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.
When you are talking about credit rating, you will be able to see two kinds of categories. The rating of BBB to Baa3 is considered as an investment grade. You will probably get a non-investment grade the moment that the rating will not reach the former. It is when you will get an investment grade rating that the credit that you have had a very low chance of it not getting 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 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.
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. If the credit tenants have a long term lease, then you can definitely get this advantage. 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 moment that this setup is used, the rent will be much lower.
The tenant that will lease your property should be considered by you when you are the building owner. 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. You can go and look the investor’s guide so that you will have the needed help.
It is the institutional investor that will provide the credit-tenant financing and they will not often have any obligations with regards to the landlord. The coverage of this factor is under 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.
Another Source: see post