Spirit MTA REIT — Investor Presentation (June 2018)
28 slides from Spirit MTA REIT's investor presentation, Jun 4, 2018
Slide 1: Spirit MTA REIT
Spirit MTA REIT New York, NY June 2018
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. These forward-looking statements can be identified by the use of words such as “expect,” “plan,” “will,” “estimate,” “project
Slide 3: Key Investor Highlights
Key Investor Highlights Spirit MTA REIT ShopKo Master Trust •790 Assets1 Academy •$2.0Bn of Debt2 •$172MM of Contractual Rent Other Assets High Quality Portfolio of Diversified Assets Flexible Master Trust Unencumbered Portfolio to Fuel Growth Strong and Independent Board Experienced External Manage
Slide 4: SMTA Portfolio Top Tenants
SMTA Portfolio Top 20 Tenants1ï,§ Shopko represents 20.1 % Specialty Retail Shops Holding Corp. the majority of the AMC Entertainment, Inc Academy, LTD. Top 5 unencumbered Universal Pool Co., Inc. 34.4% Creme De La Creme, Inc. portfolio Top 10 Goodrich Quality Theatres 44.9% Casual Male Retail Group
Slide 5: Other Key Metrics for SMTA
Other Key Metrics for SMTA1,2 As of 3/31/2018 SMTA MTA Non MTA Contractual Rent $ 233,854 $ 171,958 $ 61,896 Occupied SQF 19,763 11,377 8,386 Total Properties 894 784 110 Vacant Properties 16 9 7 Vacant SQF 379 132 247 Contractual Contractual MTA Top 10 Tenants Rent % Non MTA Tenants Rent % AMC Thea
Slide 6: SMTA Strategy
SMTA Strategy ï,§ Sell Shopko and other non-core assets ï,§ Distribute a portion of net sale proceeds to shareholdersï,§ Redeploy remaining proceeds into MTA assets for levered growthï,§ Recently sold three Shopkos for $15.5MM at a 7.9% cap rate1ï,§ Increase MTA’s cash flows through portfolio recycl
Slide 7: Operational Excellence
Operational Excellence ï,§ Research driven focus on industries 1 that are positioned for long-term Forces success utilizing Spirit Heat Map Five rter’s Poï,§ Proprietary Spirit Property Ranking Model with annual review process General Merchandise (Shopko) $557MM ensures oversight Best Fit $360MM Lin
Slide 8: Capital Allocation Strategy
Capital Allocation Strategy Sell Disposition Proceeds to Shareholders Dividends to Unencumbered Shareholders Assets to MTA Optimize MTA Cash Flows ï,§ Sell Shopko and $400MM unencumbered assets $350MM Recycle Recycle $129MM $147MM in $300MM in collateral collateral ï,§ Distribute a portion $250MM of
Slide 9: Illustrative Dividend Opportunity
Illustrative Dividend Opportunity1 $100MM Illustrative Special Dividend – 50% of Proceeds $50MM Reinvest into Assets3 Unencumbered Asset Sales2 $50MM 50% Levered 75% Levered Special Dividend $100MM $200MM -$10MM Assets Purchased Assets Purchased Lost FAD +$7.0MM – NOI +$14.0MM – NOI -$2.5MM – Int. E
Slide 10: Illustrative SMTA Sum of the Parts
Illustrative SMTA Sum of the Parts Illustrative 12/31/2017 $ in millions (except per share amounts) SMTA Portfolio ï,§ SMTA benefits from ability to Encumbered Assets Collateral Value of MTA as of Series 2017-1 Cut-Off Date $ 2,596 raise secured debt at attractive Release Account Cash as of Series 2
Slide 11: Quality Assets Within Master Trust
Quality Assets Within Master Trust Master Trust A Overview Business Sectors (% of Aggregate Collateral Value) Most Recent Issuance Date December 2017 Outstanding Series 2014-1, 2014-2, 2014-3, 2014-4, 2017-1 Ratings (S&P only) A+ / BBB LTV (Dec 2017/Current) 75% / 75% Issuer DSCR (Dec 2017/Current)
Slide 12: Master Trust Top Tenants & Maturity Profile
Master Trust Top Tenants & Maturity Profile Master Trust A has a diversified collateral pool and strong top tenant composition Top 10 Tenants Lease & Loan Maturity Schedule Weighted Average Lease Term: 10.4 years Note: All numbers as of March 2018 servicing reports unless otherwise stated. Please se
Slide 13: Master Trust Funding Facility is an Issuer of A+ Notes
Master Trust Funding Facility is an Issuer of A+ Notes Net Lease Issuer Market Share (2000—2018 YTD)ï,§ Long and established track record since 2005 Deal Si ze Issuersï,§ Proven issuer of A+ notes, Count ($ MM) CARS 8 $3,915 $510MM in 2014 and SPIRIT 10 $3,502 STORE 8 $1,936 $674MM1 in 2017 CNL 3 $7
Slide 14: S&P Stress Cash Flow Assumptions for A+ Rating
S&P Stress Cash Flow Assumptions for A+ Rating Note: Preliminary S&P stress assumptions as of October 2017 shown for non-environmental properties and their related leases only. Additional stresses apply for “environmentally sensitive” properties, leases with less than a 1.0x FCCR, vacant properties
Slide 15: Master Trust Benefits
