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Walgreens-Rite Aid Merger Could Mean Bad News for Landlords

Now that Walgreens is acquiring Rite Aid for $17.2B, the drugstore sector is left with just two national players: Walgreens and CVS. And although Rite Aid will initially operate under its existing name, Walgreens does plan to integrate the two companies over time.

Real estate experts say that's not good news for many retail landlords, National Real Estate Investor reports.

For instance, when Albertsons acquired Safeway in 2014, federal antitrust regulations forced the companies to shutter more than 160 stores in markets where there was overlap. And while Walgreens and Rite Aid don't have a lot of overlap, it's still likely they will have to sell off some stores, just the same. With roughly 13,000 stores combined, it's likely areas like New York, where Walgreens has a high concentration since acquiring Duane Reade in 2010, will have to make adjustments.

Walgreens previously announced a $1.5B cost transformation program through the end of fiscal year 2017 that will include the shuttering of an estimated 200 stores. So far 84 stores were closed in fiscal year 2015. [NREI]