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Moody’s recently upgraded CVS’s credit rating to Baa1 (from Baa2). CVS is now rated equally to Walgreens by Moody’s and is slightly higher by S&P – BBB+ to BBB. Though CVS and Walgreens are clearly the shining tenants of the pharmacy sector, Rite Aid was also upgraded to B3 by Moody’s. All of this points to vibrant health of the net lease pharmacy sector.

On the whole for 2013, net lease pharmacies have averaged a considerably lower cap rate compared to the overall net lease retail market – 6.75% to 7.05%. This is not surprising as Walgreens and CVS are two of the most coveted net lease assets. Investors are attracted both by the investment grade credit ratings featured by these tenants and their historic stability.

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