What Is An Investment Grade Tenant
It is the large national companies that issue public bonds are the ones that are also given credit rating. 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.
When you are talking about credit rating, you will be able to see two kinds of categories. 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 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.
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 referred to as credit lease the moment that the company will lease a property and the tenants that made that lease possible is known as the credit tenants.
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. There is a higher property value the moment that a credit tenants lease your building. It is this advantage that you will get the moment that your credit tenants will have a long-term lease on your property. The insurance, operating expenses, taxes of the property can be handled by the tenant in what is called as a triple net lease which is an added benefit to the owner of the building. 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. 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. 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. The responsibilities will be carried out by the tenant and not the landlord.
Source: here are the findings