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): September 30, 2016

 

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))

 

 

 



 

In this Current Report on Form 8-K, the terms “we,” “us” and “our” refer to TravelCenters of America LLC and certain of its subsidiaries and “HPT” refers to Hospitality Properties Trust and certain of its subsidiaries, unless otherwise noted.

 

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, we entered a Transaction Agreement with our principal landlord, HPT, on June 1, 2015, as amended on June 22, 2016, to, among other things, sell to HPT four travel centers upon completion of their development by us and lease back from HPT these properties under our leases with HPT.  Also as previously reported, we completed the sale and leaseback of one of the development properties on March 31, 2016, and one of the development properties on June 30, 2016. The Transaction Agreement, as amended, and related transactions are described further in Note 12 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2015, or our Annual Report, and Note 4 to the Consolidated Financial Statements included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, or our Quarterly Report, which descriptions are incorporated herein by reference.

 

On September 30, 2016, in connection with the Transaction Agreement, as amended, we entered into a development property agreement with HPT, or the Development Property Agreement. That same day, pursuant to the Development Property Agreement, we sold to HPT, for approximately $16.6 million, one of the two remaining travel centers we agreed to sell upon completion of their development pursuant to the Transaction Agreement, and HPT has leased back that travel center to us.

 

In connection with the Development Property Agreement, we and HPT entered into a sixth amendment to our TA Lease No. 2, to add the travel center that we sold to HPT on September 30, 2016. Pursuant to the amendment, minimum annual rent under the TA Lease No. 2 increased by approximately $1.4 million. As a result of this amendment, minimum annual rent under the TA Lease No. 2 is currently approximately $51.2 million in the aggregate as of September 30, 2016, subject to future adjustments if HPT purchases capital improvements made to the leased travel centers and pursuant to the contractual rent adjustment formula set forth in the lease.

 

The foregoing descriptions of the Transaction Agreement, as amended, the Development Property Agreement, the TA Lease No. 2 and the amendments thereto, and the other agreements entered into in connection with the Transaction Agreement, as amended, are not complete and are qualified in their entirety by reference to the full text of the Transaction Agreement, as amended, the Development Property Agreement, the TA Lease No. 2 and the amendments thereto and such other agreements, copies of which are filed as Exhibits 10.1 and 10.2 to this Current Report, Exhibits 10.1 and 10.2 to our Current Report on Form 8-K dated June 30, 2016, Exhibits 10.1 through 10.8 to our Current Report on Form 8-K dated June 22, 2016, Exhibits 10.1 and 10.2 to our Current Report on Form 8-K dated March 31, 2016, Exhibits 10.1 through 10.6 to our Current Report on Form 8-K dated September 23, 2015, Exhibits 10.1 through 10.4 to our Current Report on Form 8-K dated June 23, 2015, Exhibits 10.1 through 10.4 to our Current Report on Form 8-K dated June 16, 2015, Exhibits 10.1 through 10.10 to our Current Report on Form 8-K dated June 9, 2015 and Exhibit 10.1 to our Current Report on Form 8-K dated June 1, 2015 and are incorporated by reference herein.

 

Information Regarding Certain Relationships and Related Person Transactions

 

HPT is our principal landlord and largest shareholder and as of June 30, 2016, owned 3,420,000 of our common shares, representing approximately 8.8% of our outstanding common shares. One of our Managing Directors, Mr. Barry Portnoy, is a managing trustee of HPT. Mr. Barry Portnoy’s son, Mr. Adam Portnoy, is also a managing trustee of HPT, and Mr. Barry Portnoy’s son-in-law, Mr. Ethan Bornstein, is an executive officer of HPT. Our other Managing Director, Mr. Thomas O’Brien, who is also our President and Chief Executive Officer, was an

 

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executive officer of HPT until 2007. We have significant continuing relationships with HPT, including the lease arrangements referred to in this Current Report.

 

The RMR Group LLC, or RMR, provides business and property management services to us. The RMR Group Inc. is the managing member of RMR, and ABP Trust, which is the controlling shareholder of The RMR Group Inc., is a non-managing member of RMR. Mr. Barry Portnoy and Mr. Adam Portnoy, are the owners of ABP Trust. Mr. Barry Portnoy is the Chairman of RMR and a Managing Director and officer of The RMR Group Inc. and Mr. Adam Portnoy is the President and Chief Executive Officer of RMR and a Managing Director, President and Chief Executive Officer of The RMR Group Inc. Our other Managing Director, Mr. Thomas O’Brien, Mr. Andrew Rebholz, our Executive Vice President, Chief Financial Officer and Treasurer, and Mr. Mark Young, our Executive Vice President and General Counsel, are also officers and employees of RMR. RMR provides management services to HPT and HPT’s executive officers are officers and employees of RMR. Our Independent Directors also serve as independent directors or independent trustees of other public companies to which RMR or its affiliates provide management services. Mr. Barry Portnoy serves as a managing director or managing trustee of those companies and Mr. Adam Portnoy serves as a managing trustee of a majority of those companies. In addition, officers of RMR serve as officers of those other companies to which RMR or its affiliates provides management services.

