UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of report (Date of earliest event reported): June 16, 2015

 

TRAVELCENTERS OF AMERICA LLC

(Exact name of registrant as specified in its charter)

 

Delaware

 

001-33274

 

20-5701514

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

24601 Center Ridge Road,
Westlake, Ohio

 

44145

(Address of principal executive offices)

 

(Zip Code)

 

440-808-9100

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o             Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o             Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o             Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o             Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 



 

Item 1.01.  Entry into a Material Definitive Agreement.

 

The disclosure under Item 2.01 of this Current Report on Form 8-K, or this Current Report, is incorporated herein by reference.

 

Item 2.01.  Completion of Acquisition or Disposition of Assets.

 

As previously reported in our Current Report on Form 8-K dated June 1, 2015, or the June 1 Form 8-K, and our Current Report on Form 8-K dated June 9, 2015, or the June 9 Form 8-K, which Current Reports are incorporated herein by reference, on June 1, 2015, TravelCenters of America LLC, or the Company, and three of its subsidiaries, which subsidiaries we refer to collectively with the Company as we, our, us, or TA, entered a Transaction Agreement, or the Transaction Agreement, with our principal landlord, Hospitality Properties Trust, and four of its subsidiaries, which we refer to collectively as HPT, under which, among other things, HPT agreed to purchase from us for $279.4 million 14 travel centers we owned and certain assets we owned at 11 properties we currently lease from HPT, which properties HPT agreed to lease back to us. Defined terms used, but not defined, in this Current Report have the meanings ascribed to such terms in the June 9 Form 8-K.

 

On June 16, 2015, we completed the second closing of the transactions contemplated by the Transaction Agreement, which we refer to herein as the Second Closing, as follows:

 

·                   Our subsidiary, TA Operating LLC, or TA Operating, entered into two sales agreement with HPT, or the Sales Agreements, pursuant to which HPT purchased for approximately $24.4 million in aggregate one travel center we owned and certain assets we owned at another travel center that we lease from HPT under the New Lease No. 2 and HPT leased back the travel center and assets to us under the New Lease No. 4 and New Lease No. 2, respectively. Our annual rent increased by $2.1 million as a result of the sale and leaseback of the travel center and assets completed on June 16, 2015, which amount is reflected in the minimum annual rent amount under the New Lease No. 2 and New Lease No. 4 noted below.

 

·                   In connection with the Sales Agreements, TA Operating entered into first amendments to the New Lease No. 4 and New Lease No. 2 to add the travel center and assets, respectively, sold to HPT on June 16, 2015.  Minimum annual rent under the New Lease No. 4 and New Lease No. 2, each as amended, is now approximately $41.8 million in the aggregate for each lease, subject to future adjustment if we complete the remaining transactions contemplated under the Transaction Agreement and if HPT purchases from TA capital improvements made to the leased travel centers.

 

The foregoing descriptions of the Sales Agreements and the New Leases and amendments thereto, which we refer to collectively as the Second Closing Agreements, the Transaction Agreement and the related transactions are not complete and are qualified in their entirety by reference to the full text of the Second Closing Agreements, the Transaction Agreement and the forms of the other related agreements, all of which are filed as exhibits to this Form 8-K, the June 9 Form 8-K or the June 1 Form 8-K and are incorporated by reference herein.

 

Information Regarding Certain Relationships

 

The information under “ Information Regarding Certain Relationships ” in the June 9 Form 8-K is incorporated herein by reference.

 

Item 2.03.  Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

 

The disclosure under Item 2.01 of this Current Report is incorporated herein by reference.

 

2



 

WARNING CONCERNING FORWARD LOOKING STATEMENTS

 

THIS CURRENT REPORT CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS.  ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE,” “EXPECT,” “ANTICIPATE,” “INTEND,” “PLAN,” “ESTIMATE” OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR.  ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY THESE FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS.  FOR EXAMPLE, UNDER OUR TRANSACTION AGREEMENT WITH HPT, IN ADDITION TO THE TRANSACTIONS THAT HAVE ALREADY BEEN COMPLETED PURSUANT TO THE TRANSACTION AGREEMENT, WE AGREED TO SELL TO, AND LEASE BACK FROM, HPT ADDITIONAL TRAVEL CENTERS AND CERTAIN ASSETS. THESE SEVERAL AGREEMENTS CREATE SEPARATE CONTRACTUAL OBLIGATIONS. THE SEVERAL OBLIGATIONS ARE SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF LARGE, COMPLEX REAL ESTATE TRANSACTIONS. SOME OF THESE TERMS AND CONDITIONS MAY NOT BE SATISFIED AND, AS A RESULT, SOME OF THESE TRANSACTIONS MAY BE DELAYED, MAY NOT OCCUR OR THE TERMS MAY CHANGE.

 

THE INFORMATION CONTAINED IN OUR FILINGS WITH THE SEC, INCLUDING UNDER THE CAPTION “RISK FACTORS” IN OUR PERIODIC REPORTS, OR INCORPORATED THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

 

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

 

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

 

Item 9.01.  Financial Statements and Exhibits.

 

(d)  Exhibits.

 

10.1                         First Amendment to Amended and Restated Lease Agreement No. 2, dated June 16, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (filed herewith)

 

10.2                         First Amendment to Amended and Restated Lease Agreement No. 4, dated June 16, 2015, by and among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (filed herewith)

 

10.3                         Sales Agreement, dated June 16, 2015, between HPT TA Properties Trust and TA Operating LLC (filed herewith)

 

10.4                         Sales Agreement, dated June 16, 2015, between HPT TA Properties Trust and TA Operating LLC (filed herewith)

 

10.5                         Transaction Agreement, dated June 1, 2015, by and among Hospitality Properties Trust, HPT TA Properties Trust, HPT TA Properties LLC, HPT PSC Properties Trust, HPT PSC Properties LLC, TravelCenters of America LLC, TravelCenters of America Holding Company LLC, TA Leasing LLC, and TA Operating LLC (incorporated by reference to Exhibit 10.1 to our Current Report on 8-K dated June 1, 2015)

 

99.1                         Pro Forma Financial Statements (filed herewith)

 

3



 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

TRAVELCENTERS OF AMERICA LLC

 

 

Date: June  22, 2015

By:

/s/ Andrew J. Rebholz

 

 

Andrew J. Rebholz

 

 

Executive Vice President, Chief Financial Officer and Treasurer

 


 

Exhibit 10.1

 

FIRST AMENDMENT TO
AMENDED AND RESTATED LEASE AGREEMENT NO. 2

 

THIS FIRST AMENDMENT TO AMENDED AND RESTATED LEASE AGREEMENT NO. 2 (this “ Amendment ”) is made and entered into as of June 16, 2015 by and between HPT TA PROPERTIES TRUST , a Maryland real estate investment trust, and HPT TA PROPERTIES LLC , a Maryland limited liability company, as landlord (collectively, “ Landlord ”), and TA OPERATING LLC , a Delaware limited liability company, as tenant (“ Tenant ”).

 

W I T N E S S E T H :

 

WHEREAS , Landlord and Tenant are parties to that certain Amended and Restated Lease Agreement No. 2, dated as of June 9, 2015 (the “ Lease ”), pursuant to which Landlord leases to Tenant and Tenant leases from Landlord certain land and improvements, all as set forth in the Lease; and

 

WHEREAS , pursuant to the Lease, HPT TA Properties Trust leases to Tenant certain land having an address at 100 N. Carter Road, Ashland, Virginia 23005, as further described on Exhibit A-36 to the Lease (the “ Ashland Land ”);

 

WHEREAS , as of the date of this Amendment, HPT TA Properties Trust has acquired from Tenant the buildings and improvements which Tenant owned on the Ashland Land (collectively, the “ Ashland Improvements ”) ; and

 

WHEREAS , Landlord and Tenant desire to amend the Lease to include the Ashland Improvements as part of the Leased Improvements (as defined in the Lease);

 

NOW, THEREFORE , in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree, as of the date of this Amendment, as follows:

 

1.                                     Capitalized Terms .  Capitalized terms used and not otherwise defined in this Amendment shall have the meanings given such terms in the Lease.

 

2.                                     Ashland Improvements .  Landlord and Tenant hereby confirm that the Leased Improvements include the Ashland Improvements.

 

3.                                     Minimum Rent .  The defined term “Minimum Rent” set forth in Section 1.66 of the Lease is hereby deleted in its entirety and replaced with the following:

 

Minimum Rent ” shall mean Forty-One Million Seven Hundred Seventy-Three Thousand Eighty-One Dollars ($41,773,081), subject to adjustment as provided in Section 3.1.1(b) .

