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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the fiscal year ended December 31, 2016
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or
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Maryland
(State of Organization)
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04-3262075
(IRS Employer Identification No.)
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Two Newton Place,
255 Washington Street, Suite 300,
Newton, Massachusetts
(Address of Principal Executive Offices)
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02458-1634
(Zip Code)
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Title Of Each Class
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Name Of Each Exchange On Which Registered
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Common Shares of Beneficial Interest
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The NASDAQ Stock Market LLC
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Large accelerated filer ☒
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Accelerated filer ☐
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Non-accelerated filer ☐
(Do not check if a
smaller reporting company)
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Smaller reporting company ☐
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OUR HOTEL MANAGERS’ OR TENANTS’ ABILITIES TO PAY THE CONTRACTUAL AMOUNTS OF RETURNS OR RENTS DUE TO US,
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OUR ABILITY TO COMPETE FOR ACQUISITIONS EFFECTIVELY,
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OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS,
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OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND THE AMOUNT OF SUCH DISTRIBUTIONS,
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OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL,
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OUR ABILITY TO APPROPRIATELY BALANCE OUR USE OF DEBT AND EQUITY CAPITAL,
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OUR INTENT TO MAKE IMPROVEMENTS TO CERTAIN OF OUR PROPERTIES AND THE SUCCESS OF OUR HOTEL RENOVATION PROGRAM,
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OUR ABILITY TO ENGAGE AND RETAIN QUALIFIED MANAGERS AND TENANTS FOR OUR HOTELS AND TRAVEL CENTERS ON SATISFACTORY TERMS,
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THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY,
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OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT,
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OUR CREDIT RATINGS,
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THE ABILITY OF TRAVELCENTERS OF AMERICA LLC, OR TA, TO PAY CURRENT AND DEFERRED RENT AMOUNTS AND OTHER OBLIGATIONS DUE TO US,
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OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF THE RMR GROUP INC., OR RMR INC.,
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OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF AFFILIATES INSURANCE COMPANY, OR AIC, AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC,
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OUR QUALIFICATION FOR TAXATION AS A REAL ESTATE INVESTMENT TRUST, OR REIT, AND
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OTHER MATTERS.
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THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR MANAGERS AND TENANTS,
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COMPETITION WITHIN THE REAL ESTATE, HOTEL, TRANSPORTATION AND TRAVEL CENTER INDUSTRIES, PARTICULARLY IN THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED,
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COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS AFFECTING THE REAL ESTATE, HOTEL, TRANSPORTATION AND TRAVEL CENTER INDUSTRIES, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS,
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LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY FOR TAXATION AS A REIT FOR U.S. FEDERAL INCOME TAX PURPOSES,
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ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL, AND
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ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEES, TA, SONESTA INTERNATIONAL HOTELS CORPORATION, OR SONESTA, RMR INC., THE RMR GROUP LLC, OR RMR LLC, AIC AND OTHERS AFFILIATED WITH THEM.
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OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS AND THE CAPITAL COSTS WE INCUR TO MAINTAIN OUR PROPERTIES AND OUR WORKING CAPITAL REQUIREMENTS. WE MAY BE UNABLE TO PAY OUR DEBT OBLIGATIONS OR TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS ON OUR COMMON AND PREFERRED SHARES AND FUTURE DISTRIBUTIONS MAY BE REDUCED OR ELIMINATED,
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THE SECURITY DEPOSITS WHICH WE HOLD ARE NOT IN SEGREGATED CASH ACCOUNTS OR OTHERWISE SEPARATE FROM OUR OTHER ASSETS AND LIABILITIES. ACCORDINGLY, WHEN WE RECORD INCOME BY REDUCING OUR SECURITY DEPOSIT LIABILITIES, WE DO NOT RECEIVE ANY ADDITIONAL CASH PAYMENT. BECAUSE WE DO NOT RECEIVE ANY ADDITIONAL CASH PAYMENT AS WE APPLY SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS, THE FAILURE OF OUR MANAGERS OR TENANTS TO PAY MINIMUM RETURNS OR RENTS DUE TO US MAY REDUCE OUR CASH FLOWS AND OUR ABILITY TO PAY DISTRIBUTIONS TO SHAREHOLDERS,
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AS OF
DECEMBER 31, 2016
, APPROXIMATELY
79%
OF OUR AGGREGATE ANNUAL MINIMUM RETURNS AND RENTS WERE SECURED BY GUARANTEES OR SECURITY DEPOSITS FROM OUR MANAGERS AND TENANTS. THIS MAY IMPLY THAT THESE MINIMUM RETURNS AND RENTS WILL BE PAID. IN FACT, CERTAIN OF THESE GUARANTEES AND SECURITY DEPOSITS ARE LIMITED IN AMOUNT AND DURATION AND ALL THE GUARANTEES ARE SUBJECT TO THE GUARANTORS’ ABILITY AND WILLINGNESS TO PAY. THE BALANCE OF OUR ANNUAL MINIMUM RETURNS AND RENTS AS OF
DECEMBER 31, 2016
WAS NOT GUARANTEED NOR DO WE HOLD A SECURITY DEPOSIT WITH RESPECT TO THOSE AMOUNTS. WE CANNOT BE SURE OF THE FUTURE FINANCIAL PERFORMANCE OF OUR PROPERTIES AND WHETHER SUCH PERFORMANCE WILL COVER OUR MINIMUM RETURNS AND RENTS, WHETHER THE GUARANTEES OR SECURITY DEPOSITS WILL BE ADEQUATE TO COVER FUTURE SHORTFALLS IN THE MINIMUM RETURNS OR RENTS DUE TO US, OR REGARDING OUR MANAGERS’, TENANTS’ OR GUARANTORS’ FUTURE
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WE HAVE RECENTLY RENOVATED CERTAIN HOTELS AND ARE CURRENTLY RENOVATING ADDITIONAL HOTELS. WE EXPECT TO FUND APPROXIMATELY $63.2 MILLION FOR RENOVATIONS AND OTHER CAPITAL IMPROVEMENT COSTS AT OUR HOTELS DURING 2017. THE COST OF CAPITAL PROJECTS ASSOCIATED WITH SUCH RENOVATIONS MAY BE GREATER THAN WE NOW ANTICIPATE. WHILE OUR FUNDING OF THESE CAPITAL PROJECTS WILL CAUSE OUR CONTRACTUAL MINIMUM RETURNS TO INCREASE, THE HOTELS’ OPERATING RESULTS MAY NOT INCREASE OR MAY NOT INCREASE TO THE EXTENT THAT THE MINIMUM RETURNS INCREASE. ACCORDINGLY, COVERAGE OF OUR MINIMUM RETURNS AT THESE HOTELS MAY REMAIN DEPRESSED FOR AN EXTENDED PERIOD,
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WE EXPECT TO PURCHASE FROM TA DURING
2017
UP TO $80.7 MILLION OF CAPITAL IMPROVEMENTS TA EXPECTS TO MAKE TO THE TRAVEL CENTERS WE LEASE TO TA. PURSUANT TO THE TERMS OF THE APPLICABLE LEASES, THE ANNUAL RENT PAYABLE TO US BY TA WILL INCREASE AS A RESULT OF ANY SUCH PURCHASES. WE MAY ULTIMATELY PURCHASE MORE OR LESS THAN THIS BUDGETED AMOUNT. TA MAY NOT REALIZE RESULTS FROM ANY OF THESE CAPITAL IMPROVEMENTS WHICH EQUAL OR EXCEED THE INCREASED ANNUAL RENTS IT WILL BE OBLIGATED TO PAY TO US, WHICH COULD INCREASE THE RISK OF TA BEING UNABLE TO PAY AMOUNTS DUE TO US,
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HOTEL ROOM DEMAND AND TRUCKING ACTIVITY ARE OFTEN REFLECTIONS OF THE GENERAL ECONOMIC ACTIVITY IN THE COUNTRY AND IN THE GEOGRAPHICAL AREAS WHERE OUR HOTELS ARE LOCATED. IF ECONOMIC ACTIVITY IN THE COUNTRY DECLINES, HOTEL ROOM DEMAND AND TRUCKING ACTIVITY MAY DECLINE AND THE OPERATING RESULTS OF OUR HOTELS AND TRAVEL CENTERS MAY DECLINE, THE FINANCIAL RESULTS OF OUR HOTEL MANAGERS AND OUR TENANTS, INCLUDING TA, MAY SUFFER AND THESE MANAGERS AND TENANTS MAY BE UNABLE TO PAY OUR RETURNS OR RENTS. ALSO, DEPRESSED OPERATING RESULTS FROM OUR PROPERTIES FOR EXTENDED PERIODS MAY RESULT IN THE OPERATORS OF SOME OR ALL OF OUR HOTELS AND OUR TRAVEL CENTERS BECOMING UNABLE OR UNWILLING TO MEET THEIR OBLIGATIONS OR THEIR GUARANTEES AND SECURITY DEPOSITS WE HOLD MAY BE EXHAUSTED,
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HOTEL SUPPLY GROWTH HAS BEEN INCREASING AND MAY AFFECT OUR OPERATORS' ABILITY TO GROW ADR AND OCCUPANCY AND ADR AND OCCUPANCY COULD DECLINE DUE TO INCREASED COMPETITION WHICH MAY CAUSE OUR OPERATORS TO BECOME UNABLE TO PAY OUR RETURNS OR RENTS,
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IF THE CURRENT LEVEL OF COMMERCIAL ACTIVITY IN THE COUNTRY DECLINES, IF THE PRICE OF DIESEL FUEL INCREASES SIGNIFICANTLY, IF FUEL CONSERVATION MEASURES ARE INCREASED, IF FREIGHT BUSINESS IS DIRECTED AWAY FROM TRUCKING, IF TA IS UNABLE TO EFFECTIVELY COMPETE OR OPERATE ITS BUSINESS, IF FUEL EFFICIENCIES, THE USE OF ALTERNATIVE FUELS OR TRANSPORTATION TECHNOLOGIES REDUCE THE DEMAND FOR PRODUCTS AND SERVICES TA SELLS OR FOR VARIOUS OTHER REASONS, TA MAY BECOME UNABLE TO PAY CURRENT AND DEFERRED RENTS DUE TO US,
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OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES THAT GENERATE RETURNS OR CAN BE LEASED FOR RENTS WHICH EXCEED OUR OPERATING AND CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING, MANAGEMENT CONTRACTS OR LEASE TERMS FOR NEW PROPERTIES,
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WE HAVE AGREED TO ACQUIRE FROM AND LEASE BACK TO TA A TRAVEL CENTER WHICH TA IS DEVELOPING. WE AGREED TO PURCHASE THIS PROPERTY AT TA’S COST (INCLUDING HISTORICAL LAND COST) UP TO $29.0 MILLION IF THE DEVELOPMENT IS SUBSTANTIALLY COMPLETED PRIOR TO JUNE 30, 2017. TA HAS BEGUN CONSTRUCTION AT THIS TRAVEL CENTER AND WE EXPECT THAT THE ACQUISITION OF THIS NEW TRAVEL CENTER WILL BE COMPLETED
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CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING ACQUISITIONS AND SALES AND ANY RELATED MANAGEMENT ARRANGEMENTS WE MAY EXPECT TO ENTER INTO MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS OR ARRANGEMENTS MAY CHANGE,
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AT
DECEMBER 31, 2016
, WE HAD
$10.9
MILLION OF CASH AND CASH EQUIVALENTS, $809.0 MILLION AVAILABLE UNDER OUR $1.0 BILLION REVOLVING CREDIT FACILITY AND SECURITY DEPOSITS AND GUARANTEES COVERING SOME OF OUR MINIMUM RETURNS AND RENTS. THESE STATEMENTS MAY IMPLY THAT WE HAVE ABUNDANT WORKING CAPITAL AND LIQUIDITY. HOWEVER, OUR MANAGERS AND TENANTS MAY NOT BE ABLE TO FUND MINIMUM RETURNS AND RENTS DUE TO US FROM OPERATING OUR PROPERTIES OR FROM OTHER RESOURCES; IN THE PAST AND CURRENTLY CERTAIN OF OUR TENANTS AND HOTEL MANAGERS HAVE IN FACT NOT PAID THE MINIMUM AMOUNTS DUE TO US FROM THEIR OPERATIONS OF OUR LEASED OR MANAGED PROPERTIES. ALSO, CERTAIN OF THE SECURITY DEPOSITS AND GUARANTEES WE HAVE TO COVER ANY SUCH SHORTFALLS ARE LIMITED IN AMOUNT AND DURATION, AND ANY SECURITY DEPOSITS WE APPLY FOR SUCH SHORTFALLS DO NOT RESULT IN ADDITIONAL CASH FLOWS TO US. FURTHER, OUR PROPERTIES REQUIRE, AND WE HAVE AGREED TO PROVIDE, SIGNIFICANT FUNDING FOR CAPITAL IMPROVEMENTS, RENOVATIONS AND OTHER MATTERS. ACCORDINGLY, WE MAY NOT HAVE SUFFICIENT WORKING CAPITAL OR LIQUIDITY,
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WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE,
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CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CUSTOMARY CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY,
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ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY OR OTHER FLOATING RATE DEBT WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF OTHER FEES AND EXPENSES ASSOCIATED WITH SUCH FACILITIES,
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THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN MAY BE INCREASED TO UP TO $2.3 BILLION ON A COMBINED BASIS IN CERTAIN CIRCUMSTANCES; HOWEVER, INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR,
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THE PREMIUMS USED TO DETERMINE THE INTEREST RATE PAYABLE ON OUR REVOLVING CREDIT FACILITY AND TERM LOAN AND THE FACILITY FEE PAYABLE ON OUR REVOLVING CREDIT FACILITY ARE BASED ON OUR CREDIT RATINGS. FUTURE CHANGES IN OUR CREDIT RATINGS MAY CAUSE THE INTEREST AND FEES WE PAY TO INCREASE,
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WE HAVE THE OPTION TO EXTEND THE MATURITY DATE OF OUR REVOLVING CREDIT FACILITY UPON PAYMENT OF A FEE AND MEETING OTHER CONDITIONS. HOWEVER, THE APPLICABLE CONDITIONS MAY NOT BE MET,
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THE BUSINESS MANAGEMENT AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS INCLUDE TERMS WHICH PERMIT EARLY TERMINATION IN CERTAIN CIRCUMSTANCES. ACCORDINGLY, WE CANNOT BE SURE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR CONTINUING 20 YEAR TERMS OR FOR SHORTER TERMS,
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WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING RMR LLC, RMR INC., TA, SONESTA, AIC, AND OTHERS AFFILIATED WITH THEM MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS. HOWEVER, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE,
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MARRIOTT INTERNATIONAL, INC., OR MARRIOTT, HAS NOTIFIED US THAT IT DOES NOT INTEND TO EXTEND ITS LEASE FOR OUR RESORT HOTEL ON KAUAI, HAWAII WHEN THAT LEASE EXPIRES ON DECEMBER 31, 2019 AND WE INTEND TO HAVE DISCUSSIONS WITH MARRIOTT ABOUT THE FUTURE OF THIS HOTEL. THESE STATEMENTS MAY IMPLY THAT MARRIOTT WILL NOT OPERATE THIS HOTEL IN THE FUTURE OR THAT WE MAY RECEIVE LESS CASH FLOW FROM THIS HOTEL IN THE FUTURE. OUR DISCUSSIONS WITH MARRIOTT HAVE ONLY RECENTLY BEGUN. AT THIS TIME WE CANNOT PREDICT HOW OUR DISCUSSIONS WITH MARRIOTT WILL IMPACT THE FUTURE OF THIS HOTEL. FOR EXAMPLE, THIS HOTEL MAY CONTINUE TO BE OPERATED BY MARRIOTT ON DIFFERENT CONTRACT TERMS THAN THE CURRENT LEASE, WE MAY IDENTIFY A DIFFERENT OPERATOR FOR THIS HOTEL, OR THE CASH FLOWS WHICH WE RECEIVE FROM OUR OWNERSHIP OF THIS HOTEL MAY BE DIFFERENT THAN THE RENT WE NOW RECEIVE. ALSO, ALTHOUGH THE CURRENT LEASE EXPIRES ON DECEMBER 31, 2019, WE AND MARRIOTT MAY AGREE UPON A DIFFERENT TERMINATION DATE, AND
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WE HAVE ADVISED MORGANS THAT THE CLOSING OF ITS MERGER WITH SBE ENTERTAINMENT GROUP, LLC, OR SBE, WAS IN VIOLATION OF OUR MORGANS AGREEMENT, AND WE HAVE FILED AN ACTION FOR UNLAWFUL DETAINER AGAINST MORGANS AND SBE TO COMPEL MORGANS AND SBE TO SURRENDER POSSESSION OF THE SAN FRANCISCO HOTEL WHICH MORGANS HISTORICALLY LEASED FROM US, AND WE ARE CURRENTLY ENGAGED IN DISCUSSIONS WITH MORGANS AND SBE REGARDING THIS MATTER. THE OUTCOME OF THIS PENDING LITIGATION AND OF OUR DISCUSSIONS WITH MORGANS AND SBE IS NOT ASSURED BUT WE BELIEVE THAT MORGANS MAY SURRENDER POSSESSION OF THIS HOTEL OR THAT THE COURT WILL DETERMINE THAT MORGANS AND SBE HAVE BREACHED THE HISTORICAL LEASE. WE ALSO BELIEVE THAT THIS HOTEL MAY REQUIRE SUBSTANTIAL CAPITAL INVESTMENT TO REMAIN COMPETITIVE IN ITS MARKET. THE CONTINUATION OF OUR DISPUTE WITH MORGANS AND SBE REQUIRES US TO EXPEND LEGAL FEES AND THE RESULT OF THIS DISPUTE MAY CAUSE US SOME LOSS OF RENT AT LEAST UNTIL THIS HOTEL MAY BE RENOVATED AND PROPERLY OPERATED. LITIGATION AND DISPUTES WITH TENANTS OFTEN PRODUCE UNEXPECTED RESULTS AND WE CAN PROVIDE NO ASSURANCE REGARDING THE RESULTS OF THIS DISPUTE.
