Home Depot is an investment grade home improvement retailer whose ratings place it in the A rating category. Today the median asking cap rate on Home Depot listings is 5.65% against that category’s bond index yield of 5.84%, a spread of −19 bps, based on a small number of listings.
Home Depot owns most of its stores, so relatively few properties leased to it reach the market, and some that do are ground leases (two of the seven Home Depot listings we track as of October 5, 2026). See the Home Depot credit rating and NNN cap rate page.
Home Depot Credit Profile
| Metric | Details |
|---|---|
| S&P rating / outlook | A |
| Moody’s rating / outlook | A2 |
| Status | Investment Grade |
| Rated entity in our database | The Home Depot, Inc. |
| Rating sources | S&P Global Ratings A, as of March 9, 2026; Moody’s A2, as of August 14, 2026; Fitch Ratings A, as of July 28, 2026. Ratings checked September 27, 2026. |
The Spread: Home Depot Bonds vs. NNN
The comparison uses the bond index yield for Home Depot’s rating category against the median asking cap rate on active Home Depot listings.
| Metric | Home Depot bonds (rating-category index) | Home Depot net lease properties |
|---|---|---|
| Yield measure today | 5.84% (ICE BofA A index) | Median asking cap rate 5.65% (7 listings with a cap rate) |
| Spread, cap rate minus index yield | Baseline | −19 bps |
| Obligor | The issuing entity named in the bond’s indenture | The entity that signs or guarantees the lease |
| Typical minimum | $2,000 minimum on Home Depot’s September 2025 notes, then $1,000 increments; small trades can cost more | $13.99M 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 (land is not depreciable) |
| 1031 exchange | Not eligible (IRC 1031(a)(1) 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 Home Depot’s rating category via FRED, as of October 1, 2026; it is an index average, not a quote on Home Depot’s own bonds. Cap rate: median asking cap rate on active listings InvestmentGrade.com tracks, as of today; asking cap rates are not closed-sale cap rates. n/a means too few listings to report a median.
Why the Spread Exists
Big-box home improvement sites are large parcels (a median of about 8.8 acres across the Home Depot listings we track), so buyers price the land and location as well as the lease. Across the tenants we track, ground leases often ask lower cap rates than fee simple listings (26 of 30 tenants with at least three of each, October 5, 2026), but Home Depot’s two ground lease listings asked more than its fee simple median; a ground lease gives the landlord no building to depreciate (land is not depreciable, IRS Publication 946).
After-Tax Illustration
The table compares one full year of after-tax cash for a fee simple property, where the investor owns the building, using today’s index yield for Home Depot’s rating category and median asking cap rate. On a ground lease there is no depreciation and both incomes are fully taxable.
| One full year, $2,000,000 invested, all cash | Bond at 5.84% (A index) | NNN at 5.65% cap rate |
|---|---|---|
| Pre-tax income | $116,800 | $113,000 |
| Depreciation (building only, 80% of price over 39 years) | $0 | $41,026 |
| Taxable income | $116,800 | $71,974 |
| Federal tax at 40.8% | $47,654 | $29,366 |
| After-tax cash | $69,146 (3.46%) | $83,634 (4.18%) |
Illustration only. Assumes no financing, a 20% land allocation (land is not depreciable), straight-line depreciation with no cost segregation, a combined 40.8% federal rate (37% plus the 3.8% net investment income tax) on both incomes, and no state tax. It ignores closing and management costs, rent changes, and the sale. On a taxable sale, the part of the gain up to the depreciation taken is generally taxed at up to 25% (IRC 1(h)(1)(E), 1(h)(6)), plus the 3.8% net investment income tax where it applies (IRC 1411). A 1031 exchange into like-kind real property can defer that tax (IRC 1031(a)), but gain is taxable up to the cash and the value of any other non-like-kind property received (IRC 1031(b)). With cost segregation or other accelerated depreciation, part of the gain can be taxed as ordinary income even in an exchange (IRC 1245(b)(4), 1250(d)(4)). A bond bought at par returns par at maturity. Bond yield is the ICE BofA index yield for the tenant’s rating category via FRED; cap rate is the median asking cap rate on active listings InvestmentGrade.com tracks. Consult a tax advisor for your situation.
Frequently Asked Questions
What is the spread between Home Depot bonds and NNN cap rates?
Today the median asking cap rate on Home Depot listings is 5.65% against the bond index yield for its rating category, 5.84%, a spread of −19 bps.
How is Home Depot rated?
The Home Depot, Inc. is rated A by S&P and A2 by Moody’s, per our ratings database.
Can a Home Depot ground lease owner take depreciation?
No. Land is not depreciable (IRS Publication 946), and on a ground lease the tenant usually owns the building.
Considering Home Depot Net Lease Property?
We source Home Depot 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: Home Depot properties across lease terms and markets.
Fund it: financing matched to the tenant’s credit and the remaining lease term.
Exit it: buyers for Home Depot 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.