 

For further information about these and other such relationships and related person transactions, please see our Annual Report, our definitive Proxy Statement for our 2016 Annual Meeting of Shareholders, or our Proxy Statement, our Quarterly Report and our other filings with the Securities and Exchange Commission, or the SEC, including Note 12 to the Consolidated Financial Statements included in our Annual Report, the sections captioned “Business”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Related Person Transactions” and “Warning Concerning Forward Looking Statements” of our Annual Report, the section captioned “Related Person Transactions” and the information regarding our Directors and executive officers in our Proxy Statement and Note 4 to the Consolidated Financial Statements included in our Quarterly Report and the sections captioned “Management’s Discussion and Analysis of Financial Condition and Results of Operations— Related Person Transactions” and “Warning Concerning Forward Looking Statements” of our Quarterly Report.  In addition, please see the section captioned “Risk Factors” of our Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. Our filings with the SEC and copies of certain of our agreements with these related parties are publicly available as exhibits to our public filings with the SEC and accessible at the SEC’s website, www.sec.gov.

 

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.

 

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, INCLUDING SOME WHICH ARE BEYOND OUR CONTROL. FOR EXAMPLE, WE HAVE AGREED TO SELL TO, AND LEASE BACK FROM, HPT ONE ADDITIONAL TRAVEL CENTER UPON THE COMPLETION OF ITS DEVELOPMENT. THE SALE AND LEASE BACK OF THIS TRAVEL CENTER ARE SUBJECT TO VARIOUS TERMS AND CONDITIONS TYPICAL OF LARGE, COMPLEX REAL ESTATE TRANSACTIONS. SOME OF THESE TERMS AND CONDITIONS MAY NOT BE SATISFIED OR OTHER CIRCUMSTANCES MAY EXIST OR ARISE THAT RESULT IN THIS TRANSACTION BEING DELAYED, NOT OCCURRING OR THE TERMS CHANGING.

 

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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

 

Development Property Agreement, dated September 30, 2016, between HPT TA Properties LLC and TA Operating LLC (filed herewith)

 

 

 

10.2

 

Sixth Amendment to Amended and Restated Lease Agreement No. 2, dated September 30, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC (filed herewith)

 

 

 

10.3

 

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 Form 8-K dated June 1, 2015)

 

 

 

10.4

 

First Amendment to Transaction Agreement, dated June 22, 2016, 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 and TA Operating LLC (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K dated June 22, 2016)

 

 

 

99.1

 

Pro Forma Financial Statements (filed herewith)

 

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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: October 4, 2016

By:

/s/ ANDREW J. REBHOLZ

 

 

Andrew J. Rebholz

 

 

Executive Vice President, Chief Financial Officer
and Treasurer

 

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Exhibit 10.1

 

 

DEVELOPMENT PROPERTY AGREEMENT

 

between

 

HPT TA PROPERTIES TRUST,

 

as Purchaser,

 

and

 

TA OPERATING LLC ,

 

as Seller

 


 

SEPTEMBER 30, 2016

 


 



 

DEVELOPMENT PROPERTY AGREEMENT

 

THIS DEVELOPMENT PROPERTY AGREEMENT is made and entered into as of September 30, 2016 (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, as amended by that certain First Amendment to Transaction Agreement, dated as of June 22, 2016 (as so amended, 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 Development Property 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 ”:  Sixteen Million Five Hundred Fifty-Seven Thousand Fifty-Seven and 26/100ths Dollars ($16,557,057.26).

 

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/NSPS land title survey of the Real Property prepared by Kevin R. Rasnick and dated September 12, 2016, last revised September 26, 2016.

 

Title Commitment ”:  the title commitment for the Real Property issued by the Title Company and dated August 24, 2016.

 

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.

