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Gladstone Commercial Announces Lease Extension With Haier

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Gladstone Commercial Corporation (GOOD - Free Report) recently clinched 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, and serves as a critical infrastructure in the tenant’s distribution channel. Haier, which had initially signed a 10.5-year lease for this facility, precisely utilizes it for import and distribution of appliance components via the Appalachian Regional Port through rail from the Port of Savannah.

Recently, Gladstone Commercial also acquired an industrial property in Terre Haute IN, for $10.6 million. The buyout of this property positioned at a prominent I-70 interchange is in sync with the company’s efforts to enhance 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) . The acquired facility marks the tenant’s only distribution unit, located just five miles from its corporate headquarters as well as the primary manufacturing facility. Being a key infrastructure in Clabber Girl’s distribution channel, this property is likely to generate steady returns for its landlord.

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

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

The lease extension deal with Haier and the latest takeover, along the I-70 corridor, which has emerged as a premier industrial strip in the Midwest, will likely be accretive to Gladstone Commercial’s earnings, fueling long-term growth. Nevertheless, surplus supply is a concern for the industrial real estate market.

Gladstone Commercial currently carries a Zacks Rank #3 (Hold). The stock has gained 7.2% compared with the industry’s rally of 3.2% 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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