Properties – My Most Valuable Tips

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.

In a credit rating, you will be able to see two 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. 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 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. It is when you have a credit tenant in your building that the property value of it will increase as well. 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. Without thinking much of the landlord, the tenant will have better control on the property. 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. When it comes it your investment property, the bank will make sure that they will check your credit score before they will proceed in 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 triple net term is the one that covers this aspect. 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.

Cite: great post to read