 

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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 designated by Purchaser as contemplated by Section 2.2 of 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

 

3



 

estate taxes, personal property taxes, assessments or special assessments, water, gas, electric or other utilities, shall be made for the account of Seller as seller under this Agreement or as the tenant under the lease being amended 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

 

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payment of the Purchase Price and delivery of the deed and other closing documents at the 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 AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING PURCHASER, DATED AS OF 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.]

 

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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

 

 

 

 

 

By:

/s/ John G. Murray

 

 

John G. Murray

 

 

President

 

 

 

SELLER:

 

 

 

TA OPERATING LLC

 

 

 

 

 

By:

/s/ Mark R. Young

 

 

Mark R. Young

 

 

Executive Vice President

 

[Signature Page to Development Agreement]

 



 

Exhibit A

 

Legal Description

 

All of that certain land as shown on Plat Cabinet B, Page 568 in the Register’s Office for Campbell County, Tennessee.

 

Together with the non-exclusive right to use two (2) rights of way easement for ingress and egress purposes, including the right to construct and maintain roadways for such purposes, described in Book W480, Page 790, as follows:

 

Easement No. 1:

 

Beginning at an iron pin at the right of way of State Highway 63, near its intersection with Interstate 75, at a corner common with Myers; thence with said Highway S 88 deg. 13’ E 52.5 feet to an iron pin; thence leaving said Highway S 12 deg. 32’ 50” E 309.30 feet to an iron pin; thence N 72 deg. 55’08” W 52.5 feet to an iron pin; thence N 13 deg. 33’39” W 296.36 feet to the point of beginning.

 

Easement No. 2:

 

Beginning at an iron pin at the right of way of State Highway 63, near its intersection with Interstate 75, at a corner common to the Exxon property; thence N 56 deg. 26’ E 56.0 feet to a highway monument at the right of way of Interstate 75; thence with said right of way S 60 deg. 02’ E 681.06 feet to an iron pin; thence S 29 deg. 44’36” 104.13 feet to an iron pin; thence N 44 deg. 05’ W 15 feet to an iron pin; thence N 60 deg. 02’ W 398.41 feet to an iron pin; thence N 67 deg. 34’ E 62.95 feet to an iron pin; thence N 60 deg. 02’ W 269.00 feet to an iron pin at the right of way of State Highway 63, the point of beginning.

 

Being the same property conveyed to TA Operating LLC, a Delaware limited liability company from Nellie Myers by deed of record in Book W480, page 790, in the Register’s Office for Campbell County, Tennessee.

 

For reference only:

 

Tax ID# Map 91, Parcels 004.00, 005.00, 006.00, 007.01, & 007.02

 

Together with a 50’ Access Easement recorded at Book W480, Page 796.

 



 

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 [ · ], between TA Operating LLC and [HPT entity], Transferor hereby certifies to [transferee entity] (“ 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

 

 

 

 

 

By:

 

 

 

Name:

 

 

 

Title:

 

 

 

Date: [ · ]

 

 


Exhibit 10.2

 

SIXTH AMENDMENT TO
AMENDED AND RESTATED LEASE AGREEMENT NO. 2

 

THIS SIXTH AMENDMENT TO AMENDED AND RESTATED LEASE AGREEMENT NO. 2 (this “ Amendment ”) is made and entered into as of September 30, 2016, 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, as amended by that certain First Amendment to Amended and Restated Lease Agreement No. 2, dated as of June 16, 2015, that certain Second Amendment to Amended and Restated Lease Agreement No. 2, dated as of June 23, 2015, that certain Third Amendment to Amended and Restated Lease No. 2, dated as of September 23, 2015, that certain Fourth Amendment to Amended and Restated Lease No. 2, dated as of June 22, 2016, and that certain Fifth Amendment to Amended and Restated Lease No. 2, dated as of June 30, 2016 (as so amended, the “ Lease ”);

 

WHEREAS , simultaneously herewith, HPT TA Properties Trust has acquired from Tenant certain land and improvements comprising a travel center having an address at 289 Howard Baker Highway, Pioneer, Tennessee, as further described on Exhibit A-40 attached to this Amendment (collectively, the “ Pioneer Property ”);

 

WHEREAS, Landlord and Tenant desire to amend the Lease to include the Pioneer Property as a Property (this and other capitalized terms used and not otherwise defined in this Amendment shall have the meanings given such terms in the Lease); and

 

WHEREAS, Guarantor is executing this Amendment to confirm the continuation of the Guaranty;

 

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.                                       Base Year .  The defined term “Base Year” set forth in Section 1.10 of the Lease shall mean, with respect to the Pioneer Property, the 2019 calendar year.

