DALLAS--(BUSINESS WIRE)--Spirit MTA REIT (NYSE: SMTA) announced today that the Board of Trustees has reached a definitive agreement to sell the Owned Properties held in the Company’s Master Trust 2014 and three assets presently owned by Spirit Realty Capital, Inc to Hospitality Properties Trust (NASDAQ: HPT) for $2.4 billion in total cash consideration, subject to certain adjustments. These three assets include the fee simple interests in three travel centers that previously had been subject to mortgage loans held by the Trust. The closing of the transaction is subject to customary conditions, including the receipt of the approval of SMTA stockholders, and is expected to occur in the later part or end of the third quarter of 2019. This transaction has been approved by the Board of Trustees of HPT and does not require HPT’s shareholders’ vote. HPT plans to finance this transaction through a new fully committed $2.0 billion term loan facility, availability on HPT’s existing revolving credit facility, certain asset sales and potential issuance of unsecured notes.

“As the external manager, Spirit has worked to maximize the value to shareholders by prudently managing the Company’s assets, protecting the Company from problem tenants and assisting in their accelerated strategic alternatives process. Today’s announcement represents the most critical step in the full wind-down of SMTA and looking ahead, Spirit will continue to partner with SMTA’s Board of Trustees to liquidate the few remaining assets and seek maximum recovery on the Shopko B-1 Term Loan,” said Jackson Hsieh, Chairman of SMTA and President and Chief Executive Officer of Spirit Realty Capital, Inc.

“Consistent with our announcement earlier this year that SMTA would accelerate its strategic plan, our Board has diligently explored multiple scenarios in our effort to maximize shareholder value. In assessing these scenarios, we took into account the pricing, timing, and certainty of various transactions. Ultimately, we concluded that a sale of the Trust to Hospitality Properties Trust represented the best possible outcome for our shareholders. We will continue our work to close the transaction in the coming months and realize cash value for the remainder of SMTA’s assets in order to provide special distributions to our shareholders,” stated Richard J. Stockton, Lead Independent Trustee of SMTA.

The transaction is structured such that HPT will pay $2.4 billion in cash, subject to certain adjustments, to SMTA, which SMTA will use to redeem all of the then-outstanding notes collateralized by the assets of the Trust (the “Trust Notes”) in connection with the closing. As of March 31, 2019, the balance of the Trust Notes was approximately $1.93 billion. Under the terms of the transaction, HPT will also pay to SMTA the make-whole amounts payable in connection with the redemption of the Trust Notes. The make-whole amount is currently estimated at $72 million, assuming a closing during the third quarter, but it is subject to change primarily based on the applicable U.S. Treasury rates at the time of redemption.

Additionally, at the request of HPT, a subsidiary of SMTA has agreed to acquire from a subsidiary of Spirit Realty Capital, Inc. (NYSE: SRC) (“Spirit”), SMTA’s external manager, the fee interests in three travel center properties for $55 million, subject to satisfaction of certain conditions. As part of this transaction, Spirit has agreed to repay SMTA the outstanding principal amount of six mortgage notes (the “Mortgage Loans in Master Trust 2014”) issued by Spirit’s subsidiaries and which are currently held in the Trust. As of March 31, 2019, the aggregate balance of the Mortgage Loans in Master Trust 2014 was approximately $27.1 million. The ownership of the three travel center properties will be transferred to HPT as part of the transaction, subject to satisfaction of certain conditions.

Net proceeds to SMTA from this transaction are expected to be approximately $450 million after taking into consideration (i) redemption of the Trust Notes, (ii) purchasing the three travel center properties from SRC, (iii) proceeds from the repayment of the Mortgage Loans in Master Trust 2014, (iv) cash released by the Trust upon redemption of the Trust Notes and (v) certain adjustments for working capital, interim Trust cash flows between signing and closing, and transaction costs.

Additionally, at closing, SMTA will repurchase from Spirit, at par value including accrued dividends, its $150 million preferred shares in the Company (SMTA Preferred Stock) in accordance with the terms of those shares, and approximately $5.6 million plus any accrued and unpaid dividends will be paid to satisfy the SubREIT preferred shares in accordance with their terms. Also at closing, the existing asset management agreement with Spirit (the “Asset Management Agreement”) and the Trust property management agreement will terminate. Under the existing terms of the Asset Management Agreement, SMTA will pay Spirit a termination fee of approximately $48 million in connection with such termination, however (i) as a result of Spirit’s termination, SMTA will not be required to deliver notice to Spirit 180 days in advance of termination or enter into an eight month transition services period, and (ii) Spirit has agreed to waive Spirit’s right to receive any promote as otherwise provided for under the Asset Management Agreement. Spirit and SMTA will then enter into an interim asset management agreement under which SMTA will pay Spirit a significantly reduced annual fee of $1 million during the initial one-year term, and $4 million for any renewal one-year term, plus certain cost reimbursements. This interim agreement will be terminable at any time by SMTA and after one year by Spirit without payment of a termination fee.

“This strategic transaction is the culmination of several months of continued effort to maximize the value of our assets with our stated goal of returning capital to SMTA’s shareholders and materially resolving the advisory relationship with Spirit. Under the terms of a further interim agreement with Spirit, at a significantly reduced cost, the balance of the Company will be liquidated in due course and, accordingly, we expect the shares to be delisted. We will provide more specifics regarding this transaction in our proxy statement,” added Ricardo Rodriguez, President and Chief Executive Officer of SMTA.

The Company remains focused on its efforts to generate additional cash proceeds through the sale of its remaining assets in the Other Properties segment, and to seek recovery of the amounts owed by Shopko under the Shopko B-1 Term Loan.

This transaction is a first step towards winding down and liquidation of the Company. As such, the Company intends to return net proceeds from this transaction and other asset sales when appropriate, after taking into account the payments in respect of the preferred equity stakes, intervening preferred dividend payments, the declared common dividend payment, the termination fee to Spirit, satisfaction of outstanding contingent liabilities and transaction costs associated with the sales.

Further relevant details on the transaction will be disclosed in the proxy statement for the transaction.

Barclays acted as financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP served as legal advisor to SMTA. ICR, LLC acted as communications advisor to SMTA.

(1) Approximate figure provided for illustrative purposes. The final amount at closing is subject to various adjustments as noted elsewhere in this press release.

(2) Property cost leakage for Workout Assets for the first quarter of 2019 annualized was $2.3 million.

(3) Represents total of special dividends announced and payable on April 15, 2019 and July 15, 2019, respectively.

ABOUT SPIRIT MTA REIT

Spirit MTA REIT (NYSE: SMTA) is a net-lease REIT headquartered in Dallas, Texas. SMTA owns one of the largest, most diversified and seasoned commercial real estate backed master funding vehicles. SMTA is managed by a wholly-owned subsidiary of Spirit (NYSE: SRC), one of the largest publicly traded triple net-lease REITs.

As of March 31, 2019, our diversified portfolio was comprised of 796 properties, including properties securing mortgage loans made by the Company. Our Owned Properties, with an aggregate gross leasable area of approximately 13.9 million square feet, are leased to approximately 203 tenants across 43 states and 24 industries. More information about Spirit MTA REIT can be found on the investor relations page of the Company's website at www.spiritmastertrust.com.