| Metric | Details |
|---|---|
| Parent / Legal Entity | 24 Hour Fitness Worldwide, Inc. (All Day AcquisitionCo, LLC) |
| S&P / Moody‑s Rating | CCC- / Caa3 |
| Investment Grade Status | Substantially Below Investment Grade — Distressed |
| Sector | Fitness / Health Club |
| Ownership | Private equity (since 2020 bankruptcy emergence) |
| US Location Count | ~300+ gyms (down from 440+ pre-pandemic) |
| Geographic Concentration | California, Texas, Colorado, Oregon, Washington, Arizona |
| Cap Rate Range | 9.00% – 12.00%+ |
| Typical Lease Term Remaining | 5 – 12 years (many re-papered post-bankruptcy) |
| Guarantee Type | Corporate (All Day AcquisitionCo, LLC) |
| Typical Building Size | 20,000 – 45,000 SF |
| Typical Price Range | $2.0M – $12.0M |
24 Hour Fitness Business Overview & NNN Investment Profile
24 Hour Fitness was once the largest privately held fitness chain in the United States, operating more than 440 large-format clubs before filing for Chapter 11 bankruptcy in June 2020. The filing permanently closed over 130 locations and wiped out most of the pre-bankruptcy equity. The company emerged later that year under private equity ownership with a materially reduced footprint of approximately 300 gyms, concentrated heavily in California, Texas, and other Western states. The CCC-/Caa3 credit profile reflects ongoing financial fragility, the challenges of operating large-format fitness facilities in a post-pandemic environment where hybrid work has reduced commute-based gym traffic, and the company’s high operating leverage relative to membership revenue.
For NNN investors, 24 Hour Fitness properties sit at the distressed end of the single-tenant retail spectrum. The CCC-/Caa3 rating signals near-term default risk, and the large-format gym buildings (20,000 to 45,000 SF) are among the hardest property types in retail to re-tenant if the lease goes dark. Cap rates of 9.00% to 12.00%+ reflect both the tenant credit risk and the single-purpose real estate challenge. Sophisticated investors typically underwrite 24 Hour Fitness properties for the underlying land value, redevelopment potential, and demising economics rather than relying on the existing tenant’s creditworthiness through the balance of the lease.
24 Hour Fitness Credit Rating Analysis
24 Hour Fitness carries S&P Global Ratings of CCC- and Moody’s Ba/Caa3, placing it deep in the substantially-below-investment-grade tier. These ratings sit seven to nine notches below the BBB-/Baa3 investment grade threshold and signal that the issuer faces substantial credit risk with limited capacity to meet financial commitments. In S&P’s framework, a CCC- rating reflects a vulnerable issuer dependent on favorable business, financial, and economic conditions to meet obligations. Post-bankruptcy private equity ownership has provided operational runway but has not materially repaired the credit profile.
Compared to investment-grade fitness peers (Planet Fitness at BB/Ba3 is two notches above 24 Hour Fitness, and lifestyle-tier operators like Life Time Fitness and EOS Fitness sit in B+/Ba3 territory), 24 Hour Fitness represents the deepest credit risk in the publicly-rated fitness NNN universe. The spread between a Planet Fitness cap rate (6.0%–7.0%) and a 24 Hour Fitness cap rate (9.0%–12.0%+) of roughly 250–500 basis points is the market’s direct pricing of the credit differential plus re-tenanting optionality. For detailed analysis of credit ratings and what substantially-below-investment-grade status means for NNN underwriting, see how credit tier drives cap rate spreads across the net lease market.
24 Hour Fitness NNN Lease Structure
Pre-bankruptcy 24 Hour Fitness leases typically featured 15 to 20-year initial terms with 2% annual or 10% every-five-year escalations and multiple 5-year renewal options. The 2020 Chapter 11 process allowed the company to reject, renegotiate, or re-paper hundreds of leases, with many surviving leases carrying reduced rent, shorter remaining term, and weakened guarantees. As of 2026, typical remaining lease terms range from 5 to 12 years depending on whether the lease survived untouched, was re-papered during the reorganization, or was extended as part of a post-emergence landlord concession.
The guarantor on post-bankruptcy leases is typically All Day AcquisitionCo, LLC or 24 Hour Fitness Worldwide, Inc. — the same distressed credit that carries the CCC-/Caa3 ratings. The corporate guarantee therefore provides limited recourse value in a liquidation scenario. A typical facility is 20,000 to 45,000 SF on 2 to 5 acres, with NNN or absolute-NNN structure shifting property taxes, insurance, maintenance, and structural obligations to the tenant. Investors evaluating a 24 Hour Fitness property should obtain the specific post-emergence lease amendment and verify: surviving rent schedule, escalation structure, personal or third-party guarantee beyond the parent entity, remaining base term, and landlord consent provisions around assignment or subletting.
