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Gladstone Commercial (GOOD) Sees Solid Demand, Boosts Portfolio

Gladstone Commercial Corporation GOOD has been witnessing active leasing, aiding solid occupancy, healthy rental collections and ample liquidity to back its acquisitions and growth efforts. Reflecting positive sentiments, shares were up 1.07% during Friday’s regular trading session.

As of Dec 31, 2022, Gladstone Commercial’s portfolio occupancy was 96.8% due to successful leasing activities. Moreover, Gladstone Commercial collected 100% of the fourth-quarter 2022 cash base rent.

Gladstone Commercial is also focused on expansion. In the fourth quarter, the company acquired a 68,674-square-foot industrial asset in Denver, CO, for $12.0 million. GOOD also purchased a 65,000-square-foot industrial manufacturing facility in Greenville, SC.

During the full-year 2022, Gladstone Commercial acquired 1,238,680 square feet of industrial real estate comprising 13 properties and seven tenants with an average remaining lease term at acquisition of 14.5 years. The total purchase price was $114.4 million.

Gladstone Commercial is also witnessing healthy demand for its properties. The company leased 20,682 square feet of its Mason, Ohio, office property for a term of seven years and four months. This resulted in the property achieving full occupancy.

GOOD also announced the extension of leases at several properties. Particularly, the company extended the lease of its 29,626-square-foot Egg Harbor, NJ, office property for two years.

Gladstone Commercial extended the lease of its 63,257-square-foot Grand Rapids, MI, office property for seven years, leading to an increase in the total lease period to 9.3 years. Also, the company extended its lease of 13,816 square feet of industrial space in Bolingbrook, IL, for two additional years.

Moreover, in 2022, GOOD extended or executed 628,499 square feet encompassing 13 tenants with a weighted average remaining lease term of 7.8 years. The annualized straight-line rent of these transactions aggregated $7.7 million.

In the fourth quarter, Gladstone Commercial sold its 31,293-square-foot office property in Columbus, Ohio, and its 115,200-square-foot two-story office building in Allen, TX.

Management noted that as of Dec 31, 2022, the company’s available liquidity was $38.8 million consisting of a revolving credit facility and cash in hand. Since Jan 1, 2022, and through Dec 31, 2022, GOOD issued 2,130,056 shares of common stock for net proceeds of $43.2 million. Such an amount of liquidity supports Gladstone Commercial’s growth strategy.

However, rate hikes, inflation and macroeconomic uncertainty are raising concerns. Shares of this Zacks Rank #4 (Sell) company have rallied 22.7% in the past three months, outperforming the industry’s increase of 10%.

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Stocks to Consider

Some better-ranked stocks from the REIT sector are VICI Properties Inc. VICI and STAG Industrial, Inc. STAG, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ 2022 funds from operations (FFO) per share has moved 3.2% north to $1.92 over the past two months.
The Zacks Consensus Estimate for STAG Industrial’s 2022 FFO per share has been raised marginally over the past week to $2.21.

Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.


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