PHOENIX—Spirit Realty Capital, Inc., a real estate investment trust that invests in single-tenant operationally essential real estate, announced December 23 that its subsidiary, Spirit Master Funding VII LLC, (SMF VII) issued $330 million in principal amount of net-lease mortgage notes in a transaction exempt from registration under the securities act and sold to qualified institutional buyers under Rule 144A. The investment grade note issuance by SMF VII marked the successful establishment by Spirit Realty of a net-lease mortgage securitization platform designed to facilitate the financing of its net-leased commercial real estate portfolio.

The issue, rated “A+” by both Standard & Poor's Ratings Services and Kroll Bond Rating Agency, Inc., is comprised of $125 million of approximately 3.9% Series 2013-1 Class A interest only, net-lease mortgage notes expected to be repaid in December 2018 and $205 million of approximately 5.3% Series 2013-2 Class A amortizing net-lease mortgage notes expected to be repaid in December 2023. The notes are secured by the assets of SMF VII and are non-recourse. Spirit Realty will use the proceeds of the issue to replace shorter-term debt, to fund fourth quarter 2013 acquisition activity and for general corporate purposes.

The joint-book running managers for the Issue were Morgan Stanley & Co. LLC and Deutsche Bank Securities, Inc.

“This investment-grade transaction locks in attractive long-term financing as we continue our strategy of investing in operationally essential, single-tenant real estate with long-term, triple-net leases that generate predictable and consistent cash flows,” said Thomas H. Nolan, Jr., the chairman and chief executive officer of Spirit Realty. “In addition, this offering will support our fourth quarter acquisition activity and increase our financial flexibility as we enter 2014.”

Instant Insights /

Spirit Realty Announces Issuance of A+ Rated Net-Lease Mortgage Notes

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