8 Lessons Learned: Tenants
What Is An Investment Grade Tenant
Most of the time, credit rating is given to large national companies that issue public bonds. It is the one that is considered the counterpart of a credit store. The rating that is given to each company is determined by several agencies.
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. 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. 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. It is when you have a credit tenant in your building that the property value of it will increase as well. It is this advantage that you will get the moment that your credit tenants will have a long-term lease on your property. 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. The tenets in the other hand will also have better control of the property without thinking much of the landlord. The building will have a lower rent once this set up is used.
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. 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. It is the tenant that will be responsible for all of the factors involved and not the landlord.