Tenant financials and credit ratings

Westwood Net Lease Advisors

Creditworthy corporations are financially strong with a low risk of default, proven by their investment-grade ratings. Corporations of BBB- or better from the bond rating firm Standard & Poor’s are considered “investment-grade” tenants and tend to have the most stable financials. The higher the credit rating, generally, the more stable the company. When it comes to NNN lease tenants, most will have high ratings and corporate-guaranteed leases – but buyer beware! It is just as important to ensure the actual tenant or franchise is also creditworthy by performing a thorough assessment of tenant financials and store performance.

You can search for current S&P rating information using an entity name, a standard identifier such as CUSIP, CINS, or ISINS number, or a Fund name.

Moody’s also provides a similar credit rating service, but while their ratings use similar symbols, there are significant differences. The table below compares the various symbols.

Standard & Poors	Moody’s	Interpretation
AAA	Aaa	Extremely strong capacity to meet financial commitments.
AA	Aa2	Very strong capacity to meet financial commitments.
A	A2	Strong capacity to meet financial commitments, but susceptible to adverse conditions
BBB	Baa2	Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
BB	Ba2	Less vulnerable in the near-term but faces major ongoing uncertainties in the event of adverse business, financial and economic conditions.
B	B2	More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
CCC	Caa2	Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
CC		Currently highly vulnerable.
C-		A bankruptcy petition has been filed or similar action taken but payments or financial commitments are continued.
D-		Payment default on financial commitments.

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Westwood Net Lease Advisors

Choose Investment-Grade Tenants & Creditworthy Franchisees

While there is no such thing as a “risk-free” investment, choosing a NNN lease property with an investment-grade corporate tenant or a creditworthy franchise tenant will typically provide a reliable, lower-risk investment with steady monthly income and little to no responsibility, while meeting your financial and lifestyle expectations.

To obtain expert help with determining the creditworthiness of your next NNN tenant, connect with a Westwood buyer’s advisor who will walk you through the entire process from the property search to closing, saving you time and the possibility of making a costly mistake – all at no cost to you. Contact us today for your free consultation. 314-997-5227

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Westwood Net Lease Advisors has made every attempt to ensure the accuracy and reliability of the information provided. Westwood Net Lease Advisors does not accept any responsibility or liability for the accuracy, content, completeness, legality, or reliability of the information contained herein. We are not lawyers, accountants (CPAs), or certified financial planners, nor is the information herein considered legally-binding legal advice, tax guidance, or financial counsel.