Gladstone Commercial Provides a Semi-Annual Business Update

Rhea-AI Summary

Gladstone Commercial (NASDAQ:GOOD), a REIT specializing in net leased industrial properties, provided a semi-annual business update amid market volatility. The company reported 100% collection of cash base rents and a portfolio occupancy rate of 98.5% as of June 30, 2024. Key acquisitions included a 142,125 square foot facility in Pennsylvania costing $11.7 million with a 12.3% GAAP capitalization rate. Significant sales of office properties in Ohio, Utah, Texas, and New Jersey were noted. From January to June 2024, Gladstone extended or executed leases for 2.4 million square feet with five tenants, generating $11.4 million in annualized straight-line rent, marking a 46% increase. The company maintains solid liquidity, with $48.8 million available as of June 30, 2024.

Positive

• 100% of cash base rents collected through June 30, 2024.
• Portfolio occupancy rate of 98.5%.
• Acquisition of a 142,125 square foot facility in Pennsylvania for $11.7 million at a 12.3% GAAP capitalization rate.
• Executed or extended leases covering 2.4 million square feet with an annualized straight-line rent increase of 46%.
• Strong liquidity with $48.8 million available as of June 30, 2024.

Negative

• Sale of multiple office properties, indicating a possible strategic shift or divestment of non-core assets.

Financial Analyst

The most notable aspect of Gladstone Commercial Corporation's update lies in the company's robust financial health and strategic portfolio adjustments. The 100% cash base rent collection rate up to June 30, 2024, reflects strong tenant performance despite market volatility. This collection consistency suggests a resilient tenant base and effective management practices. Investors should find this reassuring as it indicates steady income without disruptions.

Gladstone's portfolio occupancy stands at 98.5%, which is notably high for the industry. High occupancy levels ensure minimal downtime and continuous revenue streams, which is important for maintaining the REIT's dividend payouts. This can be particularly appealing to income-focused investors.

The recent $11.7 million acquisition of an industrial property in Pennsylvania at a GAAP capitalization rate of 12.3% is a strategic move. A cap rate above 10% is considered high and indicates an attractive return on investment. However, the cap rate also reflects perceived risk; therefore, investors should monitor how the property performs to evaluate whether the risk-reward balance is favorable.

Gladstone has also divested several office buildings, reflecting a strategic shift towards industrial properties. This shift could be viewed positively, given the industrial sector's resilience and growth potential compared to the office sector, which has been under pressure due to changing work patterns post-pandemic.

With an $48.8 million liquidity, Gladstone is well-equipped to capitalize on future opportunities or manage potential downturns. Liquidity provides a safety net and the ability to make opportunistic acquisitions, supporting long-term growth.

Market Research Analyst

Gladstone's strategic shift towards industrial properties aligns well with broader market trends. The industrial real estate sector has shown resilience and growth, driven by e-commerce growth and supply chain restructuring. By increasing its focus on this sector, Gladstone is positioning itself to benefit from these tailwinds.

The divestment of office buildings in various locations highlights a deliberate move to reduce exposure to a sector facing headwinds due to hybrid work models. Office real estate has seen declining demand, leading to higher vacancy rates and reduced rent growth. Gladstone's pivot is a proactive measure to mitigate these risks.

The extension and execution of leases covering 2.4 million square feet, with a weighted average remaining lease term of six years and a 46% increase in annualized straight-line rent, indicate strong demand for their industrial spaces. This not only boosts immediate revenue but also provides long-term income visibility, which is important for REITs.

Investors should note the positive outlook this portfolio rebalancing presents. By focusing on industrial assets, Gladstone is aligning with sectors that are likely to see sustained demand, thus potentially enhancing long-term returns.

MCLEAN, VA / ACCESSWIRE / July 10, 2024 / Gladstone Commercial Corporation (NASDAQ:GOOD) ("we" or "Gladstone Commercial") is a real estate investment trust ("REIT") focused on acquiring, owning, and operating net leased industrial properties across the United States. We are providing the following semi-annual business update regarding our portfolio performance during a time of market volatility.

• 100% of cash base rents have been paid and collected through June 30, 2024.

• Portfolio occupancy is 98.5%, as of June 30, 2024.

• On May 7, 2024, we acquired a 142,125 square foot, industrial manufacturing, distribution, and service facility situated on 115 acres in Warfordsburg, Pennsylvania for a total purchase price of $11.7 million at a GAAP capitalization rate of 12.3%.

• We sold our 114,786 square foot office building in Columbus, Ohio.

• We sold our 86,409 square foot office building in Draper, Utah.

• We sold our 155,984 square foot office building in Richardson, Texas.

• We sold our 29,257 square foot office building in Egg Harbor, New Jersey.

• From January 1, 2024, through June 30, 2024, we have extended or executed leases covering 2.4 million square feet with five tenants at a weighted average remaining lease term of 6.0 years. The annualized straight-line rent of these transactions totaled $11.4 million, an increase of 46%.

• We continue to have ample liquidity and a strong capital structure. As of June 30, 2024, our available liquidity is approximately $48.8 million via our revolving credit facility and cash on hand.

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 March 31, 2024, Gladstone Commercial's real estate portfolio consisted of 132 properties located in 27 states, totaling approximately 16.7 million square feet. For additional information please visit www.gladstonecommercial.com.

For Broker Submittals:

Southeast/Northeast	South Central:
Nick Lindsay	Todd Alan McDonald
Vice President	Senior Vice President
(703) 966-3864	(703) 287-5895
Nick.Lindsay@gladstone.com	Todd.McDonald@gladstone.com
Midwest/West
Ryan Carter
Executive Vice President
(571) 451-0019
Ryan.Carter@gladstone.com

Investor or Media Inquiries:

Buzz Cooper	Catherine Gerkis
President	Director of Investor Relations/ESG
(703) 287-5815	(703) 287-5846
Buzz.Cooper@gladstone.com	Catherine.Gerkis@gladstone.com

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 the 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 caption "Risk Factors" of the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as filed with the SEC on February 21, 2024, and certain other filings we make 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.

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

View the original press release on accesswire.com

FAQ

What is the 2024 portfolio occupancy rate for Gladstone Commercial (GOOD)?

As of June 30, 2024, Gladstone Commercial (GOOD) reported a portfolio occupancy rate of 98.5%.

How much did Gladstone Commercial (GOOD) collect in cash base rents through June 30, 2024?

Gladstone Commercial (GOOD) collected 100% of its cash base rents through June 30, 2024.

What was the purchase price for Gladstone Commercial's new acquisition in Pennsylvania?

Gladstone Commercial acquired a property in Pennsylvania for $11.7 million.

What is the GAAP capitalization rate for Gladstone Commercial's recent acquisition?

The GAAP capitalization rate for the recent acquisition by Gladstone Commercial is 12.3%.

How much annualized straight-line rent did Gladstone Commercial generate from new leases in 2024?

Gladstone Commercial generated $11.4 million in annualized straight-line rent from new leases in 2024.

What is the available liquidity for Gladstone Commercial as of June 30, 2024?

Gladstone Commercial has available liquidity of $48.8 million as of June 30, 2024.