How to Rank NNN Tenants by Credit Quality — and Build a Portfolio Around the Best of Them

Choosing the right NNN tenant is, at its core, a credit underwriting decision. The lease agreement is only as durable as the company behind it — and in a market where
modest shifts in risk, credit, and lease term are dictating value more than the Federal Reserve’s latest move
, getting tenant credit analysis right has never mattered more. This guide walks through exactly how to rank NNN tenants by credit quality, which names consistently sit at the top of that ranking, and how to calibrate your expectations for yield and risk across the full credit spectrum. Whether you’re a 1031 exchange buyer on a deadline or a family office building a core portfolio, this framework applies.

Why NNN Tenant Credit Ratings Are the Foundation of Your Underwriting

A NNN lease shifts nearly every operating cost — taxes, insurance, maintenance — onto the tenant. But that structure only delivers passive income if the tenant can and will keep paying. That is why tenant credit is the single variable that most directly determines both your income certainty and your exit price.

Many investors consider single-tenant net lease properties as bond-like investments because of their stable, predictable returns. Because tenants commit to long-term leases, there is less re-leasing risk. Moreover, single-tenant net-leased investments can be tailored to an investor’s risk/reward expectations by choosing tenants with different credit profiles.
That tailoring process starts with understanding what the major rating agencies are actually measuring.

S&P and Moody’s evaluate a company’s ability to service its debt obligations over time — factoring in revenue scale, margin structure, leverage ratios, and competitive positioning. For NNN investors, these ratings serve as a standardized shorthand for lease-payment probability.
Some tenants are rated by national credit ratings agencies while others have only their previous financial performance to recommend them. While there are fewer risks in NNN versus more speculative real estate investments, tenants with non-investment-grade credit profiles offer higher levels of risk — but that risk typically provides higher returns as well.

The dividing line the market respects most is the investment-grade threshold: BBB- (S&P) or Baa3 (Moody’s) and above. Properties leased to investment-grade tenants command the lowest cap rates, attract the broadest institutional buyer pool, and tend to hold value most reliably through rate cycles.

How to Read the NNN Tenant Credit Rating Spectrum

Think of NNN tenant credit as a tiered pyramid. At the apex sit a handful of household-name operators whose credit profiles rival those of investment-grade corporate bonds. Moving down the pyramid, yields widen and underwriting complexity increases. Here is how the tiers stack up in practice:

Tier 1: A-Rated and Above — Institutional-Grade Anchors

These tenants carry S&P ratings of A- or better and represent the most coveted names in net lease.
Bank of America, for example, carries an S&P A+ credit rating
and has long been a benchmark for bank-branch NNN properties. At this tier, lease guaranty risk is minimal — the question for underwriters shifts almost entirely to real estate quality and remaining lease term. Cap rates for A-rated tenants in prime locations often compress into the low-to-mid 4% range, and sometimes below.

Tier 2: BBB+ to BBB- — The Investment-Grade Sweet Spot

The vast majority of institutional NNN activity concentrates here.
McDonald’s (NYSE: MCD) carries an investment-grade credit rating of BBB+ by S&P and generates annual revenue exceeding $25.92 billion
— making it one of the most universally underwritten NNN tenants in the country.
McDonald’s continues to trade at cap rates of 4.30%–4.60% on 15-year leases
, a reflection of how tightly investors price premier credit.

Tractor Supply Company (NASDAQ: TSCO), rated BBB by S&P, is the nation’s largest rural lifestyle retailer and continues to expand nationwide with proven success in rural and suburban markets.

As a dominant brand with limited competition in smaller towns, Tractor Supply consistently generates strong customer loyalty and dependable traffic, offering investors income stability and long-term security.
New-construction Tractor Supply leases signed in 2026 feature 15-year terms — a lease duration that amplifies the income certainty the BBB credit already provides.

Tier 3: BB and Below — Yield-Premium Opportunities

Non-investment-grade tenants are not automatically disqualifying. They require deeper underwriting — unit economics, market position, and franchisee vs. corporate guarantee analysis — but they reward that work with materially higher yields.
Tenants including Walgreens (6.40%–9.00% depending on term), Dollar General (6.75%–8.50%), and Family Dollar (7.80%–8.20%) offer elevated cap rates, presenting opportunities for yield-focused investors willing to accept greater credit or operational risk.

The Top NNN Tenants by Credit Rating in 2026

Across QSR, convenience, essential retail, and financial services, a consistent group of operators surfaces at the top of every institutional underwriter’s approved list. Understanding why each name earns its position — and at what cap rate — lets you buy with conviction rather than guesswork.

Chick-fil-A — The Market’s Lowest Cap Rates for a Reason

Chick-fil-A continues to trade at cap rates of 4.20%–4.50% on 15-year leases
, commanding the tightest pricing of any restaurant concept in the net lease universe. While Chick-fil-A is privately held and does not carry a public S&P rating, its operational credit is underwritten on unit-level sales metrics that dwarf the QSR industry average.
With average annual unit-level sales exceeding $9.4 million and a growing footprint of over 3,000 locations, Chick-fil-A remains the most sought-after restaurant brand in the net lease market.
Most Chick-fil-A NNN properties come structured as absolute net ground leases — meaning zero landlord responsibilities — with 10% rent bumps every five years.

