Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Spirit MTA REIT Is Soaring Today

By Matthew Frankel, CFP® – Jun 3, 2019 at 12:35PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The net-lease REIT completed a major step in its strategic plan.

What happened

Net-lease REIT Spirit MTA REIT (SMTA) is soaring on Monday, with shares up more than 17% as of 11:45 a.m. EDT. This has nothing to do with Spirit MTA's earnings or anything related to the performance of its business. Instead, the REIT is soaring because another company has agreed to acquire all its assets.

So what

Fellow REIT Hospitality Properties Trust (SVC 3.48%), which owns a portfolio of hotels and travel centers, has agreed to acquire 774 retail properties from Spirit MTA for $2.4 billion.

Stock chart rising

Image source: Getty Images.

Spirit MTA REIT was established as a portfolio of real estate that mainly consisted of bankrupt Shopko stores in the U.S., and the main goal of the company has been to unlock value for shareholders. As this transaction would liquidate most of the company's portfolio, management felt that it was the best opportunity to do just that. And, judging by the reaction of the stock price, investors seem to agree.

Now what

There are two stories here. For Spirit MTA shareholders, it appears that a pretty nice payday is in store and that the company has mostly achieved its objective of winding down its assets.

The other story is with Hospitality Properties Trust. The addition of the Spirit MTA properties represents a major diversification of its portfolio -- as I mentioned, it owns hotels and travel centers, not net-lease retail properties like Spirit MTA. Major tenants include AMC Theaters, Academy Sports, Carmax, and more.

Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.