McDonald’s NNN ground leases ask cap rates well below the yield on McDonald’s own corporate bonds. McDonald’s Corporation is rated BBB+/Baa1 (S&P / Moody’s). In August 2025 it priced 5.000% senior notes due 2036 to yield 5.059%, 72 basis points over Treasuries; with the 10-year Treasury at 5.24% on October 1, 2026 (FRED), those notes would yield roughly 6.0% today if McDonald’s spread were unchanged. Across the active McDonald’s listings we track (as of October 5, 2026), the median asking cap rate is about 4.0%. Why would a buyer accept about 200 basis points less for the real estate? This page walks through what the buyer gets in exchange, and what it costs.
For the full methodology and multi-company comparison, see the bond-to-NNN spread analysis. For McDonald’s credit and store detail, see the McDonald’s credit rating and cap rate page and the tenant ratings database.
McDonald’s Credit Profile
| Metric | Details |
|---|---|
| S&P Rating / Outlook | BBB+ |
| Moody’s Rating / Outlook | Baa1 |
| Investment Grade Status | Investment Grade |
| Ticker | NYSE: MCD |
| Restaurants | 13,706 US; 45,356 worldwide, about 95% franchised (year-end 2025) |
| Total Revenue | $26.9 billion (2025) |
| Lease Structure | Ground leases: 39 of 52 listings we track; the tenant may be a McDonald’s corporate entity or a franchisee; confirm per lease |
The Spread: McDonald’s Bonds vs NNN
| Metric | McDonald’s Corporate Bond | McDonald’s NNN Property |
|---|---|---|
| Yield / Cap Rate | 5.06% at pricing (5.000% notes due 2036, Aug. 2025); roughly 6.0% at the October 1, 2026 10-year Treasury yield if the spread is unchanged | ~4.0% median asking (3.75% to 4.18% middle half, October 5, 2026) |
| Nominal Spread vs Bond | Baseline | About -200 bps vs. the estimated bond yield (-220 to -180 bps across the middle half) |
| Minimum Investment | $1,000 face amount, in $1,000 increments, for the August 2025 notes (via broker) | $2.25M to $3.52M (middle half of asking prices) |
| Liquidity | Tradable on business days through a broker; individual issues can trade thinly | Weeks to months to market and close; timing varies |
| Income Taxation | Ordinary income (top federal rate 37%, plus state tax and 3.8% NIIT where applicable) | Fully taxable on a land-only ground lease; partly sheltered by building depreciation when the buyer owns the building |
| 1031 Exchange Eligible | No | Yes |
| Depreciation Deduction | None | None on land-only ground leases; 39 year straight line plus cost segregation on an owned building |
| Appreciation Potential | Returns par at maturity | Land value can rise or fall |
| Rent / Coupon Growth | Fixed coupon (no inflation protection) | Scheduled increases vary; 10% every 5 years is the schedule most often stated in the listings we track (October 2026); confirm in the lease |
| Leverage Available | Often unlevered | Financing commonly available; at a 4% cap rate, leverage at current loan rates reduces cash yield |
Bond yield at pricing is from McDonald’s August 2025 SEC term sheet. The current estimate adds the rise in the 10-year Treasury yield from about 4.34% at that pricing to 5.24% on October 1, 2026 (FRED) and assumes McDonald’s 72 basis point spread is unchanged; it is an estimate, not a quote. NNN cap rates and prices are asking figures across 52 active McDonald’s listings tracked by InvestmentGrade.com as of October 5, 2026. This is not investment advice.
After Tax Comparison: $1,000,000 Invested in McDonald’s
Whether taxes change this comparison depends on what the buyer owns. Below is a side by side comparison assuming a high bracket investor (37 percent federal, 5 percent state, 3.8 percent NIIT, 45.8 percent combined), using the estimated current bond yield and the median asking cap rate above.
| Metric | McDonald’s Bond (Est. 5.96%) | McDonald’s NNN Ground Lease (Land Only) | McDonald’s NNN Fee Simple (Building Owned) |
|---|---|---|---|
| Investment | $1,000,000 | $1,000,000 | $1,000,000 |
| Annual Income / NOI | $59,600 | $40,000 | $40,000 |
| Annual Depreciation | $0 | $0 (land is not depreciable) | $20,513 (80% building, 39 year straight line) |
| Taxable Income | $59,600 | $40,000 | $19,487 |
| Tax at 45.8% Combined | ($27,297) | ($18,320) | ($8,925) |
| After Tax Income | $32,303 | $21,680 | $31,075 |
| After Tax Yield | 3.23% | 2.17% | 3.11% |
Assumes a 45.8 percent combined rate (37 percent federal, 3.8 percent net investment income tax, 5 percent state), unlevered, and a 4.0 percent cap rate for both NNN columns; fee simple McDonald’s properties often ask higher cap rates than ground leases, which would raise that column. A land-only ground lease has nothing to depreciate, so the rent is taxed much like a bond coupon. A cost segregation study with 100 percent bonus depreciation (permanent for property acquired after January 19, 2025) can shelter more income in the first year on an owned building, but that deduction is front-loaded and is generally subject to recapture on sale; a 1031 exchange can defer gain, but recapture can still apply in an exchange (IRC 1245(b)(4), 1250(d)(4)). Consult a tax professional.
