Costco is one of the highest-rated retailers in our ratings database, at AA/Aa3 (S&P/Moody’s). The ICE BofA index for its rating category yields 5.80% today; that is an index average, not a quote on Costco’s own bonds. Costco owns both the land and the building at 725 of its 914 warehouses (Form 10-K, fiscal year ended August 31, 2025), so net lease properties leased to Costco are uncommon; the listings we track had no active Costco listings in October 2026. When fewer than five active listings publish a cap rate, our tables show no median.
Of the 189 warehouses Costco leases, 141 are land-only leases where Costco owns the building (Form 10-K, August 31, 2025), so a Costco net lease property is often a land lease: the investor owns the land and Costco owns the building. See the Costco credit rating and NNN cap rate page.
Costco Credit Profile
| Metric | Details |
|---|---|
| S&P rating / outlook | AA |
| Moody’s rating / outlook | Aa3 |
| Status | Investment Grade |
| Rated entity in our database | Costco Wholesale Corporation |
| Rating sources | S&P Global Ratings AA; Moody’s Aa3. Ratings checked September 27, 2026. |
The Spread: Costco Bonds vs. NNN
The comparison uses the bond index yield for Costco’s rating category against the median asking cap rate on active Costco listings, when enough listings exist.
| Metric | Costco bonds (rating-category index) | Costco net lease properties |
|---|---|---|
| Yield measure today | 5.80% (ICE BofA AA index) | Median asking cap rate n/a (0 listings with a cap rate) |
| Spread, cap rate minus index yield | Baseline | n/a |
| Obligor | The issuing entity named in the bond’s indenture | The entity that signs or guarantees the lease |
| Typical minimum | $2,000 face minimum denomination on Costco’s notes, though small trades cost more | median asking price |
| Liquidity | Trades over the counter through dealers | Weeks to months to sell |
| Income taxation | Interest taxed as ordinary income | Rent taxed as ordinary income, partly offset by depreciation of the building when the landlord owns it; land is not depreciable (Treas. Reg. 1.167(a)-2) |
| 1031 exchange | Not eligible; Section 1031 covers real property only | Eligible when held for investment or business use (IRC 1031(a)(1)) |
| Value at the end | Face value at maturity absent default; market price moves before then | Depends on the property, lease term, and market |
| Income growth | Fixed coupon | Only if the lease provides rent increases |
Bond yield: ICE BofA effective yield index for Costco’s rating category via FRED, as of October 1, 2026; it is an index average, not a quote on Costco’s own bonds. Cap rate: median asking cap rate on active listings InvestmentGrade.com tracks, as of our latest weekly listings refresh; asking cap rates are not closed-sale cap rates. n/a means too few listings to report a median.
Why the Spread Exists
Warehouse clubs are large buildings (Costco reports about 134.7 million square feet of operating floor space across its 914 warehouses at the end of fiscal 2025, Form 10-K), and a buyer of a Costco property is underwriting the land and location as well as Costco’s credit. On a land lease where Costco owns the building, the landlord has no building to depreciate (land is not depreciable, Treas. Reg. 1.167(a)-2), which leaves the cap rate, residual land value, and 1031 deferral as the main advantages over the bond.
Frequently Asked Questions
How is Costco rated?
Costco Wholesale Corporation is rated AA by S&P and Aa3 by Moody’s, per our ratings database.
Why are Costco net lease properties rare?
Costco owns both the land and the building at 725 of its 914 warehouses, and 141 of its 189 warehouse leases are land-only leases where Costco owns the building (Form 10-K, August 31, 2025).
Can a Costco land lease owner take depreciation?
Not on the land: land is not depreciable (Treas. Reg. 1.167(a)-2). On Costco’s land-only leases Costco owns the building (Form 10-K), so the landowner has no building to depreciate; confirm who owns the improvements in the lease.
Considering Costco Net Lease Property?
We source Costco properties nationally and underwrite the lease, the obligor, and the real estate. On the majority of transactions, there is no separate fee to you as the buyer.
Find it: Costco properties across lease terms and markets.
Fund it: financing matched to the tenant’s credit and the remaining lease term.
Exit it: buyers for Costco properties, including 1031 exchange buyers.
Exchange it: 1031 execution against the deadlines.
Related Reading
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 fluctuate continuously and are sourced from public market data as of the date noted. 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.
