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Stonegate Capital Partners Updates Coverage on Gladstone Commercial Corporation (NASDAQ: GOOD)

DALLAS, TX / ACCESSWIRE / November 27, 2017 / Gladstone Commercial Corporation (GOOD):

COMPANY DESCRIPTION

Gladstone Commercial Corporation (GOOD) is a publicly-traded real estate investment trust (REIT) that primarily focuses on acquiring, owning, and managing single tenant and anchored multi-tenant net-leased office and industrial properties in targeted markets. The Company also makes selective long-term industrial and commercial mortgage loans. Its 97 owned properties, containing approximately 11 million square feet, are strategically located in 24 states spanning the country. GOOD is headquartered in McLean, Virginia.

SUMMARY

  • GOOD's investment strategy involving purchases of properties with tenants that have long-term (7-15 years) net leases and contractual rent increases provides the Company with a number of advantages, including increasing consistency in cash flows and more predictable returns. This predictability not only acts as a hedge against inflation, but it also enhances the Company's ability to secure debt financing.
  • Since going public in 2003, GOOD has never missed a cash distribution to stockholders, has never decreased the monthly amount, and has raised the annual dividend rate four times; the Company raised the annual rate to $1.50 per share in 2008, and it has consistently maintained that rate, including through the economic downturn.
  • During that same time period, GOOD has steadily increased its asset base, maintaining a compounded annual asset growth rate of 18% per year (as reported through FY16). Since January 2009, the Company has reduced its leverage from 66.7% to a most recently reported 49.4% (debt to gross assets).
  • GOOD's diversified portfolio consists of 97 properties in strategically located submarkets in 24 states that are leased to 93 different tenants from 19 recession-resistant industries. This diversity, combined with stringent underwriting standards, has contributed to an occupancy rate that has never dropped below 96% since the Company's inception (currently 97.9%).
  • Largely due to GOOD's sound investment strategy and proactive management of its portfolio, as most recently reported, only 3.9% of projected rents are expiring through 2019, which is the lowest turnover rate among its peers.
  • For Q3 2017, GOOD reported $24.4M in revenue, a 6.6% increase quarter-over-quarter, resulting in net income before distributions of $2.4M, EBITDA of $19.3M and core FFO of $10.7M.
  • Q317 highlights include the Company acquiring a $26.4M industrial property in Philadelphia, PA, as well as a $51.4M office complex in Orlando, FL, and selling a fully vacant property in the non-core market of Newburyport, MA. GOOD also saw significant new and re-leasing activity, issued new debt as well as repaid debt, and issued over 1.9M common shares through its ATM program and a $26.1M overnight offering.
  • GOOD's management team, led by David Gladstone and Bob Cutlip, among others, has over 150 years of combined experience in buying, leasing, and owning office and industrial real estate, and a breadth of knowledge in lending and investing in middle market and larger operating companies.
  • Being an externally managed REIT, GOOD maintains overhead costs in line with those of internally managed REITs but has the advantage of accessing an experienced as well as connected team of credit underwriters, one of the main drivers of the Company's historically high average occupancy rates for its properties. The President, CFO, acquisitions, asset management, and accounting team members spend 100% of their time on GOOD.

We are estimating operating revenues of $94.6M for 2017E for GOOD, resulting in net income of $10.9M and core FFO of $41.8M, or $1.53 per share, and at its current price of $22.48, the stock trading is currently trading at 14.7x (price/FFO), which is below the average of selected peers; see page full report for details.

The full report can be accessed by clicking on the following link:

http://stonegateinc.com/reports/GOOD_NOV_2017.pdf

About Stonegate Capital Partners

Stonegate Capital Partners is a Dallas-based corporate advisory firm dedicated to serving the specialized needs of small-cap public companies. Since our inception, our mission has been to find innovative, undervalued public companies for our network of leading institutional investors who seek high quality investment opportunities.

SOURCE: Stonegate Capital Partners