This page compares asking cap rates on McDonald’s NNN ground leases with a scenario yield on McDonald’s own corporate notes. S&P and Moody’s rate McDonald’s Corporation’s long-term debt BBB+/Baa1 (Form 10-K for fiscal 2025). In August 2025 it priced 5.000% senior notes due 2036 to yield 5.059% to maturity, 72 basis points over the benchmark Treasury (term sheet dated August 18, 2025). With the 10-year Treasury at 5.24% on October 1, 2026 (FRED), those notes would yield roughly 6.0% to maturity if McDonald’s spread were unchanged; that is a hypothetical scenario, not a market quote or a current cash yield. Across the active McDonald’s listings we track, the median asking cap rate is 4.00% (listings observed through October 23, 2026). At an illustrative 4.0% asking cap rate, a buyer would accept about 196 basis points less than that scenario yield. Why would a buyer accept 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 Long-Term Debt Rating | BBB+ |
| Moody’s Long-Term Debt Rating | 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 | Listings we track are often marketed as ground leases; the tenant may be a McDonald’s corporate entity or a franchisee, and McDonald’s Corporation may or may not guarantee the lease; confirm both per lease |
McDonald’s rating source: S&P Global Ratings BBB+, as of February 24, 2026; Moody’s Baa1, as of February 24, 2026. Ratings checked October 8, 2026. McDonald’s Form 10-K for fiscal 2025 describes these as ratings of its long-term debt; its commercial paper is rated separately. Restaurant and revenue figures are from the same filing.
The Spread: McDonald’s Bonds vs NNN
| Metric | McDonald’s Corporate Bond | McDonald’s NNN Property |
|---|---|---|
| Yield to Maturity / Asking Cap Rate | 5.06% yield to maturity at pricing (5.000% notes due 2036, August 18, 2025); scenario: roughly 6.0% yield to maturity at the October 1, 2026 10-year Treasury yield if the spread were unchanged (not a quote or a current cash yield) | 4.00% median asking cap rate (listings observed through October 23, 2026) |
| Illustrative Difference vs Bond Scenario | Baseline (scenario yield to maturity) | Illustration: a 4.0% asking cap rate is about 196 bps below the 5.96% scenario yield to maturity; for a specific property, use its own asking cap rate |
| Minimum Investment | $1,000 face amount, in $1,000 increments, for the August 2025 notes (via broker) | $2.37M to $3.47M (middle half of asking prices in the listings we track, observed through October 23, 2026) |
| 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% for tax year 2026 per the IRS, plus state tax and the 3.8% net investment income tax under IRC 1411 above income thresholds) | Fully taxable on a land-only ground lease; partly sheltered by building depreciation when the buyer owns the building |
| 1031 Exchange Eligible | No; IRC 1031 applies only to real property | Can qualify if held for investment or business use and the IRC 1031 requirements, including its deadlines, are met |
| Depreciation Deduction | None | None on land-only ground leases (land is not depreciable, Treas. Reg. 1.167(a)-2); on an owned nonresidential building, 39-year recovery (IRS Publication 946), with possible cost segregation of shorter-lived components |
| Appreciation Potential | Returns par at maturity if held and the issuer pays; market price can rise or fall before then | Land value can rise or fall |
| Rent / Coupon Growth | Fixed coupon (no inflation protection) | Scheduled increases vary by lease; McDonald’s says escalation terms on leases where it is lessee vary by market (Form 10-K); confirm the schedule in the lease |
| Leverage | Depends on the investor and any broker margin terms | Financing may be available; leverage reduces cash-on-cash yield when the loan’s annual debt service as a share of the loan amount exceeds the unlevered cap rate, before costs |
Bond terms are from McDonald’s SEC term sheet dated August 18, 2025: 5.059% yield to maturity, 72 basis points over a 4.339% benchmark Treasury yield (the 4.250% Treasury due August 15, 2035). The scenario adds the same 72 basis point spread to the 5.24% 10-year Treasury constant maturity yield on October 1, 2026 (FRED, DGS10), for about 5.96%; it is a hypothetical yield to maturity, not a quote or a current cash yield. NNN cap rates and prices are asking figures from the active McDonald’s listings tracked by InvestmentGrade.com (49 listings observed through October 23, 2026, of which 48 have an asking cap rate on record); cap rate figures rest on the listings with a cap rate and price figures on the listings with an asking price, so the counts can differ. 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 hypothetical 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 5.96% scenario yield to maturity and an illustrative 4.0% asking cap rate. Treating a yield to maturity as annual income is a simplification: a bond’s cash income is its coupon, and its yield to maturity also reflects the price paid.
| Metric | McDonald’s Bond (5.96% Scenario Yield) | McDonald’s NNN Ground Lease (Land Only) | McDonald’s NNN Fee Simple (Building Owned) |
|---|---|---|---|
| Investment | $1,000,000 | $1,000,000 | $1,000,000 |
| Illustrative Annual Return / 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 an illustrative 4.0 percent cap rate for both NNN columns; a fee simple property’s asking cap rate can differ from a ground lease’s, which would change 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 qualified property acquired and placed in service after January 19, 2025, under IRC 168(k); IRS Notice 2026-11) 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.
