		% Change
Same Store Properties	$	12,580	$	12,070	$	510		4.2	%
Acquired & Disposed Properties		3,659		855		2,804		328.0	%
Expanded Properties		158		65		93		143.1	%
Vacant Properties		757		601		156		26.0	%
	$	17,154	$	13,591	$	3,563		26.2	%

Depreciation and amortization increased slightly for same store properties for the three and six months ended June 30, 2015 as compared to the three and six months ended June 30, 2014 due to depreciation on capital projects which were completed subsequent to June 30, 2014, coupled with amortization on leasing commissions for renewed leases with 2015 expirations. Depreciation and amortization expenses increased for acquired properties during the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014, because of the eight properties acquired subsequent to June 30, 2014 and the inclusion of a full three and six month period of depreciation and amortization recorded in 2015 for 11 properties acquired during and subsequent to the six months ended June 30, 2014.

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	For the three months ended June 30,
	(Dollars in Thousands)
Property Operating Expenses	2015		2014		$ Change			% Change
Same Store Properties	$	491	$	571	$	(80	)		-14.0	%
Acquired & Disposed Properties		551		684		(133	)		-19.4	%
Expanded Properties		3		2		1			50.0	%
Vacant Properties		133		45		88			195.6	%
	$	1,178	$	1,302	$	(124	)		-9.5	%
	For the six months ended June 30,
	(Dollars in Thousands)
Property Operating Expenses	2015		2014		$ Change			% Change
Same Store Properties	$	1,017	$	1,058	$	(41	)		-3.9	%
Acquired & Disposed Properties		892		1,436		(544	)		-37.9	%
Expanded Properties		8		5		3			60.0	%
Vacant Properties		222		133		89			66.9	%
	$	2,139	$	2,632	$	(493	)		-18.7	%

Property operating expenses consist of franchise taxes, management fees, insurance, ground lease payments and overhead expenses paid on behalf of certain of our properties. The decrease in property operating expenses for same store properties is primarily a result of a one-time adjustment related to a modified gross lease recorded during the three months ended June 30, 2014, during which we adjusted property operating expenses and associated recovery revenues. This one-time adjustment did not impact net income. The decrease in property operating expenses for acquired and disposed of properties is primarily because of a lack of operating expenses in 2015 associated with our Roseville, Minnesota property, which was conveyed to the lender in a deed-in-lieu transaction during 2014.

Acquisition related expenses primarily consist of legal fees and fees incurred for third-party reports prepared in connection with potential acquisitions and our due diligence analyses related thereto. Acquisition related expenses decreased for the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014, due to smaller acquisition volume over these comparable periods. During the six months ended June 30, 2015, we acquired four properties, respectively, as compared to the six months ended June 30, 2014, where we acquired six properties.

The base management fee paid to the Adviser increased for the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014, due to an increase in total common stockholders’ equity, the main component of the calculation. The calculation of the base management fee is described in detail above within “Advisory and Administration Agreements.”

The incentive fee paid to the Adviser increased for the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014, because of an increase in pre-incentive fee FFO. The increase in pre-incentive fee FFO was due to an increase in rental revenues from the properties acquired during the three and six months ended June 30, 2015, in conjunction with a decrease in property operating expenses during the three and six ended June 30, 2015, as compared to the three and six months ended June 30, 2014 due to the reasons stated above. The incentive fee credit increased slightly for the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014, because of an increase in common distributions paid on the shares issued during the past 12 months partially offset by lower expenses at our vacant properties. The calculation of the incentive fee is described in detail above within “Advisory and Administration Agreements.”

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The administration fee paid to the Administrator decreased for the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014. The decrease was driven primarily by a change in the way the Administrator allocates all of its fees to affiliated companies serviced by the Administrator such that the fee is generally now based upon the percentage of time employees of the Administrator spend on our matters in relation to time spent on other companies serviced by our Administrator versus the prior methodology, whereby we were generally allocated the fee based upon our total assets in relation to other funds managed by our Administrator. That change went into effect July 1, 2014. We anticipate our future administration fees to be lower than in 2014 under the new methodology. The calculation of the administration fee is described in detail above within “Advisory and Administration Agreements.”

General and administrative expenses increased for the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014, primarily as a result of an increase in professional fees from the write-off of professional fees related to our terminated Senior Common stock program.

No impairment charge was recognized during the three months ended June 30, 2015 and 2014, respectively, and the six months ended June 30, 2015. Impairment recognized during the six months ended June 30, 2014 was a result of the impairment of our Roseville, Minnesota property.

Other Income and Expenses

Interest expense increased for the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014. This increase was primarily a result of interest on the $76.4 million of mortgage debt issued and assumed in the past 12 months, partially offset by reduced interest expense on our long-term financings from amortizing and balloon principal payments made during the past 12 months.

We did not recognize a gain on sale during the three and six months ended June 30, 2015. The gain on sale of real estate during the three and six months ended June 30, 2014 is a result of the sale of our property located in Sterling Heights, Michigan in June 2014.

Other income decreased during the three and six months ended June 30, 2015, as compared to the three and six months ended June 30, 2014, because of a decrease in management fees collected from certain of our tenants, coupled with the repayment of the employee note outstanding in May 2015.

Net (Loss) Income (Attributable) Available to Common Stockholders

Net loss attributable to common stockholders increased for the three months ended June 30, 2015, as compared to the net income available to common stockholders for the three months ended June 30, 2014, primarily because of the gain on sale from the Sterling Heights, Michigan property recognized in June 2014. Net loss attributable to common stockholders decreased for the six months ended June 30, 2015, as compared to the six months ended June 30, 2014, primarily because of the impairment charge recognized from the Roseville, Minnesota property in June 2014 offset by increased interest expense, depreciation expense, and an increase in rental income from the properties acquired over the past 12 months.

Liquidity and Capital Resources

Overview

Our sources of liquidity include cash flows from operations, cash and cash equivalents, borrowings under our Line of Credit, obtaining mortgages on our unencumbered properties and issuing additional equity securities. Our available liquidity at June 30, 2015 was $14.4 million, including $3.3 million in cash and cash equivalents and an available borrowing capacity of $11.1 million under our Line of Credit.

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Future Capital Needs

We actively seek conservative investments that are likely to produce income to pay distributions to our stockholders. We intend to use the proceeds received from future equity raised and debt capital borrowed to continue to invest in industrial, commercial and retail real property, make mortgage loans, or pay down outstanding borrowings under our Line of Credit. Accordingly, to ensure that we are able to effectively execute our business strategy, we routinely review our liquidity requirements and continually evaluate all potential sources of liquidity. Our short-term liquidity needs include proceeds necessary to fund our distributions to stockholders, pay the debt service costs on our existing long-term mortgages and on borrowings under our Line of Credit, and fund our current operating costs. Our long-term liquidity needs include proceeds necessary to grow and maintain our portfolio of investments.

We believe that our available liquidity is sufficient to fund our distributions to stockholders, pay the debt service costs on our existing long-term mortgages and borrowings under our Line of Credit and fund our current operating costs in the near term. Additionally, to satisfy our short-term obligations, we may request credits to our management fees that are issued from our Adviser, although our Adviser is under no obligation to provide any such credits, either in whole or in part. Historically, our Adviser has provided such partial credits to our management fees on a quarterly basis. We further believe that our cash flow from operations coupled with the financing capital available to us in the future are sufficient to fund our long-term liquidity needs.

Equity Capital

To date, in 2015, we have raised net proceeds of $30.7 million of common equity under our ATM program with Cantor Fitzgerald at a weighted average share price of $17.65. Furthermore, we raised $2.5 million in net proceeds of senior common equity. We used these proceeds to acquire additional real estate and for general corporate purposes.

As of August 3, 2015, we have the ability to raise up to $165.7 million of additional equity capital through the sale and issuance of securities that are registered under our universal shelf registration statement on Form S-3 (File No. 333-190931), or the Universal Shelf, in one or more future public offerings. Of the $165.7 million of available capacity under our Universal Shelf, $36.3 million of common stock is reserved for additional sales under our ATM Program. We will use our existing ATM program as a source of liquidity for the remainder of 2015.

Debt Capital

As of June 30, 2015, we had mortgage notes payable in the aggregate principal amount of $484.8 million, excluding mortgage notes payable on real estate assets held for sale, collateralized by a total of 80 properties with a remaining weighted average maturity of 5.6 years. The weighted-average interest rate on the mortgage notes payable as of June 30, 2015 was 5.11%.

We continue to see banks and other non-bank lenders willing to issue mortgages. Consequently, we are focused on obtaining mortgages through regional banks, non-bank lenders and the CMBS market.

We have mortgage debt in the aggregate principal amount of $8.0 million payable during the remainder of 2015 and $97.6 million payable during 2016, excluding balloon payments on real estate assets held for sale. The 2015 principal amounts payable include both amortizing principal payments and one balloon principal payment due in the second half of the year. We anticipate being able to refinance our mortgages that come due during 2015 and 2016 with a combination of new mortgage debt and the issuance of additional equity securities.

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Operating Activities

Net cash provided by operating activities during the six months ended June 30, 2015, was $16.5 million, as compared to net cash provided by operating activities of $11.0 million for the six months ended June 30, 2014. This increase was primarily a result of an increase in rental income received from the properties acquired in the past 12 months, partially offset by the increase in general and administrative expenses as a result of increased activity in our portfolio. The majority of cash from operating activities is generated from the rental payments and operating expense recoveries that we receive from our tenants. We utilize this cash to fund our property-level operating expenses and use the excess cash primarily for debt and interest payments on our mortgage notes payable, interest payments on our Line of Credit, distributions to our stockholders, management fees to our Adviser, and other entity-level expenses.

Investing Activities

Net cash used in investing activities during the six months ended June 30, 2015, was $63.2 million, which primarily consisted of the acquisition of four properties and tenant improvements performed at certain of our properties, as compared to net cash used in investing activities during the six months ended June 30, 2014, of $60.9 million, which primarily consisted of the acquisition of six properties, coupled with tenant improvements performed at certain of our properties.

Financing Activities

Net cash provided by financing activities during the six months ended June 30, 2015, was $41.4 million, which primarily consisted of proceeds from the sale of common stock and proceeds from the issuance of mortgage notes payable, partially offset by the distributions paid to our stockholders and principal repayments on mortgage notes payable. Net cash provided by financing activities for the six months ended June 30, 2014, was $43.6 million, which primarily consisted of distributions paid to our stockholders and principal repayments on mortgage notes payable, partially offset by proceeds from the sale of common stock.

Line of Credit

In August 2013, we procured our $60.0 million Line of Credit, which was expanded to $75.0 million in November 2014, with KeyBank National Association (serving as a revolving lender, a letter of credit issuer and an administrative agent) and added Citizens Bank of Pennsylvania as an additional lender. Comerica Bank was subsequently added as another lender in December 2013. In March 2014, we amended our Line of Credit to extend the maturity date by one year to August 2017. We also modified certain terms under the Line of Credit, including the calculation of the total asset value and unencumbered asset value. The applicable LIBOR margins were also reduced 25 basis points at each pricing level. As a result of these modifications, the availability under our Line of Credit increased by $1.3 million.

The Line of Credit initially matures in August 2017; however, we have a one-year extension option subject to the payment of an extension fee equal to 25 basis points on the initial maturity date and certain other customary conditions.

As of June 30, 2015, there was $45.2 million outstanding under our Line of Credit at an interest rate of approximately 2.94% and $3.9 million outstanding under letters of credit at a weighted average interest rate of 2.75%. As of August 3, 2015, the maximum additional amount we could draw under our Line of Credit was $9.2 million. We were in compliance with all covenants under the Line of Credit as of June 30, 2015.

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Contractual Obligations

The following table reflects our material contractual obligations as of June 30, 2015 (in thousands):

	Payments Due by Period
Contractual Obligations	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
Debt Obligations (1)	$	570,486	$	94,231	$	200,051	$	56,286	$	219,918
Interest on Debt Obligations (2)		116,811		26,173		35,672		24,025		30,941
Operating Lease Obligations (3)		7,493		459		924		931		5,179
Purchase Obligations (4)		2,510		2,510		—		—		—
Total	$	697,300	$	123,373	$	236,647	$	81,242	$	256,038

⁽¹⁾  Debt obligations represent borrowings under our Line of Credit, which represents $45.2 million of the debt obligation due in 2017, mortgage notes payable that were outstanding as of June 30, 2015, and amounts due to the holders of our Term Preferred Stock.

⁽²⁾ Interest on debt obligations includes estimated interest on our borrowings under our Line of Credit, mortgage notes payable and interest due to the holders of our Term Preferred Stock. The balance and interest rate on our Line of Credit is variable; thus, the amount of interest calculated for purposes of this table was based upon rates and balances as of June 30, 2015.

⁽³⁾ Operating lease obligations represent the ground lease payments due on our Tulsa, Oklahoma, Dartmouth, Massachusetts, Springfield, Missouri, and Salt Lake City, Utah properties.

⁽⁴⁾ Purchase obligations consist of $1.3 million to fund tenant improvements at two of our Ohio properties, $0.5 million in tenant improvements at our Burnsville, MN property, $0.3 million of tenant improvements at our Austin, TX property, $0.3 million of tenant improvements at our Bolingbrook, IL property, $0.1 million of tenant improvements at our Raleigh, NC property, and $0.1 million of tenant improvements at our Indianapolis, IN property. These items were recognized on our balance sheet as of June 30, 2015.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of June 30, 2015.

Funds from Operations

The National Association of Real Estate Investment Trusts, or NAREIT, developed FFO as a relevant non-GAAP supplemental measure of operating performance of an equity REIT, to recognize that income-producing real estate historically has not depreciated on the same basis determined under GAAP. FFO, as defined by NAREIT, is 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, and after adjustments for unconsolidated partnerships and joint ventures.

FFO does not represent cash flows from operating activities in accordance with GAAP, which, unlike FFO, generally reflects all cash effects of transactions and other events in the determination of net income and 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. Comparison of FFO, using the NAREIT definition, to similarly titled measures for other REITs may not necessarily be meaningful due to possible differences in the application of the NAREIT definition used by such REITs.

FFO available to common stockholders is FFO adjusted to subtract distributions made to holders of preferred and senior common stock. We believe that net income available to common stockholders is the most directly comparable GAAP measure to FFO available to common stockholders.

Basic funds from operations per share, or Basic FFO per share, and diluted funds from operations per share, or Diluted FFO per share, is FFO available to common stockholders divided by the number of weighted average shares of common stock outstanding and FFO available to common stockholders divided by the number of weighted average shares of common stock outstanding on a diluted basis, respectively, during a period. We believe that FFO available to common stockholders, Basic FFO per share and Diluted FFO per share are useful to investors because they provide investors with a further context for evaluating our FFO results in the same manner that investors use net income and earnings per share, or EPS, in evaluating net income available to common stockholders. In addition, because most REITs provide FFO available to common stockholders, Basic FFO and Diluted FFO per share information to the investment community, we believe these are useful supplemental measures when comparing us to other REITs. We believe that net income is the most directly comparable GAAP measure to FFO, Basic EPS is the most directly comparable GAAP measure to Basic FFO per share, and that Diluted EPS is the most directly comparable GAAP measure to Diluted FFO per share.

38

The following table provides a reconciliation of our FFO available to common stockholders for the three and six months ended June 30, 2015 and 2014, respectively, to the most directly comparable GAAP measure, net income available to common stockholders, and a computation of basic and diluted FFO per weighted average share of common stock:

	For the three months ended June 30,						For the six months ended June 30,
	(Dollars in Thousands, Except for Per Share Amounts)						(Dollars in Thousands, Except for Per Share Amounts)
	2015			2014			2015			2014
Net income (loss)	$	431		$	1,219		$	1,125		$	(12,297	)
Less: Distributions attributable to preferred and senior common stock		(1,284	)		(1,133	)		(2,532	)		(2,257	)
Net (loss) income (attributable) available to common stockholders	$	(853	)	$	86		$	(1,407	)	$	(14,554	)
Adjustments:
Add: Real estate depreciation and amortization		8,947			6,871			17,154			13,591
Add: Impairment charge		—			—			—			13,958
Less: Gain on sale of real estate		—			(1,240	)		—			(1,240	)
FFO available to common stockholders	$	8,094		$	5,717		$	15,747		$	11,755
Weighted average common shares outstanding—basic		20,833,787			16,547,793			20,524,101			16,149,467
Weighted average common shares outstanding—diluted		21,664,386			16,894,973			21,299,103			16,482,075
Basic FFO per weighted average share of common stock	$	0.39		$	0.35		$	0.77		$	0.73
Diluted FFO per weighted average share of common stock	$	0.37		$	0.34		$	0.74		$	0.71
Distributions declared per share of common stock	$	0.375		$	0.375		$	0.75		$	0.75

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk includes risks that arise from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices and other market changes that affect market sensitive instruments. The primary risk that we believe we are and will be exposed to is interest rate risk. Certain of our leases contain escalations based on market indices, and the interest rate on our Line of Credit is variable. Although we seek to mitigate this risk by structuring such provisions of our loans and leases to contain a minimum interest rate or escalation rate, as applicable, these features do not eliminate this risk. To that end, we have entered into a derivative contract with Wells Fargo to cap interest rates for the variable rate note payable on our Champaign, Illinois property. We paid a fee of $0.03 million to cap LIBOR rates at 3.0%, to limit our exposure to interest rates on this note payable.

To illustrate the potential impact of changes in interest rates on our net income for the quarter ended June 30, 2015, we have performed the following analysis, which assumes that our balance sheet remains constant and that no further actions beyond a minimum interest rate or escalation rate are taken to alter our existing interest rate sensitivity.

The following table summarizes the annual impact of a 1%, 2% and 3% increase in the one month LIBOR as of June 30, 2015. As of June 30, 2015, our effective average LIBOR was 0.19%; thus, a 1%, 2% or 3% decrease could not occur.

	(Dollars in Thousands)
Interest Rate Change	Increase to Interest Expense		Net Decrease to Net Income
1% Increase to LIBOR	$	742	$	(742	)
2% Increase to LIBOR		1,484		(1,484	)
3% Increase to LIBOR		2,184		(2,184	)

As of June 30, 2015, the fair value of our mortgage debt outstanding, excluding real estate held for sale, was $496.1 million. Interest rate fluctuations may affect the fair value of our debt instruments. If interest rates on our debt instruments, using rates at June 30, 2015, had been one percentage point higher or lower, the fair value of those debt instruments on that date would have decreased or increased by $19.2 million and $20.7 million, respectively.

In the future, we may be exposed to additional effects of interest rate changes, primarily as a result of our Line of Credit or long-term mortgage debt, which we use to maintain liquidity and fund expansion of our real estate investment portfolio and operations. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows and to lower overall borrowing costs. To achieve these objectives, we will borrow primarily at fixed rates or variable rates with the lowest margins available and, in some cases, with the ability to convert variable rates to fixed rates. We may also enter into derivative financial instruments such as interest rate swaps and caps in order to mitigate the interest rate risk on a related financial instrument. We will not enter into derivative or interest rate transactions for speculative purposes.

In addition to changes in interest rates, the value of our real estate is subject to fluctuations based on changes in local and regional economic conditions and changes in the creditworthiness of lessees and borrowers, all of which may affect our ability to refinance debt, if necessary.

