HPT owns the land and buildings of roughly 233 truck stops. They have paid roughly 2.4 billion
that places the avg value on each truck stop of over $10 million
most of these truck stops are out in rural areas where land has minimal value.
If HPT ever liquidated these stops they would never get their money back, and the business of TA itself can't stand alone
dude here is the link. they are the #1 holder, and thats why they technically are at a point where they are not solvent.
When they go BK they wont get dip financing. Bargain time for someone, but they have no hard assets.
Let's get the facts straight. This TA purchase, spin off, and leaseback wasn't something that was forced upon HPT.
HPT didn't have to do anything. They chose to purchase the company, spin off the business portion to their stockholders, and lease back the real estate. After all their in the real estate business and need to maintain their reit status to keep paying out those high dividends we all expect.
I was one of those shareholders who was fortunate enough to sell Travel Centers at $26.00 before this recession occurred that the experts still refuse to recognize.
What does it say about their hotel business that they have to resort to spinning off TA to increase their rental income? The thing to remember is that we are taking a snapshot of TA during a very severe downturn. Somehow we seem to pull out of these recessions pretty quickly though it's been a while since we've seen a real one.
HPT will keep lending TA money to cover the shortfall on their operating cash flow. Everything will look hunky dory for HPT's financial statements maintaining their profit and FFO and showing the loan to TA as an asset, but TA will keep increasing their losses and debt and their book value will keep falling.
HPT is TA's largest holder. Their book is down too and so therefore they will have to borrow to pay their dividend, which is the only reason they exist. I gotta tell you that there is no collateral for DIP financing when they hit bottom. The question is fast becoming how much is HPT worth broken up, and will it be cash positive after putting TA into liquidation. I really hate to be typing this, but I know TA, and there is no salvation. Sorry.