Rite Aid Real Estate Available After Second Bankruptcy

Drugstore chain Rite Aid’s latest bankruptcy could shake up the retail real estate market.

The pharmacy placed almost its entire real estate portfolio up for bid one day after filing for Chapter 11 bankruptcy protection, CoStar reported. The availability includes 1,194 store leases and 50 company-owned properties across 15 states.

The stores range from 5,000 to 70,000 square feet, most averaging between 10,000 and 15,000 square feet. Rite Aid’s 23,000-square-foot Philadelphia headquarters is also up for grabs, as are six distribution centers and a small data center.

“There’s real opportunity here,” said Emilio Amendola, co-president of A&G Real Estate Partners, which is marketing the leases. “Some of the rents are going to be high. But there’s a good number of them that are good, attractive rents with long-term remaining.”

The 60-year-old pharmacy chain plans to close all locations after selling or rejecting its leases; 47 stores are already slated for closure this month and approximately 1,000 more will begin to shutter in June. All 178 New York state stores will reportedly close.

U.S. retail vacancy at 4.2 percent, according to CoStar data, but the winds are blowing in both directions regarding the storefronts.

“Rite Aid’s real estate is highly adaptable with sizes and features attractive to a broad range of retailers, restaurants and service providers,” Rudy Milian, president of Woodcliff Realty Advisors, told CoStar. He expects nearly all spaces to be absorbed within two years.

Rite Aid joins Party City and Joann in flooding the market with available leases from bankruptcies.

“Even in a supply-constrained market, there are only so many people looking for these kinds of spaces,” Bill Read of Retail Specialists.

The company reported in a court filing that 275 locations already have purchase agreements in place or soon to be in place.

Remaining unsold leases can be rejected through bankruptcy proceedings, leaving landlords responsible for vacant spaces.

Rite Aid, which operated 1,277 stores at filing, had already closed approximately 800 locations during its previous bankruptcy and an additional 29 stores since emerging last September.

— Holden Walter-Warner