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Item 4. Controls and Procedures.

a) Evaluation of Disclosure Controls and Procedures

As of June 30, 2015, our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, the chief executive officer and chief financial officer, concluded that our disclosure controls and procedures were effective as of June 30, 2015 in providing a reasonable level of assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable SEC rules and forms, including providing a reasonable level of assurance that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure. However, in evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated can provide only reasonable assurance of necessarily achieving the desired control objectives, and management was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

b) Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended June 30, 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us.

Item 1A. Risk Factors.

Our business is subject to certain risks and events that, if they occur, could adversely affect our financial condition and results of operations and the trading price of our securities. For a discussion of these risks, please refer to the risk below and the section captioned “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, filed by us with the Securities and Exchange Commission on February 18, 2015.

Terminating the Amended Advisory Agreement without cause requires payment of a substantial termination fee.

Termination of the Amended Advisory Agreement with our Adviser without cause would be difficult and costly. We may only terminate the agreement without cause (as defined therein) upon 120 days’ prior written notice and after the affirmative vote of at least two-thirds of our independent directors. Furthermore, if we default under the agreement and any applicable cure period has expired, the Adviser may terminate the agreement. In each of the foregoing cases, we will be required to pay the Adviser a termination fee equal to two times the sum of the average base management fee and incentive fee earned by our Adviser during the 24-month period prior to such termination. This provision increases the cost to us of terminating the Amended Advisory Agreement and adversely affects our ability to terminate our Adviser without cause. Additionally, depending on the amount of the fee, if incurred, it could adversely affect our ability to pay distributions to our common, preferred and senior common stockholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

42

Exhibit Index

Exhibit Number	Exhibit Description
3.1	Articles of Restatement of the Registrant, incorporated by reference to Exhibit 3.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33097), filed April 30, 2012.
3.2	Bylaws of the Registrant, incorporated by reference to Exhibit 3.2 to the Registrant’s Registration Statement on Form S-11 (File No. 333-106024), filed June 11, 2003.
3.3	First Amendment to Bylaws of the Registrant, incorporated by reference to Exhibit 99.1 to the Registrant’s Current Report on Form 8-K (File No. 001-33097), filed July 10, 2007.
4.1	Form of Certificate for Common Stock of the Registrant, incorporated by reference to Exhibit 4.1 to Pre-Effective Amendment No. 2 to the Registrant’s Registration Statement on Form S-11 (File No. 333-106024), filed August 8, 2003.
4.2	Form of Certificate for 7.75% Series A Cumulative Redeemable Preferred Stock of the Registrant, incorporated by reference to Exhibit 4.1 to the Registrant’s Form 8-A12G (File No. 000-50363), filed January 19, 2006.
4.3	Form of Certificate for 7.50% Series B Cumulative Redeemable Preferred Stock of the Registrant, incorporated by reference to Exhibit 4.2 to the Registrant’s Form 8-A12B (File No. 001-33097), filed October 19, 2006.
4.4	Form of Certificate for 7.125% Series C Cumulative Term Preferred Stock of the Registrant, incorporated by reference to Exhibit 4.4 to the Registrant’s Form 8-A12B (File No. 001-33097), filed January 31, 2012.
10.1	Amended and Restated Investment Advisory Agreement between the Registrant and Gladstone Management Corporation, dated July 24, 2015, incorporated by reference to Exhibit 10.1 of the Current Report on Form 8-K (File No. 001-33097), filed July 17, 2015.
11	Computation of Per Share Earnings from Operations (included in the notes to the unaudited financial statements contained in this Report).
12	Statements re: computation of ratios (filed herewith).
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith).
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith).

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101.INS***	XBRL Instance Document
101.SCH***	XBRL Taxonomy Extension Schema Document
101.CAL***	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB***	XBRL Taxonomy Extension Label Linkbase Document
101.PRE***	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF***	XBRL Definition Linkbase

*** Attached as Exhibit 101 to this Quarterly Report on Form 10-Q are the following materials, formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets as of June 30, 2015 and December 31, 2014, (ii) the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2015 and 2014, (iii) the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2015 and 2014 and (iv) the Notes to Condensed Consolidated Financial Statements.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Gladstone Commercial Corporation
Date: August 3, 2015	By:	/s/ Danielle Jones
		Danielle Jones
		Chief Financial Officer
Date: August 3, 2015	By:	/s/ David Gladstone
		David Gladstone
		Chief Executive Officer and Chairman of the Board of Directors

45

EX-12

Exhibit 12

Statements re: computation of ratio of earnings to combined fixed charges and preferred distributions

(Dollars in Thousands)

	For the six months ended June 30,			For the year ended December 31,
	2015			2014			2013			2012			2011			2010
Net income (loss) from continuing operations	$	1,125		$	(5,902	)(1)	$	1,527		$	3,761		$	5,714		$	4,928
Add: fixed charges and preferred and senior common distributions		17,680			33,592			31,506			26,962			21,247			21,191
Less: preferred and senior common distributions		(2,532	)		(4,636	)		(4,394	)		(4,206	)		(4,156	)		(4,114	)
Earnings	$	16,273		$	23,054		$	28,639		$	26,517		$	22,805		$	22,005
Fixed charges and preferred and senior common distributions:
Interest expense (2)		14,264			27,284			25,314			21,239			16,158			16,031
Amortization of deferred financing fees		878			1,656			1,780			1,502			918			1,031
Estimated interest component of rent		6			16			18			15			15			15
Preferred and senior common distributions		2,532			4,636			4,394			4,206			4,156			4,114
Total fixed charges and preferred and senior common distributions	$	17,680		$	33,592		$	31,506		$	26,962		$	21,247		$	21,191
Ratio of earnings to combined fixed charges and preferred distributions		N/A	(3)		N/A	(4)		N/A	(5)		N/A	(6)		1.1			1.0

⁽¹⁾  We recognized a $14.2 million impairment loss and a $5.3 million gain on debt extinguishment as a result of our Roseville, MN deed-in-lieu transaction during the year ended December 31, 2014.

⁽²⁾  Interest expense includes dividends paid on our mandatorily redeemable term preferred stock.

⁽³⁾  For the six months ended June 30, 2015, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by $1,407.

⁽⁴⁾  For the year ended December 31, 2014, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by $10,538.

⁽⁵⁾  For the year ended December 31, 2013, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by $2,867.

⁽⁶⁾  For the year ended December 31, 2012, earnings, as defined, were insufficient to cover fixed charges and preferred and common distributions by $445.

N/A: Not Applicable

The calculation of the ratio of earnings to combined fixed charges and preferred distributions is above. “Earnings” consist of net income from continuing operations and before fixed charges. “Fixed charges” consist of interest expense, amortization of deferred financing fees and the portion of operating lease expense that represents interest. The portion of operating lease expense that represents interest is calculated by dividing the amount of rent expense allocated to us by our Administrator as part of the administration fee payable under the Administration Agreement, by three, for the years ended December 31, 2010 to 2014 and for the six months ended June 30, 2015.

EX-31.1

Exhibit 31.1

CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, David Gladstone, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gladstone Commercial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2015

/s/ David Gladstone

David Gladstone

Chief Executive Officer and

Chairman of the Board of Directors

EX-31.2

Exhibit 31.2

CERTIFICATION

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Danielle Jones, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Gladstone Commercial Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 3, 2015

/s/ Danielle Jones

Danielle Jones

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

The undersigned, the Chief Executive Officer of Gladstone Commercial Corporation (the “Company”), hereby certifies on the date hereof, pursuant to 18 U.S.C. §1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q for the three months ended June 30, 2015 (“Form 10-Q”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: August 3, 2015

/s/ David Gladstone

David Gladstone

Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE

SARBANES-OXLEY ACT OF 2002

The undersigned, the Chief Financial Officer of Gladstone Commercial Corporation (the “Company”), hereby certifies on the date hereof, pursuant to 18 U.S.C. §1350(a), as adopted pursuant to Section 906 of The Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q for the three months ended June 30, 2015 (“Form 10-Q”), filed concurrently herewith by the Company, fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended, and that the information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

Dated: August 3, 2015

/s/ Danielle Jones

Danielle Jones

Chief Financial Officer

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Mortgage Note Receivable - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Apr. 14, 2015
Debt Disclosure [Abstract]
Interim financing loan			$ 300
Estimated percentage of rate of interest			22.00%
Loan maturity description		This loan matures upon the earlier of April 2016 or the sale of the transitional care facility, which is anticipated to occur in October 2015.
Interest revenue recognized	$ 282	$ 549

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Stockholders' Equity - Summary of Note Issued to Employee for Exercise of Stock Options (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Debt Conversion [Line Items]
Outstanding Balance of Employee Loan		$ 375
Note Outstanding to Employee Loan [Member]
Debt Conversion [Line Items]
Date Issued	2006-11
Outstanding Balance of Employee Loan		$ 375
Maturity Date of Note	2015-11
Interest Rate on Note	8.15%

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Mandatorily Redeemable Preferred Stock - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	1 Months Ended	6 Months Ended
	Feb. 29, 2012	Jun. 30, 2015	Dec. 31, 2014
Class of Stock [Line Items]
Redeemable preferred stock, shares issued		2,150,000	2,150,000
Preferred shares at a redemption price	$ 25.00
Preferred Stock redemption term		On or after January 31, 2016, we may redeem the shares at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends to and including the date of redemption.
Preferred Stock mandatory redemption date	Jan. 31, 2017
Carrying value Term Preferred Stock		$ 2	$ 2
Mandatorily Redeemable Preferred Stock [Member]
Class of Stock [Line Items]
Redeemable preferred stock, shares issued	1,540,000
Redeemable preferred stock, par value	$ 0.001
Public offering price	$ 25.00
Gross proceeds of the offering	$ 38,500
Net proceeds, after deducting offering expenses	$ 36,700
Fair value of Term Preferred Stock		39,300
Carrying value Term Preferred Stock		$ 38,500
Closing price of Term Preferred Stock		$ 25.52
Series C Preferred Stock [Member]
Class of Stock [Line Items]
Redeemable preferred stock, dividend rate percentage	7.125%
Series C Preferred Stock [Member] | Mandatorily Redeemable Preferred Stock [Member]
Class of Stock [Line Items]
Redeemable preferred stock, shares issued		1,540,000	1,540,000
Redeemable preferred stock, par value		$ 0.001	$ 0.001

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Subsequent Events - Additional Information (Detail) $ in Thousands				6 Months Ended		12 Months Ended
	Jul. 15, 2015 USD ($) ft² Option	Jul. 13, 2015 USD ($) ft² Option	Jul. 01, 2015 USD ($)	Jun. 30, 2015 USD ($)	Jun. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Subsequent Event [Line Items]
Principal repayments on mortgage notes payable				$ 23,625	$ 4,182
Lease commission to be paid				291	765
Acquisition Expenses				391	$ 924
Interest Rate Cap [Member]
Subsequent Event [Line Items]
Hedge contract, cost				$ 31		$ 31
Hedge contract, maturity date				Dec. 01, 2016
LIBOR Cap				3.00%
Mortgage Notes Payable [Member]
Subsequent Event [Line Items]
Debt instrument original maturity date				Sep. 01, 2015
Subsequent Event [Member] | Interest Rate Cap [Member]
Subsequent Event [Line Items]
Hedge contract, cost			$ 70
Hedge contract, maturity date			Jul. 01, 2018
Hedge contract, interest rate description			We will receive payments from Synovus Bank if the one month LIBOR rate increases above 3.0%.
Subsequent Event [Member] | Raleigh, North Carolina [Member]
Subsequent Event [Line Items]
Acquisition of our property, area | ft²		86,886
Percentage of space occupied		75.00%
Percentage of lease space to be retained by current tenant		18.00%
Percentage of building lease space to be occupied		93.00%
Lease commencement date		Aug. 01, 2015
Lease expiration date		Dec. 31, 2027
Annualized straight line rent escalations		$ 500
Number of options for renewal of lease | Option		2
Renew the lease for additional periods		5 years
Amount to be paid for tenant improvements		$ 800
Lease commission to be paid		$ 400
Subsequent Event [Member] | Atlanta, Georgia [Member]
Subsequent Event [Line Items]
Acquisition of our property, area | ft²	78,151
Annualized straight line rent escalations	$ 1,300
Number of options for renewal of lease | Option	2
Renew the lease for additional periods	5 years
Acquisition of our property, value	$ 13,000
Acquisition Expenses	100
Issuance of mortgage debt on property	$ 7,500
Average cap rate	9.90%
Subsequent Event [Member] | Lease One [Member] | Atlanta, Georgia [Member]
Subsequent Event [Line Items]
Acquisition of our property, area | ft²	54,836
Lease expiration period	7 years
Subsequent Event [Member] | Lease Two [Member] | Atlanta, Georgia [Member]
Subsequent Event [Line Items]
Acquisition of our property, area | ft²	23,315
Lease expiration period	15 years
Subsequent Event [Member] | LIBOR [Member]
Subsequent Event [Line Items]
LIBOR Cap			3.00%
Subsequent Event [Member] | Mortgage Notes Payable [Member]
Subsequent Event [Line Items]
Principal repayments on mortgage notes payable			$ 11,300
Debt instrument original maturity date			Sep. 01, 2015
Long-term notes payable			$ 1,700

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Mortgage Notes Payable and Line of Credit - Schedule of Principal Payments of Mortgage Notes Payable (Parenthetical) (Detail) - USD ($)		6 Months Ended
	Jul. 01, 2015	Jun. 30, 2015	Jun. 30, 2014
Debt Instrument [Line Items]
Refinance of principal payment maturity period, description		This figure includes two balloon principal payments that mature in the second half of 2015. We refinanced one of these mortgages subsequent to June 30, 2015, using a combination of new mortgage debt and equity, repaying $11.3 million of principal.
Principal repayments on mortgage notes payable		$ 23,625,000	$ 4,182,000
Mortgage Notes Payable [Member]
Debt Instrument [Line Items]
Premiums and discounts, net		$ 553,000
Mortgage Notes Payable [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Principal repayments on mortgage notes payable	$ 11,300,000

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Real Estate and Intangible Assets - Pro-Forma Condensed Consolidated Statements of Operations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Operating Data:
Total operating revenue	$ 21,122	$ 21,938	$ 42,114	$ 43,395
Total operating expenses	(12,697)	(13,033)	(25,113)	(25,851)
Other expenses	(7,775)	(6,860)	(15,495)	(28,907)
Net income (loss)	650	2,045	1,506	(11,363)
Dividends attributable to preferred and senior common stock	(1,284)	(1,133)	(2,532)	(2,257)
Net loss attributable to common stockholders	$ (634)	$ 912	$ (1,026)	$ (13,620)
Share and Per Share Data:
Basic (loss) earnings per share of common stock - pro forma	$ (0.03)	$ 0.06	$ (0.05)	$ (0.84)
Diluted (loss) earnings per share of common stock - pro forma	(0.03)	0.05	(0.05)	(0.84)
Basic (loss) earnings per share of common stock - actual	(0.04)	0.01	(0.07)	(0.90)
Diluted (loss) earnings per share of common stock - actual	$ (0.04)	$ 0.01	$ (0.07)	$ (0.90)
Weighted average shares outstanding-basic	20,833,787	16,547,793	20,524,101	16,149,467
Weighted average shares outstanding-diluted	20,833,787	16,894,973	20,524,101	16,149,467

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Related-Party Transactions - Additional Information (Detail) - USD ($) $ in Thousands			3 Months Ended			6 Months Ended
		Jul. 01, 2015	Jun. 30, 2015	Mar. 31, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014
Related Party Transaction [Line Items]
Due to Adviser and Administrator	[1]		$ 1,683			$ 1,683		$ 916
Annual base management fee, in percentage of stockholders' equity, in excess of recorded value of preferred stock						2.00%
Base management fee	[1]		866		$ 666	$ 1,717	$ 1,291
Pre-incentive quarterly fee FFO in percentage of common stockholders' equity that will reward the Adviser						1.75%
Pre-incentive annual fee FFO in percentage of common stockholders' equity that will reward the Adviser						7.00%
Amount to be paid to Adviser in percentage of pre-incentive fee condition one						100.00%
Pre-incentive fee in percentage of common stockholders' equity that awards Adviser hundred percent of amount of pre-incentive fee, maximum percentage						2.1875%
Amount to be paid to Adviser in percentage of pre-incentive fee condition two						20.00%
Pre-incentive fee in percentage of common stockholders' equity that awards the Adviser 20% of the amount of the pre-incentive fee, minimum percentage						2.1875%
Incentive fee	[1]		1,760		1,527	$ 3,433	2,767
Credits related to unconditional and irrevocable voluntary waivers issued by the Adviser	[1]		1,316		957	2,500	2,162
Related-party transactions incentive fee, net			500		500	$ 900	600
Incentive fee description						However, in no event shall the incentive fee for a particular quarter exceed by 15.0% (the cap) the average quarterly incentive fee paid by us for the previous four quarters (excluding quarters for which no incentive fee was paid).
Capital gains incentive fee description						At the end of the fiscal year, if this number is positive, then the capital gain fee payable for such time period shall equal 15.0% of such amount.
Administration fee	[1]		366		485	$ 728	977
Agreement termination date						Aug. 31, 2016
Dealer manager fee in percentage of gross proceeds of shares of Senior Common Stock sold						7.00%
Sales commission fee in percentage of gross proceeds of shares of Senior Common Stock sold						3.00%
Fees paid			100		100	$ 200	100
Total secured mortgages subject to financing fee			$ 40,500		27,500	$ 40,500	$ 27,500	$ 55,100
Financing fee on secured mortgages percentage			0.30%			0.30%	0.30%
Minimum [Member]
Related Party Transaction [Line Items]
Percentage of the amount of the mortgage						0.15%
Maximum [Member]
Related Party Transaction [Line Items]
Percentage of the amount of the mortgage						1.00%
Subsequent Event [Member]
Related Party Transaction [Line Items]
Annual base management fee, in percentage of stockholders' equity, adjusted to unrealized gains or losses		1.50%
Quarterly base management fee, in percentage of stockholders' equity, adjusted to unrealized gains or losses		0.375%
Pre-incentive quarterly fee FFO in percentage of common stockholders' equity that will reward the Adviser		2.00%
Pre-incentive annual fee FFO in percentage of common stockholders' equity that will reward the Adviser		8.00%
Amount to be paid to Adviser in percentage of pre-incentive fee condition one		15.00%
Capital gains-based incentive fee percentage		15.00%
Notice period for termination of agreement without cause		120 days
Notice period for termination of agreement with cause		30 days
Dealer Manager [Member]
Related Party Transaction [Line Items]
Agreement termination date						Mar. 28, 2015
Wrote-off of deferred offering costs						$ 100
Payments made to the Dealer Manager pursuant to Dealer Manager Agreement				$ 300	$ 100		$ 100

[1] Refer to Note 2 "Related-Party Transactions"