 

4.                                     Ratification .  As amended hereby, the Lease is hereby ratified and confirmed and all other terms remain in full force and effect.

 



 

IN WITNESS WHEREOF , Landlord and Tenant have caused this Amendment to be duly executed, as a sealed instrument, as of the date first above written.

 

 

LANDLORD:

 

 

 

HPT TA PROPERTIES TRUST

 

 

 

 

 

By:

/s/ John G. Murray

 

 

John G. Murray

 

 

President

 

 

 

 

 

HPT TA PROPERTIES LLC

 

 

 

 

 

By:

/s/ John G. Murray

 

 

John G. Murray

 

 

President

 

 

 

 

 

TENANT:

 

 

 

TA OPERATING LLC

 

 

 

 

 

By:

/s/ Mark R. Young

 

 

Mark R. Young

 

 

Executive Vice President

 

 

Reference is made to that certain Guaranty Agreement, dated as of June 9, 2015, given by TRAVELCENTERS OF AMERICA LLC , a Delaware limited liability company (the “ Guarantor ”), to Landlord with respect to Tenant’s obligations under the Lease (the “ Guaranty ”).  Guarantor hereby confirms that all references in such Guaranty to the word “Lease” shall mean the Lease, as defined therein, as amended by this Amendment, and said Guarantor hereby reaffirms the Guaranty.

 

 

TRAVELCENTERS OF AMERICA LLC

 

 

 

 

 

 

 

By:

/s/ Mark R. Young

 

 

Mark R. Young

 

 

Executive Vice President

 

[Signature Page to 1 st  Amendment to Lease No. 2]

 


Exhibit 10.2

 

FIRST AMENDMENT TO
AMENDED AND RESTATED LEASE AGREEMENT NO. 4

 

THIS FIRST AMENDMENT TO AMENDED AND RESTATED LEASE AGREEMENT NO. 4 (this “ Amendment ”) is made and entered into as of June 16, 2015 by and between HPT TA PROPERTIES TRUST , a Maryland real estate investment trust, and HPT TA PROPERTIES LLC , a Maryland limited liability company, as landlord (collectively, “ Landlord ”), and TA OPERATING LLC , a Delaware limited liability company, as tenant (“ Tenant ”).

 

W I T N E S S E T H :

 

WHEREAS , Landlord and Tenant are parties to that certain Amended and Restated Lease Agreement No. 4, dated as of June 9, 2015 (the “ Lease ”), pursuant to which Landlord leases to Tenant and Tenant leases from Landlord certain land and/or improvements, all as set forth in the Lease; and

 

WHEREAS , as of the date of this Amendment, HPT TA Properties Trust has acquired from Tenant certain land and improvements comprising a travel center having an address at 15874 Eleven Mile Road, Battle Creek, Michigan 49014, as further described on Exhibit A-37 attached to this Amendment (collectively, the “ Battle Creek Property ”) ; and

 

WHEREAS , Landlord and Tenant desire to amend the Lease to include the Battle Creek Property as a Property (as defined in the Lease);

 

NOW, THEREFORE , in consideration of the mutual covenants herein contained and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree, as of the date of this Amendment, as follows:

 

1.                                     Capitalized Terms .  Capitalized terms used and not otherwise defined in this Amendment shall have the meanings given such terms in the Lease.

 

2.                                     Commencement Date .  The defined term “Commencement Date” shall mean, with respect to the Battle Creek Property, the date of this Amendment.

 

3.                                     Minimum Rent .  The defined term “Minimum Rent” set forth in Section 1.68 of the Lease is hereby deleted in its entirety and replaced with the following:

 

Minimum Rent ” shall mean Forty-One Million Eight Hundred Thirty-Seven Thousand Six  Hundred Thirty-One Dollars ($41,837,631), subject to adjustment as provided in Section 3.1.1(b) .

 

4.                                     Leased Property .  Section 2.1(a) of the Lease is hereby amended by deleting the reference to “ Exhibits A-1 through A-36 ” in the second line thereof and replacing it with a reference to “ Exhibits A-1 through A-37 ”.

 



 

5.                                     Exhibit A .  Exhibit A to the Lease is hereby amended by (a) deleting the initial page entitled “EXHIBITS A-1 through A-36” therefrom in its entirety and replacing it with the page entitled “EXHIBITS A-1 through A-37” attached hereto and (b) adding Exhibit A-37 attached to this Amendment immediately following Exhibit A-36 to the Lease.

 

6.                                     Exhibit B .  Exhibit B to the Lease is hereby deleted in its entirety and replaced with Exhibit B attached to this Amendment.

 

7.                                     Ratification .  As amended hereby, the Lease is hereby ratified and confirmed and all other terms remain in full force and effect.

 

 

 

[Signature Page Follows]

 

- 2 -



 

IN WITNESS WHEREOF , Landlord and Tenant have caused this Amendment to be duly executed, as a sealed instrument, as of the date first above written.

 

 

LANDLORD:

 

 

 

HPT TA PROPERTIES TRUST

 

 

 

 

 

 

 

By:

/s/ John G. Murray

 

 

John G. Murray

 

 

President

 

 

 

 

 

 

 

HPT TA PROPERTIES LLC

 

 

 

 

 

 

 

By:

/s/ John G. Murray

 

 

John G. Murray

 

 

President

 

 

 

 

 

 

 

TENANT:

 

 

 

TA OPERATING LLC

 

 

 

 

 

 

 

By:

/s/ Mark R. Young

 

 

Mark R. Young

 

 

Executive Vice President

 

 

 

Reference is made to that certain Guaranty Agreement, dated as of June 9, 2015, given by TRAVELCENTERS OF AMERICA LLC , a Delaware limited liability company (the “ Guarantor ”), to Landlord with respect to Tenant’s obligations under the Lease (the “ Guaranty ”).  Guarantor hereby confirms that all references in such Guaranty to the word “Lease” shall mean the Lease, as defined therein, as amended by this Amendment, and said Guarantor hereby reaffirms the Guaranty.

 

 

TRAVELCENTERS OF AMERICA LLC

 

 

 

 

 

 

 

By:

/s/ Mark R. Young

 

 

Mark R. Young

 

 

Executive Vice President

 

[Signature Page to 1 st  Amendment to Lease No. 4]

 



 

EXHIBITS A-1 through A-37

 

Land

 

Exhibit

TA Site No.

Property Address

A-1

224

1806 Highway 371 W, Prescott, AR 71857.

A-2

41

46155 Dillon Road, Coachella, CA 92236.

A-3

346

28991 West Gonzaga Rd., Santa Nella, CA 95322.

A-4

148

5101 Quebec Street, Commerce City (Denver East), CO 80022.

A-5

22

327 Ruby Road, Willington, CT 06279.

A-6

53

556 St. Rt. 44, Wildwood, FL 34785.

A-7

45

P.O. Box 592, Madison, GA 30650.

A-8

367

5915 Monee Rd., Monee, IL 60449.

A-9

43

4510 Broadway, Mt. Vernon, IL 62864.

A-10

257

10346 S. State Rd. 39, Clayton, IN 46118.

A-11

220

1600 West US Hwy 20, Porter, IN 46304.

A-12

252

2775 US Hwy 75, Lebo (Beto Junction), KS 66856.

A-13

28

145 Richwood Road, Walton, KY 41094.

A-14

180

1682 Gause Blvd., Slidell, LA 70458.

A-15

19

1400 Elkton Road, Elkton, MD 21921.

A-16

175

3265 N. Service Road East, Foristell, MO 63348.

A-17

193

8033 W. Holling Rd., Alda (Grand Island), NE 68810.

A-18

6

2 Simpson Road, Columbia, NJ 07832.

A-19

81

2501 University Blvd. NE, Albuquerque, NM 87107.

A-20

207

753 Upper Court St., Binghamton, NY 13904.

A-21

194

8420 Alleghany Rd., Corfu (Pembroke), NY 14036.

A-22

221

153 Wiggins Road, Candler, NC 28715.

A-23

701

715 US 250 East, Ashland, OH 44805.

A-24

139

12403 US Rt. 35 NW, Jeffersonville, OH 43128.

A-25

95

4450 Portage St. NW, North Canton, OH 44720.

A-26

152

P.O. Box 171, Sayre, OK 73662.

A-27

67

5644 SR 8, Harrisville (Barkeyville), PA 16038.

A-28

68

5600 Nittany Valley Drive, Lamar, PA 16848.

A-29

179

3014 Paxville Highway, Manning, SC 29102.

A-30

245

155 Hwy. 138, Denmark (Jackson), TN 38391.

A-31

34

111 N. First Street, Nashville, TN 37213.

A-32

150

7751 Bonnie View Road, Dallas (South), TX 75241.

A-33

153

1010 Beltway Parkway, Laredo, TX 78045.

A-34

232

4817 I-35 North, New Braunfels, TX 78130.

A-35

32

RR1, Valley Grove, WV 26060.

