The nation's 3rd largest drugstore operator has not performed as well as sector leaders, Walgreens and CVS. Rite Aid has been taking steps to strengthen its balance sheet and improve its overall business. Accordingly, if you own or would like to own Rite Aid net lease properties then you must consider the risk-reward outcomes and accept higher risk compared to CVS and Walgreens. However, Rite Aid offers the opportunity for a higher return than its competitors in the net lease Pharmacy Sector.

Corporate Rite Aid currently faces a number of challenges yet they have long been a popular asset in the net lease market due to strong fundamentals: highly demanded corner locations and long-term NNN leases. The overall stability of the pharmacy sector also creates interest and demand for Rite Aid net lease properties. With their acquisition of pharmacy chains Brooks in the northeast and Eckerd's in the Carolina's and Georgia, Rite Aid has been able to remain as one of the largest pharmacy chains in the nation in regards to market presence.

Between the acquisition of rival chains and its financial woes, Rite Aid has been selling corporate owned sites through sale-leaseback transactions, and in the process has been willing to provide more favorable lease terms than its competitors. Rite Aid has been offering a 20-year primary term with 10.00% rental increases every 10 years, often agreeing to lease rates that are in-line with the local market rather than paying significant premiums. New store openings has diminished and most of the newly leased Rite Aid-occupied properties have been generated through the sale-leaseback process, which may offer an opportunistic investor a look at historical store sales, potentially alleviating some of the risk associated with the creditworthiness. The re-use or redevelopment of these net-leased assets is of utmost importance to current investors when evaluating Rite Aid investments. The underlying real estate asset may be the driving force behind investment decisions. Real estate fundamentals may be favorable in some locations with higher cap rates allowing a purchase on a low price per SF basis for the land or building, as typical sites have 11,000 - 15,000 SF buildings located on 1.00+ acres of land.