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Commitments and Contingencies - Future Minimum Rental Payments Due under Terms of Leases (Detail) - Jun. 30, 2015 - Ground Leases [Member] - USD ($) $ in Thousands	Total
Operating Leased Assets [Line Items]
Remainder of 2015	$ 229
For the year ended December 31, 2016	459
For the year ended December 31, 2017	462
For the year ended December 31, 2018	464
For the year ended December 31, 2019	465
For the year ended December 31, 2020	466
Thereafter	$ 4,948
Tulsa, OK [Member]
Operating Leased Assets [Line Items]
Lease End Date	2021-04
Remainder of 2015	$ 85
For the year ended December 31, 2016	169
For the year ended December 31, 2017	169
For the year ended December 31, 2018	169
For the year ended December 31, 2019	169
For the year ended December 31, 2020	169
Thereafter	$ 85
Dartmouth, MA [Member]
Operating Leased Assets [Line Items]
Lease End Date	2036-05
Remainder of 2015	$ 87
For the year ended December 31, 2016	174
For the year ended December 31, 2017	174
For the year ended December 31, 2018	174
For the year ended December 31, 2019	174
For the year ended December 31, 2020	174
Thereafter	$ 3,126
Springfield, MA [Member]
Operating Leased Assets [Line Items]
Lease End Date	2030-02
Remainder of 2015	$ 43
For the year ended December 31, 2016	86
For the year ended December 31, 2017	89
For the year ended December 31, 2018	90
For the year ended December 31, 2019	90
For the year ended December 31, 2020	90
Thereafter	$ 884
Salt Lake City, UT [Member]
Operating Leased Assets [Line Items]
Lease End Date	2040-11
Remainder of 2015	$ 14
For the year ended December 31, 2016	30
For the year ended December 31, 2017	30
For the year ended December 31, 2018	31
For the year ended December 31, 2019	32
For the year ended December 31, 2020	33
Thereafter	$ 853

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Mortgage Notes Payable and Line of Credit - Additional Information (Detail)			3 Months Ended		6 Months Ended
	Jul. 01, 2015 USD ($)	Jun. 29, 2015 USD ($)	Jun. 30, 2015 USD ($) Property Mortgages	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) Property Mortgages	Jun. 30, 2014 USD ($)	Aug. 03, 2015 USD ($)	Dec. 31, 2014 USD ($)	Nov. 30, 2014 USD ($)	Aug. 31, 2013 USD ($)
Debt Instrument [Line Items]
Number of mortgage notes payable | Mortgages			44		44
Weighted average interest rate on debt outstanding			4.93%		4.93%
Number of properties collateralized in mortgage notes payable | Property			99		99
Net book value of collateralized mortgage properties			$ 692,000,000		$ 692,000,000
Number of long-term mortgages issued | Mortgages					4
Number of properties to issue collateralized mortgage notes payable | Property					5
Payments of deferred financing costs			400,000	$ 400,000	$ 883,000	$ 633,000
Libor rate					0.19%
Debt instrument maturity date description					This loan matures upon the earlier of April 2016 or the sale of the transitional care facility, which is anticipated to occur in October 2015.
Extension period subject to payment of fee					1 year
Fair value of mortgage notes payable outstanding			498,600,000		$ 498,600,000
Borrowings under line of credit			$ 45,200,000		$ 45,200,000			$ 43,300,000		$ 60,000,000
Line of credit facility, maximum additional amount drawn									$ 75,000,000
Line of credit, maturity date					2017-08
Extension fee on the initial maturity date					0.25%
Line of credit at an interest rate			2.94%		2.94%
Letters of credit, outstanding			$ 3,900,000		$ 3,900,000
Interest Rate Cap [Member]
Debt Instrument [Line Items]
LIBOR Cap			3.00%		3.00%
Synovus Bank [Member]
Debt Instrument [Line Items]
Libor rate					2.25%
Maturity Date					Jul. 01, 2018
Subsequent Event [Member]
Debt Instrument [Line Items]
Line of credit facility, maximum additional amount drawn							$ 9,200,000
LIBOR [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
LIBOR Cap	3.00%
Letter of Credit [Member]
Debt Instrument [Line Items]
Weighted average interest rate on debt outstanding			2.75%		2.75%
Mortgage Notes Payable [Member]
Debt Instrument [Line Items]
Weighted average interest rate on debt outstanding			5.11%		5.11%
Number of properties collateralized in mortgage notes payable | Property			80		80
Debt instrument stated percentage		5.30%
Debt instrument balloon payment to be paid		$ 19,100,000
Debt instrument original maturity date					Sep. 01, 2015
One month LIBOR rate			0.19%		0.19%
Excess of LIBOR rate					3.00%
Carrying value of mortgage notes payable outstanding			$ 486,800,000		$ 486,800,000
Mortgage Notes Payable [Member] | Synovus Bank [Member]
Debt Instrument [Line Items]
Long-term notes payable		$ 19,800,000
Debt instrument, frequency of periodic payment					Monthly
Libor rate		2.25%
Debt instrument maturity date description					Maturity date of July 1, 2018, with one, two-year extension option.
Extension period subject to payment of fee					2 years
Maturity Date					Jul. 01, 2018
Mortgage Notes Payable [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Long-term notes payable	$ 1,700,000
Debt instrument original maturity date	Sep. 01, 2015
Mortgage Notes Payable [Member] | LIBOR [Member] | Subsequent Event [Member] | Synovus Bank [Member] | Interest Rate Cap [Member]
Debt Instrument [Line Items]
LIBOR Cap	3.00%

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Real Estate Held for Sale - Components of Income from Real Estate and Related Assets Held for Sale (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Real Estate Properties [Line Items]
Operating expense	$ 12,595	$ 11,243	$ 24,351	$ 34,981
Total operating revenues	20,688	18,390	40,567	35,526
Real Estate Held for Sale [Member]
Real Estate Properties [Line Items]
Operating revenue	86	77	169	154
Operating expense	9	20	23	43
Other expense	39	40	79	80
Total operating revenues	$ 38	$ 17	$ 67	$ 31

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Stockholders' Equity - Dividends Declared (Detail) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Common Stock [Member]
Dividends Payable [Line Items]
Common Stock, distributions declared per share	$ 0.375	$ 0.375	$ 0.750	$ 0.750
Senior Common Stock [Member]
Dividends Payable [Line Items]
Common Stock, distributions declared per share	0.2625	0.2625	0.5250	0.5250
Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Preferred Stock, distributions declared per share	0.4843749	0.4843749	0.9687498	0.9687498
Series B Preferred Stock [Member]
Dividends Payable [Line Items]
Preferred Stock, distributions declared per share	0.4688	0.4688	0.9375	0.9375
Series C Preferred Stock [Member]
Dividends Payable [Line Items]
Preferred Stock, distributions declared per share	$ 0.4453	$ 0.4453	$ 0.8906	$ 0.8906

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Mortgage Notes Payable and Line of Credit - Summary of Interest Rate Cap Agreement (Detail) - Interest Rate Cap [Member] - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Date of Issuance	Nov. 26, 2013
Notional Amount	$ 8,200,000
LIBOR Cap	3.00%
Maturity Date	Dec. 01, 2016
Cost	$ 31,000	$ 31,000
Fair Value		$ 4,000

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Real Estate and Intangible Assets

6 Months Ended

Jun. 30, 2015

Text Block [Abstract]

Real Estate and Intangible Assets

4. Real Estate and Intangible Assets

Real Estate

The following table sets forth the components of our investments in real estate as of June 30, 2015 and December 31, 2014 (dollars in thousands):

	June 30, 2015 (1)			December 31, 2014
Real estate:
Land	$	95,948		$	88,394
Building and improvements		620,924			593,155
Tenant improvements		46,959			41,016
Accumulated depreciation		(102,243	)		(92,133	)
Real estate, net	$	661,588		$	630,432

⁽¹⁾ Does not include real estate held for sale as of June 30, 2015.

Real estate depreciation expense on the building and tenant improvement assets was $5.5 million and $10.7 million for the three and six months ended June 30, 2015, respectively, and $4.6 million and $9.0 million for the three and six months ended June 30, 2014, respectively.

2015 Real Estate Activity

During the six months ended June 30, 2015, we acquired four properties, which are summarized below (dollars in thousands):

Location	Acquisition Date		Square Footage (unaudited)		Lease Term		Renewal Options		Total Purchase Price		Acquisition Expenses		Annualized GAAP Rent		Debt Issued
Richardson, TX (1)		3/6/2015		155,984		9.5 Years		2 (5 years each)	$	24,700	$	104	$	2,708	$	14,573
Birmingham, AL		3/20/2015		30,850		8.5 Years		1 (5 years)		3,648		71		333		N/A
Columbus, OH		5/28/2015		78,033		15.0 Years		2 (5 years each)		7,700		72		637		4,466
Salt Lake City, UT (1)		5/29/2015		86,409		6.5 Years		1 (5 years)		22,200		144		2,411		13,000
Total				351,276					$	58,248	$	391	$	6,089	$	32,039

⁽¹⁾ The tenant occupying this property is subject to a gross lease.

In accordance with Accounting Standards Codification, or ASC, 805, “Business Combinations,” we determined the fair value of the acquired assets related to the four properties acquired during the six months ended June 30, 2015, as follows (dollars in thousands):

	Land		Building		Tenant Improvements		In-place Leases		Leasing Costs		Customer Relationships		Above Market Leases		Below Market Leases			Total Purchase Price
Richardson, TX	$	2,709	$	12,503	$	2,761	$	2,046	$	1,791	$	1,915	$	975	$	—		$	24,700
Birmingham, AL		650		1,683		351		458		146		360		—		—			3,648
Columbus, OH		1,338		3,511		1,547		1,144		672		567		—		(1,079	)		7,700
Salt Lake City, UT		3,248		11,861		1,268		2,396		981		1,678		821		(53	)		22,200
	$	7,945	$	29,558	$	5,927	$	6,044	$	3,590	$	4,520	$	1,796	$	(1,132	)	$	58,248

Below is a summary of the total revenue and earnings recognized on the four properties acquired during the six months ended June 30, 2015 (dollars in thousands):

			For the three months ended June 30,					For the six months ended June 30,
			2015					2015
Location	Acquisition Date		Rental Revenue		Earnings (1)			Rental Revenue		Earnings (1)
Richardson, TX		3/6/2015	$	657	$	90		$	839	$	328
Birmingham, AL		3/20/2015		83		(22	)		94		106
Columbus, OH		5/28/2015		67		149			67		149
Salt Lake City, UT		5/29/2015		207		278			207		278
			$	1,014	$	495		$	1,207	$	861

⁽¹⁾ Earnings is calculated as net income exclusive of both interest expense and acquisition related costs that are required to be expensed under ASC 805.

Pro Forma

The following table reflects pro-forma consolidated statements of operations as if the properties acquired during the three and six months ended June 30, 2015 and the twelve months ended December 31, 2014, respectively were acquired as of January 1, 2014. The pro-forma earnings for the three and six months ended June 30, 2015 and 2014 were adjusted to assume that acquisition-related costs were incurred as of the previous period (dollars in thousands, except per share amounts):

	For the three months ended June 30, (unaudited)						For the six months ended June 30, (unaudited)
	2015			2014			2015			2014
Operating Data:
Total operating revenue	$	21,122		$	21,938		$	42,114		$	43,395
Total operating expenses		(12,697	)		(13,033	)		(25,113	)		(25,851	)
Other expenses		(7,775	)		(6,860	)		(15,495	)		(28,907	) (1)
Net income (loss)		650			2,045			1,506			(11,363	)
Dividends attributable to preferred and senior common stock		(1,284	)		(1,133	)		(2,532	)		(2,257	)
Net loss attributable to common stockholders	$	(634	)	$	912		$	(1,026	)	$	(13,620	)
Share and Per Share Data:
Basic (loss) earnings per share of common stock - pro forma	$	(0.03	)	$	0.06		$	(0.05	)	$	(0.84	)
Diluted (loss) earnings per share of common stock - pro forma	$	(0.03	)	$	0.05		$	(0.05	)	$	(0.84	)
Basic (loss) earnings per share of common stock - actual	$	(0.04	)	$	0.01		$	(0.07	)	$	(0.90	)
Diluted (loss) earnings per share of common stock - actual	$	(0.04	)	$	0.01		$	(0.07	)	$	(0.90	)
Weighted average shares outstanding-basic		20,833,787			16,547,793			20,524,101			16,149,467
Weighted average shares outstanding-diluted		20,833,787			16,894,973			20,524,101			16,149,467

(1) $14.0 million of other expenses relates to the impairment charge recorded in operating expenses during the six months ended June 30, 2014.

Significant Real Estate Activity on Existing Assets

On April 28, 2015, we modified the lease with the tenant occupying one of our properties located in Austin, Texas. The modification provided the tenant a termination option, which allows the tenant to terminate its lease effective December 31, 2017, upon paying a termination penalty of approximately $1.1 million on or before March 31, 2017. The lease is scheduled to otherwise terminate in June 2022. As a result of the modification, the tenant forfeited its right to $0.5 million in tenant improvement allowance, provided in an earlier amendment. All other terms and conditions of the lease remain in full force and effect.

On April 29, 2015, we modified the lease with the anchor tenant occupying one of our properties located in Columbus, Ohio. The anchor tenant is currently occupying 92.0% of the property and the modification allows the anchor tenant to expand into the remaining space, currently occupied by another tenant through November 30, 2016. The lease term for the expansion space is coterminous with their current lease, and both leases expire on December 2023. In connection with the expansion of the lease and modification of certain terms of the lease, we provided approximately $0.1 million in tenant improvements.

2014 Real Estate Activity

During the six months ended June 30, 2014, we acquired six properties, which are summarized in the table below (dollars in thousands):

Location	Acquisition Date		Square Footage		Lease Term		Renewal Options		Total Purchase Price		Acquisition Expenses		Annualized GAAP Rent		Debt Issued & Assumed
Allen, TX		3/27/2014		21,154		12 Years		4 (5 years each)	$	5,525	$	29	$	570	$	3,481
Colleyville, TX		3/27/2014		20,355		12 Years		4 (5 years each)		4,523		29		467		2,849
Rancho Cordova, CA		4/22/2014		61,358		10 Years		1 (5 year)		8,225		65		902		4,935
Coppell, TX		5/8/2014		21,171		12 Years		4 (5 years each)		5,838		22		601		3,816
Columbus, OH		5/13/2014		114,786		9.5 Years		N/A		11,800		65		1,278		N/A
Taylor, PA		6/9/2014		955,935		10 Years		4 (5 years each)		39,000		714		3,400		22,600
Total				1,194,759					$	74,911	$	924	$	7,218	$	37,681

In accordance with ASC 805, we determined the fair value of the acquired assets related to the six properties acquired during the six months ended June 30, 2014 as follows (in thousands):

	Land		Building		Tenant Improvements		In-place Leases		Leasing Costs		Customer Relationships		Above Market Leases		Below Market Leases			Premium on Assumed Debt			Total Purchase Price
Allen, TX	$	874	$	3,509	$	125	$	598	$	273	$	218	$	—	$	—		$	(72	)	$	5,525
Colleyville, TX		1,277		2,307		117		486		220		181		—		(6	)		(59	)		4,523
Rancho Cordova, CA		752		5,898		278		473		546		278		—		—			—			8,225
Coppell, TX		1,448		3,221		128		636		293		230		—		—			(118	)		5,838
Columbus, OH		990		6,080		1,937		823		719		990		261		—			—			11,800
Taylor, PA		3,102		24,449		956		6,171		1,452		2,870		—		—			—			39,000
	$	8,443	$	45,464	$	3,541	$	9,187	$	3,503	$	4,767	$	261	$	(6	)	$	(249	)	$	74,911

Below is a summary of the total revenue and earnings recognized on the six properties acquired during the three and six months ended June 30, 2014 (dollars in thousands):

			For the three months ended June 30,				For the six months ended June 30,
	Acquisition Date		2014				2014
Location			Rental Revenue		Earnings (1)		Rental Revenue		Earnings (1)
Allen, TX		3/27/2014	$	142	$	81	$	150	$	86
Colleyville, TX		3/27/2014		117		67		123		71
Rancho Cordova, CA		4/22/2014		173		65		173		65
Coppell, TX		5/8/2014		89		52		89		52
Columbus, OH		5/13/2014		167		68		167		68
Taylor, PA		6/9/2014		208		98		208		98
			$	896	$	431	$	910	$	440

(1) Earnings is calculated as net income exclusive of both interest expense and acquisition related costs that are required to be expensed under ASC 805.

Intangible Assets

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of June 30, 2015 and December 31, 2014 respectively (in thousands):

	June 30, 2015 (1)					December 31, 2014
	Lease Intangibles		Accumulated Amortization			Lease Intangibles		Accumulated Amortization
In-place leases	$	65,177	$	(19,997	)	$	59,233	$	(17,379	)
Leasing costs		42,083		(13,038	)		38,305		(11,411	)
Customer relationships		45,777		(13,109	)		41,243		(11,177	)
	$	153,037	$	(46,144	)	$	138,781	$	(39,967	)
	Deferred Rent Receivable/(Liability)		Accumulated Amortization			Deferred Rent Receivable/(Liability)		Accumulated Amortization
Above market leases	$	9,548	$	(6,194	)	$	8,314	$	(6,384	)
Below market leases		17,071		(7,793	)		15,939		(7,345	)
	$	26,619	$	(13,987	)	$	24,253	$	(13,729	)
Total	$	179,656	$	(60,131	)	$	163,034	$	(53,696	)

⁽¹⁾ Does not include real estate held for sale as of June 30, 2015.

Total amortization expense related to in-place leases, leasing costs and customer relationship lease intangible assets was $3.4 million and $6.4 million for the three and six months ended June 30, 2015, respectively, and $2.3 million and $4.7 million for the three and six months ended June 30, 2014, respectively, and is included in depreciation and amortization expense in the condensed consolidated statement of operations.

Total amortization related to above-market lease values was $0.1 million and $0.2 million, for the three and six months ended June 30, 2015, respectively, and $0.1 million, for both the three and six months ended June 30, 2014. Total amortization related to below-market lease values was $0.2 million and $0.4 million for the three and six months ended June 30, 2015, respectively, and $0.2 million and $0.3 million for the three and six months ended June 30, 2014, respectively.

