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Gladstone (GOOD) Buys Industrial Service Facility in Baytown

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Gladstone Commercial Corporation (GOOD - Free Report) recently shelled out $8.125 million for the purchase of a 25,200-square-foot industrial service facility in Baytown (Houston), TX, in a bid to expand its property base in the targeted thriving markets.

The transaction reflects Gladstone Commercial's strategy of achieving growth on buyouts of high-quality industrial assets in strong growth corridors leased out to tenants with solid credit profiles. Also, the initial capitalization rate for the acquisition was 5.9%, with an average capitalization rate of 7.1%.

However, the company’s shares were down 2.21% during Friday’s regular trading session, mirroring broader market concerns.

Located on 10.2 acres within the Thompson Ten Industrial Park, this property is fully leased to Mobile Mini, Inc., a wholly-owned subsidiary of a storage solutions provider, WillScot Mobile Mini (WSC - Free Report) . The lease has 12.7 years of remaining lease term. The property is mission-critical for the tenant as it utilizes the facility to store its modular mobile storage solutions and tank/pump products.

Thus, the property will generate stable revenues for the company by serving being mission-critical to the tenant, coupled with a decent residual lease term and a strong tenant.

Moreover, Gladstone Commercial’s rent collections have also been healthy. In its business update released earlier this month, the company noted that approximately 100% of the May cash base rents have been paid and collected. Also, as of May 31, 2021, portfolio occupancy is in excess of 95%.

On the leasing front, the company noted that during the second quarter, it has commenced three new leases aggregating 259,056 square feet in three different buildings, located in Denver, CO, Blaine, MN, and Indianapolis, IN, increasing its straight-line rents in these properties that had prior occupancies by an average of 9.4%.

Notably, during the first quarter, Gladstone Commercial purchased an 180,152-square-foot industrial facility in Findlay, OH, for $11.1 million, which is fully leased to one tenant for 14.2 years. Furthermore, the company closed 2020 on an impressive note, acquiring $57.5 million in accretive industrial assets located in its target markets during the third and fourth quarters of the year. It banks on its capital-recycling program, thereby selling non-core assets and using the proceeds to de-lever the portfolio, along with the acquisition of properties in the company’s target growth markets, which augurs well for the long term.

Gladstone Commercial currently carries a Zacks Rank #3 (Hold). The stock has gained 22.6% compared with the industry’s rally of 16.1% so far in the year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Stocks to Consider

Industrial Logistics Properties Trust’s (ILPT - Free Report) Zacks Consensus Estimate for 2021 FFO per share for the current year moved up marginally to $1.88 in the past month. The company currently carries a Zacks Rank of 2 (Buy).

National Storage Affiliates Trust’s (NSA - Free Report) estimate for the current-year FFO per share has moved 3.7% north to 1.95 in a month’s time. Currently, the company 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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