CVS Health and Big Law

Two tenant credit events in the past two weeks deserve a closer look from commercial real estate owners. CVS Health announced it will split into two public companies by the first half of 2028, and Weil, Gotshal & Manges announced plans to wind down after nearly a century in practice. Each poses different risks for landlords, and in both cases early preparation pays off. Let's look at each.

CVS Health: Two Companies by 2028

On November 4, 2026, CVS Health Corp. (“CVS”) announced that it intends to separate its retail pharmacy business from its non-retail businesses, including health insurer Aetna and pharmacy benefits manager CVS Caremark. The separation is expected to be completed in the first half of 2028 and is intended to be tax-free to CVS and its shareholders, who will own shares in both companies.

The two companies will look like this:

CVS Pharmacy (“CVS Retail”)

Approximately 9,000 retail pharmacies, mail pharmacy, MinuteClinic (including virtual care), and the Health100 technology services business

Healthcare solutions company (keeps the CVS Health name in the interim)

Aetna, CVS Caremark, CVS Specialty, Oak Street Health, and Signify Health

Completion remains subject to final board approval, an effective Form 10 registration statement with the SEC, and confirmation of tax-free treatment.

CVS: Immediate Impact for Landlords

CVS is targeting solid investment grade ratings for both companies, along with strong free cash flow and continued dividends. That is the company's stated intention, not a rating, and the credit agencies have yet to weigh in on either standalone entity.

The retail side is the thinner-margin business. CVS's Pharmacy & Consumer Wellness segment generated $1.64 billion of adjusted operating income in Q3 2026, roughly 39% of the company's $4.19 billion total. Retail pharmacy adjusted operating margins have run at roughly 4% to 5%, according to CNBC. Once separated, CVS Retail will no longer have Aetna and Caremark cash flows sitting alongside it.

The change could trigger changes in retail, office, and medical office leases across the CVS real estate portfolio. TRA suggests impacted landlords begin reviewing lease agreements with CVS entities now to determine potential impacts on lease compliance, focusing on:

• Tenant and guarantor entities: Identify which CVS entity is the tenant and whether CVS Health Corp. guarantees the lease. A parent guarantee today may sit with a different company after 2028.
• Assignment and transfer provisions: Check whether a spin-off or corporate reorganization is a permitted transfer that does not require landlord consent.
• Financing covenants: Credit tenant lease financings and loans underwritten to CVS's current rating may include tenant credit triggers worth reviewing with lenders.
• Which side of the split you're on: MinuteClinic sites go with CVS Retail, while Oak Street Health clinics, CVS Specialty locations, and Aetna offices go with the healthcare solutions company. Medical office and office landlords may end up with a different counterparty than their retail peers.

Big Law: Only as Reliable as the Partners

Within commercial leasing, Big Law has long been attracted to Class A buildings. Landlords are accustomed to seeing long-term leases, large footprints, and significant tenant improvement dollars. And after the lease is signed, Big Law often pays big rent once the free rent period is over.

On October 28, 2026, Weil, Gotshal & Manges (“Weil”) announced that its management committee had recommended an orderly wind-down of the firm, following a wave of partner departures and failed merger talks. Weil had roughly 1,200 lawyers and more than $2 billion in annual revenue, and it reportedly intends to wind down outside of bankruptcy court with restructuring advisors retained.

The news highlights the acute risk any professional services business brings to commercial landlords: these businesses are often only as reliable as their partners (or in some cases, shareholders or members). When rainmakers leave, clients and revenue can follow quickly. We have not seen Big Law collapse at this scale since the demise of Dewey & LeBoeuf (“Dewey”) in 2012, which unwound due to alleged accounting fraud and other financial missteps.

In either case, commercial landlords can plan for the off chance that a law firm tenant dissolves without much warning. Certain lease security and lease language can help protect against a disorderly dissolution that leaves landlords stranded.

Lease Security

A security deposit is often a valid tool, but it has limitations, especially when the lease requires a substantial build-out. Law firms often maintain lines of credit they use in the ordinary course of business, with letter of credit sub-facilities attached. Firms that use this approach typically pay an issuance fee ranging from 100 bps to 300 bps and a utilization fee of 25 bps to 100 bps on the amount of the letter of credit.

When structuring a letter of credit, landlords should consider:

• Simple draw conditions: Require only a simple written statement of default on the lease to draw, avoiding delays or hurdles.
• Partial draws: Allow partial draws to cure any event of default, rather than all-or-nothing.
• Cure before dissolution: It may be reasonable to require that the letter of credit be used to cure any delinquent rent before any bankruptcy filing or dissolution of a law firm tenant.
• Renewal and issuer strength: Use a creditworthy issuing bank with automatic renewal language, and the right to draw in full if the letter of credit is not renewed.
• Burn-down conditions: If the letter of credit steps down over the lease term, consider tying reductions to no defaults and no material decline in partner headcount.

Lease Language

Consider a guarantee from the partnership, or from the named or managing partners of the firm. In this instance, focus on joint liability or joint and several liability to reduce the legal expenses that may be required under several liability alone.

Additional provisions worth discussing with counsel:

• Partner headcount or revenue triggers: Require notice, or additional security, if equity partner headcount or firm revenue falls below an agreed threshold.
• Financial reporting: Require annual financial statements and prompt notice of any vote to dissolve or merge.
• Assignment on merger: Define whether a combination with another firm is a permitted transfer and require any successor firm to assume the lease.
• Orderly surrender: Spell out restoration and removal obligations so a wind-down does not leave the landlord with a stranded build-out.
• Recapture rights: Give the landlord the right to recapture space if the firm vacates or subleases a significant share of the premises.

Closing Thoughts

CVS and Weil sit at opposite ends of the tenant credit spectrum. CVS is a planned, multi-year separation that gives landlords roughly 18 months to review their leases before anything changes hands. Weil shows how quickly a professional services tenant can unwind once partners begin to leave. In both cases, the lease documents determine how well a landlord is protected.

Have more questions? Get in touch, we can help. Reach out to TRA at info@tra-llc.com.