Oak Street Health Credit Rating & NNN Cap Rate Analysis

Oak Street Health Business Overview & NNN Investment Profile

Oak Street Health is a value-based primary care provider specializing in Medicare-eligible adults, operating approximately 170 centers across 25 states. Founded in 2012 in Chicago, the company pioneered a model that aligns physician incentives with patient outcomes rather than volume: Oak Street clinics earn revenue by keeping patients healthier and out of hospitals, not by maximizing the number of office visits. In May 2023, CVS Health completed its acquisition of Oak Street Health for approximately $10.6 billion, making it a wholly owned subsidiary of one of the largest healthcare companies in the United States.

For NNN investors, Oak Street Health properties occupy a unique and growing niche. The centers are purpose-built or extensively renovated freestanding outpatient facilities, typically ranging from 8,000 to 15,000 square feet, located in urban and suburban neighborhoods where healthcare access has historically been limited. More than half of Oak Street’s patients live in underserved communities, and the centers are designed to serve as full-service primary care hubs with in-house labs, behavioral health services, and social work support. These properties carry long-term NNN leases and, since the 2023 acquisition, benefit from the indirect credit support of CVS Health’s investment grade balance sheet.

Why Oak Street Health Matters for NNN Investors

The value-based care model that Oak Street pioneered is a structural shift in American healthcare delivery that is likely to accelerate over the coming decade. As the Medicare-eligible population grows and CMS continues to push reimbursement models that reward outcomes over volume, demand for facilities purpose-built for this care model will increase. Oak Street centers are specifically designed for longitudinal primary care relationships with older adults, featuring accessibility-focused layouts, on-site diagnostic capabilities, and community gathering spaces that traditional medical office buildings do not typically offer.

The CVS Health acquisition adds a layer of credit support but also introduces complexity. CVS has been under financial pressure from declining Medicare Advantage star ratings at its Aetna insurance division, the bankruptcy filing of its Omnicare long-term care pharmacy subsidiary, and a leadership transition following the departure of CEO Karen Lynch. These headwinds contributed to CVS’s credit downgrade from BBB+ to BBB (S&P) in recent years. NNN investors holding Oak Street properties backed by CVS-level credit should monitor whether these pressures stabilize or intensify. The 16-clinic closure announced for 2026 suggests CVS is prioritizing sustainable margins over aggressive growth, which is actually a positive signal for the remaining portfolio of locations.

Cap Rate Analysis & Pricing for Oak Street Health NNN Properties

Oak Street Health NNN properties trade in the 5.75% to 7.00% cap rate range as of Q1 2026. The spread reflects uncertainty around the guarantee structure (CVS parent versus Oak Street entity), the relatively recent vintage of many locations, and the evolving strategic direction under CVS ownership. Properties with confirmed CVS Health corporate guarantees and longer remaining lease terms trade toward the lower end of that range, while locations with Oak Street entity-level guarantees or shorter terms may price closer to 7.00%.

Typical pricing for Oak Street NNN properties falls between $3 million and $12 million, depending on the center size, market, and lease terms. Build-to-suit centers in primary metropolitan areas with 12+ year remaining terms command premium pricing, while older conversions or locations in secondary markets may trade at discounts. The per-square-foot rental rates generally range from $25 to $40 NNN, reflecting the medical-grade build-out and specialized infrastructure these facilities require.