NEW YORK -- RDG Capital Fund Management, a shareholder of TravelCenters of America (TA), has continued its push to get the chain to consider the potential monetization of company-owned real estate as a source of liquidity.
RDG said that it has engaged in "constructive dialogue" with TA CEO Tom O'Brien and other board members, and that it is "pleased" that the board has indicated a willingness to consider the financial strategy.
Also, RDG said it has held discussions with a leading national real-estate firm that has completed more than $12.5 billion in real-estate transactions and that has expressed interest in TA's properties.
According to its independent assessment, this real-estate firm estimates the property value of TA's company-owned travel center sites alone to be worth in excess of $400 million, said RDG. This amount confirms RDG's estimate and conservatively excludes any property value attributed to TA's company-owned convenience stores and undeveloped acreage, which RDG believes are worth at least another $75 million. As a result, RDG is confident TA can unlock significant shareholder value by conducting sale-leaseback transactions to realize $475 million in real-estate value.
In recent weeks, RDG has also spoken with long-term and significant TA shareholders who have expressed support for the monetization of the company's real estate, it said.
RDG believes that by conducting real-estate sale-leaseback transactions, TA can reduce the significant gap between the company's current share price and its fair market value, which RDG estimates to be $24 and $27 per share.
During an earnings call in March, O'Brien put off talk of sale-leasebacks. He said that in the company's public disclosures and comments, "[We] have certainly characterized our own real estate as a potential source of liquidity," pointing to the "increasing operating results at those facilities. … Frankly, I think that's a wellspring of shareholder value creation, and so we regularly think about sale-leasebacks when that may be appropriate option for the company."
New York City-based RDG is a private investment firm founded by Russell Glass, the former President of Icahn Associates. RDG manages investment funds which primarily focus on undervalued companies with identifiable catalyst opportunities to enhance shareholder value.
TravelCenters of America, Westlake, Ohio, is a leading travel center business in 43 states and Canada operating under the TA and Petro Stopping Centers brands. With more than 250 convenient full-service locations off interstate highway exits, TA and Petro Stopping Centers offer customers diesel and gasoline fueling services, more than 500 full-service and quick-service restaurants, 24-hour convenience stores, heavy-truck maintenance services, RoadSquad Connect emergency roadside service, Reserve-It truck parking reservations and other services within large, high-traffic facilities. It also operates 31 convenience stores in Kentucky and Tennessee under the Minit Mart brand name. And it recently purchased six c-stores in Kentucky from Golightly & Long LLC, dba Cheers Food & Fuel.
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.