Why Investment-Grade Tenants Matter in Commercial Real Estate

October 19, 2026

When a commercial property is leased to a business, the tenant’s ability to pay rent is an important part of the investment. That’s one reason ExchangeRight focuses on long-term, net-leased properties with investment-grade corporate tenants, particularly in necessity-based retail.

An investment-grade rating is a credit rating assigned by agencies such as Standard & Poor’s, Moody’s, or Fitch. It indicates that a company’s debt has a lower risk of default than debt rated speculative grade. ExchangeRight’s approach is based on the idea that companies with stronger balance sheets may be better positioned to meet lease obligations during economic downturns.

The historical figures in ExchangeRight’s document show a difference in default rates between investment-grade and speculative-grade companies. For the 1981–2024 data presented, Standard & Poor’s reported an average 10-year default rate of 1.69% for investment-grade issuers, compared with 19.15% for speculative-grade issuers. Moody’s figures were 2.03% and 30.31%, respectively. The document calculates that investment-grade issuers were about 11 to 15 times less likely to default over the 10-year period, depending on the rating agency’s data.

These figures relate to corporate credit defaults, not the performance of a particular property or real estate investment. An investment-grade rating does not guarantee that a tenant will pay rent, and it does not remove other risks tied to property values, lease terms, financing, or management. Credit ratings can also change over time.

For real estate investors, tenant credit is one factor to review alongside the property, location, lease, and overall investment structure. Understanding who is responsible for the rent—and the financial strength behind that obligation—can help put a property’s income assumptions into context. If you’re reviewing a real estate investment as part of your broader financial plan, contact Verus Financial Group to schedule a conversation with your advisor.

Source: ExchangeRight, Why Investment-Grade Tenants? The document cites Standard & Poor’s and Moody’s historical default-rate data for 1981–2024.

The information presented in this article is provided for educational purposes only. The article includes a discussion of Delaware Statutory Trusts ("DSTs") and other real estate-related investment structures with ExchangeRight. The information presented does not constitute an offer to sell, or a solicitation of an offer to buy, any security, including any DST interest. DST interests are securities offered only pursuant to a Private Placement Memorandum to accredited investors and are subject to significant limitations. DSTs are not suitable for all investors and involve a substantial degree of risk. Verus Financial Group is not affiliated with and does not receive compensation from ExchangeRight in connection with the material presented here. Advisory services are offered through Verus Financial Group, an investment adviser registered with the U.S. Securities and Exchange Commission.

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