A-36

188

P.O. Box 400, Ft. Bridger, WY 82933.

A-37

242

15874 Eleven Mile Road, Battle Creek, Michigan 49014.

 

[See attached c opies.]

 



 

GRAPHIC

EXHIBIT A-37 15874 Eleven Mile Road Battle Creek, Michigan 49014 Real property in the Township of Emmett, County of Calhoun, State of Michigan, described as follows: Parcel I: Parcel of land situated in Emmett Township, Calhoun County, Michigan, all that part of the following described premises lying North of the Northerly Right-of-Way of Highway I-94: Beginning 330 feet South of the Northwest corner of Section 13, Town 2 South, Range 7 West; thence East 505.75 feet; thence South to U.S. Highway #12, formerly Territorial Road and now known as Michigan Avenue; thence Northwesterly on said Highway to the West line of Section 13; thence North to the Place of Beginning. Excepting: Part of the Northwest 1/4 of Section 13, Town 2 South, Range 7 West, Emmett Township, Calhoun County, Michigan, described as: Commencing at the Northwest corner of said Section 13; thence South 00 degrees 09 minutes 47 seconds East 330.00 feet along the West line of said Section 13; thence South 89 degrees 26 minutes 17 seconds East, 505.75 feet; thence South 00 degrees 09 minutes 47 seconds East, 914.10 feet to the Point of Beginning; thence North 89 degrees 19 minutes 40 seconds West, 49.88 feet; thence South 59 degrees 50 minutes 13 seconds West, 62.49 feet; thence South 34 degrees 37 minutes 09 seconds West, 13.42 feet; thence South 60 degrees 09 minutes 47 seconds East, 74.65 feet; thence North 89 degrees 50 minutes 13 seconds East, 47.00 feet; thence North 00 degrees 09 minutes 47 seconds West, 78.86 feet to the Point of Beginning. Parcel II: Also, beginning at the Northwest corner of Section 13, Town 2 South, Range 7 West; running thence East 505.56 feet; thence South 330 feet; thence West 505.56 feet; thence North 330 feet to the Place of Beginning, Township of Emmett, Calhoun County, Michigan.

 


 

EXHIBIT B

 

NEW PROPERTIES

 

 

TA Site No.

 

Property Address

346

 

28991 West Gonzaga Rd., Santa Nella, CA 95322.

367

 

5915 Monee Rd., Monee, IL 60449.

252

 

2775 US Hwy 75, Lebo (Beto Junction), KS 66856.

153

 

1010 Beltway Parkway, Laredo, TX 78045.

242

 

15874 Eleven Mile Road, Battle Creek, Michigan 49014.

 


 

Exhibit 10.3

 

SALES AGREEMENT

 

between

 

HPT TA PROPERTIES TRUST

 

as Purchaser,

 

and

 

TA OPERATING LLC ,

 

as Seller

 


 

June 16, 2015

 


 



 

SALES AGREEMENT

 

THIS SALES AGREEMENT is made and entered into as of June 16, 2015 (the “ Effective Date ”) between HPT TA PROPERTIES TRUST, a Maryland real estate investment trust, together with any of its successors and assigns as expressly permitted hereunder, as purchaser (“ Purchaser ”), and TA Operating LLC, a Delaware limited liability company, as seller (“ Seller ”).

 

PRELIMINARY STATEMENTS

 

Purchaser and Seller are parties, among others, to that certain Transaction Agreement, dated as of June 1, 2015 (the “ Transaction Agreement ”), pursuant to which Seller agreed to sell and Purchaser agreed to purchase the Property (this and other capitalized terms used and not otherwise defined herein shall have the meaning given such terms in Article 1), subject to and in accordance with the terms and conditions in the Transaction Agreement and as hereinafter set forth.

 

NOW, THEREFORE, it is agreed:

 

ARTICLE 1
DEFINITIONS

 

1.1        Capitalized Terms .  Capitalized terms used and not otherwise defined in this Agreement shall have the meanings set forth below or in the section of this Agreement referred to below and such definitions shall apply equally to the singular and plural forms of such terms.

 

Agreement ”:  this Sales Agreement, together with all exhibits attached hereto.

 

Closing ”:  the closing and consummation of the purchase and sale transaction contemplated by this Agreement.

 

Improvements ”:  collectively, all buildings, structures and other improvements of every kind including, but not limited to, underground storage tanks, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures situated upon the Land.

 

Intangible Property ”:  collectively, all transferable or assignable permits, certificates of occupancy, sign permits, development rights and approvals, certificates, licenses, warranties and guarantees, and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character related to the ownership, and not the operation, of the Land and Improvements, but only to the extent the foregoing is assignable without cost to Seller.

 

Internal Revenue Code ”:  the Internal Revenue Code of 1986, as amended and in effect from time to time, and including the applicable Treasury Regulations thereunder.

 

Land ”:  collectively, the parcel or parcels of land described in Exhibit A together with all easements and appurtenances related thereto.

 



 

Permitted Encumbrances ”:  collectively, applicable zoning, subdivision, building and other land use laws and regulations; liens for taxes, assessments and governmental charges not yet due and payable or due and payable but not yet delinquent; all matters shown on or referenced in the Title Commitment which are reasonably acceptable to Purchaser; and all matters shown on the Survey which are reasonably acceptable to Purchaser.

 

Property ”:  collectively, all of Seller’s right title and interest in and to the Real Property and/or the Intangible Property.

 

Purchase Price ”:  Six Million Nine Hundred Fifty-Nine Thousand One Hundred Forty-Six dollars ($6,959,146).

 

Purchaser ”:  the meaning given such term in the preamble of this Agreement.

 

Real Property ”:  the Improvements.

 

Seller ”:  the meaning given such term in the preamble of this Agreement.

 

Survey ”:  the ALTA/ACSM land title survey of the Land and Improvements prepared by Landmark Fleet Surveyors and dated June 1, 2015.

 

Title Commitment ”:  the title commitment for the Real Property issued by the Title Company and dated April 25, 2015.

 

Title Company ”:  Stewart Title Guarantee Company.

 

ARTICLE 2
PURCHASE AND SALE; CLOSING

 

2.1        Purchase and Sale .  In consideration of the payment of the Purchase Price by Purchaser to Seller as herein provided and for other good and valuable consideration, Seller shall sell the Property to Purchaser, and Purchaser shall purchase the Property from Seller, subject to and in accordance with the terms and conditions of this Agreement.

 

2.2        Closing .  The purchase and sale of the Property shall be consummated contemporaneously with the execution of this Agreement.

 

2.3        Purchase Price .  The purchase price to be paid by Purchaser to Seller for the Property shall be the Purchase Price.

 

2.4        IRS Real Estate Sales Reporting .  Seller shall act as “the person responsible for closing” the transaction which is the subject of this Agreement pursuant to Section 6045(e) of the Internal Revenue Code and shall prepare and file all informational returns, including IRS Form 1099-S, and shall otherwise comply with the provisions of Section 6045(e) of the Internal Revenue Code.

 

- 2 -



 

ARTICLE 3
CLOSING OBLIGATIONS

 

3.1        Seller’s Closing Obligations .  On the Effective Date, Seller shall deliver to Purchaser:

 

(i)      A good and sufficient deed with covenants against grantor’s acts, or its local equivalent, in proper statutory form for recording, duly executed and acknowledged by Seller, conveying good and marketable fee simple title to the Real Property, free from all liens and encumbrances other than the Permitted Encumbrances;

 

(ii)     A certificate of non-foreign status, pursuant to Section 1445 of the Internal Revenue Code, substantially in the form of Exhibit B , duly executed by TravelCenters of America LLC;

 

(iii)    An executed counterpart amendment of the Amended and Restated TA Lease as contemplated by the Transaction Agreement; and

 

(iv)    Such other conveyance documents, certificates, deeds, affidavits and other instruments as Purchaser, Seller or the Title Company may reasonably require to carry out the transactions contemplated by this Agreement and as are customary in like transactions in the area in which the Real Property is located.

