The Real Deal New York

McDonald’s not lovin’ REIT spinoff

Fast food giant won't pursue move that could have saved up to $1B in taxes

November 10, 2015 06:38PM

McDonald's NYC

McDonald’s in Times Square (inset: McDonald’s CEO Steve Easterbrook)

McDonald’s will not pursue a spinoff of its real estate assets, the fast food giant said Tuesday – eschewing a move that could have slashed its tax bill by as much as $1 billion.

Many McDonald’s shareholders had hoped the company would form a real estate investment trust that would have spun off its estimated $40 billion in worldwide real estate holdings into a separate entity.

The move would have caused tension with McDonald’s franchise owners, however, who operate the fast food chain’s locations independently and were worried about losing control of those physical locations, according to CNN.

Roughly 80 percent of McDonald’s 36,000 restaurants in more than 100 countries are franchises. While the company said Tuesday that it would not pursue a REIT spinoff, CEO Steve Easterbrook told investors that the company wants to expand its number of franchise-operated restaurants to 95 percent.

McDonald’s recently sold one of its Manhattan locations, at West 34th Street and 10th Avenue, to Related Cos. in a move that could pave the way for the developer’s latest Hudson Yards skyscraper. [CNN]Rey Mashayekhi

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