DALLAS, TX -- August 7th, 2025 -- Gladstone Commercial Corporation.(NasdaqGS: GOOD): Stonegate Capital Partners Updates Coverage on Gladstone Commercial Corp. (NasdaqGS: GOOD). In the second quarter of 2025, Gladstone Commercial Corp. maintained its disciplined portfolio management approach. The Company ended the quarter with 143 properties across 27 states, expanding its footprint from the previous quarter. During 2Q25, GOOD executed its capital recycling strategy by selling two non-core properties, for a combined $23.6M. Additionally, the Company expanded its portfolio by acquiring properties totaling 519,093 square feet for $79.3M, at a blended cap rate of 8.88%. In the same period, the Company leased or renewed 55,308 square feet with a remaining lease term of 0.8 years. These strategic 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 $38.7M in 2Q25, consisting of $11.7M in cash and cash equivalents and $27.0M in borrowing capacity under its revolving credit facility. This liquidity position represents a 18.3% y/y decrease, primarily due to a draw on the revolver. These measures reflect the company’s approach to maintaining flexibility while optimizing its debt structure.

Fundamentals Remain Strong: GOOD continues to demonstrate strong operational fundamentals, maintaining a high occupancy rate of 98.7% as of 2Q25, flat from 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 2Q25 despite broader economic uncertainty, with 55,308 square feet leased or renewed at a single property, reflecting an average remaining lease term of 0.8 years. The portfolio’s weighted average lease term was 7.1 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 $39.5M, $0.33, and $0.24, respectively. This compares to our/consensus estimates of $38.1M/$38.3M, $0.36/$0.35, and $0.22/$0.26. Core FFO for the quarter was $0.35 per share, up from $0.34 in 1Q25.

Improving Diversification: GOOD continues its strategic shift toward industrial properties, reducing exposure to office assets. As of 2Q25, the Company’s portfolio composition, based on annualized straight-line rent, consisted of 67% industrial properties and 29% 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 a 9.2% dividend yield, paying out an annualized $1.20 per share. Based on a 2Q25 per share values for FFO of $0.33, Core FFO of $0.35, and AFFO of $0.24 GOOD has payout ratios of 90%, 86%, and 123% 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 $14.84 to $16.86 with a mid-point of $15.84.

About StonegateStonegate Capital Partners is a leading capital markets advisory firm providing investor relations, equity research, and institutional investor outreach services for public companies. Our affiliate, Stonegate Capital Markets (member FINRA) provides a full spectrum of investment banking services for public and private companies.

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