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Page
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Service Level
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Chain Scale
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Full
Service
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Select
Service
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Extended
Stay
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Total
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Luxury
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8
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—
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—
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8
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Upper Upscale
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14
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—
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—
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14
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Upscale
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13
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95
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79
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187
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Upper Midscale
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8
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—
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12
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20
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Midscale
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—
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—
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77
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77
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Totals
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43
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95
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168
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306
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Minimum Returns or Minimum Rent
. All of our agreements require our managers or tenants to pay to us annual minimum returns or minimum rent.
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Additional Returns or Percentage Rent
. In addition, our hotel management agreements provide for payment of additional returns to us generally based on excess cash flows after payment of hotel operating expenses, funding of the required property maintenance reserve, if any, payment of our minimum returns, payment of management fees and in certain instances, replenishment of the security deposit or guarantee. Certain of our lease agreements require payment of percentage rent to us based on increases in gross property revenues over threshold amounts.
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Long Terms
. Our management agreements and leases generally have initial terms of 15 years or more. The weighted average term remaining for our agreements (weighted by our investment) as of
December 31, 2016
is 15.8 years, without giving effect to any renewal options our managers or tenants may have.
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Pooled Agreements
. All but two of our properties are included in one of 12 portfolio agreements. In all but one of our portfolio agreements, the manager’s or tenant’s obligations to us with respect to each property in a portfolio agreement are subject to cross default with the obligations with respect to all the other properties in the same portfolio agreement. The smallest portfolio agreement includes 11 hotels in which we have invested $210 million; the largest portfolio agreement includes 94 hotels in which we have invested $1.7 billion.
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Geographic Diversification
. The properties included in each portfolio agreement are geographically diversified.
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Strategic Locations
. Our properties are located in the vicinity of major demand generators such as large suburban office parks, urban centers, airports, medical or educational facilities or major tourist attractions for hotels and interstate highways for travel centers.
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All or None Renewals
. All manager or tenant renewal options for each portfolio agreement of our properties may only be exercised on an all or none basis and not for separate properties.
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Property Maintenance
. Most of our hotel agreements require the deposit of 5% to 6% of annual gross hotel revenues into escrows to fund periodic renovations. For recently built or renovated hotels, this requirement may be deferred for a period. Our travel center leases require the tenants to maintain the leased travel centers, including structural and non-structural components.
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Security Features
. Most of our management agreements or leases include various terms intended to secure the payments to us, including some or all of the following: cash security deposits which we receive but do not escrow; subordination of management fees payable to the operator to some or all of our minimum return or rent; and full or limited guarantees from the manager’s or tenant’s parent company. As of
December 31, 2016
, 10 of our 12 portfolio agreements and one hotel leased to a third party, a total of
218
hotels and
198
travel centers, have minimum returns or minimum rent payable to us which are subject to full or limited guarantees or are backed by security deposits. These properties represent
78.7%
of our total minimum returns and minimum rents at
December 31, 2016
. We do not have any security deposits or guarantees for two of our seven hotel portfolio agreements or one hotel we lease to a third party, a total of
88
hotels, representing
21.3%
of our total annual minimum returns and minimum rents as of
December 31, 2016
. Accordingly, the minimum returns we are paid under these agreements will depend exclusively upon the performance of the hotels.
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Historical and projected cash flows;
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The competitive market environment and the current or potential market position of each property;
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The growth, tax and regulatory environments of the market in which the property is located;
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The availability of a qualified manager or lessee;
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The financial strength of the proposed manager or lessee;
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The amount and type of financial support available from the proposed manager or lessee;
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The property’s design, construction quality, physical condition and age and expected capital expenditures that may be needed at the property;
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The size of the property;
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The location and type of property;
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The estimated replacement cost, capital improvement requirements and proposed acquisition price of the property;
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Our weighted average long term cost of capital compared to projected returns we may realize by owning the property;
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The reputation of any operator with which the property is or may become affiliated;
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The level of services and amenities offered at the property;
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The proposed management agreement or lease terms;
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The brand under which the property operates or is expected to operate;
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The strategic fit of the property or investment with the rest of our portfolio and our own plans; and
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The existence of alternative sources, uses or needs for our capital.
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The property’s current and expected future performance;
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The proposed sale price;
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Capital required to maintain the property;
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The strategic fit of the property with the rest of our portfolio and with our plans;
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The manager’s or tenant’s desire to operate the affected property;
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Our manager’s or tenant’s desire to cease operation of the property;
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The estimated value we may receive by selling the property;
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Our intended use of the proceeds we may realize from the sale of a property; and
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The existence of alternative sources, uses or needs for capital.
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a bank, insurance company or other financial institution;
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a regulated investment company or REIT;
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a subchapter S corporation;
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a broker, dealer or trader in securities or foreign currency;
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a person who marks-to-market our shares for U.S. federal income tax purposes;
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a U.S. shareholder (as defined below) that has a functional currency other than the U.S. dollar;
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a person who acquires or owns our shares in connection with employment or other performance of services;
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a person subject to alternative minimum tax;
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a person who acquires or owns our shares as part of a straddle, hedging transaction, constructive sale transaction, constructive ownership transaction or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction;
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a person who owns 10% or more (by vote or value, directly or constructively under the IRC) of any class of our shares;
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a U.S. expatriate;
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a non-U.S. shareholder (as defined below) whose investment in our shares is effectively connected with the conduct of a trade or business in the United States;
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a nonresident alien individual present in the United States for 183 days or more during an applicable taxable year;
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a “qualified shareholder” (as defined in Section 897(k)(3)(A) of the IRC);
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a “qualified foreign pension fund” (as defined in Section 897(l)(2) of the IRC) or any entity wholly owned by one or more qualified foreign pension funds; or
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except as specifically described in the following summary, a trust, estate, tax-exempt entity or foreign person.
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an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under the federal income tax laws;
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an entity treated as a corporation for federal income tax purposes that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia;
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an estate the income of which is subject to federal income taxation regardless of its source; or
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a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or, to the extent provided in Treasury regulations, a trust in existence on August 20, 1996 that has elected to be treated as a domestic trust;
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We will be taxed at regular corporate tax rates on any undistributed “real estate investment trust taxable income,” determined by including our undistributed net capital gains, if any.
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We may be subject to the corporate alternative minimum tax on our items of tax preference. This is especially possible where we utilize net operating loss carryovers against taxable income, in that the rules for net operating loss carryovers are generally more stringent under the alternative minimum tax.
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If we have net income from the disposition of “foreclosure property,” as described in Section 856(e) of the IRC, that is held primarily for sale to customers in the ordinary course of a trade or business or from other nonqualifying income from foreclosure property, we will be subject to tax on this income at the highest regular corporate tax rate.
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If we have net income from “prohibited transactions” — that is, dispositions at a gain of inventory or property held primarily for sale to customers in the ordinary course of a trade or business other than dispositions of foreclosure property and other than dispositions excepted by statutory safe harbors — we will be subject to tax on this income at a 100% rate.
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If we fail to satisfy the 75% gross income test or the 95% gross income test discussed below, due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to tax at a 100% rate on the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year.
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If we fail to satisfy the REIT asset tests described below, due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to a tax equal to the greater of $50,000 or the highest regular corporate tax rate multiplied by the net income generated by the nonqualifying assets that caused us to fail the test.
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If we fail to satisfy any provision of the IRC that would result in our failure to qualify for taxation as a REIT (other than violations of the REIT gross income tests or violations of the REIT asset tests described below), due to reasonable cause and not due to willful neglect, we may retain our qualification for taxation as a REIT but will be subject to a penalty of $50,000 for each failure.
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If we fail to distribute for any calendar year at least the sum of 85% of our REIT ordinary income for that year, 95% of our REIT capital gain net income for that year and any undistributed taxable income from prior periods, we will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the amounts actually distributed.
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If we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset in the hands of a C corporation, under specified circumstances we may be subject to federal income taxation on all or part of the built-in gain (calculated as of the date the property ceased being owned by the C corporation) on such asset. We generally have not sold and do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements.
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If we acquire a corporation in a transaction where we succeed to its tax attributes, to preserve our qualification for taxation as a REIT we must generally distribute all of the C corporation earnings and profits inherited in that acquisition, if any, no later than the end of our taxable year in which the acquisition occurs. However, if we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution. As discussed below, we have acquired C corporations in connection with our acquisition of real estate. In each such acquisition, we have either made an election under Section 338 of the IRC to purge the earnings and profits of the acquired C corporation, or investigated the acquired C corporation and found that it did not have undistributed earnings and profits that we inherited but failed to timely distribute. However, upon review or audit, the IRS may disagree.
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Our subsidiaries that are C corporations, including our TRSs, generally will be required to pay federal corporate income tax on their earnings, and a 100% tax may be imposed on any transaction between us and one of our TRSs that does not reflect arm’s length terms.
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that is managed by one or more trustees or directors;
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(2)
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the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest;
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(3)
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that would be taxable, but for Sections 856 through 859 of the IRC, as a domestic C corporation;
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(4)
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that is not a financial institution or an insurance company subject to special provisions of the IRC;
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(5)
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the beneficial ownership of which is held by 100 or more persons;
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(6)
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that is not “closely held,” meaning that during the last half of each taxable year, not more than 50% in value of the outstanding shares are owned, directly or indirectly, by five or fewer “individuals” (as defined in the IRC to include specified tax-exempt entities); and
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(7)
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that meets other tests regarding the nature of its income and assets and the amount of its distributions, all as described below.
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(1)
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not directly or indirectly operate or manage a lodging facility or a health care facility; and
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(2)
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not directly or indirectly provide to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated, except that in limited circumstances a subfranchise, sublicense or similar right can be granted to an independent contractor to operate or manage a lodging facility or a health care facility.
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At least 75% of our gross income for each taxable year (excluding: (a) gross income from sales or other dispositions of property subject to the 100% tax on prohibited transactions; (b) any income arising from “clearly identified” hedging transactions that we enter into to manage interest rate or price changes or currency fluctuations with respect to borrowings we incur to acquire or carry real estate assets; (c) any income arising from “clearly identified” hedging transactions that we enter into primarily to manage risk of currency fluctuations relating to any item that qualifies under the 75% gross income test or the 95% gross income test (or any property that generates such income or gain); (d) beginning with our 2016 taxable year, any income from “clearly identified” hedging transactions that we enter into to manage risk associated with extant, qualified hedges of liabilities or properties that have been extinguished or disposed; (e) real estate foreign exchange gain (as defined in Section 856(n)(2) of the IRC); and (f) income from the repurchase or discharge of indebtedness) must be derived from investments relating to real property, including “rents from real property” as defined under Section 856 of the IRC, interest and gain from mortgages on real property or on interests in real property, income and gain from foreclosure property, gain from the sale or other disposition of real property, or dividends on and gain from the sale or disposition of shares in other REITs (but excluding in all cases any gains subject to the 100% tax on prohibited transactions). When we receive new capital in exchange for our shares or in a public offering of our five-year or longer debt instruments, income attributable to the temporary investment of this new capital in stock or a debt instrument, if received or accrued within one year of our receipt of the new capital, is generally also qualifying income under the 75% gross income test.
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At least 95% of our gross income for each taxable year (excluding: (a) gross income from sales or other dispositions of property subject to the 100% tax on prohibited transactions; (b) any income arising from “clearly
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The amount of rent received generally must not be based on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales.
