CVS Pharmacy is the second largest retail pharmacy in the US, behind Walgreens. Their annual retail sales per square foot total more than $840, (vs. the sector average of $680 for its publicly traded peers). CVS boasts a higher credit rating than Walgreens and is investment grade with a stable outlook, improving the value and marketability of corporate guaranteed net lease properties. CVS leases feature flat rental structures, however, recently prime locations have been able to demand rental bumps during options – making these properties highly desirable to net lease investors. The attraction to the investor is due to the stability and profitability of the Pharmacy segment as well as the investment grade credit of CVS. The underlying real estate also plays an important driver in these assets, as they are almost exclusively hard corner locations with premiere visibility, and generous access across 1 to 2 acres of land. CVS currently signs 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 occasionally parking and landscaping. These NN leases at times command rental increases as often as every 5 years. 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. CVS Health Corporation includes CVS Pharmacy totaling 9,700 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 senior pharmacy care business serving more than one million patients per year, and expanding specialty pharmacy services.
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