CVS Corporation

Client Objectives

CVS Corporation, a well known retail store and pharmacy, was seeking a real estate provider who could optimize their portfolio and offer strategic financing solutions for new stores with an annual cost of several hundred million dollars per year. With opportunities to expand and the need to dispose of excess properties, CVS turned to Cresa to identify financing options and to structure their leases in a
way that offered maximum flexibility.

Our team began by structuring a program of principal sale/leasebacks for the majority of new CVS stores and distribution centers at rental rates significantly below conventional markets. The total program funded in excess of $2 billion dollars for the new properties. This reduction in operating expenses freed up capital that allowed CVS to increase their rate of growth, invest in more inventory
and make additional acquisitions.

Older properties with obsolete formats were disposed of through intensive marketing initiatives, alerting the industry to the new availability. The reduced rent expense on new stores helped offset the cost of closing stores. The program helped quantify and control the impact of closed stores to CVS’s financial statements.

In the case of acquisitions, our team structured synthetic leases and sale/leasebacks using the CVS program to provide ways to finance the new stores at a competitive rate while keeping the assets from CVS’s balance sheet.