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Rents do not qualify if the REIT owns 10% or more by vote or value of stock of the tenant (or 10% or more of the interests in the assets or net profits of the tenant, if the tenant is not a corporation), whether directly or after application of attribution rules. We generally do not intend to lease property to any party if rents from that property would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control. In this regard, we already own close to, but less than, 10% of the outstanding common shares of TA, and TA has undertaken to limit its redemptions and repurchases of outstanding common shares so that we do not come to own 10% or more of its outstanding common shares. Our declaration of trust and bylaws generally disallow transfers or purported acquisitions, directly or by attribution, of our shares to the extent necessary to maintain our qualification for taxation as a REIT under the IRC. Nevertheless, there can be no assurance that these restrictions will be effective to prevent our qualification for taxation as a REIT from being jeopardized under the 10% affiliated tenant rule. Furthermore, there can be no assurance that we will be able to monitor and enforce these restrictions, nor will our shareholders necessarily be aware of ownership of our shares attributed to them under the IRC’s attribution rules.
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There is a limited exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant where the tenant is a TRS. If at least 90% of the leased space of a property is leased to tenants other than TRSs and 10% affiliated tenants, and if the TRS’s rent to the REIT for space at that property is substantially comparable to the rents paid by nonaffiliated tenants for comparable space at the property, then otherwise qualifying rents paid by the TRS to the REIT will not be disqualified on account of the rule prohibiting 10% affiliated tenants.
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There is an additional exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant. For this additional exception to apply, a real property interest in a “qualified lodging facility” must be leased by the REIT to its TRS, and the facility must be operated on behalf of the TRS by a person who is an “eligible independent contractor,” all as described in Sections 856(d)(8)-(9) of the IRC. As described below, we believe our leases with our TRSs have satisfied and will continue to satisfy these requirements.
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In order for rents to qualify, we generally must not manage the property or furnish or render services to the tenants of the property, except through an independent contractor from whom we derive no income or through one of our TRSs. There is an exception to this rule permitting a REIT to perform customary tenant services of the sort that a tax-exempt organization could perform without being considered in receipt of “unrelated business taxable income,” or UBTI, under Section 512(b)(3) of the IRC. In addition, a de minimis amount of noncustomary services provided to tenants will not disqualify income as “rents from real property” as long as the value of the impermissible tenant services does not exceed 1% of the gross income from the property.
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If rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property qualifies as “rents from real property.” None of the rent attributable to personal property received under a lease will qualify if this 15% threshold is exceeded. The portion of rental income treated as attributable to personal property is determined according to the ratio of the fair market value of the personal property to the total fair market value of the real and personal property that is rented.
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In addition, “rents from real property” includes both charges we receive for services customarily rendered in connection with the rental of comparable real property in the same geographical area, even if the charges are separately stated, as well as charges we receive for services provided by our TRSs when the charges are not separately stated. Whether separately stated charges received by a REIT for services that are not geographically customary and provided by a TRS are included in “rents from real property” has not been addressed clearly by the IRS in published authorities; however, our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, “rents from real property” also includes charges we receive for services provided by our TRSs when the charges are separately stated, even if the services are not geographically customary. Accordingly, we believe that our revenues from TRS-provided services, whether the charges are separately stated or not, qualify as “rents from real property” because the services satisfy the geographically customary standard, because the services have been provided by a TRS, or for both reasons.
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own our assets for investment with a view to long-term income production and capital appreciation;
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engage in the business of developing, owning, leasing and managing our existing properties and acquiring, developing, owning, leasing and managing new properties; and
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make occasional dispositions of our assets consistent with our long-term investment objectives.
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our failure to meet the test is due to reasonable cause and not due to willful neglect; and
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after we identify the failure, we file a schedule describing each item of our gross income included in the 75% gross income test or the 95% gross income test for that taxable year.
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At least 75% of the value of our total assets must consist of “real estate assets,” defined as real property (including interests in real property and interests in mortgages on real property or on interests in real property), ancillary personal property to the extent that rents attributable to such personal property are treated as rents from real property in accordance with the rules described above (beginning with our 2016 taxable year), cash and cash items, shares in other REITs, debt instruments issued by “publicly offered REITs” as defined in Section 562(c)(2) of the IRC (beginning with our 2016 taxable year), government securities and temporary investments of new capital (that is, any stock or debt instrument that we hold that is attributable to any amount received by us (a) in exchange for our stock or (b) in a public offering of our five-year or longer debt instruments, but only for the one-year period commencing with our receipt of the new capital).
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Not more than 25% of the value of our total assets may be represented by securities other than those securities that count favorably toward the preceding 75% asset test.
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Of the investments included in the preceding 25% asset class, the value of any one non-REIT issuer’s securities that we own may not exceed 5% of the value of our total assets. In addition, we may not own more than 10% of the vote or value of any one non-REIT issuer’s outstanding securities, unless the securities are “straight debt” securities or otherwise excepted as discussed below. Our stock and other securities in a TRS are exempted from these 5% and 10% asset tests.
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Not more than 25% (20% beginning with our 2018 taxable year) of the value of our total assets may be represented by stock or other securities of TRSs.
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Beginning with our 2016 taxable year, not more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” as defined in Section 856(c)(5)(L)(ii) of the IRC.
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(1)
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the sum of 90% of our “real estate investment trust taxable income” and 90% of our net income after tax, if any, from property received in foreclosure, over
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(2)
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the amount by which our noncash income (e.g., imputed rental income or income from transactions inadvertently failing to qualify as like-kind exchanges) exceeds 5% of our “real estate investment trust taxable income.”
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(2)
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our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation recapture, in which case the distributions are subject to a maximum 25% federal income tax rate);
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(3)
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our dividends attributable to dividend income, if any, received by us from C corporations such as TRSs;
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(4)
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our dividends attributable to earnings and profits that we inherit from C corporations; and
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(5)
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our dividends to the extent attributable to income upon which we have paid federal corporate income tax (such as taxes on built-in gains), net of the corporate taxes thereon.
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(1)
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we will be taxed at regular corporate capital gains tax rates on retained amounts;
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(2)
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each U.S. shareholder will be taxed on its designated proportionate share of our retained net capital gains as though that amount were distributed and designated as a capital gain dividend;
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(3)
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each U.S. shareholder will receive a credit or refund for its designated proportionate share of the tax that we pay;
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(4)
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each U.S. shareholder will increase its adjusted basis in our shares by the excess of the amount of its proportionate share of these retained net capital gains over the U.S. shareholder’s proportionate share of the tax that we pay; and
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(5)
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both we and our corporate shareholders will make commensurate adjustments in our respective earnings and profits for federal income tax purposes.
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provides the U.S. shareholder’s correct taxpayer identification number;
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certifies that the U.S. shareholder is exempt from backup withholding because (a) it comes within an enumerated exempt category, (b) it has not been notified by the IRS that it is subject to backup withholding, or (c) it has been notified by the IRS that it is no longer subject to backup withholding; and
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certifies that it is a U.S. citizen or other U.S. person.
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their investment in our shares or other securities satisfies the diversification requirements of ERISA;
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the investment is prudent in light of possible limitations on the marketability of our shares;
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they have authority to acquire our shares or other securities under the applicable governing instrument and Title I of ERISA; and
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the investment is otherwise consistent with their fiduciary responsibilities.
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any restriction on or prohibition against any transfer or assignment that would result in a termination or reclassification for federal or state tax purposes, or would otherwise violate any state or federal law or court order;
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any requirement that advance notice of a transfer or assignment be given to the issuer and any requirement that either the transferor or transferee, or both, execute documentation setting forth representations as to compliance with any restrictions on transfer that are among those enumerated in the regulation as not affecting free transferability, including those described in the preceding clause of this sentence;
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any administrative procedure that establishes an effective date, or an event prior to which a transfer or assignment will not be effective; and
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any limitation or restriction on transfer or assignment that is not imposed by the issuer or a person acting on behalf of the issuer.
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Increasing truck fuel efficiency may adversely impact TA’s business. Government regulation and increasing fuel prices are causing truck manufacturers and TA’s trucking customers to focus on fuel efficiency. The largest part of TA’s business consists of selling motor fuel. If TA’s trucking customers purchase less motor fuel because their trucks are operated more efficiently, TA’s financial results will decline unless it is sufficiently able to offset those declines by selling substitute or other products or services, gaining market share, increasing its gross margins per gallon of fuel sold or reducing its operating costs.
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TA’s operating margins are narrow, and fuel sales comprise the majority of TA’s revenues. Historically, TA’s fuel margins per gallon have declined during periods of rising fuel prices, and during the recent U.S. economic recession and periods of historically high and volatile fuel prices, TA realized large operating losses.
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The trucking industry is the primary customer for TA’s goods and services. When the U.S. economy declines, demand for goods moved by trucks declines, and in turn demand for TA’s products and services typically declines.
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TA’s indebtedness and rent obligations are substantial. A decline in TA’s revenues or an increase in its expenses may make it difficult or impossible for TA to make payments of interest and principal on its debt or meet all of its rent obligations. TA’s substantial indebtedness and rent obligations may also place TA at a disadvantage in relation to competitors that have lower relative debt levels.
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Increasing fuel prices and fuel price volatility have various adverse impacts upon TA’s business. For example, high fuel prices result in higher truck shipping costs, which causes shippers to consider alternative means for transporting freight and therefore reduces trucking business and, in turn, TA’s business. Higher fuel prices may also result in less disposable income for TA’s customers to purchase TA’s nonfuel goods and services. Higher and more volatile fuel commodity prices increase the working capital needed to maintain TA’s fuel inventory and receivables, and this increases TA’s costs of doing business. Further, increases in fuel prices may place TA at a cost disadvantage to its competitors that may have larger fuel inventory or forward contracts executed during periods of lower fuel prices.
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Climate change and other environmental legislation and regulation, and market reaction to such legislation and regulation, may decrease demand for TA’s major product, diesel fuel, and require TA to make significant capital or other expenditures, which may adversely affect its business.
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To mitigate the risks arising from fuel price volatility, TA generally maintains limited fuel inventory. Accordingly, an interruption in TA’s fuel supplies, which may be caused by local conditions, such as a malfunction in a particular pipeline or terminal, by weather related events, such as hurricanes in the areas where petroleum or
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TA’s business is subject to laws relating to the protection of the environment. The travel centers and convenience stores TA operates include fueling areas, truck repair and maintenance facilities and tanks for the storage and dispensing of petroleum products, natural gas, waste and other hazardous substances, all of which create the potential for environmental damage. As a result, TA regularly incurs environmental clean up costs. TA cannot predict what environmental legislation or regulations may be enacted or how existing laws or regulations will be administered or interpreted; more stringent laws, more vigorous enforcement policies or stricter interpretation of existing laws in the future could cause TA to expend significant amounts or experience losses.
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The travel center industry is highly competitive and principally consists of a small number of large competitors. These competitive pressures could result in a reduction of TA’s gross margins or an increase in TA’s expenses or capital improvement costs, which could negatively affect TA’s profitability and liquidity.
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Increased use of efficient and alternative fuels and any widespread adoption of alternative transportation technologies may reduce demand for TA's products and services.
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The convenience store industry is also highly competitive and fragmented with ease of entry and constant change in the number and types of retailers offering products and services similar to those TA provides. Increased competition or new entrants to the convenience store industry could reduce TA’s gross margins.
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competition from other hotels in our markets, or an over supply or over building of hotels in our markets;
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competition from alternative lodging options such as timeshare, vacation rentals or sharing services such as Airbnb, in our markets;
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changes in marketing and distribution for the industry including the ability of third party internet and other travel intermediaries to attract and retain customers;
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increased operating costs, including wages, benefits, insurance, property taxes and energy, due to inflation and other factors, which may not be offset in the future by increased room rates;
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labor strikes, disruptions or lockouts that may impact operating performance;
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dependence on demand from business and leisure travelers, which may fluctuate and be seasonal;
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increases in energy costs, airline fares and other expenses related to travel, which may negatively affect traveling;
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as further described below, terrorism, terrorism alerts and warnings, military actions, pandemics or other medical events which may cause decreases in business and leisure travel; and
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changes in customer preferences for various types of hotels or hotel locations.
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Investors may consider whether to buy or sell our common shares based upon the distribution rate on our common shares relative to prevailing market interest rates. If market interest rates go up, investors may expect a higher distribution rate than we are able to pay or may sell our common shares and seek alternate investments with a higher distribution rate. Sales of our common shares may cause a decline in the market price of our common shares.
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Amounts outstanding under our revolving credit facility and term loan require interest to be paid at variable interest rates. When interest rates increase, our interest costs will increase, which could adversely affect our cash flows, our ability to pay principal and interest on our debt, our cost of refinancing our debt when it becomes due and our ability to make or sustain the rate of distributions to our shareholders. Additionally, if we choose to hedge our interest rate risk, we cannot be sure that the hedge will be effective or that our hedging counterparty will meet its obligations to us.
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Property values are often determined, in part, based upon a capitalization of rental income formula. When market interest rates increase, property investors often demand higher capitalization rates and that causes property values to decline. Increases in interest rates could lower the value of our properties and cause the market price of our common shares to decline.
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competition from other investors, including publicly traded and private REITs, numerous financial institutions, individuals and public and private companies;
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contingencies in our acquisition agreements; and
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the availability and terms of financing.
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we do not believe that it is possible to fully understand a property before it is owned and operated for an extended period of time, and, notwithstanding pre-acquisition due diligence, we could acquire a property that contains undisclosed defects in design or construction;
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the market in which an acquired property is located may experience unexpected changes that adversely affect the property’s value;
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the occupancy of properties that we acquire may decline during our ownership, and rents or returns that are in effect or expected at the time a property is acquired may decline thereafter;
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property operating costs for our acquired properties may be higher than anticipated and our acquired properties may not yield expected returns;
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we may acquire properties subject to unknown liabilities and without any recourse, or with limited recourse, such as liability for the cleanup of undisclosed environmental contamination or for claims by tenants, vendors or other persons related to actions taken by former owners of properties; and
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acquired properties might require significant management attention that would otherwise be devoted to our ongoing business.
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the illiquid nature of real estate markets, which limits our ability to sell our assets rapidly to respond to changing market conditions;
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the subjectivity of real estate valuations and changes in such valuations over time;
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costs that may be incurred relating to property maintenance and repair, and the need to make expenditures due to changes in government regulations; and
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litigation incidental to our business.
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Laws affecting the operations of hotels in foreign countries may require us to assume responsibility for payments due to employees of hotels we own or in which we invest.
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Foreign laws affecting real estate may restrict the ability of entities organized or controlled by persons outside those countries, like us, to own or make management decisions affecting the properties in which we invest.
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In most foreign countries, we will not have the same or similar tax status as we have in the United States, we will be subject to local taxes, and our net earnings may be less than we would realize by making investments in the United States.
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Most of the hotels located in foreign countries in which we invest will conduct business in local currencies rather than in U.S. dollars. We may be able to mitigate some of the risk of changing comparative currency valuations by funding our foreign investments in local currencies; however, it is unlikely we will be able to completely mitigate such foreign currency exchange rate risk.
