Hospitality Properties Trust Agrees To Purchase And Leaseback 30 Travel Centers For Approximately $397 Million
June 01 2015 - 7:39PM
Business Wire
HPT Also To Sell Five Travel Centers for
Approximately $45 Million And Realize A Gain Of Approximately $10
Million
Net Cash Rental Income To Increase By
Approximately $30.2 Million/Year Plus Future Percentage Rents
Hospitality Properties Trust (NYSE:HPT) today announced that it
has entered agreements with TravelCenters of America LLC (NYSE: TA)
to acquire and leaseback 30 travel centers for a total purchase
price of approximately $397 million. The 30 sites include 11 sites
which HPT currently owns and where HPT will acquire some or all of
the improvements, land and ancillary property owned by TA. These
agreements also provide that HPT will sell five travel centers to
TA for approximately $45 million that will result in a gain on sale
to HPT of approximately $10 million. The annual net cash rental
increase which HPT expects to realize as a result of its expected
net investment of approximately $352 million is approximately $30.2
million/year, plus percentage rent in the future.
Commenting upon today’s announcement, John G. Murray, President
of HPT, made the following statement:
“HPT is pleased to expand its relationship
with TA. For the past several years, TA has proven itself to be a
dependable source of rental income for HPT and HPT looks forward to
a long and mutually beneficial relationship with TA.”
The transactions announced today are expected to occur at
different times, including the following:
- HPT will acquire 25 travel centers,
including the 11 sites which HPT currently owns and where HPT will
acquire some or all of the improvements, land and ancillary
property, for approximately $279 million. The purchase and lease of
most of these sites is expected to occur by June 30, 2015; however,
TA has the right to delay the closing for a limited number of sites
until later this year.
- HPT expects to acquire an additional
five sites that TA is developing. The purchase price for these
sites will be equal to TA’s development costs which are currently
estimated to total up to approximately $118 million. The purchase
and leaseback of these sites is expected to occur before June 30,
2017, as the development of these sites is completed.
- HPT intends to sell five travel centers
to TA for approximately $45 million and realize a gain on sale of
approximately $10 million. These properties are currently leased by
HPT to TA and subleased by TA to its franchisees. These sales are
expected to occur before the end of the current month.
- The agreements announced today also
will modify certain terms of the current leases between HPT and TA,
expanding and subdividing one current lease for 144 travel centers
into four approximately equal sized leases for these sites (plus
the sites being acquired, less the sites being sold), extending the
lease terms and granting certain renewal options to TA. All of TA’s
obligations to HPT will remain guaranteed by TA on a full recourse
basis.
TA was formerly a 100% owned subsidiary of HPT until TA’s shares
were distributed to HPT shareholders as a special dividend in 2007.
HPT is TA’s largest shareholder owning approximately 8.9% of TA’s
outstanding shares, and one of HPT’s Trustees is also a Director of
TA. Because of these and other relationships between HPT and TA,
the terms of the agreements between HPT and TA were negotiated and
approved by special committees of HPT’s Independent Trustees and
TA’s Independent Directors who were represented by separate
counsel.
Hospitality Properties Trust is a real estate investment trust,
or REIT, which owns a diverse portfolio of hotels and travel
centers located in 44 states, Puerto Rico and Canada. HPT’s
properties are operated under long term management or lease
agreements. HPT is headquartered in Newton, Massachusetts.
