Gladstone Commercial (NasdaqGS:GOOD) Q4 2025 Earnings call February 19, 2026 08:30 AM ET Company ParticipantsBuzz Cooper - PresidentCatherine Gerkis - Director of Investor RelationsDave Storms - Director of ResearchDavid Gladstone - Chairman and CEOGary Gerson - CFO and Assistant TreasurerConference Call ParticipantsCraig Kucera - Equity Research AnalystJohn Massocca - Senior Research AnalystOperatorGreetings, and welcome to Gladstone Commercial Corporation year-end and fourth quarter earnings conference ca ...

announced today its February 2026 monthly distribution in the amount of 5.833 cents per Unit (70 cents annualized). The February distribution will be payable on March 13, 2026 to unitholders of record as at February 27, 2026. Dream Industrial REIT is an owner, manager, and operator of a global portfolio of well- located, diversified industrial properties. As at December 31, 2025, Dream Industrial REIT has an interest in. TORONTO--(BUSINESS WIRE)--DREAM INDUSTRIAL REIT (TSX: DIR.UN) (the "Trust†) ...

Financial Data and Key Metrics Changes - Adjusted company FFO for Q4 was $0.79 per diluted common share, totaling approximately $47 million, while for the full year, it was $3.15 per diluted common share, or $187 million [14] - The company provided 2026 adjusted company FFO guidance of $3.22-$3.37 per common share, indicating a 4.6% growth at the midpoint [15] - Net debt to adjusted EBITDA improved from 5.9 times to 4.9 times [5][21] Business Line Data and Key Metrics Changes - The company leased nearly 5 million sq ft in 2025, achieving attractive mark-to-market outcomes of approximately 28% on a cash basis, excluding fixed-rate renewals [5] - Portfolio occupancy increased to 97.1% at year-end 2025, up from 93.6% at year-end 2024 [16] - Same-store NOI growth for the full year was 2.9%, with a flat performance in Q4 compared to the same period in 2024 [16] Market Data and Key Metrics Changes - The target markets contributed over 66% of the overall U.S. net absorption of about 54 million sq ft [6] - Larger users favored facilities exceeding 500,000 sq ft built within the last 5 years, with significant demand in markets like Phoenix, Indianapolis, Fort Worth, and Houston [7] Company Strategy and Development Direction - The company plans to focus on disciplined investment and external growth opportunities, particularly in its land bank, while executing opportunistic share repurchases [10] - The development program has yielded a 7.1% weighted average stabilized yield on first-generation leases, with 15 facilities developed since 2019 [10] - A new 1 million sq ft spec project is set to break ground in Phoenix, with completion anticipated in the first half of 2027 [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving market fundamentals and the potential for significant value creation in the land bank [9][12] - The company is focused on leasing remaining vacancies and generating robust mark-to-market outcomes in 2026 [12] - Management noted that concessions are expected to recede as the market becomes more landlord favorable [37] Other Important Information - The company exited five non-target markets in 2025, prioritizing investments in 12 target markets that account for 87% of gross book value [8] - Total disposition volume for the year was $389 million, with an average cash capitalization rate of 5.7% on stabilized assets sold [8] - The company repaid approximately $220 million of debt in 2025, including $140 million of senior notes due 2028 [21] Q&A Session Summary Question: Inquiry about planned development in Phoenix - Management indicated that the supply-demand equation is favorable, and there is interest in the facility even before completion [27] Question: Clarification on same-store NOI growth - Management explained that the variance from guidance was primarily due to higher property expense leakage across several properties [32] Question: Discussion on concessions and market environment - Management noted that concessions are expected to decrease as the market improves, leading to a more favorable environment for landlords [37] Question: Future transaction activity and capital allocation - Management mentioned ongoing negotiations for $200 million of assets in non-target markets, which could provide capital for redeployment [39]

