Item 8.01. Other Events.
As previously reported, we entered a Transaction Agreement with TA on June 1, 2015 to, among other things, purchase from TA five travel centers upon the completion of their development at a purchase price equal to their development costs, including the cost of the land, which costs are estimated to be not more than $118 million in the aggregate. We also agreed to leaseback these development properties to TA under our leases with TA. The Transaction Agreement and related transactions are described further in Note 9 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, which descriptions are incorporated herein by reference.
On March 31, 2016, we completed the first of these development property closings pursuant to a development property agreement with TA, or the Development Property Agreement. Pursuant to that agreement, we acquired, for approximately $19.7 million, one travel center and we have leased back that travel center to TA.
In connection with the Development Property Agreement, we and TA entered into a fourth amendment to our TA No. 4 Lease to add the travel center that we acquired from TA on March 31, 2016. Minimum annual rent under our TA No. 4 Lease increased by approximately $1.7 million as a result. As a result of this amendment, minimum annual rent under our TA No. 4 lease is currently approximately $46.2 million.
The
foregoing
descriptions
of
the
Transaction
Agreement,
the
Development
Property
Agreement,
the
TA
No.
4
Lease
and
the
amendments
thereto,
and
the
other
agreements
entered
into
in
connection
with
the
Transaction
Agreement
are
not
complete
and
are
qualified
in
their
entirety
by
reference
to
the
full
text
of
the
Development
Property
Agreement,
the
TA
No.
4
Lease
and
the
amendments
thereto
and
such
other
agreements,
copies
of
which
are
filed
as
Exhibits
10.1
and
10.2
to
this
Current
Report
on
Form
8-K,
Exhibits
10.1,
10.2
and
10.3
to
our
Current
Report
on
Form
8-K
dated
September
23,
2015,
Exhibits
10.1
and
10.2
to
our
Current
Report
on
Form
8-K
dated
June
23,
2015,
Exhibits
10.1
and
10.2
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
TA was our 100% owned subsidiary until it was spun out to our shareholders in 2007. We are TAs largest shareholder owning, as of March 31, 2016, approximately 8.8% of TAs outstanding common shares. Mr. Barry Portnoy, who is one of our Managing Trustees, is a managing director of TA. Mr. Thomas OBrien, the other managing director and the President and Chief Executive Officer of TA, was an executive officer of ours until 2007. One of TAs current independent directors, Mr. Arthur Koumantzelis, was one of our Independent Trustees prior to the spin off of TA. We have significant continuing relationships with TA, including the lease arrangements referred to in this Current Report on Form 8-K. Mr. Barry Portnoy, and his son, Mr. Adam Portnoy, who is our other Managing Trustee, together own a controlling interest in, and are officers and employees of, The RMR Group LLC, or RMR LLC, our manager, and are directors and officers of The RMR Group Inc., or RMR Inc., the managing member of RMR LLC. We own shares of class A common stock of RMR Inc. Each of our executive officers is also an officer of RMR LLC, including Mr. Ethan Bornstein, who is the son-in-law of Mr. Barry Portnoy and the brother-in-law of Mr. Adam Portnoy. Certain executive officers of TA are also officers of RMR LLC. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC provides 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 LLC serve as our officers and as certain officers of those companies. RMR LLC provides both business and property management services to us under a business management agreement and a property management agreement and provides services to other companies, including TA.
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