 |
| A McDonald's branch in Seoul / Newsis |
By Anna J. Park
McDonald's Korea is up for sale, but some key pieces of real estate owned by the global fast-food chain in the country have been excluded from the deal.
According to investment banking industry sources, Wednesday, three key real estate properties held by McDonald's Korea are not included in the deal currently under negotiation with Dongwon Industries. The holding company of Dongwon Group turned out to be the sole candidate that joined the bidding process last month.
Given that McDonald's business model is based on acquiring land in populous commercial areas and leasing it out to franchise partners, real estate owned by McDonald's Korea has been featured as a key attraction of the sale. McDonald's Korea has maintained a vast amount of real estate across the country worth over 206 billion won ($163.5 million), comprised of buildings worth of 69.3 billion won and land worth 136.8 billion won, as of 2021.
Market watchers view the decision to exclude some properties from the sale could reflect the intention of McDonald's Corporation to enjoy stable rental profits from its Korean branches. Also, the exclusion of some of the priciest real estate owned by the fast-food empire would lower the sale price, which eases the potential financing burden on a buyer.
The fast-food chain's failed attempt to sell its Korean business in 2016 also explains its need to lower the selling price. Back then, McDonald's hoped to make around 500 billion won from the sale. But the interested buyer ― a consortium of Carlyle and Maeil Dairies ― was only willing to pay about 300 billion won.
Some view that it would be almost impossible to develop McDonald's real estate assets, even if a new buyer purchases of all of them, as the global headquarters put hefty restrictions and controls on operations, leaving little room for a new owner to develop any of the properties unilaterally.
Market watchers thus think Dongwon Industries made the bid seeking synergy, rather than the use of McDonald's real estate assets.
The U.S. headquarters seeks a minimum 20-year contract with a new buyer, as the sale aims to find a McDonald's development license partner, which is required to sign a multi-unit franchise agreement with the headquarters. As a result, the new owner cannot run the company independently in Korea even if it gains a 100 percent stake in McDonald's Korea.
![[INTERVIEW] North Korean defectors bear brunt of remittance scams](https://img.koreatimes.co.kr/upload/thumbnailV2/75c261156ac7415fad92dc1d7c1b30cf.jpg/dims/resize/178/optimize)
![[INTERVIEW] Foreign-born entertainers seek to revolutionize local industry](https://img.koreatimes.co.kr/upload/thumbnailV2/4a6b2bd3d23044d699dee3c5bb956863.jpg/dims/resize/178/optimize)
