VICTORVILLE – The land, building and lease for McDonald’s, located on 13625 Bear Valley Road in Victorville, is available for purchase at $2.7 million. The absolute net lease agreement allows the owner to collect $104,735 annually for rent while McDonald’s is responsible for all property related expenses including the rent, taxes, insurance, and building maintenance.

McDonald’s Quarter 2 earnings

During a Quarter 2 earnings call in July, McDonald’s Chief Financial Officer Ian Borden reported the total restaurant profit grew by nearly $450 million – almost 14% more than what they made in the previous quarter. McDonald’s President and Chief Executive Officer Chris Kempczinski also revealed the company was in the process of developing a new “small format” restaurant concept – CosMc’s. 

According to Forbes, many fast food restaurant brands have shifted towards smaller locations post pandemic. Customer preferences for drive-thru, carry-out and third party delivery options seems to be here to stay. Shrinking the physical size of operations reduces operating costs, helping franchisees to remain as profitable as possible.

The sale of the McDonald’s lease does not include the business. The acquisition is for the fee simple interest – land, building and absolute triple net lease. 

Absolute Net Lease

Absolute net leases require no landlord responsibility for expenses, making them attractive to investors who desire a passive income stream. Other expense structures require the landlord to pay for some or all the building expenses. Absolute net leases require the tenant to pay these expenses directly.

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According to the listing real estate company Re/Max Masters, the McDonald’s sits on a parcel that is 32,352 square feet. There are over 5 years left on the lease agreement with (4) five year options to extend. 

The cap rate for the investment is 3.75%.

A lower cap rate is generally associated with a safer or less-risky investment. A higher cap rate is associated with more risk. Many financial advisors feel that a high cap rate is better — a good cap rate is between 5% and 10%.

The listing says the lease has a 10% rent increase every five years. The rent increase provides a growing Net Operating Income – rent, and hedge against inflation. 

The property has been on the market for 9 days.

For more information about the McDonald’s net lease for sale visit https://www.crexi.com/properties/1212374/california-mcdonalds-ground-lease