While there is an element of greater risk associated comparative to a Walgreens or CVS chain, the company has made clear efforts to improve its financials, including daily operations. Risk analysis still shows rewarding potential, considering their prime real estate visibility and NNN lease structuring.

Part of the reason for commanding strong demand is due to acquiring both Brook’s and Eckerd’s throughout various locations in the United States. While not favored negatively, the expenses incurred should require due diligence for investors when considering longer term leases.

Sale-leasebacks have been a common occurrence with Rite Aid as of recent, making company owned properties available for purchase. To sweeten the deal, they offer understandably attractive rates versus the competition with 20-year initial lease terms and 10% rent escalations every ten years.

In fact, Rite Aid often accepts market average rates, which side-steps the issue of higher upfront costs. Since credit ratings are not seen as solid, combined with fewer stores being built, investors should take note of Rite Aid’s past sales revenue average.

Not only this, but if taking advantage of a Rite Aid opportunity, it would be wise to consider the repurposing value of the real estate location in question. This may make or break a potential deal when analyzing profitability. Whereas a minimal upfront cost location can be acquired per square foot, or depending on acreage, it may be a great decision in the long term. Most Rite Aids range from 11k to 15k square feet in dimension situated approximately on one acre. 

Tenant Description

With corporate based in Harrisburg, PA, the Rite Aid Corporation can be found on the NYSE under stock symbol RAD. As one of the top retail pharmacy chains in the U.S., in addition to being on the Fortune 500 list they have locations spanning 31 states including Washington D.C.

Offering a wide array of products and services, Rite Aid focuses in the areas of prescription and OTC (over-the-counter) drugs, in addition to photo developing. The Rite Aid brand alone covers 3,300 retail items. Other types of front end retail merchandise to be found: personal care, health, beauty, home, seasonal and holiday, as well as food and beverage.

Typically, each property structure measures around 12,500 sq. ft. in dimension, with over half of their total stores being stand alone. Many also offer drive through pharmacy pickups with 1-hour photo shops, as well as housing the familiar GNC company brand.