A Basic Knowledge on Investment Grade Credit Tenants
The very first thing that you should know about the investment grade credit tenants is that this is a special offer of finances for the landlords.
Another thing that you need to know about the investment grade credit tenant is that this is a company that receives an investment grade rating from the rating agency. A special financing will be provided by the lender when there is a credit tenant that will rent on a property. It is actually on the value and the tenant in its lease payments in the future wherein the focus of the special financing is placed. Actually, the focus of these investment grade tenants is not on the credit of the landlord and not on the real estate as well.
The rating of the tenant will as a matter of fact be the basis of the lenders of investment grade tenants. To sell the institutional investors and securitize the loans is the reason why this is done. What you need to know about the investment grade is that the rating has to be at least BBB-. There are a lot of investors that would invest in similar products and bonds as well. The participants that are able to rank in the investment grade credit tenants are the states and cities as well.
On the part of the landlords, if they have investment grade credit tenants it would mean that they can avail of the long term loans. When they have the loans, they have the option to be able to refinance the property or even buy a property. To be a non recourse to the owner of the property is one way to be able to structure the loans. At the end of the day, pushing through with this option will now mean that the personal liability of the landlord will now be removed. The reason why this can happen is because of the fact that the underwriters will be relying on the lease value.
There is another thing that the investment grade credit tenants can do and that is to be able to have the direct financing obtained. The best way to be able to do this is through the entering of the sale leaseback transaction. What the lenders with the investment grade credit tenants do is that they can sell and lease to an investor. In terms of favorable terms, the property owner will now be able to earn cash. They will also be able to have a higher loan to value. What you need to know about this is that you will not be able to find this in the traditional commercial real estate loan.
The investment grade credit tenants can actually be availed of by the property owners that are in need of loans at the soonest possible time. There is a great deal of benefits that people can enjoy with the investment grade credit tenants.