Tuesday, December 07, 2010

CVS Trust to Issue $338.1 Million in Lease-Backed Notes Secured by 77 Drug Stores in 28 States

Providence Business News - December 2, 2010

CVS Caremark Corp., the largest provider of prescription drugs in the U.S., sold $338.1 million of debt secured by mortgages and leases, raising capital through the sale leaseback market.

The securities due in January 2033 yield 287.5 basis points more than 10-year Treasuries, according to data compiled by Bloomberg.

Sale leasebacks involve property being simultaneously sold and leased back to the seller for long-term continued use. The arrangement allows CVS Caremark to “essentially monetize our real estate asset,” Chief Financial Officer David Denton said Nov. 16 at a conference.

Buyers of the pass-through certificates will receive monthly payments of 5.773 percent, backed by the leases. Proceeds help CVS finance new store development, according to the company’s most recent quarterly filing.

The company gained $124 million from sale leaseback transactions in the nine months ended Sept. 30, compared with $748 million in the year-earlier period, according to the filing. The market was inaccessible in the fourth quarter of 2008 as credit markets froze.

Barclays Capital managed the sale. Sphere: Related Content

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