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Gladstone (GOOD) Provides Update on Portfolio Performance

Zacks Equity Research
·4-min read

In light of the COVID-19 outbreak-related market disruptions, Gladstone Commercial Corporation GOOD has provided a strong business update on its portfolio performance.

The company continues to enjoy encouraging portfolio occupancy and strong rent collections, providing stable cash flows to investors.

In fact, June cash base rent collections aggregated nearly 98%. Moreover, June rental collections were in line with May and April cash base rent of 98%. The remaining 2% of cash base rents are related to the previously-agreed deferral agreements. Nonetheless, such deferrals will be collected from respective tenants commencing in July 2020 and ending in March 2021.

As of Jun 15, portfolio occupancy was around 97%.

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Further, the company’s office properties have been receiving a positive response from existing tenants, as indicated by its successful leasing efforts. In fact, in late May, it announced a lease expansion with Morgan Stanley Smith Barney Financing for 16,689 square feet of space at Gladstone’s Easton Commons office building. (Read more: Gladstone Commercial Inks Lease Expansion With Morgan Stanley)

With the lease amendment, Morgan Stanley will fully occupy the building from Aug 1, 2020, through December 2025. Amid the uncertainties in the markets due to the coronavirus outbreak-led concerns, the company’s ability to execute such leases indicates the high quality of its properties. The deals will likely boost its revenues in the near term.The expansion lease will increase the company’s GAAP rent by 51% over the previous tenant’s rent.

Moreover, it continues to enjoy strong liquidity, and has tapped the equity markets to fund its operating needs and acquisition pursuits.

Specifically, since Jan 1, Gladstone has raised $28.2 million in net proceeds by issuing 1.3 million shares of common stock. Moreover, it issued 45,600 shares of Series E perpetual preferred stock for net proceeds of $1 million.

Further, as of Jun 15th, the company’s available liquidity amounted to more than $30 million, consisting of balance under its revolving credit facility and cash on hand. Moreover, it reduced net book leverage to 46% as of Mar 31, 2020.

However, as tenants’ ability to pay rent has been impacted amid the market turmoil, the company expects to receive additional rent relief requests in the near term. Further, it aims to modify lease agreements to offer relief to certain tenants that have been significantly affected by the ongoing COVID-19 pandemic.

Moreover, shares of this Zacks Rank #3 (Hold) company have declined 13.1% over the past year compared with the industry’s decline of 7.7%.

 


Stocks to Consider

Alexander Baldwin Holdings, Inc.’s ALEX Zacks Consensus Estimate for 2020 funds from operations (FFO) per share has been unchanged at 83 cents over the past month. The company currently flaunts a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

One Liberty Properties, Inc.’s OLP FFO per share estimate for the ongoing year has been unchanged at $1.89 over the past 30 days. The company currently sports a Zacks Rank of 1.

Gladstone Land Corporation’s LAND FFO per share estimate for 2020 has been unchanged at 68 cents over the past month. Further, it currently carries a Zacks Rank of 2 (Buy).

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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