Spirit Realty Issues $330M in Net-lease Notes

SCOTTSDALE, AZ-It is full speed ahead for Spirit Realty Capital following its $7.4 billion merger with Cole Credit Property Trust II in July. The locally-based REIT has issued $330 million in net-lease mortgage notes via its subsidiary, Spirit Master Funding VII LLC, and intends to use the proceeds to refinance shorter-term debt, for acquisition funding, and for general corporate purposes.

"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," Thomas H. Nolan, Jr., the Chairman and Chief Executive Officer of Spirit Realty, says in a prepared statement. "In addition, this offering will support our fourth quarter acquisition activity and increase our financial flexibility as we enter 2014."

The notes have been rated "A+" by both Standard & Poor's Ratings Services and Kroll Bond Rating Agency. They are comprised of $125 million of 3.9% Series 2013-1 Class A interest only, net-lease mortgage notes expected to be repaid in December 2018 and $205 million of 5.3% Series 2013-2 Class A amortizing net-lease mortgage notes expected to be repaid in December 2023.

The notes are secured by assets owned by the REIT and are non-recourse. The joint-book running managers were Morgan Stanley & Co. LLC and Deutsche Bank Securities.

Earlier this year Spirit reported consolidated results for the first time, during which Nolan took the opportunity to call the merge with Cole a "transformative event."

"The triple net lease space remains dynamic, and I believe New Spirit has the scale, strategy and credit discipline to continue to deliver a predictable and attractive yield to shareholders," he said.

The combined company is one of the largest publicly traded net-lease REITs in the United States, owning approximately 1,900 properties in 48 states.