Newton’s Hospitality Properties Trust has amended its lease agreements with TravelCenters of America by both extending and increasing rents.
HPT has two historical leases with TA:
• One lease for 145 travel centers located in 39 states operated under the "TA" or "Travel Centers" brands extends to 2022 and requires annual rent of $165.1 million/year, increasing to $170.1 million/ year on Feb. 1, 2011 increasing to $175.1 million/year on Feb. 1, 2012, plus increases based upon percentages of increases in gross revenues starting in 2012.
• One lease for 40 travel centers located in 25 states operated under the "Petro" brand extends to 2024 and requires annual rent of $66.2 million/year plus increases starting in 2013 based upon percentages of increases in gross revenues.
• The total contractual rent payable by TA to HPT under these two leases currently is approximately $231.3 million/year (i.e., $165.1 million plus $66.2 million). Effective July 1, 2008, in consideration of the impact of market conditions upon TA’s business, HPT and TA entered into a rent deferral arrangement whereby TA was permitted to defer up to $5 million /month of its combined rents due to HPT through Dec. 31, 2010, and that required the amount of any such deferred rent, plus interest, would be due from TA to HPT on or before July 1, 2011. Pursuant to that agreement TA has deferred a total of $150 million of rent, and all interest due with respect to such deferrals has been paid through Dec. 31, 2010.
New Agreements:
The amended terms which have been agreed between HPT and TA are as follows:
• The TravelCenters Lease is modified effective Jan. 1, 2011 so that the current rent is reduced from $165.1 million/year to $135.1 million/year. The rent will increase to $140.1 million/year effective Feb. 1, 2012, plus increases thereafter based upon percentages of increases in gross revenues.
• The Petro Lease is modified effective Jan. 1, 2011 so that the current rent is reduced from $66.2 million/year to $54.2 million/ year plus increases starting in 2013 based upon percentages of increases in gross revenues which exceed a threshold amount; and the first $2.5 million of percentage rent which becomes due under the Petro lease shall be waived provided the settlement of certain litigation pending against HPT, TA and others is approved.
• The $150 million of previously deferred rent due from TA to HPT is further deferred, without interest, so that $107.1 million will be due in 2022 and $42.9 million shall be due in 2024. These deferred amounts will become due and interest may begin to accrue in certain circumstances set forth in the amended leases, including a change of control of TA.
