Real estate company Store Capital files for IPO

August 31
10:13 AM 2014

Real estate owner Store Capital Corp, backed by private equity firm Oaktree Capital Management LLC, filed with U.S. regulators on Friday for an initial public offering of common stock.

Scottsdale, Arizona-based Store Capital buys real estate from large tenants, such as chain restaurants, supermarkets and health clubs, and leases the properties back to the tenants.

Store, which stands for Single Tenant Operational Real Estate, had a portfolio of more than 700 properties across 43 U.S. states as of June 30.

"Demand for high-yield products is very strong and the (real estate) sector is more tied to the credit cycle and housing market, creating appeal for company," said Joseph Schuster, the founder of IPO research firm IPOX Schuster LLC, adding that the offering was likely to attract strong investor interest.

Reuters reported in July that Store Capital had hired banks to explore a potential offering that could raise $300 million to $500 million and value the company at about $2 billion.

Private equity firm Oaktree Capital, a Los Angeles-based private equity firm, helped launch Store Capital in 2011 with an initial investment of $400 million.

The company said it intended to structure itself as a real estate investment trust (REIT) after the offering.

Companies with significant real estate assets seek a REIT structure to help lower the tax burden on their rental income. Shareholders also stand to gain as REITs are required to distribute at least 90 percent of their profits as dividends.

Store Capital intends to list on the New York Stock Exchange under the symbol "STRE".

The company plans to use the proceeds from the offering for investments and debt repayment.

Store Capital listed Goldman Sachs, Credit Suisse and Morgan Stanley among the underwriters to the IPO.

Earlier this week, Paramount Group Inc also filed for an IPO, in what could be the second-largest listing by a real estate company in the United States after Hilton Worldwide Holdings Inc's (HLT.N) IPO last year.

Store Capital filed to raise $500 million from the offering, but did not reveal how many shares it planned to sell or their expected price.

The amount of money a company says it plans to raise in its first IPO filings is used to calculate registration fees. The final size of the IPO could be different.

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