Five retail real estate investment trusts reported Rite Aid Corp. as a top tenant in their financial filings, while 15 REITs reported exposure to Albertsons Cos. Inc. The two companies recently canceled their planned $24 billion merger.
After the deal fell through, Rite Aid affirmed its commitment to moving forward as a stand-alone company. Evercore ISI equity research analysts said the outlook for the company as a stand-alone entity "is notably challenged," given, among other things, its subscale regional pharmacy presence, according to an Aug. 8 research note. Also following the termination, Moody's placed Rite Aid's ratings on review for downgrade, reflecting its view that Rite Aid does not have the scale or balance sheet to compete against larger and well-capitalized competitors such as CVS Health Corp. and Walgreens Boots Alliance Inc.
Rite Aid Pharmacy is Retail Opportunity Investments Corp.'s third-largest tenant, with 14 leases aggregating 1.6% of the company's total annualized base rent as of June 30 — the highest exposure among equity REITs. The shopping center REIT also collects 5.7% of its annualized base rent from Albertsons, its largest tenant.
Realty Income Corp. and Urstadt Biddle Properties Inc. each reported that 1.3% of their total base rents came from Rite Aid. Spirit Realty Capital Inc. and Kimco Realty Corp. also reported the drugstore retailer in their list of top tenants.
Phillips Edison Grocery Center REIT III Inc. collected 14.2% of its annualized base rent from its single lease with Albertsons, the highest percentage of all equity REITs. Phillips Edison Grocery Center REIT II Inc. and Phillips Edison & Co. Inc. also reported exposure of 5.7% and 3.4% to the tenant, respectively.
Diversified REIT Alexander & Baldwin Inc. reported the highest exposure to Albertsons, its top tenant, among publicly listed REITs, at 6.2% of the company's annualized base rent.
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