Business
Service Properties Trust Agrees to Amended Lease Terms Upon Completion of BP’s Acquisition of TravelCenters of America Inc.
SVC Expects to Receive $379.3 Million in Cash from the Transaction at Closing Amended Leases Expected to Increase Annual Rents by Approximately $20.5
About this update from Service Properties Trust - Shares Of Beneficial Interest
[{"type":"text","content":"\nSVC Expects to Receive $379.3 Million in Cash from the Transaction at Closing\n\nAmended Leases Expected to Increase Annual Rents by Approximately $20.5 Million, or $0.12 Per Share Per Year, Over Initial 10-Year Terms\n\nAmended Leases to be Guaranteed by BP Corporation North America Inc. (A3 / A- Ratings)\n\n NEWTON, Mass.--(BUSINESS WIRE)--\nService Properties Trust (Nasdaq: SVC) today announced that it has agreed to amend its existing leases and guarantees with TravelCenters of America Inc. (Nasdaq: TA) effective upon the completion of the pending acquisition of TA by BP p.l.c. (NYSE: BP) for cash consideration of $86.00 per share of TA common stock outstanding (the “BP Acquisition”).\n\nFollowing the closing, BP will become SVC’s largest tenant, accounting for 29% of SVC’s gross assets as of December 31, 2022, with five leases for 178 travel centers. Under the amended leases, aggregate annual minimum rent will be $254.0 million, with annual 2% increases throughout the initial 10-year terms and any renewal terms. At closing, BP will prepay $188.0 million of rent under the amended leases and will receive monthly rent credits totaling $25.0 million per year over the 10-year initial term of the leases.\n\nUpon completion of the BP Acquisition, rental income recognized under the BP leases will be approximately $20.5 million, or $0.12 per share per year, greater than the minimum and percentage rents received by SVC for the 178 travel centers under the TA leases during 2022. BP will have five, 10-year extension options for each of the five leases. BP’s wholly owned subsidiary, BP Corporation North America Inc., will guarantee each of the leases. BP Corporation North America Inc. owns the vast majority of BP’s assets in the United States across virtually all segments, and it is rated A3 by Moody’s and A- by S&P.\n\nSVC also currently owns certain tradenames and trademarks associated with TA’s business and has agreed to sell those tradenames and trademarks to BP as part of the BP Acquisition at their current book value of $89.4 million.\n\nThe BP Acquisition is subject to the approval of TA stockholders owning a majority of TA’s outstanding common shares. SVC currently owns 7.8% of TA’s outstanding common shares, valued at $101.9 million based on the cash merger consideration, and has agreed to vote its TA shares in favor of the BP...
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