Lowe’s and Home Depot are the two largest home improvement retailers in the world, and in net lease they are the definitive institutional big-box pair. Both carry investment grade credit ratings, both sign 20-year ground-lease structures on 10–15 acre parcels, and both trade in the $15M–$35M range that puts them squarely in institutional and large family-office territory. The differences are at the margin, and at this end of the credit spectrum the margins are exactly what sophisticated buyers pay attention to: a two-notch rating gap (A/A2 versus BBB+/Baa1) that translates into only about 25 basis points of cap rate separation.
This comparison follows the framework of the investment grade guide: rating, lease, real estate, then price. For buyers deciding between the two orange-and-blue boxes, the answer turns less on which credit is “better” and more on what a quarter point of yield is worth against two notches of rating cushion.
Lowe’s vs Home Depot: Head-to-Head Comparison
| Metric | Lowe’s | Home Depot |
|---|---|---|
| S&P / Moody’s Rating | BBB+ / Baa1 | A / A2 |
| US Locations | ~1,750 | ~2,000 |
| Cap Rate Range (2026) | 4.5% – 5.5% | 4.25% – 5.25% |
| Typical Lease Term | 20-year absolute NNN / ground lease | 20-year NNN ground lease |
| Escalations | ~2.0–2.5% annual | Fixed escalations / renewal bumps |
| Guarantee | Corporate (Lowe’s Companies Inc.) | Corporate (The Home Depot, Inc.) |
| Typical Building | 130,000–170,000 SF on 10–15 acres | 100,000–130,000 SF on 10–15 acres |
| Typical Deal Size | $15M – $35M | $15M – $35M |
| Annual Revenue | ~$83B class (FY2025) | $159.5B (FY2025) |
| Ticker | LOW (NYSE) | HD (NYSE) |
Credit Rating: Upper Tier vs Top Tier
Home Depot holds A from S&P and A2 from Moody’s, both stable, placing it among the highest-rated tenants in all of retail net lease. The ratings rest on roughly 10% share of the home improvement market, $159.5 billion of FY2025 revenue, and the $18.25 billion SRS Distribution acquisition that deepened its professional contractor franchise. An A/A2 guarantee has minimal vulnerability to adverse conditions; for fiduciary capital that must justify every basis point of credit risk, Home Depot is close to the ceiling of what retail real estate offers. Full detail is on the Home Depot credit rating and cap rate page.
Lowe’s, at BBB+/Baa1, is hardly a concession. It sits three notches above the BBB‑/Baa3 cutoff, runs about 1,750 US stores, and maintains debt-to-EBITDA below 2.5x with interest coverage above 4x. The two-notch gap to Home Depot reflects scale and market-share leadership rather than any weakness in Lowe’s standalone profile. Both companies have weathered multiple housing cycles without rating stress, and both are profiled in the credit tenant ratings database; Lowe’s full profile is on the Lowe’s credit rating and cap rate page.
Cap Rates: What 25 Basis Points Buys
Home Depot trades at 4.25–5.25% and Lowe’s at 4.5–5.5%. On a $25 million acquisition, the quarter-point spread is roughly $62,500 of additional annual income for taking the BBB+ guarantee instead of the A. Whether that trade makes sense depends on the buyer: an institution matching liabilities against a 20-year income stream may prefer the A-rated paper at any spread this small, while a yield-driven family office will note that Lowe’s has never threatened its investment grade status and pockets the difference.
Within each range, pricing is driven by the usual big-box variables: remaining base term, whether the deal is a fee-simple sale or a ground lease, market rent coverage, and the strength of the retail corridor. Both tenants’ boxes anchor power centers, so corridor health and co-tenancy matter for residual value even though the leases themselves are corporate-guaranteed.
Lease Structure: Two Versions of the 20-Year Ground Lease
Both tenants sign 20-year initial terms with multiple 5-year options, and both commonly use ground-lease structures in which the tenant owns its improvements and the investor owns the land. Lowe’s leases typically carry 2.0–2.5% annual escalations, an unusually strong pattern for big-box retail that compounds meaningfully over a 20-year term. Home Depot paper more often uses fixed escalations or renewal-option bumps, trading escalation growth for the stronger guarantee.