 

3.2        Assignment and Assumption of Intangible Property and Indemnity .  Seller hereby assigns to Purchaser all of Seller’s right, title and interest in and to the Intangible Property to the extent first arising from and after the Effective Date.  Purchaser hereby assumes all of Seller’s obligations with respect to the Intangible Property to the extent first arising from and after the Effective Date.  Purchaser hereby agrees to perform all of Seller’s obligations with respect to the Intangible Property to the extent first arising from and after the Effective Date.  In each case, subject to any lease or other agreement between Seller and Purchaser that may otherwise allocate responsibilities, Purchaser shall indemnify, defend and hold harmless Seller from and against any and all losses, costs, damages, demands, expenses, fees, fines, including reasonable attorneys’ fees (“ Losses ”) arising from the Intangible Property to the extent first arising from and after the Effective Date and Seller shall indemnify, defend and hold harmless Purchaser from and against any and all Losses arising from the Intangible Property to the extent first arising prior to the Effective Date.

 

3.3        Purchaser’s Closing Obligation .  On the Effective Date, Purchaser shall pay the Purchase Price to Seller by wire transfer of immediately available funds as instructed by Seller and shall deliver an executed counterpart amendment of the Amended and Restated TA Lease as contemplated by the Transaction Agreement.

 

ARTICLE 4
PRORATIONS

 

4.1        Proration Items .  Inasmuch as Seller will be leasing the Property from Purchaser on and after the Effective Date, all customary and usual prorations, including for ad valorem real estate taxes, personal property taxes, assessments or special assessments, water, gas, electric or

 

- 3 -



 

other utilities,  shall be made for the account of Seller as seller under this Agreement or as the tenant under the lease being entered into by Seller and Purchaser.

 

4.2        Survival .  The obligations of the parties under this Article 4 shall survive the Closing.

 

ARTICLE 5
MISCELLANEOUS

 

5.1        Like-Kind Exchange .  Seller may elect to effectuate the transaction contemplated by this Agreement as part of a forward like-kind exchange in accordance with Section 1031 of the Internal Revenue Code.  In furtherance of the foregoing and notwithstanding anything contained in this Agreement to the contrary, Seller may assign its rights under this Agreement to a “qualified intermediary” in order to facilitate a forward like kind exchange under Section 1031 of the Internal Revenue Code, and Purchaser agrees to execute an instrument acknowledging and consenting to the same; provided , however , such assignment shall not relieve Seller of any of its obligations hereunder.

 

5.2        Governing Law .  This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts.

 

5.3        Severability .  If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.

 

5.4        No Third Party Beneficiaries .  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns.  This Agreement is not intended and shall not be construed to create any rights in or to be enforceable in any part by any other persons.

 

5.5        Entire Agreement .  This Agreement and the Transaction Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.

 

5.6        Merger Except with respect to the any obligation expressly stated to survive the Closing, none of the terms or provisions of this Agreement shall survive the Closing, and the payment of the Purchase Price and delivery of the deed and other closing documents at the

 

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Closing shall effect a merger, and be deemed the full performance and discharge of every obligation on the part of Seller and /or Purchaser to be performed hereunder.

 

5.7        Counterparts .  This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any such counterparts or signatures may be delivered by facsimile or e-mail (in .pdf format), and any counterparts or signatures so delivered shall be deemed an original counterpart or signature for all purposes related to this Agreement.

 

5.8        Section and Other Headings .  The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

5.9        Time of Essence .  Time shall be of the essence with respect to the performance of each and every covenant and obligation, and the giving of all notices, under this Agreement.

 

5.10      STATEMENT OF LIMITED LIABILITY THE DECLARATION OF TRUST ESTABLISHING PURCHASER, DATED NOVEMBER 29, 2006, AS AMENDED AND SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, PURCHASER.  ALL PERSONS DEALING WITH PURCHASER IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF PURCHASER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

 

5.11      Survival .  The provisions of this Article 5 shall survive the Closing.

 

 

 

 

[Remainder of page intentionally left blank; signature page follows.]

 

- 5 -



 

IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to be executed as a sealed instrument as of the date first above written.

 

 

PURCHASER:

 

 

 

HPT TA PROPERTIES TRUST,

 

a Maryland real estate investment trust

 

 

 

 

 

By:

/s/ John G. Murray

 

 

 

John G. Murray

 

 

President

 

 

 

 

SELLER:

 

 

 

TA OPERATING LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

/s/ Mark R. Young

 

 

 

Mark R. Young

 

 

Executive Vice President

 

 

[Signature Page to Sales Agreement – Ashland, VA]

 



 

GRAPHIC

Exhibit A Legal Description PARCEL 1: ALL that certain tract, piece or parcel of land, with the improvements thereon and appurtenances thereunto belonging, lying and being in Ashland District Hanover County, Virginia, containing 13.355 acres: as shown on “Plat of Property Situated on the Northern Line of Route No. 54 and West of Route No. 95, Hanover County, Virginia,” dated March 1, 1965, made by Chas, H. Fleet and Associates, Certified Surveyors, and being more particularly described as follows: BEGINNING, at a stone in the north line of State Route No. 54 at the point where the east line of the property of Humble Oil and Refining Company intersects said north line of State Route No. 54: thence extending N. 6 degrees 15’ W. 150 feet to a rod: thence S. 77 degrees 41’ 54” W. 200 feet to a rod: thence S. 6 degrees 15’ E. 150 feet to a rod in the said north line of State Route No. 54: thence along the said north line of State Route No. 54 S. 77 degrees 41’ 54” W. 30.59 feet to a stone and from said stone continuing, westwardly 69.41 feet to a rod: thence back from the north line of State Route No. 54 N. 6 degrees 15’ W. 148.66 feet to a rod: thence N. 8 degrees 26’ 43” E. 471.50 feet to a rod: thence N. 77 degrees 41’ 54” E. 100.15 feet to a rod: thence N. 8 degrees 26’. 43” E. 347.70 feet to a rod: thence S. 85 degrees 32’ E. 646.09 feet to a rod: thence S. 4 degrees 12’ 48” W. 613.82 feet to a stone: thence S. 54 degrees 25’ 34” W. 68.45 feet to a stone: thence S. 35 degrees 20’ W. 66.62 feet to a stone: thence S. 75 degrees 52’ 10” W. 299.89 feet to a stone: thence S. 71 degrees 55’ 30” W. 100.69 feet to a stone: thence S. 13 degrees 36’ W. 45.35 feet to the point and place of beginning. LESS AND EXCEPT: A 100 foot by 150 foot parcel of land located fronting on Route No. 54 between the American Oil Station and the Humble Oil Station, said parcel having been conveyed to Truckstops Corporation of America from E. Philip Saunders and Carole Saunders, his wife, by Deed dated August 31, 1983, and recorded in Hanover County, Virginia, in Deed Book 539, Page 135, and re-recorded on December 15, 1983, in Deed Book 542, Page 312. LESS AND EXCEPT: That parcel of land conveyed to the Commonwealth of Virginia, for land for Route 54, by Deed dated October 24, 1966, and recorded March 10, 1967, in the aforesaid Clerk’s Office, in Deed Book 264, Page 185. PARCEL 2: ALL that piece or parcel of land containing 6.00 acres, lying and being in Ashland District. Hanover County, Virginia, as shown on a plat of subdivision entitled “Interstate Commercial Park Subdivision. Section L” dated January 25, 1982, prepared by Johnson & Anderson of Virginia, Inc., a copy of which is recorded in the Clerk’s Office, Circuit Court, Hanover County, Virginia, in Plat Book 5, Page 135, reference to which is hereby made for a more particular description of the property herein conveyed. PARCEL 3: ALL that certain piece or parcel of land on the northern line of Route No. 54, containing 0.34 acre, according to a survey plat dated January 13, 1983, and revised March 1, 1983, prepared by Chas, H. Fleet & Associates, Engineer & Surveyors, located in the Ashland District, Hanover County, Virginia, and more particularly described as: BEGINNING at a rod on the northern line of Route No. 54, approximate 0.24 mile west of Interstate Route No. 95, where the western property line of Exxon Corporation intersects the said northern line of Route No. 54: thence (1) along the said northern line of Route No. 54, in a westerly direction S. 77 degrees - 41’ 54” W. 30.59 feet to a stone monument: thence (2) continuing along the said northern line of Route No. 54 in a westwardly direction, which is a curved line to the right having a radius of 1,803.86 feet and a length of 69.41 feet to an iron rod’ thence (3) in a northwardly direction N. 6 degrees - 15’ W. 148.66 feet to an iron rod: thence (4) continuing in a northwardly direction N. 8 degrees - 26’ - 43’ E.