The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the six months ended June 30, 2015 and 2014, respectively, were as follows:

Intangible Assets & Liabilities	2015		2014
In-place leases		10.9		10.7
Leasing costs		10.9		10.7
Customer relationships		15.6		15.6
Above market leases		18.9		8.2
Below market leases		12.4		11.9
All intangible assets & liabilities		12.5		12.2

XML

Mortgage Notes Payable and Line of Credit - Summary of Long-Term Mortgages (Detail) - 6 months ended Jun. 30, 2015 - USD ($) $ in Thousands	Total
Debt Instrument [Line Items]
Debt Issued	$ 51,819
Libor rate description	One month LIBOR was approximately 0.19%
Libor rate	0.19%
PNC Bank, NA [Member]
Debt Instrument [Line Items]
Date of Issuance	Mar. 06, 2015
Issuing Bank	PNC Bank, NA
Debt Issued	$ 14,573
Interest Rate	3.86%
Maturity Date	Apr. 01, 2025
Amortization Period (months)	300 months
FC Bank [Member]
Debt Instrument [Line Items]
Date of Issuance	May 28, 2015
Issuing Bank	FC Bank
Debt Issued	$ 4,466
Interest Rate	3.75%
Maturity Date	Jun. 01, 2022
Amortization Period (months)	85 months
Guggenheim Partners [Member]
Debt Instrument [Line Items]
Date of Issuance	Jun. 16, 2015
Issuing Bank	Guggenheim Partners
Debt Issued	$ 13,000
Interest Rate	3.99%
Maturity Date	Jul. 01, 2045
Synovus Bank [Member]
Debt Instrument [Line Items]
Date of Issuance	Jun. 29, 2015
Issuing Bank	Synovus Bank
Debt Issued	$ 19,780
Libor rate description	LIBOR + 2.25 %
Maturity Date	Jul. 01, 2018
Libor rate	2.25%

XML

Real Estate and Intangible Assets - Additional Information (Detail) $ in Thousands			3 Months Ended		6 Months Ended
	Apr. 29, 2015 USD ($)	Apr. 28, 2015 USD ($)	Jun. 30, 2015 USD ($) Property	Jun. 30, 2014 USD ($) Property	Jun. 30, 2015 USD ($) Property	Jun. 30, 2014 USD ($) Property	Dec. 31, 2014 USD ($)
Real Estate Properties [Line Items]
Number of properties acquired | Property			4	6	4	6
Tenant improvements			$ 46,959		$ 46,959		$ 41,016
Total amortization expense related to lease intangible assets			3,400	$ 2,300	6,400	$ 4,700
Amortization related to below-market lease			200	200	400	300
Building And Tenant Improvements [Member]
Real Estate Properties [Line Items]
Real estate depreciation expense			5,500	4,600	10,700	9,000
Above Market Leases [Member]
Real Estate Properties [Line Items]
Amortization related to above-market lease			$ 100	$ 100	$ 200	$ 100
Austin, Texas [Member]
Real Estate Properties [Line Items]
Early termination penalty		$ 1,100
Effective termination date					Dec. 31, 2017
Lease termination description					Termination option, which allows the tenant to terminate its lease effective December 31, 2017, upon paying a termination penalty of approximately $1.1 million on or before March 31, 2017. The lease is scheduled to otherwise terminate in June 2022. As a result of the modification, the tenant forfeited its right to $0.5 million in tenant improvement allowance, provided in an earlier amendment. All other terms and conditions of the lease remain in full force and effect.
Forfeiture of tenant improvement allowance		$ 500
Extended lease expiration					2022-06
Columbus, OH [Member]
Real Estate Properties [Line Items]
Percentage of property occupied by tenant	92.00%
Effective termination date					2023-12
Tenant improvements	$ 100

XML

Real Estate and Intangible Assets - Components of Investments in Real Estate (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Real estate:
Land	$ 95,948	$ 88,394
Building and improvements	620,924	593,155
Tenant improvements	46,959	41,016
Accumulated depreciation	(102,243)	(92,133)
Total real estate, net	$ 661,588	$ 630,432

XML

Subsequent Events - Monthly Distributions Declared by Company's Board of Directors (Detail) - Jul. 14, 2015 - Subsequent Event [Member] - $ / shares	Total
Senior Common Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	$ 0.2625
Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	0.4843749
Series B Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	0.4687500
Series C Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	0.4453125
Common Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	$ 0.3750000
Installment 1 - FY2015 [Member]
Dividends Payable [Line Items]
Record Date	Jul. 24, 2015
Payment Date	Aug. 04, 2015
Installment 1 - FY2015 [Member] | Senior Common Stock [Member]
Dividends Payable [Line Items]
Payment Date	Aug. 07, 2015
Distribution per Share	$ 0.0875
Payable to the Holders of Records During the Month	July
Installment 1 - FY2015 [Member] | Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	$ 0.1614583
Installment 1 - FY2015 [Member] | Series B Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	0.1562500
Installment 1 - FY2015 [Member] | Series C Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	0.1484375
Installment 1 - FY2015 [Member] | Common Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	$ 0.1250000
Installment 2 - FY2015 [Member]
Dividends Payable [Line Items]
Record Date	Aug. 20, 2015
Payment Date	Aug. 31, 2015
Installment 2 - FY2015 [Member] | Senior Common Stock [Member]
Dividends Payable [Line Items]
Payment Date	Sep. 08, 2015
Distribution per Share	$ 0.0875
Payable to the Holders of Records During the Month	August
Installment 2 - FY2015 [Member] | Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	$ 0.1614583
Installment 2 - FY2015 [Member] | Series B Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	0.1562500
Installment 2 - FY2015 [Member] | Series C Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	0.1484375
Installment 2 - FY2015 [Member] | Common Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	$ 0.1250000
Installment 3 - FY2015 [Member]
Dividends Payable [Line Items]
Record Date	Sep. 21, 2015
Payment Date	Sep. 30, 2015
Installment 3 - FY2015 [Member] | Senior Common Stock [Member]
Dividends Payable [Line Items]
Payment Date	Oct. 07, 2015
Distribution per Share	$ 0.0875
Payable to the Holders of Records During the Month	September
Installment 3 - FY2015 [Member] | Series A Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	$ 0.1614583
Installment 3 - FY2015 [Member] | Series B Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	0.1562500
Installment 3 - FY2015 [Member] | Series C Preferred Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	0.1484375
Installment 3 - FY2015 [Member] | Common Stock [Member]
Dividends Payable [Line Items]
Distribution per Share	$ 0.1250000

XML

Mortgage Notes Payable and Line of Credit - Summary of Long-Term Mortgages (Parenthetical) (Detail) $ in Millions	Jun. 29, 2015 USD ($)
Variable Rate Mortgage Loans [Member]
Debt Instrument [Line Items]
Debt instrument balloon payment to be paid	$ 19.1

XML

Real Estate and Intangible Assets - Summary of Properties Acquired (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($) ft² Option	Jun. 30, 2014 USD ($) ft² Option
Business Acquisition [Line Items]
Square Footage (unaudited) | ft²	351,276	1,194,759
Total Purchase Price	$ 58,248	$ 74,911
Acquisition Expenses	391	924
Annualized GAAP Rent	6,089	7,218
Debt Issued & Assumed	$ 32,039	$ 37,681
Richardson, TX [Member]
Business Acquisition [Line Items]
Acquisition Date	Mar. 06, 2015
Square Footage (unaudited) | ft²	155,984
Lease Term	9 years 6 months
Renewal Options | Option	2
Renewal Options Period	5 years
Total Purchase Price	$ 24,700
Acquisition Expenses	104
Annualized GAAP Rent	2,708
Debt Issued & Assumed	$ 14,573
Birmingham, AL [Member]
Business Acquisition [Line Items]
Acquisition Date	Mar. 20, 2015
Square Footage (unaudited) | ft²	30,850
Lease Term	8 years 6 months
Renewal Options | Option	1
Renewal Options Period	5 years
Total Purchase Price	$ 3,648
Acquisition Expenses	71
Annualized GAAP Rent	$ 333
Allen, TX [Member]
Business Acquisition [Line Items]
Acquisition Date		Mar. 27, 2014
Square Footage (unaudited) | ft²		21,154
Lease Term		12 years
Renewal Options | Option		4
Renewal Options Period		5 years
Total Purchase Price		$ 5,525
Acquisition Expenses		29
Annualized GAAP Rent		570
Debt Issued & Assumed		$ 3,481
Colleyville, TX [Member]
Business Acquisition [Line Items]
Acquisition Date		Mar. 27, 2014
Square Footage (unaudited) | ft²		20,355
Lease Term		12 years
Renewal Options | Option		4
Renewal Options Period		5 years
Total Purchase Price		$ 4,523
Acquisition Expenses		29
Annualized GAAP Rent		467
Debt Issued & Assumed		$ 2,849
Rancho Cordova, CA [Member]
Business Acquisition [Line Items]
Acquisition Date		Apr. 22, 2014
Square Footage (unaudited) | ft²		61,358
Lease Term		10 years
Renewal Options | Option		1
Renewal Options Period		5 years
Total Purchase Price		$ 8,225
Acquisition Expenses		65
Annualized GAAP Rent		902
Debt Issued & Assumed		$ 4,935
Coppell, TX [Member]
Business Acquisition [Line Items]
Acquisition Date		May 08, 2014
Square Footage (unaudited) | ft²		21,171
Lease Term		12 years
Renewal Options | Option		4
Renewal Options Period		5 years
Total Purchase Price		$ 5,838
Acquisition Expenses		22
Annualized GAAP Rent		601
Debt Issued & Assumed		$ 3,816
Columbus, OH [Member]
Business Acquisition [Line Items]
Acquisition Date	May 28, 2015	May 13, 2014
Square Footage (unaudited) | ft²	78,033	114,786
Lease Term	15 years	9 years 6 months
Renewal Options | Option	2
Renewal Options Period	5 years
Total Purchase Price	$ 7,700	$ 11,800
Acquisition Expenses	72	65
Annualized GAAP Rent	637	$ 1,278
Debt Issued & Assumed	$ 4,466
Taylor, PA [Member]
Business Acquisition [Line Items]
Acquisition Date		Jun. 09, 2014
Square Footage (unaudited) | ft²		955,935
Lease Term		10 years
Renewal Options | Option		4
Renewal Options Period		5 years
Total Purchase Price		$ 39,000
Acquisition Expenses		714
Annualized GAAP Rent		3,400
Debt Issued & Assumed		$ 22,600
Salt Lake City, UT [Member]
Business Acquisition [Line Items]
Acquisition Date	May 29, 2015
Square Footage (unaudited) | ft²	86,409
Lease Term	6 years 6 months
Renewal Options | Option	1
Renewal Options Period	5 years
Total Purchase Price	$ 22,200
Acquisition Expenses	144
Annualized GAAP Rent	2,411
Debt Issued & Assumed	$ 13,000

XML

Real Estate and Intangible Assets - Fair Value of Acquired Assets (Detail) - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Business Acquisition [Line Items]
Total Purchase Price	$ 58,248	$ 74,911
Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	4,520	4,767
Above Market Leases [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	1,796	261
Below Market Leases [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	(1,132)	(6)
Premium on Assumed Debt [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		(249)
Richardson, TX [Member]
Business Acquisition [Line Items]
Total Purchase Price	24,700
Richardson, TX [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	1,915
Richardson, TX [Member] | Above Market Leases [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	975
Birmingham, AL [Member]
Business Acquisition [Line Items]
Total Purchase Price	3,648
Birmingham, AL [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	360
Allen, TX [Member]
Business Acquisition [Line Items]
Total Purchase Price		5,525
Allen, TX [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		218
Allen, TX [Member] | Premium on Assumed Debt [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		(72)
Colleyville, TX [Member]
Business Acquisition [Line Items]
Total Purchase Price		4,523
Colleyville, TX [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		181
Colleyville, TX [Member] | Below Market Leases [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		(6)
Colleyville, TX [Member] | Premium on Assumed Debt [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		(59)
Rancho Cordova, CA [Member]
Business Acquisition [Line Items]
Total Purchase Price		8,225
Rancho Cordova, CA [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		278
Coppell, TX [Member]
Business Acquisition [Line Items]
Total Purchase Price		5,838
Coppell, TX [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		230
Coppell, TX [Member] | Premium on Assumed Debt [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		(118)
Columbus, OH [Member]
Business Acquisition [Line Items]
Total Purchase Price	7,700	11,800
Columbus, OH [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	567	990
Columbus, OH [Member] | Above Market Leases [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		261
Columbus, OH [Member] | Below Market Leases [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	(1,079)
Taylor, PA [Member]
Business Acquisition [Line Items]
Total Purchase Price		39,000
Taylor, PA [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		2,870
Salt Lake City, UT [Member]
Business Acquisition [Line Items]
Total Purchase Price	22,200
Salt Lake City, UT [Member] | Customer Relationships [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	1,678
Salt Lake City, UT [Member] | Above Market Leases [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	821
Salt Lake City, UT [Member] | Below Market Leases [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	(53)
Land [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	7,945	8,443
Land [Member] | Richardson, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	2,709
Land [Member] | Birmingham, AL [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	650
Land [Member] | Allen, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		874
Land [Member] | Colleyville, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		1,277
Land [Member] | Rancho Cordova, CA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		752
Land [Member] | Coppell, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		1,448
Land [Member] | Columbus, OH [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	1,338	990
Land [Member] | Taylor, PA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		3,102
Land [Member] | Salt Lake City, UT [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	3,248
Building [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	29,558	45,464
Building [Member] | Richardson, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	12,503
Building [Member] | Birmingham, AL [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	1,683
Building [Member] | Allen, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		3,509
Building [Member] | Colleyville, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		2,307
Building [Member] | Rancho Cordova, CA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		5,898
Building [Member] | Coppell, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		3,221
Building [Member] | Columbus, OH [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	3,511	6,080
Building [Member] | Taylor, PA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		24,449
Building [Member] | Salt Lake City, UT [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	11,861
Tenant Improvements [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	5,927	3,541
Tenant Improvements [Member] | Richardson, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	2,761
Tenant Improvements [Member] | Birmingham, AL [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	351
Tenant Improvements [Member] | Allen, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		125
Tenant Improvements [Member] | Colleyville, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		117
Tenant Improvements [Member] | Rancho Cordova, CA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		278
Tenant Improvements [Member] | Coppell, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		128
Tenant Improvements [Member] | Columbus, OH [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	1,547	1,937
Tenant Improvements [Member] | Taylor, PA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		956
Tenant Improvements [Member] | Salt Lake City, UT [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	1,268
In-Place Leases [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	6,044	9,187
In-Place Leases [Member] | Richardson, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	2,046
In-Place Leases [Member] | Birmingham, AL [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	458
In-Place Leases [Member] | Allen, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		598
In-Place Leases [Member] | Colleyville, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		486
In-Place Leases [Member] | Rancho Cordova, CA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		473
In-Place Leases [Member] | Coppell, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		636
In-Place Leases [Member] | Columbus, OH [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	1,144	823
In-Place Leases [Member] | Taylor, PA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		6,171
In-Place Leases [Member] | Salt Lake City, UT [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	2,396
Leasing Costs [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	3,590	3,503
Leasing Costs [Member] | Richardson, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	1,791
Leasing Costs [Member] | Birmingham, AL [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	146
Leasing Costs [Member] | Allen, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		273
Leasing Costs [Member] | Colleyville, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		220
Leasing Costs [Member] | Rancho Cordova, CA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		546
Leasing Costs [Member] | Coppell, TX [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		293
Leasing Costs [Member] | Columbus, OH [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	672	719
Leasing Costs [Member] | Taylor, PA [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired		$ 1,452
Leasing Costs [Member] | Salt Lake City, UT [Member]
Business Acquisition [Line Items]
Fair value of acquired assets related to the properties acquired	$ 981

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(Loss) Earnings per Share of Common Stock

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

(Loss) Earnings per Share of Common Stock

3. (Loss) Earnings per Share of Common Stock

The following tables set forth the computation of basic and diluted (loss) earnings per share of common stock for each of the three and six months ended June 30, 2015 and 2014, respectively. We computed basic (loss) earnings per share for the three and six months ended June 30, 2015 and 2014, respectively, using the weighted average number of shares outstanding during the periods. Diluted (loss) earnings per share for the three and six months ended June 30, 2015 and 2014, reflects additional shares of common stock related to our convertible Senior Common Stock (if the effect would be dilutive), that would have been outstanding if dilutive potential shares of common stock had been issued, as well as an adjustment to net income available to common stockholders as applicable to common stockholders that would result from their assumed issuance (dollars in thousands, except per share amounts).

	For the three months ended June 30,					For the six months ended June 30,
	2015			2014		2015			2014
Calculation of basic (loss) earnings per share of common stock:
Net (loss) earnings (attributable) available to common stockholders	$	(853	)	$	86	$	(1,407	)	$	(14,554	)
Denominator for basic weighted average shares of common stock		20,833,787			16,547,793		20,524,101			16,149,467
Basic (loss) earnings per share of common stock	$	(0.04	)	$	0.01	$	(0.07	)	$	(0.90	)
Calculation of diluted (loss) earnings per share of common stock:
Net (loss) earnings (attributable) available to common stockholders	$	(853	)	$	86	$	(1,407	)	$	(14,554	)
Add: Income impact of assumed conversion of senior common stock (1)		—			110		—			—
Net (loss) earnings (attributable) available to common stockholders plus assumed conversions	$	(853	)	$	196	$	(1,407	)	$	(14,554	)
Denominator for basic weighted average shares of common stock		20,833,787			16,547,793		20,524,101			16,149,467
Effect of convertible senior common stock (1)		—			347,180		—			—
Denominator for diluted weighted average shares of common stock		20,833,787			16,894,973		20,524,101			16,149,467
Diluted (loss) earnings per share of common stock	$	(0.04	)	$	0.01	$	(0.07	)	$	(0.90	)

(1) We excluded convertible senior common shares of 830,600 and 775,002 from the calculation of diluted earnings per share for the three and six months ended June 30, 2015, respectively, because it was anti-dilutive. We also excluded 332,608 convertible senior common shares from the calculation of diluted earnings per share for the six months ended June 30, 2014, because it was anti-dilutive.

