1. Walgreens ranks number 1 with market cap of $46.0B, $50.5B in revenue, 5611 stores and S&P rating of A+.
2. CVS ranks number 2 with market cap of $27.2B, $44.5B in revenue, 6191 stores and S&P rating of BBB+.
3. Rite Aid ranks number 3 with market cap of $3.2B, $17.3B in revenue, 3329 stores and S&P rating of B+. On June 4, 2007, Rite Aid completed acquisition of 1850 Eckerd & Brooks drug stores from Jean Coutu Group. So now it has annual revenues of more than $27B and 5160 stores in 31 states and District of Comumbia.

Investors purchase properties occupied by these drugstore chains for these reasons:

1. The drugstore business is considered recession-proof. People need medicine when they are sick, regardless of the state of the economy. Both rich and poor people in the US have access to medicine. Some even argue that low-income people use more medicine because they get them for free from government programs.
2. The drugstore business has a good prospect in the US:
   • People are living longer and need more medicine to help them live longer. Older people tend to use more medicine than younger ones. As the 78 million baby boomers are getting closer to retiring age starting from 2008, the drugstore chains anticipate the demand for medicine to increase in next 20 years.
   • The US population will continue to grow, and so the market will get bigger.
   • There are new drugs to treat old or previously untreatable illnesses, and new diseases, e.g. Viagra, Zoloft for depression, Avastin for colon cancer, Herceptin for breast cancer, Nicotine patches for smokers to kick the habit, Tamiflu for a potential Bird Flu pandemic, and various new drugs for AIDS and Attention Deficit Disorder (ADD). The new medicines are very expensive, e.g. a year’s supply of Avastin costs about $55,000.
   • Technology and modern life introduce and require new products, e.g. pregnancy test kits, diabetic monitors, electronic toothbrushes, diet pills, vitamins and nutrition supplements.
   • Before the customers can get to the medicine aisles or pharmacy counters, they have to pass by chocolates, sodas, digital cameras, watches, toys, dolls, wines, cosmetics, video games, flowers, fragrances, etc. As a result, customers buy more than their prescriptions and medicine in these drugstores. CVS reported that non-pharmacy sales represented 30% of the company’s total sales in January of 2007. The figure for Walgreens is 34%.
3. These companies sign very long-term, NNN leases, guaranteed by their corporate assets. This makes the investment in the underlying property fairly low risk, especially for Walgreens with an A+ debt rating. In fact, these properties are sometimes referred to as investment-grade properties. Once the drugstore chains sign the lease, they will pay the rent no matter what. The authors are not aware of any properties leased by one of these drugstore chains in which the tenants failed to pay rents. Even when the stores are closed due to weak sales (Walgreens closed 119 stores last quarter), these companies may sublease to another company and continue to pay on the main lease.
   
   

