Newton Mass. And Westlake, Ohio — TravelCenters of America LLC (NASDAQ: TA) has agreed to purchase 20 truck stop locations from its primary landlord, Hospitality Properties Trust (NASDAQ: HPT), for $308.2 million.
The 20 properties span 15 states.
HPT will continue to own 179 properties that TA leases. The leases have been amended by both companies, which puts the 179 properties under five leases. The leases have all been extended by three years.
Westlake, Ohio-based TA expects to purchase nine of the travel centers for $140.5 million Jan. 17 and expects to complete the remaining purchases in two closings by the end of January.
HPT expects to gain $160 million from the sale, which it plans to use to repay borrowings under its revolving credit facility and for general business purposes.
When the sales are finalized, TA’s rent will fall by $243.9 million per year. Under the amended leases, TA’s rent will be reduced by $43.1 million per year. HPT will receive $70.5 million for backlogged payments in 16 quarterly payments from TA beginning April 1. The backlogged rent has been reduced from $150 million due to moving the payments up from June 2024.
“As we move into the tenth year of this economic recovery, materially improving rent coverage for a tenant that accounts for approximately one-third of HPT’s returns helps HPT maintain secure, steady cash flows and provides our largest tenant financial flexibility to help weather any potential economic downturns in the future,” says John Murray, president and CEO of Newton, Massachusetts-based HPT.
The acquisition comes on the heels of TA’s December sale of 225 convenience stores for $330.8 million to U.K.-based EG Group.
“With the sale of the stand-alone convenience stores business concluded last month and the proceeds from that sale now committed to reduce TA’s leverage with the transaction announced today, TA can begin 2019 focused on our core travel center business and thoughtfully pursuing growth opportunities that include network expansion and TA’s industry leading truck service programs, while continuing to manage capital expenditures,” says Andrew Rebholz, CEO of 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.
HPT owns a portfolio of hotels and travel centers in 45 states, Puerto Rico and Canada. The REIT is managed by the operating subsidiary of The RMR Group Inc.
HPT’s stock closed Wednesday at $26.16 per share, down from $29.53 per share one year ago. TA’s stock closed Wednesday at $4.08 per share, a drop from $4.55 per share one year ago.
— Alex Tostado