DALLAS—Spirit Realty Capital (SRC) said Tuesday it had filed confidentially with the SEC to register its planned spin-off, Spirit MTA REIT (SMTA). The plan was originally announced this past August, and would spin off substantially all of SRC's properties leased to Shopko Stores.
Prior to a distribution of SMTA's common shares to SRC shareholders, the spin-off REIT will hold, directly or indirectly, the assets that collateralize SRC's Master Trust 2014, almost all the properties that Spirit leases to Shopko and certain of its affiliates, as well as certain other assets. SRC said in August that SMTA was initially expected to have about $2.7 billion in gross real estate investments. A completion date in the first half of 2018 is currently expected for the spin-off.
Among the primary objectives of the spin-off is to enable SRC and SMTA to pursue two separate investment strategies. At present, the SRC platform encompasses investment grade tenants on the one hand and small- and medium-sized tenants on the other, SRC's president and CEO, Jackson Hsieh, told analysts in August. “While many of our operational processes can effectively be applied to both investment strategies, we've concluded that it's more efficient to have separate financing approaches focused on each investment strategy,” Hsieh said at the time.
Hsieh said he was “super excited” about the spinoff plan, “because it's going to result in better alignment of capital structure with assets, unlock value inherent in our company and finally, remove and isolate certain structural impediments that have been present” since Spirit's initial public offering in 2012. He added, “The separation impact on Spirit is simply awesome.”
SRC has sought to reduce its Shopko exposure since the IPO. In late '14, for example, the net lease REIT signed an amended master lease agreement with the Green Bay, WI-based retailer, its largest tenant at 7.9% of total rent, that gave SRC greater leeway to sell Shopko locations singly or in small groups. The separation will focus SRC's portfolio more squarely on service-oriented retail as well as the industrial and distribution sectors.
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Paul Bubny
Paul Bubny is managing editor of Real Estate Forum and GlobeSt.com. He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.
