Dollar stores sell $1 items in modest buildings with minimal square footage. They don’t look like the kind of asset that anchors a high-net-worth investor’s portfolio. But, for decades, they have been among the most sought-after tenants in the triple net lease market, and the reasons extend beyond the simplicity of the lease structure.
The dollar store sector commands attention because it thrives in conditions that hurt most other retailers. Economic pressure, population shifts to rural areas, inflation on essential goods, and competition from e-commerce all work in the dollar store’s favor rather than against it. But the three major chains — Dollar General, Dollar Tree, and Family Dollar — are no longer equivalent NNN tenant choices. Their credit profiles, business trajectories, and ownership structures have diverged sharply since mid-2025.
Investors who understand the distinctions can make informed, confident decisions. Those who treat all three as interchangeable may take on more risk than their cap rate reflects.
Why Dollar Stores Work as NNN Tenants in the First Place
The value proposition of a dollar store as a NNN tenant comes down to one word: necessity.
Approximately 80% of Dollar General stores serve communities of 20,000 or fewer people, with many Americans — especially in rural areas — relying on the retailer for basic, everyday household essentials. These stores don’t compete with Walmart. They go where Walmart doesn’t, and where no other grocery or general merchandise option exists. That community dependency creates a level of tenant stickiness that discretionary retailers cannot match.
Dollar stores serve budget-conscious consumers with essential product mixes that generate steady demand regardless of the broader economic cycle. Investment-grade credit ratings, long-term lease commitments, and corporate guarantees all become especially important when evaluating tenant strength.
The business model also aligns with the NNN lease structure. Dollar stores operate small-footprint, low-maintenance buildings. They sign long lease terms, their rent obligations are corporately guaranteed, and their customer base expands (rather than contracts) during economic downturns. Dollar stores became a fast-growth retail channel for food purchases, with an 89.7% increase between 2008 and 2020.
That countercyclical strength is what makes them attractive NNN tenant candidates. But the strength of any specific investment depends on which chain occupies the building.
Dollar General: The Largest Chain, Now at a Credit Crossroads
Dollar General operates more than 20,900 stores across 48 states and has added international locations in Mexico. 75% of the US population now lives within five minutes of a Dollar General store. They operate one of the most extensive retail networks in American history.
The lease structure on new Dollar General builds is straightforward for NNN investors. New stores carry NNN leases with 15-year initial terms, 10% rent increases every five years, and full corporate guarantees. New builds typically sell between $1 million and $2 million, which creates an accessible entry point relative to other NNN tenants with similar credit profiles.
The credit picture, however, requires an updated context.
Moody’s downgraded Dollar General in March 2025 from Baa2 to Baa3. For investors, that shift has two practical effects. First, cap rates on Dollar General properties have widened slightly relative to their historical norms, which means better returns for buyers at current pricing. Second, the credit monitoring conversation becomes more important. A tenant at Baa3 on Moody’s warrants closer attention to lease duration and location quality than a Baa2 or A-rated tenant would.
Dollar General’s operational response to these pressures is worth noting. The company’s Project Elevate initiative is a major remodel program across its store fleet, adding expanded coolers and fresh produce to modernize locations and lift per-store sales. That investment signals commitment to the network rather than contraction. Our quarterly Dollar General tenant profile and dollar store investment analysis cover the lease economics in detail for investors who want to go deeper on the numbers.
Dollar Tree: A Cleaner Credit Profile After a Major Restructure
Dollar Tree has undergone the most significant strategic transformation of the three chains. Dollar Tree completed the sale of its struggling Family Dollar business to private equity firms Brigade Capital Management and Macellum Capital Management for a base purchase price of $1.01 billion in cash in July 2025, ending a relationship that began with a $9 billion acquisition in 2015.
The decision to sell at a fraction of the purchase price was painful, but the credit result has been positive. Dollar Tree now carries a higher Moody’s rating of Baa2 than Dollar General’s Baa3 — a reversal from historical norms — and S&P affirmed Dollar Tree at BBB with a stable outlook in January 2025.
With Family Dollar off its books, Dollar Tree has refocused on its core banner with a multi-price format that goes beyond the original $1 price point and targets a broader income demographic. The company operates approximately 2,900 locations with plans for continued expansion.
For NNN investors, Dollar Tree’s lease structure offers corporate-guaranteed income backed by a company that — post-divestiture — carries less operational complexity and cleaner financials than it did during the Family Dollar years. The store count is smaller than Dollar General’s, which means less inventory on the market, but the credit quality of the remaining portfolio is stronger.