Financial Data and Key Metrics Changes - Adjusted company FFO for Q4 2025 was $0.79 per diluted common share, totaling approximately $47 million, while for the full year, it was $3.15 per diluted common share, or $187 million [15] - The company provided 2026 adjusted company FFO guidance in the range of $3.22-$3.37 per common share, indicating a growth of 4.6% at the midpoint [15] - Net debt to adjusted EBITDA improved from 5.9 times to 4.9 times by year-end 2025 [6][22] Business Line Data and Key Metrics Changes - The company leased nearly 5 million sq ft in 2025, achieving attractive mark-to-market outcomes of approximately 28% on a cash basis, excluding fixed-rate renewals [6] - Portfolio occupancy increased to 97.1% at year-end 2025, up from 93.6% at year-end 2024 [16] - Same-store NOI growth for the full year was 2.9%, with flat performance in Q4 compared to the same period in 2024 [16] Market Data and Key Metrics Changes - The company’s target markets accounted for over 66% of the overall U.S. net absorption of about 54 million sq ft [6] - Larger users favored facilities exceeding 500,000 sq ft built within the last 5 years, with demand concentrated in markets like Phoenix, Indianapolis, Fort Worth, and Houston [7] Company Strategy and Development Direction - The company plans to focus on disciplined investment and external growth opportunities, particularly in its land bank, while executing opportunistic share repurchases [11] - The development program has yielded a 7.1% weighted average stabilized yield on first-generation leases, with 15 facilities developed since 2019 [11] - A new 1 million sq ft speculative project is set to break ground in Phoenix, with completion anticipated in the first half of 2027 [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about improving market fundamentals and the potential for significant value creation in the land bank [10][24] - The company is focused on leasing remaining vacancies and generating robust mark-to-market outcomes in 2026 [13][24] - Management noted that concessions are expected to recede as the market becomes more favorable for landlords [36] Other Important Information - The company exited five non-target markets in 2025, prioritizing investments in 12 target markets that now account for 87% of gross book value [8] - Total disposition volume for 2025 was $389 million, including $116 million from non-target market sales in Q4 [8] - The company repaid approximately $220 million of debt in 2025, including $140 million of senior notes due 2028 [22] Q&A Session Summary Question: Inquiry about development plans in Phoenix - Management indicated that the supply-demand equation is favorable, and there is interest in the facility even before completion [26][27] Question: Clarification on same-store NOI growth - The variance in same-store NOI growth was primarily due to higher property expense leakage across several properties [31][32] Question: Discussion on concessions and market environment - Management noted that concessions are expected to decrease as the market improves, leading to a more landlord-favorable environment [36] Question: Future transaction activity and capital allocation - Management mentioned ongoing negotiations for $200 million of assets in non-target markets, which could lead to favorable outcomes for capital redeployment [38][39] Question: Comments on build-to-suit opportunities - Management expressed interest in build-to-suit projects, particularly in light of favorable supply dynamics and their existing land bank [55][56]

Financial Data and Key Metrics Changes - NAREIT funds from operations (FFO) for Q4 2025 were $0.77 per fully diluted share, up from $0.71 in Q4 2024, representing an increase of 8.5% [10] - For the full year 2025, FFO per fully diluted share was $2.96, compared to $2.65 in 2024, indicating a 12% increase [10] - Cash same-store NOI growth for 2025 was 7.1%, driven by rental rate increases and new leasing, while Q4 cash same-store NOI growth was 3.7% [10][12] - In-service occupancy at the end of Q4 was 94.4%, an increase of 40 basis points from Q3 [10] Business Line Data and Key Metrics Changes - Total leasing for 2025 reached 941 million sq ft, marking a 12% increase from 2024 and the second highest year on record [5] - 3PLs represented 36% of total leasing activity, with retail and manufacturing also being significant contributors [5] - The company signed 231,000 sq ft of leases in two developments during the quarter, with a cash rental rate increase of 32% for new and renewal leasing in 2025 [6] Market Data and Key Metrics Changes - The overall leasing market saw a record 226 million sq ft of leasing activity in Q4 2025, a 22% increase year-over-year [4] - National vacancy rate in Q4 was 6.7%, with net absorption of 58 million sq ft and completions at 78 million sq ft [5] - Construction starts in Q4 were 45 million sq ft, consistent with Q3 but below 2022's peak levels [5] Company Strategy and Development Direction - The company is focused on capitalizing on opportunities within its portfolio and new developments to drive cash flow growth and enhance shareholder value [15] - The company plans to break ground on two new buildings in Q1 2026, continuing its development strategy in key markets [8] - The board declared a first-quarter dividend of $0.50 per share, a 12.4% increase, reflecting anticipated cash flow growth [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a volatile economy and highlighted a resilient portfolio with significant growth opportunities [4] - The company anticipates cash rental rate growth of 30%-40% for 2026, with a focus on maintaining high occupancy levels [6][12] - Management noted that bad debt expense for 2025 was $700,000, better than the original guidance of $1 million, with a forecast of $1 million for 2026 [12] Other Important Information - The company successfully refinanced two term loans, enhancing its capital structure [11] - The company is evaluating potential higher uses for its land bank, particularly in data center opportunities [41] Q&A Session Summary Question: Update on development leasing and leasing activity - Management indicated that the 1.7 million sq ft of development leasing could come from a total of 2.5 million sq ft of development opportunities [17] Question: Status of the Denver property - The property is available for lease or sale, with active prospects for leasing [18] Question: Contribution of specific assets to FFO guidance - Management stated that even without leasing the 1.7 million sq ft or the 708,000 sq ft, they would still be within their FFO guidance range [22] Question: Trends in concessions and rental rates - Concessions are flat to drifting up, with free rent averaging between half a month to one month per year of term [49] Question: Retention rates and leasing activity - The overall retention rate for 2025 was 71%, with expectations for a similar rate in 2026 [55]

