The board of trustees of Spirit MTA REIT plans to increase the pace of its proposed strategic plan, with the appointment of advisers that will examine strategic alternatives including the sale or possible merger of the retail real estate investment trust or the Master Trust 2014.
The landlord said it does not expect to receive any additional cash flow in the future related to its assets leased to Specialty Retail Shops Holding Corp., or ShopKo Stores, which filed for bankruptcy Jan. 16.
As of Sept. 30, 2018, Spirit MTA received $43.2 million in annualized contractual rent from ShopKo Stores, reflecting 18.3% of its total annualized contractual rent. It owned 784 properties through the Master Trust 2014, of which five were leased to ShopKo Stores.
Outside the Master Trust 2014, ShopKo Stores occupied 85 of the company's 100 assets that are encumbered by a nonrecourse mortgage loan.
Spirit Realty Capital Inc., which completed the spinoff of Spirit MTA into a separate and independent publicly traded REIT in June 2018, said it believes that Spirit MTA has "ample" liquidity and capacity to meet its obligations to Spirit Realty.
Spirit Realty President and CEO Jackson Hsieh added that the acceleration of the strategic plan allows it to rechannel proceeds into triple-net assets and to strengthen its balance sheet. Spirit Realty also anticipates that a nearer-term expiration of its three-year management deal with Spirit MTA will foster its organic growth "by removing a flat income stream."
Separately, the company said it is working to satisfy its $165 million nonrecourse mortgage loan secured by the ShopKo Store assets, by possibly transferring the assets to the lender. Spirit MTA obtained $141.9 million from the loan, net of expenses and reserves, in 2018.
The REIT also holds an approximately $34.4 million secured loan, made to ShopKo Stores, which has been accelerated due to the bankruptcy filing.
Spirit MTA noted that it is not certain whether the search for strategic alternatives will result in any transaction or other alternative.