What Is An Investment Grade Tenant
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.
In a credit rating, you will be able to see two 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. 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.
For the large companies and medium-sized companies, there are already a large number of them that already got an investment grade rating. It is the tenants that made the lease that are called as credit tenants and when they lease a property, referred to as a credit lease.
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. 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. 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 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. 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.