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Some foreign countries do not have judicial dispute resolution processes which are as efficient or honest as the United States judicial system generally. We may mitigate this risk by making the resolution of disputes which may arise from our foreign investments subject to arbitration; however, the enforcement of arbitration awards will remain subject to local judicial processes and there may be no way for us to mitigate the risks of our dealings in a foreign legal system.
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Investments by U.S. entities like us in foreign countries may be particularly subject to terrorism risks as it relates to the ownership of prominently identified properties such as hotels.
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The political systems in certain foreign countries are less stable than in the United States, and certain foreign governments have in the past expropriated properties owned by U.S. entities like us without paying fair compensation.
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the authority of our Board of Trustees to make various elections under Maryland’s Unsolicited Takeover Act and other provisions of Maryland law which may delay or prevent a change of control of us;
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the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees;
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the fact that only our Board of Trustees, or, if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting;
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required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be “Managing Trustees” and other Trustees be “Independent Trustees,” as defined in our governing documents;
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limitations on the ability of our shareholders to propose nominees for election as Trustees and propose other business to be considered at a meeting of our shareholders;
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limitations on the ability of our shareholders to remove our Trustees;
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requirements that shareholders comply with regulatory requirements (including Nevada and Louisiana gaming and Indiana insurance licensing requirements) affecting us which could effectively limit share ownership of us, including in some cases, to 5% of our outstanding shares; and
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the authority of our Board of Trustees to create and issue new classes or series of shares (including shares with voting rights and other rights and privileges that may deter a change in control) and issue additional common shares.
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actual receipt of an improper benefit or profit in money, property or services; or
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active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated.
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our TRSs may not directly or indirectly operate or manage a lodging facility, as defined by the IRC;
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the leases to our TRSs must be respected as true leases for federal income tax purposes and not as service contracts, partnerships, joint ventures, financings, or other types of arrangements;
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the leased properties must constitute qualified lodging facilities (including customary amenities and facilities) under the IRC;
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the leased properties must be managed and operated on behalf of the TRSs by independent contractors who are less than 35% affiliated with us and who are actively engaged (or have affiliates so engaged) in the trade or business of managing and operating qualified lodging facilities for persons unrelated to us; and
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the rental and other terms of the leases must be arm’s length.
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our ability to make or sustain the rate of our distributions will be adversely affected if any of the risks described herein, or other significant events, occur;
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our making of distributions is subject to compliance with restrictions contained in our credit agreement and may be subject to restrictions in future debt obligations we may incur; and
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any distributions will be made at the discretion of our Board of Trustees and will depend upon various factors that our Board of Trustees deems relevant, including our results of operations, our financial condition, debt and equity capital available to us, our expectation of our future capital requirements, our funds from operations, or FFO, our normalized funds from operations, or Normalized FFO, restrictive covenants in our financial or other contractual arrangements (including those contained in our credit agreement), tax law requirements to maintain our qualification for taxation as a REIT, restrictions under Maryland law and our expected needs and availability of cash to pay our obligations.
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the extent of investor interest in our securities;
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the general reputation of REITs and externally managed companies and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate based companies or by other issuers less sensitive to rises in interest rates;
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our underlying asset value;
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investor confidence in the stock and bond markets, generally;
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market interest rates;
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national economic conditions;
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changes in tax laws;
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changes in our credit ratings; and
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general market conditions.
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Hotels
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Travel Centers
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All Properties
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|
|
|
|
|
|
||||||||||||||||||||||||
Location of Properties
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
United States
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Alabama
|
|
4
|
|
|
$
|
33,715
|
|
|
$
|
23,273
|
|
|
4
|
|
|
$
|
76,122
|
|
|
$
|
54,236
|
|
|
8
|
|
|
$
|
109,837
|
|
|
$
|
77,509
|
|
Arkansas
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
91,469
|
|
|
59,268
|
|
|
4
|
|
|
91,469
|
|
|
59,268
|
|
||||||
Arizona
|
|
15
|
|
|
173,989
|
|
|
107,505
|
|
|
7
|
|
|
159,092
|
|
|
114,999
|
|
|
22
|
|
|
333,081
|
|
|
222,504
|
|
||||||
California
|
|
36
|
|
|
877,540
|
|
|
623,640
|
|
|
11
|
|
|
195,159
|
|
|
161,520
|
|
|
47
|
|
|
1,072,697
|
|
|
785,165
|
|
||||||
Colorado
|
|
6
|
|
|
141,779
|
|
|
123,213
|
|
|
3
|
|
|
42,210
|
|
|
29,536
|
|
|
9
|
|
|
183,989
|
|
|
152,749
|
|
||||||
Connecticut
|
|
1
|
|
|
5,112
|
|
|
4,042
|
|
|
3
|
|
|
35,732
|
|
|
19,200
|
|
|
4
|
|
|
40,844
|
|
|
23,242
|
|
||||||
Delaware
|
|
1
|
|
|
16,240
|
|
|
9,697
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
16,240
|
|
|
9,697
|
|
||||||
Florida
|
|
13
|
|
|
255,383
|
|
|
182,158
|
|
|
7
|
|
|
143,763
|
|
|
108,493
|
|
|
20
|
|
|
399,146
|
|
|
290,651
|
|
||||||
Georgia
|
|
21
|
|
|
316,638
|
|
|
214,583
|
|
|
8
|
|
|
116,933
|
|
|
86,844
|
|
|
29
|
|
|
433,571
|
|
|
301,427
|
|
||||||
Hawaii
|
|
1
|
|
|
92,819
|
|
|
54,731
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
92,819
|
|
|
54,731
|
|
||||||
Iowa
|
|
2
|
|
|
18,919
|
|
|
10,927
|
|
|
1
|
|
|
11,017
|
|
|
7,942
|
|
|
3
|
|
|
29,936
|
|
|
18,869
|
|
||||||
Idaho
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
16,488
|
|
|
12,487
|
|
|
1
|
|
|
16,488
|
|
|
12,487
|
|
||||||
Illinois
|
|
15
|
|
|
292,818
|
|
|
225,115
|
|
|
10
|
|
|
130,016
|
|
|
102,143
|
|
|
25
|
|
|
422,834
|
|
|
327,258
|
|
||||||
Indiana
|
|
3
|
|
|
35,401
|
|
|
19,196
|
|
|
11
|
|
|
152,012
|
|
|
127,032
|
|
|
14
|
|
|
187,413
|
|
|
146,228
|
|
||||||
Kansas
|
|
4
|
|
|
31,084
|
|
|
18,565
|
|
|
1
|
|
|
14,559
|
|
|
13,512
|
|
|
5
|
|
|
45,643
|
|
|
32,077
|
|
||||||
Kentucky
|
|
1
|
|
|
3,042
|
|
|
2,337
|
|
|
3
|
|
|
46,269
|
|
|
30,997
|
|
|
4
|
|
|
49,311
|
|
|
33,334
|
|
||||||
Louisiana
|
|
2
|
|
|
213,475
|
|
|
184,966
|
|
|
7
|
|
|
125,605
|
|
|
90,059
|
|
|
9
|
|
|
339,080
|
|
|
275,025
|
|
||||||
Massachusetts
|
|
14
|
|
|
322,032
|
|
|
238,477
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
322,032
|
|
|
238,477
|
|
||||||
Maryland
|
|
7
|
|
|
157,771
|
|
|
113,526
|
|
|
3
|
|
|
51,619
|
|
|
34,378
|
|
|
10
|
|
|
209,390
|
|
|
147,904
|
|
||||||
Michigan
|
|
11
|
|
|
81,649
|
|
|
57,535
|
|
|
5
|
|
|
50,167
|
|
|
39,967
|
|
|
16
|
|
|
131,816
|
|
|
97,502
|
|
||||||
Minnesota
|
|
5
|
|
|
57,082
|
|
|
39,180
|
|
|
1
|
|
|
6,819
|
|
|
5,341
|
|
|
6
|
|
|
63,901
|
|
|
44,521
|
|
||||||
Missouri
|
|
5
|
|
|
55,665
|
|
|
34,516
|
|
|
5
|
|
|
62,132
|
|
|
41,491
|
|
|
10
|
|
|
117,797
|
|
|
76,007
|
|
||||||
Mississippi
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
22,579
|
|
|
14,310
|
|
|
1
|
|
|
22,579
|
|
|
14,310
|
|
||||||
North Carolina
|
|
13
|
|
|
128,301
|
|
|
83,796
|
|
|
3
|
|
|
39,704
|
|
|
28,518
|
|
|
16
|
|
|
168,005
|
|
|
112,314
|
|
||||||
Nebraska
|
|
2
|
|
|
12,293
|
|
|
10,743
|
|
|
3
|
|
|
43,291
|
|
|
25,736
|
|
|
5
|
|
|
55,584
|
|
|
36,479
|
|
||||||
New Hampshire
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
6,691
|
|
|
5,172
|
|
|
1
|
|
|
6,691
|
|
|
5,172
|
|
||||||
New Jersey
|
|
15
|
|
|
297,305
|
|
|
225,591
|
|
|
4
|
|
|
109,365
|
|
|
78,634
|
|
|
19
|
|
|
406,670
|
|
|
304,225
|
|
||||||
New Mexico
|
|
2
|
|
|
26,785
|
|
|
15,203
|
|
|
6
|
|
|
95,127
|
|
|
57,245
|
|
|
8
|
|
|
121,912
|
|
|
72,448
|
|
||||||
Nevada
|
|
3
|
|
|
50,824
|
|
|
32,769
|
|
|
5
|
|
|
154,210
|
|
|
121,850
|
|
|
8
|
|
|
205,034
|
|
|
154,619
|
|
||||||
New York
|
|
5
|
|
|
118,733
|
|
|
76,462
|
|
|
6
|
|
|
48,976
|
|
|
38,012
|
|
|
11
|
|
|
167,709
|
|
|
114,474
|
|
||||||
Ohio
|
|
8
|
|
|
78,706
|
|
|
61,506
|
|
|
14
|
|
|
179,253
|
|
|
126,123
|
|
|
22
|
|
|
257,959
|
|
|
187,629
|
|
||||||
Oklahoma
|
|
3
|
|
|
32,058
|
|
|
23,842
|
|
|
4
|
|
|
38,000
|
|
|
24,324
|
|
|
7
|
|
|
70,058
|
|
|
48,166
|
|
||||||
Oregon
|
|
1
|
|
|
114,229
|
|
|
111,352
|
|
|
3
|
|
|
41,898
|
|
|
30,960
|
|
|
4
|
|
|
156,127
|
|
|
142,312
|
|
||||||
Pennsylvania
|
|
10
|
|
|
197,660
|
|
|
133,308
|
|
|
9
|
|
|
135,777
|
|
|
96,646
|
|
|
19
|
|
|
333,437
|
|
|
229,954
|
|
||||||
Rhode Island
|
|
1
|
|
|
14,750
|
|
|
7,880
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
14,750
|
|
|
7,880
|
|
||||||
South Carolina
|
|
3
|
|
|
75,578
|
|
|
52,095
|
|
|
3
|
|
|
49,079
|
|
|
37,570
|
|
|
6
|
|
|
124,657
|
|
|
89,665
|
|
||||||
Tennessee
|
|
8
|
|
|
137,637
|
|
|
80,677
|
|
|
7
|
|
|
103,794
|
|
|
81,334
|
|
|
15
|
|
|
241,431
|
|
|
162,011
|
|
||||||
Texas
|
|
35
|
|
|
500,010
|
|
|
326,762
|
|
|
18
|
|
|
391,898
|
|
|
271,978
|
|
|
53
|
|
|
891,908
|
|
|
598,740
|
|
||||||
Utah
|
|
3
|
|
|
64,801
|
|
|
36,771
|
|
|
2
|
|
|
19,177
|
|
|
12,013
|
|
|
5
|
|
|
83,978
|
|
|
48,784
|
|
||||||
Virginia
|
|
15
|
|
|
180,064
|
|
|
110,965
|
|
|
3
|
|
|
53,545
|
|
|
39,499
|
|
|
18
|
|
|
233,609
|
|
|
150,464
|
|
||||||
Vermont
|
|
1
|
|
|
14,129
|
|
|
13,388
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
14,129
|
|
|
13,388
|
|
||||||
Washington
|
|
6
|
|
|
88,820
|
|
|
53,853
|
|
|
2
|
|
|
10,414
|
|
|
5,807
|
|
|
8
|
|
|
99,234
|
|
|
59,660
|
|
||||||
Wisconsin
|
|
1
|
|
|
13,899
|
|
|
8,454
|
|
|
2
|
|
|
18,293
|
|
|
12,714
|
|
|
3
|
|
|
32,192
|
|
|
21,168
|
|
||||||
West Virginia
|
|
1
|
|
|
10,780
|
|
|
6,677
|
|
|
2
|
|
|
15,933
|
|
|
12,278
|
|
|
3
|
|
|
26,713
|
|
|
18,955
|
|
||||||
Wyoming
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
|
71,661
|
|
|
45,813
|
|
|
4
|
|
|
71,661
|
|
|
45,813
|
|
||||||
|
|
303
|
|
|
5,339,515
|
|
|
3,759,276
|
|
|
197
|
|
|
3,175,848
|
|
|
2,305,981
|
|
|
500
|
|
|
8,515,361
|
|
|
6,065,262
|
|
||||||
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Ontario, Canada
|
|
2
|
|
|
44,246
|
|
|
30,333
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
44,246
|
|
|
30,333
|
|
||||||
Puerto Rico
|
|
1
|
|
|
156,114
|
|
|
107,670
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
156,114
|
|
|
107,670
|
|
||||||
|
|
3
|
|
|
200,360
|
|
|
138,003
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
200,360
|
|
|
138,003
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total
|
|
306
|
|
|
5,539,875
|
|
|
3,897,279
|
|
|
197
|
|
|
3,175,848
|
|
|
2,305,981
|
|
|
503
|
|
|
8,715,721
|
|
|
6,203,265
