Spirit MTA to sell trust to Hospitality Properties Trust for $2.4B

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In the first step of its winding down, Spirit MTA REIT (NYSE:SMTA) agrees to sell properties held in its Master Trust 2014 and three assets currently owned by Spirit Realty Capital (NYSE:SRC) for $2.4B in cash to Hospitality Properties Trust (NASDAQ:HPT).

HPT plans to finance the deal through a newly committed $2.0B term loan facility, availability on its existing revolving credit facility, certain asset sales, and potential issuance of notes.

SMTA will use proceeds to redeem all of the then-outstanding notes collateralized by the trust; as of March 31, 2019, the balance of the notes was about $1.93B.

HPT will also pay to SMTA the make-whole amounts payable in connection with the redemption of trust notes; make-whole amount is currently estimated at $72M, assuming it closes in Q3.

SMTA will acquire from Spirit Realty, SMTA’s external manager, the fee interests in three travel centers for $55M.

Net proceeds to SMTA are expected to be about ~$450M after redemption of the trust notes, purchasing the three travel center properties from SRC, proceeds from repayment of mortgage loans in trust by SRC, cash released by the trust upon redemption of the trust notes, and certain adjustments.

At closing, SMTA will repurchase from SRC its $150M preferred shares in the company and ~$5.6M plus any accrued and unpaid dividends.

SMTA will pay Spirit a termination fee of $48M and then enter an interim management agreement for a significantly reduced annual fee of $1M for the initial one-year term and $4M for any renewal one-year term.

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June 16, 2019 at 02:29PM