TA Stocks Soar Amid Lease Agreement

“The amended lease and debt agreements give us confidence that (TA) will continue operating for the foreseeable future and places them in an effective position to better compete,” analyst says.

Shares of stock in TravelCenters of America LLC soared by 109% earlier this week, after the company and its landlord agreed on a deal for lower rent and deferred rent payments, Cleveland.com reported.

Recently, Westlake, Ohio-based TravelCenters of America (TA) has been facing questions from analysts and investors about its rent obligations. TA leases and operates gas stations and roadside restaurants owned by Hospitality Properties Trust, a real estate company based in Newton, Mass. In mid-2008, due to challenges in the trucking and travel industries, the landlord to allowed TA to put off paying up to $5 million in rent each month, through 2010.

TA had until the end of June to repay the $150 million it had deferred. Now, given this new agreement with its landlord, TA must pay $107.1 million in 2022 and $42.9 million in 2024. Interest won’t be charged on the debt. Also under the agreement, TA’s annual rent payments will be cut by roughly 18%.

“The amended lease and debt agreements give us confidence that (TA) will continue operating for the foreseeable future and places them in an effective position to better compete,” analysts at Morgan Keegan wrote about the Fortune 500 company in a research note this week. “We view this as a crucial step.”

The new agreement with Hospitality Properties Trust is retroactive to Jan. 1. TA is expected to pay $135.1 million a year, instead of $165.1 million, in rent on 145 travel centers that operate under the TA or TravelCenters brands. At 40 facilities carrying the Petro name, TA is scheduled to pay $54.2 million a year instead of $66.2 million, Cleveland.com reported.

TA also noted that a shareholder lawsuit filed in February 2008 and related to one of TA’s leases has been settled, and that the settlement is awaiting approval in a Delaware court.

css.php