9-209-030

REV: JULY 30, 2010

ROBIN GREENWOOD

DANIEL GOLDBERG

JAMES QUINN

TraavelCen
nters off Amerrica
Saara Alpern, ann analyst witth Trifthorn Capital,
C staredd out the win ndow of her office overlooking
Centrral Park. She had on her desk
d a well-tthumbed prin ntout of the final
f registrattion documen nt for
sharess of TravelCeenters of Ameerica (TA), a national opeerator of full-sservice travell centers (hig
ghway
truck stops) recenttly spun off from
f Hospitaality Propertiees Trust (HPT y traded real estate
T), a publicly
investtment trust (R
REIT). It wass February 1, 2007 and sh hares of TA had
h begun pu ublicly tradingg that
morniing. She had read about numerous
n oth
her spin-offs th
hat had proveen to be lucraative investmeents if
purchhased soon affter they began trading. She
S wondered d, Would thee dynamics su urrounding TAT be
any different?
d As she turned back
b to her Blloomberg mo onitor, she wasn’t sure wh hat to make ofo the
$29.000 price for TA
A shares flash
hing on the screen. Nearly y 900,000 shaares had tradeed hands thatt day,
aboutt 10% of sharees outstanding.

Leess than six months earliier, on Septeember 18, 2006, HPT had d announced d an agreemeent to
purchhase TA for $1 1.9 billion. Ass part of this transaction, HPT
H would retain
r all of TA’s real estatte and
transffer its operatiing business tot a newly fo ormed subsiddiary (New-TA A) that would d be distributted to
HPT’ss existing shareholders via a spin-off transaction. New-TA wo ould simultan neously enterr into
long-tterm lease ag greements wiith HPT for the t TA real estate
e retaineed by HPT. OnO the date of o the
annouuncement, HP PT shares clossed down 0.78% while the S&P 500 finisshed up 0.14% %.

Hosp
pitality Prroperties Trust
T
Prior to the accquisition of TA, HPT ow wned 310 hotels, located throughout the United States,S
Puerto Rico, and Canada
C and operated by third partiess under long--term management agreem ments
underr the Marriott, Hyatt, Carllson, Radisso
on, InterContiinental, and Homestead
H V
Village brandss. The
manaagement of HP PT believed that
t the rental income from
m TA’s sites would
w significantly diversify its
revennue stream by y providing exposure to a historicallly recession-rresistant induustry that did not
w the cyclicall patterns of the hotel in
follow ndustry. (For HPT’s historrical financiaal information n, see
Exhibbit 1.)

A’s operating business wass spun off forr federal incom

TA me tax consid
derations. To maintain its status
s
as an REIT for tax
x purposes, a large majoritty of HPT’s gross
g income had to be geenerated fromm real-

______________________
__________________________________________________________________________________________________

Professoor Robin Greenwoo od, Daniel Goldbeerg (MBA 2008), annd Research Associiate James Quinn preparedp this case. This case was deeveloped
from puublished sources. Sara Alpern and Trifthorn Capital aree fictional. HBS casses are developed solely
s as the basis for class discussion
n. Cases
are not intended
i to serve as
a endorsements, soources of primary data,
d or illustration
ns of effective or ineeffective managemeent.

Copyrigght © 2008, 2010 Prresident and Fellow

ws of Harvard Colleege. To order copiies or request perm
mission to reproducce materials, call 1-8800-545-
7685, wrrite Harvard Businness School Publishhing, Boston, MA 02163, or go to ww ww.hbsp.harvard.eedu/educators. Th his publication may y not be
digitized
d, photocopied, or otherwise reproduuced, posted, or tran
nsmitted, without the
t permission of Harvard
H Business School.
S

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 209-030 TravelCenters of America

estate rents or mortgage interest.1 To meet these requirements, HPT was forced to divest itself of TA’s
operating business.

HPT expected to finance the $1.9 billion purchase of TA by issuing new debt (50%) and new
equity (50%). Based on HPT’s recent stock price (see Exhibit 2), the company would need to issue
nearly 21 million shares to raise the required $1.0 billion of new equity.2 HPT estimated that it could
do so at a 6.5% interest rate. The long-term treasury yield in February 2007 was 5.0%. HPT expected
to generate an annual average of $170.7 million in rental income from New-TA and incur $8.4 million
of incremental administrative expenses going forward.

