Walmart and Costco are the two strongest credits in big box net lease, and comparing them is unlike comparing any other tenant pair: both sit so far above the investment grade threshold that credit risk is essentially not the question. Walmart carries AA/Aa2, Costco carries A+/A1, and both trade at cap rates of 4.0%–5.0%, at or even below the yields on their own corporate bonds. Our investment grade guide explains the full ratings scale; this page applies it to the two most institutionally coveted retail tenants in America and shows what actually separates them for a buyer.
Quick verdict: Walmart offers the higher rating (AA/Aa2 vs A+/A1), a far larger footprint (4,700 US locations vs about 620), and lower entry price points ($15M–$40M vs $20M–$50M). Costco offers arguably the scarcer asset: roughly 620 very-large-format warehouses that almost never trade, backed by a membership model with recurring fee income. Cap rates are effectively identical at 4.0%–5.0%, so the decision is about format, scarcity, and check size rather than yield.
Walmart vs Costco: Side-by-Side Comparison
| Metric | Walmart | Costco |
|---|---|---|
| S&P Rating | AA | A+ |
| Moody’s Rating | Aa2 | A1 |
| US Store Count | 4,700 | ~620 |
| Cap Rate Range (2026) | 4.0%–5.0% | 4.0%–5.0% |
| Typical Primary Lease Term | 25 years | 25 years (ground lease) |
| Escalations | Minimal; concentrated in options | Minimal annual increases |
| Guarantee | Corporate (Walmart Inc.) | Corporate (Costco Wholesale Corporation) |
| Typical Price Point | $15M–$40M | $20M–$50M |
| Annual Revenue | $681B (FY2026) | $260B (FY2025) |
| Typical Building Format | Supercenter 150,000–220,000 SF | Warehouse 145,000–160,000 SF on 15–20 acres |
Cap rate ranges reflect 2026 market conditions and vary with location, remaining term, and lease structure. Data sourced from our Walmart and Costco tenant profiles.
Credit Rating Comparison: AA/Aa2 vs A+/A1
Walmart holds AA from S&P and Aa2 from Moody’s, both with Stable outlooks. That places the world’s largest retailer in the uppermost echelon of corporate credit, seven to eight notches above the BBB‑/Baa3 investment grade cutoff. Only a handful of corporate tenants anywhere in net lease carry ratings this high, and the market treats a 25-year Walmart guarantee as close to a sovereign-quality income stream as retail real estate gets.
Costco holds A+ from S&P and A1 from Moody’s, two notches below Walmart and still five to six notches inside investment grade. The membership warehouse model is the reason: member fee income is high-margin, recurring, and renews above 90%, giving Costco earnings stability that most retailers cannot match. For practical underwriting purposes, neither tenant carries meaningful default risk over a typical hold period; the rating gap shows up in institutional portfolio construction rather than in pricing. Both tenants anchor the top of our credit tenant ratings index alongside 180 other rated net lease tenants.
Cap Rate Comparison: When Two Tenants Price the Same
Both Walmart and Costco NNN properties trade between 4.0% and 5.0%, among the tightest cap rates in all of net lease. The lower end of the range applies to strong-demographic, high-volume locations, especially ground leases; secondary markets price toward 4.5%–5.0%. That identical pricing is itself informative: the market is saying the credit difference between AA and A+ is not worth basis points at this level, because neither is expected to miss a rent payment in any plausible scenario.
What does differ is availability. Walmart operates 4,700 US locations and its real estate trades regularly enough that patient buyers can find inventory. Costco operates roughly 620 warehouses, owns most of its real estate outright, and leased Costco assets come to market rarely; scarcity, not credit, is what pushes trophy Costco ground leases to the very bottom of the cap rate range. Full underwriting detail on each tenant: Walmart credit rating & NNN cap rate and Costco credit rating & NNN cap rate.
Lease Structure: Term, Escalations, and Guarantee
Both tenants sign 25-year corporate-guaranteed leases, the longest standard terms in big box retail, and both favor ground lease structures on their large-format stores. There is no franchisee obligor risk with either: the entity on the lease is the rated parent itself, Walmart Inc. or Costco Wholesale Corporation.
The trade-off both tenants extract for that term and credit is escalation structure. Walmart and Costco leases typically carry minimal rent growth, with increases concentrated in option periods or set at modest fixed levels. A buyer at a 4.25% cap rate is accepting decades of largely flat income from an ultra-safe payer, which behaves much like a long-duration bond position: highly sensitive to interest rates, insensitive to credit. Underwriting should focus on land value and replaceable market rent rather than on income growth, because the dirt under a 15–20 acre Costco parcel or a Supercenter pad is a major component of total return.
