Spirit Realty 8-K Entry into a Material Definitive Agreement

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM

8-K

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 16, 2019

SPIRIT REALTY CAPITAL, INC.

SPIRIT REALTY, L.P.

(Exact name of registrant as specified in its charter)

Maryland	001-36004	20-1676382
(Spirit Realty Capital, Inc.)		(Spirit Realty Capital, Inc.)
Delaware	333-216815-01	20-1127940
(Spirit Realty, L.P.)		(Spirit Realty, L.P.)
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

2727 North Harwood Street, Suite 300

Dallas, Texas 75201

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (972)

476-1900

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form

8-K

filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (

see

General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Registrant	Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Spirit Realty Capital, Inc.	Common Stock, $0.05 par value per share	SRC	New York Stock Exchange
Spirit Realty Capital, Inc.	6.000% Series A Cumulative Redeemable Preferred Stock, $0.01 par value per share	SRC-A	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule

12b-2

of the Securities Exchange Act of 1934 (17 CFR §

240.12b-2).

Spirit Realty Capital, Inc.:	Emerging growth company   ☐
Spirit Realty, L.P.:	Emerging growth company   ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Spirit Realty Capital, Inc.

:  

☐

Spirit Realty, L.P.

:  

☐

Item 1.01 Entry into a Material Definitive Agreement.

The information set forth in Item 2.03 of this Current Report on Form

8-K

is incorporated by reference into this Item 1.01.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

On September 16, 2019, Spirit Realty, L.P. (the “Issuer”), a Delaware limited partnership and subsidiary of Spirit Realty Capital, Inc. (the “Guarantor”), issued $300.0 million aggregate principal amount of its 3.200% Notes due 2027 (the “2027 Notes”), and $500.0 million aggregate principal amount of its 3.400% Notes due 2030 (the “2030 Notes” and, together with the 2027 Notes, the “Notes”).

The 2027 Notes

The 2027 Notes are fully and unconditionally guaranteed by the Guarantor (the “2027 Guarantee”). The terms of the 2027 Notes are governed by an indenture, dated as of August 18, 2016 (the “Base Indenture”), by and between the Issuer and U.S. Bank National Association, as trustee (the “Trustee”), as supplemented by a third supplemental indenture, dated as of September 16, 2019 (the “Third Supplemental Indenture” and, together with the Base Indenture, the “2027 Notes Indenture”), by and among the Issuer, the Guarantor and the Trustee. The 2027 Notes Indenture contains various restrictive covenants, including limitations on the ability of the Guarantor and its subsidiaries, including the Issuer, to incur additional indebtedness and requirements to maintain a pool of unencumbered assets. Copies of the Base Indenture and the Third Supplemental Indenture, including the form of 2027 Notes and the 2027 Guarantee, the terms of which are incorporated herein by reference, are attached as Exhibits 4.1 and 4.2, respectively, to this Current Report on Form

8-K.

The purchase price paid by the underwriters for the 2027 Notes was 99.281% of the principal amount thereof. The 2027 Notes are the Issuer’s senior unsecured obligations and rank equally in right of payment with all of the Issuer’s other existing and future senior unsecured indebtedness. However, the 2027 Notes are effectively subordinated in right of payment to all of the Issuer’s existing and future mortgage indebtedness and other secured indebtedness (to the extent of the collateral securing the same) and to all existing and future indebtedness and other liabilities, whether secured or unsecured, of the Issuer’s subsidiaries and of any entity the Issuer accounts for using the equity method of accounting and to all preferred equity not owned by the Issuer, if any, in its subsidiaries and of any entity the Issuer accounts for using the equity method of accounting. The 2027 Notes bear interest at 3.200% per annum. Interest is payable on January 15 and July 15 of each year, beginning January 15, 2020, until the maturity date of January 15, 2027.

The 2027 Notes will be redeemable in whole at any time or in part from time to time, at the Issuer’s option, at a redemption price equal to the sum of:

• an amount equal to 100% of the principal amount of the 2027 Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and

• a make-whole premium calculated in accordance with the 2027 Notes Indenture.

Notwithstanding the foregoing, if any of the 2027 Notes are redeemed on or after November 15, 2026 (two months prior to the maturity date of the 2027 Notes), the redemption price will not include a make-whole premium.

