Stonegate Capital Partners Updates Coverage on Gladstone Commercial Corp. Following Strong Third Quarter Performance

Stonegate Capital Partners has updated its coverage on Gladstone Commercial Corp. (NasdaqGS: GOOD) following the company's third quarter 2025 performance. The real estate investment trust maintained its disciplined portfolio management approach, ending the quarter with 151 properties across 27 states, expanding its footprint from the previous period. The company executed its capital recycling strategy by selling one non-core property for $3.0 million while simultaneously acquiring a fully occupied six-facility portfolio totaling 693,236 square feet for $54.8 million at a cap rate of 9.53%.

Gladstone Commercial strengthened its liquidity position with approximately $24.6 million in total liquidity during 3Q25, consisting of $18.4 million in cash and cash equivalents and $6.2 million in borrowing capacity under its revolving credit facility. The company has since upsized its credit facility, providing for sufficient liquidity to support ongoing operations and strategic initiatives. These measures reflect the company's approach to maintaining financial flexibility while optimizing its debt structure in a challenging economic environment.

The company demonstrated strong operational fundamentals with an occupancy rate of 99.1% as of 3Q25, representing an improvement from both the second quarter and fourth quarter of 2024. Gladstone reported 100% cash rent collection during the quarter, showcasing its stable tenant base and effective leasing strategies. The company leased or renewed 14 properties covering 734,464 square feet with remaining lease terms ranging from 0.7 years to 11.4 years, maintaining stable renewal and leasing activity despite broader economic uncertainty.

Gladstone Commercial reported quarterly revenue of $40.8 million, with FFO per share of $0.35 and AFFO per share of $0.09. Core FFO for the quarter was $0.35 per share, representing an increase from $0.33 in the second quarter of 2025. The company continues its strategic shift toward industrial properties, with portfolio composition based on annualized straight-line rent now consisting of 69% industrial properties and 28% office properties. This maintains the trajectory from the previous quarter and represents an increase from 63% industrial assets at year-end FY24.

The company currently pays a 10.5% dividend yield, distributing an annualized $1.20 per share, down from the $1.50 per share paid out in FY22. Based on 3Q25 per share values for FFO of $0.35, Core FFO of $0.35, and AFFO of $0.09, Gladstone has payout ratios of 86.6%, 86.4%, and 345.9% respectively. Stonegate Capital Partners' valuation analysis, incorporating comparable company analysis, revalued NAV per share analysis, and a perpetual growth model based on the most recent FFO payout ratio, returns a valuation range of $13.57 to $15.43 with a midpoint of $14.50.