Dawn Patrol

How a smart real estate strategy could make First Watch the next Texas Roadhouse

Source: First Watch Investor Presentation

Summary

In general, there are securities analysts and business analysts. As a listed real estate investor, I am often wearing the hat of a securities analyst, understanding how mostly known cash flows will flow through a capital structure. Occasionally however, I must lace up my business analyst skates and look at an operating company that is benefitting from an established real estate trend.

The strength of retail real estate has not gone unnoticed, however, as I wrote in my 2025 REIT outlook,

The structural undersupply of retail real estate has been one of the most well-distributed theses in the CRE market. The looming threat of e-commerce disruption, COVID-19, and NIMBY politics have each taken their turn constraining retail development in the past decade. Eventually, however, the indefatigable U.S. consumer won out, availability has plummeted, and asking rents have risen.

Unfortunately, I just don’t see much in the way of compelling value in …