Certain events are considered events of default, which may result in the accelerated maturity of the 2027 Notes, including:

• default for 30 days in the payment of any installment of interest under the 2027 Notes;

• default in payment of the principal amount or redemption price due with respect to the 2027 Notes, when the same becomes due and payable;

• the 2027 Guarantee is not (or is claimed by the Guarantor in writing to the trustee not to be) in full force and effect (other than in accordance with the terms of the 2027 Notes Indenture) with respect to the 2027 Notes;

• failure by the Issuer or the Guarantor to comply with any of the agreements contained in the 2027 Notes or the 2027 Notes Indenture with respect to the 2027 Notes upon receipt of notice of such default by the trustee or by holders of not less than 25% in aggregate principal amount of the 2027 Notes then outstanding and failure to cure (or obtain a waiver of) such default within 60 days after receipt of such notice;

• failure to pay any indebtedness that is (a) of the Issuer or the Guarantor, any subsidiary in which the Issuer or Guarantor has invested at least $50,000,000 in capital or any entity in which the Issuer is the general partner of managing member, and (b) in an outstanding principal amount in excess of $50,000,000 at final maturity or upon acceleration after the expiration of any applicable grace period, which indebtedness is not discharged, or such default in payment or acceleration is not cured or rescinded, within 60 days after written notice to the Issuer from the trustee (or to the Issuer and the trustee from holders of at least 25% in principal amount of the outstanding 2027 Notes); and

• certain events in bankruptcy, insolvency or reorganization, or court appointment of a receiver, liquidator or trustee of the Issuer, Guarantor, or any significant subsidiary (as defined in the Indenture) or all or substantially all of their respective property.

The 2030 Notes

The 2030 Notes are fully and unconditionally guaranteed by the Guarantor (the “2030 Guarantee” and, together with the 2027 Guarantee, the “Guarantees”). The terms of the 2030 Notes are governed by the Base Indenture, as supplemented by a fourth supplemental indenture, dated as of September 16, 2019 (the “Fourth Supplemental Indenture” and, together with the Base Indenture, the “2030 Notes Indenture”), by and among the Issuer, the Guarantor and the Trustee. The 2030 Notes Indenture contains various restrictive covenants, including limitations on the ability of the Guarantor and its subsidiaries, including the Issuer, to incur additional indebtedness and requirements to maintain a pool of unencumbered assets. Copies of the Base Indenture and the Fourth Supplemental Indenture, including the form of 2030 Notes and the 2030 Guarantee, the terms of which are incorporated herein by reference, are attached as Exhibits 4.1 and 4.3, respectively, to this Current Report on Form

8-K.

The purchase price paid by the underwriters for the 2030 Notes was 99.120% of the principal amount thereof. The 2030 Notes are the Issuer’s senior unsecured obligations and rank equally in right of payment with all of the Issuer’s other existing and future senior unsecured indebtedness. However, the 2030 Notes are effectively subordinated in right of payment to all of the Issuer’s existing and future mortgage indebtedness and other secured indebtedness (to the extent of the collateral securing the same) and to all existing and future indebtedness and other liabilities, whether secured or unsecured, of the Issuer’s subsidiaries and of any entity the Issuer accounts for using the equity method of accounting and to all preferred equity not owned by the Issuer, if any, in its subsidiaries and of any entity the Issuer accounts for using the equity method of accounting. The 2030 Notes bear interest at 3.400% per annum. Interest is payable on January 15 and July 15 of each year, beginning January 15, 2020, until the maturity date of January 15, 2030.

The 2030 Notes will be redeemable in whole at any time or in part from time to time, at the Issuer’s option, at a redemption price equal to the sum of:

• an amount equal to 100% of the principal amount of the 2030 Notes to be redeemed plus accrued and unpaid interest and liquidated damages, if any, up to, but not including, the redemption date; and

• a make-whole premium calculated in accordance with the 2030 Notes Indenture.

Notwithstanding the foregoing, if any of the 2030 Notes are redeemed on or after October 15, 2029 (three months prior to the maturity date of the 2030 Notes), the redemption price will not include a make-whole premium.

