Lowe’s NNN properties trade at cap rates that yield 40 to 190 basis points more than Lowe’s corporate bonds. The same BBB+ corporate credit that backs a Lowe’s bond also backs the lease payment on a Lowe’s NNN property. The same BBB+ corporate credit that backs a Lowe’s bond also backs the lease payment on a Lowe’s NNN property, yet the NNN investor earns 40 to 190 basis points more yield before even accounting for tax advantages that are completely unavailable to bondholders.
This page compares the two instruments side by side. For the full methodology and 12 company comparison, see the Bond to NNN Spread Anchor Page. For the broader Lowe’s credit and store count detail, see the IG 180 tenant ratings database.
Lowe’s Credit Profile
| Metric | Details |
|---|---|
| S&P Rating / Outlook | BBB+ / Stable (S&P affirmed at BBB+ stable; Moody’s at Baa1 stable.) |
| Moody’s Rating / Outlook | Baa1 / Stable |
| Investment Grade Status | Investment Grade (BBB+ / Baa1 (lower medium grade, upper IG)) |
| Ticker | NYSE: LOW |
| US Store Count | 1,750+ Lowe’s stores |
| Annual Revenue | ~$86 billion (FY2026) |
| Lease Structure | Mix of ground leases and fee simple. Primary terms 15 to 25 years with multiple options |
The Spread: Lowe’s Bonds vs NNN
| Metric | Lowe’s Corporate Bond | Lowe’s NNN Property |
|---|---|---|
| Yield / Cap Rate | ~5.10% (Senior unsecured at BBB+ rating, 10 year representative) | 5.50% to 7.00% |
| Nominal Spread vs Bond | Baseline | Positive 40 bps to Positive 190 bps |
| Minimum Investment | ~$1,000 (via broker) | $7 million to $18 million |
| Liquidity | Sells in seconds on secondary market | 60 to 90 day sale cycle |
| Income Taxation | Ordinary income (37% federal + state + NIIT) | Sheltered by depreciation |
| 1031 Exchange Eligible | No | Yes |
| Depreciation Deduction | None | 39 year straight line plus cost segregation |
| Appreciation Potential | Returns par at maturity | Real estate appreciates over time |
| Rent / Coupon Growth | Fixed coupon (no inflation protection) | Contractual escalations (typically 10% every 5 years) |
| Leverage Available | Typically unlevered | 60% to 75% LTV financing available |
Bond yield is approximate, derived from Lowe’s’s rating tier position relative to the ICE BofA BBB US Corporate Index (~5.10 percent as of Q2 2026). NNN cap rates reflect market transaction benchmarks from InvestmentGrade.com’s IG 180 database. Both data sets fluctuate daily. This is not investment advice.
After Tax Comparison: $1,000,000 Invested in Lowe’s
The positive nominal spread widens substantially when taxes are applied. Below is a side by side comparison assuming a high bracket investor (37 percent federal, 5 percent state, 3.8 percent NIIT, 45.8 percent combined).
| Metric | Lowe’s Bond | Lowe’s NNN (Unlevered) | Lowe’s NNN (Levered 65% LTV) |
|---|---|---|---|
| Investment / Equity | $1,000,000 | $1,000,000 | $1,000,000 equity ($2,380,952 property) |
| Annual Income / NOI | $51,000 | $62,500 | $148,810 NOI |
| Annual Debt Service | N/A | N/A | ($105,390) at 5.5%, 30 yr amortization |
| Pre Tax Cash Flow | $51,000 | $62,500 | $43,420 cash flow plus principal paydown |
| Depreciation Shield | $0 | ~$56,000 annually (cost seg accelerated) | ~$160,000 annually (allocated to equity) |
| Taxable Income | $51,000 ordinary | ~$0 (depreciation offsets cash flow) | ~$0 to negative (passive loss generator) |
| Tax at 45.8% combined | ($23,360) | ~$0 | ~$0 |
| After Tax Income | $27,640 | $62,500 | $43,420 cash plus amortization |
| Effective After Tax Yield | 2.76% | 6.25% | 4.34% cash plus appreciation and amortization |
Depreciation values use approximate cost segregation accelerated depreciation. Actual depreciation depends on land allocation, building type, and cost segregation study results. Levered scenario assumes 35 percent down at 5.5 percent commercial mortgage. Tax assumptions exclude alternative minimum tax. Consult a tax professional.
