Thought Leaders Report: Net Lease Pharmacies

Pharmacies continue to be a highly desired asset among net lease investors. With CVS & Walgreens leading the way, cap rates for pharmacies continues to compress. The investment grade credit of premier tenants (Walgreens and CVS), long leases and quality real estate makes pharmacies an ideal investment option. As such, cap rates are lower than the net lease retail average. A lack of new supply in the market has also affected pharmacies with investors willing to pay premiums for a dwindling pool of assets.

Though there has been some talk of increasing interest rates forcing cap rates upward – the reality is cap rates have continued to compress. Though interest rates are incrementally rising – they still remain at historic lows compared to the previous market high in 2006. As a result, it still makes sense for transactions to trade at bold low rates.