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7-Eleven
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  CVS


Average Property & Lease

Average Sale Price$6,724,574
CAP Rate (12mo avg with 10+ lease term)5.43%
NOI$355,728
$/Square Foot$400 - $600
Building Size12,559 sf
Lot Size1.80 +/- acres
Lease Term15 - 25 year NNN
EscalationsVaries
CREDIT RATING
BBB+
S&P
Baa1
Moody's
view credit rating chart
View Net Lease Property Listings at CALKAIN.COM Last Updated: September 9, 2016
Net Lease Advisor Overview

Aging comes with its share of challenges, and the U.S. over-65 population is rising steadily. 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 during options - 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.

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 (though prime locations can demand rental bumps) and can vary from absolute NNN ground leases to NN fee simple transactions.  

Pros

Cons

  • Investment Grade tenant
  • Corner locations provide access and visibility
  • Generally over 1.0+ acre of land
  • Corporate leases qualify for CTL Financing
  • Some NN leases
  • Flat rent over primary term
  • High rental rates would prove difficult to replace
Tenant Description

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 9,600 retail pharmacies, CVS MinuteClinic with more than 1,100 walk-in health care clinics, CVS Caremark, a leading pharmacy benefits manager with more than 75 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.

CVS is currently the second largest retail pharmacy in the U.S. following behind Walgreens.


CVS TREND
CAP Rate

2015 avg: 6.08%

2016 avg: 5.80%

RECENT SALES

Surprise, AZ

$6,689,360 | 4.99%

Wadsworth, OH

$4,595,638 | 7.58%

MORE INFO
www.cvs.com
Google Finance: CVS
Google News: CVS