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Held For Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Tennessee
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
7,668
|
|
|
6,128
|
|
|
1
|
|
|
7,668
|
|
|
6,128
|
|
||||||
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
7,668
|
|
|
6,128
|
|
|
1
|
|
|
7,668
|
|
|
6,128
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Grand Total
|
|
306
|
|
|
$
|
5,539,875
|
|
|
$
|
3,897,279
|
|
|
198
|
|
|
$
|
3,183,516
|
|
|
$
|
2,312,109
|
|
|
504
|
|
|
$
|
8,723,389
|
|
|
$
|
6,209,393
|
|
14 hotels
(1)
|
$
|
175,864
|
|
16 travel centers
(2)
|
104,790
|
|
|
Total
|
$
|
280,654
|
|
2015
|
|
High
|
|
Low
|
||||
First Quarter
|
|
$
|
34.20
|
|
|
$
|
29.90
|
|
Second Quarter
|
|
34.08
|
|
|
28.54
|
|
||
Third Quarter
|
|
30.11
|
|
|
24.75
|
|
||
Fourth Quarter
|
|
28.83
|
|
|
25.27
|
|
2016
|
|
High
|
|
Low
|
||||
First Quarter
|
|
$
|
26.66
|
|
|
$
|
20.69
|
|
Second Quarter
|
|
28.80
|
|
|
24.62
|
|
||
Third Quarter
|
|
32.32
|
|
|
28.20
|
|
||
Fourth Quarter
|
|
32.00
|
|
|
26.06
|
|
|
Cash
Distributions
Per
Common Share
|
||||||
|
|||||||
|
|||||||
|
2016
|
|
2015
|
||||
First Quarter
|
$
|
0.50
|
|
|
$
|
0.49
|
|
Second Quarter
|
0.51
|
|
|
0.50
|
|
||
Third Quarter
|
0.51
|
|
|
0.50
|
|
||
Fourth Quarter
|
0.51
|
|
|
0.50
|
|
||
Total
|
$
|
2.03
|
|
|
$
|
1.99
|
|
|
For the Year Ended December 31,
|
|||||||||||||
|
|
|
|
|
Increase
(Decrease)
|
|
% Increase
(Decrease)
|
|||||||
|
2016
|
|
2015
|
|
|
|||||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|||||
Hotel operating revenues
|
$
|
1,730,326
|
|
|
$
|
1,634,654
|
|
|
$
|
95,672
|
|
|
5.9
|
%
|
Rental income - hotels
|
33,202
|
|
|
32,533
|
|
|
669
|
|
|
2.1
|
%
|
|||
Rental income - travel centers
|
279,175
|
|
|
250,582
|
|
|
28,593
|
|
|
11.4
|
%
|
|||
Total rental income
|
312,377
|
|
|
283,115
|
|
|
29,262
|
|
|
10.3
|
%
|
|||
FF&E reserve income
|
4,508
|
|
|
4,135
|
|
|
373
|
|
|
9.0
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|||
Hotel operating expenses
|
1,202,538
|
|
|
1,143,981
|
|
|
58,557
|
|
|
5.1
|
%
|
|||
Depreciation and amortization - hotels
|
224,335
|
|
|
213,964
|
|
|
10,371
|
|
|
4.8
|
%
|
|||
Depreciation and amortization - travel centers
|
133,007
|
|
|
115,812
|
|
|
17,195
|
|
|
14.8
|
%
|
|||
Total depreciation and amortization
|
357,342
|
|
|
329,776
|
|
|
27,566
|
|
|
8.4
|
%
|
|||
General and administrative
|
99,105
|
|
|
109,837
|
|
|
(10,732
|
)
|
|
(9.8
|
)%
|
|||
Acquisition related costs
|
1,367
|
|
|
2,375
|
|
|
(1,008
|
)
|
|
(42.4
|
)%
|
|||
|
|
|
|
|
|
|
|
|||||||
Operating income
|
386,859
|
|
|
335,935
|
|
|
50,924
|
|
|
15.2
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Dividend income
|
2,001
|
|
|
2,640
|
|
|
(639
|
)
|
|
(24.2
|
)%
|
|||
Interest income
|
274
|
|
|
44
|
|
|
230
|
|
|
522.7
|
%
|
|||
Interest expense
|
(161,913
|
)
|
|
(144,898
|
)
|
|
(17,015
|
)
|
|
11.7
|
%
|
|||
Loss on distribution to common shareholders of The RMR Group Inc. common stock
|
—
|
|
|
(36,773
|
)
|
|
36,773
|
|
|
n/m
|
|
|||
Loss on early extinguishment of debt
|
(228
|
)
|
|
—
|
|
|
(228
|
)
|
|
n/m
|
|
|||
Income before income taxes, equity earnings of an investee and gain on sale of real estate
|
226,993
|
|
|
156,948
|
|
|
70,045
|
|
|
44.6
|
%
|
|||
Income tax expense
|
(4,020
|
)
|
|
(1,566
|
)
|
|
(2,454
|
)
|
|
156.7
|
%
|
|||
Equity in earnings of an investee
|
137
|
|
|
21
|
|
|
116
|
|
|
552.4
|
%
|
|||
Income before gain on sale of real estate
|
223,110
|
|
|
155,403
|
|
|
67,707
|
|
|
43.6
|
%
|
|||
Gain on sale of real estate
|
—
|
|
|
11,015
|
|
|
(11,015
|
)
|
|
n/m
|
|
|||
Net income
|
223,110
|
|
|
166,418
|
|
|
56,692
|
|
|
34.1
|
%
|
|||
Preferred distributions
|
(20,664
|
)
|
|
(20,664
|
)
|
|
—
|
|
|
—
|
%
|
|||
Net income available for common shareholders
|
$
|
202,446
|
|
|
$
|
145,754
|
|
|
$
|
56,692
|
|
|
38.9
|
%
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding (basic)
|
156,062
|
|
|
150,709
|
|
|
5,353
|
|
|
3.6
|
%
|
|||
Weighted average shares outstanding (diluted)
|
156,088
|
|
|
151,002
|
|
|
5,086
|
|
|
3.4
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Net income available for common shareholders per common share: basic and diluted
|
$
|
1.30
|
|
|
$
|
0.97
|
|
|
$
|
0.33
|
|
|
34.0
|
%
|
|
For the Year Ended December 31,
|
|||||||||||||
|
|
|
|
|
Increase
(Decrease)
|
|
% Increase
(Decrease)
|
|||||||
|
2015
|
|
2014
|
|
|
|||||||||
Revenues:
|
|
|
|
|
|
|
|
|||||||
Hotel operating revenues
|
$
|
1,634,654
|
|
|
$
|
1,474,757
|
|
|
$
|
159,897
|
|
|
10.8
|
%
|
Rental income—hotels
|
32,533
|
|
|
32,668
|
|
|
(135
|
)
|
|
(0.4
|
)%
|
|||
Rental income—travel centers
|
250,582
|
|
|
225,394
|
|
|
25,188
|
|
|
11.2
|
%
|
|||
Total rental income
|
283,115
|
|
|
258,062
|
|
|
25,053
|
|
|
9.7
|
%
|
|||
FF&E reserve income
|
4,135
|
|
|
3,503
|
|
|
632
|
|
|
18.0
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Expenses:
|
|
|
|
|
|
|
|
|
||||||
Hotel operating expenses
|
1,143,981
|
|
|
1,035,138
|
|
|
108,843
|
|
|
10.5
|
%
|
|||
Depreciation and amortization—hotels
|
213,964
|
|
|
213,527
|
|
|
437
|
|
|
0.2
|
%
|
|||
Depreciation and amortization—travel centers
|
115,812
|
|
|
102,351
|
|
|
13,461
|
|
|
13.2
|
%
|
|||
Total depreciation and amortization
|
329,776
|
|
|
315,878
|
|
|
13,898
|
|
|
4.4
|
%
|
|||
General and administrative
|
109,837
|
|
|
45,897
|
|
|
63,940
|
|
|
139.3
|
%
|
|||
Acquisition related costs
|
2,375
|
|
|
239
|
|
|
2,136
|
|
|
893.7
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Operating income
|
335,935
|
|
|
339,170
|
|
|
(3,235
|
)
|
|
(1.0
|
)%
|
|||
|
|
|
|
|
|
|
|
|||||||
Dividend income
|
2,640
|
|
|
—
|
|
|
2,640
|
|
|
n/m
|
|
|||
Interest income
|
44
|
|
|
77
|
|
|
(33
|
)
|
|
(42.9
|
)%
|
|||
Interest expense
|
(144,898
|
)
|
|
(139,486
|
)
|
|
(5,412
|
)
|
|
3.9
|
%
|
|||
Loss on distribution to shareholders of The RMR Group Inc. common stock
|
(36,773
|
)
|
|
—
|
|
|
(36,773
|
)
|
|
n/m
|
|
|||
Loss on early extinguishment of debt
|
—
|
|
|
(855
|
)
|
|
855
|
|
|
n/m
|
|
|||
Income before income taxes and equity in earnings (losses) of an investee
|
156,948
|
|
|
198,906
|
|
|
(41,958
|
)
|
|
(21.1
|
)%
|
|||
Income tax expense
|
(1,566
|
)
|
|
(1,945
|
)
|
|
379
|
|
|
(19.5
|
)%
|
|||
Equity in earnings (losses) of an investee
|
21
|
|
|
94
|
|
|
(73
|
)
|
|
(77.7
|
)%
|
|||
Income before gain on sale of real estate
|
155,403
|
|
|
197,055
|
|
|
(41,652
|
)
|
|
(21.1
|
)%
|
|||
Gain on sale of real estate
|
11,015
|
|
|
130
|
|
|
10,885
|
|
|
8,373.1
|
%
|
|||
Net income
|
166,418
|
|
|
197,185
|
|
|
(30,767
|
)
|
|
(15.6
|
)%
|
|||
Preferred distributions
|
(20,664
|
)
|
|
(20,664
|
)
|
|
—
|
|
|
—
|
|
|||
Net income available for common shareholders
|
$
|
145,754
|
|
|
$
|
176,521
|
|
|
$
|
(30,767
|
)
|
|
(17.4
|
)%
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding (basic)
|
150,709
|
|
|
149,652
|
|
|
1,057
|
|
|
0.7
|
%
|
|||
Weighted average shares outstanding (diluted)
|
151,002
|
|
|
149,817
|
|
|
1,185
|
|
|
0.8
|
%
|
|||
|
|
|
|
|
|
|
|
|||||||
Net income available for common shareholders per common share: (basic and diluted)
|
0.97
|
|
|
1.18
|
|
|
$
|
(0.21
|
)
|
|
(17.8
|
)%
|
•
|
During the year ended
December 31, 2016
, we funded
$2,799
for capital improvements to hotels under our Marriott No. 1 agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$4,000
for capital improvements under this agreement during 2017 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the annual minimum returns payable to us increase.
|
•
|
During the year ended
December 31, 2016
, we funded
$950
for capital improvements to hotels under our Marriott No. 234 agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$6,500
for capital improvements under this agreement during 2017 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the annual minimum returns payable to us increase.
|
•
|
During the year ended
December 31, 2016
, we funded
$18,137
for capital improvements to hotels under our InterContinental agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$5,825
for capital improvements under this agreement during 2017 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the annual minimum returns payable to us increase.
|
•
|
Our Sonesta agreement does not require FF&E escrow deposits. Under our Sonesta agreement, we are required to fund capital expenditures made at our hotels. During the year ended
December 31, 2016
, we funded
$54,105
for capital improvements to hotels included in our Sonesta agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$35,800
for capital improvements under this agreement during 2017 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the annual minimum returns payable to us increase to the extent amounts funded exceed threshold amounts, as defined in our Sonesta agreement.
|
•
|
Our Wyndham agreement requires FF&E escrow deposits only if there are excess cash flows after payment of our minimum return. No FF&E escrow deposits were required during the year ended
December 31, 2016
. During the year ended
December 31, 2016
, we funded
$4,843
for capital improvements to hotels included in our Wyndham agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$11,100
for capital improvements under this agreement during 2017 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the annual minimum returns payable to us increase.
|
|
|
Payment due by period
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Less than
1 year
|
|
1 - 3 years
|
|
3 - 5 years
|
|
More than
5 years
|
||||||||||
Long-term debt obligations
(1)
|
|
$
|
3,199,478
|
|
|
$
|
—
|
|
|
$
|
941,000
|
|
|
$
|
400,000
|
|
|
$
|
1,858,478
|
|
Ground lease obligations
(2)
|
|
99,037
|
|
|
11,928
|
|
|
19,723
|
|
|
13,218
|
|
|
54,168
|
|
|||||
Security deposits
(3)
|
|
89,338
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
89,338
|
|
|||||
Capital improvements
(4)
|
|
143,925
|
|
|
143,925
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Purchase obligations
(5)
|
|
187,019
|
|
|
187,019
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Projected interest expense
(6)
|
|
808,666
|
|
|
142,586
|
|
|
236,614
|
|
|
203,944
|
|
|
225,522
|
|
|||||
Business management incentive fee expense
(7)
|
|
52,407
|
|
|
52,407
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total
|
|
$
|
4,579,870
|
|
|
$
|
537,865
|
|
|
$
|
1,197,337
|
|
|
$
|
617,162
|
|
|
$
|
2,227,506
|
|
(1)
|
Holders of our convertible senior notes ($8,478 due in 2027) may require us to repurchase all or a portion of the notes on March 15, 2017 and March 15, 2022, or upon the occurrence of certain change in control events. The amounts in the table reflect these notes in the “More than 5 years” category based on the stated maturity date of these notes.
|
(2)
|
14 of our hotels and 16 of our travel centers are on land leased partially or in its entirety. In each case the ground lessors are unrelated to us. Pursuant to the terms of our management agreements and leases, payments of ground lease obligations are generally made by our managers or tenants. However, if a manager or tenant fails to perform obligations under a ground lease or elects not to renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected hotel or travel center. We have included the future rent expense under these ground leases in the table above.
|
(3)
|
Represents the security deposit balance as of
December 31, 2016
. We may draw upon security deposits to cover any rent or return shortfalls thereby decreasing the potential obligation to repay some of these deposits.
|
(4)
|
Represents amounts we expect to fund for capital improvements to our hotels in excess of amounts available in FF&E reserves and to our travel centers as of
December 31, 2016
.
|
(5)
|
Represents the purchase price for one hotel we agreed to acquire in November 2016 for a purchase price of $71,625 and one hotel we acquired in February 2017 for a purchase price of $85,494, in each case excluding acquisition related costs. Also includes our commitment to acquire a travel center site being developed by TA for $29,000 and a parcel of land adjacent to one of our hotels we expect to acquire for $900.
|
(6)
|
Projected interest expense is interest attributable to only debt obligations listed above at existing rates as of
December 31, 2016
and is not intended to project future interest costs which may result from debt prepayments, additional borrowings under our revolving credit facility, new debt issuances or changes in interest rates.
|
(7)
|
Represents business management incentive fees due to RMR LLC under our business management agreement. This fee was paid to RMR LLC in January 2017.
|
•
|
variable interest entities;
|
•
|
allocation of purchase prices between various asset categories and the related impact on the recognition of depreciation and amortization expenses;
|
•
|
assessment of the carrying values and impairments of real estate, intangible assets and equity investments;
|
•
|
classification of leases and the related impact on the recognition of rental income; and
|
•
|
income taxes.