1. If you want a low risk investment, i.e. you want a “bullet-proof” investment, go with Walgreens. The degree of safety is the same whether the property is in California where you get a 5% cap or Texas where you may get a 6.5% cap. So, there is no significant advantage to invest in properties in California.
2. If you are willing to take more risk, then go with Rite-Aid. Some properties outside of California may offer up to 8% cap rate.
3. All 3 drugstore chains have similar requirements. They all want highly visible, standalone, rectangular property around 12,000 - 14,000 SF on a 1.5 - 2 acre lot, preferably at a corner with about 75 - 80 parking spaces in a growing and high traffic location. They all require the property to have a drive-thru. Hence, you should avoid purchasing an inline property, i.e. not standalone and property with no drive-thru, as there is a chance that these drugstores may not want to renew the lease. In addition, if you acquire a property that does not meet the new requirements, for example a drive-thru, you may have a problem getting financing as lenders are aware of these requirements.
4. If the pharmacy is opened 24 hours a day, it is in a better location. Drugstore chains do not open the store 24 hours day unless the location draws customers.
5. Some properties may have a percentage lease. If so, you want to determine the store’s sales figures. Of course, you want to invest in a location where the store’s sales are higher than the average for that drugstore chain.
6. Many properties have an existing loan that the buyer must assume. If you have a 1031 exchange, do not buy this property. Should you fail to assume the existing loan (because assuming an existing loan is a lot more difficult than getting a new loan), you may run out of time for a 1031 exchange and have to send a big check to the IRS.
7. About 10% of the drugstore properties for sale and typically CVS pharmacies allow an investor to down less than 15% of the purchase price but require the investor to assume an existing fully-amortized loan with zero cash flow. That is, all of the rent paid by the tenant must be used to pay down the loan. The cap rate may be in the 7% range, and the interest rate on the loan could be in the 5.5% to 6% range. Hence, the investor pays off the loan in 10 to 20 years. However, the investor has no positive cash flow during the year, which forces him to pay income tax on any rental profits (the difference between the rent, mortgage interest and other operating costs) from outside sources and not from the property’s rental activity. The longer you own the property, the more outside cash you will need to pay income
   The Two Biggies of SEO?
   I am not a SEO(search engine optimization) expert but I have done my reading. Like me if you read anything about SEO you will probably come to the same conclusions as I have. While there are a lot of different things you can do to help the ranking of your site, there are two biggies that are usually stressed as the most important. The first of the two is content. That means to get as much relevant, useful, content as possible on your site, and then when you have a substantial amount, add some more everyday. The second biggie of SEO is getting relevant links pointing to your site on other high ranking pages. The articles lead me to believe that doing these two thing may be the difference between success and failure.Being the skeptic that I am I decided to test what I was reading on the web to see if the amount of content and number of backlinks are in truth important factors in the search engines rankings. The test that I ran is in no way all inclusive and should in now way be considered absolute, but rather hopefully it can give a bit clearer picture of the importance that search engines (specifically Google) give these two “biggies“.First I wanted measure the amount of content that a higher ranking sites contain, and then compare them to the amount found on a lower ranking
   pression, Avastin for colon cancer, Herceptin for breast cancer, Nicotine patches for smokers to kick the habit, Tamiflu for a potential Bird Flu pandemic, and various new drugs for AIDS and Attention Deficit Disorder (ADD). The new medicines are very expensive, e.g. a year’s supply of Avastin costs about $55,000.
8. Technology and modern life introduce and require new products, e.g. pregnancy test kits, diabetic monitors, electronic toothbrushes, diet pills, vitamins and nutrition supplements.
9. Before the customers can get to the medicine aisles or pharmacy counters, they have to pass by chocolates, sodas, digital cameras, watches, toys, dolls, wines, cosmetics, video games, flowers, fragrances, etc. As a result, customers buy more than their prescriptions and medicine in these drugstores. CVS reported that non-pharmacy sales represented 30% of the company’s total sales in January of 2007. The figure for Walgreens is 34%.
10. These companies sign very long-term, NNN leases, guaranteed by their corporate assets. This makes the investment in the underlying property fairly low risk, especially for Walgreens with an A+ debt rating. In fact, these properties are sometimes referred to as investment-grade properties. Once the drugstore chains sign the lease, they will pay the rent no matter what. The authors are not aware of any properties leased by one of these drugstore chains in which the tenants failed to pay rents. Even when the stores are closed due to weak sales (Walgreens closed 119 stores last quarter), these companies may sublease to another company and continue to pay on the main lease.
    
    

