Gladstone Commercial (GOOD) Buys Georgia Industrial Facility

In a bid to expand its property base in the targeted thriving markets, Gladstone Commercial Corporation GOOD recently shelled out $12 million to purchase a 120,000-square-foot industrial facility in Stone Mountain, GA. This marks the company’s fifth industrial acquisition in Georgia.

The sale/leaseback transaction reflects Gladstone Commercial's strategy of expanding on buyouts of high-quality industrial assets in strong growth corridors leased to tenants with solid credit profiles. The initial capitalization rate for the acquisition was 6.4%, with an average capitalization rate of 7.3%.

Located on 7.5 acres, this property is fully leased to House of Cheatham LLC, with 15 years of remaining absolute NNN lease term. The tenant uses the property to manufacture and distribute its personal and beauty care products serving the multicultural and textured hair care market. Thus, the property will generate stable revenues for the company by being mission-critical to the tenant, with a decent residual lease term and a strong tenant.

In November, Gladstone acquired a 161,458-square-foot industrial facility in Charlotte, NC metropolitan statistical area for $12.8 million. The tenant — Assa Abloy Entrance Systems — has a remaining lease term of 7.9 years.

Moreover, Gladstone Commercial has been witnessing active leasing, aiding solid occupancy, healthy rental collections and ample liquidity to back its acquisitions and growth efforts. As of Nov 30, 2021, the company’s portfolio occupancy was 97.8%, resulting from successful leasing activities. Also, Gladstone Commercial has collected 100% of the November cash base rents. Healthy levels of rental receipts have enabled GOOD to maintain its dividend rate.

Gladstone Commercial banks on its capital-recycling program, thereby selling its 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 augur well for the long term.

Gladstone Commercial currently carries a Zacks Rank #3 (Hold). The stock has rallied 14.5%, outperforming the industry’s growth of 7.5% in the past three months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Stocks to Consider

Some better-ranked stocks from the REIT sector include Prologis, Inc. PLD, CubeSmart CUBE and Rexford Industrial Realty, Inc. REXR.

Prologis holds a Zacks Rank of 2 at present. 2021 funds from operations (FFO) per share for Prologis will likely increase 8.4% year over year.

The Zacks Consensus Estimate for PLD’s 2021 FFO per share has been revised marginally upward in two months.

The Zacks Consensus Estimate for CubeSmart’s ongoing-year FFO per share has moved 1.94% north to $2.10 over the past month. Its long-term growth rate is projected at 11.2%.

The Zacks Consensus Estimate for CubeSmart’s 2021 FFO per share suggests an increase of 22.1% year over year. Currently, CUBE carries a Zacks Rank of 2.

The Zacks Consensus Estimate for Rexford Industrial’s ongoing-year FFO per share has moved 3.2% north to $1.63 over the past two months.

The Zacks Consensus Estimate for Rexford Industrial’s 2021 FFO per share suggests an increase of 23.5% year over year. Currently, REXR carries a Zacks Rank of 2.

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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