REITs were generally purchased by investors for their income-generating characteristics. At the
time of the spin-off, HPT was paying $0.74 per share in quarterly dividends, a 6.4% annualized yield
based on its opening stock price of $46.49 on February 1, 2007. REITs were typically valued based on
a multiple of their “funds from operations” or “FFO,” a real estate industry term that closely
resembled levered operating cash flow in a traditional business. According to analyst estimates
(excluding the impact of the TA transaction), HPT was expected to generate $307.7 million in FFO, or
$4.14 in FFO per share, in 2006. It was therefore trading at slightly over 11x FFO, while a comparable set
of hospitality REITs had recently been trading at a median multiple of 11.9x 2006 FFO (see Exhibit 3).

TravelCenters of America3
TA operated full-service travel centers, primarily along U.S. interstate highways. Its network
included 163 travel centers in 40 states and one in Ontario. Customers included long-haul trucking
fleets and their drivers, independent truck drivers, and motorists. Many of TA’s travel centers had
originally been developed more than 25 years ago when prime real estate locations along interstate
highways had been more readily available. TA’s nationwide network gave long-haul trucking fleets
an opportunity to reduce the number of their suppliers by routing their trucks within the TA network
from coast to coast.

TA offered a broad range of products and services, including diesel fuel and gasoline, truck repair
and maintenance services, full-service restaurants, more than 20 brands of quick-service restaurants,
travel and convenience stores, and other driver amenities. The typical TA site included over 20 acres
of land with parking for approximately 170 tractor-trailers and 100 cars, multiple diesel and gasoline
fueling points, an approximately 150-seat, full-service restaurant, one to three quick-service
restaurants operated under various well-recognized brands, and a truck repair facility and parts
store.

In the 12 months ended September 30, 2006, TA generated $4.8 billion of revenues and $664
million of gross profit. Eighty-two percent of its revenues came from the sale of nearly 1.8 billion
gallons of fuel, but these sales carried low margins and accounted for only 23% of total gross profit.
On the other hand, non-fuel products and services accounted only 18% of revenues but, due to
relatively higher gross margins, generated 77% of the company’s gross profits. TA spent

1 Real Estate Investment Trusts were exempt from paying corporate income taxes under Section 856 of the Internal Revenue
Code (IRC) so long as they met certain income tests and annual distribution requirements.
2 HPT had already issued 13.8 million of the required shares at a price of $47.51 in January 2007. Thus, its total share count
immediately prior to the spin-off was 88,084,251 and its share count immediately prior to the TravelCenters acquisition
announcement had been 74,284,251.
3 Adapted from the TravelCenters of America LLC 10-K filed March 20, 2007.

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 TravelCenters of America 209-030

approximately $70 million in capital expenditures annually on the upkeep and improvement of its
facilities.

The Spin-off Transaction

Simultaneously with the closing of its acquisition of TA, HPT transferred TA’s operating business
to New-TA, which was distributed to HPT’s shareholders via a spin-off transaction on the morning of
February 1, 2007. Shareholders of HPT received one share of New-TA for every ten shares of HPT
they owned. At the time of the spin-off, there were approximately 88,084,251 shares of HPT
outstanding. (See Exhibit 4 for a list of HPT shareholders as of December 31, 2006.)

HPT retained substantially all of TA’s real estate and entered into a 16-year lease with New-TA for
this real estate. The annual cash rent expense started at $153.5 million and increased each year. On
average, over the 16-year life of the lease, the minimum annual rent expense for New-TA would be
$170.7 million. However, as part of the lease terms, HPT would fund up to $125 million of New-TA’s
capital expenditures over the next five years. (See Exhibits 5a and 5b for a summary of the material
terms of the lease and a schedule of minimum rent payments.)