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Real Estate and Intangible Assets - Schedule of Revenue and Earnings Recognized on Properties Acquired (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Business Acquisition [Line Items]
Rental Revenue	$ 1,014	$ 896	$ 1,207	$ 910
Earnings	495	431	$ 861	$ 440
Richardson, TX [Member]
Business Acquisition [Line Items]
Acquisition Date			Mar. 06, 2015
Rental Revenue	657		$ 839
Earnings	90		$ 328
Birmingham, AL [Member]
Business Acquisition [Line Items]
Acquisition Date			Mar. 20, 2015
Rental Revenue	83		$ 94
Earnings	(22)		$ 106
Allen, TX [Member]
Business Acquisition [Line Items]
Acquisition Date				Mar. 27, 2014
Rental Revenue		142		$ 150
Earnings		81		$ 86
Colleyville, TX [Member]
Business Acquisition [Line Items]
Acquisition Date				Mar. 27, 2014
Rental Revenue		117		$ 123
Earnings		67		$ 71
Rancho Cordova, CA [Member]
Business Acquisition [Line Items]
Acquisition Date				Apr. 22, 2014
Rental Revenue		173		$ 173
Earnings		65		$ 65
Coppell, TX [Member]
Business Acquisition [Line Items]
Acquisition Date				May 08, 2014
Rental Revenue		89		$ 89
Earnings		52		$ 52
Columbus, OH [Member]
Business Acquisition [Line Items]
Acquisition Date			May 28, 2015	May 13, 2014
Rental Revenue	67	167	$ 67	$ 167
Earnings	149	68	$ 149	$ 68
Taylor, PA [Member]
Business Acquisition [Line Items]
Acquisition Date				Jun. 09, 2014
Rental Revenue		208		$ 208
Earnings		$ 98		$ 98
Salt Lake City, UT [Member]
Business Acquisition [Line Items]
Acquisition Date			May 29, 2015
Rental Revenue	207		$ 207
Earnings	$ 278		$ 278

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Mortgage Notes Payable and Line of Credit - Company's Mortgage Notes Payable and Line of Credit (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2015 USD ($) Property	Dec. 31, 2014 USD ($)
Debt Instrument [Line Items]
Encumbered properties | Property	99
Carrying value	$ 532,539	$ 502,599
Stated Interest Rates	One month LIBOR was approximately 0.19%
Libor rate	0.19%
Variable Rate Line of Credit [Member]
Debt Instrument [Line Items]
Encumbered properties | Property	19
Carrying value	$ 45,200	43,300
Stated Interest Rates	LIBOR + 2.75 %
Libor rate	2.75%
Scheduled Maturity Dates	Aug. 01, 2017
Premiums and Discounts (Net) [Member]
Debt Instrument [Line Items]
Carrying value	$ 553	707
Fixed Rate Mortgage Loans [Member]
Debt Instrument [Line Items]
Encumbered properties | Property	73
Carrying value	$ 458,806	450,392
Variable Rate Mortgage Loans [Member]
Debt Instrument [Line Items]
Encumbered properties | Property	7
Carrying value	$ 27,980	8,200
Stated Interest Rates	Variable rate mortgage notes payable vary from one month LIBOR + 2.15% to one month LIBOR + 2.25%
Mortgage Notes Payable [Member]
Debt Instrument [Line Items]
Encumbered properties | Property	80
Carrying value	$ 487,339	$ 459,299

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Stockholders' Equity - Additional Information (Detail) - USD ($)		1 Months Ended	3 Months Ended	6 Months Ended
	Mar. 28, 2015	Mar. 31, 2011	Mar. 31, 2015	Jun. 30, 2015	Jun. 30, 2014	Dec. 31, 2014	Sep. 02, 2014
Class of Stock [Line Items]
Common stock, shares issued				21,143,986		19,589,606
Common stock, par value				$ 0.001		$ 0.001
Shares intended to be offered pursuant to primary offering		3,000,000
Shares offered under distribution reinvestment plan		500,000
Shares of senior common stock sold in offering	927,994		189,052
Senior common stock offering, gross proceeds				$ 30,363,000	$ 36,042,000
Repayment date of note including interest				May 07, 2015
Senior Common Stock [Member]
Class of Stock [Line Items]
Common stock, shares issued		3,500,000
Common stock, par value		$ 0.001
Common stock shares issued, selling price		$ 15.00	$ 15.00
Shares offered under distribution reinvestment plan	27,038		5,134
Net proceeds after deducting underwriting discount and commission			$ 2,600,000
Senior common stock offering, gross proceeds	$ 13,900,000
Cantor Fitzgerald & Co [Member]
Class of Stock [Line Items]
Maximum aggregate sales price of shares to be issued under open market sale agreement							$ 100,000,000
Net proceeds under ATM program				$ 27,200,000
Number of shares sold under open market sale agreement				3,400,000
Gross proceeds of shares sold under open market sale agreement				$ 60,100,000
Maximum remaining capacity to sell common stock under open market sale agreement				$ 39,900,000

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands		Jun. 30, 2015	Dec. 31, 2014
ASSETS
Real estate, at cost		$ 763,831	$ 722,565
Less: accumulated depreciation		102,243	92,133
Total real estate, net		661,588	630,432
Lease intangibles, net		106,893	98,814
Real estate and related assets held for sale, net		2,235
Mortgage note receivable		5,900	5,600
Cash and cash equivalents		3,297	8,599
Restricted cash		4,347	3,547
Funds held in escrow		12,377	11,096
Deferred rent receivable, net		24,992	21,728
Deferred financing costs, net		6,212	6,213
Other assets		2,499	1,765
TOTAL ASSETS		830,340	787,794
LIABILITIES
Mortgage notes payable		487,339	459,299
Borrowings under line of credit		45,200	43,300
Redeemable preferred stock		38,500	38,500
Deferred rent liability, net		9,278	8,594
Asset retirement obligation		3,749	3,616
Accounts payable and accrued expenses		5,925	8,285
Liabilities related to assets held for sale		93
Due to Adviser and Administrator	[1]	1,683	916
Other liabilities		7,699	7,612
Total Liabilities		$ 599,466	$ 570,122
Commitments and contingencies	[2]
STOCKHOLDERS' EQUITY
Redeemable preferred stock		$ 2	$ 2
Senior common stock, par value $0.001 per share; 7,500,000 shares authorized and 995,852 and 809,411 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		1	1
Common stock, par value $0.001 per share, 38,500,000 shares authorized and 21,143,986 and 19,589,606 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively		21	20
Additional paid in capital		399,420	369,748
Notes receivable - employee			(375)
Distributions in excess of accumulated earnings		(168,570)	(151,724)
Total Stockholders' Equity		230,874	217,672
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$ 830,340	$ 787,794

[1] Refer to Note 2 "Related-Party Transactions"

[2] Refer to Note 9 "Commitments and Contingencies"

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Mortgage Notes Payable and Line of Credit - Schedule of Principal Payments of Mortgage Notes Payable (Detail) - Mortgage Notes Payable [Member] $ in Thousands	Jun. 30, 2015 USD ($)
Debt Instrument [Line Items]
Six Months ending December 31, 2015	$ 19,282
2016	100,110
2017	68,873
2018	39,205
2019	35,603
2020	7,688
Thereafter	216,025
Total Mortgage Notes Payable	$ 486,786

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Organization, Basis of Presentation and Significant Accounting Policies

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization, Basis of Presentation and Significant Accounting Policies

1. Organization, Basis of Presentation and Significant Accounting Policies

Gladstone Commercial Corporation is a real estate investment trust, or REIT, that was incorporated under the General Corporation Laws of the State of Maryland on February 14, 2003, primarily for the purpose of investing in and owning net leased industrial, commercial and retail real property and selectively making long-term industrial and commercial mortgage loans. Subject to certain restrictions and limitations, our business is managed by Gladstone Management Corporation, a Delaware corporation, or the Adviser, and administrative services are provided by Gladstone Administration, LLC, a Delaware limited liability company, or the Administrator, each pursuant to a contractual arrangement with us. Our Adviser and Administrator collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. Gladstone Commercial Corporation conducts substantially all of its operations through a subsidiary, Gladstone Commercial Limited Partnership, a Delaware limited partnership, or the Operating Partnership.

All further references herein to “we,” “our,” “us” and the “Company” mean Gladstone Commercial Corporation and its consolidated subsidiaries, except where it is made clear that the term means only Gladstone Commercial Corporation.

Interim Financial Information

Our interim financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and pursuant to the requirements for reporting on Form 10-Q and in accordance with Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data presented herein was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of our management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair presentation of financial statements for the interim period, have been included. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the U.S. Securities and Exchange Commission on February 18, 2015. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Critical Accounting Policies

The preparation of our financial statements in accordance with Generally Accepted Accounting Principles in the U.S., or GAAP, requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and as a result, actual results could differ materially from these estimates. A summary of all of our significant accounting policies is provided in Note 1 to our condensed consolidated financial statements included in our 2014 Form 10-K. There were no material changes to our critical accounting policies during the six months ended June 30, 2015.

Recently Issued Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, “Amendments to the Consolidation Analysis” (“ASU-2015-02”), which amends or supersedes the scope and consolidation guidance under existing GAAP. The new standard changes the way a reporting entity evaluates whether a) limited partnerships and similar entities should be consolidated, b) fees paid to decision makers or service provides are variable interests in a variable interest entity, or VIE, and c) variable interests in a VIE held by related parties require the reporting entity to consolidate the VIE. ASU 2015-02 also eliminates the VIE consolidation model based on majority exposure to variability that applied to certain investment companies and similar entities. We are currently assessing the impact of ASU 2015-02, which is effective for annual and interim reporting periods beginning after December 15, 2015. Early adoption is permitted.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU-2015-03”), which simplifies the presentation of debt issuance costs. We are currently assessing the impact of ASU 2015-03 and do not anticipate a material impact on our financial position, results of operations or cash flows from adopting this standard. ASU 2015-03 is effective for annual and interim reporting periods beginning after December 15, 2015. Early adoption is permitted.

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Real Estate and Intangible Assets - Carrying Value of Intangible Assets, Liabilities and Accumulated Amortization (Detail) - USD ($) $ in Thousands	Jun. 30, 2015	Dec. 31, 2014
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	$ 179,656	$ 163,034
Finite-lived intangible assets, accumulated amortization	(60,131)	(53,696)
Below market leases, gross	17,071	15,939
Below market leases, accumulated amortization	(7,793)	(7,345)
In-Place Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	65,177	59,233
Finite-lived intangible assets, accumulated amortization	(19,997)	(17,379)
Leasing Costs [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	42,083	38,305
Finite-lived intangible assets, accumulated amortization	(13,038)	(11,411)
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	45,777	41,243
Finite-lived intangible assets, accumulated amortization	(13,109)	(11,177)
Lease Intangibles [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	153,037	138,781
Finite-lived intangible assets, accumulated amortization	(46,144)	(39,967)
Above and Below Market Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	26,619	24,253
Finite-lived intangible assets, accumulated amortization	(13,987)	(13,729)
Above Market Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	9,548	8,314
Finite-lived intangible assets, accumulated amortization	$ (6,194)	$ (6,384)

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Future Minimum Rental Payments Due under Terms of Leases

We are obligated as lessee under four ground leases. Future minimum rental payments due under the terms of these leases for the remainder of 2015 and each of the five succeeding years and thereafter, are as follows (dollars in thousands):

			For the year ended December 31,
Location	Lease End Date		2015		2016		2017		2018		2019		2020		Thereafter
Tulsa, OK		Apr-21	$	85	$	169	$	169	$	169	$	169	$	169	$	85
Dartmouth, MA		May-36		87		174		174		174		174		174		3,126
Springfield, MA		Feb-30		43		86		89		90		90		90		884
Salt Lake City, UT		Nov-40		14		30		30		31		32		33		853
			$	229	$	459	$	462	$	464	$	465	$	466	$	4,948

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Real Estate and Intangible Assets - Weighted Average Amortization Period for Intangible Assets Acquired and Liabilities Assumed (Detail)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Finite-Lived Intangible Assets [Line Items]
Period for intangible assets and liabilities	12 years 6 months	12 years 2 months 12 days
In-Place Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Period for intangible assets and liabilities	10 years 10 months 24 days	10 years 8 months 12 days
Leasing Costs [Member]
Finite-Lived Intangible Assets [Line Items]
Period for intangible assets and liabilities	10 years 10 months 24 days	10 years 8 months 12 days
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Period for intangible assets and liabilities	15 years 7 months 6 days	15 years 7 months 6 days
Above Market Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Period for intangible assets and liabilities	18 years 10 months 24 days	8 years 2 months 12 days
Below Market Leases [Member]
Finite-Lived Intangible Assets [Line Items]
Period for intangible assets and liabilities	12 years 4 months 24 days	11 years 10 months 24 days

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Subsequent Events (Tables)

6 Months Ended

Jun. 30, 2015

Subsequent Events [Abstract]

Monthly Distributions Declared by Company's Board of Directors

On July 14, 2015, our Board of Directors declared the following monthly distributions:

Record Date	Payment Date	Common Stock Distributions per Share		Series A Preferred Distributions per Share		Series B Preferred Distributions per Share		Series C Preferred Distributions per Share
July 24, 2015	August 4, 2015	$	0.125	$	0.1614583	$	0.15625	$	0.1484375
August 20, 2015	August 31, 2015		0.125		0.1614583		0.15625		0.1484375
September 21, 2015	September 30, 2015		0.125		0.1614583		0.15625		0.1484375
Total		$	0.375	$	0.4843749	$	0.46875	$	0.4453125

Senior Common Stock Distributions
Payable to the Holders of Record During the Month of:	Payment Date	Distribution per Share
July	August 7, 2015	$	0.0875
August	September 8, 2015		0.0875
September	October 7, 2015		0.0875
Total		$	0.2625

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Related-Party Transactions

6 Months Ended

Jun. 30, 2015

Related Party Transactions [Abstract]

Related-Party Transactions

2. Related-Party Transactions

Gladstone Management and Gladstone Administration

We are externally managed pursuant to contractual arrangements with our Adviser and our Administrator, which collectively employ all of our personnel and pay their salaries, benefits, and general expenses directly. Both our Adviser and Administrator are affiliates of ours, as their parent company is controlled by Mr. David Gladstone, our chairman and chief executive officer. We have an advisory agreement with our Adviser, and an administration agreement with our Administrator, or the Administration Agreement. The management and administrative services and fees under the advisory agreement and Administration Agreement are described below. At June 30, 2015 and December 31, 2014, $1.7 million and $0.9 million, respectively, was collectively due to our Adviser and Administrator.

Base Management Fee

On July 24, 2015, we entered into an amended and restated advisory agreement, or the Amended Advisory Agreement, with the Adviser. Our entrance into the agreement was approved unanimously by our Board, including separate and unanimous approval by the independent directors on our Board.

Prior to its amendment and restatement on July 24, 2015, our then-existing advisory agreement with the Adviser, or the Former Advisory Agreement, provided for an annual base management fee equal to 2.0% of our common stockholders’ equity, which is our total stockholders’ equity, less the recorded value of any preferred stock and adjusted to exclude the effect of any unrealized gains, losses, or other items that do not affect realized net income (including impairment charges). Under the Former Advisory Agreement, for the three and six months ended June 30, 2015, we recorded a base management fee of $0.9 million and $1.7 million, respectively, and for the three and six months ended June 30, 2014, we recorded a base management fee of $0.7 million and $1.3 million, respectively.

Pursuant to the terms of the Amended Advisory Agreement, effective July 1, 2015, the calculation of the annual base management fee shall equal 1.5% of our adjusted total stockholders’ equity, which is our total stockholders’ equity (before giving effect to the base management fee and incentive fee), adjusted to exclude the effect of any unrealized gains or losses that do not affect realized net income (including impairment charges) and adjusted for any one-time events and certain non-cash items (the later to occur for a given quarter only upon the approval of our Compensation Committee). The fee is calculated and accrued quarterly as 0.375% per quarter of such adjusted total stockholders’ equity figure.

Incentive Fee

The incentive fee under the Former Advisory Agreement rewarded the Adviser in circumstances where our quarterly FFO, before giving effect to any incentive fee, or pre-incentive fee FFO, exceeded 1.75%, or 7.0% annualized, or the hurdle rate, of common stockholders’ equity. Funds from operations, or FFO, included any realized capital gains and capital losses, less any distributions paid on preferred stock and Senior Common Stock, but FFO did not include any unrealized capital gains or losses (including impairment charges). The Adviser received 100.0% of the amount of the pre-incentive fee FFO that exceeded the hurdle rate, but was less than 2.1875% of our common stockholders’ equity. The Adviser also received an incentive fee of 20.0% of the amount of our pre-incentive fee FFO that exceeded 2.1875% of common stockholders’ equity.

For the three and six months ended June 30, 2015, pursuant to the terms of the Former Advisory Agreement we recorded an incentive fee of $1.8 million and $3.4 million, respectively, offset by credits related to unconditional, voluntary and irrevocable waivers issued by the Adviser of $1.3 million and $2.5 million, respectively, resulting in a net incentive fee for the three and six months ended June 30, 2015, of $0.5 million and $0.9 million, respectively. For the three and six months ended June 30, 2014, we recorded an incentive fee of $1.5 million and $2.8 million, respectively, offset by credits related to unconditional, voluntary and irrevocable waivers issued by the Adviser of $1.0 million and $2.2 million, respectively, resulting in a net incentive fee for the three and six months ended June 30, 2014, of $0.5 million and $0.6 million, respectively. Our Board of Directors accepted the Adviser’s offer to waive, on a quarterly basis, a portion of the incentive fee for the three and six months ended June 30, 2015, and 2014, in order to support the current level of distributions to our stockholders. This waiver cannot be recouped by the Adviser in the future.

Under the Amended Advisory Agreement, effective July 1, 2015, the calculation of the incentive fee was revised to reward the Adviser in circumstances where our quarterly Core FFO (defined below), before giving effect to any incentive fee, or pre-incentive fee Core FFO, exceeds 2.0%, or 8.0% annualized, of adjusted total stockholders’ equity (after giving effect to the base management fee but before giving effect to the incentive fee), or the new hurdle rate. The Adviser will receive 15.0% of the amount of our pre-incentive fee Core FFO that exceeds the new hurdle rate. However, in no event shall the incentive fee for a particular quarter exceed by 15.0% (the cap) the average quarterly incentive fee paid by us for the previous four quarters (excluding quarters for which no incentive fee was paid). Core FFO is defined as GAAP net income (loss) available to common stockholders, excluding the incentive fee, depreciation and amortization, any realized and unrealized gains, losses or other non-cash items recorded in net income (loss) available to common stockholders for the period, and one-time events pursuant to changes in GAAP.

Capital Gain Fee

Under the Amended Advisory Agreement, effective July 1, 2015, we will pay to the Adviser a capital gains-based incentive fee that will be calculated and payable in arrears as of the end of each fiscal year (or upon termination of the agreement). In determining the capital gain fee, we will calculate aggregate realized capital gains and aggregate realized capital losses for the applicable time period. For this purpose, aggregate realized capital gains and losses, if any, equals the realized gain or loss calculated by the difference between the sales price of the property, less any costs to sell the property and the current gross value of the property (which is calculated as the original acquisition price plus any subsequent non-reimbursed capital improvements). At the end of the fiscal year, if this number is positive, then the capital gain fee payable for such time period shall equal 15.0% of such amount.

Termination Fee

The Amended Advisory Agreement includes a termination fee where, in the event of our termination of the agreement without cause (with 120 days’ prior written notice and the vote of at least two-thirds of our independent directors), a termination fee would be payable to the Adviser equal to two times the sum of the average annual base management fee and incentive fee earned by the Adviser during the 24-month period prior to such termination. A termination fee is also payable if the Adviser terminates the agreement after the Company has defaulted and applicable cure periods have expired. The agreement may also be terminated for cause by us (with 30 days’ prior written notice and the vote of at least two-thirds of our independent directors), with no termination fee payable. Cause is defined in the agreement to include if the Adviser breaches any material provisions of the agreement, the bankruptcy or insolvency of the Adviser, dissolution of the Adviser and fraud or misappropriation of funds.

Administration Agreement

Pursuant to the Administration Agreement, we pay for our allocable portion of the Administrator’s expenses in performing services to us, including, but not limited to, rent and the salaries and benefits of its personnel, including our chief financial officer, treasurer, chief compliance officer, general counsel and secretary (who also serves as our Administrator’s president), and their respective staffs. Prior to July 1, 2014, our allocable portion was generally derived by multiplying that portion of the Administrator’s expenses allocable to all funds managed by the Adviser by the percentage of our total assets at the beginning of each quarter in comparison to the total assets of all funds managed by the Adviser. As approved by our Board of Directors, effective July 1, 2014, our allocable portion of the Administrator’s expenses is derived by multiplying our Administrator’s total expenses by the approximate percentage of time the Administrator’s employees perform services for us in relation to their time spent performing services for all companies serviced by our Administrator under contractual agreements. For the three and six months ended June 30, 2015, we recorded an administration fee of $0.4 million and $0.7 million, respectively, and for the three and six months ended June 30, 2014, we recorded an administration fee of $0.5 million and $1.0 million, respectively.

Gladstone Securities

Gladstone Securities, LLC, or Gladstone Securities, is a privately held broker dealer registered with the Financial Industry Regulatory Authority and insured by the Securities Investor Protection Corporation. Gladstone Securities is an affiliate of ours, as its parent company is controlled by Mr. David Gladstone, our chairman and chief executive officer. Mr. Gladstone also serves on the board of managers of Gladstone Securities.

