Crucial Facts You Need To Know About Investment Grade Tenants
It is the large national companies that issue public bonds are the ones that are also given credit rating. This is 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.
In a credit rating, you will be able to see two categories. The company that you have will have an investment grade rating the moment that it will have a BBB or Baa3 rating. You will probably get a non-investment grade the moment that the rating will not reach the former. The credit that you have once you will get an investment grade rating is that it has a lower chance for it not to get 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.
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. There is a higher property value the moment that a credit tenants lease your building. You can definitely get this especially if the lease that they have is a long term. It is when a triple net lease is made that the owner of the building will get additional benefit as the tenant will cover the insurance, operating expenses, taxes of the property. The tenets in the other hand will also have better control of the property without thinking much of the landlord. But the landlord must also know that this set up will have lower rent.
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. In completing the exchange, there will be an investor’s guide.
It is because the institutional investors that will provide the credit-tenant financing, they will not be liable to any 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. It is the tenant that will be responsible for all of the factors involved and not the landlord.
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