What Is An Investment Grade Tenant
It is the large national companies that issue public bonds are the ones that are also 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 rating of BBB to Baa3 is considered as an investment grade. It is by not reaching the former rating that the credit rating that you will get with your company is a non-investment grade. 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.
For the large companies and medium-sized companies, there are already a large number of them that already got 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. It is when you have a credit tenant in your building that the property value of it will increase as well. It is this advantage that you will get the moment that your credit tenants will have a long-term lease on your property. The insurance, operating expenses, taxes of the property can be handled by the tenant in what is called as a triple net lease which is an added benefit to the owner of the building. The tenets in the other hand will also have better control of the property without thinking much of the landlord. The moment that this setup is used, the rent will be much lower.
If you are a building owner, it is important that you will consider the credit strength of the tenant that will lease your property. Before the bank lends you money, they will first check the credit score that you have especially for your investment property. It should be that the exchange will not be difficult. There is an investor guide that will take help you in completing the exchange.
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 reason for this is because of the triple net terms. When it comes to the loan term, it will match the length of the lease. The responsibilities will be carried out by the tenant and not the landlord.