Gladstone Sees Solid Rent Collection, Portfolio Occupancy

In light of the pandemic-related market disruptions, Gladstone Commercial Corporation GOOD has provided a solid business update on its portfolio performance.
The company continues to enjoy encouraging portfolio occupancy and strong rent collections, helping it provide stable cash flows to investors.

The July cash base rent collections aggregated nearly 99%. Moreover, July rental collections were in line with June, May and April cash base rent of 98%. The remaining 1-2% of cash base rents is related to the previously-agreed deferral agreements. Nonetheless, such deferrals will be collected from the respective tenants, beginning July 2020 and ending in March 2021. Moreover, as of Jul 16, portfolio occupancy was around 97%.

Further, the company’s properties have been receiving a positive response from the existing tenants, as reflected by its successful leasing efforts. In July, Gladstone Commercial, which deals with net leased industrial and office properties across the United States, announced a six-year lease extension with Conduent State Healthcare at its 42,213-square-foot office building in Richmond, VA.

With the lease extension, the building will maintain its full occupancy until September 2026. Amid the uncertainties in the markets due to the coronavirus crisis, Gladstone’s ability to execute such leases highlights the high quality of its properties. These deals will likely boost its revenues in the near term.

Apart from this lease extension, Gladstone’s success in four lease extensions and tenant expansion in the second quarter has helped increase the overall straight line rent at these properties by 14%. Also, it leads to increased same-store property net operating income (NOI) as well as an expected increase in contribution to core funds from operations (FFO) for third-quarter 2020.

In addition, Gladstone continues to enjoy strong liquidity, and has tapped the equity markets to fund its operating needs and acquisitions. Since Jan 1, Gladstone has raised $28.4 million in net proceeds by issuing 1.3 million shares of common stock. It has also issued 113,000 shares of Series E perpetual preferred stock for net proceeds of $2.6 million.

Further, as of Jul 16, the company’s available liquidity amounted to more than $35 million, consisting of balance under its revolving credit facility and cash on hand. 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.

Shares of this Zacks Rank #2 (Buy) company have gained 34.9% over the past three months compared with the industry’s rally of 8.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

PrologisPLD FFO per share estimate for the ongoing year have been unchanged at $3.59 over the past 30 days. It indicates an increase of 8.5% year on year. The company currently carries a Zacks Rank of 2.

Alexandria Real Estate Equities, Inc.’s ARE FFO per share estimate for 2020 has been revised marginally upward to $7.32 over the past month. It currently carries a Zacks Rank of 2.

Cousins Properties Incorporated’s CUZ Zacks Consensus Estimate for 2020 FFO per share has revised marginally upward to $2.74 over the past month. The company currently carries a Zacks Rank of 2.

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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