What Is An Investment Grade Tenant
Most of the time, credit rating is given to large national companies that issue public bonds. This is the counterpart of a credit store. There are several agencies that determine the rating of each company.
There are basically two categories when it comes to the credit ratings. The moment that the credit rating has a BBB or Baa3 rating then your company is considered as an investment grade 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. 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. 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. It is when you have a credit tenant in your building that the property value of it will increase as well. If the credit tenants have a long term lease, then you can definitely get this advantage. 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. 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.
It is when you are a building owner that you should make sure that you will consider the credit strength of your tenant. 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. It should be that the exchange will not be difficult. You can go and look the investor’s guide so that you will have the needed help.
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. The length of the lease is the one that will match the loan term. The landlord will not be thinking of anything as the tenant will carry the responsibilities.