The Basic Guide to Investment Grade Credit Tenants
A special financing offer for the landlords is what is called as the investment grade credit tenants and this is what you need to know first.
The investment grade credit tenant is a kind of company that is able to have an investment grade rating from the rating agency. If there is a property that is rented by the credit tenant then what will happen is that the lenders will offer a special financing. The focus of the special financing is as a matter of fact on the value and the tenant in its lease payments in the future. The focus of the investment grade tenants is not on the credit of the landlord or the real estate.
What you need to know about the lenders of the investment grade tenants is that it will based on the rating of the tenant. To sell the institutional investors and securitize the loans is the reason why this is done. A rating of at the very least a BBB- is what you need to know about the investment grade. There is one thing that you need to know about the investors and that is the fact that they would gladly 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.
The long term loans can as a matter of fact be availed of by the landlords when they have investment grade credit tenants. When they have the loans, they have the option to be able to refinance the property or even buy a property. When it comes to the loans they can actually be structured in a way that it will now be non recourse to the owner of the property. 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 underwriters will be able to rely on the lease value which is why this can be possible.
To be able to obtain the direct financing is as a matter of fact what the investment grade credit tenants can also do. The best way in order to be able to avail of this is to be able to enter the sale leaseback transaction. To be able to sell and lease to an investor is what the lender with an investment grade credit tenants can do. What happens now is that the property owner will be able to earn cash on favorable terms. They will also be able to have a higher loan to value. This is something that you cannot find in the traditional commercial real estate loan.
Therefore, the property owners that are in need of loans as soon as possible can avail of the investment grade credit tenants. The investment grade credit tenants will be able to bring them a great deal of benefits.
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