Dealer Manager Agreement

In connection with the offering of our Senior Common Stock (see Note 10, “Stockholders’ Equity,” for further details) we entered into a Dealer Manager Agreement, dated March 25, 2011, or the Dealer Manager Agreement, with Gladstone Securities pursuant to which Gladstone Securities agreed to act as our exclusive dealer manager in connection with the offering. The Dealer Manager Agreement terminated according to its terms on March 28, 2015, requiring us to write-off $0.1 million of deferred offering costs to general and administrative expense. Pursuant to the terms of the Dealer Manager Agreement, Gladstone Securities was entitled to receive a sales commission in the amount of 7.0% of the gross proceeds of the shares of Senior Common Stock sold, plus a dealer manager fee in the amount of 3.0% of the gross proceeds of the shares of Senior Common Stock sold. Gladstone Securities, in its sole and absolute discretion, was permitted to re-allocate all of its selling commissions attributable to a participating broker-dealer and also re-allocate a portion of its dealer manager fee earned in respect of the proceeds generated by the participating broker-dealer to any participating broker-dealer as a non-accountable marketing allowance. In addition, we agreed to indemnify Gladstone Securities against various liabilities, including certain liabilities arising under the federal securities laws. We made approximately $0.3 million of payments during the three months ended March 31, 2015 and we made approximately $0.1 million of payments during both the three and six months ended June 30, 2014, respectively, to Gladstone Securities pursuant to this agreement. All such payments are reflected as a component of Senior Common Stock costs as reflected in footnote 10.

Mortgage Financing Arrangement Agreement

We also entered into an agreement with Gladstone Securities, effective June 18, 2013, for it to act as our non-exclusive agent to assist us with arranging mortgage financing for properties we own. In connection with this engagement, Gladstone Securities may from time to time solicit the interest of various commercial real estate lenders or recommend to us third party lenders offering credit products or packages that are responsive to our needs. We pay Gladstone Securities a financing fee in connection with the services it

provides to us for securing mortgage financing on any of our properties. The amount of these financing fees, which are payable upon closing of the financing, are based on a percentage of the amount of the mortgage, generally ranging from 0.15% to a maximum of 1.0% of the mortgage obtained. The amount of the financing fees may be reduced or eliminated, as determined by us and Gladstone Securities, after taking into consideration various factors, including, but not limited to, the involvement of any third party brokers and market conditions. We paid financing fees to Gladstone Securities of $0.1 million and $0.2 million during the three and six months ended June 30, 2015, which are reflected as deferred financing costs in the condensed consolidated balance sheets, on total mortgages secured of $40.5 million and $55.1 million, or 0.3%. We paid financing fees of $0.1 million during the three and six months ended June 30, 2014, on total mortgages secured of $27.5 million, or 0.3%. The agreement is scheduled to terminate on August 31, 2016, unless renewed or earlier terminated pursuant to the provisions contained therein.

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Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2015	Dec. 31, 2014
Redeemable preferred stock, shares issued	2,150,000	2,150,000
Senior common stock, par value	$ 0.001	$ 0.001
Senior common stock, shares authorized	7,500,000	7,500,000
Senior common stock, shares issued	995,852	809,411
Senior common stock, shares outstanding	995,852	809,411
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	38,500,000	38,500,000
Common stock, shares issued	21,143,986	19,589,606
Common stock, shares outstanding	21,143,986	19,589,606
Series A and B Preferred Stock [Member]
Redeemable preferred stock, par value	$ 0.001	$ 0.001
Redeemable preferred stock, liquidation preference	$ 25	$ 25
Redeemable preferred stock, shares authorized	2,300,000	2,300,000
Redeemable preferred stock, shares issued	2,150,000	2,150,000
Redeemable preferred stock, shares outstanding	2,150,000	2,150,000
Mandatorily Redeemable Preferred Stock [Member] | Series C Preferred Stock [Member]
Redeemable preferred stock, par value	$ 0.001	$ 0.001
Redeemable preferred stock, liquidation preference	$ 25	$ 25
Redeemable preferred stock, shares authorized	1,700,000	1,700,000
Redeemable preferred stock, shares issued	1,540,000	1,540,000
Redeemable preferred stock, shares outstanding	1,540,000	1,540,000

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Organization, Basis of Presentation and Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Interim Financial Information

Interim Financial Information

Our interim financial statements are prepared in accordance with U.S. generally accepted accounting principles, or GAAP, for interim financial information and pursuant to the requirements for reporting on Form 10-Q and in accordance with Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with GAAP are omitted. The year-end balance sheet data presented herein was derived from audited financial statements, but does not include all disclosures required by GAAP. In the opinion of our management, all adjustments, consisting solely of normal recurring accruals, necessary for the fair presentation of financial statements for the interim period, have been included. The interim financial statements and notes thereto should be read in conjunction with the financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the U.S. Securities and Exchange Commission on February 18, 2015. The results of operations for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for other interim periods or for the full fiscal year.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could materially differ from those estimates.

Critical Accounting Policies

Critical Accounting Policies

The preparation of our financial statements in accordance with Generally Accepted Accounting Principles in the U.S., or GAAP, requires management to make judgments that are subjective in nature to make certain estimates and assumptions. Application of these accounting policies involves the exercise of judgment regarding the use of assumptions as to future uncertainties, and as a result, actual results could differ materially from these estimates. A summary of all of our significant accounting policies is provided in Note 1 to our condensed consolidated financial statements included in our 2014 Form 10-K. There were no material changes to our critical accounting policies during the six months ended June 30, 2015.

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, “Amendments to the Consolidation Analysis” (“ASU-2015-02”), which amends or supersedes the scope and consolidation guidance under existing GAAP. The new standard changes the way a reporting entity evaluates whether a) limited partnerships and similar entities should be consolidated, b) fees paid to decision makers or service provides are variable interests in a variable interest entity, or VIE, and c) variable interests in a VIE held by related parties require the reporting entity to consolidate the VIE. ASU 2015-02 also eliminates the VIE consolidation model based on majority exposure to variability that applied to certain investment companies and similar entities. We are currently assessing the impact of ASU 2015-02, which is effective for annual and interim reporting periods beginning after December 15, 2015. Early adoption is permitted.

In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs” (“ASU-2015-03”), which simplifies the presentation of debt issuance costs. We are currently assessing the impact of ASU 2015-03 and do not anticipate a material impact on our financial position, results of operations or cash flows from adopting this standard. ASU 2015-03 is effective for annual and interim reporting periods beginning after December 15, 2015. Early adoption is permitted.

Fair Value Measurements and Disclosures

We have entered into an interest rate cap agreement with Wells Fargo that caps the interest rate on the note payable for our Champaign, Illinois property at a certain interest rate when one-month LIBOR is in excess of 3.0%. The fair value of the interest rate cap agreement is recorded in Other assets on our accompanying condensed consolidated balance sheets. We record changes in the fair value of the interest rate cap agreement quarterly based on the current market valuations at quarter end as Other income (loss) on our accompanying condensed consolidated statements of operations. Generally, we will estimate the fair value of our interest rate cap using estimates of value provided by the counterparty and our own assumptions in the absence of observable market data, including estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar securities as of the measurement date. At June 30, 2015 and December 31, 2014, our interest rate cap agreement was valued using Level 3 inputs. The following table summarizes the key terms of each interest rate cap agreement (dollars in thousands):

								As of June 30, 2015				As of December 31, 2014
Interest Rate Cap	Notional Amount		LIBOR Cap			Maturity Date		Cost		Fair Value		Cost		Fair Value
November 26, 2013	$	8,200		3.00	%		Dec-16	$	31	$	—	$	31	$	4

Equity

In accordance with ASC 505-10-45-2, “Equity,” receivables from employees for the issuance of capital stock to employees prior to the receipt of cash payment should be reflected in the balance sheet as a reduction to stockholders’ equity. Therefore, this note was recorded as a full recourse loan to the employee and is included in the equity section of the accompanying condensed consolidated balance sheets.

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Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2015	Aug. 03, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q2
Trading Symbol	GOOD
Entity Registrant Name	GLADSTONE COMMERCIAL CORP
Entity Central Index Key	0001234006
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		21,358,465

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(Loss) Earnings per Share of Common Stock (Tables)

6 Months Ended

Jun. 30, 2015

Earnings Per Share [Abstract]

Basic and Diluted (Loss) Earnings Per Share of Common Stock

The following tables set forth the computation of basic and diluted (loss) earnings per share of common stock for each of the three and six months ended June 30, 2015 and 2014, respectively. We computed basic (loss) earnings per share for the three and six months ended June 30, 2015 and 2014, respectively, using the weighted average number of shares outstanding during the periods. Diluted (loss) earnings per share for the three and six months ended June 30, 2015 and 2014, reflects additional shares of common stock related to our convertible Senior Common Stock (if the effect would be dilutive), that would have been outstanding if dilutive potential shares of common stock had been issued, as well as an adjustment to net income available to common stockholders as applicable to common stockholders that would result from their assumed issuance (dollars in thousands, except per share amounts).

	For the three months ended June 30,					For the six months ended June 30,
	2015			2014		2015			2014
Calculation of basic (loss) earnings per share of common stock:
Net (loss) earnings (attributable) available to common stockholders	$	(853	)	$	86	$	(1,407	)	$	(14,554	)
Denominator for basic weighted average shares of common stock		20,833,787			16,547,793		20,524,101			16,149,467
Basic (loss) earnings per share of common stock	$	(0.04	)	$	0.01	$	(0.07	)	$	(0.90	)
Calculation of diluted (loss) earnings per share of common stock:
Net (loss) earnings (attributable) available to common stockholders	$	(853	)	$	86	$	(1,407	)	$	(14,554	)
Add: Income impact of assumed conversion of senior common stock (1)		—			110		—			—
Net (loss) earnings (attributable) available to common stockholders plus assumed conversions	$	(853	)	$	196	$	(1,407	)	$	(14,554	)
Denominator for basic weighted average shares of common stock		20,833,787			16,547,793		20,524,101			16,149,467
Effect of convertible senior common stock (1)		—			347,180		—			—
Denominator for diluted weighted average shares of common stock		20,833,787			16,894,973		20,524,101			16,149,467
Diluted (loss) earnings per share of common stock	$	(0.04	)	$	0.01	$	(0.07	)	$	(0.90	)

(1) We excluded convertible senior common shares of 830,600 and 775,002 from the calculation of diluted earnings per share for the three and six months ended June 30, 2015, respectively, because it was anti-dilutive. We also excluded 332,608 convertible senior common shares from the calculation of diluted earnings per share for the six months ended June 30, 2014, because it was anti-dilutive.

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Condensed Consolidated Statements of Operations - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Operating revenues
Rental revenue		$ 20,012	$ 17,620	$ 39,300	$ 34,205
Tenant recovery revenue		394	770	718	1,321
Interest income from mortgage note receivable		282		549
Total operating revenues		20,688	18,390	40,567	35,526
Operating expenses
Depreciation and amortization		8,947	6,871	17,154	13,591
Property operating expenses		1,178	1,302	2,139	2,632
Acquisition related expenses		255	859	451	970
Base management fee	[1]	866	666	1,717	1,291
Incentive fee	[1]	1,760	1,527	3,433	2,767
Administration fee	[1]	366	485	728	977
General and administrative		539	490	1,229	957
Impairment charge					13,958
Total operating expenses before credit to incentive fee		13,911	12,200	26,851	37,143
Credit to incentive fee	[1]	(1,316)	(957)	(2,500)	(2,162)
Total operating expenses		12,595	11,243	24,351	34,981
Other income (expense)
Interest expense		(6,999)	(6,509)	(13,770)	(12,784)
Gain on sale of real estate			1,240		1,240
Other income		23	27	51	74
Total other expense		(7,662)	(5,928)	(15,091)	(12,842)
Net income (loss)		431	1,219	1,125	(12,297)
Distributions attributable to senior common stock		(261)	(110)	(485)	(210)
Net (loss) income (attributable) available to common stockholders		$ (853)	$ 86	$ (1,407)	$ (14,554)
(Loss) income per weighted average share of common stock - basic & diluted (Loss) income (attributable) available to common shareholders		$ (0.04)	$ 0.01	$ (0.07)	$ (0.90)
Weighted average shares of common stock outstanding
Basic		20,833,787	16,547,793	20,524,101	16,149,467
Diluted		20,833,787	16,894,973	20,524,101	16,149,467
Earnings per weighted average share of senior common stock		$ 0.26	$ 0.26	$ 0.52	$ 0.52
Weighted average shares of senior common stock outstanding - basic		995,852	421,312	928,323	404,243
Series C Preferred Stock [Member]
Other income (expense)
Distributions attributable to Series C mandatorily redeemable preferred stock		$ (686)	$ (686)	$ (1,372)	$ (1,372)
Series A and B Preferred Stock [Member]
Other income (expense)
Distributions attributable to Series A and B preferred stock		$ (1,023)	$ (1,023)	$ (2,047)	$ (2,047)

[1] Refer to Note 2 "Related-Party Transactions"

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Mortgage Notes Payable and Line of Credit

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Mortgage Notes Payable and Line of Credit

7. Mortgage Notes Payable and Line of Credit

Our mortgage notes payable and line of credit as of June 30, 2015 and December 31, 2014 are summarized below (dollars in thousands):

			Carrying Value at
	Encumbered properties at June 30, 2015		June 30, 2015		December 31, 2014		Stated Interest Rates at June 30, 2015 (4)			Scheduled Maturity Dates at June 30, 2015
Mortgage and Other Secured Loans:
Fixed rate mortgage loans		73	$	458,806	$	450,392		(1	)		(2	)
Variable rate mortgage loans		7		27,980		8,200		(3	)		(2	)
Premiums and discounts (net)		N/A		553		707		N/A			N/A
Total Mortgage Notes Payable		80	$	487,339	$	459,299
Variable rate Line of Credit		19		45,200		43,300		LIBOR + 2.75	% (3)		8/1/2017
Total Mortgage Notes Payable and Line of Credit		99	$	532,539	$	502,599

⁽¹⁾ Interest rates on our fixed rate mortgage notes payable vary from 3.75% to 6.80%.

⁽²⁾ We have 44 mortgage notes payable with maturity dates ranging from 9/1/2015 through 1/6/2039.

⁽³⁾ Interest rates on our variable rate mortgage notes payable vary from one month LIBOR + 2.15% to one month LIBOR + 2.25%. At June 30, 2015, one month LIBOR was approximately 0.19%.

⁽⁴⁾ The weighted average interest rate on all debt outstanding at June 30, 2015, was approximately 4.93%.

N/A - Not Applicable

Mortgage Notes Payable

As of June 30, 2015, we had 44 mortgage notes payable, collateralized by a total of 80 properties with a net book value of $692.0 million. Gladstone Commercial Corporation has limited recourse liabilities that could result from any one or more of the following circumstances: a borrower voluntarily filing for bankruptcy, improper conveyance of a property, fraud or material misrepresentation, misapplication or misappropriation of rents, security deposits, insurance proceeds or condemnation proceeds, or physical waste or damage to the property resulting from a borrower’s gross negligence or willful misconduct. We will also indemnify lenders against claims resulting from the presence of hazardous substances or activity involving hazardous substances in violation of environmental laws on a property. The weighted-average interest rate on the mortgage notes payable as of June 30, 2015 was 5.11%.

During the six months ended June 30, 2015, we issued four long-term mortgages, collateralized by five properties, which are summarized below (dollars in thousands):

Date of Issuance	Issuing Bank	Debt Issued		Interest Rate			Maturity Date			Amortization Period (months)
3/6/2015	PNC Bank, NA	$	14,573		3.86	%		4/1/2025			300
5/28/2015	FC Bank		4,466		3.75	%		6/1/2022			85
6/16/2015	Guggenheim Partners		13,000		3.99	%		7/1/2045
6/29/2015	Synovus Bank		19,780		LIBOR + 2.25	%		7/1/2018	(1)
		$	51,819

⁽¹⁾ We refinanced maturing debt on our Duncan, South Carolina and Charlotte, North Carolina properties which had aggregate balloon principal payments of $19.1 million. We completed this refinance on June 29, 2015.

We made payments of $0.4 million and $0.9 million for deferred financing costs during the three and six months ended June 30, 2015, respectively, and payments of $0.4 million and $0.8 million during the three and six months ended June 30, 2014, respectively.

Scheduled principal payments of mortgage notes payable for the remainder of 2015, and each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands):

Year	Scheduled Principal Payments
Six Months ending December 31, 2015	$	19,282	(1)
2016		100,110
2017		68,873
2018		39,205
2019		35,603
2020		7,688
Thereafter		216,025
	$	486,786	(2)

⁽¹⁾ This figure includes two balloon principal payments that mature in the second half of 2015. We refinanced one of these mortgages subsequent to June 30, 2015, using a combination of new mortgage debt and equity, repaying $11.3 million of principal.

⁽²⁾  This figure is exclusive of premiums and discounts (net) on assumed debt, which were $553,000 as of June 30, 2015.

Refinancing

On June 29, 2015, through a wholly-owned subsidiary, we refinanced our $19.1 million mortgage loan, originally set to mature on September 1, 2015. This note had an original interest rate of 5.3% and was collateralized by security interests in our Charlotte, North Carolina and Duncan, South Carolina properties. We borrowed $19.8 million in the refinancing pursuant to a long-term note payable from Synovus Bank. The new loan is variable rate, in which the interest rate resets monthly and is calculated as the one month London Interbank Offered Rate, or LIBOR, plus a margin of 2.25%. Subsequent to the end of the quarter, we entered into an interest rate cap agreement with Synovus Bank, which caps LIBOR at 3.0%. As of June 30, 2015, one month LIBOR was 0.19%. The new note has a maturity date of July 1, 2018, with one, two-year extension option.

Interest Rate Cap

We have entered into an interest rate cap agreement with Wells Fargo that caps the interest rate on the note payable for our Champaign, Illinois property at a certain interest rate when one-month LIBOR is in excess of 3.0%. The fair value of the interest rate cap agreement is recorded in Other assets on our accompanying condensed consolidated balance sheets. We record changes in the fair value of the interest rate cap agreement quarterly based on the current market valuations at quarter end as Other income (loss) on our accompanying condensed consolidated statements of operations. Generally, we will estimate the fair value of our interest rate cap using estimates of value provided by the counterparty and our own assumptions in the absence of observable market data, including estimated remaining life, counterparty credit risk, current market yield and interest rate spreads of similar securities as of the measurement date. At June 30, 2015 and December 31, 2014, our interest rate cap agreement was valued using Level 3 inputs. The following table summarizes the key terms of each interest rate cap agreement (dollars in thousands):

								As of June 30, 2015				As of December 31, 2014
Interest Rate Cap	Notional Amount		LIBOR Cap			Maturity Date		Cost		Fair Value		Cost		Fair Value
November 26, 2013	$	8,200		3.00	%		Dec-16	$	31	$	—	$	31	$	4

Fair Value

The fair value of all mortgage notes payable outstanding as of June 30, 2015 was $498.6 million, as compared to the carrying value stated above of $486.8 million. The fair value is calculated based on a discounted cash flow analysis, using interest rates based on management’s estimate of market interest rates on long-term debt with comparable terms and loan to value ratios. The fair value was calculated using Level 3 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.”

