Analysis of Investments

Zero Coupon Pharmacy 7

Inland

Inland Zero Coupon Pharmacy 7 is an investment into 10 CVS Pharmacy locations in 5 states. Each of the properties is NNN and operated by CVS with a lease guaranteed by CVS Health Corp.

Investment Highlights

  • Yr. 1 Cash-on-Cash 0.00%
  • Initial Occupancy 100.00%
  • Est. Time Horizon 10 years YEARS
  • Current Cash Flow 0.00%
  • Yr. 1 Cap Rate to Investor 5.32%
  • Investor Purchase Price $49,986,000
  • Total Offering Size $9,208,662

Loan Information

There is a separate loan for each property however they are not cross collateralized and have the same terms. The loans total $40,777,338 and are from Wells Fargo. The loan term is for a total of 22 years and is fully amortizing on a 22 year schedule. The interest rate is fixed at 3.416%.

  • Yr. 1 DSCR 1.0
  • Loan-to-Offering 81.58%
  • Hold Period DSCR 1.0

Tenant Information & Lease Terms

There are 10 properties in this portfolio each with the same tenant.
CVS - lease guaranteed by CVS Health Corp which has an investment grade credit rating of BBB+ from Standard and Poor's. The leases are NNN and have a remaining term of 25 years expiring in 2042. There are 50 years to extend in increments of 5 years each. Rent escalations are schedule in accordance with the lease.

Key Positives

  • The loan term is for a total of 25 years which allows the trust to execute a sale at a time they feel will maximize value.

  • The leases have a remaining term of 22 years.

  • The guarantor on the leases is an investment grade parent corporation.

  • The population counts in this portfolio are better than the previous Zero Coupon portfolio from Inland and population growth rate is above 1%.

Key Risks to Consider

  • The loan will be amortizing during the hold period, which will create phantom income for investors.

  • The initial term does not have rent escalations.

  • CVS has the right of first refusal on sales. This may hinder or potentially delay the sales process.

Investment Sponsor Information

Inland

The Inland Real Estate Group of Companies, Inc. ("Inland"), is an industry leader and one of the nation's largest commercial real estate and finance organizations. As a business incubator, we specialize in creating, developing and supporting Inland member companies that provide commercial real estate-related services and alternative investment funds, including limited partnerships, institutional funds and non-listed and listed REITs.

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