Morningstar Analyst On Ackman Possibly Seeking REIT Spinoff For McDonald's: 'I Think Management Would Push Back On It'

Speaking to Benzinga about a rumor that Pershing Square Capital Management CEO Bill Ackman wants McDonald’s Corporation MCD to do a REIT spinoff, Morningstar Analyst RJ Hottovy said that he thinks McDonald’s management would push back on it.

One reason Hottovy gave is that because of the way U.S. laws work, the company wouldn’t maintain majority control of the REIT. He explained that the top holders would have to parse out ownership, and each can’t own more than a certain percentage of the newly created entity.

He also pointed out that McDonald’s being a franchise would make it difficult to break up the business.

“Given that it’s not only a franchise, but a landlord for its franchisees, it does complicate the manner,” he said.

In essence, creating a REIT would be giving up control of that part that was spun off.