Hospitality Properties Trust Agrees to $397M SLB

NEWTON, MA—Locally-based Hospitality Properties Trust reports it has entered into agreements with former subsidiary TravelCenters of America, LLC of Westlake, OH to acquire and leaseback 30 travel centers across the nation in a deal valued at approximately $397 million.

Specifically, HPT will acquire 25 travel centers, including 11 sites that 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 states in its announcement. Those travel centers are located in: Arizona, California, Illinois, Indiana, Kansas, Michigan, Alabama, South Carolina, Texas, Tennessee, Virginia, Pennsylvania, Florida, West Virginia, Colorado and Maryland.

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 that 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. The five properties to be developed are located in Quartzsite, AZ; Wilmington, IL; Columbia, SC; Pioneer, TN and Hillsboro, TX.

HPT intends to sell five travel centers to TA for approximately $45 million and realize a gain on the sale of approximately $10 million. These properties are currently leased by HPT to TA and subleased by TA to its franchisees. Those sales are expected to close before the end of this month. Those properties are located in: Montgomery, AL; Jackson, GA; Knoxville, TN, Denton, TX and Sweetwater, TX. 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. TA expects to receive net cash proceeds (before transaction costs) of approximately $352 million. These proceeds are expected to be used to fund TA's on-going expansion program, the company states.

“HPT is pleased to expand its relationship with TA,” says John G. Murray, president of HPT. “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.”

Thomas M. O'Brien, president, CEO and a managing director of TA, says, "The agreements announced today represent the results of a lot of hard work that TA and HPT began to conceptualize almost one year ago. I believe they represent clear wins for both companies. I also believe these agreements are strong evidence of TA's success in creating value by buying and redeveloping travel centers."