What Is An Investment Grade Tenant
Any large national companies that issue public bonds are being given credit rating. This is the counterpart of a credit store. There are several agencies that determine the rating of each company.
When you are talking about credit rating, you will be able to see two kinds of categories. 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. It is the agencies that give out the rating that constantly checks the financial status of every company and the rating will change over time.
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. 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. 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. When it comes it your investment property, the bank will make sure that they will check your credit score before they will proceed in lending you money. You have to make sure that this exchange will not be difficult. There is an investor guide that will take help you in completing the exchange.
With regards to the obligations to the landlords, the institutional investors is the one that will provide the credit-tenant financing. 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. It is the tenant that will be responsible for all of the factors involved and not the landlord.
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