Net Lease News

B+E Weekly Newsletter

June 13 – June 19, 2023

MARKET

FED PAUSES INTEREST RATE HIKES | Fortune

• The Fed decided Wednesday to forgo another increase in its benchmark interest rate, leaving it at about 5.1%. The pause followed 10 straight hikes in 15 months — the fastest series of increases in four decades.
• Top Fed officials hope to use the extra time to more fully assess how higher borrowing rates have affected inflation and the economy. They also want to see whether the collapse of three large banks this spring will weigh on lending and growth.
• Fed forecasters have consistently thought that inflation was about to turn down and have been wrong. The Fed wants to get inflation down to 2%, and they don’t see that yet.

CONSUMER CONFIDENCE HITS FOUR-MONTH HIGH | CoStar

• Consumer sentiment rose in June to its highest level in four months in a closely watched national survey of economic confidence. An easing of inflation and the resolution of last month’s federal debt ceiling negotiations were cited as factors boosting optimism.
• Researchers said preliminary findings, subject to revision later this month, showed June’s overall consumer sentiment index at 63.9, topping 59.2 posted in May and well above the 50 figure for June 2022.
• On the mortgage rate side, as inflation continues to decelerate, economic growth is slowing and the tightening cycle of monetary policy is reaching its apex, which means mortgage rates are expected to decrease later this year and into next.

INDUSTRIAL

WALMART OPENS ITS LARGEST-EVER FULFILLMENT CENTER | Commercial Search

• Walmart has completed a 2.2 million-square-foot fulfillment center in McCordsville, Ind. The property is the largest of its kind for Walmart and will expand access to the retailer’s next- or two-day shipping.
• The property has access to several transportation routes, including interstates 70 and 465. Neighboring industrial companies include Amazon, Smithfield Distribution, Progressive Logistics, and Tsuda USA Corp.
• Since the beginning of 2023, several industrial projects were brought to completion or broke ground in Indianapolis. As of April, the market had nearly 11 million square feet under construction, representing 3.1 percent of stock.

RETAIL

READY TO GROW AGAIN, BOJANGLES IS GOING ALL-IN ON EXPERIENCE | QSR

•  Bojangles started 2023 by signing multiple franchise development agreements to bring 32 new restaurants to target markets across the U.S., including Texas, Mississippi, New York, Maryland, and Tennessee.
• Last year, Bojangles closed the calendar with more than 230 units in the pipeline. It opened north of 30 stores and debuted its 800th systemwide in Monroe, Louisiana. 
• Bojangles is now headed to fresh cities, it’s preparing to establish a Texas presence in one example, built for broad appeal and performance. Yet with the same spirit and DNA that has made Bojangles a regional cult favorite.

CAVA’S GROWTH WINS OVER INVESTORS AND FUELS STOCK SURGE | QSR

• The Mediterranean chain revealed Wednesday that it priced its IPO at $22 per share, above its projected range of $19–$20. The restaurant sold 14.4 million shares, meaning it raised roughly $318 million. Based on more than 111 million outstanding shares, it was valued at $2.45 billion.
• The company earned $564.1 million in revenue in 2022, an increase from $500 million during the previous year. Same-store sales rose 14.2 percent last year and 23.6 percent against 2019, and AUV reached $2.4 million last year.
• In 2022 alone, the brand debuted a net of 73 restaurants, including 63 Zoes Kitchen conversions. The final Zoes Kitchen units will be converted before 2023 is over. CAVA expects to reach 1,000 locations by 2032.

CONVENIENCE STORE ACQUISITIONS: WHAT TO KNOW ABOUT RISK AND LIABILITY | GlobeSt

• Regulations require owners and operators to prove they have the financial resources to remediate contamination and/or compensate third parties for bodily injury/property damage resulting from a UST release.
• Environmental due diligence is another critical area of concern in the acquisition of C-Stores. Fueling and service operations associated with these types of assets may generate hazardous waste materials such as used oil, transmission fluid, and brake fluid or there is the possibility of issues with UST tanks.
• The acquisition of a C-Store can be a complex process, insurance brokers and environmental consultants can provide invaluable support to buyers throughout this process, helping them manage risks and liabilities associated with the C-Store, and ensuring compliance with all relevant regulations.