McDonald’s — BBB+ Corporate Guarantee, Global Brand Moat

McDonald’s is an investment-grade-rated company with a Standard & Poor’s rating of BBB+.

Premier McDonald’s locations typically feature 20-year absolute NNN ground leases with multiple five-year renewal options, offering long-term stability and zero landlord responsibilities.
For 1031 buyers seeking maximum passivity combined with institutional-grade credit, a new-construction McDonald’s ground lease checks every box. The trade-off is price: cap rates in the 4.30%–4.60% range on 15-year paper leave little room for yield, but the durability of income and liquidity at resale more than justify the entry cost for many buyers.

Wawa — Sub-5% Cap Rates, Expanding Footprint

Wawa continues to trade at cap rates of 4.90%–5.20%
, sitting slightly above the QSR leaders but still commanding a significant premium to the overall net lease market average.
Transaction activity in the net lease sector has shifted noticeably toward high-credit tenants. Premium brands such as 7-Eleven, Chase Bank, and Wawa are commanding cap rates well below the market average, often trading at sub-6% levels.
Wawa’s vertically integrated food-service model and fanatically loyal customer base translate into operating metrics that institutional underwriters treat as near-A credit, even without a formal agency rating.

Tractor Supply — BBB-Rated Essential Retailer with Rural Runway

Tractor Supply Company, rated BBB by S&P, is the nation’s largest rural lifestyle retailer. As a dominant and trusted brand with limited competition in smaller towns, Tractor Supply consistently generates strong customer loyalty and dependable traffic.
New-construction, built-to-suit Tractor Supply properties offer 15-year lease terms with passive ownership structures — and the BBB rating means institutional financing is broadly available, widening the buyer pool at resale.

Bank of America — A+ Credit, Bank-Branch Stability

Bank of America carries an S&P A+ credit rating
and operates approximately 4,700 retail financial centers nationwide. NNN bank-branch properties backed by corporate Bank of America guarantees represent some of the most conservative income plays in all of commercial real estate. Typical structures include 10-year lease terms with rent bumps in year five. The A+ rating enables the most aggressive financing terms of any asset class in net lease, often unlocking non-recourse debt at the highest LTV available to private investors.

How NNN Tenant Credit Ratings Drive Cap Rate Compression — and Your Return

The direct relationship between credit quality and cap rate pricing is the mechanism every NNN investor must internalize.
Credit quality and lease duration drive sharp tiering in single-tenant net lease pricing.
In practical terms: a 100-basis-point improvement in a tenant’s credit profile can translate into a 50–100 bps compression in cap rate — meaning the same property generates a meaningfully higher purchase price at sale, all else equal.

Single-tenant net lease cap rates decreased one basis point to 6.80% in Q1 2026, according to The Boulder Group’s First Quarter Net Lease Research Report, with office cap rates compressing the most at 10 basis points to 7.90% and industrial declining five basis points to 7.15%.
That overall market average, however, obscures the enormous spread between credit tiers.
The net lease market remains bifurcated between investment-grade credit assets with long lease terms, which continue to attract institutional buyers, 1031 exchange capital, and private investors
, and shorter-term or non-rated assets that face wider spreads and more selective buyer engagement.

For investors executing 1031 exchanges — where replacement property must be identified quickly — this bifurcation has a practical implication:
single-tenant net lease property supply declined 9.8% quarter-over-quarter in Q1 2026
, meaning the pool of available investment-grade deals is actively tightening. Acting on sourced inventory matters more than waiting for the “perfect” moment. To see live deals currently available across credit tiers, take a look at some of the deals on Triple Net Direct.

Beyond the Rating: What Else Should NNN Investors Underwrite?

A credit rating is a backward-looking snapshot of a company’s financial strength — updated periodically, not continuously. The most rigorous NNN underwriters layer additional variables on top of the agency rating to build a complete picture of income durability.

• Unit-level sales per square foot: A tenant generating $600+ per square foot has far more economic incentive to honor its lease than one at $250. High-volume locations almost never get vacated voluntarily.
• Corporate vs. franchisee guarantee:
  The QSR sector differs from other net lease sub-sectors as almost three-quarters of properties are leased to franchisees rather than corporate entities. Cap rates for QSR properties leased to franchisees are influenced by the strength of the guarantor, which can range from a one-unit operator to a franchisee with hundreds of restaurants.
  Always verify the guarantor, not just the brand.
• Remaining lease term:
  The majority of profiled tenants favor 15-year triple net or double net leases with 10% rent escalations every five years, while ground leases are prevalent among QSR and banking tenants.
  Anything under 7 years of term remaining creates financing risk and exit friction regardless of credit quality.
• Rent-to-sales ratio: Occupancy cost below 8–10% of gross store revenue signals a tenant with ample headroom to absorb economic stress without triggering a lease renegotiation.
• Expansion vs. contraction trajectory: A tenant actively opening new locations is demonstrating confidence in its own model. Net store growth is a leading indicator that the credit rating agencies often lag.