WARNING REGARDING FORWARD LOOKING
STATEMENTS
THIS PRESS RELEASE INCLUDES FORWARD LOOKING STATEMENTS WITHIN
THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
AND OTHER SECURITIES LAWS. ALSO, WHENEVER HPT USES THE WORDS
EXPECT, BELIEVE, INTEND, ANTICIPATE OR SIMILAR EXPRESSIONS, HPT IS
MAKING FORWARD LOOKING STATEMENTS. THE FORWARD LOOKING STATEMENTS
IN THIS PRESS RELEASE ARE BASED UPON HPT’S CURRENT BELIEFS AND
EXPECTATIONS, BUT THESE FORWARD LOOKING STATEMENTS ARE NOT
GUARANTEED TO OCCUR AND THEY MAY NOT OCCUR FOR VARIOUS REASONS,
INCLUDING SOME REASONS WHICH ARE BEYOND HPT’S CONTROL. FOR
EXAMPLE:
- THIS PRESS RELEASE STATES THAT THE
ANNUAL NET CASH RENTAL INCREASE WHICH HPT WILL REALIZE AS A RESULT
OF THE AGREEMENTS WITH TA ANNOUNCED TODAY WILL BE APPROXIMATELY
$30.2 MILLION/YEAR, PLUS PERCENTAGE RENT IN THE FUTURE. THE
PURCHASE, LEASE AND SALE OF TRAVEL CENTERS DISCUSSED IN THIS PRESS
RELEASE ARE EXPECTED TO OCCUR DURING THE NEXT TWO YEARS. WHEN
CERTAIN PROPERTIES ARE SOLD BY HPT TO TA, HPT’S RENTAL INCOME WILL
DECLINE; AND WHEN PROPERTIES ARE BOUGHT BY HPT AND LEASED TO TA,
HPT’S RENTAL INCOME WILL INCREASE. UNTIL THESE AGREEMENTS ARE FULLY
IMPLEMENTED, THE RENTAL INCOME WHICH HPT WILL RECEIVE FROM TA MAY
DECLINE ON AN INTERIM BASIS AND THE INCREASE IN RENTAL INCOME HPT
WILL REALIZE MAY BE LESS THAN $30.2 MILLION/YEAR. ALSO, THE
PERCENTAGE RENT PAYABLE BY TA TO HPT IS BASED UPON INCREASES IN THE
VALUE OF SALES OF CERTAIN PRODUCTS AND SERVICES OVER CERTAIN
THRESHOLD AMOUNTS AT THE SITES LEASED BY TA FROM HPT. THERE IS NO
GUARANTEE THAT TA’S SALES WILL INCREASE OR THAT ANY PERCENTAGE RENT
WILL BE PAID TO HPT IN THE FUTURE.
- THIS PRESS RELEASE STATES THAT FOR THE
PAST SEVERAL YEARS, TA HAS PROVEN ITSELF TO BE A DEPENDABLE SOURCE
OF RENTAL INCOME FOR HPT. AN IMPLICATION OF THIS STATEMENT MAY BE
THAT TA’S FUTURE RENTS TO HPT ARE ASSURED. HOWEVER, IN THE PAST,
TA’S OPERATING FINANCIAL RESULTS HAVE APPEARED TO FOLLOW THE
ECONOMIC CYCLE. PRIOR TO 2011, TA EXPERIENCED ANNUAL LOSSES AND
SINCE TA BECAME A SEPARATE PUBLIC COMPANY IN 2007 IT HAS
EXPERIENCED A NET AGGREGATE LOSS. DURING 2008 TO 2010, HPT AGREED
TO DEFER CERTAIN RENTS THEN DUE FROM TA; THOSE DEFERRED RENTS HAVE
NOT BEEN PAID AND THEIR MATURITY HAS BEEN EXTENDED BY THE
AGREEMENTS ANNOUNCED TODAY. THERE IS NO ASSURANCE THAT TA WILL
CONTINUE TO PAY ALL THE RENT CONTRACTUALLY DUE TO HPT.
- THIS PRESS RELEASE STATES SEVERAL TIME
PERIODS WHEN CERTAIN SALES ARE EXPECTED TO CLOSE. LARGE AND COMPLEX
REAL ESTATE TRANSACTIONS INVOLVING MULTIPLE LOCATIONS IN MULTIPLE
LEGAL JURISDICTIONS LIKE THOSE ANNOUNCED TODAY OFTEN TAKE LONGER TO
CLOSE THAN ANTICIPATED. HPT CAN PROVIDE NO ASSURANCE THAT THESE
TRANSACTIONS WILL OCCUR WITHIN THE SPECIFIED TIMES.
