Tenant Description
CVS Pharmacy is one of the largest retail pharmacy chains in the United States, holding a strong position in the market alongside its primary competitor, Walgreens. CVS has been expanding its presence in the net lease market, consistently delivering new properties that appeal to investors.
One of CVS’s notable strengths is its credit rating, which has improved over the years. CVS now enjoys a higher credit rating than Walgreens, a significant shift from the past when CVS had a lower rating. This rating is considered investment grade with a stable outlook, enhancing the value and marketability of its corporate-guaranteed net lease properties. This strong credit standing contributes to investor confidence, making CVS net lease properties a preferred choice for stable, long-term investments.
Traditionally, CVS leases featured flat rental structures. However, in recent years, prime locations have begun to command rental increases during option periods, further boosting their appeal to investors. This change is likely driven by the stability and profitability of CVS's Pharmacy segment and the company’s strong financial health. The high-quality real estate typically associated with CVS leases, often situated on prime, hard-corner locations with excellent visibility and generous access, further enhances the desirability of these assets. These properties usually occupy 1.00 to 2.00 acres of land, making them highly sought after in the net lease market.
Over the past decade, CVS has signed a variety of lease types. Originally, CVS stores operated under NN leases, holding the landlord responsible for the roof and structure of the building, and in some cases parking and landscaping. These NN leases might provide rental increases as often as every 5 years. However, new leases typically contain flat rents over the primary term, (some prime locations can demand rental bumps) and can vary from ground leases to NN fee simple transactions.
CVS Health Corporation is a publicly traded company on the New York Stock Exchange and has been in business for more than 50 years with the start of first store in Lowell, Massachusetts.
CVS Health Corporation includes CVS Pharmacy which approximately has 9,500 retail pharmacies, CVS MinuteClinic with more than 1,100 walk-in health care clinics, CVS Caremark, a leading pharmacy benefits manager with more than 90 million plan members, and CVS Specialty, a dedicated senior pharmacy care business serving more than one million patients per year, and expanding specialty pharmacy services.