In addition, New-TA entered into a management and shared services agreement with REIT
Management LLC, an affiliate of HPT, which required New-TA to make annual payments equal to
0.6% of the sum of gross profits from fuel sales and revenues from non-fuel sales. In the 12 months
ended September 30, 2006, this would have amounted to a payment of $6.1 million to REIT
Management LCC. (See Exhibit 6 for pro forma income statements for TA following the spin-off, as
filed with the SEC.)

Finally, in conjunction with the spin-off, HPT placed $213 million of cash on New-TA’s balance
sheet. New-TA had no debt outstanding after the spin-off. (See Exhibit 7 for a pro forma balance
sheet for TA following the spin-off.)

Valuation of New-TA
HPT’s $1.9 billion purchase price implied an EV/EBITDA of approximately 10x estimated
EBITDA for TA on a stand-alone basis. However, comparable businesses (convenience stores that
sold gasoline) were currently trading at approximately 8x forward EBITDA estimates (see Exhibit 8).
A number of questions were on Alpern’s mind. Had HPT overpaid for TA? Were EV/EBITDA
multiples an appropriate method to value these businesses? How should one adjust the valuation for
the fact that TA had previously owned substantially all of its real estate, but New-TA would lease
substantially all of its real estate? (See Exhibit 9 for five-year financial projections, including pre- and
post-acquisition data.)

Alpern considered two methods of valuing New-TA: (i) a traditional discounted-cash-flow

valuation and (ii) a separate valuation of each of the components of the enterprise (i.e., the cash flow
prior to rental payments, the rental payments, the management fee payments, the capital
expenditures reimbursed by HPT, and the $213 million of excess cash on the balance sheet).

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 209-030 TravelCenters of America

Risk Factors
Alpern normally glossed over the “Risk Factors” section of offering memorandums as she
believed it contained mostly boilerplate legal statements and did not offer an unbiased assessment of
subtle business and investment risks. This time, however, a few statements regarding conflicts of
interest caught her attention (see Exhibit 10). She wasn’t sure how to evaluate these with respect to
the deal.

Decision
In addition to coming up with a reasonable per share valuation of New-TA, Alpern wanted to
make sure she understood exactly why HPT was entering into this transaction and what it had to
gain. She suspected that this transaction would be accretive to HPT shareholders, but if so, how much
value would it create? In addition to any value created from earnings accretion, HPT shareholders
received shares of TA that were currently worth $2.90 for every share of HPT they held. She
wondered: Was all this value being created out of thin air?

She also wanted to better understand the rationale for certain aspects of the transaction. For
instance, why did HPT put $213 million of cash on TA’s balance sheet in conjunction with the spin-
off? Were HPT’s incentives to allow TA to thrive, or merely to survive?

Finally, Alpern wondered how HPT shareholders—most of whom were institutional real estate
funds or fixed-income investors—were reacting now that they had received shares of New-TA.

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 TravelCenters of America 209-030

Exhibit 1 Hospitality Properties Trust—Historic Financials

Year Ended December 31

(In thousands, except per-share data) 2006 2005 2004

Income Statement Data:

Revenues:
Hotel operating revenues $879,324 682,541 498,122
Rental income 120,649 114,332 112,325
FF&E reserve income 20,299 19,767 18,147
Interest income 2,674 1,373 627
Gain on lease terminations — — —
Total revenues $1,022,946 818,013 629,221
Expenses:
Hotel operating expenses 618,334 476,858 333,818
Interest 81,451 65,263 50,393
Depreciation and amortization 141,198 127,242 110,333
General and administrative 25,090 22,514 18,659
Loss on early extinguishment of debt — — —
Loss on asset impairment — 7,300 —
Total expenses $866,073 699,177 513,203
Income before income taxes $156,873 118,836 116,018
Income tax expense (372) (57) —
Income before gain on sale of real estate
and discontinued operations 156,501 118,779 116,018
Gain on sale of real estate — — 203
Income from continuing operations $156,501 118,779 116,221

Balance Sheet Data (as of December 31):

Real estate properties, at cost $4,018,781 3,606,404 3,161,259
Real estate properties, net $3,316,268 2,997,605 2,608,019

Source: Hospitality Properties Trust 2006 Annual Report.