1. If you want a low risk investment, i.e. you want a “bullet-proof” investment, go with Walgreens. The degree of safety is the same whether the property is in California where you get a 5% cap or Texas where you may get a 6.5% cap. So, there is no significant advantage to invest in properties in California.
2. If you are willing to take more risk, then go with Rite-Aid. Some properties outside of California may offer up to 8% cap rate.
3. All 3 drugstore chains have similar requirements. They all want highly visible, standalone, rectangular property around 12,000 - 14,000 SF on a 1.5 - 2 acre lot, preferably at a corner with about 75 - 80 parking spaces in a growing and high traffic location. They all require the property to have a drive-thru. Hence, you should avoid purchasing an inline property, i.e. not standalone and property with no drive-thru, as there is a chance that these drugstores may not want to renew the lease. In addition, if you acquire a property that does not meet the new requirements, for example a drive-thru, you may have a problem getting financing as lenders are aware of these requirements.
4. If the pharmacy is opened 24 hours a day, it is in a better location. Drugstore chains do not open the store 24 hours day unless the location draws customers.
5. Some properties may have a percentage lease. If so, you want to determine the store’s sales figures. Of course, you want to invest in a location where the store’s sales are higher than the average for that drugstore chain.
6. Many properties have an existing loan that the buyer must assume. If you have a 1031 exchange, do not buy this property. Should you fail to assume the existing loan (because assuming an existing loan is a lot more difficult than getting a new loan), you may run out of time for a 1031 exchange and have to send a big check to the IRS.
7. About 10% of the drugstore properties for sale and typically CVS pharmacies allow an investor to down less than 15% of the purchase price but require the investor to assume an existing fully-amortized loan with zero cash flow. That is, all of the rent paid by the tenant must be used to pay down the loan. The cap rate may be in the 7% range, and the interest rate on the loan could be in the 5.5% to 6% range. Hence, the investor pays off the loan in 10 to 20 years. However, the investor has no positive cash flow during the year, which forces him to pay income tax on any rental profits (the difference between the rent, mortgage interest and other operating costs) from outside sources and not from the property’s rental activity. The longer you own the property, the more outside cash you will need to pay income
   Learn to Invest Money: Free Global Market Opportunities Technology Stock Picks (April 19 2006)
   Looking for some tech stocks to add to your portfolio? Here are three technology stocks that are well positioned for the remainder of FY2006.TKO: AMEXTelkonet, Inc. (TKO) is a small cap company that develops and sells proprietary equipment that enables the transmission of voice, video, and data communications over existing electric utility lines within a building at a very cost-effective price, often even less than a typical wireless setup. TKO offers the Telkonet iWire System product suite, a technology that enables the delivery of commercial high-speed broadband access from an Internet protocol platform.Last year, TKO’s technology was awarded the “Best of FOSE” at the Federal Office Systems Expo (FOSE) in Washington D.C. In February 2006, TKO acquired a 90% share in Microwave Satellite Technologies, Inc. which allows them to provide wi-fi solutions as well as voice, video, and data solutions to residential, commercial, and institutional clients. So why have you never heard of them? Because as of April 16, 2006, their market cap is under $200M, their average daily volume over the past three months is only about 350,000 shares, and their stock is trading at roughly $4 a share, all parameters too small for the big investment houses to ever consider. Chicago. While the company has existed for more than 100 years, most stores are only 5-10 years old. The company plans to open 500 new stores in 2007. This is the best managed company among the three drugstore chains and also among the most admired public companies in the US. Due to its superior financial strength and premium locations, properties with leases from Walgreens get the highest price per square foot among the 3 drugstore chains. In addition, Walgreens gets a flat rent or very low rent increase for 20 to 30 years. The cap rate is often in the 5% range for properties in California and up to 6.5% outside of California. Investors who buy properties leased by Walgreens look for a safe investment. They often compare the returns on their investment with the returns from US treasury bonds or Certificate of Deposits from banks.
   
   CVS Pharmacy: CVS Corporation was founded in 1963 in Lowell, MA by Stanley Goldstein, Sidney Goldstein, and Ralph Hoagland. The name CVS stands for “Consumer Value Stores”. It now has close to 6,200 stores in the US, mostly through acquisitions. In 2004, CVS bought 1,200 Eckerd Drugstores mostly in Texas and Florida. In 2006, CVS bought 700 Savon and Osco drugstores mostly in Southern California. It is also buying Caremark, the largest pharmaceutical services company. When CVS bought 1,200 Eckerd stores, it formed a single-entity LLC to own each Eckerd store. Each LLC signs the lease with the property owner. In the event of a default, the owner collects only from the assets of the LLC and not from any other CVS-owned assets. Although the owner loses the security from CVS corporate assets, the authors are not aware of any incident where CVS closes a store and does not pay rent.
   
   Rite-Aid: Rite Aid opened its first store in 1962 as “Thrif D Discount Center” in Scranton, Pennsylvania. It officially incorporated as Rite Aid Corporation in 1968. Rite Aid is the weakest financially among the 3 drugstore chains. It had serious financial problems just a few years ago. However, the worst seems to be over. Rite-Aid is acquiring (as of Feb 07) about 1,850 Brooks and Eckerd drugstores, mostly along the East coast to catch up with Walgreens and CVS. After the acquisition, Rite-Aid will have about 5,000 stores and nearly $27 Billion in revenues.
   
   Do’s and Don’ts: If you are interested in investing in a property leased by drugstore chains, here are a few things you should consider:

