Hospitality Properties (HPT) announces $2.4 billion net-lease acquisition.
Hospitality Properties Trust (HPT) announced today that has entered into an agreement to purchase $2.4 billion of net-lease properties from Spirit MTA REIT. The acquisition portfolio includes 774 retail properties in 22 industries with a 98% occupancy rate and weighted average lease term of 8.6 years. The transaction is expected to close in the third quarter of 2019.
HPT expects to finance the Spirit portfolio with proceeds from a $2.0 billion unsecured term loan facility and draws under HPT's existing credit agreement. Subsequent to closing, HPT expects to sell $500 million of acquired assets and $300 million of hotel properties to reduce Debt/EBITDA ratios to approximately 6x, and term out a portion of the remaining debt through bond offerings. The company noted that it does not expect to issue equity in this transaction.
The acquisition of the Spirit MTA portfolio represents a strategic move by HPT to reduce its historical concentration in hotel properties (71% of base rental income) and highway travel centers (29%), and provide avenues for additional growth. As stated by management: "In the future, we expect to invest in additional service and necessity-based retail properties on a triple net basis, preferable in portfolios." A link to the company's presentation filed with the SEC is included here.