 


GRAPHIC

1.34 feet to an iron rod; thence (5) in an eastwardly direction N. 78 degrees 25’ 13” E. 99.66 feet to an iron rod; thence (6) in a southwardly direction S. 6 degrees 15’ E. 150.00 feet to an iron rod on the northern line of Route No. 54, the point of beginning. ALL of the above described land being the same as follows: BEGINNING at a stone in the North line of State Route No. 54 at the point where the East line of the property of Exxon Company intersects said North line of State Route No. 54; thence extending N. 6 degrees 15’00” W. a distance of 150.00 feet to a nail: thence S. 77 degrees 41’ 54” W. a distance of 200.00 feet to a rod; thence S. 6 degrees 15’ 00” E. a distance of 150.00 feet to a rod in said North line of State Route No. 54; thence along said North line of State Route No. 54 S. 77 degrees 41’ 54” W. a distance of 30.59 feet to a stone; thence along a curve to the right. having a radius of 1.803.86 feet and a length of 69.41 feet to a rod; thence leaving State Route No. 54 N. 6 degrees 15’ 00” W. a distance of 148.66 feet to a rod; thence N. 8 degrees 26’ 43” E a distance of 471.50 feet to a rod, thence N. 77 degrees 41’ 54” E. a distance of 100.15 feet to a spike: thence N. 8 degrees 26’ 43” E. a distance of 347.70 feet to a rod; thence N. 85 degrees 32’ 00” W. a distance of 30.37 feet to a rod; thence N. 00 degrees 05’ 09” W. a distance of 379.60 feet to a rod; thence 8.85 degrees 32’ 06” E. 704.92 feet; thence S. 04 degrees 12’ 48” W. a distance or 992.23 feet to a rod; thence S. 54 degrees 25’ 34” W. a distance of 88.45 feet to a rod: thence S. 35 degrees 20’ 00” W. a distance of 66.62 feet to a lead hub; thence S. 81 degrees 31’44” W. a distance of 378.83 feet to a nail; thence S. 13 degrees 36’ 00” W. a distance of 95.38 feet to the point of beginning and containing 19.178 acres. BEING the same property conveyed to HPT TA Properties Trust. a Maryland real estate investment trust, by Special Warranty Deed from TA Operating LLC. a Delaware limited liability company (formerly TA Operating Corporation), dated January 31, 2007, and recorded February 22, 2007, in the Clerk’s Office, Circuit Court, Hanover County. Virginia. in Deed Book 2844, Page 241.  Purported Address: 100 North Carter Road, Ashland, VA 23005

 


 

EXHIBIT B

 

Form of FIRPTA Certificate

 

(See attached)

 



 

FIRPTA CERTIFICATE

 

Section 1445 of the Internal Revenue Code of 1986, as amended, provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. federal income tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by TravelCenters of America LLC, a Delaware limited liability company  (“ Transferor ”), pursuant to the Development Property Agreement, dated as of [ · ], 2015, between TA Operating LLC and [HPT entity], Transferor hereby certifies to [transferee entity] (“ Transferee ”) the following:

 

Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and income tax regulations thereunder);

 

Transferor is not a disregarded entity as defined in Treasury Regulation Section 1.1445-2(b)(2)(iii);

 

TA Operating LLC, which has legal title to one or more transferred U.S. real property interests under local law, is disregarded as an entity separate from Transferor for U.S. federal income tax purposes;

 

Transferor’s U.S. employer identification number is 20-5701514; and

 

Transferor’s office address is 24601 Center Ridge Road, Westlake, OH 44145.

 

The undersigned and Transferor understand that this certificate may be disclosed to the Internal Revenue Service by Transferee and any transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

 

[Remainder of page intentionally left blank; signature page follows.]

 



 

Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct, and complete, and I further declare that I have the authority to sign this document on behalf of Transferor.

 

 

TravelCenters of America LLC

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

Date:  [ · ], 2015

 


Exhibit 10.4

 

SALES AGREEMENT

 

between

 

HPT TA PROPERTIES TRUST,

 

as Purchaser,

 

and

 

TA OPERATING LLC ,

 

as Seller

 


 

JUNE 16, 2015

 


 



 

SALES AGREEMENT

 

THIS SALES AGREEMENT is made and entered into as of June 16, 2015 (the “ Effective Date ”) between HPT TA Properties Trust, a Maryland real estate investment trust, together with any of its successors and assigns as expressly permitted hereunder, as purchaser (“ Purchaser ”), and TA Operating LLC, a Delaware limited liability company, as seller (“ Seller ”).

 

PRELIMINARY STATEMENTS

 

Purchaser and Seller are parties, among others, to that certain Transaction Agreement, dated as of June 1, 2015 (the “ Transaction Agreement ”), pursuant to which Seller agreed to sell and Purchaser agreed to purchase the Property (this and other capitalized terms used and not otherwise defined herein shall have the meaning given such terms in Article 1), subject to and in accordance with the terms and conditions in the Transaction Agreement and as hereinafter set forth.

 

NOW, THEREFORE, it is agreed:

 

ARTICLE 1
DEFINITIONS

 

1.1                             Capitalized Terms .  Capitalized terms used and not otherwise defined in this Agreement shall have the meanings set forth below or in the section of this Agreement referred to below and such definitions shall apply equally to the singular and plural forms of such terms.

 

Agreement ”:  this Sales Agreement, together with all exhibits attached hereto.

 

Closing ”:  the closing and consummation of the purchase and sale transaction contemplated by this Agreement.

 

Improvements ”:  collectively, all buildings, structures and other improvements of every kind including, but not limited to, underground storage tanks, alleyways and connecting tunnels, sidewalks, utility pipes, conduits and lines (on-site and off-site), parking areas and roadways appurtenant to such buildings and structures situated upon the Land.

 

Intangible Property ”:  collectively, all transferable or assignable permits, certificates of occupancy, sign permits, development rights and approvals, certificates, licenses, warranties and guarantees, and all other transferable intangible property, miscellaneous rights, benefits and privileges of any kind or character related to the ownership, and not the operation, of the Land and Improvements, but only to the extent the foregoing is assignable without cost to Seller.

 

Internal Revenue Code ”:  the Internal Revenue Code of 1986, as amended and in effect from time to time, and including the applicable Treasury Regulations thereunder.

 

Land ”:  collectively, all of Seller’s right, title and interest in and to the parcel or parcels of land described in Exhibit A together with all easements and appurtenances related thereto.

 



 

Permitted Encumbrances ”:  collectively, applicable zoning, subdivision, building and other land use laws and regulations; liens for taxes, assessments and governmental charges not yet due and payable or due and payable but not yet delinquent; all matters shown on or referenced in the Title Commitment which are reasonably acceptable to Purchaser; and all matters shown on the Survey which are reasonably acceptable to Purchaser.

 

Property ”:  collectively, all of Seller’s right title and interest in and to the Real Property and/or the Intangible Property.

 

Purchase Price ”:  Seventeen Million Four Hundred Fifty-Five Thousand Four Hundred Ninety-Five and No/100 Dollars ($17,455,495.00).

 

Purchaser ”:  the meaning given such term in the preamble of this Agreement.

 

Real Property ”:  collectively, the Land and the Improvements.

 

Seller ”:  the meaning given such term in the preamble of this Agreement.

 

Survey ”:  the ALTA/ACSM land title survey of the Real Property coordinated by Commercial Due Diligence Services and dated June 21, 2012.

 

Title Commitment ”:  the title commitment for the Real Property issued by the Title Company and dated March 31, 2015.

 

Title Company ”:  First American Title Insurance Company.

 

ARTICLE 2
PURCHASE AND SALE; CLOSING

 

2.1                             Purchase and Sale .  In consideration of the payment of the Purchase Price by Purchaser to Seller as herein provided and for other good and valuable consideration, Seller shall sell the Property to Purchaser, and Purchaser shall purchase the Property from Seller, subject to and in accordance with the terms and conditions of this Agreement.

 

2.2                             Closing .  The purchase and sale of the Property shall be consummated contemporaneously with the execution of this Agreement.

 

2.3                             Purchase Price .  The purchase price to be paid by Purchaser to Seller for the Property shall be the Purchase Price.

 

2.4                             IRS Real Estate Sales Reporting .  Seller shall act as “the person responsible for closing” the transaction which is the subject of this Agreement pursuant to Section 6045(e) of the Internal Revenue Code and shall prepare and file all informational returns, including IRS Form 1099-S, and shall otherwise comply with the provisions of Section 6045(e) of the Internal Revenue Code.