Certain events are considered events of default, which may result in the accelerated maturity of the 2030 Notes, including:

• default for 30 days in the payment of any installment of interest under the 2030 Notes;

• default in payment of the principal amount or redemption price due with respect to the 2030 Notes, when the same becomes due and payable;

• the 2030 Guarantee is not (or is claimed by the Guarantor in writing to the trustee not to be) in full force and effect (other than in accordance with the terms of the 2030 Notes Indenture) with respect to the 2030 Notes;

• failure by the Issuer or the Guarantor to comply with any of the agreements contained in the 2030 Notes or the 2030 Notes Indenture with respect to the 2030 Notes upon receipt of notice of such default by the trustee or by holders of not less than 25% in aggregate principal amount of the 2030 Notes then outstanding and failure to cure (or obtain a waiver of) such default within 60 days after receipt of such notice;

• failure to pay any indebtedness that is (a) of the Issuer or the Guarantor, any subsidiary in which the Issuer or Guarantor has invested at least $50,000,000 in capital or any entity in which the Issuer is the general partner of managing member, and (b) in an outstanding principal amount in excess of $50,000,000 at final maturity or upon acceleration after the expiration of any applicable grace period, which indebtedness is not discharged, or such default in payment or acceleration is not cured or rescinded, within 60 days after written notice to the Issuer from the trustee (or to the Issuer and the trustee from holders of at least 25% in principal amount of the outstanding 2030 Notes); and

• certain events in bankruptcy, insolvency or reorganization, or court appointment of a receiver, liquidator or trustee of the Issuer, Guarantor, or any significant subsidiary (as defined in the Indenture) or all or substantially all of their respective property.

The descriptions of the Indenture, the Third Supplemental Indenture and the Fourth Supplemental Indenture in this Current Report on Form

8-K

are summaries and are qualified in their entirety by the terms of the Indenture, the Third Supplemental Indenture and Fourth Supplemental Indenture, respectively.

The Notes were offered pursuant to an effective shelf registration statement filed with the Securities and Exchange Commission on September 25, 2017 (Registration Nos.

333-220618

and

333-220618-01),

a base prospectus, dated September 25, 2017, and a prospectus supplement, dated September 9, 2019, filed with the Securities and Exchange Commission pursuant to Rule 424(b) under the Securities Act of 1933, as amended. In connection with the filing of the prospectus supplement, we are filing as Exhibit 5.1 to this Current Report on Form

8-K

an opinion of the Issuer’s counsel, Latham & Watkins LLP, regarding the validity of the Notes and related Guarantees, as Exhibit 5.2 to this Current Report on Form

8-K

an opinion of the Guarantor’s counsel, Ballard Spahr LLP, regarding certain Maryland law issues, and as Exhibit 5.3 to this Current Report on Form

8-K

an opinion of the Operating Partnership’s counsel, Richards, Layton & Finger, P.A., regarding the validity of the Notes.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number		Description
	1.1	Underwriting Agreement, dated September 9, 2019, between Spirit Realty Capital, Inc., Spirit Realty, L.P. and J.P. Morgan Securities LLC, BofA Securities, Inc., RBC Capital Markets, LLC, and SunTrust Robinson Humphrey, Inc., as representatives of the several underwriters named therein (incorporated by reference to Exhibit 1.1 to the Combined Current Report on Form 8-K of Spirit Realty Capital, Inc. and Spirit Realty, L.P. filed on September 11, 2019).
	4.1	Indenture, dated as of August 18, 2016, among Spirit Realty, L.P., as issuer, and U.S. Bank, National Association, as trustee (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K of Spirit Realty Capital, Inc. filed on August 19, 2016).
	4.2	Third Supplemental Indenture, dated as of September 16, 2019, among Spirit Realty, L.P., as issuer, Spirit Realty Capital, Inc., as guarantor, and U.S. Bank National Association, as trustee, including the form of the 2027 Notes and the 2027 Guarantee.
	4.3	Fourth Supplemental Indenture, dated as of September 16, 2019, among Spirit Realty, L.P., as issuer, Spirit Realty Capital, Inc., as guarantor, and U.S. Bank National Association, as trustee, including the form of the 2030 Notes and the 2030 Guarantee.
	5.1	Opinion of Latham and Watkins LLP
	5.2	Opinion of Ballard Spahr LLP
	5.3	Opinion of Richards, Layton & Finger, P.A.
	23.1	Consent of Latham & Watkins LLP (included in Exhibit 5.1)
	23.2	Consent of Ballard Spahr LLP (included in Exhibit 5.2)
	23.3	Consent of Richards, Layton & Finger, P.A. (included in Exhibit 5.3)
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned hereunto duly authorized.

Date: September 16, 2019

	SPIRIT REALTY CAPITAL, INC.
By:	/s/ Michael Hughes
	Michael Hughes
	Executive Vice President and Chief Financial Officer
	SPIRIT REALTY, L.P.
By:	Spirit General OP Holdings, LLC, as general partner of Spirit Realty, L.P.
By:	/s/ Michael Hughes
	Michael Hughes
	Executive Vice President and Chief Financial Officer