McDonald’s Yass listing offers rare turnover lease with uncapped income potential
A legacy “partner” lease structure tied to sales, not fixed rent, is drawing investor attention as a potential hedge against inflation.
2 min
A McDonald’s restaurant in Yass has been brought to market with one of the last remaining pure turnover leases in Australia, offering investors a direct share of revenue rather than a traditional fixed rental return.
The asset, located at 1713 Yass Valley Way, is being marketed by JLL via an expressions of interest campaign closing on 30 April. It is underpinned by a legacy lease structure no longer offered by McDonald’s in Australia.
Under the arrangement, the landlord receives 6.5 cents for every dollar spent at the restaurant, creating uncapped income growth linked directly to sales performance.
The lease is structured as triple net, meaning no operational risk, capital expenditure obligations or management responsibilities for the owner.
According to JLL, the property has recorded compounded annual sales growth of 4.26 per cent since 2003, with rental income rising by 150 per cent over the same period.
JLL’s David Mahood said the structure allows investors to “participate directly in the sales growth” of the business, rather than relying on fixed annual rent reviews.
The newly commenced lease runs to 2036, with four additional 10-year options extending to 2076, providing a weighted average lease expiry of 9.92 years by income.
The asset sits on a 3,571 square metre freehold site in Yass, with significant frontage to the Hume Highway, one of Australia’s busiest freight corridors.
The location benefits from high volumes of passing traffic, including an estimated 75,000 vehicles per day.
The quick service restaurant sector has remained resilient through economic cycles, including the pandemic and recent cost-of-living pressures, with McDonald’s continuing to expand its footprint and invest in store upgrades across Australia.
JLL pointed to strong investor demand for McDonald’s-backed assets, with recent transactions typically yielding between the high 2 per cent to mid 3 per cent range.
The Yass listing is expected to attract interest due to the scarcity of turnover-based leases, which provide a natural hedge against inflation by linking income growth to consumer spending rather than predetermined increases.
McDonald’s Yass is available for sale via an Expressions of Interest campaign closing at 3:00pm (AEST) on Thursday, April 30.
As interest rates, inflation and market sentiment fluctuate, investors are being urged to focus on data, not panic.
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The Federal Budget has created a supply freeze that could push rents higher, reduce investment and hand more of Australia’s housing stock to offshore institutions.
4 min
For months, I have been one of the few commentators openly stating what the data was already showing: property prices had begun to fall.
The latest figures confirm it. Cotality’s June 1 Home Value Index showed Sydney values down 0.9 per cent in May and Melbourne down 0.8 per cent. ANZ has cut its national capital city forecast to 2.8 per cent growth this year, down from 4.8 per cent in April. CBA has also downgraded its outlook.
So the Federal Budget arrived at the worst possible time, with the wrong prescription, to treat a problem it fundamentally misunderstands.
Treasurer Jim Chalmers has suggested that making it easier for first-home buyers to get a fair crack at auctions is a good thing. The reality is more complicated.
Driving property prices down does not simply hand a discount to first-home buyers. It affects the 1.4 million Australians employed by the property sector, the 67 per cent of household wealth tied to housing, and the state government revenues that fund schools, hospitals and roads.
The government had a choice: tackle supply constraints, link migration growth to housing completions and reduce spending, or increase taxes on property investors. It chose the latter.
Property is an economic pillar
Property is not simply another investment class. It contributes about 10.6 per cent of GDP directly, up to 15 per cent when flow-on effects are included, and employs more than 1.4 million Australians. It also generates more tax revenue than mining and underpins consumer confidence through the wealth effect.
Against that backdrop, the Budget removed negative gearing from established residential properties purchased after Budget night and replaced the 50 per cent capital gains tax discount with cost-base indexation and a 30 per cent minimum tax from July 1, 2027.
The government calls this fairness. I call it a misdiagnosis.
The grandfathering trap
The policy is also internally contradictory.
