DALLAS, TX -- November 5th, 2025 -- Gladstone Commercial Corporation.(NasdaqGS: GOOD): Stonegate Capital Partners Updates Coverage on Gladstone Commercial Corp. (NasdaqGS: GOOD). In the third quarter of 2025, Gladstone Commercial Corp. maintained its disciplined portfolio management approach. The Company ended the quarter with 151 properties across 27 states, expanding its footprint from the previous quarter. During 3Q25, GOOD executed its capital recycling strategy by selling one non-core property, for $3.0M. Additionally, the Company expanded its portfolio by acquiring a fully occupied six facility portfolio totaling 693,236 square feet for $54.8M, at a cap rate of 9.53%. In the same period, the Company leased or renewed 14 properties over 734,464 square feet with a remaining lease term ranging from 0.7 years to 11.4 years. These moves underscore GOOD’s ongoing emphasis on industrial assets while maintaining liquidity and reducing exposure to non-core properties.
Company Updates:
Strengthened Liquidity and Capital Resources: Gladstone reported total liquidity of approximately $24.6M in 3Q25, consisting of $18.4M in cash and cash equivalents and $6.2M in borrowing capacity under its revolving credit facility. This liquidity position represents a decrease from last year, primarily due to a draw on the revolver. As of this report the Company has upsized its credit facility, providing for sufficient liquidity. These measures reflect the company’s approach to maintaining flexibility while optimizing its debt.
Fundamentals Remain Strong: GOOD continues to demonstrate strong operational fundamentals, maintaining a high occupancy rate of 99.1% as of 3Q25, up from both 2Q25 and 4Q24. The Company also reported 100% cash rent collection in the quarter, showcasing its stable tenant base and strong leasing activity. Renewal and Leasing activity remained stable in 3Q25 despite broader economic uncertainty, with 14 properties seeing leasing activity. The portfolio’s weighted average lease term was 7.5 years, reflecting the Company’s ability to secure long-term leases with creditworthy tenants.
Quarterly Results: GOOD reported revenue, FFO per share, and AFFO per share of $40.8M, $0.35, and $0.09, respectively. This compares to our/consensus estimates of $38.8M/$40.2M, $0.48/$0.38, and $0.40/$0.31. Core FFO for the quarter was $0.35 per share, up from $0.33 in 2Q25.
Improving Diversification: GOOD continues its strategic shift toward industrial properties, reducing exposure to office assets. As of 3Q25, the Company’s portfolio composition, based on annualized straight-line rent, consisted of 69% industrial properties and 28% office properties, maintaining its trajectory from the previous quarter and up from 63% industrial assets at year-end FY24. The shift underscores the Company’s focus on acquiring resilient, long-duration, single-tenant net lease industrial properties.
Payout Ratios: The Company currently pays an 10.5% dividend yield, paying out an annualized $1.20 per share. This is down from the $1.50 per share paid out in FY22. As is noted in the valuation segment, despite the decreased dividend the company still appears undervalued. Based on a 3Q25 per share values for FFO of $0.35, Core FFO of $0.35, and AFFO of $0.09 GOOD has payout ratios of 86.6%, 86.4%, and 345.9% respectively.
Valuation: We use a combination of comp analysis, Revalued NAV (reNAV) per share analysis, and a Perpetual Growth Model based on the most recent FFO Payout Ratio to frame our valuation of GOOD. When we average these valuation methods it returns a valuation range of $13.57 to $15.43 with a mid-point of $14.50.