|
|
|
|
|
|
|
|
|
|
|
Rent / Return Coverage
(3)
|
||||||||
|
|
|
|
|
|
|
|
Annual
Minimum
Return/Rent
(2)
|
|
Year Ended
December 31,
|
||||||||
Operating Agreement
|
|
Number of
Properties
|
|
Number of
Rooms/
Suites
|
|
|
|
|
||||||||||
Reference Name
|
|
|
|
Investment
(1)
|
|
|
2016
|
|
2015
|
|||||||||
Marriott (No. 1)
(4)
|
|
53
|
|
|
7,610
|
|
|
$
|
691,298
|
|
|
$
|
68,636
|
|
|
1.37x
|
|
1.33x
|
Marriott (No. 234)
(5)
|
|
68
|
|
|
9,120
|
|
|
1,001,389
|
|
|
106,360
|
|
|
1.14x
|
|
1.08x
|
||
Marriott (No. 5)
(6)
|
|
1
|
|
|
356
|
|
|
90,078
|
|
|
10,116
|
|
|
0.74x
|
|
0.55x
|
||
Subtotal / Average Marriott
|
|
122
|
|
|
17,086
|
|
|
1,782,765
|
|
|
185,112
|
|
|
1.20x
|
|
1.14x
|
||
InterContinental
(7)
|
|
94
|
|
|
14,403
|
|
|
1,695,778
|
|
|
161,789
|
|
|
1.21x
|
|
1.19x
|
||
Sonesta
(8)
|
|
34
|
|
|
6,329
|
|
|
1,196,797
|
|
|
90,171
|
|
|
0.70x
|
|
0.70x
|
||
Wyndham
(9)
|
|
22
|
|
|
3,579
|
|
|
386,758
|
|
|
28,404
|
|
|
0.90x
|
|
0.91x
|
||
Hyatt
(10)
|
|
22
|
|
|
2,724
|
|
|
301,942
|
|
|
22,037
|
|
|
1.16x
|
|
1.12x
|
||
Carlson
(11)
|
|
11
|
|
|
2,090
|
|
|
209,895
|
|
|
12,920
|
|
|
1.29x
|
|
1.32x
|
||
Morgans
(12)
|
|
1
|
|
|
372
|
|
|
120,000
|
|
|
7,595
|
|
|
1.01x
|
|
1.18x
|
||
Subtotal / Average Hotels
|
|
306
|
|
|
46,583
|
|
|
5,693,935
|
|
|
508,028
|
|
|
1.10x
|
|
1.08x
|
||
TA (No. 1)
(13)
|
|
40
|
|
|
N/A
|
|
|
661,417
|
|
|
51,435
|
|
|
1.64x
|
|
1.73x
|
||
TA (No. 2)
(14)
|
|
40
|
|
|
N/A
|
|
|
665,127
|
|
|
52,327
|
|
|
1.52x
|
|
1.75x
|
||
TA (No. 3)
(15)
|
|
39
|
|
|
N/A
|
|
|
620,240
|
|
|
52,665
|
|
|
1.57x
|
|
1.74x
|
||
TA (No. 4)
(16)
|
|
39
|
|
|
N/A
|
|
|
568,098
|
|
|
50,117
|
|
|
1.55x
|
|
1.76x
|
||
TA (No. 5)
(17)
|
|
40
|
|
|
N/A
|
|
|
862,697
|
|
|
67,573
|
|
|
1.58x
|
|
1.71x
|
||
Subtotal / Average TA
|
|
198
|
|
|
N/A
|
|
|
3,377,579
|
|
|
274,117
|
|
|
1.57x
|
|
1.74x
|
||
Total / Average
|
|
504
|
|
|
46,583
|
|
|
$
|
9,071,514
|
|
|
$
|
782,145
|
|
|
1.26x
|
|
1.30x
|
(1)
|
Represents the historical cost of our properties plus capital improvements funded by us less impairment writedowns, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations.
|
(2)
|
Each of our management agreements or leases provides for payment to us of an annual minimum return or rent, respectively. Certain of these minimum payment amounts are secured by full or limited guarantees or security deposits as more fully described below. In addition, certain of our hotel management agreements provide for payment to us of additional amounts to the extent of available cash flows as defined in the management agreement. Payments of these additional amounts are not guaranteed or secured by deposits. Annualized minimum rent amounts represent cash rent amounts due to us and exclude adjustments necessary to record rent on a straight line basis.
|
(3)
|
We define coverage as combined total property level revenues minus all property level expenses and FF&E reserve escrows which are not subordinated to minimum returns and rent payments due to us (which data is provided to us by our managers or tenants), divided by the minimum return or rent payments due to us. Coverage amounts for our InterContinental, Sonesta and TA Nos. 1, 2, 3 and 4 leases include data for periods prior to our ownership of certain properties.
|
(4)
|
We lease
53
Courtyard by Marriott
®
branded hotels in 24 states to one of our TRSs. The hotels are managed by a subsidiary of Marriott under a combination management agreement which expires in 2024; Marriott has two renewal options for 12 years each for all, but not less than all, of the hotels.
|
(5)
|
We lease
68
of our Marriott branded hotels (one full service Marriott
®
,
35
Residence Inn by Marriott
®
, 18 Courtyard by Marriott
®
,
12
TownePlace Suites by Marriott
®
and
two
SpringHill Suites by Marriott
®
hotels) in 22 states to one of our TRSs. The hotels are managed by subsidiaries of Marriott under a combination management agreement which expires in 2025; Marriott has two renewal options for 10 years each for all, but not less than all, of the hotels.
|
(6)
|
We lease one Marriott
®
branded hotel in Kauai, HI to a subsidiary of Marriott under a lease that expires in 2019. Marriott has four renewal options for 15 years each. On August 31, 2016, Marriott notified us that it will not exercise its renewal option at the expiration of the current lease term ending on December 31, 2019. This lease is guaranteed by Marriott and provides for increases in the annual minimum rent payable to us based on changes in the consumer price index.
|
(7)
|
We lease 93 InterContinental branded hotels (
19
Staybridge Suites
®
,
61
Candlewood Suites
®
, two InterContinental
®
,
seven
Crowne Plaza
®
,
three
Holiday Inn
®
and
one
Kimpton
®
Hotels & Restaurants) in 28 states in the U.S. and Ontario, Canada to one of our TRSs. These 93 hotels are managed by subsidiaries of InterContinental under a combination management agreement. We lease one additional InterContinental
®
branded hotel in Puerto Rico to a subsidiary of InterContinental. The annual minimum return amount presented in the table on page 70 includes $7,904 of minimum rent related to the leased Puerto Rico hotel. The management agreement and the lease expire in 2036; InterContinental has two renewal options for 15 years each for all, but not less than all, of the hotels.
|
(8)
|
We lease our
34
Sonesta branded hotels (
four
Royal Sonesta
®
Hotels,
five
Sonesta Hotels & Resorts
®
and
25
Sonesta ES Suites
®
hotels) in 19 states to one of our TRSs. The hotels are managed by Sonesta under a combination management agreement which expires in 2037; Sonesta has two renewal options for 15 years each for all, but not less than all, of the hotels.
|
(9)
|
We lease our
22
Wyndham branded hotels (
six
Wyndham Hotels and Resorts
®
and
16
Hawthorn Suites
®
hotels) in 14 states to one of our TRSs. The hotels are managed by a subsidiary of Wyndham under a combination management agreement which expires in 2038; Wyndham has two renewal options for 15 years each for all, but not less than all, of the hotels. We also lease 48 vacation units in one of the hotels to Wyndham Vacation Resorts, Inc., a subsidiary of Wyndham, or Wyndham Vacation, under a lease that expires in 2037; Wyndham Vacation has two renewal options for 15 years each for all, but not less than all, of the vacation units. The lease is guaranteed by Wyndham and provides for rent increases of 3% per annum. The annual minimum return amount presented in the table on page 70 includes $1,407 of minimum rent related to the Wyndham Vacation lease.
|
(10)
|
We lease our
22
Hyatt Place
®
branded hotels in 14 states to one of our TRSs. The hotels are managed by a subsidiary of Hyatt under a combination management agreement that expires in 2030; Hyatt has two renewal options for 15 years each for all, but not less than all, of the hotels.
|
(11)
|
We lease our
11
Carlson branded hotels (
five
Radisson
®
Hotels & Resorts,
one
Park Plaza
®
Hotels & Resorts and
five
Country Inns & Suites
®
hotels) in seven states to one of our TRSs. The hotels are managed by a subsidiary of Carlson under a combination management agreement that expires in 2030; Carlson has two renewal options for 15 years each for all, but not less than all, of the hotels.
|
(12)
|
We historically leased the Clift Hotel
®
in San Francisco, California to a subsidiary of Morgans. By its terms, this historical lease expired in 2103 and required annual rent to us of $7,595, which amount was scheduled to increase on October 14, 2019 and every five years thereafter based upon consumer price index increases of no less than 10% and no more than 20% at the time of each increase. Although this historical lease would have qualified as a direct financing lease under GAAP, we recognized the rental income we received from Morgans on a cash basis because of uncertainty regarding our collection of future rent increases. In December 2016, we notified Morgans that the closing of its merger with SBE without our consent was a breach of its lease obligations and shortly thereafter we commenced an unlawful detainer action in the California state courts to compel Morgans and SBE to surrender possession of this hotel to us. We are currently pursuing this litigation and simultaneously having discussions with Morgans and SBE regarding this hotel. The outcome of this pending litigation and our discussions with Morgans and SBE is not assured, but we believe Morgans may surrender to us possession of this hotel or that the court will determine that Morgans and SBE have breached the historical lease. We also believe that this hotel may require substantial capital investment to remain competitive in its market. The continuation of our dispute with Morgans and SBE is causing us to incur legal fees. Despite the continuation of this dispute, Morgans has paid the rents due to us in January and February 2017; however, we believe that we may suffer some loss of future rent from this hotel, at least until this hotel is renovated and properly operated.
|
(13)
|
We lease 40 travel centers (36 TravelCenters of America
®
branded travel centers and four Petro Stopping Centers
®
branded travel centers) in 29 states to a subsidiary of TA under a lease that expires in 2029; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, beginning in 2016, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2015 non-fuel revenues). TA’s previously deferred rent of $27,421 is due at the expiration of the initial term of this lease. This lease is guaranteed by TA.
|
(14)
|
We lease 40 travel centers (38 TravelCenters of America
®
branded travel centers and two Petro Stopping Centers
®
branded travel centers) in 27 states to a subsidiary of TA under a lease that expires in 2028; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, beginning in 2016, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2015 non-fuel revenues). TA’s previously deferred rent of $29,107 is due at the expiration of the initial term of this lease. This lease is guaranteed by TA.
|
(15)
|
We lease 39 travel centers (38 TravelCenters of America
®
branded travel centers and one Petro Stopping Centers
®
branded travel center) in 29 states to a subsidiary of TA under a lease that expires in 2026; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, beginning in 2016, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2015 non-fuel revenues). TA’s previously deferred rent of $29,324 is due at the expiration of the initial term of this lease. This lease is guaranteed by TA.
|
(16)
|
We lease 39 travel centers (37 TravelCenters of America
®
branded travel centers and two Petro Stopping Centers
®
branded travel centers) in 28 states to a subsidiary of TA under a lease that expires in 2030; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, beginning in 2016, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year
|
(17)
|
We lease 40 Petro Stopping Centers
®
branded travel centers in 25 states to a subsidiary of TA under a lease that expires in 2032; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2012 non-fuel revenues). We have waived an aggregate of $2,500 of percentage rent as of
December 31, 2016
, the full amount we previously agreed to waive under our TA No. 5 lease. TA’s previously deferred rent of $42,915 is due on June 30, 2024. This lease is guaranteed by TA.
|
|
|
|
|
No. of
Rooms/
Suites
|
|
Year Ended December 31,
|
|||||||||||
|
|
No. of
Hotels
|
|
|
2016
|
|
2015
|
|
Change
|
||||||||
ADR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Marriott (No. 1)
|
|
53
|
|
|
7,610
|
|
|
$
|
131.72
|
|
|
$
|
127.86
|
|
|
3.0
|
%
|
Marriott (No. 234)
|
|
68
|
|
|
9,120
|
|
|
129.78
|
|
|
126.60
|
|
|
2.5
|
%
|
||
Marriott (No. 5)
|
|
1
|
|
|
356
|
|
|
252.03
|
|
|
239.62
|
|
|
5.2
|
%
|
||
Subtotal / Average Marriott
|
|
122
|
|
|
17,086
|
|
|
133.58
|
|
|
129.85
|
|
|
2.9
|
%
|
||
InterContinental
(1)
|
|
94
|
|
|
14,403
|
|
|
115.47
|
|
|
111.50
|
|
|
3.6
|
%
|
||
Sonesta
(1)
|
|
34
|
|
|
6,329
|
|
|
144.57
|
|
|
140.78
|
|
|
2.7
|
%
|
||
Wyndham
|
|
22
|
|
|
3,579
|
|
|
98.97
|
|
|
98.12
|
|
|
0.9
|
%
|
||
Hyatt
|
|
22
|
|
|
2,724
|
|
|
108.71
|
|
|
106.09
|
|
|
2.5
|
%
|
||
Carlson
|
|
11
|
|
|
2,090
|
|
|
109.34
|
|
|
107.29
|
|
|
1.9
|
%
|
||
Morgans
|
|
1
|
|
|
372
|
|
|
267.13
|
|
|
268.98
|
|
|
(0.7
|
)%
|
||
All Hotels Total / Average
|
|
306
|
|
|
46,583
|
|
|
$
|
125.01
|
|
|
$
|
121.65
|
|
|
2.8
|
%
|
OCCUPANCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Marriott (No. 1)
|
|
53
|
|
|
7,610
|
|
|
70.2
|
%
|
|
71.0
|
%
|
|
-0.8 pts
|
|
||
Marriott (No. 234)
|
|
68
|
|
|
9,120
|
|
|
76.1
|
%
|
|
75.4
|
%
|
|
0.7 pts
|
|
||
Marriott (No. 5)
|
|
1
|
|
|
356
|
|
|
86.2
|
%
|
|
84.8
|
%
|
|
1.4 pts
|
|
||
Subtotal / Average Marriott
|
|
122
|
|
|
17,086
|
|
|
73.7
|
%
|
|
73.6
|
%
|
|
0.1 pts
|
|
||
InterContinental
(1)
|
|
94
|
|
|
14,403
|
|
|
81.5
|
%
|
|
82.3
|
%
|
|
-0.8 pts
|
|
||
Sonesta
(1)
|
|
34
|
|
|
6,329
|
|
|
66.5
|
%
|
|
67.2
|
%
|
|
-0.7 pts
|
|
||
Wyndham
|
|
22
|
|
|
3,579
|
|
|
71.7
|
%
|
|
70.1
|
%
|
|
1.6 pts
|
|
||
Hyatt
|
|
22
|
|
|
2,724
|
|
|
80.3
|
%
|
|
79.3
|
%
|
|
1.0 pts
|
|
||
Carlson
|
|
11
|
|
|
2,090
|
|
|
72.4
|
%
|
|
73.4
|
%
|
|
-1.0 pts
|
|
||
Morgans
|
|
1
|
|
|
372
|
|
|
91.1
|
%
|
|
91.3
|
%
|
|
-0.2 pts
|
|
||
All Hotels Total / Average
|
|
306
|
|
|
46,583
|
|
|
75.4
|
%
|
|
75.6
|
%
|
|
-0.2 pts
|
|
||
RevPAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Marriott (No. 1)
|
|
53
|
|
|
7,610
|
|
|
$
|
92.47
|
|
|
$
|
90.78
|
|
|
1.9
|
%
|
Marriott (No. 234)
|
|
68
|
|
|
9,120
|
|
|
98.76
|
|
|
95.46
|
|
|
3.5
|
%
|
||
Marriott (No. 5)
|
|
1
|
|
|
356
|
|
|
217.25
|
|
|
203.20
|
|
|
6.9
|
%
|
||
Subtotal / Average Marriott
|
|
122
|
|
|
17,086
|
|
|
98.45
|
|
|
95.57
|
|
|
3.0
|
%
|
||
InterContinental
(1)
|
|
94
|
|
|
14,403
|
|
|
94.11
|
|
|
91.76
|
|
|
2.6
|
%
|
||
Sonesta
(1)
|
|
34
|
|
|
6,329
|
|
|
96.14
|
|
|
94.60
|
|
|
1.6
|
%
|
||
Wyndham
|
|
22
|
|
|
3,579
|
|
|
70.96
|
|
|
68.78
|
|
|
3.2
|
%
|
||
Hyatt
|
|
22
|
|
|
2,724
|
|
|
87.29
|
|
|
84.13
|
|
|
3.8
|
%
|
||
Carlson
|
|
11
|
|
|
2,090
|
|
|
79.16
|
|
|
78.75
|
|
|
0.5
|
%
|
||
Morgans
|
|
1
|
|
|
372
|
|
|
243.36
|
|
|
245.58
|
|
|
(0.9
|
)%
|
||
All Hotels Total / Average
|
|
306
|
|
|
46,583
|
|
|
$
|
94.26
|
|
|
$
|
91.97
|
|
|
2.5
|
%
|
(1)
|
Operating data includes data for periods prior to our ownership of certain hotels.
