By Colin Kellaher
Shares of Service Properties Trust jumped nearly 25% on Thursday, as the real-estate investment trust is poised to reap several benefits from the acquisition of its biggest tenant.
The Newton, Mass., company said it expects to receive $379.3 million in cash when U.K. oil giant BP PLC completes its planned $1.3 billion acquisition of TravelCenters of America Inc.
Service Properties, which leases 179 properties to TravelCenters, holds a 7.8% stake in the travel-center operator valued at $101.9 million based on the $86 a share BP has agreed to pay for the company.
Service Properties also owns certain tradenames and trademarks associated with TA's business, for which BP will pay $89.4 million, and the company would also receive $188 million of prepaid rent under amended leases with BP.
The company said it expects the amended leases with BP will boost annual rents by about $20.5 million, or 12 cents a share per year, over their initial 10-year terms, adding that BP will become its largest tenant, accounting for 29% of its gross assets.
Service Properties shares were recently changing hands at $10.68, up around 24%, after hitting a 52-week high of $11.07 earlier in the session.
Write to Colin Kellaher at colin.kellaher@wsj.com
(END) Dow Jones Newswires
February 16, 2023 12:01 ET (17:01 GMT)
Copyright (c) 2023 Dow Jones & Company, Inc.
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