Real estate investment trust (REIT)
Gladstone Commercial Corp.
) announced the equity offering of around 1.4 million shares at
$18.15 each. The company also granted the underwriters an option
to buy up to an additional 0.2 million shares. The offering is
anticipated to complete on Nov 25, 2013, upon fulfillment of
customary closing conditions.
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Gladstone Commercial expects to utilize the net proceeds from the
offering in ongoing and future asset acquisitions, paying back
debt and meeting other corporate needs. Notably , as of Sep 30,
2013 outstanding debt stood at $0.5 billion that comprise
of mortgage notes payable, term preferred stock and borrowings
under the line of credit.
Oppenheimer & Co Inc., a unit of
Oppenheimer Holdings Inc.
) is the lead manager while Jefferies LLC and Janney Montgomery
Scott LLC are acting as the joint book-running managers for the
We believe that though the offering will result in share dilution
for the company, the payment of debt is encouraging as it will
reduce interest expenses. Also, strategic investments will help
Gladstone Commercial enhance its portfolio quality.
Earlier in November, Gladstone Commercial reported its
third-quarter 2013 results with adjusted FFO (fund from
operations) per share of 38 cents, missing the Zacks Consensus
Estimate by 2 cents. However, it was in line with the year-ago
Results were adversely affected by an increase in total operating
expenses. However, top-line growth and the acquisition of two
fully occupied properties were the positives. As of Sep 30, 2013
total assets stood at $666.4 million.
Gladstone Commercial currently has a Zacks Rank #3 (Hold).
However, other REIT -equity trust stocks worth considering
The GEO Group, Inc.
Sabra Health Care REIT, Inc.
). Both the stocks carry a Zacks Rank #1 (Strong Buy).
Funds from operations, a widely accepted and reported measure
of REITs performance, are derived by adding depreciation,
amortization and other non-cash expenses to net income.