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Re: Shopko Plans to Close All Stores After Failing to Find a BuyerAfter Shopko Stores filed for bankruptcy protection, Spirit MTA (NYSE: SMTA), a Dallas-based REIT, announced on Wednesday that it is exploring options such as selling the company or its Master Trust 2014 or merging with another company. SMTA said the exploration of alternatives doesn’t mean a transaction will necessarily take place, and there is no timetable for completion of the process. It also said it does not intend to comment on the process unless a specific transaction or alternative is approved by the board. According to the release, as of Sept. 30, SMTA’s portfolio of assets consisted of 784 properties held through the Master Trust 2014, including five leased to Shopko Stores. In addition, SMTA had 100 properties held outside that trust, 85 of which were leased to Shopko and which are encumbered by a non-recourse mortgage loan. SMTA has approximately $102 million of unrestricted cash and $16 million of restricted cash, providing it with sufficient liquidity as it considers alternatives. “Taking into account our recently announced dividends, we have returned a total of $1.66 per share to our shareholders since our inception less than eight months ago,” Ricardo Rodriguez, SMTA’s Chief Executive Officer, Chief Financial Officer and Treasurer said in the release. “Through the acceleration of our strategic plan, we will explore all available options to maximize shareholder value. Our Board of Trustees also intends to continue paying dividends equal to 100 percent of (cash available for distribution.)” On Wednesday, ShopKo's parent company, Specialty Retail Shops Holding Corp., filed for Chapter 11 bankruptcy protection from creditors. The company announced it will be shutting down 105 under-performing Shopko stores as a result. Last year SMTA completed a $165 million non-recourse mortgage loan with a third party lender secured by SMTA’s Shopko Stores assets held outside of the Master Trust 2014. SMTA is working with the lender, including potentially satisfying the loan by relinquishing the Shopko Stores to the lender. As of Sept. 30, SMTA received $43.2 million in annualized contractual rent from Shopko Stores, which represented 18.3 percent of SMTA’s total annualized contractual rent. As a consequence of the Chapter 11 filing, SMTA does not expect to receive any additional cash flow from the assets leased to Shopko. SMTA also holds a secured loan previously made to Shopko Stores in the amount of approximately $34.4 million, which has been accelerated due to the filing. SMAT said there can be no assurances that there will be a recovery in whole or in part of that loan, but the company intends to exercise and pursue all of its rights and remedies. Spirit MAT is a net-lease REIT and owns one of the largest commercial real estate-backed master funding vehicles. SMTA is managed by Spirit Realty Capital, L.P., a wholly-owned subsidiary of Spirit (NYSE: SRC), one of the largest publicly traded triple net-lease REITs. |
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