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We love some Cava. The harissa honey chicken, the crazy feta — our mouths are watering just thinking about it. But today’s report that Cava’s latest valuation means every location is worth $33M is just blowing our minds. Cava is now valued at more than $10B, a 300% increase since its IPO a year ago. It has 323 restaurants, including 50 opened in the last year, and is looking to bring that up to 1,000 by 2032. That blows Chipotle out of the salsa water. One year after its IPO, Chipotle, which is often seen as a benchmark for fast-casual restaurants, was valued at $3M per store. It all could come crashing down. Analysts are worried the valuation has moved beyond common sense, especially since each location brings in about $3M in revenue annually. But in general, Cava is seen as a standout in what has been a rather sluggish fast-casual restaurant space. “Investors are willing to pay a premium for these growth-oriented concepts,” Jim Salera, an analyst who covers restaurant stocks at Stephens, told Bloomberg. “[They’ll] pay that premium because there’s only a handful of restaurants that are providing growth.” Restaurants are coming off a few really bad years, and some longtime chains are biting the dust. (See: Red Lobster.) But that is starting to turn around. More openings than closings are expected this year, and sales are expected to hit a record $1T. Restaurants accounted for nearly 20% of retail leases last year, the highest proportion for any category ever. Sun Belt cities like Houston are starting to see bidding wars, thanks to more restaurant demand than space availability. So all in all, it may end up being a pretty good year for restaurants. Do your part and take your dad out for a nice meal on Sunday. You can probably do better than Cava, though. — Catie Dixon, Jay Rickey, Mark F. Bonner and Kayla Carmicheal Not getting The First Draft in your inbox? Click here to sign up. Got any feedback for us? Email first...@bisnow.com. |
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On Our Radar
Deep worries persist over U.S. inflation and income. The consumer sentiment index dropped to its lowest level in seven months this morning — it has fallen for three months straight. The Bank of Japan kept its benchmark interest rate unchanged. Notably, the central bank also said it would significantly reduce government bond purchases. The yen slumped on the news. It’s Donald Trump’s birthday today. The former president, real estate developer, convicted felon and presumptive 2024 Republican presidential nominee is turning 78. Mark thinks he knows what every CRE dad wants for Father’s Day. And it’s definitely not a tie. Will the Boston Celtics hoist the Larry O’Brien Trophy tonight? They have thoroughly dominated the Dallas Mavericks so far in the NBA Finals. The series stands at 3-0. Tipoff is at 8:30 p.m. ET. The UEFA European Championship starts at 3 p.m. ET. The tournament is expected to be the biggest one in history. Nearly 3 million fans will attend matches scheduled until July 14 in Germany. The opening match is Germany vs. Scotland. And if you’re looking for further entertainment this weekend, Season 2 of House of the Dragon and the Tony Awards are both on Sunday night. Early reviews on House of Dragon are, well, not great. This Morning’s News Shorenstein Troubled Debt Approaches $1B (Bisnow): Shorenstein Properties is grappling with increasing defaults as office tenants continue to vacate spaces. It surrendered ownership of downtown Minneapolis’ second-tallest tower last week after failing to find a buyer and has another $822M of defaulted or at-risk debt. Read more here.
Quebec Pension, Walker & Dunlop's U.S. Property Bet (Bloomberg): Quebec’s CDPQ and Walker & Dunlop are ramping up investments in U.S. apartments and student housing. Walker & Dunlop Investment Partners original JV with CDPQ was for $250M. Read more here.
Blackstone REIT Sweetens A Deal (Bloomberg): When Blackstone put a portfolio of student dorms up for sale, it “dangled the option for buyers to take over $800 million in debt that had already been negotiated at low rates.” Blackstone also provided below-market financing, BREIT’s first seller financing ever. Read more here.
Today’s Deep Dive: Why Apple’s Big AI Push Could Change Where Data Centers Are Built |
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Wikimedia Commons/Mike Deerkoski
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We all know that guy who shows up hours after the party begins, but once he’s there, the shindig always goes to another level. For data centers, that’s Apple Intelligence. AI has been booming for a few years now without Apple taking much of a role in it, and that has already led to an exponential increase in data center demand. But now Apple has unveiled a new AI strategy that is expected to bring the technology to more of the general public — and that’s sure to create another seismic shift and bring data centers into the urban core. “It’s going to mean data center demand in Tier 1 cities with large population bases,” said Ali Greenwood, executive director of Cushman & Wakefield’s data center group. “I think you're going to see a tremendous increase in demand around these real-life rollouts of AI tools that are going into the consumer’s hands.” Read the full story here.
Sila Realty Launches As Public REIT (Sila Realty Trust): Sila Realty Trust is targeting strategic acquisitions across the healthcare sector, from hospitals to medical offices, after listing on the NYSE. Read more here.
