Walgreens Dividend Suspension and REIT Exposure

Walgreens Suspends Dividends, Downgrades to Junk Status, Store Closings

Investors in non-traded real estate investment trusts (REITs) should take note of Walgreens’ recent decision to suspend its quarterly dividend—an event that breaks a nearly century-long streak dating back to the Great Depression, according to an article in Fact Right on February 7th, 2025. The company reportedly cited the move as a necessary step to strengthen its balance sheet and improve free cash flow.

This development follows a series of financial setbacks for Walgreens, including a downgrade to junk status by both S&P (July 2024) and Moody’s (December 2023), an announcement of 1,200 store closures over the next three years, and a multi-billion-dollar opioid litigation settlement.

Walgreens is reportedly a significant tenant in various alternative investment real estate programs, including non-traded REITs and Delaware Statutory Trust (DST) portfolios.

Some REITs with notable exposure to Walgreens include:

• ExchangeRight Essential Income REIT – 15.9% of annualized base rent (ABR)
• Cantor Fitzgerald Income Trust – 4.3% of annualized rental income
• Alpine Income Property Trust (NYSE: PINE) – Publicly traded REIT with Walgreens as a tenant
• NETSTREIT Corp. – 5.9% of ABR
• Realty Income Corp. – 3.3% of ABR

For investors in non-traded REITs, Walgreens’ financial troubles raise real concerns about what could happen when a major tenant struggles. REITs that rely heavily on Walgreens for rental income could feel the effects, and investors may want to take a closer look at how their portfolios could be impacted.

The Risks of Investing in Non-Traded REITs

1. Lack of Liquidity– Unlike publicly traded REITs, non-traded REITs are not bought and sold on major stock exchanges. This means investors may have difficulty selling their shares when they need to access their money. Redemption programs, if available, are often limited, and investors may be forced to sell at a steep discount.

2. High Fees and Costs – Non-traded REITs typically have high upfront fees—often ranging from 10% to 15% of the investment—which can significantly reduce returns. Additionally, ongoing management and operational fees can eat into potential profits, making it harder for investors to see meaningful gains.

3. Valuation and Transparency Issues – Because non-traded REITs don’t trade on the open market, their valuations are not updated daily like publicly traded stocks. This lack of transparency makes it difficult for investors to determine the real-time value of their holdings. Additionally, distributions (or dividends) are not always based on actual earnings, and in some cases, they may be paid from borrowed funds or return of capital.

Broker Due Diligence

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor. Firms that fail to do so may be held responsible for any losses in a FINRA arbitration claim.

The White Law Group continues to investigate potential securities claims involving broker dealers who may have improperly recommended non-traded REITs to investors. The firm has represented numerous investors who have lost money investing in non-traded REITs and other alternative investments.

If you suffered losses investing in a non-traded REIT and would like a free consultation with a securities attorney, please call The White Law Group at 888-637-5510.    

The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Seattle, Washington.