National pharmacy and QSR brands are among the most recognizable names in single-tenant net-lease real estate, and for good reason — long-term corporate-guaranteed leases on well-known brands have historically offered some of the most predictable income in commercial real estate. But “big name brand” isn’t a substitute for underwriting, and the pharmacy and QSR categories have each gone through real structural change over the past several years.
Pharmacy NNN: Walgreens and CVS
Walgreens and CVS long anchored the pharmacy net-lease category as two of the most sought-after NNN tenants in the market, typically on 20-25 year absolute net leases at relatively low cap rates reflecting their investment-grade credit.
That said, the pharmacy sector has been in a consolidation cycle, with both companies closing a meaningful number of underperforming locations in recent years. This makes location-specific and lease-specific due diligence more important than it was a decade ago:
- Confirm the lease hasn’t been flagged for closure or renegotiation. Store-closure lists are publicly reported periodically; check current status before assuming a listed property is a stable hold.
- Review remaining lease term carefully. Older pharmacy leases signed at the height of the category’s popularity may be approaching renewal, which shifts the risk profile meaningfully.
- Understand the guarantor. Confirm whether the lease is guaranteed by the parent corporation directly, which affects your actual credit exposure.
QSR NNN: McDonald’s and Other Drive-Thru Brands
McDonald’s remains one of the most consistently in-demand QSR ground lease tenants in net-lease investing, typically commanding some of the tightest cap rates in the entire NNN category due to its credit strength and the enduring performance of the drive-thru QSR format.
QSR ground leases (McDonald’s, Chick-fil-A, Chipotle, Wendy’s, and similar brands) differ from a typical building lease in an important way: many are structured as ground leases, where the tenant owns the building and the landlord owns only the land. This affects both your ongoing obligations and what happens at lease expiration. See our ground lease vs. fee simple discussion for how that structure works.
For QSR properties specifically, checking the rent-to-sales ratio where unit-level sales data is available is one of the more useful underwriting steps — healthy QSR units typically run 6-10% rent-to-sales, with ratios above 12-15% signaling potential renewal risk.
What Makes a “Best” NNN Tenant
There’s no single answer to what makes the best NNN tenant — it depends on your priorities as an investor — but a few characteristics consistently correlate with the tightest cap rates and most stable long-term holds:
- Investment-grade public parent company credit (S&P BBB- or better)
- Long remaining primary lease term (10+ years)
- Strong, consistent unit-level sales performance
- A business model resilient to e-commerce and delivery disruption
- Direct corporate guarantee rather than a franchisee or subsidiary guarantee
Brand recognition alone doesn’t guarantee any of these — some well-known national brands have gone through significant credit or store-closure cycles even while remaining household names, which is exactly why underwriting the specific lease and location matters more than the sign on the building.
Comparing Brand Categories
Pharmacy and QSR brands are two of several common single-tenant net-lease categories active in the Southeast market. See our page on Dollar General and dollar store NNN properties for how that category compares on price point and credit profile.
Sourcing Brand-Specific NNN Opportunities in Georgia
Walgreens, CVS, and McDonald’s properties trade relatively infrequently in any given market compared to dollar stores, which means patience and off-market sourcing often matter more for this category. We track available and off-market brand-name NNN opportunities across Atlanta and its submarkets and can help you evaluate a specific listing.
This page is provided for general informational purposes and is not investment advice. Every property and tenant credit situation is different — talk with Doug directly about a specific opportunity.
Frequently Asked Questions
Is a Walgreens or CVS NNN property still a safe investment given store closures? Store-specific and lease-specific due diligence is more important now than it was a decade ago, given the pharmacy sector’s consolidation. A specific location’s performance and remaining lease term matter more than the brand name alone.
What’s a typical cap rate for a McDonald’s NNN property? McDonald’s ground leases typically command some of the tightest cap rates in the QSR category due to strong credit and consistent performance, but exact ranges move with the rate cycle — contact us for current figures relevant to your target market.
Why are McDonald’s properties often structured as ground leases rather than building leases? McDonald’s has historically preferred to own and control its own building and equipment, leasing only the land from the property owner. This is common across many QSR brands and affects what reverts to the landowner at lease expiration.
What does “best NNN tenant” actually mean? There’s no universal answer — it depends on your investment priorities. Investment-grade credit, long remaining lease term, strong unit-level sales, and a direct corporate guarantee are the factors that most consistently correlate with stable, tightly-priced NNN investments.
Can I 1031 exchange into a Walgreens, CVS, or McDonald’s property? Yes — these are all common 1031 replacement property choices given their passive management profile. See our 1031 exchange advisory page if you’re working under an identification deadline.