Core Insights - The upcoming earnings season for REITs is focused on how distribution sustainability is being redefined in a high-interest rate environment, emphasizing the importance of active portfolio management [1][13] Group 1: CapitaLand Ascendas REIT (CLAR) - CLAR is executing an aggressive divestment-and-acquisition strategy to enhance its S$17.7 billion portfolio, recently selling an older asset for S$23 million at a 5% premium [3] - Investors should confirm the closure of S$306 million in Singapore divestments by late 2025, with proceeds being reinvested into new properties yielding between 6% and 7% [4] - The REIT's stabilized occupancy target of 65% is crucial for validating its internal growth potential, with current rental reversions at 7.6% and portfolio occupancy at 91.3% [5] Group 2: Frasers Logistics & Commercial Trust (FLCT) - FLCT has strategically exited the Melbourne CBD office market by divesting 357 Collins Street for A$192.1 million, creating S$507 million in debt headroom to focus on logistics and industrial segments [6] - FY2025 revenue grew by 5.6% YoY, but finance costs surged by 26.4% YoY, impacting distribution per unit (DPU) [7] - The quality of distribution is improving, with capital distributions shrinking to 9% of 2HFY2025 DPU, down from 23% the previous year, indicating a shift towards recurring operations [8] Group 3: ParkwayLife REIT - ParkwayLife REIT has achieved uninterrupted DPU growth since its 2007 IPO, with a significant 35.4% increase in annual rent for its Singapore hospitals projected to reach S$99.2 million in FY2026 [10] - Gross revenue rose 8.2% YoY to S$117.3 million, while net property income (NPI) increased 8.1% to S$110.7 million in the first nine months of 2025 [11] - The REIT's strategy focuses on long-term planning and contractual agreements, positioning it as a stable investment in the healthcare sector [12] Group 4: Industry Insights - The current market environment necessitates active management strategies for REITs to ensure distribution sustainability, as passive ownership may lead to stagnation [13] - The performance of CLAR, FLCT, and ParkwayLife REIT illustrates that management decisions significantly impact sustainability and growth potential [14]

Core Insights - One Liberty Properties, Inc. has acquired a portfolio of ten industrial properties totaling 637,633 square feet, which is fully leased and below replacement cost, enhancing its long-term mark-to-market opportunities [1][3] Group 1: Acquisition Details - The acquisition adds $246 million in industrial assets over the last 12 months, marking a historic period for the company [3] - The properties are located in seven growing distribution markets, including Greensboro, NC, and Salt Lake City, UT, with an average size of 64,000 square feet and an average construction year of 2004 [3] Group 2: Financial Structure - The acquisition was financed through a $17 million mortgage and approximately $30 million from a $100 million credit facility, with the mortgage having a fixed interest rate of 5.53% [2] - The company anticipates obtaining additional financing on two other properties in the portfolio to pay down the credit facility [2] Group 3: Portfolio Composition - Industrial properties now comprise 82% of the total portfolio's annual base rent (ABR), indicating a strong focus on industrial real estate [1][3] - The average in-place rent for the acquired properties is below market rates, providing significant upside potential for future rent increases [1][3]