- THIS PRESS RELEASE STATES THAT HPT
EXPECTS TO ACQUIRE FIVE SITES WHICH TA IS DEVELOPING, THAT THE
PURCHASE PRICES FOR THESE SITES WILL BE EQUAL TO TA’S DEVELOPMENT
COSTS WHICH ARE ESTIMATED TO BE UP TO APPROXIMATELY $118 MILLION,
AND THAT THE PURCHASE AND LEASEBACK OF THESE SITES IS EXPECTED TO
OCCUR AS THE DEVELOPMENT OF THESE SITES IS COMPLETED BEFORE JUNE
30, 2017. TA HAS BEGUN CONSTRUCTION AT SOME, BUT NOT ALL, OF THESE
SITES. OBTAINING GOVERNMENTAL APPROVALS TO BUILD TRAVEL CENTERS IS
OFTEN A COMPLEX AND TIME CONSUMING PROCESS. HPT CAN PROVIDE NO
ASSURANCE THAT TA WILL OBTAIN ALL REQUIRED APPROVALS TO DEVELOP ALL
FIVE SITES. IF REQUIRED DEVELOPMENT APPROVALS ARE NOT OBTAINED OR
IF CERTAIN SITES ARE NOT DEVELOPED FOR OTHER REASONS, HPT MAY
ACQUIRE LESS THAN FIVE SITES OR DIFFERENT SITES MAY BE AGREED FOR
SALE AND LEASEBACK BETWEEN HPT AND TA. IT IS DIFFICULT TO ESTIMATE
THE COST TO DEVELOP NEW TRAVEL CENTERS. HPT AND TA HAVE AGREED THAT
HPT WILL PURCHASE THESE PROPERTIES FOR TA’S COST OF DEVELOPMENT,
WHICH IS ESTIMATED TO BE UP TO APPROXIMATELY $118 MILLION, BUT THAT
COST MAY BE MORE OR LESS THAN THE $118 MILLION ESTIMATE. ALSO,
CONSTRUCTION OF NEW TRAVEL CENTERS MAY BE DELAYED FOR VARIOUS
REASONS SUCH AS LABOR STRIFE, WEATHER CONDITIONS, THE
UNAVAILABILITY OF CONSTRUCTION MATERIALS, ETC.; AND THE PURCHASE
AND LEASEBACK OF THESE SITES MAY BE DELAYED BEYOND JUNE 30,
2017.
- THIS PRESS RELEASE STATES THAT THE
TERMS OF THE AGREEMENTS DESCRIBED IN THIS PRESS RELEASE WERE
NEGOTIATED AND APPROVED BY SPECIAL COMMITTEES OF HPT’S INDEPENDENT
TRUSTEES AND TA’S INDEPENDENT DIRECTORS WHO WERE REPRESENTED BY
SEPARATE COUNSEL. AN IMPLICATION OF THESE STATEMENTS MAY BE THAT
THESE AGREEMENTS ARE EQUIVALENT TO “ARM’S LENGTH” AGREEMENTS
BETWEEN UNRELATED PARTIES. HPT AND TA ARE AFFILIATED BECAUSE THEY
HAVE A COMMON BOARD MEMBER, BECAUSE BOTH HAVE CERTAIN MANAGEMENT
CONTRACTS WITH THE SAME COMPANY AND OTHERWISE. ALSO, AN AGREEMENT
WHICH WAS ENTERED BY HPT AND TA AT THE TIME TA WAS SPUN OUT OF HPT
TO BECOME A SEPARATE PUBLIC COMPANY GRANTS HPT CERTAIN RIGHTS OF
FIRST REFUSAL REGARDING TA’S REAL ESTATE TRANSACTIONS. ACCORDINGLY,
HPT CAN PROVIDE NO ASSURANCE THAT THE TERMS OF THE AGREEMENTS
ANNOUNCED TODAY ARE EQUIVALENT TO “ARM’S LENGTH” AGREEMENTS.
