Investment Overview

McDonald’s USA, LLC executed a new 20-year NNN lease scheduled to commence rent in February 2026. The lease includes 10% rental increases every five years throughout the base term and option periods, with exception to a rare 15% increase in year 6 – providing an exceptional hedge against inflation. This outsized rent increase has an 0.15% impact on the overall yield on the property throughout its base term versus the typical 10% every 5-year increase structure. McDonald’s return to this corridor comes nearly five years after a fire led to the demolition of their longtime Walnut Street location just a few blocks away. (The former location is going to be redeveloped vertically, so it is no longer available for lease). With 17 feet of frontage, only one building removed from the southwest corner of 16th Street, the property is surrounded by dense retail, office, residential, and tourist activity. This flagship location benefits from exceptional foot traffic and proximity to major destinations, including Rittenhouse Square, the Central Business District, City Hall, and the Theater District. In fact, according to studies conducted in 2021 and 2022, the intersection of 16th and Chestnut recorded the highest pedestrian counts in all of Center City with average daily pedestrian volume of 28,860. The property is highly visible to both vehicular and foot traffic, and is supported by excellent transit connectivity, with multiple SEPTA rail lines and bus routes, including one immediately out front. This offering provides rare depreciation benefits as most McDonald’s assets operate under NNN ground leases. This fee-simple offering provides the valuable ability to depreciate the improvements, creating meaningful tax shelter and enhancing after-tax yield. Further strengthening the investment, McDonald’s occupies the property at an at-market rental rate, ensuring that the income stream is supportable and easily replaceable should the tenant ever vacate in the future.