Spirit Realty Capital, Inc. (SRC)

[Enterprising Investor]

Spirit Realty Capital, Inc. Comments on Recent Announcement by Spirit MTA REIT (6/03/19)

DALLAS--(BUSINESS WIRE)--Spirit Realty Capital, Inc. (NYSE:SRC) (“Spirit”), a net-lease real estate investment trust (REIT) that invests in single-tenant, operationally essential real estate, today commented on the announcement by Spirit MTA REIT (NYSE: SMTA) (“SMTA”), externally managed by Spirit, that SMTA’s Board of Trustees has reached a definitive agreement to sell the assets held in Master Trust 2014. The closing of the sale is subject to customary conditions, including the receipt of SMTA shareholder approval, and is expected to occur in the later part or end of the third quarter of 2019.

“As I reiterated in my recent annual letter to Spirit stockholders, the resolution of SMTA’s accelerated strategic process is one of the most important 2019 initiatives for SRC. At conclusion of the announced $2.4 billion sale by SMTA, Spirit will be a simplified, pure-play, triple-net REIT. As the external manager of SMTA, we remain focused on helping SMTA’s Board of Trustees finalize the liquidation of the remaining SMTA assets. I want to thank SMTA’s independent Board of Trustees, the entire Spirit team and the Spirit Board of Directors for their hard work and attention over the past two years,” stated Jackson Hsieh, President and Chief Executive Officer of Spirit.

In conjunction with the completion of the proposed transaction, Spirit has agreed to:

Terminate the existing asset management agreement with SMTA (and as a result of this termination, SMTA will not be required to deliver notice 180 days in advance of termination or enter into an eight month transition services period); the property management agreement for Master Trust 2014 will terminate in connection with the redemption of the Master Trust 2014 notes

Sell the fee interest in three Spirit owned Pilot Travel Centers for $55.0 million in gross proceeds at a 5.7% cash capitalization rate, subject to satisfaction of certain conditions

Waive Spirit’s rights to receive any potential promote fee

Enter into an interim asset management agreement with SMTA whereby Spirit will receive $1 million during the initial one-year term and $4 million for any renewal one-year term, plus certain cost reimbursements, to manage and liquidate the remaining SMTA assets; such agreement is terminable at any time by SMTA and by Spirit after the initial one year term, in each case without a termination fee

Assuming a closing at the end of the third quarter of 2019, Spirit expects to receive:

Termination fee of approximately $48 million ($35 million net of estimated tax)

$150 million for the repurchase of Spirit’s preferred equity investment in SMTA
Approximately $28 million in net proceeds from the sale of the Pilot Travel Centers (net of approximately $27 million in related party note repayments)1

Approximately $34 million for the redemption of Master Trust 2014 notes held by Spirit1

Additional information about the transaction referenced can be found in the announcement released by SMTA at http://investors.spiritmastertrust.com/press-releases.

ABOUT SPIRIT REALTY

Spirit Realty Capital, Inc. (NYSE: SRC) is a net-lease REIT that primarily invests in single-tenant, operationally essential real estate assets, subject to long-term, net leases.

As of March 31, 2019, Spirit’s diversified portfolio was comprised of 1,528 properties, including properties securing mortgage loans made by Spirit. Spirit’s properties, with an aggregate gross leasable area of approximately 28.6 million square feet, are leased to approximately 256 tenants across 49 states and 32 industries.

https://www.businesswire.com/news/home/20190603005379/en/Spirit-Realty-Capital-Comments-Announcement-Spirit-MTA