Master Trust Benefits Net lease ABS securitizations provide benefits that do not exist in traditional transactions Transaction Structure Optimize transaction leverage, rating and pricing via efficient and flexible structure Ladder Debt Maturities Reduce the potential for liability sensitivity in a g
Slide 16: Liability Management Opportunity
Liability Management Opportunity Earliest large refinancing opportunity January and July of 2019—1 Series 2014-1 Class A-1 Notes A No Make repaid in November 2017 Jul Series Cl Whole ARD 2014-1—2 (12 2020 A months) Cl5.37% $252.7mm outstanding on ARD No Make Series A Mar 2014-2 Whole ARD Class (12 2
Slide 17: MTA Amortization Schedule
MTA Amortization Schedule Series 2014-4 Class A1 ARD—10 $150.0MM due January 2020 Series 2014-1 Class A2 ARD -9.1 $215.9MM due July 20201,2 8.9 9.0 Series 2014-4 Class A2 ARD—8.7 8.8 9 8.4 8.5 $92.5MM due January 2030 8.2 8.3 8.2 Series 2014-2 Class A ARD -$220.7MM due March 2021 8 Series 2014-3 Cla
Slide 18: Experienced Independent Trustees
Experienced Independent Trustees 4 of 5 trustees are independent with a range of experience across real estate, private equity, restructuring and public REITs Trustees Profile • CEO and President of Spirit Realty Capital Jackson Hsieh • Former Managing Director and Vice Chairman of Investment Bankin
Slide 19: SRC Platform Capabilities
SRC Platform Capabilities Real estate platform built on experienced management team and specialized disciplines ï,§ Expanded senior management team Finance Accounting and ï,§ Strong cross departmental interaction Credit & Asset Acquisitions Management Research ï,§ Commitment to credit and research P
Slide 20: Overview of SMTA/SRC Relationship
Overview of SMTA/SRC Relationship Alignment of Interest ï,§ SRC provides property management, special servicing and asset management services to SMTA for total annual fees of approximately $27.7MM ï,§ Asset Management Agreement: – Term: 3-year initial term – Termination Fee: 1.75x Property Managemen
Slide 21: Appendix — Supplemental Information and Reporting Definitions
Appendix — Supplemental Information and Reporting Definitions
Slide 22: Spirit Heat Map
Spirit Heat Map Focus on industries that are less vulnerable to competitive forces and technological disruption Worse Technological Disruption Better 100 50 0 Better 0 Wholesale Clubs Entertainment Data Centers Building Materials Industrial Entry, Pet Supplies Home Improvement to Specialty Retail Dr
Slide 23: Illustrative SMTA Industry Investment
Illustrative SMTA Industry Investment1 SMTA is targeting several industries for future growth General Merchandise (Shopko) $557MM Best Fit $360MM Line Casual Dining SMTA’s $ Movie Theaters Industries Industrial below the QSR Investment best fit line within $240MM are areas in each which category SMT
Slide 24: Spirit Property Ranking Model
Spirit Property Ranking Model • Asset level ranking of all properties using twelve criteria 16% • Individual weightings applied to each criteria to arrive at overall ranking 21% • All rankings updated annually 64% • All acquisition candidates ranked; key ingredient in Investment Committee decision p
Slide 25: Asset Level Ranking System
Asset Level Ranking System Tenant KFC KFC Taco Bell / KFC Location Stone Mountain, GA Alexandria, VA Spencer, IN 5 Mile Pop. 158,143 551,076 8,015 5 Mile Income $63,569 $98,778 $45,319 Lease Term 14.9 3.6 4.1 Remaining (Years) Coverage 4.4x 3.2x 2.0x (Pre-OH Unit FCC) (Corporate FCC) (Pre-OH Unit FC
Slide 26: Process Improvements
Process Improvements Operations Finance & Accounting • Midland Servicing Transferred In- • Implemented Flash Report House • Lease Administration • Asset Management Realignment Transitioned to Property • Credit Monitoring Process Accounting Reengineered • Collaborative Tenant Review • Enhanced Tax &
Slide 27: Reporting Definitions
Reporting Definitions (reported Adjusted Debt in accordance represents with interest GAAP) bearing adjusted debt to exclude Annualized disposition Capitalization Cash Rents prior Rate to. computing In the case the of MTA EBITDAre plus adjustments of unconsolidated to reflect the real Company’s estat
Slide 28: Reporting Definitions
Reporting Definitions Operations Funds from (AFFO) Operations We calculate (FFO) and FFO Adjusted in accordance Funds from with and relocation divestiture of the costs, Company’s other G&A headquarters, costs associated transactions with Spirit industries Heat across Map is Porter’s an analysis Five