 

2.                                       Commencement Date .  The defined term “Commencement Date” set forth in Section 1.18 of the Lease shall mean, with respect to the Pioneer Property, the date of this Amendment.

 

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:

 



 

1.66                         Minimum Rent ” shall mean Fifty-One Million Two Hundred Twenty-Four Thousand Two Hundred Ninety-Three and 19/100ths Dollars ($51,224,293.19), as adjusted from time to time pursuant to 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-39” in the second line thereof and replacing it with a reference to “Exhibits A-1 through A-40.”

 

5.                                       Exhibit A .  Exhibit A to the Lease is hereby amended by (a) deleting the initial page entitled “EXHIBITS A-1 through A-39” therefrom in its entirety and replacing it with the page entitled “EXHIBITS A-1 through A-40” attached hereto and (b) adding Exhibit A-40 attached to this Amendment immediately following Exhibit A-39 to the Lease.

 

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

 

7.                                       Counterparts .  This Amendment may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

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

 

[Signature Page to Sixth Amendment to Amended and Restated Lease Agreement No. 2]

 



 

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

 

 

 

TRAVELCENTERS OF AMERICA LLC

 

 

 

 

 

By:

/s/ Mark R. Young

 

 

Mark R. Young

 

 

Executive Vice President

 

 

 

 

 

TRAVELCENTERS OF AMERICA HOLDING COMPANY LLC

 

 

 

 

 

By:

/s/ Mark R. Young

 

 

Mark R. Young

 

 

Executive Vice President

 



 

EXHIBITS A-1 through A-40

 

Land

 

Exhibit

 

TA Site No.

 

Property Address

A-1

 

54

 

9201 Grand Bay Wilmer Rd, Grand Bay (Mobile), AL 36541.

A-2

 

7

 

2949 S. Toltec Road, Eloy, AZ 85213.

A-3

 

94

 

946 West Beale Street, Kingman, AZ, 86401.

A-4

 

33

 

408 Highway 149 North, Earle (West Memphis), AR 72331.

A-5

 

227

 

2930 Lenwood Rd., Barstow, CA 92311.

A-6

 

57

 

19483 Knighton Rd., Redding, CA 96002.

A-7

 

248

 

1650 C.R. 210 West, Jacksonville (Jacksonville South), FL 32259.

A-8

 

158

 

11706 Tamp Gateway Blvd., Seffner (Tampa), FL 33584.

A-9

 

156

 

30732 Highway 441 South, Commerce, GA 30529.

A-10

 

249

 

6901 Bellville Road, Lake Park, GA 31636.

A-11

 

167

 

4115 Broadway, Boise, ID 83705.

A-12

 

30

 

16650 Russell Rd., Russell (Chicago North), IL 60075.

A-13

 

199

 

819 Edwardsville Road, Troy, IL 62294.

A-14

 

65

 

2636 E. Tipton Street, Seymour, IN 47274.

A-15

 

66

 

3210 South 7th Street, Council Bluffs, IA 51501.

A-16

 

237

 

8560 Greenwood Rd., Greenwood, LA 71033.

A-17

 

69

 

1255 N. Dixie Hwy, Monroe, MI 48162.

A-18

 

190

 

13400 Rogers Drive, Rogers, MN 55374.

A-19

 

52

 

100 North Broadway, Oak Grove, MO 64075.

A-20

 

90

 

103 Prospectors Drive, Ogallala, NE 69153.

A-21

 

108

 

8050 Dean Martin Drive, Las Vegas, NV 89139.

A-22

 

48

 

975 St. Rt. 173, Bloomsbury, NJ 08804.

A-23

 

23

 

HC 69 - Box 120, Santa Rosa, NM 88435.

A-24

 

209

 

40 Riverside Drive, Fultonville, NY 12072.

A-25

 

2

 

1101 NC Highway 61, Whitsett (Greensboro), NC 27377.

A-26

 

39

 

10679 Lancaster Rd., Hebron, OH 43025.

A-27

 

29

 

5551 St. Rt. 193, Kingsville, OH 44048.

A-28

 

59

 

501 South Morgan Road, Oklahoma City (West), OK 73128.

A-29

 

56

 

21856 Bents Road, NE, Aurora (Portland), OR 97002.

A-30

 

215

 

4050 Depot Road, Erie (Harborcreek), PA 16510.

A-31

 

12

 

7848 Linglestown Road, Harrisburg, PA 17112.

A-32

 

13

 

608 Lovell Road, Knoxville, TN 37932.

A-33

 

17

 

6800 Thompson Road, Baytown, TX 77522.

A-34

 

230

 

704 West Interstate 20, Big Spring, TX 79720.

A-35

 

147

 

6170 I-10 East, San Antonio, TX 78219.

A-36

 

1

 

100 N. Carter Road, Ashland (Richmond), VA 23005.

A-37

 

170

 

435 Winton Parkway, Livingston, CA 95334.

A-38

 

369

 

3001 Grant Street, Gary, IN 46408.

A-39

 

402

 

24225 and 24263 West Lorenzo Road, Wilmington, IL 60481

A-40

 

255

 

289 Howard Baker Highway, Pioneer, TN 37847

 

[See attached copies.]

