Modern technology keeps churning out newer health products which become part of people’s everyday lives. Moreover, while customers are trying to get prescriptions, they’d pass through stands of perfumery, candies, and games. Well, what’s important about all that?
I’m starting to show you why a large pharmacy lease makes an excellent real estate investment. Are you thinking of buying a triple net property? Read on to find out why a drugstore lease might be the suitable investment to choose. We begin by looking at the top pharmacy chains in the US today.
CVS
CVS is the largest pharmacy chain in the United States, with a BBB+ rating. It’s a Fortune 500 company with over 9,600 stores across the US states (as of 2016). Like the typical drugstore, CVS sells prescription drugs, in addition to general merchandise of assorted goods. The store’s extensive reach makes it a top real estate investment destination.
Walgreens
Walgreens is America’s second-largest drugstore chain with a BBB+ S&P rating. As of 2019, the chain ran 9,277 stores across the United States. This large expanse of stores makes Walgreens a surplus real estate field for intending NNN investors.
RiteAid
Let’s see one more large drugstore chain in the US, RiteAid. RiteAid is the largest drugstore chain on the East Coast and the third in the country. Founded in 1962, the store has grown to become a Fortune 500 company with a B- S&P rating. NNN Investors who don’t mind a bit of risk for more significant returns should consider patronizing Rite Aid.
Why Purchase a Pharmacy Lease with America’s Top Drugstore Chains?
What are the benefits of buying an NNN property from any of America’s large pharmacy stores? Are there any advantages to investing in a pharmacy lease over other real estate investment trusts? What are the risks involved in purchasing from a smaller drugstore over a larger chain? At the end of this section, you’d be able to answer these questions for yourself. Let’s see some encouraging qualities of investing in a pharmacy lease?
Guaranteed Cash Flow in the Long Term
Pharmacy chain stores like Walgreens and CVS or RiteAid have a wide reputation for high security. It’s different from investing in many other retail investments. Here, every property on lease bears the guarantee of the total assets of the multimillion-dollar companies. You can expect to receive your rent every month with CVS and Walgreens for 20+ years!
Typical Real Estate Financial Benefits
NNN pharmacy chain investors also enjoy the same financial perks as other real estate investors. They have access to real estate benefits such as leverage and after-tax savings. Investors can enjoy after-tax savings based on the depreciation of a commercial real estate investment.
Walgreen’s properties, for instance, have depreciated for over 39 years unhindered. Nevertheless, any savvy investor would get more tax returns based on “accelerated depreciation” on their investments. By investing with a Fortune 500 drugstore like CVV, they’re planning to get themselves substantial post-tax savings.
Additionally, leverage allows investors to use loaned money for maximum cash flow in the short term. It also lets them structure a longer-term loan to plan their estate. Both CVS and Walgreen have a high credit rating (BBB+). That’s why they offer investors a broad range of financing options.
Also, borrowers can often get better loan offers from these drugstores than other commercial property investments. Are you considering getting a loan to set up a profitable NNN real estate investment? Then it’s almost best you go for a pharmacy lease.
No Landlord Hassles or Liability Exposure
By owning a triple net property leased to a pharmacy chain, you never have to worry about tenants. The chain runs the stores and so is responsible for addressing any structural or financial needs. You also don’t have to bear the brunt of being exposed to unexpected expenses. As in NNN leases, the tenant is legally responsible for all operating costs, taxes, or insurance. Don’t you think that’d be a great investment idea?
As a triple net investor, you have absolutely NO LANDLORD WORRIES like fixing pipes—or bills. Walgreen real estate tenants have the total obligations to maintain and repair or finance insurance costs. It works just like owning a company’s shares. When you buy NNN units from a CVS pharmacy for sale, you will receive fixed yields until maturity.
An Excellent Real Estate Planning Opportunity
It’s being discovered that most investors in the top drugstore chains are in it for the long haul. It’s common to find CVS NNN investors considering longer-term household estate plans when purchasing a property. Add all the above benefits of pharmacy leases, and you see why savvy investors choose this investment.
You’re Buying a Property at a Top Location
Remember that you’re purchasing a real estate property. When you buy a triple net property from Walgreens or CVS, you’re buying a hot spot in town. As you’d already know, top drugstores choose the best places in cities to locate their stores. And you’ll find most new stores in high-brow areas.
Before a top pharmacy chain situates a store, they have a real estate department that scrutinizes the site. They’re very professional at selecting a location for their store. They’d check each site for demographics, traffic, competition, and profitability, among other factors.
Things to Note Before Signing a Pharmacy Lease
There are a plethora of NNN pharmacy properties on the market for investing. However, whether you choose from a larger or smaller drugstore, you’d find the tips below helpful in making investment decisions.
- Buy a property that has an above-average store sales
- Pharmacies that operate round-the-clock are most likely in well-profitable environments
- Also, go for stores with high visibility and drive-thru area
- Consider buildings with up to 12,000 sq. ft space—ample ground space.
Triple net investments are quite different from other real estate investments. You don’t have to worry about tenant issues or fixing kitchens. Then, there aren’t any expense risks you’re faced with in such investments. Moreover, drugstore leases give you the chance to invest with some of the most secure and safe NNN portfolios. You may want to consider including a pharmacy lease into your triple net investments anytime soon.