Line of Credit

In August 2013, we procured a $60.0 million senior unsecured revolving credit facility, or the Line of Credit, which was expanded to $75.0 million in November 2014, with KeyBank National Association (serving as a revolving lender, a letter of credit issuer and an administrative agent) and added Citizens Bank of Pennsylvania and Comerica Banks as additional lenders.

The Line of Credit initially matures in August 2017; however, we have a one-year extension option subject to the payment of an extension fee equal to 25 basis points on the initial maturity date and certain other customary conditions.

As of June 30, 2015, there was $45.2 million outstanding under our Line of Credit at an interest rate of approximately 2.94% and $3.9 million outstanding under letters of credit at a weighted average interest rate of 2.75%. As of August 3, 2015, the maximum additional amount we could draw was $9.2 million. We were in compliance with all covenants under the Line of Credit as of June 30, 2015.

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Mortgage Note Receivable

6 Months Ended

Jun. 30, 2015

Text Block [Abstract]

Mortgage Note Receivable

6. Mortgage Note Receivable

On April 14, 2015, we closed a $0.3 million interim financing loan for the acquisition of land to be used for continuing development of a medical center campus in Phoenix, Arizona. This loan is collateralized by proceeds from the future sale of the transitional care facility for which we provided a mortgage development loan on July 25, 2014. We will earn interest of 22.0% per annum through the maturity date, with all accrued interest and principal payable upon maturity. This loan matures upon the earlier of April 2016 or the sale of the transitional care facility, which is anticipated to occur in October 2015. We have recognized approximately $0.01 million in interest revenue during the three months ended June 30, 2015.

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Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Summary of Changes in Stockholders' Equity

The following table summarizes the changes in our stockholders’ equity for the six months ended June 30, 2015 (dollars in thousands):

																		Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity
	Shares Issued												Additional Paid in Capital		Notes Receivable from Employees
	Preferred Stock		Senior Common Stock		Common Stock		Preferred Stock		Senior Common Stock		Common Stock
Balance at December 31, 2014		2,150,000		809,411		19,589,606	$	2	$	1	$	20	$	369,748	$	(375	)	$	(151,724	)	$	217,672
Issuance of senior common stock and common stock, net		—		186,441		1,554,380		—		—		1		29,672		—			—			29,673
Distributions declared to common, senior common and preferred stockholders		—		—		—		—		—		—		—		—			(17,971	)		(17,971	)
Principal repayments of employee notes receivable		—		—		—		—		—		—		—		375			—			375
Net income		—		—		—		—		—		—		—		—			1,125			1,125
Balance at June 30, 2015		2,150,000		995,852		21,143,986	$	2	$	1	$	21	$	399,420	$	—		$	(168,570	)	$	230,874

Dividends Declared

Our Board of Directors declared the following distributions per share for the three and six months ended June 30, 2015 and 2014:

	For the three months ended June 30,				For the six months ended June 30,
	2015		2014		2015		2014
Common Stock	$	0.375	$	0.375	$	0.75	$	0.75
Senior Common Stock		0.2625		0.2625		0.525		0.525
Series A Preferred Stock		0.4843749		0.4843749		0.9687498		0.9687498
Series B Preferred Stock		0.4688		0.4688		0.9375		0.9375
Series C Preferred Stock		0.4453		0.4453		0.8906		0.8906

Summary of Note Issued to Employee for Exercise of Stock Options

The following table is a summary of the note issued to an employee of the Adviser for the exercise of stock options (dollars in thousands). The note, and all corresponding interest, was repaid in full on May 7, 2015:

Date Issued	Outstanding Balance of Employee Loan at June 30, 2015		Outstanding Balance of Employee Loan at December 31, 2014		Maturity Date of Note		Interest Rate on Note
Nov 2006	$	—	$	375		Nov 2015		8.15	%

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Real Estate and Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2015

Text Block [Abstract]

Components of Investments in Real Estate

The following table sets forth the components of our investments in real estate as of June 30, 2015 and December 31, 2014 (dollars in thousands):

	June 30, 2015 (1)			December 31, 2014
Real estate:
Land	$	95,948		$	88,394
Building and improvements		620,924			593,155
Tenant improvements		46,959			41,016
Accumulated depreciation		(102,243	)		(92,133	)
Real estate, net	$	661,588		$	630,432

⁽¹⁾ Does not include real estate held for sale as of June 30, 2015.

Summary of Properties Acquired

2015 Real Estate Activity

During the six months ended June 30, 2015, we acquired four properties, which are summarized below (dollars in thousands):

Location	Acquisition Date		Square Footage (unaudited)		Lease Term		Renewal Options		Total Purchase Price		Acquisition Expenses		Annualized GAAP Rent		Debt Issued
Richardson, TX (1)		3/6/2015		155,984		9.5 Years		2 (5 years each)	$	24,700	$	104	$	2,708	$	14,573
Birmingham, AL		3/20/2015		30,850		8.5 Years		1 (5 years)		3,648		71		333		N/A
Columbus, OH		5/28/2015		78,033		15.0 Years		2 (5 years each)		7,700		72		637		4,466
Salt Lake City, UT (1)		5/29/2015		86,409		6.5 Years		1 (5 years)		22,200		144		2,411		13,000
Total				351,276					$	58,248	$	391	$	6,089	$	32,039

⁽¹⁾ The tenant occupying this property is subject to a gross lease.

2014 Real Estate Activity

During the six months ended June 30, 2014, we acquired six properties, which are summarized in the table below (dollars in thousands):

Location	Acquisition Date		Square Footage		Lease Term		Renewal Options		Total Purchase Price		Acquisition Expenses		Annualized GAAP Rent		Debt Issued & Assumed
Allen, TX		3/27/2014		21,154		12 Years		4 (5 years each)	$	5,525	$	29	$	570	$	3,481
Colleyville, TX		3/27/2014		20,355		12 Years		4 (5 years each)		4,523		29		467		2,849
Rancho Cordova, CA		4/22/2014		61,358		10 Years		1 (5 year)		8,225		65		902		4,935
Coppell, TX		5/8/2014		21,171		12 Years		4 (5 years each)		5,838		22		601		3,816
Columbus, OH		5/13/2014		114,786		9.5 Years		N/A		11,800		65		1,278		N/A
Taylor, PA		6/9/2014		955,935		10 Years		4 (5 years each)		39,000		714		3,400		22,600
Total				1,194,759					$	74,911	$	924	$	7,218	$	37,681

Fair Value of Acquired Assets

In accordance with Accounting Standards Codification, or ASC, 805, “Business Combinations,” we determined the fair value of the acquired assets related to the four properties acquired during the six months ended June 30, 2015, as follows (dollars in thousands):

	Land		Building		Tenant Improvements		In-place Leases		Leasing Costs		Customer Relationships		Above Market Leases		Below Market Leases			Total Purchase Price
Richardson, TX	$	2,709	$	12,503	$	2,761	$	2,046	$	1,791	$	1,915	$	975	$	—		$	24,700
Birmingham, AL		650		1,683		351		458		146		360		—		—			3,648
Columbus, OH		1,338		3,511		1,547		1,144		672		567		—		(1,079	)		7,700
Salt Lake City, UT		3,248		11,861		1,268		2,396		981		1,678		821		(53	)		22,200
	$	7,945	$	29,558	$	5,927	$	6,044	$	3,590	$	4,520	$	1,796	$	(1,132	)	$	58,248

In accordance with ASC 805, we determined the fair value of the acquired assets related to the six properties acquired during the six months ended June 30, 2014 as follows (in thousands):

	Land		Building		Tenant Improvements		In-place Leases		Leasing Costs		Customer Relationships		Above Market Leases		Below Market Leases			Premium on Assumed Debt			Total Purchase Price
Allen, TX	$	874	$	3,509	$	125	$	598	$	273	$	218	$	—	$	—		$	(72	)	$	5,525
Colleyville, TX		1,277		2,307		117		486		220		181		—		(6	)		(59	)		4,523
Rancho Cordova, CA		752		5,898		278		473		546		278		—		—			—			8,225
Coppell, TX		1,448		3,221		128		636		293		230		—		—			(118	)		5,838
Columbus, OH		990		6,080		1,937		823		719		990		261		—			—			11,800
Taylor, PA		3,102		24,449		956		6,171		1,452		2,870		—		—			—			39,000
	$	8,443	$	45,464	$	3,541	$	9,187	$	3,503	$	4,767	$	261	$	(6	)	$	(249	)	$	74,911

Schedule of Revenue and Earnings Recognized on Properties Acquired

Below is a summary of the total revenue and earnings recognized on the four properties acquired during the six months ended June 30, 2015 (dollars in thousands):

			For the three months ended June 30,					For the six months ended June 30,
			2015					2015
Location	Acquisition Date		Rental Revenue		Earnings (1)			Rental Revenue		Earnings (1)
Richardson, TX		3/6/2015	$	657	$	90		$	839	$	328
Birmingham, AL		3/20/2015		83		(22	)		94		106
Columbus, OH		5/28/2015		67		149			67		149
Salt Lake City, UT		5/29/2015		207		278			207		278
			$	1,014	$	495		$	1,207	$	861

⁽¹⁾ Earnings is calculated as net income exclusive of both interest expense and acquisition related costs that are required to be expensed under ASC 805.

Below is a summary of the total revenue and earnings recognized on the six properties acquired during the three and six months ended June 30, 2014 (dollars in thousands):

			For the three months ended June 30,				For the six months ended June 30,
	Acquisition Date		2014				2014
Location			Rental Revenue		Earnings (1)		Rental Revenue		Earnings (1)
Allen, TX		3/27/2014	$	142	$	81	$	150	$	86
Colleyville, TX		3/27/2014		117		67		123		71
Rancho Cordova, CA		4/22/2014		173		65		173		65
Coppell, TX		5/8/2014		89		52		89		52
Columbus, OH		5/13/2014		167		68		167		68
Taylor, PA		6/9/2014		208		98		208		98
			$	896	$	431	$	910	$	440

(1) Earnings is calculated as net income exclusive of both interest expense and acquisition related costs that are required to be expensed under ASC 805.

Pro-Forma Condensed Consolidated Statements of Operations

The following table reflects pro-forma consolidated statements of operations as if the properties acquired during the three and six months ended June 30, 2015 and the twelve months ended December 31, 2014, respectively were acquired as of January 1, 2014. The pro-forma earnings for the three and six months ended June 30, 2015 and 2014 were adjusted to assume that acquisition-related costs were incurred as of the previous period (dollars in thousands, except per share amounts):

	For the three months ended June 30, (unaudited)						For the six months ended June 30, (unaudited)
	2015			2014			2015			2014
Operating Data:
Total operating revenue	$	21,122		$	21,938		$	42,114		$	43,395
Total operating expenses		(12,697	)		(13,033	)		(25,113	)		(25,851	)
Other expenses		(7,775	)		(6,860	)		(15,495	)		(28,907	) (1)
Net income (loss)		650			2,045			1,506			(11,363	)
Dividends attributable to preferred and senior common stock		(1,284	)		(1,133	)		(2,532	)		(2,257	)
Net loss attributable to common stockholders	$	(634	)	$	912		$	(1,026	)	$	(13,620	)
Share and Per Share Data:
Basic (loss) earnings per share of common stock - pro forma	$	(0.03	)	$	0.06		$	(0.05	)	$	(0.84	)
Diluted (loss) earnings per share of common stock - pro forma	$	(0.03	)	$	0.05		$	(0.05	)	$	(0.84	)
Basic (loss) earnings per share of common stock - actual	$	(0.04	)	$	0.01		$	(0.07	)	$	(0.90	)
Diluted (loss) earnings per share of common stock - actual	$	(0.04	)	$	0.01		$	(0.07	)	$	(0.90	)
Weighted average shares outstanding-basic		20,833,787			16,547,793			20,524,101			16,149,467
Weighted average shares outstanding-diluted		20,833,787			16,894,973			20,524,101			16,149,467

(1) $14.0 million of other expenses relates to the impairment charge recorded in operating expenses during the six months ended June 30, 2014.

Carrying Value of Intangible Assets, Liabilities and Accumulated Amortization

The following table summarizes the carrying value of intangible assets, liabilities and the accumulated amortization for each intangible asset and liability class as of June 30, 2015 and December 31, 2014 respectively (in thousands):

	June 30, 2015 (1)					December 31, 2014
	Lease Intangibles		Accumulated Amortization			Lease Intangibles		Accumulated Amortization
In-place leases	$	65,177	$	(19,997	)	$	59,233	$	(17,379	)
Leasing costs		42,083		(13,038	)		38,305		(11,411	)
Customer relationships		45,777		(13,109	)		41,243		(11,177	)
	$	153,037	$	(46,144	)	$	138,781	$	(39,967	)
	Deferred Rent Receivable/(Liability)		Accumulated Amortization			Deferred Rent Receivable/(Liability)		Accumulated Amortization
Above market leases	$	9,548	$	(6,194	)	$	8,314	$	(6,384	)
Below market leases		17,071		(7,793	)		15,939		(7,345	)
	$	26,619	$	(13,987	)	$	24,253	$	(13,729	)
Total	$	179,656	$	(60,131	)	$	163,034	$	(53,696	)

⁽¹⁾ Does not include real estate held for sale as of June 30, 2015.

Weighted Average Amortization Period for Intangible Assets Acquired and Liabilities Assumed

The weighted average amortization periods in years for the intangible assets acquired and liabilities assumed during the six months ended June 30, 2015 and 2014, respectively, were as follows:

Intangible Assets & Liabilities	2015		2014
In-place leases		10.9		10.7
Leasing costs		10.9		10.7
Customer relationships		15.6		15.6
Above market leases		18.9		8.2
Below market leases		12.4		11.9
All intangible assets & liabilities		12.5		12.2

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Stockholders' Equity

6 Months Ended

Jun. 30, 2015

Equity [Abstract]

Stockholders' Equity

10. Stockholders’ Equity

The following table summarizes the changes in our stockholders’ equity for the six months ended June 30, 2015 (dollars in thousands):

																		Distributions in Excess of Accumulated Earnings			Total Stockholders’ Equity
	Shares Issued												Additional Paid in Capital		Notes Receivable from Employees
	Preferred Stock		Senior Common Stock		Common Stock		Preferred Stock		Senior Common Stock		Common Stock
Balance at December 31, 2014		2,150,000		809,411		19,589,606	$	2	$	1	$	20	$	369,748	$	(375	)	$	(151,724	)	$	217,672
Issuance of senior common stock and common stock, net		—		186,441		1,554,380		—		—		1		29,672		—			—			29,673
Distributions declared to common, senior common and preferred stockholders		—		—		—		—		—		—		—		—			(17,971	)		(17,971	)
Principal repayments of employee notes receivable		—		—		—		—		—		—		—		375			—			375
Net income		—		—		—		—		—		—		—		—			1,125			1,125
Balance at June 30, 2015		2,150,000		995,852		21,143,986	$	2	$	1	$	21	$	399,420	$	—		$	(168,570	)	$	230,874

Distributions

Our Board of Directors declared the following distributions per share for the three and six months ended June 30, 2015 and 2014:

	For the three months ended June 30,				For the six months ended June 30,
	2015		2014		2015		2014
Common Stock	$	0.375	$	0.375	$	0.75	$	0.75
Senior Common Stock		0.2625		0.2625		0.525		0.525
Series A Preferred Stock		0.4843749		0.4843749		0.9687498		0.9687498
Series B Preferred Stock		0.4688		0.4688		0.9375		0.9375
Series C Preferred Stock		0.4453		0.4453		0.8906		0.8906

ATM Program

On September 2, 2014 we entered into an open market sale agreement, or the ATM Program, with Cantor Fitzgerald & Co., or Cantor Fitzgerald, pursuant to which we may, from time to time, offer to sell shares of our common stock with an aggregate sales price of up to $100.0 million on the open market through Cantor Fitzgerald, acting as sales agent and/or principal. During the six months ended June 30, 2015, we raised approximately $27.2 million in net proceeds under the ATM Program. As of June 30, 2015, under the existing program, we have sold a total of 3.4 million shares with aggregate gross proceeds of $60.1 million, and have a remaining capacity to sell up to $39.9 million of common stock under the ATM Program with Cantor Fitzgerald.

Senior Common Program

In March 2011, we commenced an offering of an aggregate of 3,500,000 shares of our Senior Common Stock, par value $0.001 per share, at a price to the public of $15.00 per share, of which 3,000,000 shares were intended to be offered pursuant to the primary offering and 500,000 shares were intended to be offered pursuant to our senior common distribution reinvestment plan, or the DRIP. We elected not to extend this offering, which terminated according to its terms on March 28, 2015. During the three months ended March 31, 2015, we sold 189,052 shares of our Senior Common Stock at $15.00 per share and issued 5,134 shares of our Senior Common Stock under the Dividend Reinvestment Plan, or DRIP, program. The net proceeds, after deducting the underwriting discount and commission, were $2.6 million. At the conclusion of the offering on March 28, 2015, we had sold 927,994 shares of Senior Common Stock, for gross proceeds of $13.9 million, and issued an additional 27,038 shares of Senior Common Stock under the DRIP program.

Note to Employee

The following table is a summary of the note issued to an employee of the Adviser for the exercise of stock options (dollars in thousands). The note, and all corresponding interest, was repaid in full on May 7, 2015:

Date Issued	Outstanding Balance of Employee Loan at June 30, 2015		Outstanding Balance of Employee Loan at December 31, 2014		Maturity Date of Note		Interest Rate on Note
Nov 2006	$	—	$	375		Nov 2015		8.15	%

The employee stock option program terminated in 2006. In accordance with ASC 505-10-45-2, “Equity,” receivables from employees for the issuance of capital stock to employees prior to the receipt of cash payment should be reflected in the balance sheet as a reduction to stockholders’ equity. Therefore, this note was recorded as a full recourse loan to the employee and is included in the equity section of the accompanying condensed consolidated balance sheets.

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Mandatorily Redeemable Preferred Stock

6 Months Ended

Jun. 30, 2015

Text Block [Abstract]

Mandatorily Redeemable Preferred Stock

8. Mandatorily Redeemable Preferred Stock

In February 2012, we completed a public offering of 1,540,000 shares of 7.125% Series C Cumulative Term Preferred Stock, par value $0.001 per share, or the Term Preferred Stock, at a public offering price of $25.00 per share. Gross proceeds of the offering totaled $38.5 million and net proceeds, after deducting offering expenses borne by us, were $36.7 million. On or after January 31, 2016, we may redeem the shares at a redemption price of $25.00 per share, plus any accumulated and unpaid dividends to and including the date of redemption. The shares of the Term Preferred Stock have a mandatory redemption date of January 31, 2017.

The fair value of our Term Preferred Stock as of June 30, 2015, was $39.3 million, as compared to the carrying value stated above of $38.5 million. The fair value is calculated based on the closing share price as of June 30, 2015 of $25.52. The fair value was calculated using Level 1 inputs of the hierarchy established by ASC 820, “Fair Value Measurements and Disclosures.”