Why Lowe’s Has a Positive Spread
Lowe’s sits at the upper end of the BBB tier and is the second largest home improvement retailer behind Home Depot. The BBB+ rating positions Lowe’s NNN cap rates higher than Home Depot’s by approximately 50 to 75 basis points, reflecting both the rating tier difference and the secondary buyer pool depth. For yield seeking IG investors, Lowe’s offers a meaningful spread pickup over Home Depot or Walmart on similar real estate quality.
- Trophy real estate quality. Lowe’s sites are typically located on prime commercial corridors with high traffic counts and strong demographics.
- Long lease term certainty. Lowe’s leases provide multi decade contracted income from an investment grade credit.
- Institutional buyer competition. Lowe’s NNN is bid by REITs, sovereign wealth funds, pension funds, and family offices, compressing cap rates below pure yield based pricing.
- Tax advantaged after tax math. The depreciation shield converts the cap rate into a higher after tax yield than the bond delivers.
- 1031 exchange eligibility. A Lowe’s property can roll forward indefinitely through 1031 exchanges, deferring all capital gains tax until death.
Key Underwriting Considerations for Lowe’s NNN
- Lease term remaining. Institutional bid concentrates on 12+ year remaining terms. Shorter terms trade 50 to 150 basis points wider.
- Ground lease vs fee simple. Ground leases trade tighter due to land ownership and stronger residual value, but cost segregation depreciation is more limited.
- Rent escalation structure. Verify the schedule. Flat rent during primary term with bumps at options is less inflation protected than annual or periodic escalations.
- Geographic and market quality. Lowe’s and Home Depot serve overlapping markets, and Lowe’s closures have historically been concentrated in markets where Home Depot also operates. Verifying the local competitive position (which retailer is the dominant store) is part of underwriting Lowe’s NNN. Strong markets reduce closure risk; weaker markets concentrate it.
- Guarantor strength verification. Confirm corporate guarantee (not franchisee) and pull current rating action history before closing. S&P affirmed at BBB+ stable; Moody’s at Baa1 stable.
Frequently Asked Questions
Lowe’s is rated BBB+ (S&P) and Baa1 (Moody’s) with stable outlooks. S&P affirmed at BBB+ stable; Moody’s at Baa1 stable.
Q2 2026 market cap rates run 5.50 to 7.00 percent depending on lease term remaining, geographic market, and rent in place. The average sits near the midpoint of the range for institutional quality assets with 12+ years remaining and prime locations.
Q2 2026 market data shows Lowe’s BBB+ corporate bonds yielding approximately 5.10 percent versus Lowe’s NNN properties at 5.50 to 7.00 percent cap rates. The 40 to 190 basis point spread reflects illiquidity premium, lease term risk, residual value risk, and the smaller buyer pool. Tax advantages widen the after tax gap further.
Lowe’s NNN properties typically transact between 7 million dollars and 18 million dollars depending on geographic market, traffic counts, lease term remaining, and rent in place.
Lowe’s NNN cap rates run 40 to 190 basis points wider than Lowe’s bond yields. The positive nominal spread is amplified by tax advantages unavailable to bond investors: depreciation deductions shelter NNN cash flow from current taxation, while bond coupon income is fully taxed at ordinary rates. The after tax yield gap is meaningfully larger than the nominal spread suggests.
Considering Lowe’s NNN?
We source Lowe’s NNN properties nationally across all lease terms and price points. On the majority of NNN transactions, the listing broker pays a cooperating commission, so there is typically no separate fee to you as the buyer for professional representation.
Find It — On market and off market Lowe’s NNN sourced and underwritten for your criteria.
Fund It — 150+ lender relationships. Lowe’s’s BBB+ credit qualifies for competitive NNN financing terms.
Exit It — Lowe’s NNN benefits from a deep institutional and 1031 exchange buyer pool. When you sell, demand is consistent.
Exchange It — 1031 exchange into or out of Lowe’s NNN with deadline driven execution.
Educational content only. InvestmentGrade.com is a commercial real estate brokerage and educational publisher. We do not sell, broker, underwrite, or solicit any bonds, securities, or investment products. Yields, ratings, and prices referenced are approximate, fluctuate continuously, and are sourced from public market data as of Q2 2026. Nothing on this page constitutes investment advice, an offer to sell, or a solicitation to buy any security. Consult a licensed broker-dealer, registered investment advisor, or tax professional before making any investment decision. For SEC investor education, visit investor.gov.
