McDonald’s, the world’s most beloved fast-food chain, has looked to expand its business past Big Macs, McGriddles, and franchisee payments. With former CEO Steve Easterbrook ousted, some say that the company might be eyeing a move toward a real estate investment trust (REIT). Is this true?
Don’t Get Too Excited About a McDonald’s REIT
Are you excited about a new investment in a McDonald’s REIT? If that is the case, slow down. McDonald’s does not seem to want to deal with the risks that a REIT brings.
Financial experts say that it is not likely that McDonald’s will pursue a REIT spin-off. Bethany Babcock, principal of Foresite Real Estate Inc., stated, “McDonald’s strategy to act as a landlord to their franchisees has a long history and has been extremely successful. I do not think that strategy will change in the near future.”
More Than Burgers: McDonald’s as a Real Estate Powerhouse
Worldwide, McDonald’s owns about $34 billion worth of buildings, building improvements, and land. One might think the company gets all of its profit from food sales, but the company generates over 50% more of its gross profit from the rent that it charges franchise owners than it does from food sales. In many ways, the fast-food giant is, as a coalition of American and European trade unions puts it, the “largest real estate company in the world.” So, with the massive profits from real estate, any potential value that McDonald’s would get from a REIT is outweighed by the significant operational and financial risks. However, if you are looking for a new way to invest in real estate, there are better ways than relying on a McDonald’s REIT move.
Take Real Estate Investing in Your Own Hands
With PropTech firms like Propy gaining notoriety, it is easier than ever to take real estate investing into your own hands. Borderless by design, the Propy platform allows investors to transact on real estate located across the globe quickly. Furthermore, groupware, smart contracts, and blockchain technology integration mean that the entire transaction process can be completed automatically without the need for escrow agents or middlemen. So, do not wait for McDonald’s to make a decision to do a REIT spin-off; be a self-starter and see what is out there today.