Morningstar Analyst On Rumor Of Ackman Push For McDonald's REIT: What Works For Darden Might Not Work For McDonald's

Speaking to Benzinga about the rumor that Pershing Square Capital Management CEO Bill Ackman is seeking a REIT spinoff for McDonald’s Corporation MCD, Morningstar Analyst RJ Hottovy said that there have been a couple of precedents for spinning off a real estate transaction in the restaurant industry.

Most notably, Hottovy pointed out that the Starboard Value-led board for Darden Restaurants, Inc. DRI is planning to spin off some sort of real estate transaction. That gives the sense that McDonald’s would potentially be allowed to do that, Hottovy said.

But Hottovy thinks that McDonald’s would still run into problems with its franchisees since it essentially operates as their landlord.

“The fact that Darden doesn’t really have a franchise base, whereas McDonald’s does, is the key difference,” he said.