A Better Knowledge on Investment Grade Credit Tenants
The first thing that you need to know about the investment grade credit tenants is that this is a special financing offer for the landlords.
The investment grade credit tenant is a kind of company that is able to have an investment grade rating from the rating agency. When there is a credit tenant that will rent a property then the lenders will have a special financing provided. The focus of the special financing is as a matter of fact on the value and the tenant in its lease payments in the future. The investment grade tenants does not focus on the credit of the landlord or the real estate.
The rating of the tenant will as a matter of fact be the basis of the lenders of investment grade tenants. The main reason as to why this is being done is so that it will be possible to sell the institutional investors and securitize the loans. What you need to know about the investment grade is that the rating has to be at least BBB-. There are a lot of investors that would invest in similar products and bonds as well. The participants that are able to rank in the investment grade credit tenants are the states and cities as well.
Most of the time, the landlords that have investment grade credit tenants are able to avail of long term loans. When they have the loans, they have the option to be able to refinance the property or even buy a property. The loans can also be structured in a way that is non recourse to the owner of the property. What will happen if one will push through with this option is that the personal liability of the landlord will be removed. The underwriters will be able to rely on the lease value which is why this can be possible.
The investment grade credit tenants also has the option to be able to obtain direct financing. The best way to be able to do this is through the entering of the sale leaseback transaction. To be able to sell and lease to an investor is what the lender with an investment grade credit tenants can do. What happens now is that the property owner will be able to earn cash on favorable terms. A higher loan to value is as a matter of fact what they can also have. This is something that you cannot find in the traditional commercial real estate loan.
For the property owners that are in need of the loans at the soonest possible time can in fact avail of the investment grade credit tenants. The investment grade credit tenants will be able to avail of the benefits.
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