The Strategic Implications of Dragos Capital's Acquisition of a CVS-Leased Portfolio: A New Dawn for Triple-Net Leases in a Post-Pandemic Economy

In the ever-evolving landscape of commercial real estate, Dragos Capital's recent acquisition of 18 CVS Health-leased properties in 2025 marks a pivotal moment for triple-net (NNN) lease investments. This strategic move not only underscores the firm's disciplined approach to capital preservation but also highlights a broader industry trend: the resurgence of NNN leases as a compelling vehicle for risk-adjusted returns in a post-pandemic economy.

The Dragos-CVS Acquisition: A Case Study in Strategic Resilience

Dragos Capital's acquisition of these 18 retail properties, leased under long-term NNN agreements to CVS Health, aligns with its focus on high-credit-tenant assets. The leases, spanning 20–25 years with structured rent escalations (5% every five years for fee-simple leases and 10% bumps at 7.5 years for ground leases), provide a predictable income stream. With an average cap rate of 6.44% in 2025, these properties reflect a balance between risk and reward, leveraging CVS Health's investment-grade credit profile (BBB/S&P, Baa3/Moody's) to mitigate tenant default risks.

The acquisition also taps into CVS's strategic expansion, including HealthHUB locations and drive-thru services, which enhance the properties' long-term value. By securing assets in high-traffic areas with median household incomes of $55,000–$75,000, Dragos positions itself to benefit from sustained consumer demand for healthcare and retail services.

NNN Leases: A Resurgence in a Post-Pandemic Economy

The post-pandemic NNN market has seen a recalibration of investor priorities. While Q2 2025 recorded a 13.1% quarterly drop in sales volume, the sector has stabilized, with cap rates for retail NNN properties rising to 6.44%—a reflection of improved financing conditions and narrowing buyer-seller price gaps. Private investors now dominate 43% of transactions, drawn to the passive income and operational simplicity of NNN structures.

The QSR (Quick Service Restaurant) sector has been a standout, with cap rates averaging 5.4% due to its recession-resistant nature. However, the retail segment, particularly healthcare-focused tenants like CVS, is gaining traction. These properties offer a unique blend of stability and growth, as evidenced by the 5.7% year-over-year increase in retail NNN sales in 2025.

Strategic Implications for Investors

Dragos's acquisition exemplifies the strategic advantages of NNN leases in today's economic climate:
1. Stable Cash Flow: With tenants covering taxes, insurance, and maintenance, landlords enjoy consistent net operating income (NOI). For CVS-leased properties, this translates to an average NOI supported by 25,000–40,000 daily vehicle traffic and strong demographic footprints.
2. Credit Security: CVS Health's BBB rating ensures lease reliability, even amid macroeconomic uncertainties. This is critical as rising interest rates and inflationary pressures test tenant resilience.
3. Long-Term Appreciation: The 20–25-year lease terms, coupled with programmed rent escalations, create a compounding effect on returns. For instance, a $5.5 million property with 5% annual escalations could see rent increase by 60% over 15 years.

Risks and Considerations

While NNN leases offer compelling benefits, investors must remain cautious. Rising interest rates have pushed cap rates higher, compressing valuations. Additionally, tenant-specific risks—such as CVS's potential store rationalization—could impact occupancy. However, the full guaranty of CVS Health and the properties' strategic locations mitigate these concerns.

Investment Advice: Balancing Caution and Opportunity

For investors seeking income resilience, NNN leases remain a cornerstone strategy. The key lies in selecting assets with:
- Investment-Grade Tenants: Prioritize tenants with BBB or higher credit ratings.
- Structured Escalations: Look for leases with clear rent bump schedules (e.g., 5–10% every 5–7.5 years).
- Diversified Geography: Acquire properties in multiple markets to reduce regional risk.

Dragos Capital's acquisition of the CVS-leased portfolio is more than a transaction—it's a testament to the enduring appeal of NNN leases in a post-pandemic world. As the market navigates higher borrowing costs and shifting tenant strategies, the disciplined pursuit of high-quality, corporate-backed assets will define the next chapter of real estate investing. For those willing to navigate the nuances of cap rates, tenant credit, and lease terms, the NNN sector offers a path to stable, long-term value creation.

In the end, the Dragos-CVS deal isn't just about acquiring property—it's about securing a future where cash flow and capital preservation align in an unpredictable economy.