Properties purchased before Budget night are grandfathered, allowing existing investors to retain full negative gearing and capital gains tax benefits until they sell. The logical response is simple: hold.
That means fewer properties coming onto the market, fewer rental listings and reduced transaction volumes.
The result is likely to be higher rents, reduced stamp duty revenue and further inflationary pressure at a time when the Reserve Bank remains focused on bringing inflation under control.
The government is attempting to fight inflation with one hand while fuelling it with the other.
Who really owns investment properties?
What is often lost in this debate is who Australia’s property investors actually are.
According to ATO data, 71 per cent of investors own just one investment property. They are not wealthy property moguls.
They are teachers, nurses, police officers and small business owners who have purchased an investment property as part of their retirement strategy.
For many Australians, property remains the most tangible and trusted pathway to building long-term wealth.
Removing the incentives that supported that investment does not hurt a billionaire developer. It hurts ordinary Australians trying to secure their financial future.
Investors aren’t the affordability problem
It is true that housing affordability has deteriorated significantly over the past two decades. However, negative gearing is not the primary cause.
Research by economists Ross Kendall and Peter Tulip found planning and zoning restrictions significantly increase housing costs.
Their work showed zoning lifted detached house prices well above marginal construction costs in Sydney, Melbourne, Brisbane and Perth.
Low interest rates, strong population growth, chronic under-supply and restricted access to development-ready land have all played a much larger role in pushing prices higher.
Punishing private investors does nothing to address these structural issues.
The Build-to-Rent advantage
At the same time the government is reducing incentives for Australian investors, it has created a more attractive tax environment for foreign institutional capital through Build-to-Rent projects.
Under current arrangements, foreign institutional investors can access a 15 per cent withholding tax rate through Managed Investment Trusts, accelerated depreciation benefits and exemptions from the new negative gearing restrictions.
State governments have added further concessions, including land tax reductions and exemptions from foreign investor surcharges.
Australian mum-and-dad investors receive none of these advantages.
The cumulative effect is striking. Foreign institutions can access a range of tax benefits unavailable to Australian private investors, while local investors lose concessions they have relied upon for decades.
This is not solving the housing crisis. It risks transferring ownership of Australia’s rental housing stock from local investors to offshore institutions.
Why state governments should worry
There are already signs these changes are affecting the credit cycle.
Major banks are removing negative gearing benefits from serviceability calculations for investment loans.
As market conditions soften, lenders become more cautious and investors find it harder to secure finance.
That matters because property transactions are a major source of state government revenue.
In NSW alone, transfer duty generates more than $12 billion annually. If transaction volumes fall significantly, the impact on state budgets will be substantial.
The consequences extend beyond stamp duty to GST collections, payroll tax receipts and land tax revenue.
The 95 per cent loan trap
There is another aspect of the Budget that concerns me.
The government has expanded first-home buyer deposit guarantee schemes, allowing eligible purchasers to buy with a five per cent deposit backed by the Commonwealth.
The intention is admirable. The timing may not be.
If prices in Sydney and Melbourne fall further, buyers entering the market with 95 per cent loan-to-value mortgages could quickly find themselves in negative equity.
They become trapped. They cannot sell without crystallising a loss, while the taxpayer guarantees the loan and the bank remains protected.
That is not wealth creation. It is a debt obligation.
After three decades working with debt and investment, I would never encourage my own children to borrow at a 95 per cent loan-to-value ratio.
A policy built on politics
The government had an opportunity to address the housing crisis by encouraging supply, reforming planning systems and reducing development costs.
Instead, it chose Robin Hood politics.
The optics may be appealing, but the economics are not.
Australians may ultimately pay the price through higher rents, weaker investment and a future in which an increasing share of the nation’s housing stock is owned by offshore institutions rather than local investors.
Paul Miron is the Co-Founder & Fund Manager of Msquared Capital.
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