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

Ground Leases

We are obligated as lessee under four ground leases. Future minimum rental payments due under the terms of these leases for the remainder of 2015 and each of the five succeeding years and thereafter, are as follows (dollars in thousands):

			For the year ended December 31,
Location	Lease End Date		2015		2016		2017		2018		2019		2020		Thereafter
Tulsa, OK		Apr-21	$	85	$	169	$	169	$	169	$	169	$	169	$	85
Dartmouth, MA		May-36		87		174		174		174		174		174		3,126
Springfield, MA		Feb-30		43		86		89		90		90		90		884
Salt Lake City, UT		Nov-40		14		30		30		31		32		33		853
			$	229	$	459	$	462	$	464	$	465	$	466	$	4,948

Expenses recorded in connection to rental expense incurred for the properties listed above during both the three months ended June 30, 2015 and 2014 and the six months ended June 30, 2015 and 2014 were $0.1 million, and $0.2 million, respectively. Rental expenses are reflected in property operating expenses on the condensed consolidated statements of operations.

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Subsequent Events

6 Months Ended

Jun. 30, 2015

Subsequent Events [Abstract]

Subsequent Events

11. Subsequent Events

On July 1, 2015, through a wholly-owned subsidiary, we repaid our $11.3 million mortgage on our Canton, Dayton, and Akron, Ohio properties. The mortgage was originally set to mature on September 1, 2015. We borrowed $1.7 million pursuant to a long-term note payable from Synovus bank to refinance a portion of this debt. The new loan is variable rate and we entered into an interest rate cap with Synovus Bank to hedge against the variability of the LIBOR rate, at a cost of approximately $0.07 million through July 1, 2018. We will receive payments from Synovus Bank if the one month LIBOR rate increases above 3.0%.

On July 13, 2015 we executed a lease with a new tenant in our Raleigh, North Carolina property to occupy 86,886 square feet, 75.0% of the total square footage. The current tenant will retain 18.0% of the space and the building will be approximately 93.0% occupied. The lease will commence on August 1, 2015 and will expire on December 31, 2027. The new lease provides for prescribed rent escalations over its life, with annualized straight line rents of approximately $0.5 million. The lease grants the tenant two extension options for an additional five years each. In connection with the execution of the lease, we will pay $0.8 million in tenant improvements, and anticipate paying $0.4 million in leasing commissions.

On July 14, 2015, our Board of Directors declared the following monthly distributions:

Record Date	Payment Date	Common Stock Distributions per Share		Series A Preferred Distributions per Share		Series B Preferred Distributions per Share		Series C Preferred Distributions per Share
July 24, 2015	August 4, 2015	$	0.125	$	0.1614583	$	0.15625	$	0.1484375
August 20, 2015	August 31, 2015		0.125		0.1614583		0.15625		0.1484375
September 21, 2015	September 30, 2015		0.125		0.1614583		0.15625		0.1484375
Total		$	0.375	$	0.4843749	$	0.46875	$	0.4453125

Senior Common Stock Distributions
Payable to the Holders of Record During the Month of:	Payment Date	Distribution per Share
July	August 7, 2015	$	0.0875
August	September 8, 2015		0.0875
September	October 7, 2015		0.0875
Total		$	0.2625

On July 15, 2015 we acquired a 78,151 square foot single-tenant, office building located in Atlanta, Georgia for $13.0 million, excluding related acquisition expenses of $0.1 million. We funded this acquisition with existing cash on hand and the issuance of $7.5 million of mortgage debt on the property. The tenant leased 54,836 square feet of the property for 7 years, and the remaining 23,315 square feet for 15 years. The tenant has 2 options to renew both leases for an additional 5 years each. The lease provides for prescribed rent escalations over its life with annualized straight line rents of $1.3 million. The average cap rate on this acquisition is 9.9%.

On July 24, 2015, we entered into the Amended Advisory Agreement, which revised the calculation of the annual base management and annual incentive fee and also added a capital gains fee and a termination fee, effective July 1, 2015. Please refer to footnote 2 for a detailed explanation of these changes.

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Real Estate and Intangible Assets - Pro-Forma Condensed Consolidated Statements of Operations (Parenthetical) (Detail) $ in Thousands	6 Months Ended
	Jun. 30, 2014 USD ($)
Business Combinations [Abstract]
Impairment charge	$ 13,958

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Stockholders' Equity - Summary of Changes in Stockholders' Equity (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Preferred Stock, Shares Issued, beginning balance			2,150,000
Preferred Stock, Shares Issued, ending balance	2,150,000		2,150,000
Senior Common stock, Shares Issued, beginning balance			809,411
Senior Common stock, Shares Issued, ending balance	995,852		995,852
Common Stock, Shares Issued, beginning balance			19,589,606
Common Stock, Shares Issued, ending balance	21,143,986		21,143,986
Total Stockholders' Equity, beginning balance			$ 217,672
Issuance of senior common stock and common stock, net			29,673
Distributions declared to common, senior common and preferred stockholders			(17,971)
Principal repayments of employee notes receivable			375
Net income	$ 431	$ 1,219	1,125	$ (12,297)
Total Stockholders' Equity, ending balance	230,874		$ 230,874
Senior Common Stock [Member]
Issuance of common stock, net, Shares			186,441
Total Stockholders' Equity, beginning balance			$ 1
Total Stockholders' Equity, ending balance	1		1
Preferred Stock [Member]
Total Stockholders' Equity, beginning balance			2
Total Stockholders' Equity, ending balance	2		$ 2
Common Stock [Member]
Issuance of common stock, net, Shares			1,554,380
Total Stockholders' Equity, beginning balance			$ 20
Issuance of senior common stock and common stock, net			1
Total Stockholders' Equity, ending balance	21		21
Additional Paid in Capital [Member]
Total Stockholders' Equity, beginning balance			369,748
Issuance of senior common stock and common stock, net			29,672
Total Stockholders' Equity, ending balance	399,420		399,420
Notes Receivable from Employees [Member]
Total Stockholders' Equity, beginning balance			(375)
Principal repayments of employee notes receivable			375
Distributions in Excess of Accumulated Earnings [Member]
Total Stockholders' Equity, beginning balance			(151,724)
Distributions declared to common, senior common and preferred stockholders			(17,971)
Net income			1,125
Total Stockholders' Equity, ending balance	$ (168,570)		$ (168,570)

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Mortgage Notes Payable and Line of Credit (Tables)

6 Months Ended

Jun. 30, 2015

Debt Disclosure [Abstract]

Company's Mortgage Notes Payable and Line of Credit

Our mortgage notes payable and line of credit as of June 30, 2015 and December 31, 2014 are summarized below (dollars in thousands):

			Carrying Value at
	Encumbered properties at June 30, 2015		June 30, 2015		December 31, 2014		Stated Interest Rates at June 30, 2015 (4)			Scheduled Maturity Dates at June 30, 2015
Mortgage and Other Secured Loans:
Fixed rate mortgage loans		73	$	458,806	$	450,392		(1	)		(2	)
Variable rate mortgage loans		7		27,980		8,200		(3	)		(2	)
Premiums and discounts (net)		N/A		553		707		N/A			N/A
Total Mortgage Notes Payable		80	$	487,339	$	459,299
Variable rate Line of Credit		19		45,200		43,300		LIBOR + 2.75	% (3)		8/1/2017
Total Mortgage Notes Payable and Line of Credit		99	$	532,539	$	502,599

⁽¹⁾ Interest rates on our fixed rate mortgage notes payable vary from 3.75% to 6.80%.

⁽²⁾ We have 44 mortgage notes payable with maturity dates ranging from 9/1/2015 through 1/6/2039.

⁽³⁾ Interest rates on our variable rate mortgage notes payable vary from one month LIBOR + 2.15% to one month LIBOR + 2.25%. At June 30, 2015, one month LIBOR was approximately 0.19%.

⁽⁴⁾ The weighted average interest rate on all debt outstanding at June 30, 2015, was approximately 4.93%.

Summary of Long-Term Mortgages

During the six months ended June 30, 2015, we issued four long-term mortgages, collateralized by five properties, which are summarized below (dollars in thousands):

Date of Issuance	Issuing Bank	Debt Issued		Interest Rate			Maturity Date			Amortization Period (months)
3/6/2015	PNC Bank, NA	$	14,573		3.86	%		4/1/2025			300
5/28/2015	FC Bank		4,466		3.75	%		6/1/2022			85
6/16/2015	Guggenheim Partners		13,000		3.99	%		7/1/2045
6/29/2015	Synovus Bank		19,780		LIBOR + 2.25	%		7/1/2018	(1)
		$	51,819

⁽¹⁾ We refinanced maturing debt on our Duncan, South Carolina and Charlotte, North Carolina properties which had aggregate balloon principal payments of $19.1 million. We completed this refinance on June 29, 2015.

Schedule of Principal Payments of Mortgage Notes Payable

Scheduled principal payments of mortgage notes payable for the remainder of 2015, and each of the five succeeding fiscal years and thereafter are as follows (dollars in thousands):

Year	Scheduled Principal Payments
Six Months ending December 31, 2015	$	19,282	(1)
2016		100,110
2017		68,873
2018		39,205
2019		35,603
2020		7,688
Thereafter		216,025
	$	486,786	(2)

⁽¹⁾ This figure includes two balloon principal payments that mature in the second half of 2015. We refinanced one of these mortgages subsequent to June 30, 2015, using a combination of new mortgage debt and equity, repaying $11.3 million of principal.

⁽²⁾  This figure is exclusive of premiums and discounts (net) on assumed debt, which were $553,000 as of June 30, 2015.

Summary of Interest Rate Cap Agreement

The following table summarizes the key terms of each interest rate cap agreement (dollars in thousands):

								As of June 30, 2015				As of December 31, 2014
Interest Rate Cap	Notional Amount		LIBOR Cap			Maturity Date		Cost		Fair Value		Cost		Fair Value
November 26, 2013	$	8,200		3.00	%		Dec-16	$	31	$	—	$	31	$	4

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(Loss) Earnings per Share of Common Stock - Basic and Diluted (Loss) Earnings Per Share of Common Stock (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Calculation of basic (loss) earnings per share of common stock:
Net (loss) earnings (attributable) available to common stockholders	$ (853)	$ 86	$ (1,407)	$ (14,554)
Denominator for basic weighted average shares of common stock	20,833,787	16,547,793	20,524,101	16,149,467
Basic (loss) earnings per share of common stock	$ (0.04)	$ 0.01	$ (0.07)	$ (0.90)
Calculation of diluted (loss) earnings per share of common stock:
Net (loss) earnings (attributable) available to common stockholders	$ (853)	$ 86	$ (1,407)	$ (14,554)
Add: Income impact of assumed conversion of senior common stock		110
Net (loss) earnings (attributable) available to common stockholders plus assumed conversions	$ (853)	$ 196	$ (1,407)	$ (14,554)
Denominator for basic weighted average shares of common stock	20,833,787	16,547,793	20,524,101	16,149,467
Effect of convertible senior common stock		347,180
Denominator for diluted weighted average shares of common stock	20,833,787	16,894,973	20,524,101	16,149,467
Diluted (loss) earnings per share of common stock	$ (0.04)	$ 0.01	$ (0.07)	$ (0.90)

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Commitments and Contingencies - Additional Information (Detail) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2015 USD ($) Lease	Jun. 30, 2014 USD ($)	Jun. 30, 2015 USD ($) Lease	Jun. 30, 2014 USD ($)
Commitments and Contingencies Disclosure [Abstract]
Number of leases	4		4
Expenses incurred for the properties listed | $	$ 0.1	$ 0.1	$ 0.2	$ 0.2

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Mortgage Notes Payable and Line of Credit - Company's Mortgage Notes Payable and Line of Credit (Parenthetical) (Detail) - Jun. 30, 2015 - Mortgages	Total
Debt Instrument [Line Items]
Number of mortgage notes payable	44
Libor rate	0.19%
Libor rate description	One month LIBOR was approximately 0.19%
Weighted average interest rate on debt outstanding	4.93%
Fixed Rate Mortgage Loans [Member]
Debt Instrument [Line Items]
Number of mortgage notes payable	44
Maturity date of mortgage notes payable, start date	Sep. 01, 2015
Maturity date of mortgage notes payable, end date	Jan. 06, 2039
Fixed Rate Mortgage Loans [Member] | Minimum [Member]
Debt Instrument [Line Items]
Stated Interest Rates	3.75%
Fixed Rate Mortgage Loans [Member] | Maximum [Member]
Debt Instrument [Line Items]
Stated Interest Rates	6.80%
Variable Rate Mortgage Loans [Member]
Debt Instrument [Line Items]
Libor rate description	Variable rate mortgage notes payable vary from one month LIBOR + 2.15% to one month LIBOR + 2.25%
Variable Rate Mortgage Loans [Member] | Minimum [Member]
Debt Instrument [Line Items]
Libor rate	2.15%
Variable Rate Mortgage Loans [Member] | Maximum [Member]
Debt Instrument [Line Items]
Libor rate	2.25%

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
Cash flows from operating activities:
Net income (loss)	$ 1,125	$ (12,297)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	17,154	13,591
Impairment charge		13,958
Gain on sale of real estate		(1,240)
Amortization of deferred financing costs	878	795
Amortization of deferred rent asset and liability, net	(270)	(178)
Amortization of discount and premium on assumed debt	(154)	(114)
Asset retirement obligation expense	76	(137)
Increase in other assets	(538)	(372)
Increase in deferred rent receivable	(1,843)	(1,778)
Increase (decrease) in accounts payable, accrued expenses, and amount due Adviser and Administrator	1,021	(1,004)
(Decrease) increase in other liabilities	(683)	585
Leasing commissions paid	(291)	(765)
Net cash provided by operating activities	16,475	11,044
Cash flows from investing activities:
Acquisition of real estate and related intangible assets	(58,248)	(64,764)
Improvements of existing real estate	(3,072)	(2,934)
Proceeds from sale of real estate		11,162
Issuance of mortgage note receivable	(300)
Receipts from lenders for funds held in escrow	642	1,287
Payments to lenders for funds held in escrow	(1,924)	(5,445)
Receipts from tenants for reserves	2,037	1,519
Payments to tenants from reserves	(1,308)	(3,423)
(Increase) decrease in restricted cash	(800)	1,935
Deposits on future acquisitions	(1,600)	(1,500)
Deposits applied against acquisition of real estate investments	1,400	1,300
Net cash used in investing activities	(63,173)	(60,863)
Cash flows from financing activities:
Proceeds from issuance of equity	30,363	36,042
Offering costs paid	(742)	(2,028)
Borrowings under mortgage notes payable	51,819	27,535
Payments for deferred financing costs	(883)	(633)
Principal repayments on mortgage notes payable	(23,625)	(4,182)
Principal repayments on employee notes receivable	375
Borrowings from line of credit	56,400	44,250
Repayments on line of credit	(54,500)	(43,000)
Increase (decrease) in security deposits	108	(31)
Distributions paid for common, senior common and preferred stock	(17,919)	(14,313)
Net cash provided by financing activities	41,396	43,640
Net decrease in cash and cash equivalents	(5,302)	(6,179)
Cash and cash equivalents, beginning of period	8,599	8,546
Cash and cash equivalents, end of period	3,297	2,367
NON-CASH INVESTING AND FINANCING INFORMATION
Increase in asset retirement obligation	56
Fixed rate principal debt assumed in connection with acquisition		10,147
Senior common dividend issued in the dividend reinvestment program	52	87
Capital improvements included in accounts payable and accrued expenses	$ 2,922	$ 5,521

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Real Estate Held for Sale

6 Months Ended

Jun. 30, 2015

Real Estate [Abstract]

Real Estate Held for Sale

5. Real Estate Held for Sale

Real Estate Held for Sale

As of June 30, 2015, we classified one of our properties located in Columbus, Ohio as held for sale under the provisions of ASC 360-10, “Property, Plant, and Equipment,” which requires that the assets and liabilities of any such properties, be presented separately in our condensed consolidated balance sheet in the current period presented. We executed a purchase and sale agreement with the third party purchaser, and we anticipate the sale to close during the fourth quarter of 2015. The agreed upon purchase price, net of expected costs to sell, is in excess of the carrying value of the property as of June 30, 2015, and thus the property was measured at its carrying value in our condensed consolidated balance sheet as of June 30, 2015 in accordance with ASC 360-10.

The table below summarizes the components of income from real estate and related assets held for sale (dollars in thousands):

	For the three months ended June 30,				For the six months ended June 30,
	2015		2014		2015		2014
Operating revenue	$	86	$	77	$	169	$	154
Operating expense		9		20		23		43
Other expense		39		40		79		80
Income from real estate and related assets held for sale	$	38	$	17	$	67	$	31

The table below summarizes the components of the assets and liabilities held for sale reflected on the accompanying condensed consolidated balance sheet (dollars in thousands):

	June 30, 2015
ASSETS HELD FOR SALE
Real estate, at cost	$	2,795
Less: accumulated depreciation		(615	)
Total real estate held for sale, net		2,180
Lease intangibles, net		17
Deferred rent receivable, net		30
Deferred financing costs, net		5
Other assets		3
TOTAL ASSETS HELD FOR SALE	$	2,235
LIABILITIES HELD FOR SALE
Other liabilities		93
TOTAL LIABILITIES HELD FOR SALE	$	93

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(Loss) Earnings per Share of Common Stock - Basic and Diluted (Loss) Earnings Per Share of Common Stock (Parenthetical) (Detail) - shares	3 Months Ended	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share [Abstract]
Anti-dilutive convertible senior common shares excluded from calculation of diluted earnings per share	830,600	775,002	332,608

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Real Estate Held for Sale - Components of Assets and Liabilities Held for Sale (Detail) $ in Thousands	Jun. 30, 2015 USD ($)
ASSETS HELD FOR SALE
TOTAL ASSETS HELD FOR SALE	$ 2,235
LIABILITIES HELD FOR SALE
TOTAL LIABILITIES HELD FOR SALE	93
Real Estate Held for Sale [Member]
ASSETS HELD FOR SALE
Real estate, at cost	2,795
Less: accumulated depreciation	(615)
Total real estate held for sale, net	2,180
Lease intangibles, net	17
Deferred rent receivable, net	30
Deferred financing costs, net	5
Other assets	3
TOTAL ASSETS HELD FOR SALE	2,235
LIABILITIES HELD FOR SALE
Other liabilities	93
TOTAL LIABILITIES HELD FOR SALE	$ 93

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Real Estate Held for Sale (Tables)

6 Months Ended

Jun. 30, 2015

Real Estate [Abstract]

Components of Income from Real Estate and Related Assets Held for Sale

The table below summarizes the components of income from real estate and related assets held for sale (dollars in thousands):

	For the three months ended June 30,				For the six months ended June 30,
	2015		2014		2015		2014
Operating revenue	$	86	$	77	$	169	$	154
Operating expense		9		20		23		43
Other expense		39		40		79		80
Income from real estate and related assets held for sale	$	38	$	17	$	67	$	31

Components of Assets and Liabilities Held for Sale

The table below summarizes the components of the assets and liabilities held for sale reflected on the accompanying condensed consolidated balance sheet (dollars in thousands):

	June 30, 2015
ASSETS HELD FOR SALE
Real estate, at cost	$	2,795
Less: accumulated depreciation		(615	)
Total real estate held for sale, net		2,180
Lease intangibles, net		17
Deferred rent receivable, net		30
Deferred financing costs, net		5
Other assets		3
TOTAL ASSETS HELD FOR SALE	$	2,235
LIABILITIES HELD FOR SALE
Other liabilities		93
TOTAL LIABILITIES HELD FOR SALE	$	93