Gladstone Commercial Corporation GOOD has been witnessing active leasing, aiding solid occupancy, healthy rental collections and ample liquidity to back its acquisitions and growth efforts.
As of Aug 31, 2022, Gladstone Commercial’s portfolio occupancy was 96.9% due to successful leasing activities. Moreover, Gladstone Commercial collected 100% of the August cash base rent. The healthy levels of rental receipts have enabled GOOD to maintain its dividend rate.
Gladstone Commercial is also focused on expansion. In August, the company acquired a 246,000-square-foot, two-property, industrial portfolio in Vineland, NJ, and Bridgeton, NJ, for $32.5 million in a 15-year sale/leaseback transaction.
So far in the year, the company shelled out $83.9 million as the total cost for the acquisition of 988,303 square feet of industrial real estate. These consisted of nine properties and five tenants with an average remaining lease term at acquisition of 9.1 years.
Recently, GOOD sold its 60,000-square-foot Parsippany, NJ, office building, realizing a leveraged internal rate of return of around 15% on the property, which was acquired in 2011. The move came as part of the company’s capital recycling efforts, allowing the company to redeploy capital into industrial real estate. Also, the company sold its 25,000-square-foot office property in Boston Heights, Ohio.
Gladstone Commercial is also witnessing healthy demand for its properties. Recently, the company executed a five-year, four-month lease with Moss & Associates LLC for 47,566 square feet of space at its 119,224-square-foot office building in Fort Lauderdale, FL. Also, GOOD executed a five-year lease renewal with Corning, Inc. at its 120,000-square-foot industrial building in Horseheads, NY.
So far in the year, GOOD extended or executed 501,501 square feet of space, covering nine tenants with an average residual lease term of 8.1 years. The annualized straight-line rent of these transactions amounts to $5.8 million.
Further, management noted that as of Aug 31, 2022, the company’s available liquidity was $84.9 million consisting of a revolving credit facility and cash in hand. Gladstone Commercial amended, extended and upsized its syndicated revolving credit and term loan facility to $480 million from $325 million. GOOD used the net proceeds for paying down mortgage loans and borrowings under its revolving credit facility.
Since Jan 1, 2022 and through Aug 31, 2022, the company issued 1,992,706 shares of common stock for net proceeds of $40.6 million. Such an amount of liquidity supports Gladstone Commercial’s growth strategy.
Shares of this Zacks Rank #3 (Hold) company have declined 6.4% in the past three months compared with the industry’s fall of 6.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
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