Gladstone Commercial Expands Industrial Portfolio with Strategic Acquisitions, Maintains 99.1% Occupancy
TL;DR
Gladstone Commercial Corp's strategic shift to industrial properties and high 99.1% occupancy rate provides investors with a competitive advantage in resilient real estate assets.
Gladstone Commercial executed capital recycling by selling one property for $3.0M and acquiring a six-facility portfolio for $54.8M while maintaining $24.6M liquidity and 99.1% occupancy.
Gladstone Commercial's stable portfolio management and 100% rent collection demonstrate corporate responsibility that supports long-term economic stability for communities across 27 states.
Gladstone Commercial acquired a fully occupied six-facility industrial portfolio totaling 693,236 square feet at a remarkable 9.53% cap rate during third quarter 2025.
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Stonegate Capital Partners has updated its third quarter 2025 coverage report on Gladstone Commercial Corp., highlighting the company's continued strategic execution in portfolio management and industrial property focus. The real estate investment trust ended the quarter with 151 properties across 27 states, expanding its footprint through disciplined capital allocation strategies.
During the third quarter, Gladstone Commercial executed its capital recycling approach by selling one non-core property for $3.0 million while simultaneously acquiring a fully occupied six-facility industrial portfolio totaling 693,236 square feet for $54.8 million. The acquisition was completed at a capitalization rate of 9.53%, demonstrating the company's ability to secure attractive industrial assets. The leasing activity remained robust with 14 properties covering 734,464 square feet seeing lease transactions, with remaining lease terms ranging from 0.7 to 11.4 years.
The company maintained strong operational fundamentals with occupancy reaching 99.1% in the third quarter, representing an improvement from both the previous quarter and year-end 2024 levels. Gladstone Commercial reported 100% cash rent collection during the period, underscoring the stability of its tenant base and the effectiveness of its leasing strategy. The portfolio's weighted average lease term stood at 7.5 years, reflecting the company's success in securing long-term commitments from creditworthy tenants.
Financial performance showed revenue of $40.8 million for the quarter, with funds from operations per share of $0.35 and adjusted funds from operations per share of $0.09. Core FFO per share increased to $0.35 from $0.33 in the second quarter, indicating improving operational efficiency. The company maintained total liquidity of approximately $24.6 million, consisting of $18.4 million in cash and cash equivalents and $6.2 million in borrowing capacity under its revolving credit facility.
Gladstone Commercial's strategic shift toward industrial properties continued to progress, with industrial assets now comprising 69% of the portfolio based on annualized straight-line rent, up from 63% at fiscal year-end 2024. Office properties accounted for 28% of the portfolio, maintaining the trajectory of reduced exposure to office assets. The company currently pays a 10.5% dividend yield, distributing an annualized $1.20 per share, with payout ratios of 86.6% based on FFO, 86.4% based on core FFO, and 345.9% based on AFFO.
Stonegate Capital Partners' valuation analysis, incorporating comparable company analysis, revalued net asset value per share assessment, and perpetual growth modeling, suggests a valuation range of $13.57 to $15.43 with a midpoint of $14.50 per share. The analysis indicates potential undervaluation despite the company's reduced dividend from previous levels, reflecting the market's assessment of Gladstone Commercial's strategic positioning and operational performance.
Curated from Reportable
