S&P cuts McDonald's credit rating by one notch; Outlook stable

MCD CEO: Not pursuing REIT transaction

After 'robust' discussion, fast food giant McDonald's is not pursuing a REIT, its CEO Easterbrook said at its investor meeting Tuesday.

Amid low interest rates, McDonald's also plans to add a "meaningful" amount of additional debt, said CFO Kevin Ozan in a release.

"As a result, we are increasing the Company's cash return to shareholders target to about $30 billion for the three-year period ending 2016 - a $10 billion increase over our previous target, with incremental debt funding the vast majority of the increase," he said.

It said its call that it expects credit rating agencies to cut its rating by a notch, a move S&P made later in the day.

After earlier being halted on Tuesday, its shares reopened and hit a fresh record high. (Click here to track its latest price.)

McDonald's REIT not in the works

Easterbrook said the chain does not think a REIT would be in the best interest of shareholders at this time, adding the potential upside is not compelling and the risk is too great.

The restaurant also considered a sale leaseback structure, said Pete Bensen, its chief administrator officer, on the investor call.

Bensen said the company plans to keep our eyes open where a McDonald's restaurant might not be the best use of a real estate site.

Refranchising locations

The chain also said it wants to refranchise 4,000 locations by 2018, up from 3,500 announced in May.

In May, it laid out the first details of its multi-stage turnaround to turn itself into a "modern progressive burger company." As part of this, it has organized itself into a new organizational structure that created segments with similar characteristics rather than focusing merely on geography.

McDonald's investors will see an increase in its dividend by 5 percent. The new quarterly dividend will be 89 cents a share.

"Everything we said we'd do in May, we've done, and now we're going further," Easterbrook said.