Herrick Co. Buys 44 CVS-Leased Retail Properties for $190M

The Herrick Co. shelled out $190 million on the acquisition of a portfolio of triple-net leased retail/pharmacy locations spanning 17 states, all of which are leased to CVS Caremark, from Fortress Investment Group.

Herrick - CVS PortfolioThe Herrick Co. Inc. shelled out $190 million on the acquisition of a portfolio of triple-net leased retail/pharmacy locations spanning 17 states. Herrick purchased the 44 properties, all of which are leased to CVS Caremark, from Fortress Investment Group L.L.C.

Herrick’s newly acquired collection of stores encompasses 683,200 square feet, with locations in the South, Southeast, Midwest the Mid-Atlantic and Northeast. CVS will continue to occupy the properties for the long-term, as there are 25 years remaining on each of the 44 individual leases.

“CVS is a great company. We own about 150 of their retail stores now and we just can’t get enough of them,” Norton Herrick, chairman of Herrick, told Commercial Property Executive. “It’s an extremely well-run company.

Apparently, the lending community was just as attracted to the portfolio as Herrick. The real estate investment firm was able to secure debt financing from a group of capital sources under a private placement arrangement.

Portfolios of premier, single-tenant, triple net leased retail assets are not easy to come by in the current market. “Competition is overwhelming,” Mr. Herrick added. “There were 10 of us doing these deals 50 years ago, and now there must be over a thousand.”

Overall, the net-lease market is booming. Last year, the market closed with more than $44 billion of transactions, as noted in a report by investment real estate services firm The Boulder Group. And there’s more to come. While there was a 17 percent quarter-over-quarter surge in supply of net lease properties on the market in the first quarter, “current demand greatly exceeds today’s inventory levels.”