   1. If you want a low risk investment, i.e. you want a “bullet-proof” investment, go with Walgreens. The degree of safety is the same whether the property is in California where you get a 5% cap or Texas where you may get a 6.5% cap. So, there is no significant advantage to invest in properties in California.
   2. If you are willing to take more risk, then go with Rite-Aid. Some properties outside of California may offer up to 8% cap rate.
   3. All 3 drugstore chains have similar requirements. They all want highly visible, standalone, rectangular property around 12,000 - 14,000 SF on a 1.5 - 2 acre lot, preferably at a corner with about 75 - 80 parking spaces in a growing and high traffic location. They all require the property to have a drive-thru. Hence, you should avoid purchasing an inline property, i.e. not standalone and property with no drive-thru, as there is a chance that these drugstores may not want to renew the lease. In addition, if you acquire a property that does not meet the new requirements, for example a drive-thru, you may have a problem getting financing as lenders are aware of these requirements.
   4. If the pharmacy is opened 24 hours a day, it is in a better location. Drugstore chains do not open the store 24 hours day unless the location draws customers.
   5. Some properties may have a percentage lease. If so, you want to determine the store’s sales figures. Of course, you want to invest in a location where the store’s sales are higher than the average for that drugstore chain.
   6. Many properties have an existing loan that the buyer must assume. If you have a 1031 exchange, do not buy this property. Should you fail to assume the existing loan (because assuming an existing loan is a lot more difficult than getting a new loan), you may run out of time for a 1031 exchange and have to send a big check to the IRS.
   7. About 10% of the drugstore properties for sale and typically CVS pharmacies allow an investor to down less than 15% of the purchase price but require the investor to assume an existing fully-amortized loan with zero cash flow. That is, all of the rent paid by the tenant must be used to pay down the loan. The cap rate may be in the 7% range, and the interest rate on the loan could be in the 5.5% to 6% range. Hence, the investor pays off the loan in 10 to 20 years. However, the investor has no positive cash flow during the year, which forces him to pay income tax on any rental profits (the difference between the rent, mortgage interest and other operating costs) from outside sources and not from the property’s rental activity. The longer you own the property, the more outside cash you will need to pay income
      India's Influential News Media
      Indian press has such a deep influence over the lives of people that the Indians trust their media more than their government in terms of news authenticity. A survey shows that the most preferred medium of news in India is television (about 37 per cent), followed closely by newspapers (at 36 per cent). Then comes radio at 7 per cent and news magazines at 4 per cent. Thus, media training is a must to handle the Indian limelight.Surprisingly, Indians trust local newspapers, television, and radio more than news websites and blogs. So the pressure is on for Indian reporters to produce engaging news stories every hour.The Most Prominent Newspapers Of India In most of the Indian households, the day starts with a morning cup of tea, along with a newspaper. They are an integral part of the lives of Indians.In a survey of Indian newspapers, the Hindustan Times (www.hindustantimes.com), published from Delhi, came up as the largest circulated single edition daily with 1,175,339 copies followed by the Ananda Bazar Patrika, published from Kolkata with 1,130,167 copies. The Times of India, published from New Delhi and printed at New Delhi and Sahibabad came third with 1,102,772 copies. The Times of India, the most read English daily
      re and does not pay rent.
      
      Rite-Aid: Rite Aid opened its first store in 1962 as “Thrif D Discount Center” in Scranton, Pennsylvania. It officially incorporated as Rite Aid Corporation in 1968. Rite Aid is the weakest financially among the 3 drugstore chains. It had serious financial problems just a few years ago. However, the worst seems to be over. Rite-Aid is acquiring (as of Feb 07) about 1,850 Brooks and Eckerd drugstores, mostly along the East coast to catch up with Walgreens and CVS. After the acquisition, Rite-Aid will have about 5,000 stores and nearly $27 Billion in revenues.
      
