TO OUR SHAREHOLDERS: HIGHLIGHTS FOR 2014 INCLUDE: increasing the number of properties we own, expanding an existing   property, issuing a construction mortgage loan for a build-to-suit property, leasing one of our vacant   properties, extending the terms of upcoming expiring leases, implementing a new stock issuance program,  extending our line of credit, and obtaining mortgages for some of our properties. We are pleased that we  have been very active and able to consistently grow our portfolio. We expect to continue to build on those  successes in 2015. During the year, we invested approximately $139 million  in 11 new properties and the expansion of one of our exist- ing buildings. We also invested $5.6 million in a construction  mortgage loan for a build-to-suit property. The weighted  average yield for these new investments is 9.0%. We continue  to focus on investing in strong, secondary markets and each  of our regions had new investments during the year, includ- ing Phoenix, Denver, Dallas, Indianapolis, Sacramento and  Columbus. We also borrowed or assumed about $62 million  in mortgages to finance a portion of the new properties we  acquired, as we continue to take advantage of the low inter- est rates. The weighted average interest rate on the new  mortgages is 4.5%. We currently own 96 properties, which  are located in 23 states, leased to 91 different tenants in 19 different industries. This gives us great diversification.  Most of our properties are single tenant and “triple net”  leased properties in which the tenant pays rent as well as  the building’s operating expenses, plus maintenance, taxes  and insurance; however, we are seeking to expand by pur- chasing a few strategic multitenant properties in which one  tenant rents most of the building. We continued to focus on maintaining our portfolio of  quality tenants. During the year, we renewed five leases  that were scheduled to expire in 2015 and leased one of our  previously vacant buildings. At year end, all of our existing  tenants were paying as agreed and our portfolio was 99%  leased. We had one building without a tenant and one  building that was partially vacant, but we continue to seek  new tenants for each. We are also focused on extending the  leases expiring in the next several years.  We have mortgage debt in the aggregate principal  amount of $42 million payable during 2015 and $99 million  payable during 2016. The 2015 principal amounts payable  include $34.6 million of balloon principal payments due on  three mortgages that mature in the second half of 2015. We  anticipate being able to refinance these mortgages with a  combination of new mortgage debt and additional equity.  PICTURED FROM LEFT TO RIGHT: Terry L. Brubaker, David Gladstone, Bob Cutlip 2 GLADSTONE COMMERCIAL  2014 ANNUAL REPORT OPERATING RESULTS