The latest earnings report from one of the largest drugstore chains gives one indication why buyers of net lease property, where the renter pays expenses, have interest in pharmacy real estate.While many retailers struggled during the pandemic, CVS Health, based in Woonsocket, Rhode Island, reported higher revenue and profit in spite. Revenue increased 3% over last year’s second quarter to $65.3 billion as net income rose almost 55% to nearly $3 billion.
CVS did not have to shut its approximately 9,900 stores because, as with other drugstores and grocery store chains, its sockets were considered essential. Though open, CVS said the shops still lost some traffic because stay-at-home orders kept consumers inside, slicing 4.6 percent off”front store” revenue from selling goods aside from prescriptions. Prescriptions were down some too.Larry Merlo, CVS Health’s CEO, told investors on the corporation’s earnings call that its testing centers performed about 2 million evaluations through the end of July. That is positive news for investors in real estate.
The company has net leases, where the chain pays costs like property taxes and insurance. Rent is received by the landlords of CVS locations and earns an annual return.CVS Health’s biggest competitor, Walgreens, does the same. Its earnings report in July showed reductions, primarily in the United Kingdom due to the chain’s stores. The business reported that U.S. store sales rose 3 percent. With investors estate leased to Walgreens and CVS had lost some of their luster before the pandemic as they restructured and closed stores.John Feeney, senior vice president of Wilmette, Illinois, internet least agent The Boulder Group, stated the coronavirus pandemic and its essential status have”cemented them back into to the good graces of investors.” Walgreens real estate and CVS continued to sell while the earnings generally slowed.
According to CoStar data, 60 of the 90 CVS stores sold this season have exchanged since mid-March when the pandemic started gaining ground. Investors have snapped roughly 116 Walgreens up over the period, pushing the total sales for the year.
CVS NNN Properties for Sale in Florida & Texas
We have several CVS and Walgreen’s properties and portfolio’s exclusively list and we’re bringing more to the market soon. Including locations in Florida and Texas, tax-free states. Call me to discuss this.
Michael Salafia, Issenberg Britti Group @ Marcus & Millichap.
Direct Dial: (786) 522-7134