What You Need To Know About Investment Grade Tenants
It is the large national companies that issue public bonds are the ones that are also given credit rating. It is the one that is considered the counterpart of a credit store. The rating that is given to each company is determined by several agencies.
When you are talking about credit rating, you will be able to see two kinds of categories. The rating of BBB to Baa3 is considered as an investment grade. You will probably get a non-investment grade the moment that the rating will not reach the former. The moment that you are rated as an investment grade company, the is a very low chance that you will not be able to pay out the credit that you have. The financial status of every company is being checked once in a while by the agencies that provide the ratings that is why the ratings will change over time as well.
An investment grade rating has already been given to a number of different big companies as well as medium-sized companies. The moment that these companies will lease a property, then it is called as credit lease and the tenants that leased the property is called as credit tenants.
The moment that the owner of the building will have credit tenants, then he will be ensured that he will get the payment every time as the business continues. Once there will be credit tenants that lease your property, the building that you own will have a higher property value. It is this advantage that you will get the moment that your credit tenants will have a long-term lease on your property. An added benefit to the owner of the building which is called as a triple net lease is when a tenant will handle the insurance, operating expenses, taxes of the property. There will be better control of the property on the side of the tenant without thinking much of the landlord. The building will have a lower rent once this set up is used.
If you are a building owner, it is important that you will consider the credit strength of the tenant that will lease your property. It is when you have an investment property that the bank will also check the credit score that you have before they will be lending you money. You have to make sure that this exchange will not be difficult. In completing the exchange, there will be an investor’s guide.
It is because the institutional investors that will provide the credit-tenant financing, they will not be liable to any landlord. The coverage of this factor is under the triple net terms. When it comes to the loan term, it will match the length of the lease. It is the tenant that will be responsible for all of the factors involved and not the landlord.
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