McDonald’s is a real estate goldmine with holdings estimated at about $40 billion worldwide. And with sales down for three years in a row, some analysts suggest that the fast food giant could offer its shareholders better returns through a real estate investment trust.
Glenview Capital Management chief Larry Robbins said in a letter to investors that by entering a publically traded trust, McDonald’s could access at least $20 billion in value, according to the Wall Street Journal
Still, some analysts are against the idea, arguing that the burger giant already derives huge amounts of revenue from its real estate holdings. About a fifth of McDonald’s $27.4 billion in total revenue last year came from rental income from franchisees. And rent payments from franchisees have actually risen 26 percent over the past five years, to $6.1 billion in 2014, according to the Journal.
“McDonald’s is facing a lot of headwinds, like minimum wage increases and more competitors,” Bob Schulz, managing director at Standard & Poor’s Ratings Services, told the Journal. “This would be an additional complication for management’s time.” [WSJ] – Christopher Cameron