Core Viewpoint - Mapletree Industrial Trust (MIT) is experiencing a decline in financial performance, primarily due to the divestment of properties and challenges in its North American portfolio, while maintaining a stable occupancy rate in its Singapore and Japan properties [1][5][22]. Financial Performance - For 3Q FY2025/26, MIT reported a gross revenue of S$163.1 million, down 8.0% year-on-year, and a net property income of S$122.8 million, down 7.8% [4][5]. - Distributable income to unitholders decreased by 6.8% to S$90.5 million, attributed to the absence of income from divested properties [7][11]. - For the first nine months of FY2025/26, gross revenue was S$509.2 million, a decline of 4.6%, and net property income was S$380.4 million, down 4.9% [8][9]. Property Portfolio - MIT's portfolio consists of 55 properties in North America, 79 in Singapore, and 2 in Japan, with a total value of S$8.5 billion [2][1]. - The occupancy rate improved slightly to 91.4%, with Singapore properties at 93.0% and Japan properties fully occupied, while North American properties declined to 87.5% [13][24]. Debt Profile - Aggregate leverage decreased to 37.2%, with 88.6% of borrowings hedged at fixed rates [16][25]. - Debt maturity is well-staggered, with 15%, 17%, and 25% of borrowings due for refinancing in the next three financial years [17]. Distribution Payout - Distribution per unit for 3Q FY2025/26 was 3.17 cents, a decrease of 7.0% year-on-year, and for the first nine months, it was 9.62 cents, down 5.8% [19][21]. - The decline in distribution is expected to persist due to the absence of income from divested properties and lower occupancy in North America [20][22]. Management Outlook - The management remains focused on managing the impact of non-renewal of leases in North America while executing strategic divestments and acquisitions to enhance portfolio quality [22].

Core Viewpoint - Mapletree family of REITs is actively reshaping portfolios through divestments and capital redeployment, aiming for stronger growth despite short-term distribution impacts [1][13] Mapletree Logistics Trust (MLT) - MLT is pursuing a portfolio rejuvenation strategy with a divestment target of approximately S$1.0 billion, mainly from older properties in China and Hong Kong [2] - For FY2026, MLT aims to divest between S$100 million and S$150 million, having completed S$58 million in divestments year-to-date as of September 2025 [3] - DPU for 2QFY2026 decreased by 10.5% YoY to S$0.01815, largely due to the absence of divestment gains, with operational DPU down 4.8% YoY [4] Mapletree Pan Asia Commercial Trust (MPACT) - MPACT owns 15 commercial properties across five Asian markets, with total assets under management of S$15.9 billion [5] - For 1HFY2026, MPACT reported gross revenue of S$437.1 million, down 5.4% YoY, and net property income fell 5% to S$329.9 million [5] - DPU declined 1.2% YoY to S$0.0402, influenced by divestments and overseas market challenges, while VivoCity showed positive performance with increased shopper traffic and tenant sales [6][7] Mapletree Industrial Trust (MIT) - MIT manages 136 industrial properties with assets under management of S$8.5 billion, where data centres represent 58.3% of the portfolio [9] - For 1HFY2026, MIT's gross revenue was S$346.1 million, down 3% YoY, and DPU fell 5.1% to S$0.065 [9][10] - The North American portfolio occupancy is a concern at 87.8%, while Singapore properties achieved a weighted average rental reversion of 6.2% [11][12] Overall Investment Outlook - All three Mapletree REITs have experienced DPU declines, but management is focused on long-term sustainability through strategic portfolio repositioning [13] - The upcoming earnings reports in January 2026 are expected to provide insights into the effectiveness of these strategies and potential for future income growth [14]

Core Viewpoint - EastGroup Properties, Inc. announced the income tax treatment of its 2025 distributions, encouraging shareholders to consult personal tax advisors for specific tax implications [1]. Distribution Summary - Total distributions for 2025 amount to $5.91119 per share, with specific payments detailed as follows: - $0.40314 on January 15, 2025, for the record date of December 31, 2024 - $1.40000 on April 15, 2025, for the record date of March 31, 2025 - $1.40000 on July 15, 2025, for the record date of June 30, 2025 - $1.55000 on October 15, 2025, for the record date of September 30, 2025 - $1.15805 on January 15, 2026, for the record date of December 31, 2025 [2]. Tax Treatment - Cash distributions made on January 15, 2026, are treated as received by shareholders on December 31, 2025, to the extent of 2025 undistributed earnings and profits [2]. - The company did not incur any foreign taxes in 2025, and none of the total distributions are considered qualified dividends eligible for reduced capital gains rates [3]. Company Overview - EastGroup Properties, Inc. is a self-administered equity real estate investment trust focused on the development, acquisition, and operation of industrial properties in high-growth markets across the United States, particularly in Texas, Florida, California, Arizona, and North Carolina [4]. - The company's strategy aims to maximize shareholder value by providing functional, flexible, and quality business distribution space for location-sensitive customers, primarily in the 20,000 to 100,000 square foot range [4]. - EastGroup's portfolio includes approximately 65 million square feet, encompassing development projects and value-add acquisitions currently in lease-up and under construction [4].