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Due Diligence Key for Single Tenant REITs

08/01/2012 | By Matthew Bechard

For Gladstone Commercial Corp. (NASDQ: GOOD), a triple-net, single-tenant REIT, executing the proper due diligence on prospective tenants takes on great importance, according to David Gladstone, the company's chairman and CEO.

"The tenant is everything for us," he said during a video interview with REIT.com in New York at REITWeek 2012: NAREIT's Investor Forum. "Most of our tenants are non-rated. As a result, we do a great deal of work. We go in as if we were lending them money or buying their business and do a deep dive into all their financials, projections. We interview the management, so we're intimately involved with the tenant to make sure that the tenant is the right one for us."

Out of its diversified portfolio, Gladstone is currently seeing strong returns from its industrial and commercial assets, according to the CEO.

"We like manufacturing companies," Gladstone said. "We like anything to do with the wholesale retail area."

Gladstone Commercial recently hired a new president, Robert Cutlip. Gladstone said Cutlip's experience in the real estate industry should be a major asset to the company. Additionally, Gladstone said Cutlip should bring creativity to company.