Ground-lease mechanics cut both ways at this scale. The land-only basis gives the investor a residual claim on 10–15 acres of infill commercial land, often the best-located large parcel in the trade area. But a 100,000+ square foot box has few like-for-like replacement tenants if the retailer ever leaves, which is why both credits’ rating stability, more than their absolute level, is the real underwriting anchor.
The Bond-to-NNN Pivot: Same Credits, Two Markets
Both companies are benchmark investment grade bond issuers, which makes the real estate comparison unusually clean. Home Depot senior notes yield in the high-4% to low-5% area at intermediate maturities; Home Depot NNN ground leases at 4.25–5.25% price nearly on top of the bonds, yet add depreciation on improvements (where included), 1031 exchange eligibility, escalations, and residual land value. Lowe’s bonds yield modestly wider, and Lowe’s real estate at 4.5–5.5% plus 2–2.5% annual escalations out-earns the paper on a total-return basis within a few years. The side-by-side math for each credit lives on the Lowe’s bonds vs NNN page and the Home Depot bonds vs NNN page, with the full sector framework at the investment grade bonds hub.
Which NNN Investment Wins in 2026?
Choose Home Depot if the mandate prioritizes credit quality above all else. A/A2 is as strong as national retail tenancy gets, the SRS acquisition deepens the Pro moat that insulates the business from e-commerce pressure, and the slightly tighter cap rate is a small price for top-tier paper on a 20-year term.
Choose Lowe’s if you want the annual escalation engine and the extra quarter point. A BBB+/Baa1 tenant with 2.0–2.5% annual bumps will typically out-yield a flat-escalation A-rated lease on cumulative income well before year ten, and three notches of cushion above the cutoff is ample rating headroom for a 20-year hold.
In practice, the deal usually decides. Inventory at this size is thin, and buyers with a $20M+ exchange or allocation typically evaluate whichever of the two is actually on market in their target geography. Both are core, financeable, institutional credits; neither is a mistake.
Lowe’s vs Home Depot: Frequently Asked Questions
What credit ratings do Lowe’s and Home Depot have?
Home Depot is rated A by S&P and A2 by Moody’s; Lowe’s is rated BBB+ by S&P and Baa1 by Moody’s. Both are solidly investment grade, with Home Depot two notches higher and Lowe’s still three notches above the BBB‑/Baa3 cutoff.
What cap rates do Lowe’s and Home Depot NNN properties trade at?
In 2026, Home Depot trades at roughly 4.25–5.25% and Lowe’s at 4.5–5.5%. The ~25 basis point spread reflects the two-notch rating difference, with pricing inside each range driven by remaining term, structure, and corridor quality.
Why do Lowe’s and Home Depot deals cost $15M to $35M?
Both tenants occupy 100,000–170,000 square foot buildings on 10–15 acre parcels generating multi-million-dollar annual rents. At 4.25–5.5% cap rates, that rent capitalizes to $15M–$35M, placing these assets in institutional and large 1031 exchange territory.
Which has better lease escalations, Lowe’s or Home Depot?
Lowe’s, typically. Lowe’s leases commonly carry 2.0–2.5% annual escalations, while Home Depot paper more often uses fixed escalations or bumps at renewal options. Over a 20-year term, the Lowe’s structure usually produces higher cumulative income despite the slightly wider cap rate.
Are Lowe’s and Home Depot ground leases or fee-simple NNN deals?
Both. Many offerings are ground leases in which the tenant owns its building and the investor owns the land, prized for residual land value on large infill parcels. Fee-simple structures also trade and typically price slightly differently based on depreciable basis and financing terms.
Evaluating a big-box net lease acquisition or a $15M+ exchange? We track Lowe’s, Home Depot, and every major investment grade big-box tenant, including live inventory, cap rate movement, and ground lease structures. Request a buyer consultation for a deal-level comparison.