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income available for common shareholders
|
$
|
202,446
|
|
|
$
|
145,754
|
|
|
$
|
176,521
|
|
|
Add (Less):
|
Depreciation and amortization expense
|
357,342
|
|
|
329,776
|
|
|
315,878
|
|
|||
|
Gain on sale of real estate
|
—
|
|
|
(11,015
|
)
|
|
(130
|
)
|
|||
FFO available for common shareholders
|
559,788
|
|
|
464,515
|
|
|
492,269
|
|
||||
Add (Less):
|
Acquisition related costs
|
1,367
|
|
|
2,375
|
|
|
239
|
|
|||
|
Loss on distribution to common shareholders of The RMR Group Inc. common stock
|
—
|
|
|
36,773
|
|
|
—
|
|
|||
|
Loss on early extinguishment of debt
|
228
|
|
|
—
|
|
|
855
|
|
|||
Normalized FFO available for common shareholders
|
$
|
561,383
|
|
|
$
|
503,663
|
|
|
$
|
493,363
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding (basic)
|
156,062
|
|
|
150,709
|
|
|
149,652
|
|
||||
Weighted average shares outstanding (diluted)
|
156,088
|
|
|
151,002
|
|
|
149,817
|
|
||||
Basic and diluted per common share amounts:
|
|
|
|
|
|
|||||||
|
FFO available for common shareholders (basic and diluted)
|
$
|
3.59
|
|
|
$
|
3.08
|
|
|
$
|
3.29
|
|
|
Normalized FFO available for common shareholders (basic)
|
$
|
3.60
|
|
|
$
|
3.34
|
|
|
$
|
3.30
|
|
|
Normalized FFO available for common shareholders (diluted)
|
$
|
3.60
|
|
|
$
|
3.34
|
|
|
$
|
3.29
|
|
Distributions declared per share
|
$
|
2.03
|
|
|
$
|
1.99
|
|
|
$
|
1.95
|
|
Debt
|
|
Principal
Balance
|
|
Annual Interest
Rate
|
|
Annual Interest
Expense
|
|
Maturity
|
|
Interest Payments
Due
|
|||||
Unsecured Notes
|
|
$
|
350,000
|
|
|
6.700
|
%
|
|
$
|
23,450
|
|
|
2018
|
|
Semi-Annually
|
Unsecured Notes
|
|
400,000
|
|
|
4.250
|
%
|
|
17,000
|
|
|
2021
|
|
Semi-Annually
|
||
Unsecured Notes
|
|
500,000
|
|
|
5.000
|
%
|
|
25,000
|
|
|
2022
|
|
Semi-Annually
|
||
Unsecured Notes
|
|
300,000
|
|
|
4.500
|
%
|
|
13,500
|
|
|
2023
|
|
Semi-Annually
|
||
Unsecured Notes
|
|
350,000
|
|
|
4.650
|
%
|
|
16,275
|
|
|
2024
|
|
Semi-Annually
|
||
Unsecured Notes
|
|
350,000
|
|
|
4.500
|
%
|
|
15,750
|
|
|
2025
|
|
Semi-Annually
|
||
Unsecured Notes
|
|
350,000
|
|
|
5.250
|
%
|
|
18,375
|
|
|
2026
|
|
Semi-Annually
|
||
Convertible unsecured notes
|
|
8,478
|
|
|
3.800
|
%
|
|
322
|
|
|
2027
(1)
|
|
Semi-Annually
|
||
|
|
$
|
2,608,478
|
|
|
|
|
|
$
|
129,672
|
|
|
|
|
|
(1)
|
The convertible senior notes are convertible, if certain conditions are met (including certain changes in control). Upon conversion, the holder of notes is entitled to receive cash in an amount equal to the principal amount of the notes and, to the extent the market price of our common shares then exceeds the conversion price of $49.70 per share, subject to adjustment, at our option either cash or our common shares valued based on such market price for such excess amount. Holders of our convertible senior notes may require us to repurchase all or a portion of the notes on March 15, 2017 and March 15, 2022, or upon the occurrence of certain change in control events.
|
|
Impact of Increase in Interest Rates
|
|
|
|
||||||||||
|
Interest Rate
Per Year
(1)
|
|
Outstanding
Debt
|
|
Total Interest
Expense Per Year
|
|
Annual Per
Share Impact
(2)
|
|||||||
At December 31, 2016
|
1.83
|
%
|
|
$
|
591,000
|
|
|
$
|
10,815
|
|
|
$
|
0.07
|
|
100 basis point increase
|
2.83
|
%
|
|
$
|
591,000
|
|
|
$
|
16,725
|
|
|
$
|
0.11
|
|
(1)
|
Weighted average based on the interest rates and the respective outstanding borrowings as of
December 31, 2016
.
|
(2)
|
Based on diluted weighted average shares outstanding for the year ending
December 31, 2016
.
|
|
Impact of Increase in Interest Rates
|
|||||||||||||
|
Interest Rate
Per Year
(1)
|
|
Outstanding
Debt
|
|
Total Interest
Expense Per Year
|
|
Annual Per
Share Impact
(2)
|
|||||||
At December 31, 2016
|
1.85
|
%
|
|
$
|
1,400,000
|
|
|
$
|
25,900
|
|
|
$
|
0.17
|
|
100 basis point increase
|
2.85
|
%
|
|
$
|
1,400,000
|
|
|
$
|
39,900
|
|
|
$
|
0.26
|
|
(1)
|
Weighted average based on the interest rates and the respective outstanding borrowings (assuming fully drawn) as of
December 31, 2016
.
|
(2)
|
Based on diluted weighted average shares outstanding for the year ending
December 31, 2016
.
|
Plan category
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
|
Number of securities
remaining available for
future issuance under
equity compensation plans (excluding securities reflected in column (a))
|
|
|
(a)
|
|
(b)
|
|
(c)
|
Equity compensation plans approved by security holders—2012 Plan
|
|
None.
|
|
None.
|
|
2,585,527
(1)
|
Equity compensation plans not approved by security holders
|
|
None.
|
|
None.
|
|
None.
|
Total
|
|
None.
|
|
None.
|
|
2,585,527
(1)
|
(1)
|
Consists of common shares available for issuance pursuant to the terms of the 2012 Plan. Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2012 Plan.
|
|
|
Page
|
|
|
|
|
F-1
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
Exhibit Number
|
|
Description
|
|
|
|
|
|
3.1
|
|
|
Composite Copy of Amended and Restated Declaration of Trust, dated as of August 21, 1995, as amended to date. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.)
|
3.2
|
|
|
Articles Supplementary, dated as of January 13, 2012. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 13, 2012, File Number 001-11527.)
|
3.3
|
|
|
Amended and Restated Bylaws of the Company, adopted September 7, 2016. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 7, 2016.)
|
4.1
|
|
|
Form of Common Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.)
|
4.2
|
|
|
Indenture, dated as of February 25, 1998, between the Company and State Street Bank and Trust Company. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File Number 001-11527.)
|
4.3
|
|
|
Supplemental Indenture No. 10, dated as of March 7, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 3.80% Convertible Senior Notes due 2027, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 7, 2007, File Number 001-11527.)
|
4.4
|
|
|
Supplemental Indenture No. 11, dated as of March 12, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 5.625% Senior Notes due 2017, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 12, 2007, File Number 001-11527.)
|
4.5
|
|
|
Supplemental Indenture No. 12, dated as of September 28, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 6.70% Senior Notes due 2018, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File Number 001-11527.)
|
4.6
|
|
|
Supplemental Indenture No. 14, dated as of August 16, 2012, between the Company and U.S. Bank National Association, relating to the Company’s 5.000% Senior Notes due 2022, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.)
|
4.7
|
|
|
Supplemental Indenture No. 15, dated as of June 6, 2013, between the Company and U.S. Bank National Association, relating to the Company’s 4.500% Senior Notes due 2023, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.)
|
4.8
|
|
|
Authentication Order, dated January 13, 2017, from the Company to U.S. Bank National Association, relating to the Company’s 4.500% Senior Notes due 2023. (Filed herewith.)
|
4.9
|
|
|
Supplemental Indenture No. 16, dated as of March 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.650% Senior Notes due 2024, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.)
|
4.10
|
|
|
Supplemental Indenture No. 17, dated as of September 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.50% Senior Notes due 2025, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.)
|
4.11
|
|
|
Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 3, 2016.)
|
4.12
|
|
|
First Supplemental Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association, relating to the Company’s 4.25% Senior Notes due 2021, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 3, 2016.)
|
4.13
|
|
|
Second Supplemental Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association, relating to the Company’s 5.25% Senior Notes due 2026, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 3, 2016.)
|
4.14
|
|
|
Third Supplemental Indenture, dated as of January 13, 2017, between the Company and U.S. Bank National Association, relating to the Company’s 4.950% Senior Notes due 2027, including form thereof. (Filed herewith.)
|
4.15
|
|
|
Registration Rights and Lock-Up Agreement, dated as of June 5, 2015, among the Company, ABP Trust, Barry M. Portnoy and Adam D. Portnoy. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
|
8.1
|
|
|
Opinion of Sullivan & Worcester LLP as to certain tax matters. (Filed herewith.)
|
10.1
|
|
|
Transaction Agreement, dated as of June 5, 2015,
among the Company, The RMR Group LLC (f/k/a Reit Management & Research LLC), ABP Trust (f/k/a Reit Management & Research Trust) and The RMR Group Inc. (f/k/a Reit Management & Research Inc.). (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
|
10.2
|
|
|
Second Amended and Restated Business Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
|
10.3
|
|
|
Second Amended and Restated Property Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
|
10.4
|
|
|
Summary of Trustee Compensation. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 25, 2016.)
|
10.5
|
|
|
2012 Equity Compensation Plan. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 9, 2012.)
|
10.6
|
|
|
First Amendment to 2012 Equity Compensation Plan. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.)
|
10.7
|
|
|
Form of Restricted Share Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.)
|
10.8
|
|
|
Form of Restricted Share Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.)
|
10.9
|
|
|
Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.)
|
10.10
|
|
|
Form of Indemnification Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.)
|
10.11
|
|
|
Amended and Restated Credit Agreement, dated as of January 8, 2014, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions initially a signatory thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 6, 2014.)
|
10.12
|
|
|
First Amendment to Amended and Restated Credit Agreement, dated as of December 9, 2015, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other financial institutions party thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K dated December 9, 2015.)
|
10.13
|
|
|
Representative Form of Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc. (full service). (Incorporated by reference to the Company’s Current Report on Form 8-K dated April 23, 2012.) (Schedule of applicable agreements filed herewith.)
|
10.14
|
|
|
Representative Form of Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc. (limited service). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A, Amendment No. 2, for the quarter ended June 30, 2012.) (Schedule of applicable agreements incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.)
|
10.15
|
|
|
Pooling Agreement, dated April 23, 2012, as updated through December 5, 2016, between Sonesta International Hotels Corporation and Cambridge TRS, Inc. (Filed herewith.)
|
10.16
|
|
|
First Amendment to Pooling Agreement, dated May 31, 2012, between Sonesta International Hotels Corporation and Cambridge TRS, Inc. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.)
|
10.17
|
|
|
Management Agreement, dated as of January 31, 2012, between Sonesta Acquisition Corp. (now known as Sonesta International Hotels Corporation) and Cambridge TRS, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 31, 2012, File Number 001-11527.)
|
10.18
|
|
|
Management Agreement, dated as of January 31, 2012, between Sonesta International Hotels Corporation and Royal Sonesta, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 31, 2012, File Number 001-11527.)
|
10.19
|
|
|
First Amendment to Management Agreements, dated August 6, 2012, among Royal Sonesta Inc., Cambridge TRS, Inc. and Sonesta International Hotels Corporation. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A, Amendment No. 2, for the quarter ended June 30, 2012.)
|
10.20
|
|
|
Letter Agreement, dated January 4, 2016, between the Company and Sonesta International Hotels Corporation. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 4, 2016.)
|
10.21
|
|
|
Transaction Agreement, dated as of June 5, 2015, among the Company,
HPT TA Properties Trust, HPT TA Properties LLC, HPT PSC Properties Trust, HPT PSC Properties LLC, TravelCenters of America LLC, TravelCenters of America Holding Company LLC, TA Leasing LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 1, 2015.)
|
10.22
|
|
|
First Amendment to Transaction Agreement, dated June 22, 2016, among the Company, HPT TA Properties Trust, HPT TA Properties LLC, HPT PSC Properties Trust, HPT PSC Properties LLC, TravelCenters of America LLC, TravelCenters of America Holding Company LLC, TA Leasing LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 22, 2016.)
|
10.23
|
|
|
Amended and Restated Lease No. 1, dated June 9, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.24
|
|
|
First Amendment to Amended and Restated Lease Agreement No. 1, dated June 22, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 22, 2016.)
