5290 Overpass Road, Suite 122, Santa Barbara, CA 93111 Ph: (805) 683-2755   Fax: (805) 683-4751 Email: alliance@alliance2.com
Project Summary
Tenant Credit Rating Like Standard & Poors rates a company's debt, The Alliance Group now offers a Tenant Credit Rating system that rates the risks involved in a particular tenant transaction. The ratings represent our opinion of the current creditworthiness of a company with respect to a specific lease obligation and are derived from an analysis of a company's key financial and business fundamentals. Our overall Tenant Rating distills the issue of tenant credit down to a single number (see Guide below) and is designed to simplify the process of making leasing/tenant decisions and determining the need for credit enhancements. A Tenant Rating Report (see sample) includes data developed from three of our analytical options -- Financial Trends Review, Peer Group Benchmarking and a Market Overview -- as well as a number of additional areas of scrutiny. There are eight financial and business factors that are part of a company's Tenant Credit Rating, with each category assigned an individual rating and those eight numbers used to arrive at an overall Tenant Credit Rating. The table below shows how that rating is used to judge a company's suitability as a tenant, which allows for clear decision-making. Tenant Credit Rating Guide Rating Outlook Level of Tenant Risk Need for Credit Enhancements 1-2.9 Precarious Unacceptable Avoid as tenant 3-4.9 Vulnerable High Protection needed 5-6.9 Fair Areas of Concern Should be considered 7-8.9 Good Low Unnecessary 9-10 Excellent Minimal Unnecessary A key advantage is that, once an initial rating has been established, inexpensive updates can be done periodically in order to detect changes in the overall rating of a particular tenant. Shifts into a higher risk category can be charted and a course of action can be initiated. With small emerging companies and markets, size and stage of evolution take on a dominant level of importance in judging a tenant's creditworthiness. The Alliance Group's rating system focuses on the future and the duration of time that a lease will be in place. While a company might have a strong current capacity to meet its leasing obligations, a landlord must consider how stable and predictable company fundamentals will be over the life of a lease. Established companies in established industries are much less affected by unfavorable business and economic conditions and are less vulnerable to changing markets, emerging competition, outmoded technologies and other evolutionary changes that cannot be predicted. As a result, the rating system gives extra weighting to factors that relate to size and stage of development. Estimated fee range:* $3,100 - $3,900
Note:* The pricing on the reports is presented in estimated ranges since analytical projects can change in scope and can vary widely in the complexity of financial documents, availability of market data, the cooperation of management, and other project-specific issues. The estimated fee schedules assume that a single company or market is being examined. The scrutiny of technology-based companies often require specialized research efforts: markets are frequently ill defined; the ability of management to productize a technology must be judged; and complex technologies need to be examined. Expenses are in-addition to analytical fees. All invoice payments are due on a net 30-day basis unless alternative arrangements are made prior to the start of a particular project.