Dealmaker: Hospitality Properties Trust to Acquire $2.4B Net Lease Portfolio

Hospitality Properties Trust, Newton, Mass. agreed to buy a net lease portfolio from Spirit Master Trust, Dallas, for $2.4 billion in cash.

The portfolio included 774 retail properties totaling 12 million rentable square feet net leased to tenants in 22 industries. The properties yielded $172 million in annual cash rent as of March 31.

In addition to the $2.4 billion purchase price, HPT agreed to pay the prepayment premiums to pay off existing mortgage debt on the portfolio, which it estimated at $72 million. HPT said it intends to sell $500 million of the acquired assets and $300 million of its existing hotel assets following closing to reduce its debt level.

BofA Securities, Citigroup, Morgan Stanley Senior Funding, RBC Capital Markets and Wells Fargo Securities LLC arranged an up to $2 billion unsecured loan facility for HPT. The REIT can use this term loan, its existing revolving credit facility, proceeds from selling other assets and/or issue new unsecured notes to finance the transaction.

BofA Merrill Lynch acted as HPT’s exclusive financial advisor; Morrison & Foerster Corporate Partner David Slotkin was BofA Merrill Lynch’s counsel. Hunton Andrews Kurth LLP served as HPT’s legal advisor in the transaction.

Barclays acted as SMTA’s financial advisor and Fried, Frank, Harris, Shriver & Jacobson LLP provided its legal services.

Hospitality Properties Trust President and CEO John Murray said the new portfolio will complement HPT’s existing lodging and net lease travel center assets, giving the REIT greater scale and more diversity in tenant base, property type and geography.

Both REITs said they expect the deal to close in the third quarter.