Gladstone Commercial (GOOD) Inks Lease With Moss & Associates
Gladstone Commercial Corporation GOOD signed an 11-year, 1-month lease with Moss & Associates LLC (Moss), a construction management company, for the totality of its office building in Fort Lauderdale, FL. The move reflects the robust demand for the company’s properties, especially from existing tenants.
Moss had been subleasing around 40% of the building and had earlier inked a 5-year, 4-month deal post the sublease term for the office space. With its expansion into the remaining three floors of the building, the same now classifies as a single-tenant asset.
The long-term direct lease between Moss and Gladstone Commercial for the 119,224 square feet property began on Jun 1, 2023, and is expected to generate steady cash flows for Gladstone for a decent time.
Per Greg Yayac, senior vice president of Gladstone Commercial, “This long-term deal reflects Moss's commitment to the space and their desire to expand their relationship with us. We strive to develop strong partnerships with our tenants, and we look forward to continuing to work with them.”
This real estate investment trust (REIT), focused on acquiring, owning and operating net leased industrial and office properties across the United States, has been benefiting from the healthy demand for flight-to-quality office spaces by tenants and the robust operating trends of the industrial real estate asset category.
Amid this backdrop, the company has been witnessing healthy leasing activity, aiding occupancy levels and solid rent collections.
Per its June REIT Week Presentation, as of Mar 31, 2023, GOOD’s portfolio occupancy aggregated 95.9% and the remaining average lease term was 6.9 years. Notably, it had collected 100% of base rent since January 2022.
Additionally, given the continuing growth of e-commerce and the recent trend of manufacturing onshoring, Gladstone Commercial remains focused on expanding its property base in strong industrial locations. Notably, from the beginning of 2020 through May 3, 2023, its property acquisitions, all industrial, totaled $343.2 million with a weighted average lease term of 13.2 years.
Further, GOOD’s disciplined capital-recycling strategy adds to its balance-sheet strength, poising it well to capitalize on long-term growth opportunities.
Nonetheless, a choppy office real estate market environment, supply chain disruptions and related inventory management issues, and a high-interest rate environment pose concerns for the company.
GOOD presently carries a Zacks Rank #4 (Sell).
The company’s shares have lost 30.8% in the past six months compared with the industry’s decline of 3.6%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks from the REIT sector are Rexford Industrial Realty REXR, Stag Industrial STAG and Innovative Industrial Properties IIPR. Each of these companies presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Rexford Industrial’s current-year funds from operations (FFO) per share has moved 1.4% northward over the past two months to $2.19.
The Zacks Consensus Estimate for Stag Industrial’s ongoing year’s FFO per share has been raised marginally upward over the past month to $2.25.
The Zacks Consensus Estimate for Innovative Industrial Properties’ 2023 FFO per share has moved 3.6% upward in the past month to $8.66.
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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