 



 

EXHIBIT A-40

 

289 Howard Banker Highway
Pioneer, TN 37847

 

All of that certain land as shown on Plat Cabinet B, Page 568 in the Register’s Office for Campbell County, Tennessee.

 

Together with the non-exclusive right to use two (2) rights of way easement for ingress and egress purposes, including the right to construct and maintain roadways for such purposes, described in Book W480, Page 790, as follows:

 

Easement No. 1:

 

Beginning at an iron pin at the right of way of State Highway 63, near its intersection with Interstate 75, at a corner common with Myers; thence with said Highway S 88 deg. 13’ E 52.5 feet to an iron pin; thence leaving said Highway S 12 deg. 32’ 50” E 309.30 feet to an iron pin; thence N 72 deg. 55’08” W 52.5 feet to an iron pin; thence N 13 deg. 33’39” W 296.36 feet to the point of beginning.

 

Easement No. 2:

 

Beginning at an iron pin at the right of way of State Highway 63, near its intersection with Interstate 75, at a corner common to the Exxon property; thence N 56 deg. 26’ E 56.0 feet to a highway monument at the right of way of Interstate 75; thence with said right of way S 60 deg. 02’ E 681.06 feet to an iron pin; thence S 29 deg. 44’36” 104.13 feet to an iron pin; thence N 44 deg. 05’ W 15 feet to an iron pin; thence N 60 deg. 02’ W 398.41 feet to an iron pin; thence N 67 deg. 34’ E 62.95 feet to an iron pin; thence N 60 deg. 02’ W 269.00 feet to an iron pin at the right of way of State Highway 63, the point of beginning.

 

Being the same property conveyed to TA Operating LLC, a Delaware limited liability company from Nellie Myers by deed of record in Book W480, page 790, in the Register’s Office for Campbell County, Tennessee.

 

For reference only:

 

Tax ID# Map 91, Parcels 004.00, 005.00, 006.00, 007.01, & 007.02

 

Together with a 50’ Access Easement recorded at Book W480, Page 796.

 


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 TA Lease, (ii) the sale of properties and other assets to, and our lease back of those properties and assets from, HPT, (iii) the purchase of properties from HPT and (iv) the sale to HPT of five travel centers upon the completion of their development, which was then expected to be completed before June 30, 2017, at a purchase price equal to their development costs, including the cost of land, which costs were estimated to be not more than $118.0 million in the aggregate, and our lease back of these properties from HPT.

 

On June 22, 2016, we entered into a First Amendment to Transaction Agreement, or the Amendment, with HPT to, among other things, replace one of the five development properties that we had agreed to sell to and lease back from HPT with two alternative existing travel centers owned by us.

 

Since June 1, 2015, we completed certain of the transactions contemplated by the Transaction Agreement and the Amendment as summarized below:

 

·                   On June 9, 2015, the Prior TA Lease was expanded and subdivided into four new leases, which we refer to collectively as the New TA Leases. The initial terms for the New TA Leases end on December 31, 2026, 2028, 2029 and 2030. Each of the New TA Leases grants us two renewal options of 15 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 TA Lease. HPT leased back these properties to us under the New TA Leases. Our annual rent increased by $15.8 million as a result of the sale and leaseback 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 TA 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 New TA Leases and HPT leased back the travel center and assets to us under two of the New TA 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.

 

·                   On June 23, 2015, HPT purchased from us, for $20.1 million, one travel center we owned and certain assets we owned at another travel center that we lease from HPT under one of the New TA Leases and HPT leased back the travel center and assets to us under two of the New TA Leases. Our annual rent increased by $1.7 million as a result of the sale and leaseback of the travel center and assets completed on June 23, 2015.