Why Buyers Pay Through the Bond Yield
At October 2026 yields, a McDonald’s ground lease earns less current income than McDonald’s own bonds, before and after tax. Buyers accept that for reasons a bond cannot match:
- Rent growth. McDonald’s ground leases often step up rent on a schedule, and 10% every five years is the schedule most often stated in the listings we track (October 2026), while a bond coupon is fixed.
- Land ownership. The buyer owns the land under a restaurant on a commercial corridor, with residual value if the lease ends, though land values can fall as well as rise.
- 1031 exchange eligibility. A McDonald’s property can receive exchange proceeds and roll forward into later exchanges, deferring capital gains tax as long as the exchange rules are met; bonds cannot.
- Buyer competition. McDonald’s ground leases draw private investors, family offices and 1031 exchange buyers, which can help keep cap rates low.
- Structure. A ground lease leaves the landlord with minimal obligations, but tenant, lease and site risks remain, and franchisee-only McDonald’s leases carry a different credit entirely.
Key Underwriting Considerations for McDonald’s NNN
- Tenant entity. Confirm whether a McDonald’s corporate entity or a franchisee is the tenant and whether McDonald’s Corporation guarantees the lease.
- Lease term remaining. Of the McDonald’s ground lease listings we track that state a lease term, 16 of 20 state a term of about 20 years from commencement to expiration (October 2026), but remaining terms vary; confirm the remaining term and renewal options in the lease, and note that shorter remaining terms often ask higher cap rates.
- Rent schedule. Verify the escalation schedule in the lease rather than assuming 10% every five years.
- Rent versus land value. At a 4% cap rate, much of the price rests on the land; compare the price with local land values.
- Financing. With cap rates below current loan rates, leverage reduces cash yield, so an all-cash purchase may produce a higher cash yield than borrowing.
Frequently Asked Questions
McDonald’s Corporation is rated BBB+ by S&P and Baa1 by Moody’s. The investment grade floor is BBB- at S&P and Baa3 at Moody’s.
Across the active listings we track as of October 5, 2026, the median McDonald’s asking cap rate is about 4.0%, with the middle half between 3.75% and 4.18%. Most of those listings (39 of 52) are ground leases. Asking cap rates are not closing cap rates.
Buyers value what a bond does not offer: scheduled rent increases (10% every five years is the schedule most often stated in the listings we track as of October 2026), land ownership, and 1031 exchange eligibility. At October 2026 rates, a 4.0% McDonald’s ground lease yields roughly 200 basis points less than McDonald’s 2036 bonds would at an unchanged spread, and it also trails the bonds after tax because a land-only ground lease provides no depreciation.
Asking prices in the listings we track cluster between about $2.25M and $3.52M, with a median near $3.01M, depending on market, traffic, lease term remaining, and rent in place.
At October 2026 yields, the bonds pay more current income, before and after tax, than a McDonald’s ground lease at the median asking cap rate. The lease offers rent growth, land ownership, and 1031 exchange treatment; the bond offers liquidity and simplicity. Which is better depends on the investor’s tax situation, need for liquidity, and view on long-term rent and land value growth.
1031 Buyer Shortcut: McDonald’s as a Pricing Benchmark
McDonald’s has the lowest median asking cap rate of any tenant with at least 10 priced listings we track (October 2026), so buyer demand is already priced in. Use the 1031 tenant-selection framework to test whether the lease term, rent schedule, and residual land value justify paying through the bond yield.
Benchmark next: 2026 NNN cap rates | QSR NNN cap rates by credit and lease type | Starbucks bonds vs NNN
Benchmark McDonald’s NNN Before Paying a Trophy Premium
McDonald’s ground leases often ask cap rates below McDonald’s corporate bond yields, so the underwriting question is whether the buyer is paying for true long-term real estate quality or simply accepting a low headline cap rate. Start with the current 2026 NNN cap rates by tenant credit quality and the 1031 tenant-selection framework, then compare lease term, guarantor, rent schedule, residual land value, and 45-day replacement urgency.
For adjacent benchmarks, compare Starbucks bonds vs NNN, Walmart bonds vs NNN, and the broader Investment Grade Tenants database.
Considering McDonald’s NNN?
We source McDonald’s NNN properties nationally across lease terms and price points. On the majority of transactions, there is no separate fee to you as the buyer; the listing broker pays a cooperating commission.
Find It: On market and off market McDonald’s NNN sourced and underwritten for your criteria.
Fund It: Investment Grade Capital, a service of Investment Grade LLC, matches buyers with lenders. McDonald’s BBB+/Baa1 credit can support competitive financing terms when a McDonald’s corporate entity is the tenant.
Exit It: McDonald’s NNN draws a broad pool of private and 1031 exchange buyers, though demand varies with lease term and location.
Exchange It: 1031 exchange into or out of McDonald’s NNN with deadline driven execution.
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