TA doesn't own properties, but rather has a 15 year lease on the TA full service truck stops you often see next to highways. HPT retained the properties and leased them to TA. The lease appears to be normal and fair.
HPT contributed $225 million in cash to TA prior to the spin off, and TA will have no debt. At its current price of $29, TA is being valued at $255 million. So the business itself is being valued at roughly $30 million, closer to $55 million if you use net working capital instead of cash.
Based on TA's registration statement, we estimate that the company will have operating cash flow of around $25 million annually. Backing out the cash, the business is selling at well under two times operating cash flow, or less than 6 times free cash flow. Any way you look at it the stock is very cheap.
Upside could be much magnified should TA decide to aggressively repurchase shares. Their business doesn't consume a lot of cash, so it's anybody's guess what else they would do with the big cash hoard.
TA has tanked since it first started trading when-issued, from $36.50 to less than $29 today. While the stock may remain volatile, the business itself is being valued at very little, and we could have big upside should management make intelligent use of their cash.
Disclosure: We own shares of Travelcenters of America.