 

·                   On September 23, 2015, HPT purchased from us, for $51.5 million, two travel centers we owned and certain assets we owned at another travel center that we lease from HPT under one of the New TA Leases and HPT leased back the two travel centers and assets to us under three of the New TA Leases. Our annual rent increased by $4.4 million as a result of the sale and leaseback of the travel center and assets completed on September 23, 2015.

 

·                   On March 31, 2016, HPT purchased from us, for $19.7 million, one travel center we developed and owned and HPT leased back the travel center to us under one of the New TA Leases. Our annual rent increased by $1.7 million as a result of the sale and leaseback of the travel center completed on March 31, 2016.

 

·                   On June 22, 2016, pursuant to the Amendment, HPT purchased from us, for $23.9 million, two travel centers we owned and HPT leased back these two travel centers to us under two of the New TA Leases. Our annual rent increased by $2.0 million as a result of the sale and leaseback of the travel centers completed on June 22, 2016.

 

·                   On June 30, 2016, HPT purchased from us, for $22.3 million, one travel center we developed and owned, and HPT leased back the travel center to us under one of the New TA Leases. Our annual rent increased by $1.9 million as a result of the sale and leaseback of the travel center completed on June 30, 2016.

 

1



 

·                   On September 30, 2016, HPT purchased from us, for $16.6 million, one travel center we developed and owned, and HPT leased back the travel center to us under one of the New TA Leases. Our annual rent increased by $1.4 million as a result of the sale and leaseback of the travel center completed on September 30, 2016.

 

As of September 30, 2016, after giving effect to the above referenced transactions completed through that date, we leased a total of 158 properties from HPT under the New TA Leases.

 

The pro forma financial statements included herein include adjustments related to the amendments to the terms of our leases with HPT and our purchase of assets and our sale and lease back of assets on June 9, 2015, June 16, 2015, June 23, 2015, September 23, 2015, March 31, 2016, June 22, 2016, June 30, 2016, and September 30, 2016. The pro forma financial statements do not reflect adjustments related to the future sale and lease back of the remaining property we expect to sell to HPT after we have completed the construction of the travel center at that property, as contemplated in the Transaction Agreement. The pro forma financial statements also do not reflect adjustments to rent payable to HPT as a result of our sales to HPT during the periods presented of improvements at properties that we lease from HPT, for periods prior to the dates HPT purchased such improvements. Such improvements totaled $55.1 million during the six months ended June 30, 2016, and $99.9 million during the year ended December 31, 2015, and, in accordance with the leases, annual minimum rent at the time HPT purchased these improvements was increased by 8.5% of the amounts of the improvements purchased by HPT. No pro forma adjustments have been made to reflect the results of operations for periods prior to our acquisitions of the travel centers and convenience stores we acquired from parties other than HPT during the periods presented, or to eliminate the one time acquisition costs related to such acquisition activities. For the six months ended June 30, 2016, and the year ended December 31, 2015, we incurred $2.1 million and $5.0 million of acquisition costs, respectively.

 

The adjustments to the pro forma condensed consolidated balance sheet as of June 30, 2016, assume that these transactions occurred on that date. The adjustments to the pro forma condensed consolidated statements of income for the six months ended June 30, 2016, and for the year ended December 31, 2015, assume that these transactions occurred on January 1, 2015. The pro forma financial statements are 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, 2015, which we refer to as our Annual Report, and our unaudited consolidated financial statements and accompanying notes included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, 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.

 

2



 

Travel Centers of America LLC

Pro Forma Condensed Consolidated Balance Sheets (Unaudited)

(in thousands)

 

 

 

June 30, 2016
(as reported)

 

Transaction
adjustments

 

Note

 

June 30, 2016
pro forma

 

Assets

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

133,799

 

$

16,557

 

2 (a)

 

$

150,356

 

Accounts receivable (less allowance for doubtful accounts of $690)

 

125,819

 

 

 

 

125,819

 

Inventory

 

192,470

 

 

 

 

192,470

 

Other current assets

 

44,629

 

 

 

 

44,629

 

Total current assets

 

496,717

 

16,557

 

 

 

513,274

 

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

1,042,687

 

(16,557

)

2 (b)

 

1,026,130

 

Goodwill and intangible assets, net

 

127,760

 

 

 

 

127,760

 

Other noncurrent assets

 

32,694

 

 

 

 

32,694

 

Total assets

 

$

1,699,858

 

$

 

 

 

$

1,699,858

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

158,040

 

$

 

 

 

$

158,040

 

Current HPT Lease liabilities

 

38,799

 

 

 

 

38,799

 

Other current liabilities

 

176,774

 

 

 

 

176,774

 

Total current liabilities

 

373,613

 

