Westwood Net Lease Advisors

Tenant Financials and Credit Ratings

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 & PoorsMoody’sInterpretation
AAAAaaExtremely strong capacity to meet financial commitments.
AAAa2Very strong capacity to meet financial commitments.
AA2Strong capacity to meet financial commitments, but susceptible to adverse conditions
BBBBaa2Adequate capacity to meet financial commitments, but more subject to adverse economic conditions.
BBBa2Less vulnerable in the near-term but faces major ongoing uncertainties in the event of adverse business, financial and economic conditions.
BB2More vulnerable to adverse business, financial and economic conditions but currently has the capacity to meet financial commitments.
CCCCaa2Currently vulnerable and dependent on favorable business, financial and economic conditions to meet financial commitments.
CCCurrently 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