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 209-030 -6-

Exhibit 2 Scaled Returns: HPT Stock, REIT Index, and S&P 500

1.60

1.40 REIT Index

HPT
1.20
S&P 500
1.00

Return Index
0.80

0.60

0.40

Jul-06

Jan-06
Jan-07

Jun-06
Oct-06

Apr-06

Feb-06
Sep-06
Dec-06

Aug-06
Nov-06

Mar-06
May-06
Source: Casewriters. HPT Stock Returns from Datastream. REIT Index from REIT.com, “Monthly Index Values & Returns, 1972–2008,” http://www.reit.com/tabid/208/Default.aspx (accessed August
1, 2008). S&P 500 data from Yahoo Finance, http://finance.yahoo.com/ (accessed August 1, 2008).

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 TravelCenters of America 209-030

Exhibit 3 Lodging REITs: Comparable Company Analysis

FFO/Share
FFO/Share Growth P/FFO PEG (FFO)
Company Name Ticker 2005 2006E 2007E 2006E 2007E 2006E 2007E 2006E 2007E

LaSalle Hotel Properties LHO $2.25 $2.82 $3.39 25.3% 20.2% 16.8 14.0 66% 69%
Host Hotels & Resorts HST $1.15 $1.53 $1.87 33.0% 22.2% 16.3 13.4 49% 60%
DiamondRock Hospitality DRH $0.52 $1.30 $1.56 150.0% 20.0% 14.0 11.7 9% 58%
Highland Hospitality HIH $0.75 $1.09 $1.34 45.3% 22.9% 13.8 11.2 30% 49%
Strategic Hotels & Resorts BEE $1.37 $1.48 $1.84 8.0% 24.3% 13.9 11.2 173% 46%
Winston Hotels WXH $0.59 $1.09 $1.24 84.7% 13.8% 12.4 10.9 15% 79%
Hospitality Properties HPT $3.77 $4.13 $4.46 9.5% 8.0% 11.4 10.6 120% 132%
Equity Inns ENN $1.00 $1.35 $1.56 35% 15.6% 12.0 10.3 34% 67%
Eagle Hospitality Properties EHP $0.76 $0.86 $0.95 13.2% 10.5% 10.8 9.7 82% 93%
FelCor Lodging Trust FCH ($3.07) $1.96 $2.25 n/a 14.8% 10.9 9.5 n/a 64%
Hersha Hospitality Trust HT $0.72 $1.00 $1.16 38.9% 16.0% 10.8 9.3 28% 58%
Innkeepers USA Trust KPA $1.05 $1.32 $1.72 25.7% 30.3% 11.9 9.1 46% 30%
Ashford Hospitality Trust AHT $0.96 $1.11 $1.32 15.6% 18.9% 10.8 9.1 69% 48%
Sunstore Hotel Investors SHO $2.03 $2.56 $3.04 26.1% 18.8% 10.7 9.0 41% 48%
Mean $0.99 $1.69 $1.98 39.3% 18.3% 12.6 10.6 59% 64%
Median $0.98 $1.34 $1.64 26.1% 18.8% 11.9 10.5 46% 59%

Source: RBC Capital Markets, January 22, 2007.

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 209-030 TravelCenters of America

