Spirit Realty Capital, Inc. Comments on Recent Announcement by Spirit MTA REIT

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
  • 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.


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.


This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Exchange Act of 1934, as amended. When used in this
press release, the words “estimate,” “anticipate,” “expect,” “believe,”
“intend,” “may,” “will,” “should,” “seek,” “approximately” or “plan,” or
the negative of these words or similar words or phrases that are
predictions of or indicate future events or trends and which do not
relate solely to historical matters are intended to identify
forward-looking statements. You can also identify forward-looking
statements by discussions of strategy, plans or intentions of
management. Forward-looking statements involve numerous risks and
uncertainties and you should not rely on them as predictions of future
events. Forward-looking statements depend on assumptions, data or
methods that may be incorrect or imprecise, and Spirit may not be able
to realize them. Spirit does not guarantee that the transactions and
events described will happen as described (or that they will happen at
all). The following risks and uncertainties, among others, could cause
actual results and future events to differ materially from those set
forth or contemplated in the forward-looking statements: industry and
economic conditions; volatility and uncertainty in the financial
markets, including potential fluctuations in the CPI; Spirit’s success
in implementing its business strategy and its ability to identify,
underwrite, finance, consummate, integrate and manage diversifying
acquisitions or investments; the financial performance of Spirit’s
retail tenants and the demand for retail space, particularly with
respect to challenges being experienced by general merchandise
retailers; Spirit’s ability to diversify its tenant base; the nature and
extent of future competition; increases in Spirit’s costs of borrowing
as a result of changes in interest rates and other factors; Spirit’s
ability to access debt and equity capital markets; Spirit’s ability to
pay down, refinance, restructure and/or extend its indebtedness as it
becomes due; Spirit’s ability and willingness to renew its leases upon
expiration and to reposition its properties on the same or better terms
upon expiration in the event such properties are not renewed by tenants
or Spirit exercises its rights to replace existing tenants upon default;
the impact of any financial, accounting, legal or regulatory issues or
litigation that may affect Spirit or its major tenants; Spirit’s ability
to manage its expanded operations; Spirit’s ability and willingness to
maintain its qualification as a REIT under the Internal Revenue Code of
1986, as amended; SMTA’s ability to satisfy the conditions to closing
the proposed sale of assets held in Master Trust 2014 (including its
ability to obtain shareholder approval) and complete the transaction;
the timing of the completion of the transaction; Spirit’s ability to
manage and liquidate the remaining SMTA assets; and other risks inherent
in the real estate business, including tenant defaults, potential
liability relating to environmental matters, illiquidity of real estate
investments and potential damages from natural disasters discussed in
Spirit’s most recent filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K and subsequent
Quarterly Reports on Form 10-Q. You are cautioned not to place undue
reliance on forward-looking statements, which speak only as of the date
of this press release. While forward-looking statements reflect Spirit’s
good faith beliefs, they are not guarantees of future performance.
Spirit disclaims any obligation to publicly update or revise any
forward-looking statement to reflect changes in underlying assumptions
or factors, new information, data or methods, future events or other
changes, except as required by law.

1 Balances for related party notes and Master Trust 2014
notes held by Spirit are as of March 31, 2019.


Investor Contact:
Pierre Revol
(972) 476-1403

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