24 Hour Fitness NNN Cap Rate & Pricing Trends
24 Hour Fitness NNN properties trade at cap rates of 9.00% to 12.00%+ as of Q1 2026, with significant dispersion across the range driven by remaining lease term, underlying land value, and the quality of the submarket. Properties in infill Southern California, Bay Area, and Denver submarkets with irreplaceable dirt underneath often trade at the tighter end (9.0%–10.0%) because the real estate itself carries redevelopment optionality. Tertiary-market properties with limited alternative-use value can trade at 11.0%–12.0%+ and are often priced below replacement cost.
Pricing typically ranges from $2.0M to $12.0M, reflecting the wide building-size range and the regional variation in underlying land values. A well-located, irreplaceable-dirt 24 Hour Fitness in a supply-constrained submarket can command pricing closer to land value plus a modest improvement credit, while a secondary-market asset with high re-tenanting risk may trade below the cost of the improvements themselves. For guidance on evaluating cap rates in the distressed credit tier and how to underwrite for dark-space scenarios, review the investment grade guide framework for pricing below-investment-grade net lease risk.
24 Hour Fitness Real Estate Footprint
24 Hour Fitness operates approximately 300 clubs, heavily concentrated in California (the company’s historic stronghold), Texas, Colorado, Oregon, Washington, and Arizona. The company retreated significantly from the Northeast, Midwest, and Southeast during the 2020 bankruptcy. This geographic concentration is a double-edged sword for NNN investors: California submarkets offer high underlying land values (supporting residual value in a dark-space scenario) but also carry meaningful natural disaster, regulatory, and entitlement risk.
The typical club occupies 20,000 to 45,000 square feet on 2 to 5 acres, with 150 to 300 surface parking spaces. Buildings are purpose-built for fitness use with specialized HVAC (high-occupancy air handling), shower and locker facilities, extensive plumbing, heavy electrical infrastructure for cardio and strength equipment, and sometimes swimming pools or basketball courts. This specialized buildout drives significant capital expenditure to convert to alternative uses (grocery, medical, flex industrial, self-storage, or demising to multi-tenant retail), which must be factored into the residual value analysis on any acquisition.
24 Hour Fitness Growth, Restructuring & Forward Outlook
Unlike investment-grade growth tenants such as Planet Fitness (300+ new clubs annually) or Chick-fil-A (consistent unit expansion with an investment-grade financial profile), 24 Hour Fitness is in steady-state operation mode post-bankruptcy, focused on stabilizing membership revenue at the ~300-club footprint rather than pursuing new unit growth. The private equity sponsor’s strategy appears to be margin improvement, digital membership tools, and potential second-round recapitalization rather than aggressive unit expansion.
Key risks to the forward outlook include continued hybrid-work pressure on commute-based gym traffic, competitive encroachment from value-tier operators (Planet Fitness, EOS) and boutique operators (Orangetheory, F45), rising insurance costs on large-footprint facilities, and the potential for a second restructuring event if membership revenue deteriorates. NNN investors underwriting a 24 Hour Fitness property should model a credible scenario in which the lease is rejected or renegotiated before natural expiration, and price the property such that the acquisition makes sense on land-value-plus-improvements economics even in that downside case.
24 Hour Fitness NNN Investment: Pros & Cons
| Pros | Cons |
|---|---|
| Deep Cap Rate Premium: 9%–12%+ cap rates offer 250–500 bps spread over investment-grade fitness peers. | Distressed Credit: CCC-/Caa3 signals substantial near-term default risk; corporate guarantee has limited recourse value. |
| Real Estate Optionality: Large parcels (2–5 acres) in infill California and Western metros offer meaningful residual land value. | Re-Tenanting Difficulty: 20,000–45,000 SF specialized fitness buildouts are among the hardest retail boxes to convert. |
| Post-Bankruptcy Cleanup: Weakest locations already closed in 2020; surviving clubs represent the better-performing subset. | Second Restructuring Risk: Distressed credit signals the potential for another Chapter 11 event with further lease rejections. |
| Value-Add / Redevelopment Play: Properties can be acquired below replacement cost and underwritten on land-value-plus-improvements economics. | Hybrid-Work Headwind: Permanent reduction in commute-based gym traffic has not fully normalized across the footprint. |
Comparable NNN Tenants
| Tenant | Rating | Sector | Cap Rate Range |
|---|---|---|---|
| Planet Fitness | BB / Ba3 | Value Fitness | 6.0% – 7.0% |
| LA Fitness | BB / Ba3 | Mid-Tier Fitness | 6.5% – 7.5% |
| Life Time Fitness | B+ / B2 | Premium Fitness | 6.5% – 7.5% |
| EOS Fitness | B+ / Ba3 | Value Fitness | 7.0% – 8.0% |
| 24 Hour Fitness | CCC- / Caa3 | Distressed Fitness | 9.0% – 12.0%+ |
Frequently Asked Questions About 24 Hour Fitness NNN Investments
No. 24 Hour Fitness carries CCC-/Caa3 credit ratings from S&P and Moody’s respectively, among the lowest ratings in the NNN tenant universe. These ratings sit seven to nine notches below the BBB-/Baa3 investment grade threshold and signal substantial near-term default risk with limited capacity to meet financial commitments through the balance of the lease term.
