Fitch: Spirit Realty preferreds BB

Fitch Ratings said it affirmed the credit ratings for Spirit Realty Capital Inc., including the issuer default rating at BBB-, upon its inaugural preferred stock issuance.

The outlook is stable.

The agency also assigned a BB rating to the series A perpetual preferred stock issued by Spirit Realty.

Spirit plans to spin off substantially all of its properties leased to its largest tenant, Shopko, its assets that collateralize Master Trust 2014 (part of Spirit's asset-backed securitization program, Master Trust A) and certain other assets into a separate, publicly traded REIT; the spin-off is expected to close in the first half of 2018.

Based on the proposed plan, remaining Spirit will have leverage of about 5 times pro forma for the spin-off (based on 2017 annualized EBITDA adjusted for planned dispositions), down significantly from the mid-6 times range as of June 30.

“Management has not publicly stated a leverage target post-transaction, which is something Fitch will continue to monitor in relation to our 6.0x positive rating sensitivity,” the agency said in a news release.

“The preferred stock issuance is not expected to materially impact SRC's post spin-off actual or targeted leverage ratio.”

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