Gladstone Commercial Corporation (Nasdaq:GOOD) Grows Industrial Portfolio in 2023
Gladstone Commercial Corporation (Nasdaq:GOOD) reported a successful year of investing, leasing, and disposition activity in the net lease space. The company completed $29.5 million in new acquisitions across five properties, increased industrial concentration to 60% of annualized straight-line rent, entered into 1,428,830 square feet of leases resulting in a more than $1.2 million net increase in same-store GAAP rent, and raised substantial liquidity for future growth.
The strategic shift by Gladstone Commercial Corporation towards increasing its industrial exposure while divesting non-core office assets is indicative of a broader trend within the real estate investment trust (REIT) sector. Industrial properties, particularly in established markets like Chicago and Dallas/Fort Worth, have proven resilient, often driven by e-commerce growth and supply chain demands. The company's focus on properties with long weighted average lease terms (19.3 years) is a significant move, as it suggests stable long-term cash flows, which are attractive to investors looking for predictability in dividends.
Moreover, the reported net increase in same-store GAAP rent contributes positively to the REIT's financial health by potentially increasing the earnings before interest, taxes, depreciation and amortization (EBITDA). This, coupled with the full collection of cash-based rents, indicates strong operational performance, which could be a positive signal to shareholders and potential investors evaluating the company's financial stability and growth prospects.
From a financial perspective, the liquidity position of Gladstone Commercial Corporation, with $57.4 million available via revolving credit and cash on hand, is a critical factor in assessing the company's ability to fund future acquisitions and manage debt obligations. The issuance of common shares and Series F Cumulative Redeemable Preferred Stock, raising a combined total of approximately $9.7 million, reflects a strategic approach to capital raising that balances equity financing with debt. This approach can mitigate the risk of over-leveraging and maintain a healthy debt-to-equity ratio.
The exit from seven non-core markets and properties could be seen as a move to optimize the portfolio and concentrate on higher-performing assets, which may enhance the overall return on investment (ROI) for shareholders. It also implies a disciplined capital recycling strategy that is crucial for sustaining growth and managing risk in the real estate portfolio.
The transition towards a 60% industrial concentration of annualized straight-line rent represents a tactical adjustment in asset allocation that aligns with current market demands. This shift is significant when considering the competitive landscape of REITs, as it suggests an adaptation to market conditions that favor industrial real estate due to its lower volatility compared to office spaces, especially in a post-pandemic environment where office demand has seen fluctuations. By focusing on mission-critical assets, Gladstone Commercial is positioning itself to capitalize on the stability and growth potential of industrial properties.
However, it's important to monitor the potential risks associated with concentration in a single asset class. While industrial assets are currently performing well, diversification within a portfolio can mitigate risk should market conditions shift. Investors should consider the balance between the benefits of specialization in a high-performing sector against the risks of reduced diversification.
02/05/2024 - 04:30 PM
MCLEAN, VA / ACCESSWIRE / February 5, 2024 / Gladstone Commercial Corporation (Nasdaq:GOOD) ("Gladstone Commercial") is pleased to report another successful year of investing, leasing, and disposition activity in the net lease space. We continue to create shareholder value by increasing our industrial exposure and disposing of non-core office assets.
Acquisition Activity:
We completed $29.5 million in new acquisitions across five properties totaling 321,432 square feet. At closing, these five properties had a weighted average lease term of 19.3 years. The transactions were completed in established, growing industrial markets, including Chicago, Illinois, Dallas/Fort Worth, Texas, Lehigh Valley, Pennsylvania, and Indianapolis, Indiana. We increased portfolio industrial concentration to 60% of annualized straight-line rent as of December 2023 (compared to 56% as of December 2022). Leasing and Disposition Activity:
During 2023 we entered into 1,428,830 square feet of leases at 14 of our properties. These leases resulted in a more than $1.2 million net increase in same-store GAAP rent. We exited seven non-core markets and properties. Additional Highlights:
We collected 100% of cash-based rents during the year, generating substantial internal cash flow. We raised net proceeds of $4.1 million by issuing common shares through our at-the-market offering program and $5.6 million by issuing our Series F Cumulative Redeemable Preferred Stock. As of December 31, 2023, we had $57.4 million in available liquidity via our revolving credit facility and cash on hand. Available Liquidity:
We begin 2024 with substantial liquidity, and we are well positioned to continue growing our portfolio of mission-critical assets. Please reach out to EJ Wislar, Ryan Carter, or Todd McDonald with any questions or investment opportunities.
About Gladstone Commercial (Nasdaq: GOOD)
Gladstone Commercial is a real estate investment trust focused on acquiring, owning and operating net leased industrial and office properties across the United States. As of September 30, 2023, Gladstone Commercial's real estate portfolio consisted of 135 properties located in 27 states, totaling approximately 17.2 million square feet. For additional information, please visit www.gladstonecommercial.com .
For Broker Submittals:
Investor or Media Inquiries:
All statements contained in this press release, other than historical facts, may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements. Readers should not rely upon forward-looking statements because the matters they describe are subject to known and unknown risks and uncertainties that could cause Gladstone Commercial's business, financial condition, liquidity, results of operations, funds from operations or prospects to differ materially from those expressed in or implied by such statements. Such risks and uncertainties are disclosed under the captions "Forward-Looking Statements" and "Risk Factors" of the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC on February 22, 2023, and certain other filings made with the SEC. Gladstone Commercial cautions readers not to place undue reliance on any such forward-looking statements which speak only as of the date made. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
For further information:
Gladstone Commercial Corporation, (703) 287-5893
For Investor Relations inquiries related to any of the monthly dividend paying Gladstone funds, please visit www.gladstonecompanies.com .
SOURCE: Gladstone Commercial Corporation
press release on accesswire.com
What is the ticker symbol for Gladstone Commercial Corporation?
The ticker symbol for Gladstone Commercial Corporation is GOOD.
How much did the company complete in new acquisitions?
The company completed $29.5 million in new acquisitions across five properties.
What is the current industrial concentration of the company's portfolio?
The company's portfolio industrial concentration is 60% of annualized straight-line rent.
How much liquidity did the company have as of December 31, 2023?
As of December 31, 2023, the company had $57.4 million in available liquidity via its revolving credit facility and cash on hand.
Gladstone Commercial Corp
GOOD Rankings
#4043 Ranked by Stock Gains
GOOD Stock Data
Industry
Lessors of Other Real Estate Property
Sector
Real Estate and Rental and Leasing
Tags
Finance, Real Estate Investment Trusts, Real Estate and Rental and Leasing, Lessors of Other Real Estate Property
Country
US
City
Mc Lean
About GOOD
gladstone commercial corporation is a publicly traded reit (nasdaq: good) that invests in single tenant and anchored multi-tenant net leased industrial, office and, to a lesser extent, medical properties nationwide. we also invest alongside developers in build-to-suit transactions where a tenant requires a new building. we buy properties with strong tenants of all sizes and we believe our track record of underwriting the credit of middle market businesses is unmatched. we target primary and secondary growth markets that possess favorable economic growth trends, diversified industries, growing populations, and strong employment. our senior management team, under the guidance of david gladstone, has over 200 years of combined experience investing in real estate and middle market businesses. we have a track record of success, as exhibited by a history of strong distribution yields, consistent occupancy greater than 96.0%, and 10+ years of paying continuous monthly cash distributions. we a
