The COVID-19 pandemic, rapid inflation, supply chain disruptions, unprecedented interest rate hikes, and geopolitical conflicts have reshaped the commercial real estate landscape. Over the past several years, the way people live, work, and operate businesses has fundamentally changed. These events have served as a wake-up call for many market participants.
In this volatile environment—particularly within the single-tenant net lease space—the importance of rigorous tenant underwriting has never been more pronounced. Tenant quality today plays a critical role not only in income stability but also in long-term asset performance.
CAI Investments is an experienced asset manager, developer, and private placement sponsor that is setting new industry expectations through a disciplined, comprehensive approach to tenant underwriting.
Tenant strength is foundational to single-tenant investments, supporting consistent rent payments and lease compliance. However, what is often overlooked is that even when a tenant remains current on rent, a deterioration in tenant strength can create meaningful secondary risks.
Key areas impacted by tenant quality include:
Key Takeaway: A well-positioned property with a strong tenant and favorable lease terms lays the groundwork for stable DST performance.
CAI’s underwriting process evaluates tenant risk across financial, operational, and industry-specific dimensions. Like many sponsors, we analyze earnings, balance sheet strength, cash flow, and financial flexibility. Beyond this baseline, we seek a deeper understanding of each tenant’s business model, including:
In addition to financial analysis, CAI places significant emphasis on the industry fundamentals in which a tenant operates. Industry dynamics can materially affect a tenant’s long-term viability if not fully understood.
For example, tenants operating in the technology sector face constant innovation and disruption, where rapid advancements—particularly in artificial intelligence—can quickly render existing business models obsolete.
To assess industry-level risk, CAI considers:
Key Takeaway: CAI underwrites the full tenant profile — financials, industry dynamics, and business strategy — to ensure alignment with our investment philosophy.
CAI acquired the vacant 1.5-million-square-foot former Motorola manufacturing facility in Harvard, Illinois, from the U.S. Marshals. The objective was to reposition a dormant asset by securing a high-quality tenant that met CAI’s underwriting standards for recession resistance, industry security, and long-term viability.
CAI successfully executed a 20+ year lease with U.S. Medical Glove Company (USMGC).
In evaluating USMGC, CAI applied a holistic underwriting approach that assessed both tenant-specific financials and broader industry considerations
CAI assessed USMGC’s financial stability, growth potential, and adaptability within the PPE manufacturing sector. While USMGC did not have a long operational history, a key consideration was the substantial support USMGC received from the Department of Health and Human Services (HHS) and the Department of Defense (DoD). These grants underscored USMGC’s strategic importance to national health security and reinforced its position within a recession-resistant industry that experienced heightened demand during the COVID-19 pandemic.
CAI recognized the importance of onshoring critical PPE manufacturing to reduce reliance on foreign supply chains—a national regulatory priority. USMGC’s commitment to American labor, domestic materials, and advanced in-house technologies positioned the company to withstand future regulatory and market shifts.
USMGC’s re-engineering of the glove manufacturing process, including proprietary machinery development and onshoring chemical production, demonstrated operational control and technological resilience.
CAI evaluated favorable regulatory tailwinds, including the Buy American Act and the Berry Amendment, which prioritize domestic manufacturing of essential goods. These policies create meaningful competitive advantages for companies like USMGC.
Key Takeaway: Comprehensive underwriting validated USMGC as a long-term, government-supported, recession-resistant tenant.
CAI’s focus on single-tenant net-leased properties, combined with rigorous tenant vetting, is designed to mitigate risk and enhance stability. By evaluating tenant financial strength, industry resilience, and long-term viability, CAI seeks to ensure that only recession-resistant and technology-resilient tenants occupy its properties.
This approach can:
By aligning with tenants that demonstrate adaptability and growth potential, CAI seeks to enhance property desirability, supports higher valuations, and improves exit strategies. CAI’s model is designed to capture long-term value through secure, reliable tenant partnerships.
In summary: CAI’s single-tenant strategy prioritizes stability, liquidity, and long-term value creation.
CAI’s tenant vetting and acquisition strategy establishes a new benchmark for single-tenant investments. By extending due diligence beyond traditional financial analysis to include industry resilience and future adaptability, CAI redefines disciplined tenant selection.
CAI’s commitment to comprehensive underwriting positions us as a preferred partner for financial advisors and their clients.
Investment advisors are encouraged to explore Manufacturing Essential Asset I, DST and the advantages of CAI’s single-tenant investment opportunities to better understand how CAI’s tenant-focused model may support portfolio stability and sustained value creation.