 

 

 

373,613

 

 

 

 

 

 

 

 

 

 

 

Long term debt

 

318,262

 

 

 

 

318,262

 

Noncurrent HPT Lease liabilities

 

388,970

 

 

 

 

388,970

 

Other noncurrent liabilities

 

71,938

 

 

 

 

71,938

 

Total liabilities

 

1,152,783

 

 

 

 

1,152,783

 

 

 

 

 

 

 

 

 

 

 

Total shareholders’ equity

 

547,075

 

 

 

 

547,075

 

Total liabilities and shareholders’ equity

 

$

1,699,858

 

$

 

 

 

$

1,699,858

 

 

3



 

Travel Centers of America LLC

Pro Forma Condensed Consolidated Statements of Income (Unaudited)

Six months ended June 30, 2016

(in thousands, except per share data)

 

 

 

As reported

 

Transaction
adjustments

 

Note

 

Pro forma

 

Revenues:

 

 

 

 

 

 

 

 

 

Fuel

 

$

1,640,739

 

$

 

 

 

$

1,640,739

 

Nonfuel

 

960,170

 

 

 

 

960,170

 

Rent and royalties from franchisees

 

8,606

 

 

 

 

8,606

 

Total revenues

 

2,609,515

 

 

 

 

2,609,515

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold (excluding depreciation):

 

 

 

 

 

 

 

 

 

Fuel

 

1,447,045

 

 

 

 

1,447,045

 

Nonfuel

 

443,680

 

 

 

 

443,680

 

Total cost of goods sold

 

1,890,725

 

 

 

 

1,890,725

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Site level operating

 

478,170

 

 

 

 

478,170

 

Selling, general and administrative

 

66,975

 

 

 

 

66,975

 

Real estate rent

 

128,265

 

2,839

 

2 (c)

 

131,104

 

Depreciation and amortization

 

41,847

 

(316

)

2 (d)

 

41,531

 

Total operating expenses

 

715,257

 

2,523

 

 

 

717,780

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

3,533

 

(2,523

)

 

 

1,010

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

 

2,061

 

 

 

 

2,061

 

Interest expense, net

 

13,561

 

 

 

 

13,561

 

Income from equity investees

 

2,038

 

 

 

 

2,038

 

Loss before income taxes

 

(10,051

)

(2,523

)

 

 

(12,574

)

Benefit for income taxes

 

3,692

 

981

 

2 (e)

 

4,673

 

Net loss

 

(6,359

)

(1,542

)

 

 

(7,901

)

Less net income attributable to common shareholders

 

64

 

 

 

 

64

 

Net loss attributable to common shareholders

 

$

(6,423

)

$

(1,542

)

 

 

$

(7,965

)

 

 

 

 

 

 

 

 

 

 

Net loss per common share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.17

)

$

(0.04

)

 

 

$

(0.21

)

 

4



 

Travel Centers of America LLC

Pro Forma Condensed Consolidated Statements of Income (Unaudited)

Year Ended December 31, 2015

(in thousands, except per share data)

 

 

 

As reported

 

Transaction
adjustments

 

Note

 

Pro forma

 

Revenues:

 

 

 

 

 

 

 

 

 

Fuel

 

$

4,055,448

 

$

 

 

 

$

4,055,448

 

Nonfuel

 

1,782,761

 

 

 

 

1,782,761

 

Rent and royalties from franchisees

 

12,424

 

 

 

 

12,424

 

Total revenues

 

5,850,633

 

 

 

 

5,850,633

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold (excluding depreciation):

 

 

 

 

 

 

 

 

 

Fuel

 

3,640,954

 

 

 

 

3,640,954

 

Nonfuel

 

819,995

 

 

 

 

819,995

 

Total cost of goods sold

 

4,460,949

 

 

 

 

4,460,949

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Site level operating

 

885,646

 

 

 

 

885,646

 

Selling, general and administrative

 

121,767

 

 

 

 

121,767

 

Real estate rent

 

231,591

 

14,966

 

2 (c)

 

246,557

 

Depreciation and amortization

 

72,383

 

(4,843

)

2 (d)

 

67,540

 

Total operating expenses

 

1,311,387

 

10,123

 

 

 

1,321,510

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

78,297

 

(10,123

)

 

 

68,174

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

 

5,048

 

 

 

 

5,048

 

Interest expense, net

 

22,545

 

(1,846

)

2 (c)

 

20,699

 

Income from equity investees

 

4,056

 

 

 

 

4,056

 

Loss on extinguishment of debt

 

