Tractor Supply is an investment grade rural lifestyle retailer that leases about 97% of its stores (Form 10-K for fiscal 2025). Today the median asking cap rate on Tractor Supply listings is 6.10% against a BBB bond index yield of 6.19%, a spread of −9 bps.
Confirm whether the lease is signed by Tractor Supply Company or a subsidiary. See the Tractor Supply credit rating and NNN cap rate page.
Tractor Supply Credit Profile
| Metric | Details |
|---|---|
| S&P rating / outlook | BBB (Stable) |
| Moody’s rating / outlook | Baa1 (Stable) |
| Status | Investment Grade |
| Rated entity in our database | Tractor Supply Company |
| Rating type | Senior unsecured debt (fiscal 2025 Form 10-K) |
| Rating sources | S&P Global Ratings BBB, Stable, as of February 19, 2026; Moody’s Baa1, Stable, as of February 19, 2026. Ratings checked October 8, 2026. |
The Spread: Tractor Supply Bonds vs. NNN
The comparison uses the bond index yield for Tractor Supply’s rating category against the median asking cap rate on active Tractor Supply listings.
| Metric | Tractor Supply bonds (rating-category index) | Tractor Supply net lease properties |
|---|---|---|
| Yield measure today | 6.19% (ICE BofA BBB index) | Median asking cap rate 6.10% (39 listings with a cap rate) |
| Spread, cap rate minus index yield | Baseline | −9 bps |
| Obligor | The issuing entity named in the bond’s indenture | The entity that signs or guarantees the lease |
| Minimum size | $2,000 minimum denomination on Tractor Supply’s 5.200% notes due 2032 (prospectus supplement, August 2026) | $6.14M median asking price |
| How it trades | The company does not intend to list the notes on an exchange (same prospectus supplement) | Sold property by property in negotiated sales; timing varies |
| Income taxation | Interest is included in gross income (IRC 61(a)(4)) and taxed at ordinary rates | Rent is included in gross income (IRC 61(a)(5)), partly offset by depreciation of an owned building (land is not depreciable, IRS Publication 946) |
| 1031 exchange | Not available; IRC 1031(a)(1) covers only real property | Can qualify when real property held for business or investment use is exchanged for like-kind real property (IRC 1031(a)(1)); conditions apply |
| 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 Tractor Supply’s rating category via FRED, as of October 1, 2026; it is an index average, not a quote on Tractor Supply’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.
Factors Behind the Spread
Tractor Supply says its stores are located primarily in towns outlying major metropolitan markets and in rural communities, and that its store leases typically have initial terms of between 10 and 20 years (Form 10-K for fiscal 2025). 28% of the active Tractor Supply listings we track that state a year built are new construction, with a stated year built of 2026 or later. Location, remaining term, rent schedule and landlord duties can each affect a property’s cap rate, and the spread shown here does not isolate any one of them.
After-Tax Illustration
The table compares one full year of after-tax cash from a bond position and an all-cash net lease purchase of the same size. The bond column assumes a hypothetical bond bought at par that pays an annual coupon equal to today’s index yield; Tractor Supply’s own notes have their own coupons, prices and payment dates. The property column assumes the median asking cap rate, a fee simple purchase in which the investor owns and depreciates the building, and the other assumptions listed below the table. Much of any after-tax advantage for the property comes from depreciation. On a taxable sale, gain attributable to depreciation on the building is generally taxed at up to 25% as unrecaptured section 1250 gain (IRC 1(h)(1)(E) and 1(h)(6)), so depreciation-related tax on a taxable gain can reduce the advantage shown for a single year. The result over a full holding period depends on the sale price and timing, costs, rent changes, the use of deductions and whether the property is exchanged, which this illustration does not model. This is general information, not tax advice.
| One full year, $2,000,000 invested, all cash | Bond at 6.19% (BBB index) | NNN at 6.10% cap rate |
|---|---|---|
| Pre-tax income | $123,800 | $122,000 |
| Depreciation (building only, 80% of price over 39 years) | $0 | $41,026 |
| Taxable income | $123,800 | $80,974 |
| Federal tax at 40.8% | $50,510 | $33,038 |
| After-tax cash | $73,290 (3.66%) | $88,962 (4.45%) |
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 Tractor Supply bonds and NNN cap rates?
Today the median asking cap rate on Tractor Supply listings is 6.10% against a BBB bond index yield of 6.19%, a spread of −9 bps.
How is Tractor Supply rated?
Tractor Supply Company is rated BBB (Stable) by S&P and Baa1 (Stable) by Moody’s, per our ratings database. These are ratings of its senior unsecured debt, as described in the company’s fiscal 2025 Form 10-K, filed February 19, 2026.
Considering Tractor Supply Net Lease Property?
We source Tractor Supply 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: Tractor Supply properties across lease terms and markets.
Fund it: financing matched to the tenant’s credit and the remaining lease term.
Exit it: buyers for Tractor Supply 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.