For a deeper dive into the analytical frameworks that separate institutional underwriting from surface-level due diligence, read more NNN analysis on the Triple Net Direct blog.

How to Build a NNN Portfolio Across the Credit Spectrum

Few sophisticated investors concentrate entirely at one credit tier. The most effective NNN portfolios are deliberately blended — anchored by investment-grade credits that provide stability and liquidity, while a smaller allocation to higher-yielding sub-investment-grade tenants boosts the overall portfolio return.

A practical construction framework might look like this:

1. Core allocation (50–60%): Investment-grade tenants with 15+ years of remaining term. McDonald’s, Chick-fil-A, Tractor Supply, Wawa, and bank branches. Expect cap rates in the 4.2%–5.5% range and prioritize absolute NNN or ground lease structures.
2. Core-plus allocation (25–35%): BBB- tenants or high-performing non-rated operators with strong unit economics. Solid regional grocery operators, leading c-store brands, and QSR franchisees with corporate-level balance sheets fall here. Cap rates in the 5.5%–7.0% range.
3. Yield-enhancement allocation (10–20%): Sub-investment-grade tenants where deeper underwriting reveals durable store economics and favorable real estate re-tenanting potential. Cap rates of 7.0%–9.0%+ are achievable, but position sizing matters.

Pricing is stabilizing after 2024–2025, with The Boulder Group forecasting 10%–15% growth in 2026 as bid-ask spreads narrow
— a window that favors buyers who have already done their credit homework and can move decisively. To discuss how a credit-tiered strategy applies to your specific capital deployment goals, connect with a specialist advisor at Triple Net Direct.

Frequently Asked Questions

What S&P credit rating should a NNN tenant have for it to be considered investment grade?

A tenant must carry an S&P rating of BBB- or higher — or its Moody’s equivalent of Baa3 — to be classified as investment grade. This threshold is significant because it defines the universe of tenants institutional lenders will finance at the most favorable terms, and it drives the broadest buyer demand at resale.

Which NNN tenants have the highest credit ratings in 2026?

Bank of America holds an S&P A+ credit rating
, placing it among the highest-rated NNN tenants available to private investors. Other elite names include McDonald’s (BBB+) and Tractor Supply (BBB). Chick-fil-A is privately held without a public rating but trades at cap rates that imply A-tier credit quality based on unit-level economics.

Do higher-credit NNN tenants always mean lower cap rates?

Generally yes — but lease term, location, and lease structure also heavily influence pricing. A BBB-rated tenant on a 20-year absolute NNN ground lease in a dense infill market will often command a tighter cap rate than an A-rated tenant with only 5 years remaining on a standard NNN lease.
Credit quality and lease duration together drive sharp tiering in single-tenant net lease pricing.

How do franchisee-backed NNN leases compare to corporate-guaranteed leases?

Cap rates for QSR properties leased to franchisees are influenced by the strength of the guarantor, which can range from a one-unit operator to a franchisee with hundreds of restaurants.
Corporate guarantees command tighter cap rates and broader lender acceptance. A multi-unit franchisee with audited financials and 50+ locations can approach — but rarely match — corporate-guarantee pricing.

Can a non-investment-grade NNN tenant still be a good investment?

Yes, with disciplined underwriting. Non-rated or sub-investment-grade tenants like certain Dollar General locations trade at cap rates of 6.75%–8.50%, offering meaningful yield premiums. The key variables to stress-test are unit-level profitability, occupancy cost as a percentage of sales, and the re-tenanting viability of the real estate if the tenant vacates.

How does tenant credit quality affect 1031 exchange property selection?

A 1031 exchange allows investors to defer capital gains taxes by reinvesting proceeds from a property sale into a like-kind property. Net lease properties are popular for 1031 exchanges due to their stable income and ease of management.
For exchange buyers under identification-window pressure, investment-grade tenants offer the largest available inventory and the fastest path to a financeable, closeable deal.

Bottom Line

Tenant credit is not one factor among many in NNN underwriting — it is the load-bearing wall of the entire investment thesis.
The net lease market remains bifurcated, with investment-grade credit assets with long lease terms continuing to attract institutional buyers, 1031 exchange capital, and private investors.
Investors who build their portfolio selection around a structured credit-tiering framework — starting with agency ratings, then stress-testing with unit economics and lease structure — will consistently outperform those who chase yield without context. To explore how top-rated NNN tenants fit your capital deployment strategy, view available NNN deals on Triple Net Direct today.

Sources

• Q1 2026 Net Lease Research Report — The Boulder Group
• Net Lease FAQ: NNN, Cap Rates & 1031 Exchanges — The Boulder Group
• Cap Rate Growth Slows, Signaling New Phase for Net Lease Properties — GlobeSt.
• Single Tenant Investments — Avison Young
• Chick-fil-A — The Bridges, Tucson, AZ — JLL
• Brand New McDonald’s | 20-Year NNN Ground Lease — Houston, TX — Marcus & Millichap
• Tractor Supply Co. | Brand New Construction — Hamilton, TX — Marcus & Millichap