Gladstone Commercial Still A Buy, But Analyst Lowers Expectations Due To Occupancy Slump

EF Hutton analyst Gaurav Mehta reiterated a Buy rating on the shares of Gladstone Commercial Corp. GOOD, lowering the price target to $15 from $18.
While steady rent collection has been a solid catalyst, the analyst remains particularly cautious about decreasing occupancy rates of the real estate investment trust in the first quarter of FY23 from the last quarter.
In 1Q, rent collection was strong at 100%, but occupancy declined sequentially to 95.9% (-90bps), the analyst noted.
The company has 2.7% of leases (by annualized straight-line rents) expiring in 2023, followed by 4.6% lease expiration in 2024.
The analyst flagged that the company's growth could be impacted if it cannot source new acquisitions.
Accordingly, Mehta lowered the core funds from operations, or FFO/share estimate to $1.45 from $1.50 for 2023 and to $1.46 from $1.47 for 2024.
The company collected 100% of its rents quarter-to-date (as ofApril).
Price Action: GOOD shares are trading lower by 0.86% at $11.58 on the last check Friday.

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