Spirit Realty Capital CEO Expects REIT’s Acquisition Pace To Continue

Thomas Nolan, chairman and CEO of Spirit Realty Capital (NYSE: SRC), joined REIT.com for a CEO Spotlight video interview during REITWeek 2015: NAREIT’s Investor Forum, held in New York.

Scottsdale, Ariz.-based Spirit Realty Capital was formed in 2003 to purchase single-tenant, net lease properties. The company booked close to $1 billion in acquisitions in 2014.

“Last year was a terrific year. Not only did we like the volume number but more importantly we liked what we bought,” Nolan said. Spirit Realty is on track to continue a similar pace of acquisitions in 2015, he added, with $276 million of acquisitions recorded in the first quarter.

Nolan stressed, however, that the company doesn’t set an “artificial target” for acquisitions.

“We buy when the green light is on and we think we’re getting great value, and we turn it off if we think the market dynamics aren’t as positive. Right now they are pretty good,” he said.

Meanwhile, Nolan said Spirit Realty is also working to increase its tenant diversification. He noted that at the time of the company’s initial public offering Spirit Realty had one tenant providing 30 percent of  revenue. At the beginning of this year that number had fallen to 14 percent,  and it is currently around 12 percent, Nolan said. He added that the tenant’s overall share of revenue is expected to be less than 10 percent before the end of the year.

Nolan also said he expects sale-leaseback transactions to continue to play a large role. “We like the arrangement because you are negotiating directly with a tenant,” he said. In the first quarter about 75 percent of the company’s transactions were in the form of sale-leaseback.