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Gladstone Buys Industrial Asset, Boosts Columbus Portfolio

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Gladstone Commercial Corporation GOOD recently shelled out $8.3 million for the acquisition of an industrial building in Delaware, OH. The move is in sync with the company’s efforts to strengthen its allocation to industrial buildings and particularly boost presence in the target market of Columbus.

The 157,810-square-foot industrial building is fully occupied by a designer and manufacturer of thermal and acoustical engineering products — Midwest Acoust-A-Fiber. The company has been an occupier of the building since its construction in 1990, and has opted for this facility expansion twice in recent years. Moreover, a lease extension has been executed by Midwest Acoust-A-Fiber, concurrent with the deal’s closure. This has resulted in the remaining term of the absolute-NNN lease to 15 years.

The acquisition of this property is a strategic fit for Gladstone Commercial. It has premium infrastructure access and is mission critical for the tenant. This is likely to ensure steady returns from the property. In fact, the initial capitalization rate for the acquisition of 7.68% and the average (GAAP) capitalization rate of 9.18% highlight decent earning potential of the property.

Also, the company’s industrial portfolio expansion will likely help drive growth, as high consumer spending, e-commerce boom and a healthy manufacturing environment amid recovering economy and job market are spurring demand for the real estate category. This is stoking growth of Gladstone Commercial, as well as other REITs, including Prologis, Inc. PLD, Duke Realty Corp. DRE and Liberty Property Trust LPT.

As such for Gladstone Commercial, which is focused on acquiring, owning and operating net leased industrial and office properties across the United States, this latest acquisition is likely to be accretive to its earnings and drive long-term growth.

Shares of Gladstone Commercial have outperformed the industry it belongs to, in the past six months. This Zacks Rank #3 (Hold) company’s shares have gained 11.1%, while the industry recorded growth of 8.7% during the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.



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