Debt

6 Months Ended

Jun. 30, 2024

Debt

Debt

4. Debt

Credit Facility

The Company has a credit agreement (the “Unsecured Credit Agreement”) with a group of lenders which provides for a senior unsecured revolving credit facility (the “Unsecured Revolving Credit Facility”) and unsecured, variable-rate term loans which are discussed in more detail in the section titled “Unsecured Notes and Term Loans Payable, net” below. The Unsecured Revolving Credit Facility has a borrowing capacity of $753.9 million, matures in February 2027 and includes two six-month extension options, subject to certain conditions and the payment of a 0.075% extension fee. At June 30, 2024, the Company had $375.0 million of borrowings outstanding on the facility.

Borrowings under the Unsecured Revolving Credit Facility require monthly payments of interest at a rate selected by the Company of either (1) SOFR plus an adjustment of 0.10% plus a spread ranging from 1.00% to 1.45%, or (2) the Base Rate, as defined in the Unsecured Credit Agreement, plus a spread ranging from 0.00% to 0.45%. The spread used is based on the Company’s consolidated total leverage ratio as defined in the Unsecured Credit Agreement. The Company is required to pay a facility fee on the total commitment amount ranging from 0.15% to 0.30% based on the Company’s consolidated total leverage ratio. Currently, the applicable spread for SOFR-based borrowings is 1.10% and the facility fee is 0.20%. As of June 30, 2024, the Company has three interest rate swap agreements with an aggregate notional value of $375.0 million that effectively convert the outstanding borrowings on the Unsecured Revolving Credit Facility to an all-in fixed rate of 4.5950%.

Under the terms of the Unsecured Credit Agreement, the Company is subject to various restrictive financial and nonfinancial covenants which, among other things, require the Company to maintain certain leverage ratios, cash flow and debt service coverage ratios and secured borrowing ratios. Certain of these ratios are based on the Company’s pool of unencumbered assets, which aggregated approximately $10.0 billion at June 30, 2024. The facility is recourse to the Company and, as of June 30, 2024, the Company was in compliance with the covenants under the facility.

The Unsecured Credit Agreement also includes capacity for uncommitted incremental term loans and revolving commitments, whether in the form of additional facilities or an increase to the existing facilities, up to an aggregate amount for all revolving commitments and term loans under the Unsecured Credit Agreement of $3.2 billion.

At June 30, 2024 and December 31, 2023, unamortized financing costs related to the Company’s credit facility totaled $5.0 million and $6.0 million, respectively, and are included in other assets, net, on the condensed consolidated balance sheets.

Unsecured Notes and Term Loans Payable, net

The Company has completed four public offerings of ten-year unsecured notes (“Public Notes”). In March 2018, February 2019 and November 2020, the Company completed public offerings of $350.0 million each in aggregate principal amount. In November 2021, the Company completed a public offering of $375.0 million in aggregate principal amount. The Public Notes have coupon rates of 4.50%, 4.625%, 2.75% and 2.70%, respectively, and interest is payable semi-annually in arrears in March and September of each year for the 2018 and 2019 Public Notes, May and November of each year for the 2020 Public Notes, and June and December of each year for the 2021 Public Notes.

The supplemental indentures governing the Public Notes contain various restrictive covenants, including limitations on the Company’s ability to incur additional secured and unsecured indebtedness. As of June 30, 2024, the Company was in compliance with these covenants. The Public Notes can be redeemed, in whole or in part, at par within three months of their maturity date or at a redemption price equal to the sum of (i) the principal amount of the notes being redeemed plus accrued and unpaid interest and (ii) the make-whole premium, as defined in the supplemental indentures governing these notes.

The Company has entered into Note Purchase Agreements (“NPAs”) with institutional purchasers that provided for the private placement of three series of senior unsecured notes initially aggregating $375.0 million (the “Notes”). At June 30, 2024, the Company had $114.4 million of Notes outstanding. Interest on the Notes is payable semi-annually in arrears in May and November of each year. On each interest payment date, the interest rate on each series of Notes may be increased by 1.0% should the Company’s Applicable Credit Rating (as defined in the NPAs) fail to be an investment-grade credit rating; the increased interest rate would remain in effect until the next interest payment date on which the Company obtains an investment grade credit rating. The Company may prepay at any time all, or any part, of any series of Notes, in an amount not less than 5% of the aggregate principal amount of the series then outstanding in the case of a partial prepayment, at 100% of the principal amount so prepaid plus a Make-Whole Amount (as defined in the NPAs). The Notes are senior unsecured obligations of the Company.