 

- 2 -



 

ARTICLE 3
CLOSING OBLIGATIONS

 

3.1                             Seller’s Closing Obligations .  On the Effective Date, Seller shall deliver to Purchaser:

 

(i)                       A good and sufficient deed with covenants against grantor’s acts, or its local equivalent, in proper statutory form for recording, duly executed and acknowledged by Seller, conveying good and marketable fee simple title to the Real Property, free from all liens and encumbrances other than the Permitted Encumbrances;

 

(ii)                   A certificate of non-foreign status, pursuant to Section 1445 of the Internal Revenue Code, substantially in the form of Exhibit B , duly executed by TravelCenters of America LLC;

 

(iii)               An executed counterpart amendment of the Amended and Restated TA Lease as contemplated by the Transaction Agreement; and

 

(iv)               Such other conveyance documents, certificates, deeds, affidavits and other instruments as Purchaser, Seller or the Title Company may reasonably require to carry out the transactions contemplated by this Agreement and as are customary in like transactions in the area in which the Real Property is located.

 

3.2                             Assignment and Assumption of Intangible Property and Indemnity .  Seller hereby assigns to Purchaser all of Seller’s right, title and interest in and to the Intangible Property to the extent first arising from and after the Effective Date.  Purchaser hereby assumes all of Seller’s obligations with respect to the Intangible Property to the extent first arising from and after the Effective Date.  Purchaser hereby agrees to perform all of Seller’s obligations with respect to the Intangible Property to the extent first arising from and after the Effective Date.  In each case, subject to any lease or other agreement between Seller and Purchaser that may otherwise allocate responsibilities, Purchaser shall indemnify, defend and hold harmless Seller from and against any and all losses, costs, damages, demands, expenses, fees, fines, including reasonable attorneys’ fees (“ Losses ”) arising from the Intangible Property to the extent first arising from and after the Effective Date and Seller shall indemnify, defend and hold harmless Purchaser from and against any and all Losses arising from the Intangible Property to the extent first arising prior to the Effective Date.

 

3.3                             Purchaser’s Closing Obligation .  On the Effective Date, Purchaser shall pay the Purchase Price to Seller by wire transfer of immediately available funds as instructed by Seller and shall deliver an executed counterpart amendment of the Amended and Restated TA Lease as contemplated by the Transaction Agreement.

 

ARTICLE 4
PRORATIONS

 

4.1                             Proration Items .  Inasmuch as Seller will be leasing the Property from Purchaser on and after the Effective Date, all customary and usual prorations, including for ad valorem real estate taxes, personal property taxes, assessments or special assessments, water, gas, electric or

 

- 3 -



 

other utilities, shall be made for the account of Seller as seller under this Agreement or as the tenant under the lease being entered into by Seller and Purchaser.

 

4.2                             Survival .  The obligations of the parties under this Article 4 shall survive the Closing.

 

ARTICLE 5
MISCELLANEOUS

 

5.1                             Like-Kind Exchange .  Seller may elect to effectuate the transaction contemplated by this Agreement as part of a forward like-kind exchange in accordance with Section 1031 of the Internal Revenue Code.  In furtherance of the foregoing and notwithstanding anything contained in this Agreement to the contrary, Seller may assign its rights under this Agreement to a “qualified intermediary” in order to facilitate a forward like kind exchange under Section 1031 of the Internal Revenue Code, and Purchaser agrees to execute an instrument acknowledging and consenting to the same; provided , however , such assignment shall not relieve Seller of any of its obligations hereunder.

 

5.2                             Governing Law .  This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of The Commonwealth of Massachusetts.

 

5.3                             Severability .  If any provision of this Agreement shall be held or deemed to be, or shall in fact be, invalid, inoperative or unenforceable as applied to any particular case in any jurisdiction or jurisdictions, or in all jurisdictions or in all cases, because of the conflict of any provision with any constitution or statute or rule of public policy or for any other reason, such circumstance shall not have the effect of rendering the provision or provisions in question invalid, inoperative or unenforceable in any other jurisdiction or in any other case or circumstance or of rendering any other provision or provisions herein contained invalid, inoperative or unenforceable to the extent that such other provisions are not themselves actually in conflict with such constitution, statute or rule of public policy, but this Agreement shall be reformed and construed in any such jurisdiction or case as if such invalid, inoperative or unenforceable provision had never been contained herein and such provision reformed so that it would be valid, operative and enforceable to the maximum extent permitted in such jurisdiction or in such case.

 

5.4                             No Third Party Beneficiaries .  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns.  This Agreement is not intended and shall not be construed to create any rights in or to be enforceable in any part by any other persons.

 

5.5                             Entire Agreement .  This Agreement and the Transaction Agreement constitute the entire agreement of the parties hereto with respect to the subject matter hereof and shall supersede and take the place of any other instruments purporting to be an agreement of the parties hereto relating to the subject matter hereof.

 

5.6                             Merger Except with respect to the any obligation expressly stated to survive the Closing, none of the terms or provisions of this Agreement shall survive the Closing, and the payment of the Purchase Price and delivery of the deed and other closing documents at the

 

- 4 -



 

Closing shall effect a merger, and be deemed the full performance and discharge of every obligation on the part of Seller and /or Purchaser to be performed hereunder.

 

5.7        Counterparts .  This Agreement may be executed in one (1) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.  Any such counterparts or signatures may be delivered by facsimile or e-mail (in .pdf format), and any counterparts or signatures so delivered shall be deemed an original counterpart or signature for all purposes related to this Agreement.

 

5.8        Section and Other Headings .  The headings contained in this Agreement are for reference purposes only and shall not in any way affect the meaning or interpretation of this Agreement.

 

5.9        Time of Essence .  Time shall be of the essence with respect to the performance of each and every covenant and obligation, and the giving of all notices, under this Agreement.

 

5.10      STATEMENT OF LIMITED LIABILITY THE DECLARATION OF TRUST ESTABLISHING PURCHASER, DATED NOVEMBER 29, 2006, AS AMENDED AND SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, PURCHASER.  ALL PERSONS DEALING WITH PURCHASER IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF PURCHASER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

 

5.11                     Survival .  The provisions of this Article 5 shall survive the Closing.

 

 

 

 

[Remainder of page intentionally left blank; signature page follows.]

 

- 5 -



 

IN WITNESS WHEREOF, Purchaser and Seller have caused this Agreement to be executed as a sealed instrument as of the date first above written.

 

 

PURCHASER:

 

 

 

HPT TA PROPERTIES TRUST,

 

a Maryland real estate investment trust

 

 

 

 

 

 

 

By:

/s/ John G. Murray

 

 

 

John G. Murray

 

 

 

President

 

 

 

 

 

 

 

 

 

 

SELLER:

 

 

 

TA OPERATING LLC,

 

a Delaware limited liability company

 

 

 

 

 

 

By:

/s/ Mark R. Young

 

 

 

Mark R. Young

 

 

Executive Vice President

 

 

[Signature Page: Sales Agreement – Battle Creek, Michigan]

 



 

GRAPHIC

EXHIBIT A Legal Description  Real property in the Township of Emmett, County of Calhoun, State of Michigan, described as follows: Parcel I: Parcel of land situated in Emmett Township, Calhoun County, Michigan, all that part of the following described premises lying North of the Northerly Right-of-Way of Highway I-94: Beginning 330 feet South of the Northwest corner of Section 13, Town 2 South, Range 7 West; thence East 505.75 feet; thence South to U.S. Highway #12, formerly Territorial Road and now known as Michigan Avenue; thence Northwesterly on said Highway to the West line of Section 13; thence North to the Place of Beginning. Excepting: Part of the Northwest 1/4 of Section 13, Town 2 South, Range 7 West, Emmett Township, Calhoun County, Michigan, described as: Commencing at the Northwest corner of said Section 13; thence South 00 degrees 09 minutes 47 seconds East 330.00 feet along the West line of said Section 13; thence South 89 degrees 26 minutes 17 seconds East, 505.75 feet; thence South 00 degrees 09 minutes 47 seconds East, 914.10 feet to the Point of Beginning; thence North 89 degrees 19 minutes 40 seconds West, 49.88 feet; thence South 59 degrees 50 minutes 13 seconds West, 62.49 feet; thence South 34 degrees 37 minutes 09 seconds West, 13.42 feet; thence South 60 degrees 09 minutes 47 seconds East, 74.65 feet; thence North 89 degrees 50 minutes 13 seconds East, 47.00 feet; thence North 00 degrees 09 minutes 47 seconds West, 78.86 feet to the Point of Beginning. Parcel II: Also, beginning at the Northwest corner of Section 13, Town 2 South, Range 7 West; running thence East 505.56 feet; thence South 330 feet; thence West 505.56 feet; thence North 330 feet to the Place of Beginning, Township of Emmett, Calhoun County, Michigan.

