What You Need To Know About Investment Grade Tenants
Any large national companies that issue public bonds are being given credit rating. Some have credit store and this s its counterpart. 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 company that you have will have an investment grade rating the moment that it will have a BBB or Baa3 rating. It is by not reaching the former rating that the credit rating that you will get with your company is a non-investment grade. It is when you will get an investment grade rating that the credit that you have had a very low chance of it not getting paid. There will be a change of the ratings over time due to the fact that then agencies that provide the ratings always checks the financial status of every company.
There are a number of big and medium size companies that are already having an investment grade rating. 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. There is a higher property value the moment that a credit tenants lease your building. If the credit tenants have a long term lease, then you can definitely get this advantage. 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.
It is when you are a building owner that you should make sure that you will consider the credit strength of your tenant. When it comes it your investment property, the bank will make sure that they will check your credit score before they will proceed in 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 the institutional investor that will provide the credit-tenant financing and they will not often have any obligations with regards to the landlord. The coverage of this factor is under the triple net terms. It is the loan term that will also match the length of the lease. The responsibilities will be carried out by the tenant and not the landlord.
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