S&P: Spirit Realty remains on positive watch

Standard & Poor's said the B corporate credit rating on Spirit Realty Capital Inc. remains on CreditWatch, where it was placed with positive implications in January.

The company plans to merge with non-traded real estate investment trust Cole Credit Property Trust II in a stock-for-stock exchange.

The merged company, which will retain the Spirit name, will become the second-largest publicly traded triple-net-lease REIT in the United States with a pro forma enterprise value of about $7.1 billion, said Elizabeth Campbell, an S&P analyst.

The company expects the transaction to close in the third quarter of 2013, the agency said.

The ultimate corporate credit rating on Spirit will depend on several factors, including an assessment of its business risk profile following the merger and the diversification and cash flow stability of the combined portfolio, S&P said.

The rating also will consider the financial risk profile, particularly the liquidity and debt coverage metrics of the company post-merger as its financial policy and strategic direction are clarified, the agency said.

If the transaction proceeds as currently structured, the ratings will be removed from CreditWatch and upgraded, S&P said.

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