Gladstone Commercial Sells Georgia Medical Office Assets

Gladstone Commercial Corporation GOOD recently sold its two medical office properties in the Atlanta MSA at a cap rate of 5.97%. The properties, which were leased to Northside Hospital, encompassed 26,331 square feet of space.

GOOD shares were up marginally in Friday's regular trading session on the Nasdaq.

The REIT realized a leveraged internal rate of return of around 13.2% on the properties, which were acquired as part of an eight-property portfolio transaction in 2007. The move comes as part of Gladstone Commercial's capital recycling efforts, allowing the company to redeploy capital into industrial real estate.

Per Buzz Cooper, the president of Gladstone Commercial, "This sale is a strong outcome for the legacy portfolio and reinforces our overall migration to the industrial sector."

GOOD is focused on expanding on the buyouts of high-quality industrial assets in strong growth corridors leased to tenants with solid credit profiles. In line with this, in May, Gladstone Commercial acquired a 142,125-square-foot industrial manufacturing, distribution and service facility located on 115 acres in Warfordsburg, PA, for $11.7 million at a GAAP capitalization rate of 12.3%.

Gladstone Commercial also collected 100% of cash rents during April, May and June, underscoring the robustness of its tenant base. The strong occupancy rate of 98.5% as of Jun 30, 2024 is a testament to the trust tenants place in the company's properties and management.

Given the strong demand for industrial real estate, the maximization of value through non-core asset dispositions and the redeploying of proceeds for the selective re-positioning of GOOD's portfolio with a more industrial focus augur well for its long-term growth.

Gladstone Commercial currently carries a Zacks Rank #2 (Buy). The stock has rallied 19.1%, outperforming the industry's growth of 10.3% in the past six months.

Image Source: Zacks Investment Research

Other Stocks to Consider

Some other top-ranked stocks from the REIT sector are Lamar Advertising LAMR and Crown Castle Inc. CCI, each carrying a Zacks Rank #2 at present.

The Zacks Consensus Estimate for Lamar Advertising's 2024 FFO per share has moved marginally northward in the past month to $8.08.

The Zacks Consensus Estimate for Crown Castle's ongoing year's FFO per share has increased marginally over the past month to $6.97.

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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