10,502

 

(10,502

)

2 (f)

 

 

Income before income taxes

 

44,258

 

2,225

 

 

 

46,483

 

Provision for income taxes

 

16,539

 

866

 

2 (e)

 

17,405

 

Net income

 

27,719

 

1,359

 

 

 

29,078

 

Less net income attributable to common shareholders

 

 

 

 

 

 

Net income attributable to common shareholders

 

$

27,719

 

$

1,359

 

 

 

$

29,078

 

 

 

 

 

 

 

 

 

 

 

Net income per common share attributable to common shareholders:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

0.72

 

$

0.04

 

 

 

$

0.76

 

 

5



 

TravelCenters of America LLC

Notes to Condensed Consolidated Pro Forma Financial Statements (Unaudited)

(In thousands, 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 and Quarterly Reports. 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 remaining property we agreed to sell to HPT after we have completed the construction of the travel center at this property.

 

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 the amendments to the terms of our leases with HPT and our purchase of assets and our sale and lease back of assets on June 9, 2015, June 16, 2015, June 23, 2015, September 23, 2015, March 31, 2016, June 22, 2016, June 30, 2016, and September 30, 2016.

 

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

 

The adjustment to cash totaling $16,557 is comprised of proceeds from the sale to HPT of one travel center completed on September 30, 2016. The pro forma statements of income do not assume investment income related to the net increase in cash from the transaction.

 

(b)                Property and equipment, net

 

The adjustment to property and equipment, net totaling $16,557 reflects the sale of one travel center to HPT completed on September 30, 2016.

 

Pro Forma Statements of Income Adjustments

 

(c)                 Real estate rent

 

The increase in our annual 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 during 2015

 

$

279,382

 

Less: Purchase price of five travel centers

 

(45,042

)

Net proceeds from transaction

 

234,340

 

Rent increase rate

 

8.6

%

Net increase in annual base rent from 2015 transactions

 

20,153

 

 

 

 

 

Proceeds from the sales of three development properties and two travel centers during 2016

 

82,413

 

Rent increase rate

 

8.5

%

Increase in annual base rent from 2016 transactions

 

7,005

 

 

 

 

 

Total net increase in annual base rent

 

$

27,158

 

 

6



 

Adjustments to real estate rent expense consisted of the following:

 

 

 

Six Months Ended
June 30, 2016

 

Year Ended
December 31, 2015

 

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

 

$

3,084

 

$

15,402

 

Add: HPT rent previously classified as interest expense

 

 

1,846

 

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

 

 

704

 

Pro forma increase in real estate rent

 

3,084

 

17,952

 

Less: Amortization of deferred gain

 

(245

)

(4,864

)

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

 

 

1,878

 

Net adjustment to real estate rent expense

 

$

2,839

 

$

14,966

 

 

On June 9, 2015, June 16, 2015, June 23, 2015, September 23, 2015, March 31, 2016, and June 22, 2016 we completed certain of the transactions contemplated by the Transaction Agreement, as described above. Our historical results for the year ended December 31, 2015, and six months ended June 30, 2016, include the effects of those completed transactions from those respective dates.

 

Taking into account the transaction completed on September 30, 2016, our annual run rate rent expense as of June 30, 2016 was as follows:

 

Annual rent payments obligation

 

$

279,159

 

Adjustments:

 

 

 

Less: Amortization of deferred gain

 

(9,915

)

Less: Net amortization of deferred rent credits and accruals

 

(6,845

)

Less: Portion of rent payment recognized as principal and interest payments related to sale leaseback financing obligation

 

(2,138

)

Annual run rate rent expense as of June 30, 2016

 

$

260,261

 

 

The annual run rate rent expense as of June 30, 2016, does not take into account future increases in rent that may result from sales of improvements to HPT and from percentage rent.

 

(d)                Depreciation and amortization

 

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

 

 

 

Six Months Ended
June 30, 2016

 

Year Ended
December 31, 2015

 

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

 

$

(316

)

$

(4,530

)

Adjustment to remove depreciation expense related to properties that qualified for sale leaseback accounting effective June 1, 2015

 

 

(313

)

 

 

$

(316

)

$

(4,843

)

 

(e)                 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%.

 

(f)                  Loss on extinguishment of debt

 

The purchase of five properties on June 9, 2015, that we formerly leased from HPT and subleased to franchisees, resulted in a loss on extinguishment of debt of $10,502 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. This loss on extinguishment of debt is eliminated and not reflected in the pro forma statements of income because it is non-recurring.

 

7