STORE Capital Sees Rebound in Middle Market Following Coronavirus Crisis

STORE Capital Corp. (NYSE: STOR) President and CEO Chris Volk said the industries represented in the net lease REIT’s portfolio will remain relevant in the aftermath of the coronavirus crisis.

Speaking on a March 31 investor call hosted by Raymond James, Volk added that “as the recovery ensues, the middle market will be rebounding strongly and there’ll be amazing opportunities for STORE to grow.”

Volk also noted that STORE’s strong capital base will enable it to withstand the current crisis.

Catherine Long, CFO and treasurer, said STORE started 2020 with leverage at the lower end of its target range and raised about $150 million in equity in January, “so we started the year with a lot of liquidity.”

STORE has also laddered out its debt maturities, and two-thirds of its borrowings are non-recourse loans, Long added. In addition, she noted that STORE has recently drawn down the full amount of its $600 million credit facility, “so we’re sitting on about $630 million of cash today.”

Long said she expects to see increased caution toward access to capital for the real estate sector in general going forward.

Meanwhile, Volk said that in the longer term he expects that businesses considered to be essential may see a cost of capital advantage over non-essential businesses.

“Such a potential shift, as investors look to pandemic-proof their portfolios, would be a natural outcome of this COVID-19 event,” Volk said. As a result, “the government is going to have to consider making business interruption insurance available to all companies to avoid such discrimination and level the playing field,” he added.

“Pandemic risk stands to indiscriminately harm whatever companies are viewed as non-essential, irrespective of their corporate credit quality,” Volk said.