Kroger operated 2,697 supermarkets in 35 states and the District of Columbia as of January 31, 2026 (Form 10-K), and The Kroger Co. is rated investment grade. The median asking cap rate on the Kroger listings InvestmentGrade.com tracks is 5.00% (latest listing update October 16, 2026), against a BBB bond index effective yield of 6.19% as of October 1, 2026, a difference of −119 bps. Those listings mix ground leases, fuel centers and supermarket buildings, so the figure is not a like-for-like comparison for any single property.
A federal court blocked Kroger’s proposed merger with Albertsons in December 2024, and the companies terminated the agreement. See the Kroger credit rating and NNN cap rate page.
Kroger Credit Profile
| Metric | Details |
|---|---|
| S&P rating / outlook | BBB |
| Moody’s rating / outlook | Baa1 |
| Status | Investment Grade |
| Rated entity in our database | The Kroger Co. |
| Rating sources | S&P Global Ratings BBB, as of December 16, 2024; Moody’s Baa1, as of September 28, 2026. Ratings checked October 8, 2026. |
The Spread: Kroger Bonds vs. NNN
The comparison uses the bond index yield for Kroger’s rating category against the median asking cap rate on active Kroger listings InvestmentGrade.com tracks. As of October 8, 2026, 6 of the 8 Kroger listings were flagged as ground leases, 1 was flagged as not a ground lease and 1 did not say, and 3 were titled as fuel centers or fuel stations, so the median is drawn mainly from ground leases and is not a benchmark for a fee simple supermarket. Ground lease flags come from listing descriptions, not reviewed leases or title records.
| Metric | Kroger bonds (rating-category index) | Kroger net lease properties |
|---|---|---|
| Yield measure today | 6.19% (ICE BofA BBB index) | Median asking cap rate 5.00% (9 listings with a cap rate) |
| Spread, cap rate minus index yield | Baseline | −119 bps |
| Obligor | The issuing entity named in the bond’s indenture | The entity that signs or guarantees the lease |
| Purchase size | Minimum denomination of $2,000 face, then $1,000 increments, on the 2032 and 2036 notes Kroger offered in September 2026 | Median asking price of $3.22M in the listings we track |
| Liquidity | Trades over the counter through dealers | Sold by negotiated sale with due diligence and closing; timing varies |
| Income taxation | Interest taxed as ordinary income (26 U.S.C. 61(a)(4)) | Rent taxed as ordinary income (26 U.S.C. 61(a)(5)), partly offset, for a fee simple owner, by depreciation of the building (land is not depreciable; Treas. Reg. 1.167(a)-2) |
| 1031 exchange | Not eligible (26 U.S.C. 1031(a)(1) applies only to real property) | Eligible if held for investment or business use and exchanged for like-kind real property (26 U.S.C. 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 Kroger’s rating category via FRED, as of October 1, 2026; it is an index average, not a quote on Kroger’s own bonds. Cap rate: median asking cap rate on active listings InvestmentGrade.com tracks (latest listing update October 16, 2026); asking cap rates are not closed-sale cap rates. The spread is computed from unrounded inputs, so it can differ by a basis point from the difference between the rounded figures shown. n/a means too few listings to report a median.
Reading the Spread
Ground leases, where the landlord owns only the land, and fee simple properties, where the landlord also owns the building, are different investments. Across the active listings InvestmentGrade.com tracks with an asking cap rate, as of October 8, 2026, the 778 listings flagged as ground leases asked a median of 5.25%, the 4,157 flagged as not ground leases asked 6.50%, and the 1,736 that did not say asked 6.63%. The flags come from listing descriptions, not reviewed leases or title records, so a listing not flagged as a ground lease is not thereby confirmed as fee simple, and the groups also differ in tenant, location and term. The gap is an observed difference between groups of listings, not a measure of the effect of ownership structure alone.
The two structures have different tax results: a ground lease owner has no building to depreciate (land is not depreciable under Treas. Reg. 1.167(a)-2), while a fee simple owner can depreciate the building. Compare like with like when reading a spread.
After-Tax Illustration
The table below is a hypothetical illustration, not a forecast, of one full year of after-tax cash on $2,000,000 invested with no financing. Its key assumptions: the bond column is a hypothetical bond bought at par whose annual coupon equals the BBB index effective yield shown, not a quote on any Kroger note; the NNN column is a hypothetical fee simple purchase, where the investor owns the building, at a cap rate equal to the live median asking cap rate on Kroger listings, which mix ground leases and other structures, so the NNN column does not describe any actual Kroger property; 20% of the price is allocated to land; and both incomes are taxed at a combined 40.8% federal rate, with no other income, deductions or expenses. Actual notes differ from an index: Kroger’s 6.200% senior notes due 2036, for example, priced at 99.756% of face to yield 6.232% on September 28, 2026 (pricing term sheet filed with the SEC). For a land-only ground lease, the owner has no building to depreciate, so under the same assumptions both incomes would be taxable in full.
| One full year, $2,000,000 invested, all cash | Bond at 6.19% (BBB index) | NNN at 5.00% cap rate |
|---|---|---|
| Pre-tax income | $123,800 | $100,000 |
| Depreciation (building only, 80% of price over 39 years) | $0 | $41,026 |
| Taxable income | $123,800 | $58,974 |
| Federal tax at 40.8% | $50,510 | $24,062 |
| After-tax cash | $73,290 (3.66%) | $75,938 (3.80%) |
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
How is Kroger rated?
The Kroger Co. is rated BBB by S&P and Baa1 by Moody’s, per our ratings database.
Do Kroger ground leases offer depreciation?
No. A ground lease owner owns land, which is not depreciable (Treas. Reg. 1.167(a)-2). The cost of a building on leased land is recovered by the lessee or lessor that paid for it (Treas. Reg. 1.167(a)-4); in a land-only ground lease, that is not the land owner.
What happened to the Kroger and Albertsons merger?
A federal court blocked it in December 2024, and the companies terminated the agreement.
What is the spread between Kroger bonds and NNN cap rates?
The median asking cap rate on the Kroger listings InvestmentGrade.com tracks is 5.00% (latest listing update October 16, 2026) against a BBB index effective yield of 6.19% as of October 1, 2026, a difference of −119 bps computed from unrounded inputs. Those listings mix ground leases, fuel centers and supermarket buildings, so the figure is not a like-for-like comparison for any single property.
Considering Kroger Net Lease Property?
We source Kroger 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; the listing broker pays a cooperating commission.
Find it: Kroger properties across lease terms and markets.
Fund it: financing matched to the tenant’s credit and the remaining lease term.
Exit it: buyers for Kroger 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.
