TravelCenters Seeks New Deal With Hospitality Properties Trust
WESTLAKE, Ohio — On the heels of selling its standalone convenience store network, TravelCenters of America LLC is hoping to renegotiate its rental agreement with Hospitality Properties Trust (HPT), the retailer's largest shareholder.
The move comes as TravelCenters aims to improve its leverage ratio, according to CEO Andy Rebholz, who said the company's analysis includes looking at reducing future rent and/or interest payment obligations.
In June 2015, TravelCenters inked a deal with the Newton, Mass.-based real estate investment trust for sale-leasebacks of 30 of its travel centers for approximately $397 million, as Convenience Store News previously reported.
"As I mentioned in early September when we announced the sale of the c-store business, our likely first step would be to try to find an acceptable deal with HPT. Since then, we have approached HPT regarding talks toward a potential agreement," Rebholz explained during TravelCenter's third-quarter 2018 earnings call on Nov. 5. "At this time, there is no way to say whether we will reach an agreement with HPT or what the specifics of such a potential agreement may be. If we fail in talks with HPT, we will turn our attention to our senior notes."
"I believe that our best opportunity for the greatest amount of savings is to come to some agreement with HPT on a rent reduction," the chief executive acknowledged.
As Rebholz explained, the stated rates for the senior notes average a little more than 8 percent, while the rate for the HPT leases is roughly 8.5 percent.
The company's intention is to reach an agreement with HPT that's acceptable for both parties, he said, adding that it's early in the process.
"We've gone to HPT, as we said we would, and said that we wanted to engage them in a discussion to see whether there's a transaction that both sides could be comfortable with that would reduce our rental obligations," Rebholz reported. "They've agreed to engage in those conversations. That's a process that is sort of now underway."
Westlake-based TravelCenters' business includes travel centers located in 43 U.S. states and Canada, and standalone restaurants in 13 states. The travel centers operate under the TravelCenters of America, TA, TA Express, Petro Stopping Centers and Petro brand names. The standalone restaurants operate principally under the Quaker Steak & Lube brand name.
In September, TravelCenters reached an agreement to sell its Minit Mart convenience store chain to EG Group for $330.8 million. The U.K.-based retailer's U.S. division is headquartered in Cincinnati.