Walgreens Tenant Overview

Net Lease Advisor Tenant Walgreens


  • Investment grade tenant
  • Corner locations
  • Long absolute NNN leases


  • No rental increases
  • High initial rental rate
  • Annual cancellation option after initial term

Earnings Highlights

Earnings Summary
  • Third quarter earnings per share (EPS*) was $0.14, a decrease of $0.20 from the year-ago quarter; adjusted EPS increased 3.3 percent to $1.00, up 3.6 percent on a constant currency basis reflecting a 19.5 percent headwind from significantly lower COVID-19 vaccine and testing volumes
  • Third quarter sales increased 8.6 percent year-over-year to $35.4 billion, and up 8.9 percent on a constant currency basis

Tenant Description

Walgreens is one of the largest drugstore chains.

The poster-child of net lease properties, Walgreens has been a highly traded investment property given the low risks typically associated with these drugstore properties. Additionally, the drugstore sector remains stable given is non-discretionary merchandise offerings.

On the real estate side of things, Walgreens demands premier hard corner locations greater than 1.00 acre. Generally, sites are 1.5 - 2.0 acres to fit their store prototypes of 14,500 square feet, however units can range from 10,800 - 15,000 square feet. To compete with rival CVS, Walgreens has generally been willing to pay premier rental rates to secure prime sites with a primary lease term of 25 years. The most significant lease variation from Walgreens of late has been the difference in their renewal options, previously requiring eight to ten renewal options of five years in length; they recently signed a number of leases that were 75 years in length, however after the 25th year Walgreens has an annual cancellation option, essentially creating 50 1-year renewal options. This small variation created significant concern for investors because at the end of the initial 25-year lease term, these assets will not be financeable.

Walgreens is owned by the Walgreens Boots Alliance, Inc. This parent company is currently the largest retail pharmacy in the US and Europe, with 13,423 stores in over 11 countries.

Walgreens Boots Alliance was created through the combination of Walgreens and Alliance Boots in December 2014. This transaction brought together two leading companies with iconic brands, complementary geographic footprints, shared values and a heritage of trusted healthcare services through pharmaceutical wholesaling and community pharmacy care, dating back more than 100 years. Walgreens had been in merger talks with Rite Aid since 2015. In June of 2017, the pharmacies announced the merger was off however Walgreens acquired over 1,900 Rite Aid locations.

Walgreens is a market leader in the US and has 8,175 retail stores which includes Walgreens and Duane Reade. Walgreens owns 15% of these retail locations and the rest are leased. Walgreens Boots Alliance stated that they will close about 200 less-profitable US Walgreens stores and open the same number of stores in new locations.

Average Cap Rate
Trailing 12-month average
Average Property & Lease
Average Sale Price $5,847,906
NOI $329,936
$/Square Foot $403
Building SF 14,500
Lot Size 1.8 Acres
Lease Term 25 Years
Escalations None
Stock Symbol WBA
Credit Rating
Moody's Baa3
Average Cap Rate Trend
Rates reflect year-over-year comparison
Recent Sales Comps
San Diego, CA 4.90%
Payson, UT 5.75%
Savannah, TN 6.00%
Jackson, OH 6.86%