Net Lease Profile: McDonald's

McDonald’s, with its “golden arches” and Dollar Menu, remains the dominant brand in the QSR space. With primary, secondary, and tertiary market locations, McDonald’s size and reach provide a strategic competitive advantage, as well as varying risk/return investment opportunities for net lease property buyers. Brand recognition, operating stability, and strong credit ratings reinforce McDonald’s standing as a prime net lease investment property.

McDonald’s remains the best example of a “flight to quality” in net lease investing. As cap rates have adjusted across the board for all net lease investments, McDonald’s assets continue to attract multiple buyers and trade at a significant premium over other properties. This aggressive pricing is a result of the high credit of the tenant, overall lease terms, relatively low purchase price, and general lack of supply in the marketplace. While McDonald’s, like most QSR brands, franchise the vast majority of their locations, when leasing a location they almost exclusively select locations and guaranty leases on a corporate level.