The Boulder Group’s Research Department has released a new research report providing comprehensive numbers and analysis of the activity in the National Net Lease Drug Store Market.

1. www.bouldergroup.com
THE NET LEASE
DRUG STORE REPORT
Q3 2015
Q3 2014 Q3 2015 Basis Point
Sector (Previous) (Current) Change
Walgreens 5.60% 5.50% -10
CVS 5.75% 5.45% -30
Rite Aid 7.40% 6.63% -77
DRUG STORE PROPERTIES
ON THE MARKET
Q3 2014 Q3 2015 Percentage
Sector (Previous) (Current) Change
Walgreens 169 203 +20.1%
CVS 74 95 +28.4%
Rite Aid 36 43 +19.4%
DRUG STORE PROPERTIES
MEDIAN ASKING PRICE
Median Asking Median Price
Sector Price Per Foot
Walgreens $6,700,000 $460
CVS $5,340,460 $438
Rite Aid $3,995,000 $357
MARKET OVERVIEW
Cap rates for single tenant CVS, Rite Aid and Walgreens properties
reached a new historic low in the net lease drug store sector in the third
quarter of 2015. Cap rates continued to decline as investors flock to
the net lease space’s cornerstone asset, drug stores. With historically
low cap rates, the drug store property supply has increased drastically
by over 20% as owners attempt to take advantage of unprecedented
high values. While overall cap rate levels experienced compression,
short term leased Rite Aid properties with 5-9 years of lease term
remaining had the greatest cap rate compression of 85 basis points
in the third quarter of 2015. New construction CVS properties
experienced the second greatest compression of 50 basis points
to a 5% cap rate, the same level for new construction Walgreens
assets. These levels can be attributed to the historically low interest
rate environment coupled with high demand amongst 1031 exchange
buyers for long term leased properties in a market constrained by
limited expansion plans for drug stores tenants.
With cap rates for Walgreens and CVS at all-time low levels, the ratio
of long term leased drug store properties (20 years or more) to the
total supply has decreased when compared to the third quarter of
2014 and total overall supply of long term leased drug stores declined
by 27% in the same time period.
As Rite Aid’s financial strength improves, investors have gained
interest in the extra yield associated with Rite Aid properties. The
additional yield is attributed to Rite Aid not being an investment grade
rated company similar to Walgreens or CVS. However, with improving
company fundamentals, cap rates for Rite Aid properties decreased
by 77 basis points since the third quarter of 2014.
Transaction velocity for 2016 in the net lease drug store sector should
remain at a similar pace to 2015 as drug stores continue to be at
the forefront of investor demand. As cap rates for new construction
properties with long term leases continue to compress, expect 1031
exchange buyers and private investors to remain the primary buyer. It
has become increasingly difficult for institutional investors to acquire
long term leased drug stores due to the low cap rates associated with
these properties. Additionally, investors searching for higher yields for
drug store properties will seek short term leased assets with strong
store sales.
DRUG STORE PROPERTIES
MEDIAN ASKING CAP RATES
Above numbers include properties with all lease lengths.

2. www.bouldergroup.com
THE NET LEASE
DRUG STORE REPORT
Q3 2015
MEDIAN ASKING CAP RATE BY LEASE TERM REMAINING
Term Remaining Walgreens CVS Rite Aid
20+ 5.00% 5.00% 6.15%
15-19 5.50% 5.25% N/A
10-14 5.60% 5.83% 6.65%
6-9 6.75% 6.60% 7.15%
5 & Under 6.90% 7.00% 8.00%
MEDIAN ASKING CAP RATE BY PROPERTY TYPE
Property Type Walgreens CVS Rite Aid
Ground Lease 5.05% 4.85% N/A
Fee Simple 5.50% 5.25% 6.63%
Leasehold 6.88% 7.00% N/A
MEDIAN NATIONAL ASKING VS. CLOSED
CAP RATE SPREAD
Tenant Closed Asking Spread (bps)
Walgreens 6.23% 6.00% 23
CVS 5.92% 5.73% 19
Rite Aid 6.93% 6.72% 21
DRUG STORE VS. RETAIL NET LEASE
MARKET CAP RATE
Q3 2014 Q3 2015
Tenant (Previous) (Current)
Drug Store 5.75% 5.49%
Retail Net Lease Market 6.50% 6.25%
Drug Store Premium (bps) 75 76
Above numbers are only reflective of closed transactions.

