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Gladstone (GOOD) Boosts Industrial Property Base With Buyout

To expand its property base in targeted thriving markets, Gladstone Commercial Corporation GOOD recently announced the acquisition of an industrial manufacturing facility spanning 65,000 square feet in Greenville, SC, at a weighted GAAP capitalization rate of 9.0%.

The latest buyout is in sync with GOOD’s growth strategy of expanding the buyouts of functional assets in strong industrial locations, which are leased to tenants with solid credit profiles.

Gladstone Commercial purchased the property in a long-term sale/leaseback transaction with a 12-year absolute NNN lease. It is 100% leased to a specialty chemical producer.

The company is likely to capitalize on the mission-critical location, which accommodates manufacturing and distribution operations for chemicals to a diverse base of the tenant's customers in the Southeast United States.

Moreover, the addition of mission-critical industrial facilities in growth markets has enabled the company to improve the weighted average lease term and increase its industrial concentration. This is likely to help it generate stable revenues for a long period.

Of late, Gladstone Commercial has been making concerted efforts to expand its property base in strong industrial locations. This October, the company acquired an industrial manufacturing and outdoor storage facility encompassing 68,674 square feet in Denver, CO, for $12 million at a weighted GAAP capitalization rate of 8.2%.

Further, in September 2022, GOOD purchased two industrial assets in Jacksonville, FL and Fort Payne, AL, for $13.6 million.

Additionally, in the nine months ended Sep 30, 2022, the company acquired 11 industrial properties covering around 1.1 billion for $98.3 million. The weighted average lease term for these properties was 13.8 years.  

Gladstone Commercial has been witnessing healthy leasing activity, aiding solid occupancy, healthy rental collections and ample liquidity to back its acquisitions and growth efforts.

As of Nov 7, 2022, Gladstone Commercial’s portfolio occupancy was 96.3% due to successful leasing activities. The company collected 100% of the first three quarters' cash rent and 100% of October's cash rent.

Moreover, GOOD’s disciplined capital-recycling strategy adds to its balance-sheet strength, poising it well to capitalize on long-term growth opportunities.

Shares of this Zacks Rank #3 (Hold) company have gained 19.1% in the quarter-to-date period, higher than its industry’s growth of 1.1%.

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Zacks Investment Research

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Stocks to Consider

Some better-ranked stocks from the REIT sector are VICI Properties VICI, Lamar Advertising LAMR and Chatham Lodging Trust REIT CLDT, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ current-year FFO per share is currently pegged at $1.92.

The Zacks Consensus Estimate for Lamar Advertising’s 2022 FFO per share presently stands at $7.34.

The Zacks Consensus Estimate for Chatham Lodging Trust REIT’s ongoing year’s FFO per share is pegged at $1.17, presently.

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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Lamar Advertising Company (LAMR) : Free Stock Analysis Report

Chatham Lodging Trust REIT (CLDT) : Free Stock Analysis Report

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VICI Properties Inc. (VICI) : Free Stock Analysis Report

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