McDonald's NNN Property For Sale: What Investors Need to Know

Why McDonald's is the Gold Standard NNN Tenant

When investors think of NNN properties, McDonald's is almost always the first tenant that comes to mind — and for good reason. McDonald's Corporation (NYSE: MCD) is one of the most financially strong corporate guarantors in the entire NNN market. With over 14,000 US locations, McDonald's generates consistent off-market investment sale activity that few other NNN tenants can match.

For the investor, a McDonald's NNN property offers the combination that defines a quality net lease investment: investment-grade credit, absolute NNN lease structure, long primary term, and a nationally recognized brand with decades of operating history. The question is never whether McDonald's is a good NNN tenant — it is. The question is how to evaluate a specific McDonald's property and whether the price and cap rate reflect the deal's true value.

McDonald's NNN Lease Structure: What You're Actually Buying

McDonald's NNN properties come in two primary forms, and understanding the difference is critical before making an offer.

1. McDonald's Ground Lease (Most Valuable)

In a ground lease structure, the investor owns the land. McDonald's (or the franchisee) owns the building and is responsible for all improvements, maintenance, taxes, and insurance. The investor receives ground rent — typically with 10% rent escalations every 5 years or CPI-based adjustments. Ground leases typically trade at the tightest cap rates (3.75–5.0%) because the investor's ownership of the land is permanent; even after lease expiration, the land remains a valuable asset in a proven commercial location.

2. McDonald's Fee Simple (Building + Land)

In a fee simple structure, the investor owns both the land and the building. This is the more common investment structure. Absolute NNN leases mean McDonald's (or the franchisee) handles all costs — taxes, insurance, maintenance, roof, and structure. The investor collects rent with zero landlord responsibilities. Fee simple McDonald's deals typically trade at slightly higher cap rates than ground leases (4.5–6.0%) because the investor bears residual value risk on the building at lease expiration.

Corporate vs. Franchisee Guarantee: The Critical Distinction

This is the single most important factor in evaluating any McDonald's NNN property — and the one most buyers overlook.

Corporate Guarantee

McDonald's Corporation directly guarantees the lease. The corporate entity backs every rent payment regardless of how the individual restaurant performs. This is the highest-quality guarantee available in the NNN market and commands the tightest cap rates. In hot markets (Los Angeles, Dallas, Austin), corporate-guaranteed McDonald's ground leases can trade below 4% cap rates with multiple competing offers.

Franchisee Guarantee

The lease is guaranteed by the franchisee — typically an individual operator or small operating company. The quality of a franchisee guarantee varies enormously. A large, multi-unit operator with 50+ locations and corporate-quality financials is very different from a single-restaurant operator. Franchisee-guaranteed McDonald's deals command higher cap rates (5.0–6.5%) to compensate for the reduced credit quality. Buyers must review franchisee financials, unit count, and operating history before valuing these assets.

McDonald's NNN Cap Rates by Market (2025)

Cap rates for McDonald's NNN properties vary significantly by location:

• Los Angeles / coastal California: 3.75% – 4.75% (corporate guarantee, ground lease)
• Dallas / Austin / major Texas metros: 4.5% – 5.5%
• Florida (Miami, Tampa, Orlando): 4.75% – 5.75%
• Atlanta / Southeast primary markets: 4.85% – 5.75%
• Phoenix and Sunbelt growth markets: 5.0% – 5.75%
• Secondary and tertiary markets: 5.5% – 6.5%+

The key cap rate drivers are: market size, location quality within the market (traffic count, visibility, access), corporate vs. franchisee guarantee, ground lease vs. fee simple, and remaining lease term.

Remaining Lease Term: How Much is Left?

A McDonald's NNN lease with 20 years remaining is priced very differently than one with 5 years remaining. Cap rate compression is most extreme on long-term leases (15+ years) because they provide predictable income for a longer period. As lease term shortens below 10 years, cap rates expand and pricing drops — reflecting the re-leasing risk at expiration.

For 1031 exchange buyers, remaining lease term is critical. You need a property that generates stable income through at least your anticipated hold period — typically 10–20 years for a 1031 replacement property. Avoid McDonald's properties with less than 7 years of term unless you have a clear re-leasing or re-development strategy.

Rent Escalations in McDonald's NNN Leases

McDonald's leases typically include rent escalations of:

• 10% every 5 years — the most common structure in older leases
• 1.5–2% annual escalations — more common in newer leases and sale-leasebacks
• CPI-based escalations — less common but provides inflation protection

Annual escalations are preferable to 5-year bumps in a high-inflation environment because they compound continuously. A McDonald's deal with 1.75% annual escalations will significantly outperform one with 10% every 5 years over a 20-year hold period.

How to Find Off-Market McDonald's NNN Properties for Sale

The best McDonald's NNN deals rarely hit LoopNet or CoStar. They trade through direct relationships between brokers and investor networks before any public marketing occurs. The primary sources of off-market McDonald's NNN inventory are:

• Estate sales: When a franchise operator or early NNN investor passes away, their properties often trade quietly before a public listing
• Portfolio dispositions: Larger investors selling a portfolio of QSR NNN assets often prefer a quiet transaction with a qualified buyer
• Franchise consolidation: When McDonald's corporate acquires franchisee operations or vice versa, NNN sale-leasebacks often occur
• 1031 exchange sourcing: Investors who need to move quickly on replacement properties create off-market demand that accelerates quiet dispositions

The ESS Group maintains an active network of McDonald's NNN deal flow across all major US markets. Contact us with your target market, cap rate range, and transaction timeline to access current off-market inventory.

McDonald's NNN as a 1031 Exchange Replacement Property

McDonald's NNN properties are among the most popular 1031 exchange replacement assets in the US. They satisfy the typical 1031 exchange buyer's criteria perfectly: passive income, no management responsibility, investment-grade credit, long lease term, and a nationally recognized brand that's easy to explain to lenders and heirs. If you're identifying replacement properties on a 45-day timeline, tell us your price range and we'll match you with available McDonald's NNN inventory immediately.