Exhibit 4 Hospitality Properties Trust—Shareholders as of December 31, 2006

% of Total TA Shares to
Holder HPT Shares Shares be Received

1 Barclays Global Investors 5,824,948 6.8% 582,495

2 Capital Research and Management Company 5,330,000 6.2% 533,000
3 The Vanguard Group, Inc. 4,610,586 5.3% 461,059
4 Morgan Stanley & Co. International Limited
Investment Arm 3,546,964 4.1% 354,696
5 Cohen & Steers Capital Management, Inc. 3,440,734 4.0% 344,073
6 J.P. Morgan Asset Management 2,535,633 2.9% 253,563
7 State Street Global Advisors, Inc. 2,198,853 2.5% 219,885
8 ING Clarion Real Estate Securities, L.P. 1,408,900 1.6% 140,890
9 LSV Asset Management 1,197,200 1.4% 119,720
10 Putnam Investment Management, LLC 1,141,513 1.3% 114,151
11 Nomura Asset Management Co., Ltd. 1,065,053 1.2% 106,505
12 Federated Investors Inc. 1,046,315 1.2% 104,632
13 Morgan Stanley Investment Management Inc. 977,712 1.1% 97,771
14 Franklin Portfolio Associates, LLC 823,700 1.0% 82,370
15 Morgan Stanley Investment
Management Limited 773,555 0.9% 77,356
16 RREEF America LLC 708,400 0.8% 70,840
17 Teacher Retirement System of Texas 606,200 0.7% 60,620
18 AIM Management Group Inc. 601,600 0.7% 60,160
19 Dimensional Fund Advisors LP 585,500 0.7% 58,550
20 Neuberger Berman, LLC 542,524 0.6% 54,252
21 College Retirement Equities Fund 542,372 0.6% 54,237
22 Gateway Investment Advisers, L.P. 515,187 0.6% 51,519
23 AEW Capital Management, LP 495,600 0.6% 49,560
24 Northern Trust Investments, N.A. 472,278 0.5% 47,228
25 MFC Global Investment Management 465,917 0.5% 46,592
26 Citadel Investment Group, LLC 418,788 0.5% 41,879
27 BNY Mellon Wealth Management 412,305 0.5% 41,231
28 Two Sigma Investments, LLC 401,300 0.5% 40,130
29 Barclays Global Investors Limited 383,399 0.4% 38,340
30 New York State Common Retirement Fund 374,100 0.4% 37,410
31 Goldman Sachs Asset Management, L.P. 339,016 0.4% 33,902
32 The Boston Company Asset Management, LLC 330,738 0.4% 33,074
33 Quantitative Management Associates LLC 328,743 0.4% 32,874
34 Martingale Asset Management LP 324,783 0.4% 32,478
35 Westwood Management Corp. 321,885 0.4% 32,189
Top 35 45,092,301 52.10% 4,509,230
Top 50 48,743,162 56.5% 4,874,316
51–100 6,713,049 7.8% 671,305
101–200 3,627,156 4.2% 362,716
All Other 27,200,884 31.5% 2,720,088
Total 86,284,251 100.0% 8,628,425

Source: Thomson Financial.

Note: On December 2, 2006, HPT sold 12 million shares of common stock (in part, to fund the TravelCenters acquisition).
Total shares outstanding after the transaction was 86,284,251. Underwriters were expected to exercise their over-
allotments.

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 TravelCenters of America 209-030

Exhibit 5a Lease Terms: New-TA and HPT

Operating Costs—The lease is expected to be a "triple net" lease, which requires New-TA to pay all costs
incurred in the operation of the leased travel centers, including personnel, utilities, inventories, service to
customers, insurance, real estate and personal property taxes and ground lease payments, if any.

Improvements—HPT expects to agree to provide up to $25 million of funding annually for the first five years of
the lease for certain specified improvements to the leased travel centers. This funding is expected to be
cumulative, meaning if some portion of the $25 million is not spent in one year it may be drawn by New-TA
from us in subsequent years until December 31, 2015. All improvements are expected to be owned by us. There is
not expected to be any adjustment in minimum rent as HPT funds these amounts.

Maintenance and Alterations—Except for HPT’s commitment to fund up to $125 million as described above,
New-TA is expected to be required to maintain, at its expense, the leased travel centers in good order and repair,
including structural and non-structural components. New-TA may request that HPT fund amounts for
renovations, improvements and equipment at the leased travel centers, in addition to the $125 million described
above, in return for minimum annual rent increases according to a formula; generally, the amount funded times
the greater of (i) 8.5% or (ii) a benchmark U.S. Treasury interest rate plus 3.5%.

Percentage Rent—Starting in 2012, the lease will require New-TA to pay additional rent with respect to each
lease year in an amount equal to three percent (3%) of increases in non-fuel gross revenues and three tenths of
one percent (0.3%) of increases in gross fuel revenues at each leased travel center over 2011 gross revenue
amounts. Percentage rent attributable to fuel sales is expected to be subject to a maximum each year calculated
by reference to changes in the consumer price index.

