To expand its property base in targeted thriving markets, Gladstone Commercial Corporation GOOD recently shelled out $18.8 million to purchase a 345,584-square-foot industrial manufacturing/distribution warehouse in Wilmington, NC. The move boosts Gladstone Commercial’s industrial presence in the Southeast with its 10th acquisition in North Carolina.
The acquisition reflects GOOD’s strategy of expanding on the buyouts of high-quality industrial assets in strong growth corridors leased to tenants with solid credit profiles.
Located on 59 acres, this property is fully leased to Pacon Manufacturing, with 13.1 years of remaining lease term. The property will generate stable revenues for Gladstone Commercial as it functions as the mission-critical manufacturing and distribution headquarters facility for Pacon, which is a contract manufacturer of household/medical cleaning supplies.
Apart from being leased to a strong tenant, this property enjoys access to I-40 and I-95, which connect the Port of Wilmington and Wilmington Terminal Railroad to key markets in North and South.
The acquisition of properties in Gladstone Commercial’s targeted growth markets augurs well for long-term growth. On May 4, 2022, GOOD acquired a 260,719-square-foot, two-property industrial portfolio, with locations in Fort Payne, AL and Cleveland, OH, for $19.3 million.
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 May 6, 2022, Gladstone Commercial’s portfolio occupancy was 97.2% due to successful leasing activities. Moreover, Gladstone Commercial collected 100% of the April cash base rent. The healthy levels of rental receipts have enabled GOOD to maintain its dividend rate.
However, shares of this Zacks Rank #3 (Hold) company have declined 11% in the past three months, wider than its industry’s fall of 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Stocks to Consider
Some key picks from the REIT sector include Prologis, Inc. PLD, Public Storage PSA and Extra Space Storage Inc. EXR.
Prologis holds a Zacks Rank of 2 (Buy) at present. Prologis’ 2022 revenues are expected to increase 8.9% year over year.
The Zacks Consensus Estimate for PLD’s 2022 funds from operations (FFO) per share has been revised marginally upward in the past week to $5.15.
The Zacks Consensus Estimate for Public Storage’s 2022 FFO per share has moved a cent north to $15.54 over the past month.
Currently, Public Storage carries a Zacks Rank of 2. PSA’s long-term growth rate is projected at 7.2%.
The Zacks Consensus Estimate for Extra Space Storage’s 2022 FFO per share has moved six cents north to $7.98 in the past month.
Extra Space Storage’s 2022 revenues are expected to increase 15.6% year over year. Currently, EXR 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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