WESTLAKE, OHIO — TravelCenters of America LLC (NYSE: TA) has agreed to sell 30 travel centers to Hospitality Properties Trust (NYSE: HPT) to fund its continuing expansion program. The sale-leaseback transactions total $397 million. TA expects to receive net cash proceeds of approximately $352 million before transaction costs.
TA, based in Westlake, Ohio, also will purchase from HPT five travel centers now leased by TA and subleased to TA franchisees for approximately $45 million.
TA’s travel centers operate under the TA, TravelCenters of America, Petro and Petro Stopping Centers brand names and offer gasoline and diesel fuel, restaurants, truck repair services, travel and convenience stores, and other services at locations in 43 states. The centers are located primarily at exits from the U.S. Interstate Highway System and in Canada.
TA also operates convenience stores and retail gasoline stations primarily under the Minit Mart trade name.
The company highlights several benefits from the transaction. Among the advantages:
- A significant portion of the gains to be realized from these transactions will result from sales of travel centers that were developed, or acquired and redeveloped, by TA. TA believes these gains will be amortized as a reduction of rent expense during the lease terms for the leased sites.
- Five of the travel centers to be sold to HPT and leased back by TA are currently being developed by TA at an estimated cost of approximately $118 million. Although TA will not realize gains from the sale of these new development sites, the rent for these sites will be set based upon the cost of development rather than the possibly higher values of these five sites after they are built and their financial results are stabilized.
- TA was able to arrange a closing schedule for the sales of the existing 25 locations being sold to HPT to match expected property purchases by TA. As a result, TA expects that most or all of the gains that it earns upon these sales will qualify for “like-kind exchange” tax-deferred treatment.
- TA’s historical lease with HPT for 144 travel centers was scheduled to expire in 2022 with no contractual renewal options. This lease will be expanded and subdivided into four approximately equal-sized leases expiring in 2026, 2028, 2029 and 2030, respectively, and each of these four leases will include contractual renewal options for up to 30 additional years. TA’s obligation to pay HPT approximately $107 million of previously deferred rent that was due in 2022 has been subdivided and extended to the new lease maturity dates between 2026 and 2030.
- The terms of TA’s lease with HPT for 40 Petro-branded sites that expires in 2024 with 30 years of contractual extension options remain unchanged.
- TA was formerly a 100 percent-owned subsidiary of HPT. HPT is currently TA’s largest shareholder, holding approximately 9 percent of TA’s outstanding shares.
Newton, Mass.-based HPT is a real estate investment trust that 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.
TA’s stock price closed at $15.76 per share on Monday, June 1, up from $8.51 per share a year ago.
HPT’s stock price closed at $30.59 per share on Monday, June 1, up from $29.01 per share a year ago.
List of Travel Centers Affected by the Agreements Between HPT and TA
Travel centers currently owned by TA that 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 |
Travel centers HPT currently owns and where HPT will acquire 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 |
Travel centers currently owned by HPT that 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 | X |
Travel centers to be developed by TA and sold to HPT at TA’s development cost and leased back:
| Quartzsite | AZ | Petro |
| Wilmington | IL | Petro |
| Columbia | SC | TA |
| Pioneer | TN | TA |
| Hillsboro | TX | TA |