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
NEWTON, Mass.--(BUSINESS WIRE)--
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:
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|
|
|
|
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TA Holbrook
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I-40, Exit 283
|
|
Holbrook
|
|
AZ
|
Petro Santa Nella
|
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State Hwy 152, Exit State Hwy 33
|
|
Santa Nella
|
|
CA
|
Petro Monee
|
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I-57, Exit 335
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|
Monee
|
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IL
|
Petro Greensburg
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I-74, Exit 143
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Greensburg
|
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IN
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TA Beto Junction
|
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I-35, Exit 155 (US 75)
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Lebo
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KS
|
TA Greenwood
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I-20, Exit 5
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Greenwood
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LA
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TA Battle Creek
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I-94, Exit 104
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Battle Creek
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MI
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TA Edinburg
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HWY 281, Exit FM 2812
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Edinburg
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|
TX
|
Petro Gadsden
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|
I-59, Exit 181
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Gadsden
|
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AL
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TA Livingston
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SR 99, Exit 203 (Winton Pkwy.)
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Livingston
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CA
|
TA Morris
|
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I-80, Exit 112 (Rt. 47)
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Morris
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IL
|
Petro Gary
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I-80/I-94, Exit 9
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|
Gary
|
|
IN
|
Petro Florence
|
|
I-95, Exit 169
|
|
Florence
|
|
SC
|
TA Laredo
|
|
I-35, Exit 13 (Beltway Pkwy.)
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|
Laredo
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|
TX
|
|
|
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|
|
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|
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:
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|
|
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TA Ashland
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I-95 & Rt. 54, Ashland Exit #92
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Ashland
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VA
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TA Barkeyville
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I-80 & SR 8, Exit (3) 29
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Harrisville
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PA
|
TA Vero Beach
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I-95 & SR 60, Exit 147
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Vero Beach
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FL
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TA Milesburg
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I-80, Exit (23) 158
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Milesburg
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PA
|
TA Denmark
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I-40 & 138 Providence Road
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Denmark
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TN
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TA Clayton
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I-70 & SR 39, Exit 59
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Clayton
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IN
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TA Wheeling
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I-70 at Dallas Pk, Exit 11
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Valley Grove
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WV
|
TA Commerce City
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I-70/I-270 Exit 278
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Commerce City
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CO
|
TA Effingham
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I-57/I-70 SR 32 & 33 Exit 160
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Effingham
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IL
|
TA Porter South
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I-94, Exit 22B
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Porter
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IN
|
TA Baltimore South
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Rte 175 & I-95
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Jessup
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MD
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C. Travel centers currently owned by HPT which will be sold to TA:
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TA Montgomery
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I-65, Exit 168
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Montgomery
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AL
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TA Jackson
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I-75 & Route 36, Exit 201
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Jackson
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GA
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TA Knoxville
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I-40/75 Watt Road, Exit 369
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Knoxville
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TN
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TA Denton
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I-35; SR 77, Exit 471
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Denton
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TX
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TA Sweetwater
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I-20 & Hopkins Road
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Sweetwater
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TX
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D. Travel centers to be developed by TA, sold to HPT at TA's development
cost and leased back to TA:
Quartzsite
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AZ
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Petro
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Wilmington
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IL
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Petro
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Columbia
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SC
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TA
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Pioneer
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TN
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TA
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Hillsboro
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TX
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TA
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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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150601006840/en/
Hospitality Properties Trust
Katie Strohacker, 617-796-8232
Director,
Investor Relations.
www.hptreit.com