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Gladstone's September Rent Collection & Occupancy Strong

·4 min read

Gladstone Commercial Corporation GOOD has been witnessing steady rental collections. The company’s portfolio of net-lease industrial and office properties is enjoying robust occupancies amid the pandemic-led challenges, highlighting the resilience of its portfolio.

Specifically, September cash base rent collections of 99% are in line with August and July receipts. Moreover, rental receipts have increased from 98% of collections made in April, May and June. The balancing 1-2% of cash base rents reflects the previously-agreed deferral agreements. Nonetheless, all such deferral amounts are to be paid back to the company by the respective tenants, beginning July 2020 and ending in March 2021.

Additionally, as of Sep 17, the company’s portfolio occupancy is in excess of 95%. Notably, successful leasing activities have likely driven such encouraging portfolio occupancy.  

However, reflecting the overall bearish sentiment for the broader market, the REIT’s shares have depreciated 1.9% during Friday’s regular session.

On Sep 8, Gladstone Commercial announced a two-year lease extension with Haier US Appliance Solutions at a Georgia industrial property. The move is likely to help the company secure steady cash flows from the property for a decent period as the extension provides more than 12 years of lease term with a high-quality credit tenant that has a growing business. Delivered in March 2020, this 504,400-square-foot build-to-suit facility is located at 6900 Highway 411 North, in Crandall, serving as a critical infrastructure in the tenant’s distribution channel.

Gladstone is also focused on strategic acquisitions. Early this month, the company announced the completion of acquisition of an industrial property in Terre Haute IN, for $10.6 million. The 153,600-square-foot distribution building, constructed as a build-to-suit in 2010, is fully leased to Clabber Girl Corporation with full guaranty from its publicly-traded parent company B&G Foods BGS.The GAAP capitalization rate on the investment is 8%.  

Gladstone’s financial policy approach underlines a disciplined debt and equity funding strategy to support organic and acquisition-driven growth. Since July, the company has issued 215,000 shares of common stock for net proceeds of $4 million as well as 137,000 shares of Series E perpetual preferred stock for net proceeds of $3.2 million.

As of Sep 17, its liquidity stood at more than $35 million, consisting of revolving credit facility and cash on hand, displaying the company’s ability to withstand the current crisis and any unexpected negative externalities in the future.

Nonetheless, the company is apprehensive of any additional rent relief requested by tenants during the pandemic which might affect its top-line growth.

Shares of this Zacks Rank #3 (Hold) company have gained 87.8% over the past six months compared with the industry’s rally of 41.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Alpine Income Property Trust, Inc.’s PINE FFO per share estimate for 2020 has been revised 2.6% upward to $1.18 over the past month. It currently sports a Zacks Rank of 1.

Duke Realty Corporation’s DRE Zacks Consensus Estimate for 2020 FFO per share moved up 3.5% to $1.49 over the past two months. The company currently carries a Zacks Rank of 2.

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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Duke Realty Corporation (DRE) : Free Stock Analysis Report
 
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