The NPAs contain a number of financial covenants that are similar to the covenants contained in the Company’s Unsecured Credit Agreement as summarized above. Subject to the terms of the NPAs and the Notes, upon certain events of default, including, but not limited to, (i) a payment default under the Notes, and (ii) a default in the payment of certain other indebtedness by the Company or its subsidiaries, all amounts outstanding under the Notes will become due and payable at the option of the purchasers. As of June 30, 2024, the Company was in compliance with its covenants under the NPAs.

The Company’s Unsecured Credit Agreement, provides for the Company’s Unsecured Revolving Credit Facility, as discussed above, and two unsecured, variable-rate term loans. The loans consist of an unsecured, variable rate term loan issued in February 2023 (“February 2023 Unsecured Term Loan”) and an unsecured, variable rate term loan issued in December 2023 (“December 2023 Unsecured Term Loan”).

The February 2023 Unsecured Term Loan had initial borrowings of $600.0 million and was amended throughout 2023 to increase total borrowings to $921.1 million; as of June 30, 2024 and December 31, 2023, total borrowings on the February 2023 Unsecured Term Loan remained at $921.1 million. The February 2023 Unsecured Term Loan matures in April 2027 and the interest rate resets daily at Daily Simple SOFR plus an adjustment of 0.10% plus a spread ranging from 1.10% to 1.70% based on the Company’s consolidated total leverage ratio as defined in the Unsecured Credit Agreement. At June 30, 2024, the spread applicable to the Company was 1.25%. As of June 30, 2024, the Company had 11 interest rate swap agreements, with an aggregate notional value of $921.1 million, which effectively convert the term loan borrowings to an all-in fixed rate of 4.3469% for the remaining term of the loan.

The December 2023 Unsecured Term Loan had borrowings of $592.5 million as of December 31, 2023. In January 2024, the Company entered into an incremental amendment of the existing Unsecured Credit Agreement which provided for an increase to the December 2023 Unsecured Term Loan of $135.0 million; as of June 30, 2024, total term loan borrowings under the December 2023 Unsecured Term Loan were $727.5 million. The December 2023 Unsecured Term Loan matures in July 2026 and includes two 12-month extensions. The interest rate resets daily at Daily Simple SOFR plus an adjustment of 0.10%, plus a spread ranging from 1.20% to 1.80% based on the Company’s consolidated total leverage ratio as defined in the Credit Agreement. At June 30, 2024, the spread applicable to the Company was 1.35%.

During 2023, the Company entered into six interest rate swap agreements, with an aggregate notional value of $592.5 million, which effectively convert the borrowings as of December 31, 2023 to an all-in fixed rate of 5.4520% for the remaining term of the loan. In conjunction with the incremental amendment in January 2024, the Company entered into one interest rate swap agreement with a notional value of $135.0 million, which effectively converts the incremental borrowings to a fixed rate of 5.0095%.

As noted above, under the terms of the Unsecured Credit Agreement, the Company is subject to various restrictive financial and nonfinancial covenants which, among other things, require the Company to maintain certain leverage ratios, cash flow and debt service coverage ratios and secured borrowing ratios. As of June 30, 2024, the Company was in compliance with these covenants. The Unsecured Term Loans are senior unsecured obligations of the Company, require monthly interest payments and may be prepaid without premium or penalty at any time.

