Hospitality Properties Trust Completes $2.4 Billion Acquisition of Net Lease Service Retail Portfolio
September 20 2019 - 4:10PM
Business Wire
HPT Will Change its Name to “Service
Properties Trust” and Its Common Shares Will be Listed on the
Nasdaq Under the New Ticker “SVC” Beginning on September
25th
Service Properties Trust Will be a $12.6
Billion REIT with a Diversified Tenant Base of 185 Different Brands
in 24 Industries
Hospitality Properties Trust (Nasdaq: HPT) today announced that
it has completed its acquisition of a net lease service retail
portfolio from Spirit MTA REIT (NYSE: SMTA) for $2.4 billion in
cash, excluding transaction costs. In addition to the $2.4 billion
purchase price, HPT paid $82.1 million of prepayment penalties
related to SMTA’s extinguishment of the existing mortgage debt on
the portfolio. In connection with the completion of the
transaction, HPT will change its name to “Service Properties
Trust”. HPT’s common shares will continue to be listed for trading
on the Nasdaq, but under the new ticker symbol “SVC” beginning as
of the opening of trading on September 25, 2019. The company’s new
website will be “www.svcreit.com”.
HPT funded the transaction with net proceeds from its recently
completed $1.7 billion unsecured senior notes offering and by
drawing on its revolving credit facility. HPT terminated its
previously announced commitment for a $2.0 billion unsecured term
loan facility upon completion of its unsecured senior notes
offering.
John Murray, Managing Trustee, President and Chief Executive
Officer of HPT, made the following statement about today’s
announcement:
“The properties acquired from SMTA are
service and necessity-based assets that we are confident can be
asset managed efficiently. The tenants and industries represented
in the acquired portfolio benefit from demand drivers that are
largely resistant to digital disruption, providing us with a steady
contractual income stream while limiting capital expenditure
requirements due to their net lease structure.”
“The name ‘Service Properties Trust’ captures
the essential nature of our tenants’ businesses and represents our
broader portfolio composition of hotels and net lease service and
necessity-based retail properties. We remain focused on generating
value by delivering secure and predictable cash flows. Our
acquisition today diversifies our tenant concentration and we
believe will improve our overall rent coverage.”
BofA Merrill Lynch acted as exclusive financial advisor to HPT
for the SMTA acquisition and Hunton Andrews Kurth LLP served as
legal advisor to HPT for the SMTA acquisition.
Hospitality Properties Trust is a real estate investment trust,
or REIT, which owns a diverse portfolio of hotels and net lease
service and necessity-based retail properties across the United
States and in Puerto Rico and Canada with 185 distinct brands
across 24 industries. HPT's properties are operated under long term
management or lease agreements. HPT is managed by the operating
subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative
asset management company that is headquartered in Newton,
Massachusetts.
WARNING REGARDING FORWARD-LOOKING
STATEMENTS
This press release 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 HPT uses words such as "believe", "expect",
"anticipate", "intend", "plan", "estimate", "will", "may" and
negatives or derivatives of these or similar expressions, HPT is
making forward-looking statements. These forward-looking statements
are based upon HPT’s 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 HPT's forward-looking statements. Forward-looking
statements involve known and unknown risks, uncertainties and other
factors, some of which are beyond HPT’s control. For example:
- HPT expects that the change in ticker symbol to “SVC” for the
listing of its common shares on Nasdaq will begin on September 25,
2019. However, effecting this change is subject to conditions and
will depend on actions of third parties. As a result, this change
could be delayed.
- Statements in the press release about the repayment of debt
that secured the portfolio of properties HPT acquired from SMTA and
HPT’s termination of its commitment for a $2.0 billion unsecured
term loan facility may imply that HPT will maintain or further
reduce its leverage. However, HPT may need or determine it
beneficial to increase its leverage in the future to pursue
business opportunities or for other reasons, including if it does
not realize its target proceeds from its previously announced asset
dispositions plan.
- Mr. Murray states that the properties HPT acquired from SMTA
are service and necessity-based assets that HPT is confident can be
asset managed efficiently. However, the asset management of those
properties are subject to risks, some of which are beyond HPT’s
control. As a result, these properties may not be asset managed
efficiently.
- Mr. Murray states that the tenants and industries represented
in the portfolio of properties that HPT acquired from SMTA benefit
from demand drivers that are largely resistant to digital
disruption and that they provide HPT with a steady contractual
income stream while limiting capital expenditure requirements due
to their net lease structure. However, the businesses of the
tenants and industries represented in this portfolio are subject to
risk and technological changes that may exist or develop could
disrupt those businesses. As a result, the tenants and industries
represented by this portfolio of properties may experience
disruptions to their businesses for these or other reasons and they
may not provide HPT with a steady contractual income stream or be
able to fund needed or appropriate capital expenditures to these
properties.
- Mr. Murray states that the portfolio of properties HPT acquired
from SMTA will improve HPT’s overall rent coverage. However, as
noted above, the businesses of the tenants and industries
represented in this portfolio are subject to risk. If the tenants
for these properties experience declining operating results, HPT’s
overall rent coverage may not improve and it could decline.
- Mr. Murray states that HPT remains focused on generating value
by delivering secure and predictable cash flows. This may imply
that HPT will successfully execute on this focus and that it will
realize secure and predictable cash flows. However, HPT’s and its
managers’ and tenants’ businesses are subject to risks. As a
result, HPT may not realize secure and predictable cash flows in
future periods and its cash flows may decline.
The information contained in HPT’s filings with the SEC,
including under the caption “Risk Factors” in HPT’s periodic
reports, or incorporated therein, identifies other important
factors that could cause differences from HPT’s forward-looking
statements.
HPT’s filings with the SEC are available on the SEC’s website at
www.sec.gov.
You should not place undue reliance upon forward-looking
statements.
Except as required by law, HPT does not intend to update or
change any forward-looking statements as a result of new
information, future events or otherwise.
A Maryland Real Estate Investment Trust with
transferable shares of beneficial interest listed on the Nasdaq. No
shareholder, Trustee or officer is personally liable for any act or
obligation of the Trust.
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version on businesswire.com: https://www.businesswire.com/news/home/20190920005479/en/
Kristin Brown, Director, Investor Relations (617) 796-8232
www.hptreit.com
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