      Do’s and Don’ts: If you are interested in investing in a property leased by drugstore chains, here are a few things you should consider:
      1. If you want a low risk investment, i.e. you want a “bullet-proof” investment, go with Walgreens. The degree of safety is the same whether the property is in California where you get a 5% cap or Texas where you may get a 6.5% cap. So, there is no significant advantage to invest in properties in California.
      2. If you are willing to take more risk, then go with Rite-Aid. Some properties outside of California may offer up to 8% cap rate.
      3. All 3 drugstore chains have similar requirements. They all want highly visible, standalone, rectangular property around 12,000 - 14,000 SF on a 1.5 - 2 acre lot, preferably at a corner with about 75 - 80 parking spaces in a growing and high traffic location. They all require the property to have a drive-thru. Hence, you should avoid purchasing an inline property, i.e. not standalone and property with no drive-thru, as there is a chance that these drugstores may not want to renew the lease. In addition, if you acquire a property that does not meet the new requirements, for example a drive-thru, you may have a problem getting financing as lenders are aware of these requirements.
      4. If the pharmacy is opened 24 hours a day, it is in a better location. Drugstore chains do not open the store 24 hours day unless the location draws customers.
      5. Some properties may have a percentage lease. If so, you want to determine the store’s sales figures. Of course, you want to invest in a location where the store’s sales are higher than the average for that drugstore chain.
      6. Many properties have an existing loan that the buyer must assume. If you have a 1031 exchange, do not buy this property. Should you fail to assume the existing loan (because assuming an existing loan is a lot more difficult than getting a new loan), you may run out of time for a 1031 exchange and have to send a big check to the IRS.
      7. About 10% of the drugstore properties for sale and typically CVS pharmacies allow an investor to down less than 15% of the purchase price but require the investor to assume an existing fully-amortized loan with zero cash flow. That is, all of the rent paid by the tenant must be used to pay down the loan. The cap rate may be in the 7% range, and the interest rate on the loan could be in the 5.5% to 6% range. Hence, the investor pays off the loan in 10 to 20 years. However, the investor has no positive cash flow during the year, which forces him to pay income tax on any rental profits (the difference between the rent, mortgage interest and other operating costs) from outside sources and not from the property’s rental activity. The longer you own the property, the more outside cash you will need to pay income
         Ecommerce - Making the Move From the Back Room
         In the heart of a man in a major urban city there beats a dream. This dream includes the proverbial white picket fence and prosperity. He finds a product he is sure will be a best selling item. He does quality research on the item and sees enormous profit potential so he acquires an unlisted phone number and operates his business from a basement apartment located at the back of a house in an undesirable part of town. There are no signs located outside his apartment and each day he wonders why no one comes to buy his product.If this fictional scenario seems absurd that’s because it is absurd. If you are going to develop a business you need to find a location that is high profile. You will need to advertise your business and employ additional methods of marketing your business.Yet when it comes to ecommerce there are so many businesses that engage their online business in a hide and seek game with potential customers. There is a lack of marketing strategies that can provide an increase in visitation. Like our fictional example these ecommerce businesses are operating as if they don’t need a phone number, high traffic location or any signs that might help customers find them.Search engines are to the Internet what phone books are to telephone customers. These search engines are rel
         f you acquire a property that does not meet the new requirements, for example a drive-thru, you may have a problem getting financing as lenders are aware of these requirements.
      8. If the pharmacy is opened 24 hours a day, it is in a better location. Drugstore chains do not open the store 24 hours day unless the location draws customers.
      9. Some properties may have a percentage lease. If so, you want to determine the store’s sales figures. Of course, you want to invest in a location where the store’s sales are higher than the average for that drugstore chain.
      10. Many properties have an existing loan that the buyer must assume. If you have a 1031 exchange, do not buy this property. Should you fail to assume the existing loan (because assuming an existing loan is a lot more difficult than getting a new loan), you may run out of time for a 1031 exchange and have to send a big check to the IRS.
      11. About 10% of the drugstore properties for sale and typically CVS pharmacies allow an investor to down less than 15% of the purchase price but require the investor to assume an existing fully-amortized loan with zero cash flow. That is, all of the rent paid by the tenant must be used to pay down the loan. The cap rate may be in the 7% range, and the interest rate on the loan could be in the 5.5% to 6% range. Hence, the investor pays off the loan in 10 to 20 years. However, the investor has no positive cash flow during the year, which forces him to pay income tax on any rental profits (the difference between the rent, mortgage interest and other operating costs) from outside sources and not from the property’s rental activity. The longer you own the property, the more outside cash you will need to pay income taxes as the mortgage interest will get less and less toward the end. So who would buy this kind of property?
          • The misinformed investors who failed to consider that they have to raise additional cash to pay income taxes.
          • The investors who have rental losses from other properties. By acquiring this zero cash flow property, they may offset the income from the drugstore tenant against the rental losses from other properties. For example, a property has $105,000 of rental profits a year, and the investor also has rental losses of $100,000 from other properties. As a result, the combined profits are only $5,000.
          • The investors who are motivated by a low down payment and high cap rate.

      Disclosure: The investment strategy and information presented in this article should not be construed to be formal financial planning advice or the formation of a financial manager/client relationship. The authors intend to provide information to the general public based on our recommendations of investment strategies and is not designed to be representative of your own financial needs. Please do not make any decisions about an investment strategy without consulting with a qualified professional.

      To ensure compliance with requirements imposed by IRS Circular 230, we hereby inform you that the U.S. Federal tax advice contained in this article is not intended to be used nor has this article been written to be used, and it cannot be used, by any taxpayer for the purpose: (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. No tax advice is being given by this article for any specific transaction. If you desire advice about any particular transaction, then please consult a professional tax advisor.

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