The Company’s senior unsecured notes and term loans payable are summarized below (dollars in thousands):

			Outstanding Balance
	Maturity Date	Interest Rate	June 30, 2024			December 31, 2023
Notes Payable:
Series B issued November 2015	Nov. 2024	5.24%	$	32,400		$	32,400
Series C issued April 2016	Apr. 2026	4.73%		82,000			82,000
Public Notes issued March 2018	Mar. 2028	4.50%		350,000			350,000
Public Notes issued February 2019	Mar. 2029	4.625%		350,000			350,000
Public Notes issued November 2020	Nov. 2030	2.75%		350,000			350,000
Public Notes issued November 2021	Dec. 2031	2.70%		375,000			375,000
Total notes payable				1,539,400			1,539,400
Term Loans:
Term Loan issued December 2023 (a)	Jul. 2026	5.3699% (b)		727,500			592,500
Term Loan issued February 2023	Apr. 2027	4.3469% (c)		921,100			921,100
Total term loans				1,648,600			1,513,600
Unamortized discount				(185,116	)		(200,875	)
Unamortized deferred financing costs				(11,585	)		(12,417	)
Total unsecured notes and term loans payable, net			$	2,991,299		$	2,839,708

(a)Term loan was issued in December 2023 with borrowings of $592.5 million and amended in January 2024 to increase the total term loan borrowings to $727.5 million.

(b)Loan is a floating-rate loan which resets daily at Daily Simple SOFR plus an adjustment of 0.10% plus the applicable spread, which was 1.35% at June 30, 2024. The Company has entered into seven interest rate swap agreements that effectively convert the floating rate to the weighted-average fixed rate noted as of June 30, 2024.

(c)Loan is a floating-rate loan which resets daily at Daily Simple SOFR plus an adjustment of 0.10% plus the applicable spread, which was 1.25% at June 30, 2024. The Company has entered into 11 interest rate swap agreements that effectively convert the floating rate to the weighted-average fixed rate noted as of June 30, 2024.

Non‑recourse Debt Obligations of Consolidated Special Purpose Entities, net

During 2012, the Company implemented its STORE Master Funding debt program pursuant to which certain of its consolidated special purpose entities issue multiple series of non‑recourse net‑lease mortgage notes from time to time that are collateralized by the assets and related leases (collateral) owned by these entities. One of the principal features of the program is that, as additional series of notes are issued, new collateral is contributed to the collateral pool, thereby increasing the size and diversity of the collateral pool for the benefit of all noteholders, including those who invested in prior series. Another feature of the program is the ability to substitute collateral from time to time subject to meeting certain prescribed conditions and criteria. The notes issued under this program are generally segregated into Class A amortizing notes and Class B non‑amortizing notes. The Company has retained the Class B notes which aggregate $210.0 million at June 30, 2024.

The Class A notes require monthly principal and interest payments with a balloon payment due at maturity and these notes may be prepaid at any time, subject to a yield maintenance prepayment premium if prepaid more than 24 or 36 months prior to maturity. As of June 30, 2024, the aggregate collateral pool securing the net‑lease mortgage notes was comprised primarily of single-tenant commercial real estate properties with an aggregate investment amount of approximately $4.9 billion.

Certain of the consolidated special purpose entity subsidiaries of the Company have financed their real estate properties with traditional first mortgage debt. The notes generally require monthly principal and interest payments with balloon payments due at maturity. In general, these mortgage notes payable can be prepaid in whole or in part upon payment of a yield maintenance premium. The mortgage notes payable are collateralized by real estate properties owned by these consolidated special purpose entity subsidiaries with an aggregate investment amount of approximately $233.5 million at June 30, 2024.

The mortgage notes payable, which are obligations of the consolidated special purpose entities described in Note 2, contain various covenants customarily found in mortgage notes, including a limitation on the issuing entity’s ability to incur additional indebtedness on the underlying real estate. Although this mortgage debt generally is non‑recourse, there are customary limited exceptions to recourse for matters such as fraud, misrepresentation, gross negligence or willful misconduct, misapplication of payments, bankruptcy and environmental liabilities. Certain of the mortgage notes payable also require the posting of cash reserves with the lender or trustee if specified coverage ratios are not maintained by the Company or one of its tenants.

