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Gladstone (GOOD) Boosts Industrial Property Base With Buyout

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To expand its property base in targeted thriving markets, Gladstone Commercial Corporation (GOOD - Free Report) recently announced the acquisition of an industrial manufacturing, distribution and service facility spanning 142,125 square feet on around 115 acres in Warfordsburg, PA, for $11.7 million at a weighted GAAP capitalization rate of 12.3%.

The latest buyout is in sync with GOOD’s growth strategy of the acquisition of functional assets in strong industrial markets, which are leased to tenants with solid credit profiles.

Gladstone Commercial purchased the property in a long-term sale/leaseback transaction with a 25-year absolute NNN lease. It is 100% leased to a provider of processing services and equipment for infrastructure end markets.

The addition of this well-located, functional industrial asset in a southern Pennsylvania market with strong underlying fundamentals has enabled the company to improve the weighted average lease term and increase its industrial concentration. This is likely to help it generate stable revenues for a long period.

Gladstone Commercial has been witnessing healthy leasing activity, aiding solid occupancy and healthy rental collections. The company collected 100% of cash rent during January, February and March. Subsequent to the quarter end, the company also collected 100% of cash rent due in April. Gladstone Commercial also renewed or newly leased 740,948 square feet with remaining lease terms ranging from 1.0 to 11.0 years at three of its properties.

Moreover, GOOD’s disciplined capital-recycling strategy adds to its balance sheet strength, poising it well to capitalize on long-term growth opportunities. The company focuses on selling non-core assets and using the proceeds to de-lever its portfolio and acquire properties in its target growth markets with a focus on industrial investment opportunities. So far in the current year, the company has exited four non-core assets and has additional non-core assets, which it anticipates selling over the next one to two years.

Shares of this Zacks Rank #2 (Buy) company have risen 12.7% in the past three months against its industry’s decline of 5.4%.

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Other Stocks to Consider

Some other top-ranked stocks from the REIT sector are Iron Mountain Incorporated (IRM - Free Report) , Rexford Industrial Realty, Inc. (REXR - Free Report) and Lamar Advertising (LAMR - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Iron Mountain’s current-year FFO per share is currently pegged at $4.42.

The Zacks Consensus Estimate for Rexford Industrial Realty’s ongoing year’s FFO per share is pegged at $2.34 at present.

The Zacks Consensus Estimate for Lamar Advertising’s 2024 FFO per share presently stands at $8.11.

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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