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Gladstone Commercial Corporation GOOD is not only witnessing robust demand for its properties from new tenants but for the existing ones as well. Recently, the company clinched a six-year lease extension with Yanfeng US Automotive Interior Systems LLC at an industrial property in Monroe, MI, a suburb of Detroit.
The 315,000 -square-foot property is located at 1833 Frenchtown Center Drive. Notably, the lease renewal continues Yanfeng's existing tenancy, which began in 2008, through Aug 31, 2029. In fact, the renewal has been done much ahead of the deadline. Further, Yanfeng has the right to request expansion of the building to accommodate its growing demands.
The lease renewal will help Gladstone secure steady cash flows from the property. The company will receive more than $10 million in contractual rental revenues during the extension term.
Per Karen Priesman, senior vice president and head of asset management for the Midwest Region for Gladstone, "Executing this lease delivers on Gladstone Commercial's core attributes of engaging and retaining financially strong tenants. This transaction increases the weighted average term of our Midwest portfolio and is immediately accretive to FFO."
Gladstone Commercial also focuses on achieving growth on buyouts of high-quality industrial assets in the thriving markets with creditworthy tenants. As part of such measures, recently, Gladstone Commercial also acquired a 25,200-square-foot industrial service facility in Baytown for $8.125 million.
Located on 10.2 acres within the Thompson Ten Industrial Park, this property is fully leased to Mobile Mini, Inc., a wholly-owned subsidiary of a storage solutions provider, WillScot Mobile Mini WSC. The property will generate stable revenues for the company by serving being mission-critical to the tenant, coupled with a decent residual lease term and a strong tenant.
Moreover, Gladstone Commercial’s rent collections have been healthy. In its business update released earlier this month, the company noted that approximately 100% of the May cash base rents have been paid and collected. Also, as of May 31, 2021, portfolio occupancy is in excess of 95%.
On the leasing front, management noted in its business update that it has commenced three new leases aggregating 259,056 square feet in three different buildings, during the second quarter, located in Denver, CO, Blaine, MN, and Indianapolis, IN, increasing the company’s straight-line rents in these properties that had prior occupancies by an average of 9.4%.
Gladstone Commercial currently carries a Zacks Rank #3 (Hold). The stock has gained 27.9%, outperforming its industry’s rally of 20.9% in the past six months. In addition, the trend in estimate revisions for 2021 funds from operations (FFO) per share indicates a favorable outlook for the company as it has been revised marginally upward over the past two months.
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Key Industry Picks
Industrial Logistics Properties Trust’s ILPT Zacks Consensus Estimate for 2021 FFO per share moved up 5% over the past two months. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
BRAEMAR HOTELS & RESORTS INC.’s BHR FFO per share estimate for the ongoing year has been revised upward by 4.5% in the past month. The company carries a Zacks Rank of 2, currently.
Note: Anything related to earnings presented in this write-up represent funds from operations (FFO) — a widely used metric to gauge the performance of REITs
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