Introductory Note
Unless otherwise indicated or unless the context requires otherwise, all references in this report to the “Company” refer to Spirit Realty Capital, Inc., together with its consolidated subsidiaries, including Spirit Realty, L.P., its “Operating Partnership.”
| Item 1.01. | Entry into a Material Definitive Agreement. |
On August 22, 2022, the Operating Partnership entered into an unsecured term loan agreement with the parties named therein (the “Term Loan Agreement”). The Term Loan Agreement provides for an initial aggregate amount of $800.0 million comprised of a $300.0 million three-year tranche with a maturity date of August 22, 2025 and a $500.0 million five-year tranche with a maturity date of August 20, 2027. The Term Loan Agreement also includes an accordion feature to increase the available term loans in the aggregate amount of $200.0 million (such that the term loans shall not exceed $1.0 billion), subject to obtaining lender commitments and the satisfaction of certain customary conditions. The Term Loan Agreement provides that the term loans will bear interest, at the Operating Partnership’s option, at the rate of either (x) a term rate benchmark plus an applicable margin ranging from 80 to 160 basis points depending on the Operating Partnership’s credit rating, or (y) base rate plus an applicable margin ranging from 0 to 60 basis points depending on the Operating Partnership’s credit rating; provided that upon the achievement of a certain leverage ratio, so long as the credit rating is not lower than BBB/Baa2, the applicable margins will be based on the credit rating of BBB+/Baa1/BBB+.
The Operating Partnership is required to comply with the following financial covenants under the Term Loan Agreement:
| | • | | Maximum total debt to total asset value ratio not to exceed 0.60:1.00; |
| | • | | Ratio of Adjusted EBITDA to fixed charges ratio not less than 1.50:1.00; |
| | • | | Maximum secured debt to total asset value ratio not to exceed 0.40:1.00; |
| | • | | Ratio of unencumbered NOI to unsecured interest expense not less than 1.75:1.00; and |
| | • | | Maximum unsecured debt to unencumbered asset value ratio not to exceed 0.60:1.00. |
The Term Loan Agreement contains customary affirmative and negative covenants that, among other things, limit the ability of the Company to pay dividends and enter into certain transactions. A breach of such covenants or any other event of default would entitle the administrative agent to accelerate the Operating Partnership’s debt obligations.
In connection with the Term Loan Agreement, the Company entered into a guaranty (the “Guaranty”) pursuant to which it has absolutely, irrevocably and unconditionally guaranteed to the administrative agent for the benefit of the lenders party to the Term Loan Agreement, the payment and performance of the obligations of the Operating Partnership under the Term Loan Agreement as and when due and payable.
The foregoing descriptions of the Term Loan Agreement and the Guaranty are only summaries and are qualified in their entirety by reference to the full text of the Term Loan Agreement and the Guaranty, copies of which are attached hereto as Exhibits 10.1 and 10.2, respectively, each of which is incorporated herein by reference.
| Item 2.03. | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The information set forth in Item 1.01 is incorporated herein by reference.
| Item 7.01. | Regulation FD Disclosure. |
On August 22, 2022, the Company issued a press release announcing its entry into the Term Loan Agreement. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
