Sherwin-Williams and Tractor Supply are the rare net lease matchup where the credit ratings are literally identical: both carry BBB from S&P and Baa2 from Moody’s, both with stable outlooks, and both guarantee every lease at the corporate level with zero franchisee exposure. When two investment grade tenants match notch for notch, the comparison stops being about credit and becomes a pure test of real estate, escalations, and business model, which is exactly what makes this pair so instructive for 1031 buyers shopping the $2 million to $5 million small-format band.
One is the world’s largest paint company running 4,700 company-owned stores on 10 to 15-year leases. The other is America’s dominant rural lifestyle retailer running 2,200 stores on 15-year leases with the most aggressive escalation schedule in its class. Same rating, different machines. How the BBB/Baa2 notch itself fits the broader scale is covered in our investment grade guide.
Sherwin-Williams vs Tractor Supply: Head-to-Head NNN Metrics
| Metric | Sherwin-Williams | Tractor Supply |
|---|---|---|
| S&P / Moody’s Rating | BBB / Baa2 (Stable) | BBB / Baa2 (Stable) |
| US Locations | ~4,700 company-owned stores | ~2,200 |
| Annual Revenue | ~$23B | ~$15B |
| Cap Rate Range | 5.50%–6.75% | 5.75%–7.0% |
| Typical Lease Term | 10–15 years | 15 years |
| Escalations | Standard fixed increases | 10% every 5 years |
| Guarantee | Corporate (The Sherwin-Williams Company) | Corporate (Tractor Supply Company) |
| Store Format | Small-format paint stores | 15,000–22,000 sq ft on 2–5 acres |
| Typical Price Range | Generally under $5.0M | $2.5M–$5.0M |
| Ticker | SHW (NYSE) | TSCO (NASDAQ) |
Data from InvestmentGrade.com tenant profiles as of Q3 2026. Both tenants operate 100% company-owned store models; no franchisee guarantee analysis is required on either.
Credit Comparison: A Dead Heat on Paper
There is no rating daylight between these two tenants, and that is the headline. Sherwin-Williams’ BBB/Baa2 reflects the dominant global position in paint and coatings, roughly $23 billion in revenue diversified across retail, industrial, and professional channels, and a 160-year operating history. Tractor Supply’s identical BBB/Baa2 reflects a narrower but extraordinarily defensible niche: rural lifestyle retail with no national competitor, need-based demand, and unit economics that have supported 70+ new stores a year without straining the balance sheet. Both entries sit side by side in our credit tenant ratings index.
The difference is what stands behind the rating. Sherwin-Williams is the larger, more diversified enterprise, arguably the more resilient credit in a deep construction downturn given its professional contractor base. Tractor Supply is the faster-growing retailer with the more recession-tested consumer demand. Rating agencies call it even; buyers should read the two annual reports and decide which risk profile they prefer, because the lease documents will not settle it.
Neither tenant has a franchise layer. Every Sherwin-Williams store and every Tractor Supply store is company-operated, so every lease is direct corporate paper from the rated entity. This is the cleanest guarantee structure in net lease, shared by both sides of this comparison.
Cap Rate Analysis: 25 Basis Points and an Escalation Schedule
The published ranges nearly overlap: 5.50% to 6.75% for Sherwin-Williams against 5.75% to 7.0% for Tractor Supply, a modest 25-basis-point premium for the rural retailer at both ends. With identical credit, that spread is pricing real estate factors: Sherwin-Williams stores sit in denser suburban retail corridors with more re-tenanting depth, while Tractor Supply’s rural and exurban parcels carry thinner local backfill markets.
The escalation schedules break the tie economically. Tractor Supply’s 10% bump every five years compounds to roughly 21% rent growth over a 15-year term. Sherwin-Williams leases typically carry standard fixed increases at more conventional levels. A buyer at similar going-in caps ends up with a visibly higher rent line in year 11 on the Tractor Supply lease, which is much of the argument for accepting the rural location profile.
Lease and Real Estate Structure
Sherwin-Williams operates compact paint stores, frequently inline or small freestanding formats, on 10 to 15-year NNN leases. The small footprint is the residual-risk advantage: if a store ever closes, the box re-leases to the broadest tenant pool in retail. The company’s contractor-driven business also makes individual locations sticky, since pro customers build supply relationships around specific stores.
