Spirit Realty Capital Spin-Off of SMTA REIT is a “Game Changer”

 

Jackson Hsieh, president and CEO of Spirit Realty Capital, Inc. (NYSE: SRC), participated in a video interview at Nareit’s REITworld: 2018 Annual Conference in San Francisco.

Spirit Realty completed the spin-off of SMTA REIT on June 1, and Hsieh called it a “game changer” for the company. He said it left Spirit with a low-leverage balance sheet after raising debt on the SpinCo prior to launching it to investors.

“We were able to move a couple of major impediments that would have continued to be derailers for Spirit,” Hsieh said. “We had a large concentration of Shopko stores and a very large master funding trust facility that was secured debt, so we were able to move those two things off.”

As a result, Hsieh said Spirit ended up with “two thirds of the assets and half the debt,” leaving the company in a good position.

Hsieh also talked about investment opportunities for the company heading into 2019, noting that Spirit is looking for industries that are “Amazon-resistant,” while also taking into account competition and barriers to entry.

Regarding changes to the company’s tenant base, Hsieh said the spinoff led to about 50 percent of Spirit’s rent coming from public-reporting tenants, whereas it was only 30 percent before.