Spirit Finance Corporation

Spirit Finance investor drinking on tropical cruise

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The Spirit Finance Corporation (NYSE: SFC) is a mortgage real estate investment trust formed in 2003 to provide sale/leaseback financing strategies to businesses in single tenant buildings. They have completed over $3 billion in such transactions, including the largest one ever done.

Spirit Finance Sale/Leaseback Financing

In a sale/leaseback, the business occupying the property sells the property to a company such as Spirit Finance, who then leases it to the business. This allows the business access to the money previously tied up in its equity in the property, so they can put it to use in running or expanding the business. They then have to pay rent to the new owner, but this is an expense that reduces their net taxable income.

The overall idea is to lower the cost of capital.

Examples include: SKO Group Holding Corp (ShopKo Stores Operating Co, LLC), Falcon Holdings LLC (Church's Chicken), Capital Racquet Sports Inc, Universal Pool Co., Inc DBA The Great Escape, America's Auto Auction, Inc, Grand Canyon University, 84 Lumber Company, and National Envelope Company (NEC).

Also -- Arby's, Apollo College, Swift Spinning, Taco Bell, Santa Fe Cattle, Hardee's, Tire Warehouse, Burger King, "NNN" Gander, Bojangles Hickory, Frontier Spinning, Pamida Store, Mahogany Prime Steakhouse, Dillon Tire, Charleston's, Pizza Hut, KFC, "NNN" Taco Bueno, "NNN" Joe's Crab Shack, and "NNN" Regal Cinema.

Because property equity has gone down, this may diminish the business of this mortgage REIT Spirit Finance Corporation at least in the near term future.

Next: iStar Financial -- financing real estate projects

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