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Gladstone (GOOD) Buys $19.9M Industrial Asset, Boosts Portfolio

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In efforts to expand its property base in the targeted thriving markets, Gladstone Commercial Corporation (GOOD - Free Report) recently shelled out $19.9 million for the purchase of a 278,000-square-foot industrial facility in Huntsville, AL.

The transaction reflects Gladstone Commercial's strategy of achieving growth on buyouts of high-quality mission-critical assets leased out to tenants with strong credit profiles.

Constructed in 2021 and revamped last year, the Huntsville facility is situated on 19.6 acres within the Chase Industrial Park. It is fully leased to Dynetics, Inc., which is a wholly-owned subsidiary of defense contractor, Leidos Holdings (LDOS - Free Report) , with a remaining lease term of 9.2 years.

With the facility serving as a mission-critical manufacturing center, with significant tenant investment inside the facility, a decent residual lease term and a strong tenant with long-term government contracts, the company is likely to enjoy stable revenues

Remarkably, Gladstone Commercial has been making encouraging moves to expand its footprint in robust growth corridors like Alabama. This is apt, given the strong macro tailwinds that are driving the industrial real estate space. In fact, the asset class demonstrated resilience despite the coronavirus pandemic, with low vacancy rates, high asking rents and high rent collections.

Moreover, despite the pandemic-borne challenges, Gladstone Commercial seems to be firing on all cylinders, with high levels of rental collections, active leasing that is boosting occupancy, and ample liquidity to back its acquisitions and growth initiatives.

Specifically, for 2020, the company has collected 99% of cash base rents. This consisted of cash base rental collection for the first, second, third and fourth quarters of 100%, 98%, 99% and 99%, respectively. Additionally, it has collected around 98% of December cash base rents.

In addition, its leasing activities look encouraging and have driven portfolio occupancy, which was more than 95% as of Dec 14. As of the same date, Gladstone Commercial’s available liquidity stood in excess of $40 million, consisting of revolving credit facility and cash on hand.

Shares of this Zacks Rank #3 (Hold) company have gained 13.1% over the past three months, outperforming the industry’s rally of 7.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Stocks to Consider

CubeSmart’s (CUBE - Free Report) Zacks Consensus Estimate for 2020 FFO per share has moved up marginally to $1.66 over the past week. The company currently carries a Zacks Rank of 2.

Rexford Industrial Realty, Inc.’s (REXR - Free Report) FFO per share estimate for the current year has moved 1.6% north to $1.30 over the past two months. The company carries a Zacks Rank of 2, currently.

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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