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Fitch affirms Spirit Realty ratings, revises outlook after spinoff

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Fitch affirms Spirit Realty ratings, revises outlook after spinoff

Fitch Ratings affirmed Spirit Realty Capital Inc.'s long-term issuer default rating at BBB- and revised its outlook to positive from stable, following the spinoff of substantially all of the single-tenant retail real estate investment trust's portfolio that is leased to troubled general retailer Shopko.

The rating agency affirmed Spirit's senior unsecured convertible notes at BBB- and its preferred stock at BB.

The rating agency also assigned a BBB- long-term issuer default rating to Spirit Realty LP with a positive outlook and affirmed the BBB- ratings on its senior unsecured revolving credit facility, senior unsecured term loan and senior unsecured notes.

Fitch credits the outlook revision to a reduction in Spirit's financial policy leverage target to below 5.5x and the portfolio's improved tenant credit profile, post-spinoff.

The rating agency attributed its ratings affirmation to the reduction in Spirit's exposure to Shopko following the spinoff, its increase in exposure to convenience stores and drug stores and its reduced reliance on a master trust funding program.