18 May

Short Course on Resources – Getting to Square 1

A Better Knowledge on Investment Grade Credit Tenants

The first thing that you need to know about the investment grade credit tenants is that this is a special financing offer for the landlords.

The investment grade credit tenant is a kind of company that is able to have an investment grade rating from the rating agency. When there is a credit tenant that will rent a property then the lenders will have a special financing provided. 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.

The lenders of the investment grade tenants will based on the rating of the tenant. The main reason as to why this is being done is so that it will be possible to sell the institutional investors and securitize the loans. 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.

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. The loans can also be structured in a way that is non recourse to the owner of the property. What will happen if one will push through with this option is that the personal liability of the landlord will be removed. The reason why this can happen is because of the fact that the underwriters will be relying on the lease value.

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. This also means that they now have the opportunity to have a higher loan to value. When it comes to the traditional real estate loan, you will actually not be able to find this in here.

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 avail of the benefits.