Hospitality Trust created TA for their benefit and controls their lease rates. It is well documented that TA overpays on rent to Hospitality, which has Board control. Recently, Hospitality lowered rates for TA, which caused TA stock to jump. However, if you look closely, they had a big equity raise months after. The whole event was to temporarily and artificially boost the stock price so that they could sell shares.
Further, there has been serious issues of overpaying management, which is in bed with Hospitality. TA is set up not to benefit shareholders, but to benefit Hospitality Trust. Where am I going wrong? Why do you think that TA appears so cheap at 4x pe yadda yadda? Equity sale is now over and you can expect earnings to drop as rental rates to Hospitality are hiked.
Another factor in share price is that there is a limitation on how many of the TA common shares can be acquired by any one party (or parties acting as a group) triggering a default under the HPT lease agreement. This cap and the lack of board independence will keep the price of the stock in check.
"the acquisition by any person or group of beneficial ownership of 9.8% or more of the voting shares or the power to direct the management and policies of us or any of our subsidiary tenants or guarantors; the sale of a material part of the assets of us or any such tenant or guarantor; or the cessation of certain continuing directors constituting a majority of the board of directors of us or any such tenant or guarantor; in each case without the consent of HPT; "
You know all poison pills are subject to litigation, if enough money is on the table. Just like the internal rent agreements, litigation changed the terms! So do not believe everything you read.
Sentiment: Strong Buy
the cap on share ownership is not uncommon at all. I don't like the RMR arrangement either but is it not any different than News Corp, Facebook, Google who control with A & B shares? The investors who have the most invested, who took the initial risk, can be counted on to protect their own interests. So long as TA can produce profits, keep growing by buying travel centers at fire sale prices, at these price levels I'll continue to sit and wait. Sooner or later the value will be "unlocked" whether by HPT selling, or working with a PE firm. And the good news is that TA wont go out of business...HPT will keep them going no matter what to those rents keep rolling in. And those stock options TA's officers have? They will want TA shares to rise yo enrich themselves no matter what-count on it.
There was a shareholders lawsuit about rents. The lawsuit got setlled and the settlement specified exactly what the rents should be and how they can be raised. So hpt cannot raise rents arbitrarily.
I have to agree with you i do not like the way the conflicts of interest in management. If they hired proper independent management and fired that management co, their share price would probably double.
But to have such low p/e with high growth prospects, with high net cash with low price/book ratio you have to accept some warts. I think the settlement makes it hard for conflicts of interest to do too much damage. I think it is still a decent buy.
By the way, a company with a lot of value and problematic management ... Sounds like a perfect candidate for a takeover doesnt it. And they say americas pe companies are flush wi cash and looking for investments ... Hint hint.
lol...you are a funny short. Need to get you crap straight if you want to build any credibility for lies here. Say things that are not easily verifiable for example.
Sentiment: Strong Buy
Go do some homework and you will realize that the conflict of interest and corporate governance issues indeed exists. Citigroup used to provide research coverage on TA with a strong buy rating and $8 price target before the equity raise. Hospitality also lowered rents on TA before the equity raise so that TA would appear profitable and be able to raise a ton of money.
What happens after the equity raise? Investment bank Citi, which helps companies raise funds, discontinues coverage on TA. Could it be because they know what is going to happen next? Hospitality to raise rents on the entity they created?
By maximizing rents on TA, it makes Hospitality appear extremely profitable and allows them to command a nice multiple. Hospitality is a multi-billion $ conglomerate that has strong investor interests from institutional funds. It makes the most sense in the world to squeeze TA as that will maximize the valuation on Hospitality shares. If I've made this all up, I must have a great sense of imagination.
Do your research to see if Im making all this stuff up!