What You Need To Know About Investment Grade Tenants
Most of the time, credit rating is given to large national companies that issue public bonds. It is the one that is considered the counterpart of a credit store. You will be able to see a number of different agencies that provides the credit rating of the corporation.
There are basically two categories when it comes to the credit ratings. The company that you have will have an investment grade rating the moment that it will have a BBB or Baa3 rating. The moment that it will not get pass this rating then it is considered as not 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.
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.
As the businesses continues if the credit tenants, the owner if the building, on the other hand, will enjoy being paid every month for the rent of his building and that is a sure fact. 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. 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. Without thinking much of the landlord, the tenant will have better control on the property. 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. You have to make sure that this exchange will not be difficult. In completing the exchange, there will be an investor’s guide.
With regards to the obligations to the landlords, the institutional investors is the one that will provide the credit-tenant financing. 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. The landlord will not be thinking of anything as the tenant will carry the responsibilities.
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