 

A-1


 

EXHIBIT B

 

Form of FIRPTA Certificate

 

(See attached)

 

B-1



 

FIRPTA CERTIFICATE

 

Section 1445 of the Internal Revenue Code of 1986, as amended, provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. federal income tax purposes (including Section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by TravelCenters of America LLC , a Delaware limited liability company  (“ Transferor ”), pursuant to the Sales Agreement, dated as of June __, 2015, between TA Operating LLC and HPT TA Properties Trust (“ Transferee ”), Transferee the following:

 

1.             Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and income tax regulations thereunder);

 

2.             Transferor is not a disregarded entity as defined in Treasury Regulation Section 1.1445-2(b)(2)(iii);

 

3.             TA Operating LLC, which has legal title to one or more transferred U.S. real property interests under local law, is disregarded as an entity separate from Transferor for U.S. federal income tax purposes;

 

4.             Transferor’s U.S. employer identification number is 20-5701514 ; and

 

5.             Transferor’s office address is 24601 Center Ridge Road, Westlake, OH 44145.

 

The undersigned and Transferor understand that this certificate may be disclosed to the Internal Revenue Service by Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

 

[Remainder of page intentionally left blank; signature page follows.]

 



 

Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct, and complete, and I further declare that I have the authority to sign this document on behalf of Transferor.

 

 

 

 

 

TravelCenters of America LLC,

 

a Delaware limited liability company

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

Title:

 

Date:  June __, 2015

 


Exhibit 99.1

 

Pro Forma Condensed Consolidated Financial Statements (Unaudited)

 

On June 1, 2015, TravelCenters of America LLC and three of its subsidiaries, which we refer to collectively as we, our, us, or TA, entered into a Transaction Agreement with our principal landlord, Hospitality Properties Trust, and four of its subsidiaries, which we refer to collectively as HPT, as disclosed in the Current Report on Form 8-K filed with the Securities and Exchange Commission on June 5, 2015. The transactions contemplated by the Transaction Agreement, include (i) the amendment and restatement of our lease with HPT for 144 properties, which we refer to as the Prior Lease, (ii) the sale of properties and other assets to, and our lease back of those properties and assets from, HPT and (iii) the purchase of properties from HPT.

 

On June 9, 2015 and June 16, 2015, we completed the first two transactions contemplated by the Transaction Agreement as summarized below:

 

·                   On June 9, 2015, the Prior Lease was amended and restated into four new leases, which we refer to collectively as the Leases. The initial terms for the Leases end on December 31, 2026, 2028, 2029 and 2030, respectively. Each of the Leases grants us two renewal options of fifteen years each.

 

·                   On June 9, 2015, HPT purchased from us, for $183.4 million, 10 travel centers we owned and certain assets we owned at eight properties we leased from HPT under the Prior Lease. HPT leased back these properties to us under the Leases. Our annual rent increased by $15.8 million as a result of the sale and lease back of properties completed on June 9, 2015.

 

·                   On June 9, 2015, we purchased from HPT, for $45.0 million, five travel centers that we previously leased from HPT under the Prior Lease. Our annual rent decreased by $3.9 million as a result of our completion of the purchase of these properties.

 

·                   On June 16, 2015, HPT purchased from us, for $24.4 million, one travel center we owned and certain assets we owned at another travel center that we lease from HPT under one of the Leases and HPT leased back the travel center and assets to us under two of the Leases. Our annual rent increased by $2.1 million as a result of the sale and leaseback of the travel center and assets completed on June 16, 2015.

 

As of June 16, 2015, after giving effect to the above referenced transactions completed through that date, we leased a total of 150 properties from HPT under the Leases.

 

Additional sales contemplated by the Transaction Agreement of three other properties and the assets at two other properties for $71.6 million are expected to close before the end of June 2015, unless we exercise our right to delay the sale and lease of three of the properties with an aggregate sale price of $51.5 million to no later than December 31, 2015. As of June 16, 2015 we have not determined whether we will exercise this right to delay.  Our annual rent will increase by an additional $6.2 million (for a combined net increase of $20.2 million after giving effect to and assuming completion of all the applicable transactions contemplated by the Transaction Agreement, excluding the five properties we agreed to sell upon completion of their development) upon the completion of the sale and lease back of these remaining properties and assets.

 

The pro forma financial statements included herein include adjustments related to our purchase of assets and our sale and lease back of assets on June 9, 2015 and June 16, 2015, as well as the additional sale and lease back of three properties and the assets at two other properties for $71.6 million that are expected to occur prior to December 31, 2015, as described above. The pro forma financial statements reflect the amendments to the terms of our leases with HPT.

 

The adjustments to the pro forma condensed consolidated balance sheet as of March 31, 2015, assume that these transactions occurred on that date. The adjustments to the pro forma condensed consolidated statements of income for the three months ended March 31, 2015, and for the year ended December 31, 2014, assume that these transactions occurred on January 1, 2014. The pro forma financial statements are primarily based on, and should be read in conjunction with our audited consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2014, which we refer to as our Annual Report, and our unaudited condensed consolidated financial statements and accompanying notes included in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, which we refer to as our Quarterly Report.

 

The historical consolidated financial information of TA has been adjusted in the pro forma financial statements to give effect to pro forma events that are (1) directly attributable to the transactions, (2) factually supportable, and (3) expected to have a continuing impact on the results of operations. The pro forma financial statements should be read in conjunction with the accompanying notes.

 



 

Travel Centers of America LLC

Pro Forma Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

 

 

 

March 31,
2015
(as reported)

 

Transaction
adjustments

 

Note

 

March 31, 2015
pro forma

 

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

218,151

 

$

234,340

 

2(a)

 

$

452,491

 

Accounts receivable (less allowance for doubtful accounts of $1,210 as of March 31, 2015)

 

119,977

 

 

 

 

119,977

 

Inventories

 

172,139

 

 

 

 

172,139

 

Other current assets

 

66,700

 

 

 

 

66,700

 

Total current assets

 

576,967

 

234,340

 

 

 

811,307

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

814,605

 

(191,945

)

2(b)

 

622,660

 

Goodwill and intangible assets, net

 

57,234

 

 

 

 

57,234

 

Other noncurrent assets

 

42,758

 

 

 

 

42,758

 

Total assets

 

$

1,491,564

 

$

42,395

 

 

 

$

1,533,959

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

142,513

 

$

 

 

 

$

142,513

 

Current HPT Leases liabilities

 

31,785

 

7,093

 

2(d)

 

38,878

 

Other current liabilities

 

132,991

 

 

 

 

132,991

 

Total current liabilities

 

307,289

 

7,093

 

 

 

314,382

 

 

 

 

 

 

 

 

 

 

 

Noncurrent HPT Leases liabilities

 

330,290

 

(84,777

)

2(c)

 

245,513

 

Deferred gain

 

 

131,355

 

2(d)

 

131,355

 

Long term debt

 

230,000

 

 

 

 

230,000

 

Other noncurrent liabilities

 

88,668

 

(877

)

2(e)

 

83,746

 

 

 

 

 

(4,045

)

2(f)

 

 

 

Total liabilities

 

956,247

 

48,749

 

 

 

1,004,996

 

 

 

 

 

 

 

 

 

 

 

Total shareholders’ equity

 

535,317

 

(6,354

)

2(f)

 

528,963

 

Total liabilities and shareholders’ equity

 

$

1,491,564

 

$

42,395

 

 

 

$

1,533,959

 

 

2



 

Travel Centers of America LLC

Pro Forma Condensed Consolidated Statements of Income (Unaudited)

Three Months Ended March 31, 2015

(in thousands, except per share data)

 

 

 

As reported

 

Transaction
adjustments

 

Note

 

Pro forma

 

Revenues:

 

 

 

 

 

 

 

 

 

Fuel

 

$

1,003,167

 

$

 

 

 

$

1,003,167

 

Nonfuel

 

401,510

 

 

 

 

401,510

 

Rent and royalties from franchisees

 

3,024

 

 

 

 

3,024

 

Total revenues

 

1,407,701

 

 

 

 

1,407,701

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold (excluding depreciation):

 

 

 

 

 

 

 

 

 

Fuel

 

890,780

 

 

 

 

890,780

 

Nonfuel

 

178,422

 

 

 

 

178,422

 

Total cost of goods sold

 

1,069,202

 

 

 

 

1,069,202

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Site level operating

 

205,584

 

 

 

 

205,584

 

Selling, general & administrative

 

27,616

 

 

 

 

27,616

 

Real estate rent

 

55,604

 

5,970

 

2(g)

 

61,574

 

Depreciation and amortization

 

17,525

 

(2,623

)

2(h)

 

14,902

 

Total operating expenses

 

306,329

 

3,347

 

 

 

