With BP p.l.c. having completed its acquisition of TravelCenters of America Inc. on May 15, the amended lease terms between a real estate investment trust Service Properties Trust (SVC) and bp are now in effect. bp is now SVC’s largest tenant, leasing 30% of SVC’s gross assets.
The REIT received $379.3 million in cash as part of the transaction, including $188 million in prepaid rent from bp; $101.9 million in merger consideration for the 7.8% of the outstanding TA shares owned by SVC; and $89.4 million for certain tradenames and trademarks associated with TA’s business previously owned by SVC.
Annual minimum cash rents under the amended leases are $254 million, with annual 2% increases throughout the initial 10-year term and the five 10-year extension options. bp will receive monthly rent credits totaling $25 million per year over the 10-year initial term of the leases for the rent bp has prepaid.
“We believe that the closing of the transaction will benefit SVC shareholders both from the $379.3 million in funds received and by the significantly increased credit quality of our largest tenant, as the amended leases are now guaranteed by an A3/A- rated subsidiary of BP p.l.c.,” said Todd Hargreaves, president and chief investment officer of SVC.
- bp is No. 7 and TravelCenters of America is No. 29 on CSP’s Top 40 update to the 2022 Top 202 ranking of U.S. convenience-store chains by company-owned store count. Watch for the updated list in June.
TravelCenters of America, Westlake, Ohio, is a nationwide operator and franchisor of the TA, Petro Stopping Centers and TA Express travel center brands. In mid-May, BP Products North America Inc. completed its $1.3 billion acquisition of TravelCenters of America Inc. The transaction adds a network of about 280 travel centers, located on major highways across United States, almost doubles bp's global convenience gross margin and brings growth opportunities for four of bp's five transition growth engines, including EV charging via bp pulse, convenience, biofuels/ renewable natural gas (RNG) and, later, hydrogen.
bp listed a total of 20,700 retail sites in first-quarter 2023, and 2,450 strategic convenience sites, which it defines as retail sites that sell bp-branded vehicle energy including bp, Aral, Arco, Amoco, Thorntons and bp pulse, and carry one of its strategic convenience brands. As of year-end 2022, London-based bp had 1,224 company-owned and -operated c-store sites in the United States.
Newton, Massachusetts-based SVC has more than $11 billion invested in two asset categories, hotels and service-focused retail net lease properties. SVC owns 220 hotels in the United States, including Puerto Rico, and in Canada. It also owns 765 retail service-focused net lease properties totaling more than 13.3 million square feet throughout United States. SVC is managed by The RMR Group, an alternative asset management company with more than $37 billion in assets under management and more than 35 years of institutional experience in buying, selling, financing and operating commercial real estate.
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