In a significant development, Hospitality Properties Trust HPT has signed agreements to expand its alliance with TravelCenters of America LLC TA, the Westlake, OH-based specialty retail firm. In fact, with TravelCenters of America being a steady source of rental revenues for Hospitality Properties Trust over the past several years, the latter is keen to further nurture the mutually beneficial relationship.
Per the agreement, the Newton, MA-based real estate investment trust (“REIT”) will buy and leaseback 30 travel centers for around $397 million from TravelCenters of America. This includes 11 sites currently owned by Hospitality Properties Trust, wherein the REIT will buy some or all of the improvements, land and ancillary property, for around $279 million. Majority of these sites will likely be purchased and leased by Jun 30, 2015.
Additionally, Hospitality Properties Trust expects to acquire five sites, currently under development by TravelCenters of America, for around $118 million. The purchase and leaseback of these sites is expected to take place within Jun 30, 2017.
Per the deal, Hospitality Properties Trust will also sell five travel centers to the specialty retail firm for around $45 million, which will translate into a gain of around $10 million for the former. Through these transactions, the REIT is expected to increase its cash rental by around $30.2 million per year, along with percentage rent, in the future.
Currently, Hospitality Properties Trust holds a Zacks Rank #2 (Buy), while TravelCenters of America carries a Zacks Rank #3 (Hold).
Investors interested in the REIT industry may consider stocks like Hudson Pacific Properties, Inc. HPP and Strategic Hotels & Resorts, Inc. BEE. Both these stocks sport a Zacks Rank #1 (Strong Buy).
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