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Gladstone Acquires Industrial Asset, Grows Indiana Portfolio

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Gladstone Commercial Corporation (GOOD - Free Report) recently announced the completion of acquisition of an industrial property in Terre Haute IN, for $10.6 million. The strategic move is in sync with the company’s efforts to fortify its portfolio of high-quality assets in the thriving markets with creditworthy tenants.

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 - Free Report) . With its headquarter in Terre Haute for more than 150 years, Clabber Girl is a leading manufacturer of branded retail baking powder, baking soda and corn starch.

The acquired facility marks the tenant’s only distribution facility and is located roughly just five miles from its corporate headquarters as well as its primary manufacturing facility. Being a critical infrastructure in Clabber Girl’s distribution channel, this property is likely to generate steady returns for its landlord. The initial capitalization rate for the acquisition was 7.3%, the average being 8%.

Moreover, located at a prominent I-70 interchange, this property enjoys solid access to the primary east-west corridor in the United States, thereby ensuring substantial returns over the long-term.

Notably, Gladstone Commercial has been making encouraging moves to bolster its property base in the Indiana market in a bid to benefit from the upbeat market trends. In fact, the latest acquisition marks the company’s fifth purchase in the Central Indiana market and the fourth industrial buyout in the same zone of the Indiana since January 2019.

What is impressive is that the industrial asset class is showing resilience amid the coronavirus pandemic with low vacancy rates, high asking rents and robust rent collections. There has been a notable increase in the e-commerce’s share of total retail sales, spurring demand for warehouse and distribution space. Apart from the fast adoption of e-commerce, the industrial real estate space is anticipated to gain traction in the long run from a likely rise in the inventory levels of companies as a precaution for any supply-chain disruption.

This, in turn, will likely keep supporting the industrial landlords like Gladstone Commercial, Prologis (PLD - Free Report) and Duke Realty Corp. (DRE - Free Report) , among others to enjoy a favorable market environment.

Evidently, for Gladstone Commercial, its latest takeover along the I-70 corridor, which emerged as a premier industrial strip in the Midwest will likely be accretive to its earnings, fueling long-term growth. Nevertheless, surplus supply remains a concern for the industrial real estate market.

This currently Zacks Rank #3 (Hold) stock has depreciated 4.1% compared with the industry’s decline of 4.8% in the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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