Term—The term of the lease is expected to expire on December 31, 2022.

Exhibit 5b Schedule of Minimum Lease Payments

Minimum Rent
Calendar Year ($000s)

2007 $153,500
2008 $157,000
2009 $161,000
2010 $165,000
2011 $170,000
2012 $175,000
2013 $175,000
2014 $175,000
2015 $175,000
2016 $175,000
2017 $175,000
2018 $175,000
2019 $175,000
2020 $175,000
2021 $175,000
2022 $175,000
Average Straight Line $170,719

Source: Company filings and casewriter analysis.

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 209-030 -10-

Exhibit 6 Pro Forma Summary Income Statement for New-TA (in 1,000 USD)

Nine Months Ended 12 Months Ended

September 30 September 30
2003 2004 2005 2005 2006 2006

Sales
Fuel 1,513,648 1,959,239 3,231,853 2,294,946 3,010,251 3,947,158
Non-fuel 649,502 707,958 833,500 627,527 660,674 866,647
Rent and Royalties 13,080 10,667 9,943 7,502 7,543 9,984
Total Revenues 2,176,230 2,677,864 4,075,296 2,929,975 3,678,468 4,823,789

Cost of Goods Sold

Fuel 1,408,728 1,857,160 3,102,513 2,206,346 2,899,156 3,795,323
Non-fuel 266,038 289,867 348,267 259,486 275,071 363,852

Operating Expenses
Operating Expenses 342,045 362,169 420,367 308,418 325,062 437,011
Selling, General and Administrativea 40,543 43,180 53,051 32,702 48,532 68,881
Depreciation and Amortization 60,375 58,750 64,981 46,078 52,124 71,027
Merger and Refinancing Expenses 0 0 0 0 4,773 4,773
Gain on Asset Sales (1,476) (2,547) (207) (208) (579) (578)
Income from Operations 59,977 69,285 86,324 77,153 74,329 83,500

Memo
Income from Operations 59,977 69,285 86,324 77,153 74,329 83,500
Plus: Depreciation and Amortization 60,375 58,750 64,981 46,078 52,124 71,027
Plus: Merger and Refinancing Expenses 0 0 0 0 4,773 4,773
Plus: SFAS-123 Stock Compensation Expense 0 65 8,921 53 11,946 20,814
Less: Reversal of Gain on Asset Sales (1,476) (2,547) (207) (208) (579) (578)
Historical EBITDA 118,876 125,553 160,019 123,076 142,593 179,536
Less: Pro Forma Management Fee to HPTb (5,777) (4,297) (4,631) (6,111)
Less: Pro Forma Straight-Line Lease Rent to HPTc (170,719) (128,039) (128,039) (170,719)
Pro Forma EBITDA (16,477) (9,260) 9,923 2,706

Source: Hospitality Properties Trust 2006 Annual Report.

aIncludes SFAS-123 stock option compensation expense.

bAs part of the spin-off, New-TA entered into a management agreement with REIT Management LLC (an affiliate of HPT) which required New-TA to pay REIT Management 0.6% of non-fuel revenues
plus 0.6% of gross profits on fuel revenues.
cBased on the average lease expense over the 16-year lease with HPT.

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 TravelCenters of America 209-030

Exhibit 7 Pro Forma Summary Balance Sheet for New-TA (in 1,000 USD)

Pro Formaa

Current Assets
Cash $213,205
Accounts Receivable, net 89,459
Inventories 93,013
Other Current Assets 8,991
Total Current Assets $404,668

Property and Equipment, net 207,734

Goodwill 34,133
Intangible assets, net 23,779
Other Non-current assets, net 8,953
Total Assets $679,267

Current Liabilities
Accounts Payable $124,729
Other Accrued Liabilities 79,939
Total Current Liabilities $204,668

Capital Lease Obligationsb 105,252

Other Non-current Liabilities 18,415
Total Liabilities $328,335

Shareholders' Equity 350,932

Total Liabilities and Shareholders' Equity $679,267

Source: Hospitality Properties Trust 2006 Annual Report.

aPro forma adjustments based on latest available balance sheet (September 30, 2006).

bUnder Statement of Financial Accounting Standards No. 98, which addresses sale leaseback transactions involving real estate,
several of the leases between HPT and TA do not qualify as operating leases and must be recorded on the balance sheet as a
capital lease liability. However, the annual cash payments owed to HPT for all leases are fully accounted for in the lease
payment schedule in Exhibit 5b.