Related: Gas Station Bonus Depreciation
Why a Buyer Might Accept Less Than the Bond Scenario
In the hypothetical above, a land-only McDonald’s ground lease at a 4.0% asking cap rate shows a lower annual return than the 5.96% bond scenario, before and after tax. Reasons a buyer might accept that include:
- Rent growth. A McDonald’s ground lease may step up rent on a schedule that varies by lease; McDonald’s says escalation terms on leases where it is lessee vary by market (Form 10-K). A bond coupon is fixed. Confirm the schedule in the lease.
- Land ownership. The buyer owns the land under the restaurant, with residual value if the lease ends, though land values can fall as well as rise.
- 1031 exchange eligibility. Real property held for investment or for use in a business can be exchanged for like-kind real property without recognizing gain if the requirements of IRC 1031 are met, including the 45-day identification and 180-day receipt deadlines (the receipt deadline ends earlier if the tax return due date, with extensions, comes first), so gain can be deferred across later qualifying exchanges; bonds are not real property and do not qualify. This is general information, not tax advice.
- Structure. A ground lease can leave the landlord with limited obligations, depending on the lease, 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. Remaining terms vary by property. Among the McDonald’s listings we track with a remaining lease term on record (22 listings, observed through October 23, 2026), the average is 16.2 years. Confirm the remaining term and renewal options in the lease, and weigh how much term is left when comparing asking cap rates.
- Rent schedule. Verify the escalation schedule in the lease rather than assuming 10% every five years.
- Rent versus land value. On a ground lease the buyer pays for the land and the lease income; compare the price with local land values.
- Financing. Leverage reduces cash-on-cash yield when the loan’s annual debt service as a share of the loan amount exceeds the property’s unlevered cap rate, before costs; compare a dated loan quote with the asking cap rate before deciding whether to borrow.
Frequently Asked Questions
S&P and Moody’s rate McDonald’s Corporation’s long-term debt BBB+ and Baa1, respectively (Form 10-K for fiscal 2025). These are debt ratings, not a rating of any specific lease. The investment grade floor is BBB- at S&P and Baa3 at Moody’s.
Across the active McDonald’s listings we track, the median asking cap rate is 4.00% (listings observed through October 23, 2026). Those listings are often marketed as ground leases; confirm the structure in each lease. Asking cap rates are not closing cap rates.
Buyers may value what a bond does not offer: rent increases where the lease schedules them (schedules vary; confirm in the lease), land ownership, and the possibility of deferring gain through a 1031 exchange if its requirements are met. As an illustration, a 4.0% asking cap rate is about 196 basis points below the roughly 5.96% yield to maturity McDonald’s 2036 notes would have at the October 1, 2026 10-year Treasury yield and an unchanged spread; that scenario is not a current cash yield. In the after-tax illustration above, a land-only ground lease also trails the bond scenario because land is not depreciable.
In the McDonald’s listings we track (observed through October 23, 2026), the middle half of asking prices runs from about $2.37M to $3.47M, with a median near $3.00M, depending on market, traffic, lease term remaining, and rent in place.
In the hypothetical on this page, the bond scenario (a roughly 5.96% yield to maturity at the October 1, 2026 10-year Treasury yield and an unchanged spread) shows a higher annual return, before and after tax, than a land-only ground lease at an illustrative 4.0% cap rate. That is not a quote: a bond’s cash income is its coupon, and its yield to maturity also reflects the price paid. The lease can offer scheduled rent increases, land ownership, and 1031 exchange treatment if the requirements are met; 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 median asking cap rate in the listings we track is 4.00% (observed through October 23, 2026). Use the 1031 tenant-selection framework to test whether the lease term, rent schedule, and residual land value justify an asking cap rate below the bond scenario 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 can ask cap rates below the scenario yield to maturity on McDonald’s 2036 notes shown above (a hypothetical, not a current cash yield), 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. A lender may give weight to McDonald’s Corporation’s BBB+/Baa1 long-term debt ratings only where the lease’s legal obligor is McDonald’s Corporation or the lease carries an enforceable McDonald’s Corporation guaranty; confirm the exact obligor and any guaranty first. Debt ratings are not a rating of a specific lease.
Exit It: When you sell, we market McDonald’s NNN to private and 1031 exchange buyers; demand varies with lease term and location.
Exchange It: 1031 exchange into or out of McDonald’s NNN with deadline driven execution.
Educational content only. InvestmentGrade.com is a commercial real estate brokerage and educational publisher. We do not sell, broker, underwrite, or solicit any bonds, securities, or investment products. Yields, ratings, and prices referenced are approximate, fluctuate continuously, and are sourced from public market data as of the dates noted. Nothing on this page constitutes investment advice, an offer to sell, or a solicitation to buy any security. Consult a licensed broker-dealer, registered investment advisor, or tax professional before making any investment decision. For SEC investor education, visit investor.gov.
