In an article last week I suggested the Hospitality Property Trust (NYSE:HPT) appeared to operating a self-serving sale/leaseback platform as a means to tap into high-yielding off-balance assets owned by TravelCenters of America (NYSE:TA). HPT’s “truckstop piggybank” – consisting of over 184 travel centers – provides the Lodging REIT with substantial exposure (33%) in which the cozy relationship (between the two) appears ripe for conflicts of interest.
As I explained, TravelCenters does not own most of the locations it operates. Instead it leases the majority of them from HPT. The “coziness” comes into play when you see that HPT is managed by REIT Management & Research, which is majority-owned by Barry Portnoy.
In 2007 TA spun off from HPT, so now Barry Portnoy has his hands in two pies which might mean that he can favor HPT when setting the leases and other contractual affairs.
But having multiple hands in the pie is nothing new for Portnoy since he also owns interests in other REITs, all managed by RMR/ Government Properties Trust (NYSE:GOV), Select Income REIT (NYSE:SIR), and Senior Housing Properties Trust (NYSE:SNH) are all externally-managed by the Portnoy clan.
In a recent Benzinga article, Bill Stoller explained several differences between internal and external (fee-based) REIT management teams, as it relates to RMR:
- RMR gets paid large fees for growing assets under management, (even to the detriment of shareholder returns).
- Therefore, RMR and shareholder interests are clearly not aligned.
- These RMR managed REITs have underperformed compared to the broader REIT sector.
- This situation does not appear likely to change any time soon.
RMR has demonstrated a willingness to do whatever it takes to retain voting control of the REIT trustee boards which approve these lucrative management agreements.
Is Government Properties Trust On Solid Ground?
Recently I was writing an article on STAG Industrial (NYSE:STAG) and when I was researching the dividend yields for the broader peer group, I noticed that Government Properties Trust was offering an outsized yield of 8.9%.