The Company’s non-recourse debt obligations of consolidated special purpose entity subsidiaries are summarized below (dollars in thousands):

			Outstanding Balance
	Maturity Date	Interest Rate	June 30, 2024			December 31, 2023
Non-recourse net-lease mortgage notes:
$150,000 Series 2018-1, Class A-1 (a)		3.96%	$	—		$	139,052
$50,000 Series 2018-1, Class A-3 (a)		4.40%		—			47,917
$270,000 Series 2015-1, Class A-2	Apr. 2025 (b)	4.17%		257,625			258,300
$200,000 Series 2016-1, Class A-1 (2016)	Oct. 2026 (b)	3.96%		169,034			171,355
$82,000 Series 2019-1, Class A-1	Nov. 2026 (b)	2.82%		77,565			77,770
$46,000 Series 2019-1, Class A-3	Nov. 2026 (b)	3.32%		44,946			45,061
$135,000 Series 2016-1, Class A-2 (2017)	Apr. 2027 (b)	4.32%		115,665			117,201
$228,000 Series 2018-1, Class A-2	Oct. 2027 (c)	4.29%		210,218			211,358
$164,000 Series 2018-1, Class A-4	Oct. 2027 (c)	4.74%		156,347			157,167
$346,000 Series 2023-1, Class A-1	May 2028 (b)	6.19%		344,126			344,991
$182,000 Series 2023-1, Class A-2	May 2028 (b)	6.92%		181,014			181,469
$168,500 Series 2021-1, Class A-1	Jun. 2028 (b)	2.12%		165,972			166,394
$89,000 Series 2021-1, Class A-3	Jun. 2028 (b)	2.86%		87,665			87,887
$74,400 Series 2024-1, Class A-1	Apr. 2029 (b)	5.69%		74,338			—
$25,600 Series 2024-1, Class A-3	Apr. 2029 (b)	5.93%		25,579			—
$260,600 Series 2024-1, Class A-2	Apr. 2031 (b)	5.70%		260,383			—
$89,400 Series 2024-1, Class A-4	Apr. 2031 (b)	5.94%		89,326			—
$168,500 Series 2021-1, Class A-2	Jun. 2033 (c)	2.96%		165,972			166,394
$89,000 Series 2021-1, Class A-4	Jun. 2033 (c)	3.70%		87,665			87,887
$244,000 Series 2019-1, Class A-2	Nov. 2034 (c)	3.65%		230,804			231,414
$136,000 Series 2019-1, Class A-4	Nov. 2034 (c)	4.49%		132,883			133,223
Total non-recourse net-lease mortgage notes				2,877,127			2,624,840
Non-recourse mortgage notes:
$10,075 note issued March 2014	Apr. 2024 (d)	5.10%		—			8,386
$65,000 note issued June 2016	Jul. 2026 (e)	4.75%		56,002			56,674
$41,690 note issued March 2019	Mar. 2029 (f)	4.80%		39,661			40,001
$6,350 notes issued March 2019 (assumed in December 2020)	Apr. 2049 (e)	4.64%		5,812			5,874
Total non-recourse mortgage notes				101,475			110,935
Unamortized discount				(146,437	)		(164,326	)
Unamortized deferred financing costs				(5,374	)		(2,975	)
Total non-recourse debt obligations of    consolidated special purpose entities, net			$	2,826,791		$	2,568,474

(a)Notes were prepaid, without penalty, in April 2024 using a portion of the proceeds from the aggregate $450.0 million STORE Master Funding Series 2024-1 issuance.

(b)Prepayable, without penalty, 24 months prior to maturity.

(c)Prepayable, without penalty, 36 months prior to maturity.

(d)Note was repaid, without penalty, in April 2024 at maturity.

(e)Prepayable, without penalty, three months prior to maturity.

(f)Prepayable, without penalty, four months prior to maturity.

Credit Risk Related Contingent Features

The Company has agreements with derivative counterparties, which provide generally that the Company could be declared in default on its derivative obligations if the Company defaults on the underlying indebtedness. As of June 30, 2024, the Company had no derivative counterparties with interest rate swaps in a net liability position.

Long-term Debt Maturity Schedule

As of June 30, 2024, the scheduled maturities, including balloon payments, on the Company’s aggregate long-term debt obligations are as follows (in thousands):

	Scheduled
	Principal		Balloon
	Payments		Payments		Total
Remainder of 2024	$	12,672	$	32,400	$	45,072
2025		24,667		256,612		281,279
2026		22,618		1,141,642		1,164,260
2027		14,112		1,381,572		1,395,684
2028		7,841		1,113,615		1,121,456
2029		5,358		483,585		488,943
Thereafter		20,801		1,649,107		1,669,908
	$	108,069	$	6,058,533	$	6,166,602