CVS Caremark Nearing $600 Million Sale leaseback of 163 Drug Stores in 29 US States

Moody's Investors Service Web Site - December 7, 2007

Based on information received through December 5, Moody's Investors Service assigns a provisional (P) Baa2 rating to $593.1 million of CVS Caremark Lease-Backed Pass-Through Certificates, Series 2007, to be issued by a trust that will acquire 163 first-priority lien commercial mortgage, credit-tenant lease loans. The loans will be secured by newly constructed and existing drug stores and related realty that will be triple-net leased to subsidiaries of CVS Caremark Corporation. Each of the leases will be bondable and guaranteed by CVS Caremark Corporation, and bankruptcy-remote, special purpose borrowers will own each of the fee or ground-leased properties. The loans mature in January 2030. Fixed net rent under the leases, plus a pre-funded interest reserve, will be sufficient to pay in full all interest and principal of the loans. The 163 drugstores are located in 29 states.

Moody's determined that, among other factors, the dark value of the collateral is sufficient, assuming a bankruptcy of CVS Caremark and rejection of leases, to support the expected loss consistent with the Certificates' rating. The rating of the Certificates is primarily based on the senior unsecured debt rating of CVS Caremark Corporation, which is currently Baa2, stable outlook; therefore, the Certificates' rating will change as the senior unsecured debt rating of CVS Caremark Corporation may change. The rating of the Certificates was also based on the overall structure and legal integrity of the transaction. Sphere: Related Content