309,676

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

32,170

 

(3,347

)

 

 

28,823

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

 

414

 

 

 

 

414

 

Interest expense, net

 

6,332

 

(1,452

)

2(g)

 

4,880

 

Income before income taxes and income from equity investees

 

25,424

 

(1,895

)

 

 

23,529

 

Provision for income taxes

 

(10,486

)

737

 

2(i)

 

(9,749

)

Income from equity investees

 

791

 

 

 

 

 

791

 

Net income

 

$

15,729

 

$

(1,158

)

 

 

$

14,571

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.41

 

$

(0.03

)

 

 

$

0.38

 

 

3



 

Travel Centers of America LLC

Pro Forma Condensed Consolidated Statements of Income (Unaudited)

Year Ended December 31, 2014

(in thousands, except per share data)

 

 

 

As reported

 

Transaction
adjustments

 

Note

 

Pro forma

 

Revenues:

 

 

 

 

 

 

 

 

 

Fuel

 

$

6,149,449

 

$

 

 

 

$

6,149,449

 

Nonfuel

 

1,616,802

 

 

 

 

1,616,802

 

Rent and royalties from franchisees

 

12,382

 

 

 

 

12,382

 

Total revenues

 

7,778,633

 

 

 

 

7,778,633

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold (excluding depreciation):

 

 

 

 

 

 

 

 

 

Fuel

 

5,720,949

 

 

 

 

5,720,949

 

Nonfuel

 

738,871

 

 

 

 

738,871

 

Total cost of goods sold

 

6,459,820

 

 

 

 

6,459,820

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Site level operating

 

815,611

 

 

 

 

815,611

 

Selling, general & administrative

 

106,823

 

 

 

 

106,823

 

Real estate rent

 

217,155

 

23,883

 

2(g)

 

241,038

 

Depreciation and amortization

 

65,584

 

(10,593

)

2(h)

 

54,991

 

Total operating expenses

 

1,205,173

 

13,290

 

 

 

1,218,463

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

113,640

 

(13,290

)

 

 

100,350

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

 

1,160

 

 

 

 

1,160

 

Interest expense, net

 

16,712

 

(5,887

)

2(g)

 

10,825

 

Income before income taxes and income from equity investees

 

95,768

 

(7,403

)

 

 

88,365

 

Provision for income taxes

 

(38,023

)

2,880

 

2(i)

 

(35,143

)

Income from equity investees

 

3,224

 

 

 

 

 

3,224

 

Net income

 

$

60,969

 

$

(4,523

)

 

 

$

56,446

 

 

 

 

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

1.62

 

$

(0.12

)

 

 

$

1.50

 

 

4



 

TravelCenters of America LLC

Notes to Condensed Consolidated Pro Forma Financial Statements (Unaudited)

(In thousands except for per share data, unless indicated otherwise)

 

Note 1.          Basis of Presentation

 

The condensed consolidated pro forma financial statements were derived from historical financial statements prepared in accordance with U.S. generally accepted accounting principles, and should be read in conjunction with our Annual Report and Quarterly Report. The pro forma financial statements are presented for informational purposes only and are not necessarily indicative of what our results of operations actually would have been had the transaction been completed as of the dates indicated. In addition, the pro forma financial statements do not purport to project our future operating results. The accompanying pro forma financial statements do not reflect adjustments related to the expected sale and lease back of the five properties we expect to sell to HPT after we have completed the construction of travel centers at those properties.

 

Note 2. Pro Forma Transaction Adjustments

 

The condensed consolidated pro forma financial statements were prepared based on our historical consolidated financial statements and include adjustments for our purchase of assets and our sale and lease back of assets on June 9, 2015 and June 16, 2015, as well as the additional sale and lease back of assets expected to occur prior to December 31, 2015.

 

The historical consolidated financial information of TA has been adjusted in the pro forma financial statements to give effect to events that are (1) directly attributable to the transactions, (2) factually supportable, and (3) expected to have a continuing impact on the results of operations. The pro forma statements of income do not reflect the one time transaction related expense adjustment described in note (f) below.

 

Pro Forma Balance Sheet Adjustments

 

(a)                                  Cash

 

Adjustments to cash totaling $234,340 are comprised of proceeds from the sale to HPT of 14 travel centers and certain assets at 11 leased properties for $279,382, less the payment of $45,042 for the purchase of travel centers from HPT. The pro forma statements of income do not assume investment income related to the net increase in cash from the transactions.

 

(b)                                  Property and equipment, net

 

Adjustments to property and equipment, net totaling $191,945 are to remove assets related to the sale of 14 travel centers and certain assets at 11 other travel centers to HPT for $142,785 as well as to remove $49,160 of assets related to travel centers that previously did not qualify for sale leaseback accounting under the Prior Lease but do so qualify under the Leases.

 

(c)                                   Sale leaseback financing obligation

 

Adjustments to noncurrent HPT Leases liabilities totaling $84,777 consisted of the following:

 

Elimination of sale leaseback financing obligation liability related to the purchase of five formerly subleased properties

 

$

(34,643

)

Elimination of sale leaseback financing obligation liability related to the properties that now qualify for sale leaseback accounting but were not purchased or sold in the transactions

 

(50,134

)

 

 

$

(84,777

)

 

5



 

(d)                                  Deferred gain

 

In conjunction with the sale of 14 travel centers and certain assets at 11 other travel centers, and properties that now qualify for sale leaseback accounting, we recognized or will recognize after giving effect to and assuming completion of all the applicable transactions contemplated by the Transaction Agreement, an aggregate deferred gain of $138,448 which is to be amortized as a reduction to rent expense over the term of the respective leases on a straight line basis.

 

The deferred gain is comprised as follows:

 

Sale of 14 travel centers and certain assets at 11 other travel centers

 

$

137,474

 

Properties that now qualify for sale leaseback accounting

 

974

 

Total deferred gain

 

138,448

 

Less: current portion of deferred gain

 

(7,093

)

Long term deferred gain

 

$

131,355

 

 

(e)                                   Asset retirement obligation

 

The adjustment to other noncurrent liabilities relates to the removal of asset retirement obligations related to assets sold to HPT totaling $877.

 

(f)                                    Loss on extinguishment of debt

 

The purchase of five properties that we formerly leased from HPT and subleased to franchisees resulted in a loss on extinguishment of debt of $10,399 because the lease of these properties had been accounted for as a financing and the purchase prices paid for the properties exceeded the unamortized balance of the sale leaseback financing obligation. The $4,045 tax effect of this loss is reflected as a reduction in other noncurrent liabilities, while the after tax impact is reflected as a reduction to shareholders’ equity. This loss on extinguishment of debt is not reflected in the pro forma statements of income because it is non-recurring.

 

Pro Forma Statements of Income Adjustments

 

(g)                                   Real estate rent

 

The increase in our base rent payable to HPT as a result of the sale and lease back and purchase transactions described above is calculated as follows:

 

Proceeds from the sales of 14 travel centers and certain assets at 11 properties

 

$

279,382

 

Less: Purchase price of 5 travel centers

 

(45,042

)

Net proceeds from transaction

 

234,340

 

Rent increase rate

 

8.6

%

Net increase in base rent

 

$

20,153

 

 

6



 

Adjustments to real estate rent expense consisted of the following:

 

 

 

Three months ended
March 31, 2015

 

Year ended
December 31, 2014

 

Increase in base rent due to sales and lease back and purchase transactions

 

$

5,038

 

$

20,153

 

Add: HPT rent previously classified as interest expense

 

1,452

 

5,887

 

Add: HPT rent previously charged against the sale leaseback financing obligation

 

636

 

2,380

 

Pro forma increase in real estate rent

 

7,126

 

28,420

 

Less: Amortization of deferred gain

 

(2,365

)

(9,458

)

Add: Amortization of other existing deferred rent credits over longer amended lease terms

 

1,209

 

4,921

 

Net adjustment to real estate rent expense

 

$

5,970

 

$

23,883

 

 

(h)                                  Depreciation and amortization

 

Adjustments to depreciation and amortization expense in the pro forma statements of income consisted of the following:

 

 

 

Three months ended
March 31, 2015

 

Year ended
December 31, 2014

 

Adjustment to remove depreciation expense related to the assets sold to HPT

 

$

(2,211

)

$

(9,009

)

Adjustment to remove depreciation expense related to properties that now qualify for sale leaseback accounting

 

(412

)

(1,584

)

 

 

$

(2,623

)

$

(10,593

)

 

(i)                                      Provision for income taxes

 

The pro forma transaction adjustments have been tax affected at a blended statutory federal and state income tax rate of 38.9%.

 

7