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Gladstone (GOOD) Buys Industrial Property in Tennessee Market

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Gladstone Commercial Corporation (GOOD - Free Report) recently announced the acquisition of an industrial property in Jackson, TN. The $9 million buyout is in sync with the company’s efforts to fortify its portfolio on high-quality assets in thriving markets with credit-worthy tenants.

The 241,000-square-foot industrial building is fully leased to Berry Global, Inc. It is a build-to-suit for Berry, which was completed this August. The tenant makes use of this warehouse mainly for storage and distribution of products that are manufactured at its neighboring production facility. This is likely to ensure steady returns from the property.

Gladstone Commercial has been making encouraging moves to bolster its property base in key markets, in a bid to bank on upbeat market trends. In fact, the latest acquisition marks the company’s foray into the Tennessee, and the industrial property with access to transportation routes is vital to Berry’s supply chain.

As part of its capital-recycling program, the company is aimed at selling non-core assets and use proceeds to de-lever its portfolio as well as acquire properties in the stronger target-growth markets. Gladstone Commercial’s acquisition pipeline and closings, in the year so far, look good for its industrial properties.

Last month, the company announced making moves to bolster its property base in the Indianapolis market. The company acquired a 231,509-square-foot industrial building, which marked Gladstone Commercial’s third purchase in the market, and the second industrial acquisition in Indianapolis this year.

Such portfolio-expansion efforts will likely fuel growth, as high consumer spending, e-commerce boom and a healthy job market are spurring demand for the industrial real estate category. This is highly encouraging for Gladstone Commercial, as well as other REITs, including Duke Realty Corp. (DRE - Free Report) , Prologis (PLD - Free Report) and Rexford Industrial Realty, Inc. (REXR - Free Report) .

As such for Gladstone Commercial, which is focused on investments in mission-critical facilities occupied by middle market to investment-grade businesses located in growing markets, the latest acquisition will likely be accretive to its earnings and drive long-term growth. Nevertheless, rising supply and protectionist trade policies remain concerns for the industrial real estate market.

Shares of this Rank #4 (Sell) company have declined 2.9% in the past three months. Nevertheless, it is narrower than its industry’s decline of 4.1% during the same time frame.


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