Shares of Gladstone Commercial Corporation (NASDAQ:GOOD) surged around 7% on Monday, November 5th after the real estate investment trust reported better-than-expected third quarter earnings and provided an upbeat outlook for its growing industrial portfolio.

For the quarter ended September 30th, 2024, GOOD posted core funds from operations (FFO) of $0.38 per share, surpassing analysts' consensus estimate of $0.35. This marked an increase from $0.36 in the prior quarter and $0.34 in Q3 2023. Total operating revenue climbed 7.6% year-over-year to $39.2 million, also exceeding expectations of $36.9 million.

The strong results were driven in part by GOOD's strategy of shifting its property mix towards more industrial assets, which now account for 63% of annualized straight-line rent versus just 33% for office buildings. During the earnings call, President Buzz Cooper expressed optimism that "same-store rents, which have increased by 2% annually in recent years, should continue to rise as we grow, and we will continue to primarily focus on investing in our target markets, with an emphasis on industrial properties."