11

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 209-030 -12-

Exhibit 8 Comparable Firms

Market Net Enterprise EBITDA EV/EBITDA Equity Asset

Ticker Name Cap. Debt Value LTM 2007E 2008E LTM 2007E 2008E Beta Beta

CASY Casey's General Stores $1,276 176.6 $1,452 153.0 169.0 206.3 9.5x 8.6x 7.0x 1.56x 1.40x

PTRY Pantry $1,131 750.4 $1,881 232.3 264.1 314.7 8.1x 7.1x 6.0x 1.33x 0.90x

SUSS Susser Holdings Corp. $283 75.7 $358 53.1 – – 6.7x -- --

Mean 8.1x 7.9x 6.5x 1.45x 1.15x

Casey’s General Stores—Operated convenience stores under the name “Casey’s General Store” in nine Midwest states, primarily Iowa, Missouri, and Illinois. All stores offered
gasoline for sale on a self-service basis. On October 31, 2006, there were 1,456 stores in operation, of which 1,438 were operated by the Company and 18 were operated by
franchisees. Casey’s owned the real property at substantially all its stores.

Pantry—A leading convenience store chain in the southeastern United States. As of September 28, 2006, there were 1,493 stores in 11 states under a number of banners, including
Kangaroo Express, a primary operating banner. Stores offered a broad selection of merchandise, gasoline, and ancillary products and services. Owned the real property at 368
stores and leased the real property at 1,125 stores. Lease rent expense in fiscal year ended September 30, 2006 was $59.8 million.

Susser Holdings Corp.—One of the largest operators of convenience stores in Texas (based on store count) and the largest non-refining motor-fuel distributor in Texas (by gallons).
Operations included retail convenience stores and wholesale motor-fuel distribution. As of December 31, 2006, operated 325 convenience stores in Texas and Oklahoma, offering
merchandise, food service, motor fuel, and other services. Owned the real property at 246 stores and leased the real property at 79 stores. Lease rent expense in the fiscal year
ended December 31, 2006 was $22.6 million.

Source: Adapted by casewriter using Lehman Brothers estimates and Bloomberg data as of January 26, 2007.

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 TravelCenters of America 209-030

Exhibit 9 Five-year Financial Projections, Including Pre- and Post-acquisition Data

2005 2006 2007E 2008E 2009E 2010E 2011E

Sales
Fuel 3,231,853 3,905,128 4,061,333 4,223,786 4,392,738 4,568,447 4,751,185
Growth % 65.0% 20.8% 4.0% 4.0% 4.0% 4.0% 4.0%
Non-fuel 833,500 868,380 903,115 939,240 976,809 1,015,882 1,056,517
Growth % 17.7% 4.2% 4.0% 4.0% 4.0% 4.0% 4.0%
Franchise Royalties 9,943 10,006 10,406 10,822 11,255 11,706 12,174
Growth % (6.8%) 0.6% 4.0% 4.0% 4.0% 4.0% 4.0%
Total Revenues 4,075,296 4,783,514 4,974,855 5,173,849 5,380,803 5,596,035 5,819,876

Gross Profit
Fuel 129,340 143,557 153,942 160,100 166,504 173,164 180,091
Gross Profit / Gallon $0.073 $0.078 $0.080 $0.080 $0.080 $0.080 $0.080
Gallons 1,771,406 1,850,266 1,924,277 2,001,248 2,081,298 2,164,550 2,251,131
Growth % 0 0 0 0 0 0
Non-fuel 485,233 506,507 523,807 544,759 566,549 589,211 612,780
Margin % 58.2% 58.3% 58.0% 58.0% 58.0% 58.0% 58.0%
Franchise Royalties 9,943 10,006 10,406 10,822 11,255 11,706 12,174
Total Gross Profit 624,516 660,070 688,155 715,681 744,309 774,081 805,044
Margin% 15.3% 13.8% 13.8% 13.8% 13.8% 13.8% 13.8%