9.00% to 12.00%+ as of Q1 2026, with significant dispersion based on location quality, remaining lease term, and underlying land value. Irreplaceable-dirt properties in infill California and Western submarkets trade at the tighter end of the range; tertiary-market properties with weak alternative-use value trade at the wider end.
24 Hour Fitness filed Chapter 11 bankruptcy in June 2020, citing the COVID-19 pandemic and pre-existing debt burden. The filing permanently closed more than 130 underperforming locations, wiped out the pre-bankruptcy equity, and allowed the company to reject or renegotiate hundreds of leases. The company emerged later that year under private equity ownership with a footprint of approximately 300 clubs, concentrated in California, Texas, and other Western states.
Underwrite for the downside. Model a credible scenario in which the lease is rejected or renegotiated before natural expiration and price the property on land-value-plus-improvements economics, with any residual in-place income treated as upside rather than base-case cash flow. Obtain the post-emergence lease amendment, verify the surviving rent schedule and guarantee, and run a re-tenanting cost estimate against realistic alternative-use rents for the specific submarket.
Yes, but at meaningful capital cost. The 20,000–45,000 SF specialized fitness buildout (shower/locker facilities, high-capacity HVAC, heavy electrical, pool or court infrastructure where present) is not trivially convertible. Typical repositioning paths include: demising to multi-tenant retail, conversion to medical office or urgent care, flex industrial or self-storage in appropriate submarkets, or scrape-and-rebuild in high-land-value locations. The cost of repositioning and the gap rent during transition must be capitalized into the acquisition underwriting.
Roughly 250 to 500 basis points. Planet Fitness (BB/Ba3) trades at 6.0% to 7.0% cap rates; 24 Hour Fitness (CCC-/Caa3) trades at 9.0% to 12.0%+. The spread is the market’s direct pricing of the credit differential (two to four rating notches), the re-tenanting optionality, and the growth-versus-distressed trajectory between the two operators. The spread widens further in weak submarkets and compresses in strong ones where underlying land value anchors residual value regardless of tenant credit.
Large-format fitness facilities offer exceptional cost segregation potential. Specialized HVAC for high-occupancy spaces, rubber and sport flooring, locker-room buildouts, heavy electrical infrastructure for cardio and strength equipment, plumbing for shower and pool facilities, and pool/court infrastructure where present can be reclassified from 39-year real property to 5-, 7-, or 15-year recovery periods. For a distressed-credit asset where the tenant may not be present at exit, front-loaded depreciation can materially improve the after-tax return profile. See our full ranking of net lease sectors by depreciation value: Best NNN Tenants for Bonus Depreciation: The Complete Ranking.
The Only 24 Hour Fitness NNN Advisor Whose Fee Comes From the Deal, Not From You
In NNN buyer representation, the listing broker pays the cooperating commission. That means you get a dedicated 24 Hour Fitness NNN advisor handling sourcing, underwriting, financing, and closing — and on the majority of transactions, there is no separate fee to you as the buyer.
Here’s what that buys you on a distressed-credit acquisition:
Find It — On-market and off-market 24 Hour Fitness NNN properties sourced and underwritten on your behalf, with particular attention to underlying land value, remaining lease term, and post-emergence lease amendment terms. We know which markets are pricing the credit risk correctly, which listings are overpriced for what the distressed amendment actually says, and where the land basis makes sense even in a dark-space scenario.
Fund It — Acquisition financing for distressed-credit NNN is specialized territory. Bridge-to-perm debt, private credit, and value-add lenders are the right fit — not CMBS or life company paper. We maintain 150+ lender relationships including the specific desks that actively underwrite CCC/Caa fitness exposure and price it correctly.
Exit It — Selling a 24 Hour Fitness asset, repositioning through a 1031, or running a strategic scrape-and-rebuild play? Our Capital Markets desk targets the private investors, value-add funds, and redevelopers actively acquiring distressed fitness real estate — not a public blast that signals desperation.
Not committed to 24 Hour Fitness? Tell us your criteria — cap rate floor, credit tier, lease structure, geography, equity check size — and we’ll find the deal that fits. We represent investors across the full NNN credit spectrum, from QSR and pharmacy to industrial, medical, and big box retail. The tenant is a variable. Your criteria is the constant.
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Own a 24 Hour Fitness Property? Capital Markets Strategies Beyond Selling
Maturing debt and considering refinancing? Our capital markets team maintains 150+ lender relationships underwriting NNN properties across the full credit spectrum, including the specialized desks that price distressed-credit fitness exposure correctly. We structure rate-and-term refinancing, cash-out refis, and bridge-to-perm takeouts.
Evaluating a 1031 exchange or disposition? We represent both sides of 24 Hour Fitness NNN transactions — whether you are looking to exit at peak value, exchange into a higher-quality credit tenant, or reposition the underlying real estate through a scrape-and-rebuild or demise-to-multi-tenant play.
Need a current valuation? We maintain live comps on distressed-fitness NNN transactions and can produce a Broker Opinion of Value within 48 hours reflecting today’s cap rate market for CCC-/Caa3 exposure.
