Crucial Facts You Need To Know About Investment Grade Tenants
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. 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. 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.
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. Once there will be credit tenants that lease your property, the building that you own will have a higher property value. 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. You have to make sure that this 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. 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.