FOR THE FOREGOING REASONS, AMONG OTHERS, INVESTORS ARE CAUTIONED
NOT TO PLACE UNDUE RELIANCE UPON THE FORWARD LOOKING STATEMENTS IN
THIS PRESS RELEASE. EXCEPT AS MAY BE REQUIRED BY APPLICABLE LAW,
HPT DOES NOT INTEND TO UPDATE ANY FORWARD LOOKING STATEMENTS IN
THIS PRESS RELEASE AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.
List of Travel Centers Affected by the
Agreements Between HPT and
TA____________________________________
A. Travel centers currently owned by TA which will be sold to
HPT and leased back to TA:
TA Holbrook I-40, Exit 283 Holbrook AZ Petro
Santa Nella State Hwy 152, Exit State Hwy 33 Santa Nella CA Petro
Monee I-57, Exit 335 Monee IL Petro Greensburg I-74, Exit 143
Greensburg IN TA Beto Junction I-35, Exit 155 (US 75) Lebo KS TA
Greenwood I-20, Exit 5 Greenwood LA TA Battle Creek I-94, Exit 104
Battle Creek MI TA Edinburg HWY 281, Exit FM 2812 Edinburg TX Petro
Gadsden I-59, Exit 181 Gadsden AL TA Livingston SR 99, Exit 203
(Winton Pkwy.) Livingston CA TA Morris I-80, Exit 112 (Rt. 47)
Morris IL Petro Gary I-80/I-94, Exit 9 Gary IN Petro Florence I-95,
Exit 169 Florence SC TA Laredo I-35, Exit 13 (Beltway Pkwy.) Laredo
TX
B. Travel centers which HPT currently owns and where HPT will
acquire certain improvements, land and ancillary property owned by
TA and the rent payable by TA to HPT will increase:
TA Ashland I-95 & Rt. 54, Ashland Exit #92
Ashland VA TA Barkeyville I-80 & SR 8, Exit (3) 29 Harrisville
PA TA Vero Beach I-95 & SR 60, Exit 147 Vero Beach FL TA
Milesburg I-80, Exit (23) 158 Milesburg PA TA Denmark I-40 &
138 Providence Road Denmark TN TA Clayton I-70 & SR 39, Exit 59
Clayton IN TA Wheeling I-70 at Dallas Pk, Exit 11 Valley Grove WV
TA Commerce City I-70/I-270 Exit 278 Commerce City CO TA Effingham
I-57/I-70 SR 32 & 33 Exit 160 Effingham IL TA Porter South
I-94, Exit 22B Porter IN TA Baltimore South Rte 175 & I-95
Jessup MD
C. Travel centers currently owned by HPT which will be sold to
TA:
TA Montgomery I-65, Exit 168 Montgomery AL TA
Jackson I-75 & Route 36, Exit 201 Jackson GA TA Knoxville
I-40/75 Watt Road, Exit 369 Knoxville TN TA Denton I-35; SR 77,
Exit 471 Denton TX TA Sweetwater I-20 & Hopkins Road Sweetwater
TX
D. Travel centers to be developed by TA, sold to HPT at TA’s
development cost and leased back to TA:
Quartzsite AZ Petro Wilmington IL Petro Columbia SC
TA Pioneer TN TA Hillsboro TX TA
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the New York
Stock Exchange.No shareholder, Trustee or officer is personally
liable for any act or obligation of the Trust.
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version on businesswire.com: http://www.businesswire.com/news/home/20150601006840/en/
Hospitality Properties TrustKatie Strohacker,
617-796-8232Director, Investor Relations.www.hptreit.com
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