3. www.bouldergroup.com
THE NET LEASE
DRUG STORE REPORT
Q3 2015
SELECTED SINGLE TENANT SALES COMPARABLES
Sale
Date Tenant City State Price
Price
Per SF
Cap
Rate
Lease Term
Remaining
Sep-15 Walgreens Anchorage AK $11,600,000 $783 5.22% 19
Oct-15 CVS Plano TX $10,202,589 $699 4.82% 21
Aug-15 CVS Niskayuna NY $10,200,000 $750 5.32% 21
Sep-15 CVS Ballston Spa NY $8,993,000 $680 5.00% 20
Aug-15 CVS Oxford MS $8,690,000 $657 5.10% 23
Aug-15 Walgreens Minneapolis MN $8,275,000 $591 5.45% 20
Jul-15 Walgreens Columbus OH $7,713,700 $520 5.73% 20
Sep-15 Walgreens Altoona PA $7,599,999 $532 5.50% 19
Aug-15 Walgreens Levittown PA $7,233,644 $488 5.30% 15
Aug-15 Walgreens Bellingham WA $7,089,000 $469 6.35% 6
Aug-15 Walgreens Midfield AL $7,063,943 $523 5.30% 20
Sep-15 Walgreens Southington CT $7,050,000 $484 5.86% 14
Aug-15 Walgreens Shawnee KS $7,034,339 $465 5.35% 15
Jul-15 Walgreens Idaho Falls ID $6,915,000 $477 5.35% 20
Aug-15 Walgreens Oklahoma City OK $6,634,800 $453 5.75% 15
Aug-15 Walgreens Nashville TN $6,562,000 $480 5.80% 14
Aug-15 Walgreens Kansas City MO $6,229,875 $420 5.90% 14
Sep-15 Walgreens Ypsilanti MI $6,000,000 $440 5.80% 17
Sep-15 Walgreens Tallahassee FL $5,900,000 $432 5.50% 14
Oct-15 Walgreens Midvale UT $5,895,000 $400 5.94% 15
Aug-15 Walgreens Woodway TX $5,500,000 $371 5.55% 15
Oct-15 Walgreens San Bernardino CA $5,400,000 $364 5.30% 15
Aug-15 CVS (GL) Glenview IL $5,220,000 $395 4.50% 25
Sep-15 CVS Clermont FL $5,175,000 $375 5.72% 9
Sep-15 Rite Aid Boston MA $5,000,000 $366 5.48% 13
Aug-15 CVS Vallejo CA $4,880,625 $296 4.30% 25
Sep-15 Rite Aid Durham NC $4,548,000 $357 7.75% 4
Sep-15 Walgreens Lewisburg TN $4,378,700 $297 6.10% 15
Sep-15 Walgreens Natchitoches LA $4,350,000 $294 5.90% 15
Aug-15 Walgreens Ramseur NC $3,800,000 $376 6.70% 10
Aug-15 Walgreens Mesa AZ $3,680,000 $237 5.90% 10
Aug-15 Rite Aid Thomasville GA $3,402,773 $305 6.90% 10
Aug-15 CVS (GL) Bonita Springs FL $3,269,904 $334 6.75% 5
Sep-15 Walgreens Terre Haute IN $2,875,000 $213 7.16% 5
Sep-15 Rite Aid Seneca SC $2,550,000 $234 9.20% 5
Sep-15 Rite Aid Wadsworth OH $2,496,240 $222 8.80% 3
Sep-15 Rite Aid Millen GA $2,439,456 $216 7.35% 10

4. www.bouldergroup.com
THE NET LEASE
DRUG STORE REPORT
Q3 2015
Walgreens CVS Rite Aid
Credit Rating BBB (Stable) BBB+ (Stable) B (Positive)
Market Cap $91 billion $112 billion $6 billion
Revenue $93 billion $145 billion $27 billion
2015 Stores Planned 150 150 N/A
Number of Stores 8,207 7,822 4,600
Typical Lease Term 20 year primary term with fifty
years of options
25 year primary term with six
5-year options
20 year primary term with six
5-year options
Typical Rent Increases None None in primary
10% increases in option periods
Increases every 10 years of
10%
COMPANY AND LEASE OVERVIEW
(Company estimates)
FOR MORE INFORMATION
AUTHOR
John Feeney | Vice President
john@bouldergroup.com
Randy Blankstein | President
randy@bouldergroup.com
Jimmy Goodman | Partner
jimmy@bouldergroup.com
© 2015. The Boulder Group. Information herein has been obtained from databases owned and maintained by The Boulder Group as well as third party sources. We have not verified the information
and we make no guarantee, warranty or representation about it. This information is provided for general illustrative purposes and not for any specific recommendation or purpose nor under any
circumstances shall any of the above information be deemed legal advice or counsel. Reliance on this information is at the risk of the reader and The Boulder Group expressly disclaims any liability
arising from the use of such information. This information is designed exclusively for use by The Boulder Group clients and cannot be reproduced, retransmitted or distributed without the express
written consent of The Boulder Group.
Zach Wright | Analyst
zach@bouldergroup.com
CONTRIBUTORS
Scott Harris | Analyst
scott@bouldergroup.com