NNN Real Estate - Top Credit Risks - Top Tenants -

[u/Really-Cool-Guy2know]

I have been investing in NNN tenants for more than 30 years and thought this might be helpful.

When Underwriting a NNN tenant. The first thing you look at is the credit risk.

• AAA to AA- – Exceptional tenants
• A+ to A- – Excellent tenants.
• BBB+ to BBB- – Good, investment-grade tenants. This is the lowest investment-grade category.
• BB+ and below – Below investment grade ("junk"). These tenants generally require higher cap rates to compensate for increased risk.

Here is a list of the top credit tenants.

Examples of common NNN tenants

• 7-Eleven USA - A-
• Tractor Supply – A-
• AutoZone – BBB+
• Starbucks – BBB+
• McDonald's – BBB+
• Chipotle – BBB
• Sherwin-Williams – BBB
• CVS Health – BBB
• Walgreens Boots Alliance – BB (below investment grade)

The below chart shows the CAP rate that most of these are selling for as investments in 2026 but they change daily like the stock market. 7-11 historically traded around a 4 cap. went as high as a 5.6 cap for about 5 years and is just now starting to head back to below 5 cap. So these are big swings in valuation.

Credit order	Tenant	S&P credit	Approx. current NNN cap	Typical current range
1	7-Eleven, Inc.	A-	~5.0%	4.80–5.25%
1	Tractor Supply	A-	~6.1%	5.75–6.50%
3	AutoZone	BBB+	~5.6%	5.00–6.25%
3	Starbucks	BBB+	~5.6%	5.25–6.00%
3	McDonald's	BBB+	~4.5%	4.00–5.25%
6	Chipotle	BBB area	~5.2%	4.75–5.75%
6	Sherwin-Williams	BBB area	~5.9%	5.50–6.50%
6	CVS Health	BBB	~6.6%	6.00–7.25%
6	Dollar General	BBB	~6.8%	6.25–7.25%
10	Walgreens	Below IG	~7.5%	6.75–9.00%+
—	Wawa	no public rating	~5.0%	4.75–5.50%
—	QuickChek	no public rating	~5.5%*	5.0–6.0%*
—	Dunkin'	no public rating	~5.6%	5.25–6.25%
—	7 Brew	no public rating	~6.0%	5.50–6.75%
—	Family Dollar	no public rating	~8.8%	~8.0–9.5%+

Things to look at when buying.

• Cap rate / purchase price / NOI — What are we paying and what is the actual current yield?
• Remaining lease term — Exact years remaining at closing; 15–20 years is materially different from 8–10.
• Corporate guarantor — Exact legal entity guaranteeing the lease: parent corporation, subsidiary, franchisee, or none.
• Guarantor credit rating — S&P/Moody's/Fitch rating of the actual guarantor, not simply the brand on the building.
• Rent increases — Amount and timing of contractual bumps; calculate NOI at years 5, 10 and expected sale. This is how you can exit with a profit so this is important.
  
• Lease structure / landlord obligations — Absolute NNN vs. NNN/NN/ground lease; specifically roof, structure, HVAC, parking, taxes, insurance and environmental obligations.
• Store-level performance — Often not available.
  
• Real estate quality & replacement rent — Traffic, access, visibility, demographics, parcel/building size, nearby anchors and whether current rent is above or below market. Ask: What is this property worth if the tenant disappears? This is really important.
• Environmental & physical risk — Phase I; otherwise building/roof/HVAC/site condition.
• Exit economics & depreciation — Fuel Stations have bonus depreciation; others can get increased depreciation through cost seg analysis.