A possible merger between drugstore giants Walgreens and Rite Aid is driving drug store cap rates higher, according to Realty Biz News. Cap rates for CVS, Rite Aid and Walgreens buildings reached 5.96%, a 33 basis-point jump from last year. Investors are concerned over possible store closures, resulting from a possible merger.
On average, annual sales of drug store properties declined by 23.2%, with the sharpest decline hitting Rite Aid stores by 26%. Additionally, the supply of stores leased for over 20 years dropped sharply because of the lack of new store development.