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. Some have credit store and this s its counterpart. 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 moment that the credit rating has a BBB or Baa3 rating then your company is considered as an investment grade rating. The moment that it will not get pass this rating then it is considered as not investment grade. 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.
An investment grade rating has already been given to a number of different big companies as well as medium-sized companies. 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.
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. 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.
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. 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 reason for this is because of the triple net terms. It is the loan term that will also 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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