NNN Lease Pharmacies for Sale
If you’re searching for a long-term investment in the retail pharmacy sector, there are plenty of pharmacies for sale that can carry you towards your financial aspirations. Pharmacies, in particular, offer a range of price points that suit a wide variety of investment goals. Retail pharmacy real estate provides a popular strategy among investors because of its liquidity, presenting a low-risk passive income stream to commercial real estate investors.
Through the social and economic disruption encountered during the global pandemic that threatened a number of retail divisions, the pharmacy sector has proven itself to be a resilient unit that can withstand disturbance for two reasons: the first being that pharmacies are one of the leading healthcare product and service administrators, providing essential protection such as vaccinations and masks. The second is simply because with or without a pandemic, people will always need access to healthcare services.
The industry is expected to undergo expansion in the foreseeable future due to America’s aging population trends. It is forecast that in the next twenty years the age bracket of 85+ will double, and the bracket of 65+ will double by 2050 as the boomer generation approaches retirement age. Older populations tend to require greater healthcare treatment, which will be a positive trend for the retail pharmacy sector in the coming decades.
Properties
Pharmacies typically range in size between 8,000 – 15,000 sq ft and are located on-site parcels between 1-4 acres to accommodate parking and in some cases drive-through facilities. Properties are highly visible with pylon sign identification and are predominantly sited on high-traffic roads and at intersections with easy access.
You can expect a lease term of 15-25 years, with multiple five-year lease renewal options, which are best suited to triple net investors with long-term goals. However, the liquidity of this asset allows investors with short-term goals the flexibility to add this property class to their portfolio as well. Many leases come with inbuilt increases at the renewal options or after a set period of years, which is an attractive offer for landlords to buffer against economic fluctuations.
Properties in this class come with capitalization rates averaging between 4-6%, which indicates their propensity toward being a stable and low-risk passive income generator over the long term.
Tenants
We partner with the two pharmaceutical giants in the United States, Walgreens and CVS Pharmacy, who respectively hold the first and second-largest market share. Both companies are considered stable and have an investment-grade status, which increases the marketability of these corporate-backed net lease properties.
CVS Pharmacy operates under the umbrella of CVS Health Corporation, which owns 9,00 retail pharmacies, CVS MinuteClinic with over 1,100 walk-in healthcare hubs, along with CVS Caremark and CVS Specialty.
In 2018, both companies were involved in strategic acquisitions: Walgreens closed on procurement of 1,900 Rite Aid stores, and CVS closed a major deal with Aetna, a healthcare service provider aiming to serve lower-cost health care options. These strategic moves allow both companies to remain competitive performers in the pharmacy sector as other retail giants such as Amazon enter the pharmaceutical market.
CVS has also announced its plans to integrate 1500 “health hubs” to stores as a location-based service. This is another way the company is future-proofing the profitability of its brick-and-mortar footprint.
If you’re looking at pharmacies for sale as your next triple net lease investment venture, talk to the team at Buy NNN Properties to get started.
