McDonald’s Corp is selling eight retail properties in Hong Kong with an estimated market value of HK$1.2 billion (US$153 million), giving investors a rare opportunity to own fully tenanted assets, as the world’s biggest fast-food chain reviews its real estate portfolio in the city.
The Chicago-based group appointed a property consultancy to find buyers for its assets in Tsim Sha Tsui, Causeway Bay, Mong Kok, Kennedy Town, Tai Kok Tsui, Yuen Long, Tsuen Wan and Tsz Wan Shan, according to a statement on Monday. The public tender closes on September 16, it added.
McDonald’s said it would continue to operate its restaurants in the eight locations on long-term leases. Some of the properties would be sold with additional tenancies involving 7-Eleven convenience stores and independent pharmacies, it added.
“This is an exceptional opportunity – one that has not occurred in decades – to acquire high-quality retail assets backed by resilient tenants like McDonald’s, who have maintained long-lasting leases and strong cash flow,” a property agent said. With a 100 per cent occupancy, the portfolio offers stable income, supported by a high rental yield, the agent said.
The property consultancy has “received significant interest from a wide pool of potential investors”, the agent said.
The sale comes as the American chain celebrates 50 years in Hong Kong. The firm opened its first restaurant on Paterson Street in Causeway Bay in January 1975 and sold its first one million hamburgers in 1977. The group currently operates 265 outlets across the city, according to its website.
“McDonald’s Corp reviews on an ongoing basis the real estate the company owns and continues to optimise sites in our real estate portfolio,” it said in the statement. “As part of this, several properties in Hong Kong will be available for sale. There are, however, no changes to the restaurants at these locations, which remain operational.”
Hong Kong’s food and beverage operators were among the worst hit in the current economic slump, with retail sales shrinking for 14 straight months before rebounding May, according to official data. Financial Secretary Paul Chan Mo-po said in a blog on Sunday that he expected a recovery in spending in the June quarter.
There were 17,154 valid restaurant licences as of April 30, according to data published by the Food and Environmental Hygiene Department, a drop of 255 from a year earlier. A comparison of licence data showed 2,034 restaurants had closed in the past year, while 1,779 new licences were issued over the same period.
McDonald’s has held the properties in Hong Kong for decades, the property consultancy said. The sizes of the eight properties range from 6,800 sq ft to 19,000 sq ft, which may be sold individually or as a portfolio, it added.
Among the more prominent locations were the Yee Wo outlet in the Causeway Bay shopping district, as well as the ground floor and basement of Star House on Salisbury Road in Tsim Sha Tsui, the largest of the lot. They feature prominent signage and wide shop fronts, “ensuring high visibility and strong customer traffic”, the property consultancy said.
