| Item 1.01 | Entry into a Material Definitive Agreement. |
On June 29, 2021, STORE Capital Corporation, a Maryland corporation (the “Company”), completed the issuance of $550,000,000 aggregate principal amount of STORE Master Funding Net-Lease Mortgage Notes, Series 2021-1 (the “Notes”) by STORE Master Funding I, LLC, STORE Master Funding II, LLC, STORE Master Funding III, LLC, STORE Master Funding IV, LLC, STORE Master Funding V, LLC, STORE Master Funding VI, LLC, STORE Master Funding VII, LLC, STORE Master Funding XIV, LLC, STORE Master Funding XIX, LLC and STORE Master Funding XX, LLC (together, the “Issuers”). Each of the Issuers is a Delaware limited liability company and a wholly owned, special purpose, bankruptcy-remote, indirect subsidiary of the Company. Notes in the aggregate principal amount of $515,000,000 were issued to qualified institutional investors (the “Class A Notes”). The remaining Notes, in the aggregate principal amount of $35,000,000, were issued to an affiliate of the Company (the “Class B Notes”).
As previously disclosed, on May 19, 2021, the Company and the Issuers entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with Credit Suisse Securities (USA) LLC and Morgan Stanley & Co. LLC (together, the “Initial Purchasers”). Pursuant to the Note Purchase Agreement, the Issuers sold the Class A Notes to the Initial Purchasers in reliance on certain exemptions from registration under the Securities Act of 1933, as amended, and upon certain representations and warranties made by the Initial Purchasers in the Note Purchase Agreement. The Note Purchase Agreement also contained customary representations, warranties and agreements by the Company and the Issuers.
The Notes
The Notes were issued in five classes: (i) Class A-1 (AAA), (ii) Class A-2 (AAA), (iii) Class A-3 (A+), (iv) Class A-4 (A+) and (v) Class B (BBB), with such classes bearing the following initial principal balances, annual interest rates, anticipated repayment dates and Standard & Poor’s ratings, respectively:
| | | | | | | | |
Class | | Initial Principal Balance | | Note Rate | | Anticipated Repayment Date | | Rating (S&P) |
A-1 (AAA) | | $168,500,000 | | 2.12% | | June 2028 | | AAA(sf) |
A-2 (AAA) | | $168,500,000 | | 2.96% | | June 2033 | | AAA(sf) |
A-3 (A+) | | $89,000,000 | | 2.86% | | June 2028 | | A+(sf) |
A-4 (A+) | | $89,000,000 | | 3.70% | | June 2033 | | A+(sf) |
B(BBB) | | $35,000,000 | | 4.70% | | June 2033 | | BBB(sf) |
The Company and the Issuers intend to use the net proceeds from the sale of the Class A Notes to refinance or repay certain indebtedness, fund certain reserves, pay fees and expenses related to the issuance and fund other general corporate purposes. The Class B Notes are being retained by an affiliate of the Company and some or all of them may be sold in the future.
Indenture and Indenture Supplement
The Notes were issued pursuant to the Eighth Amended and Restated Master Indenture, dated as of June 29, 2021 (the “Indenture”), among the Issuers and Citibank, N.A. (the “Indenture Trustee”) and are governed by the Series 2021-1 Supplement to the Indenture entered into by the Issuers and the Indenture Trustee on June 29, 2021 (the “Indenture Supplement”). From time to time and subject to certain conditions, the Issuers and/or any special purpose, bankruptcy-remote affiliate of the Issuers (each, a “Co-Issuer”) may issue additional series of notes pursuant to the Indenture and any applicable series supplement thereto. The Notes and any additional series of notes will be payable solely from and secured by a security interest in the assets of the Issuers and any Co-Issuer.
Under the Indenture, the Notes are subject to events of default that generally are customary in nature for rated net-lease mortgage securitizations of this type, including (a) the non-payment of interest or principal, (b) material violations of covenants, (c) material breaches of representations and warranties and (d) certain bankruptcy events. The Notes are subject to early amortization events that generally are customary in nature for rated net-lease mortgage securitizations of this type, including (i) the average cash flow coverage ratio falling below certain levels, (ii) the occurrence of an event of default and (iii) the failure by the Issuers to repay any class of notes in full prior to the anticipated repayment date for such class of notes. The occurrence of an early amortization event or an event of default could result in the early amortization of the Notes and the occurrence of an event of default could, in certain instances, result in the liquidation of the collateral securing the Notes.
Property Management and Servicing Agreement
In connection with the issuance of the Notes, the Company also has entered into the Seventh Amended and Restated Property Management and Servicing Agreement, dated as of June 29, 2021 (the “Property Management Agreement”), among the Issuers, the