Michael Shvo's Real Estate Struggle (WSJ): After a bold $3B acquisition of luxury properties, developer Michael Shvo faces significant financial headwinds as his high-stakes investments falter. Read more here.
Bears QB Caleb Williams Gets Into Real Estate (Bisnow): Caleb Williams, the No. 1 overall pick in the 2024 NFL draft, is now a Chicago Bears quarterback and the owner of an investment firm. His new company, 888 Midas, will invest in real estate, private equity and venture capital. Read more here.
Construction Costs Dip (Construction Dive): Construction materials' prices decreased in May for the first time this year. Still, the report says overall and nonresidential construction costs are 2.1% and 2.2% higher, respectively, than a year ago. Read more here.
Ares Eyes Major Acquisition (Bloomberg): Ares Management is reportedly exploring a deal to acquire real estate investor GLP Capital Partners. That would add $66B to its portfolio and be one of the biggest alternative asset management M&A deals in years. Read more here.
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Wikimedia Commons/Pedro Aragão
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Wreckage Of Jet Carrying Late Cousins Properties Execs Discovered 53 Years Later (Bisnow): A plane that went missing in 1971 with three Cousins Properties executives on board has been found in Lake Champlain. Read more here.
Real Estate Fund Trouble (Austin Business Journal): A lender's real estate investment fund, Pride of Austin, has been placed in receivership following allegations of misleading investors about its financial health and operations. Read more here.
The £3B Question: Why Private Equity Is Piling Into UK Hotel Portfolios (Bisnow): The UK hospitality market is rebounding rapidly, largely driven by private equity companies buying large portfolios of midmarket hotels. Four deals totaling £3B have either been completed or are in the works so far this year, a huge increase from £2B completed in all of 2023. Read more here.
Six Flags' New Venture (BNN Bloomberg): Six Flags plans to open a luxury safari lodge in New Jersey, marking its venture into the luxury hospitality industry. Read more here.
Casey's Expansion Plans (Chain Store Age): Convenience store giant Casey's aims to expand its network to over 2,750 stores this year. Casey’s entered its 17th state in the recently completed fiscal year and currently has 2,658 locations. Read more here.
The CRE Billionaire, Clarence Thomas And More Ethics Concerns (ProPublica): Billionaire real estate mogul Harlan Crow provided Justice Clarence Thomas with more private jet trips than Thomas previously disclosed. Read more here.
Seattle's Sports Expansion (BNN Bloomberg and NBC New York): Seattle Kraken owner David Bonderman is expanding his vision for Seattle's sports scene, harboring hopes to bring an NBA team to the city. NBA commissioner Adam Silver this week mentioned Seattle, Las Vegas and Mexico City as potential cities for NBA expansion. Read more here and here.
Google's New Development Initiative (CoStar): Google is seeking approvals for a new mixed-use project that may include residential units in San Jose. The proposal includes demolishing a shuttered Orchard Supply Hardware store in an area where Google once planned a $1B development project. Google paused that project, called Downtown West, last year. Read more here.
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Courtesy of ARX Creative
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Historic Financing For Florida's Future Tallest Tower (Bisnow): The Waldorf Astoria supertall project in Florida has secured the state's largest construction loan. This financing is set to support the completion of what will be the tallest building in the U.S. south of New York City. Read more here.
Sears HQ Transformation (ComEd and Compass): ComEd and Compass have started to transform the former Sears headquarters campus in suburban Chicago into one of the largest-ever data center projects in Illinois. The buildings are projected to bring $10B of investment into the area in the coming years. Read more here.
Major Retail Portfolio Acquisition (Pine Tree): A Pine Tree joint venture has acquired a $495M retail portfolio from REIT Site Centers. Site Centers says it retained 94K SF of leasable area at three of the properties which it intends to include in an expected spin-off of Curbline Properties. Read more here and here.
Starwood Hotel Transaction (Bisnow and Bloomberg): Starwood is close to selling the 1 Hotel Central Park to Host Hotels & Resorts. Starwood previously tried to sell the 230-room hotel in 2016 – a year after it opened – for $1M per room. Host's latest buying spree includes the $725M acquisition of the Turtle Bay Resort in Hawaii and the $530M acquisition of 1 Hotel in Nashville. Read more here.
Abercrombie & Fitch's Turnaround (CNBC): Once a struggling mall brand, Abercrombie & Fitch has revamped its products, overhauled its supply chain and rebranded to make a dramatic recovery, becoming one of retail’s biggest success stories. Read more here. *** The First Draft is produced by Director of Newsletters Jay Rickey, Managing Editor Catie Dixon, Editor-in-Chief Mark F. Bonner and Deputy Newsletter Editor Kayla Carmicheal, with an assist from ChatGPT. We’d love your feedback! Email us at first...@bisnow.com. Was this email forwarded to you? Get on the distribution list here. |
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