Over the years, CVS has sold many locations that they developed through sale leasebacks.ĬVS buildings typically range from 9,000 square feet up to 30,000 square feet. Due to these varying factors in CVS properties for sale it’s important to work with a broker who has a firm understanding of drugstore properties and who has closed a variety of CVS properties for sale.ĬVS owns some of their real estate that they have either developed internally or purchased through acquiring another pharmacy chain. The factors mentioned in this article will allow any investor considering a purchase of a CVS investment a way to gauge value between one CVS for sale versus another CVS for sale when real estate quality is even. The difference with CVS for sale is that an investor must understand the backfill rent per square foot and compare that with the likelihood of CVS renewing the lease to see if they are purchasing the risk at a fair CAP rate. As with most net leased properties, the main value is the credit strength of the tenant and the lease in place but obviously all investors regardless of property type consider the real estate quality. CVS for sale that have over 15 years of primary lease term before the options may trade 125 basis points lower or more versus other CVS properties that have less than 5 years of lease term remaining.
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In addition to these factors, two main drivers in pricing of CVS property for sale are the primary lease term remaining before the renewal options and the real estate quality. If a CVS for sale has a few of these positive subtle differences over another CVS for sale then it provides comfort to an investor in the likelihood of CVS remaining as a tenant for years to come. Some CVS stores may have beer, wine or liquor sales as well.These are all smaller factors that help investors value CVS for sale especially when stores sales volumes are not available to the landlord. Most CVS stores for sale have store operating hours until 8 PM to 10 PM. CVS properties all have varying business operations which directly affect store profitability.ĬVS properties for sale have a minute clinic or are 24 hour operations which are preferred by many net lease investors. Of the double net CVS property for sale some have roof, structure or parking lot responsibilities and some may have reimbursable expenses pertaining to common areas if located within a shopping center.
Some CVS for sale are absolute net with zero landlord responsibilities and other CVS for sale are double net with varying landlord responsibilities. Another differentiator between CVS properties for sale is the lease structure. These CVS properties have a ground owner but then also a leasehold position that can become available for sale. Another ownership type that is more prevalent with CVS for sale are the leasehold ownership structures.
Most CVS for sale are fee simple ownership structures however, there are some CVS for sale that are infill ground lease structures that may have increases in the primary lease term or have larger increases in the renewal option periods versus a typical CVS lease.
These zero cash flow CVS investments are valued completely differently than the typical CVS for sale. Many times these CVS properties for sale have a rent holiday for CVS at the end of the primary term before the lease options. Some CVS for sale are zero cash flow ownership structures where the entire rental payments go to the lender to pay down the debt giving the landlord zero cash flow during the primary lease term. These factors directly impact the value of any CVS for sale and should be considered in addition to the typical valuation factors of real estate quality and lease term remaining before the options. CVS property for sale can range in square footage, tenant operations, building type, lease structure and ownership structure.
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