Operating Expenses
Operating Expenses 420,367 426,879 443,954 461,712 480,181 499,388 519,364
Growth % 16.1% 1.5% 4.0% 4.0% 4.0% 4.0% 4.0%
SG&A (ex-SFAS-123) 44,130 49,417 51,394 53,449 55,587 57,811 60,123
Growth % 2.4% 12.0% 4.0% 4.0% 4.0% 4.0% 4.0%
Pre- and Post-acquisition Data
Pre-acquisition Depreciation 64,981 71,856 70,000 70,000 70,000 70,000 70,000
Post-acquisition Depreciation --- --- 18,029 18,029 18,029 18,029 18,029
Post-acquisition Mgmt. Fee 5,777 6,072 6,342 6,596 6,860 7,134 7,420
Post-acquisition Cash Renta --- --- 153,500 157,000 161,000 165,000 170,000

Pre-acquisition EBIT 95,038 111,918 122,807 130,520 138,540 146,882 155,557

Post-acquisition EBIT 0 0 14,936 18,895 22,652 26,719 30,109

Source: Casewriter analysis.

aPost-acquisition cash rent expense paid to HPT.

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 209-030 TravelCenters of America

Exhibit 10 Selected Risk Factors (excerpted from S-1)

The market price of the TA shares we expect to distribute in the spin off may be low.

The value of the TA shares we expect to distribute to our shareholders in the spin off will be determined
by the trading market for those shares. We do not know the price at which the TA shares will trade. Spin
off transactions often result in a large number of shareholders who desire to sell distributed shares because
the shares do not match those shareholders' investment guidelines or otherwise.

We were formed for the benefit of Hospitality Trust and not for our own benefit. Our formation allows
Hospitality Trust to acquire and retain ownership of 146 travel centers without adverse tax consequences
to Hospitality Trust. Because we were formed to benefit Hospitality Trust, some of our contractual
relationships and the terms of our initial business operations may provide more benefits to Hospitality
Trust than to us.

Our creation was, and our continuing business will be, subject to conflicts of interest with Hospitality Trust
and REIT Management, as follows:

• Two of our directors were trustees of Hospitality Trust at the time we were created.
• Upon completion of the spin off we will have five directors, one of whom, Mr. Barry Portnoy, also
will be a trustee of Hospitality Trust and the majority owner of REIT Management, one of whom,
Mr. Arthur G. Koumantzelis, is a former trustee of Hospitality Trust, and one of whom, Mr.
Thomas O'Brien, is a former executive officer of Hospitality Trust.
• Mr. O'Brien who will be active in our senior management activities is also an employee of REIT
Management. Another REIT Management employee, John R. Hoadley, is our treasurer and will
also be active in our senior management activities. REIT Management is the manager for
Hospitality Trust and we will purchase various services from REIT Management pursuant to a
management and shared services agreement.

These conflicts may have caused, and in the future may cause, adverse effects on our business, including:

• Our lease with Hospitality Trust may be on terms less favorable to us than leases we could have
entered as a result of arm's length negotiations.
• The terms of our management and shared services agreement with REIT Management may be less
favorable to us than we could have achieved on an arm's length basis; specifically, our payments to
REIT Management of 0.6% of our fuel gross margin and 0.6% of our total non-fuel revenues for
shared services, equal to $4.7 million on a pro forma basis for the nine months ended September 30,
2006, may be greater than if these services were purchased from third parties.
• Future business dealings between us and Hospitality Trust, REIT Management and their affiliates
may be on terms less favorable to us than we could achieve on an arm's length basis.
• We may have to compete with Hospitality Trust, REIT Management and their affiliates for the time
and attention of Messrs. Portnoy, O'Brien and Hoadley.

Source: Adapted by casewriter from TravelCenters of America LLC S-1 Offering, January 26, 2007.

Note: Form S-1 is filed with the Securities and Exchange Commission to register the initial public offer of securities.

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