| Item 1.01 | Entry into a Material Definitive Agreement. |
On May 31, 2023, STORE Capital LLC, a Delaware limited liability company (the “Company”), completed the issuance of $548,000,000 aggregate principal amount of STORE Master Funding Net-Lease Mortgage Notes, Series 2023-1 (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, STORE Master Funding XX, LLC and STORE Master Funding XXIV, 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 $528,000,000 were issued to qualified institutional investors (the “Class A Notes”). The remaining Notes, in the aggregate principal amount of $20,000,000, were issued to an affiliate of the Company (the “Class B Notes”).
The Notes were issued pursuant to a Note Purchase Agreement, entered into on May 22, 2023 (the “Note Purchase Agreement”) among the Company and the Issuers, and SMBC Nikko Securities America, Inc., Capital One Securities, Inc., Citigroup Global Markets Inc., BofA Securities, Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Scotia Capital (USA) Inc. and Truist Securities, Inc. (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 (the “Securities Act”), 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 three classes: (i) Class A-1 (AAA), (ii) Class A-2 (A+) and (iii) 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) | | $346,000,000 | | 6.19% | | May 2028 | | AAA(sf) |
| A-2 (A+) | | $182,000,000 | | 6.92% | | May 2028 | | A+(sf) |
| B | | $20,000,000 | | 7.88% | | May 2028 | | BBB(sf) |
The weighted average note rate of the Class A Notes was 6.44%. The Class B Notes will be retained by an affiliate of the Company and may be sold in the future. The Company and the Issuers used the net proceeds from the sale of the Class A Notes to repay certain indebtedness, and pay fees and expenses related to the issuance.
The Notes have not been and will not be registered under the Securities Act and may not be offered and sold absent registration or an applicable exemption from registration.
Indenture and Indenture Supplement
The Notes were issued pursuant to the Ninth Amended and Restated Master Indenture, dated as of May 31, 2023 (the “Indenture”), among the Issuers and Citibank, N.A. (the “Indenture Trustee”) and are governed by the Series 2023-1 Supplement to the Indenture entered into by the Issuers and the Indenture Trustee on May 31, 2023 (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.