Tractor Supply’s 15,000 to 22,000-square-foot boxes with fenced outdoor display sit on 2 to 5 acres in rural and exurban trade areas. The format is larger and the locations thinner, but the company’s store-level economics are strong enough that closures are rare, and the building spec suits farm, hardware, and discount users if backfill is ever needed. Both assets trade in the accessible sub-$5 million band where individual 1031 buyers dominate.
Growth Trajectory
Tractor Supply is the clear growth engine, adding 70+ stores annually toward a 3,000-store target and continuously feeding new 15-year paper into the 1031 market. Sherwin-Williams grows its store base steadily but at a more measured pace relative to its 4,700-store installed footprint, so investment supply skews toward existing assets with seasoned terms. Buyers who want maximum remaining term will find it easier to source in Tractor Supply inventory; buyers who prioritize infill locations will find them more often under a Sherwin-Williams sign.
Bond-to-NNN Pivot: Two Positive Spreads on the Same Notch
Both companies issue in the investment grade bond market, and both offer the real estate buyer a genuine positive spread. Sherwin-Williams senior bonds have recently yielded near 5.15% against NNN caps of 5.50% to 6.75%, roughly 35 to 160 basis points of pickup on identical credit, detailed in our Sherwin-Williams Bonds vs NNN analysis. Tractor Supply bonds near 5.05% against 5.75% to 7.0% caps produce roughly 70 to 195 basis points, covered in our Tractor Supply Bonds vs NNN analysis. Layer depreciation, 1031 deferral, and escalations on top, and the after-tax gap widens further in the real estate’s favor for both names, with Tractor Supply offering the larger nominal cushion.
Verdict: Which NNN Investment Wins?
Choose Sherwin-Williams if you want the larger, more diversified enterprise behind the same BBB/Baa2 rating, denser suburban real estate with the deepest re-tenanting pool in small-format retail, and slightly tighter pricing. Choose Tractor Supply if you want longer initial terms, 10%-per-5-year escalations, a wider bond-to-NNN spread, and a steady pipeline of new-build full-term supply, accepting rural locations as the trade. With credit removed from the argument, Tractor Supply wins on lease economics and Sherwin-Williams wins on real estate fundamentals. That is the entire decision, and it is refreshingly clean.
Sherwin-Williams vs Tractor Supply NNN: Frequently Asked Questions
Is Sherwin-Williams or Tractor Supply a better NNN credit?
They are rated identically: BBB from S&P and Baa2 from Moody’s, both stable, and both guarantee every lease at the corporate level. Sherwin-Williams is the larger and more diversified enterprise, while Tractor Supply is the faster-growing retailer, so the choice rests on business-model preference rather than rating.
What are typical Sherwin-Williams and Tractor Supply cap rates in 2026?
Sherwin-Williams NNN properties trade between 5.50% and 6.75%, with long-term leases in primary markets at the tight end. Tractor Supply trades between 5.75% and 7.0%, about 25 basis points wider, reflecting its rural location profile rather than any credit difference.
Do Sherwin-Williams or Tractor Supply use franchisees?
No. Both companies operate 100% company-owned store models, so every lease carries a direct corporate guarantee from the BBB/Baa2 rated parent. There is no franchisee credit layer to underwrite on either tenant.
Which tenant has stronger lease escalations?
Tractor Supply, decisively. Its standard 10% increase every five years compounds to roughly 21% rent growth over a 15-year term, well above the conventional fixed increases in typical Sherwin-Williams leases. At similar going-in caps, the Tractor Supply rent line pulls ahead by the middle of the hold.
How do their bond yields compare to NNN cap rates?
Sherwin-Williams bonds have recently yielded about 5.15% against 5.50%–6.75% NNN caps, a 35 to 160 basis point real estate premium. Tractor Supply bonds near 5.05% against 5.75%–7.0% caps offer roughly 70 to 195 basis points. Both real estate positions add depreciation, 1031 eligibility, and escalations the bonds cannot match.
Comparing small-format IG retail for an exchange? We source live Sherwin-Williams and Tractor Supply inventory, verify lease terms against the ranges above, and model both escalation schedules side by side. Request a buyer consultation before your 45-day identification clock forces the choice.