Family Dollar: What Every NNN Investor Needs to Know Right Now
Family Dollar’s story is the most important one for investors to understand before they evaluate any dollar store property, because the rules changed in 2025.
Dollar Tree purchased Family Dollar in 2015 for $9 billion. After the sale, the chain struggled with messy stores, high prices, and over-expansion in the years that followed, and Dollar Tree closed more than 1,000 locations before completing the sale to private equity in July 2025.
The consequence for NNN investors is direct. Family Dollar is now owned by private equity with no public credit rating, and new leases no longer carry a Dollar Tree corporate guarantee. Legacy leases signed before the July 2025 sale still benefit from Dollar Tree backing, but these will diminish over time. Cap rates on Family Dollar properties have widened to 50 to 100 or more basis points above Dollar General, reflecting the elevated re-tenanting risk of single-purpose buildings.
That distinction separates two genuinely different investment scenarios that share a tenant name.
A Family Dollar property with a legacy lease — signed before July 2025 and backed by Dollar Tree’s corporate guarantee — is a different investment from a Family Dollar property signed after the sale under the new private entity. The former carries investment-grade credit support. The latter carries the credit profile of a private equity-owned retailer with no public rating and an ongoing store rationalization program.
There are signs of operational improvement under new ownership. Family Dollar generated approximately $13 billion in revenue with comparable sales growth of 2.5% in fiscal year 2025, and the company expects positive comparable sales growth in 2026, alongside a $300 million improvement in net debt since the separation from Dollar Tree. Operational improvement for a private company, however, is not the same as the public credit transparency that NNN investors rely on for long-term lease security.
Our 2026 Retail Tenant Health Check addresses this category of tenant risk across the broader retail landscape, and our guide to tenant credit ratings explains how to read the difference between corporate-backed and non-rated leases.
How to Evaluate a Dollar Store NNN Property Today
The dollar store category remains one of the most reliable tenant pools in the NNN market. The business model is sound, dollar stores address a real community need, and the lease structures are among the most investor-friendly available. But the right evaluation approach depends on which chain occupies the building and when the lease was executed.
For Dollar General properties, the key questions are lease vintage, remaining term, and location profile. New builds with 12 or more years remaining and full corporate guarantee represent the most straightforward hold. Older stores with NN rather than NNN structures require a closer look at roof and structure obligations before the cap rate can be read as a true return.
For Dollar Tree properties, the post-divestiture credit profile is cleaner than it was during the Family Dollar years. Properties with long remaining terms and corporate guarantees from the current Dollar Tree entity are well-positioned for investors who want a somewhat smaller footprint in a stronger credit wrapper.
For Family Dollar properties, the first question is always the date of the lease. A pre-July 2025 lease with Dollar Tree corporate backing is a fundamentally different investment from a post-sale lease under the new private entity. Both can work, but they require different due diligence frameworks and should be priced at different cap rates.
Our recession-resistant tenant guide covers how to evaluate tenant quality across these categories, and our NNN investment step-by-step guide walks through the full due diligence process.
Dollar Stores and the 1031 Exchange
Dollar General properties in the $1 million to $2 million range are among the most practical options for investors who need to identify replacement properties within a 1031 exchange timeline. They are frequently sought after by investors executing 1031 exchanges because the transactions are direct and can be completed within standard exchange deadlines.
The corporate guarantee and long lease term also satisfy lender requirements for financed acquisitions, which gives exchange buyers flexibility on structure. Our 1031 exchange guide covers the timeline, identification rules, and property selection criteria for investors who need to move capital on a defined schedule.
What Dollar Stores Tell Us About Tenant Selection
The dollar store sector offers a useful framework for how Westwood approaches tenant analysis across the entire NNN market. A strong brand name is a starting point, not a conclusion. The credit rating behind the lease, the structure of the guarantee, the business model’s relationship to economic cycles, and the specific lease terms on the property in question all determine whether an investment makes sense at a given price.
Dollar General at Baa3 on Moody’s is still investment grade and still backed by a company with 20,900 locations and an active remodel program. Dollar Tree at Baa2 is a cleaner credit profile after a painful but necessary divestiture. Family Dollar under private equity ownership is a more complex underwrite that depends entirely on lease vintage and location quality.
None of these is a universal buy or a universal avoid. Each rewards investors who bring the right questions to the table.
Browse our current dollar store properties to see what’s available at your investment level, and reach out to the Westwood team to discuss which properties match your credit requirements, timeline, and portfolio goals. The conversation is free and often surfaces opportunities that don’t appear through standard search tools. When you’re ready, our team is a phone call away.