Store Footprint and Real Estate Strategy
Walmart’s 4,700 US locations span Supercenters, discount stores, and neighborhood markets across every state and demographic band, supported by $681B in FY2026 revenue and e-commerce growth above 20%. The company’s omnichannel investment keeps its physical stores central to fulfillment, which supports long-term occupancy of well-located real estate.
Costco’s roughly 620 US warehouses average 145,000–160,000 square feet on 15–20 acre parcels and open at a measured pace of about 30 new warehouses per year globally. Each warehouse draws from a large trade area of loyal members, making Costco one of the most powerful traffic anchors in retail. The very-large-format footprint limits the buyer universe to institutions and larger private investors, but it also means each asset is effectively irreplaceable in its trade area.
Bond Yields vs NNN Cap Rates: The Pivot
Both companies are benchmark corporate bond issuers, and here the comparison turns unusual: Walmart and Costco NNN cap rates sit at or even below the yields on the companies’ own bonds. The nominal spread is near zero or negative, which looks irrational until the after-tax math is included. Bondholders receive fully taxable coupons with no depreciation shelter, no 1031 exchange eligibility, and no residual asset. The NNN owner of the same credit receives depreciation deductions, the ability to defer gains indefinitely through 1031 exchanges, and ownership of increasingly valuable land under a proven location.
For high-tax-bracket investors, a 4.5% Walmart or Costco cap rate can out-earn the same company’s bond after taxes, which is precisely why trophy assets on these credits trade through their bond yields. Full comparisons: Walmart bonds vs NNN and Costco bonds vs NNN.
Which Tenant Fits Which Buyer?
Choose Walmart if you want the highest rating available in big box net lease, a deeper pool of available inventory across formats and price points ($15M–$40M), and maximum flexibility on geography. Walmart is the more practical target for a 1031 exchange buyer working against a 45-day identification deadline, simply because assets actually come to market.
Choose Costco if you can write the larger check ($20M–$50M), have time to wait for scarce inventory, and want the single most defensible traffic anchor in retail on an irreplaceable parcel. Costco ground leases are generational holds: the kind of asset families and institutions buy intending never to sell.
Talk to a buyer’s broker before you commit. Walmart and Costco assets trade quickly and quietly, often off market. We track live comps on both tenants and can benchmark any asking price within 48 hours. Request a buyer consultation and tell us your target cap rate, geography, and equity check size.
Frequently Asked Questions
Is Walmart or Costco a better NNN investment?
Both trade at 4.0%–5.0% cap rates on 25-year corporate-guaranteed leases, so neither offers a yield advantage. Walmart offers a higher rating (AA/Aa2 vs A+/A1), more available inventory, and lower entry prices; Costco offers greater scarcity and one of the strongest traffic-anchor formats in retail. The right choice depends on check size, timing, and whether the buyer values liquidity or scarcity.
What are the credit ratings of Walmart and Costco?
Walmart is rated AA by S&P and Aa2 by Moody’s, both Stable. Costco is rated A+ by S&P and A1 by Moody’s. Both sit far above the BBB‑/Baa3 investment grade threshold and rank among the strongest tenant credits in all of net lease real estate.
What cap rates do Walmart and Costco NNN properties trade at?
Both tenants trade between 4.0% and 5.0% in 2026, among the lowest cap rates in net lease. Premium ground leases in strong trade areas price at the low end; secondary markets price toward 4.5%–5.0%. Both frequently trade at or below the yield on the company’s own corporate bonds because of the tax advantages of real estate ownership.
Why would anyone buy a Walmart NNN at a cap rate below the Walmart bond yield?
Because after-tax returns differ. NNN owners receive depreciation deductions, 1031 exchange eligibility, and residual land value; bondholders receive none of these. For high-bracket investors the after-tax income from the real estate can exceed the after-tax bond coupon on the identical credit, justifying a negative nominal spread.
Which is easier to buy in a 1031 exchange?
Walmart, in most cases. With 4,700 US locations, Walmart assets reach the market far more often than leased Costco warehouses, of which only about 620 exist. Costco inventory is scarce enough that finding one inside a 45-day identification window is unrealistic without advance off-market sourcing.
