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Net Lease Profile: CVS

Fueled by an aging population and the demand for generic drugs and convenience, CVS continues to deliver new net lease properties to the market.

By Jonathan Hipp | Updated on August 13, 2013

Fueled by an aging population and the demand for generic drugs and convenience, CVS continues to deliver new net lease properties to the market. CVS has annual retail sales per square foot totaling more than $840, compared to the sector average of $680 for its publicly traded peers. CVS also now boasts a higher credit rating than Walgreens (historically CVS had a lower credit rating than Walgreens) and is considered investment grade with a stable outlook, which improves the value and marketability of corporate guaranteed net lease properties. 

Traditionally, CVS leases featured a flat rental structure, however, recently prime locations have been able to demand rental bumps – making these properties highly sought after by the net lease investor. The attraction to the investor is likely due to the stability and profitability of the Pharmacy segment as well as the investment grade credit of CVS. The real estate also plays an important driver in these assets, as they are almost exclusively hard corner locations with premiere visibility, and generous access on 1.00 -2.00 acres of land. 

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