McdonaldsSo much for two of the largest retail-space operators spinning their real estate holdings off into real estate investment trusts.

Two major retailer names in the industry recently backed out of reported aspirations to bring their properties public. McDonald’s management apparently has no interest in starting a REIT. Meanwhile, executives at Macy’s decided not to do a real estate spinoff.

The thinking was for both, and possibly other large retail chains, that putting real estate into its own publicly traded entity would create capital for the companies, and allow them to concentrate on their main lines of business, selling goods and services. After all, McDonald’s and Macy’s aren’t real estate companies. On the face of it, this makes sense.

McDonald’s reportedly owns $25 billion in land, so spinning it off publicly would free up a great deal of capital for the fast-food giant. But executives said the move would come at too big of a risk.

Plus, the company garners a significant amount of revenue from rents it collects from franchisees. That number is likely to increase. Right now, about 80 percent of all of its restaurants are owned by franchisees, and McDonald’s reportedly wants to step that up to 93 percent by 2018. Additionally, the chain is experiencing strong sales and a strong turnaround.

The Macy’s situation is a little different. The department-store giant has seen sales and profits slide, and its stock has taken quite a dive. Macy’s is also closing stores.

Instead of pursuing a REIT, Macy’s management has other plans. The retailer hired commercial real estate firm Tishman Speyer to help it formulate a real estate strategy. Part of the plan could involve selling off some stores to other companies, as well as redeveloping them into different types of facilities that would cut down the square footage a department store takes up and add different uses for the remainder of the space. Moody’s likes the Macy’s move and said that forming a REIT could put pressure on its credit metrics. However, Macy’s management said it was not totally ruling out a real estate spin off in the future.

The moves by McDonald’s and Macy’s follow the opposite by Sears Holdings Corp. Earlier this year, the retailer decided to start a REIT with its real estate called Seritage Growth Properties, which currently has 322 retail assets in its portfolio, totaling about 42 million square feet. In Seritage’s most recent quarter, it reported net operating income (NOI) of $42.5 million, while funds from operations (FFO) came in at $4.8 million. These numbers sound good, but we don’t have a history in which to make a comparison.

Additionally, Darden Restaurants, the owner of Olive Garden, decided to start its own REIT earlier this year. The new entity is called Four Corners Property Trust, with nearly 430 assets in its portfolio, and will start trading next year.

So major retail/restaurant chains obviously have differing opinions when it comes to spinning their real estate off into REITs.

Do you think the strategy is a good idea, or a bad one?