|
10.25
|
|
|
Guaranty Agreement, dated June 9, 2015, among TravelCenters of America LLC and TravelCenters of America Holding Company LLC for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Amended and Restated Lease No. 1). (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.26
|
|
|
Amended and Restated Lease No. 2, dated June 9, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.27
|
|
|
First Amendment to Amended and Restated Lease Agreement No. 2, dated June 16, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 16, 2015.)
|
10.28
|
|
|
Second Amendment to Amended and Restated Lease Agreement No. 2, dated June 23, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 23, 2015.)
|
10.29
|
|
|
Third Amendment to Amended and Restated Lease Agreement No. 2, dated September 23, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 23, 2015.)
|
10.30
|
|
|
Fourth Amendment to Amended and Restated Lease Agreement No. 2, dated June 22, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 22, 2016.)
|
10.31
|
|
|
Fifth Amendment to Amended and Restated Lease Agreement No. 2, dated June 30, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 30, 2016.)
|
10.32
|
|
|
Sixth Amendment to Amended and Restated Lease Agreement No. 2, dated September 30, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 30, 2016.)
|
10.33
|
|
|
Guaranty Agreement, dated June 9, 2015, among TravelCenters of America LLC and TravelCenters of America Holding Company LLC for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Amended and Restated Lease No. 2). (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.34
|
|
|
Amended and Restated Lease No. 3, dated June 9, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.35
|
|
|
First Amendment to Amended and Restated Lease Agreement No. 3, dated September 23, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 23, 2015.)
|
10.36
|
|
|
Second Amendment to Amended and Restated Lease Agreement No. 3, dated June 22, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 22, 2016.)
|
10.37
|
|
|
Guaranty Agreement, dated June 9, 2015, among TravelCenters of America LLC and TravelCenters of America Holding Company LLC for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Amended and Restated Lease No. 3). (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.38
|
|
|
Amended and Restated Lease No. 4, dated June 9, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.39
|
|
|
First Amendment to Amended and Restated Lease Agreement No. 4, dated June 16, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 16, 2015.)
|
10.40
|
|
|
Second Amendment to Amended and Restated Lease Agreement No. 4, dated June 23, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 23, 2015.)
|
10.41
|
|
|
Third Amendment to Amended and Restated Lease Agreement No. 4, dated September 23, 2015, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 23, 2015.)
|
10.42
|
|
|
Fourth Amendment to Amended and Restated Lease Agreement No. 4, dated March 31, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 31, 2016.)
|
10.43
|
|
|
Fifth Amendment to Amended and Restated Lease Agreement No. 4, dated June 22, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 22, 2016.)
|
10.44
|
|
|
Sixth Amendment to Amended and Restated Lease Agreement No. 4, dated September 14, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016.)
|
10.45
|
|
|
Guaranty Agreement, dated June 9, 2015, among TravelCenters of America LLC and TravelCenters of America Holding Company LLC for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Amended and Restated Lease No. 4). (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.46
|
|
|
Lease Agreement, dated as of May 30, 2007, among HPT PSC Properties Trust and HPT PSC Properties LLC, as Landlord, and Petro Stopping Centers, L.P., as Tenant. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File Number 001-11527.)
|
10.47
|
|
|
First Amendment to Lease Agreement, dated as of March 17, 2008, among HPT PSC Properties Trust, HPT PSC Properties LLC and Petro Stopping Centers, L.P. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, File Number 001-11527.)
|
10.48
|
|
|
Amendment to Lease Agreement, dated as of December 23, 2013, among HPT PSC Properties Trust, HPT PSC Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.)
|
10.49
|
|
|
Amendment to Lease Agreement, dated June 9, 2015, among HPT PSC Properties Trust, HPT PSC Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.50
|
|
|
Amendment to Lease Agreement, dated October 30, 2015, among HPT PSC Properties Trust, HPT PSC Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015.)
|
10.51
|
|
|
Amendment to Lease Agreement, dated June 22, 2016, among HPT PSC Properties Trust, HPT PSC Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 22, 2016.)
|
10.52
|
|
|
Guaranty Agreement, dated as of May 30, 2007, made by TravelCenters of America LLC, as Guarantor, for the benefit of HPT PSC Properties Trust and HPT PSC Properties LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 4, 2007, File Number 001-11527.)
|
10.53
|
|
|
Deferral Agreement, dated as of August 11, 2008, among the Company, HPT TA Properties Trust, HPT TA Properties LLC, HPT PSC Properties Trust, HPT PSC Properties LLC, TravelCenters of America LLC, TA Leasing LLC and Petro Stopping Centers, L.P. (Incorporated by reference to the Company’s Current Report on Form 8-K dated August 11, 2008, File Number 001-11527.)
|
10.54
|
|
|
Amendment Agreement, dated as of January 31, 2011, among the Company, HPT TA Properties Trust, HPT TA Properties LLC, HPT PSC Properties Trust, HPT PSC Properties LLC, TravelCenters of America LLC, TA Leasing LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 31, 2011, File Number 001-11527.)
|
10.55
|
|
|
Amendment Agreement, dated April 15, 2013, among HPT TA Properties Trust, HPT TA Properties LLC, HPT PSC Properties Trust, HPT PSC Properties LLC, TA Leasing LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.)
|
10.56
|
|
|
Property Exchange Agreement, dated June 9, 2015, among the Company, HPT TA Properties Trust, HPT TA Properties LLC, TravelCenters of America LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 9, 2015.)
|
10.57
|
|
|
Form of Sales Agreement between the Company entity and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 1, 2015.) (Schedule of applicable agreements incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.)
|
10.58
|
|
|
Form of Development Property Agreement between a Company entity and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 1, 2015.)
|
10.59
|
|
|
Development Property Agreement, dated March 31, 2016, between HPT TA Properties Trust and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 31, 2016.)
|
10.60
|
|
|
Development Property Agreement, dated June 22, 2016, between HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 22, 2016.)
|
10.61
|
|
|
Development Property Agreement, dated June 22, 2016, between HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 22, 2016.)
|
10.62
|
|
|
Development Property Agreement, dated June 30, 2016, between HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 30, 2016.)
|
10.63
|
|
|
Development Property Agreement, dated September 30, 2016, between HPT TA Properties Trust and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 30, 2016.)
|
10.64
|
|
|
Amended and Restated Shareholders Agreement, dated May 21, 2012, by and among Affiliates Insurance Company, Five Star Quality Care, Inc., the Company, ABP Trust, Senior Housing Properties Trust, TravelCenters of America LLC, Government Properties Income Trust and Select Income REIT. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A, Amendment No. 2, for the quarter ended June 30, 2012.)
|
10.65
|
|
|
Form of Amended and Restated Management Agreement among certain subsidiaries of the Company and certain subsidiaries of Marriott International, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 14, 2011, File Number 001-11527.)
|
10.66
|
|
|
Pooling Agreement, dated as of June 14, 2011 but effective as of January 1, 2011, among HPT TRS MRP, Inc., Marriott International, Inc. and certain subsidiaries of Marriott International, Inc. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.)
|
10.67
|
|
|
Letter Agreement, dated May 30, 2012, among Marriott International Inc., HPT TRS MRP, Inc. and other parties referencing T-234 FF&E Reserve Contributions. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 30, 2012.)
|
10.68
|
|
|
Management Agreement, dated as of July 1, 2011, among HPT TRS IHG-1, Inc., HPT TRS IHG-2, Inc., HPT TRS IHG-3, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC, and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated July 25, 2011, File Number 001-11527.)
|
10.69
|
|
|
Amendment to Management Agreement, dated as of March 16, 2015, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015.)
|
10.70
|
|
|
Second Amendment to Management Agreement, dated as of February 11, 2016, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.)
|
10.71
|
|
|
Third Amendment to Management Agreement, dated as of February 1, 2017, among HPT TRS IHG-2, Inc., InterContinental Hotels Group Resources, Inc., IHG Management (Maryland) LLC and InterContinental Hotels Group (Canada), Inc. (Filed herewith.)
|
12.1
|
|
|
Computation of Ratio of Earnings to Fixed Charges. (Filed herewith.)
|
12.2
|
|
|
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Distributions. (Filed herewith.)
|
21.1
|
|
|
Subsidiaries of the Company. (Filed herewith.)
|
23.1
|
|
|
Consent of Ernst & Young LLP. (Filed herewith.)
|
23.2
|
|
|
Consent of Sullivan & Worcester LLP. (Contained in Exhibit 8.1.)
|
31.1
|
|
|
Rule 13a-14(a) Certification. (Filed herewith.)
|
31.2
|
|
|
Rule 13a-14(a) Certification. (Filed herewith.)
|
31.3
|
|
|
Rule 13a-14(a) Certification. (Filed herewith.)
|
31.4
|
|
|
Rule 13a-14(a) Certification. (Filed herewith.)
|
32.1
|
|
|
Section 1350 Certification. (Furnished herewith.)
|
99.1
|
|
|
Registration Rights Agreement, dated as of June 5, 2015, between the Company and The RMR Group Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.)
|
101.1
|
|
|
The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2016 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Statements of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.)
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
ASSETS
|
|
|
|
||||
|
|
|
|
||||
Real estate properties:
|
|
|
|
||||
Land
|
$
|
1,563,263
|
|
|
$
|
1,525,637
|
|
Buildings, improvements and equipment
|
7,152,458
|
|
|
6,736,135
|
|
||
Total real estate properties, gross
|
8,715,721
|
|
|
8,261,772
|
|
||
Accumulated depreciation
|
(2,512,456
|
)
|
|
(2,217,135
|
)
|
||
Total real estate properties, net
|
6,203,265
|
|
|
6,044,637
|
|
||
Cash and cash equivalents
|
10,896
|
|
|
13,682
|
|
||
Restricted cash (FF&E reserve escrow)
|
60,456
|
|
|
51,211
|
|
||
Due from related persons
|
65,332
|
|
|
50,987
|
|
||
Other assets, net
|
294,279
|
|
|
234,280
|
|
||
Total assets
|
$
|
6,634,228
|
|
|
$
|
6,394,797
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
||||
|
|
|
|
||||
Unsecured revolving credit facility
|
$
|
191,000
|
|
|
$
|
465,000
|
|
Unsecured term loan, net
|
398,421
|
|
|
397,756
|
|
||
Senior unsecured notes, net
|
2,565,908
|
|
|
2,403,439
|
|
||
Convertible senior unsecured notes
|
8,478
|
|
|
8,478
|
|
||
Security deposits
|
89,338
|
|
|
53,579
|
|
||
Accounts payable and other liabilities
|
188,053
|
|
|
179,783
|
|
||
Due to related persons
|
58,475
|
|
|
69,514
|
|
||
Dividends payable
|
5,166
|
|
|
5,166
|
|
||
Total liabilities
|
3,504,839
|
|
|
3,582,715
|
|
||
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
||||
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Preferred shares of beneficial interest, no par value; 100,000,000 shares authorized:
|
|
|
|
||||
Series D preferred shares; 7 1/8% cumulative redeemable; 11,600,000 shares issued and outstanding, aggregate liquidation preference of $290,000
|
280,107
|
|
|
280,107
|
|
||
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 164,268,199 and 151,547,288 shares issued and outstanding, respectively
|
1,643
|
|
|
1,515
|
|
||
Additional paid in capital
|
4,539,673
|
|
|
4,165,911
|
|
||
Cumulative net income
|
3,104,767
|
|
|
2,881,657
|
|
||
Cumulative other comprehensive income (loss)
|
39,583
|
|
|
(15,523
|
)
|
||
Cumulative preferred distributions
|
(341,977
|
)
|
|
(321,313
|
)
|
||
Cumulative common distributions
|
(4,494,407
|
)
|
|
(4,180,272
|
)
|
||
Total shareholders’ equity
|
3,129,389
|
|
|
2,812,082
|
|
||
Total liabilities and shareholders’ equity
|
$
|
6,634,228
|
|
|
$
|
6,394,797
|
|
|
Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Revenues:
|
|
|
|
|
|
||||||
Hotel operating revenues
|
$
|
1,730,326
|
|
|
$
|
1,634,654
|
|
|
$
|
1,474,757
|
|
Rental income
|
312,377
|
|
|
283,115
|
|
|
258,062
|
|
|||
FF&E reserve income
|
4,508
|
|
|
4,135
|
|
|
3,503
|
|
|||
Total revenues
|
2,047,211
|
|
|
1,921,904
|
|
|
1,736,322
|
|
|||
|
|
|
|
|
|
||||||
Expenses:
|
|
|
|
|
|
||||||
Hotel operating expenses
|
1,202,538
|
|
|
1,143,981
|
|
|
1,035,138
|
|
|||
Depreciation and amortization
|
357,342
|
|
|
329,776
|
|
|
315,878
|
|
|||
General and administrative
|
99,105
|
|
|
109,837
|
|
|
45,897
|
|
|||
Acquisition related costs
|
1,367
|
|
|
2,375
|
|
|
239
|
|
|||
Total expenses
|
1,660,352
|
|
|
1,585,969
|
|
|
1,397,152
|
|
|||
|
|
|
|
|
|
||||||
Operating income
|
386,859
|
|
|
335,935
|
|
|
339,170
|
|
|||
|
|
|
|
|
|
||||||
Dividend income
|
2,001
|
|
|
2,640
|
|
|
—
|
|
|||
Interest income
|
274
|
|
|
44
|
|
|
77
|
|
|||
Interest expense (including amortization of deferred financing costs and debt discounts of $8,151, $5,849 and $5,491, respectively)
|
(161,913
|
)
|
|
(144,898
|
)
|
|
(139,486
|
)
|
|||
Loss on distribution to common shareholders of The RMR Group Inc. common stock
|
—
|
|
|
(36,773
|
)
|
|
—
|
|
|||
Loss on early extinguishment of debt
|
(228
|
)
|
|
—
|
|
|
(855
|
)
|
|||
Income before income taxes, equity in earnings of an investee and gain on sale of real estate
|
226,993
|
|
|
156,948
|
|
|
198,906
|
|
|||
Income tax expense
|
(4,020
|
)
|
|
(1,566
|
)
|
|
(1,945
|
)
|
|||
Equity in earnings of an investee
|
137
|
|
|
21
|
|
|
94
|
|
|||
Income before gain on sale of real estate
|
223,110
|
|
|
155,403
|
|
|
197,055
|
|
|||
Gain on sale of real estate
|
—
|
|
|
11,015
|
|
|
130
|
|
|||
Net income
|
223,110
|
|
|
166,418
|
|
|
197,185
|
|
|||
Unrealized gain (loss) on investment in available for sale securities
|
54,954
|
|
|
(41,307
|
)
|
|
9,849
|
|
|||
Equity interest in investee’s unrealized gains (losses)
|
152
|
|
|
(20
|
)
|
|
3
|
|
|||
Other comprehensive income (loss)
|
55,106
|
|
|
(41,327
|
)
|
|
9,852
|
|
|||
|
|
|
|
|
|
||||||
Comprehensive income
|
$
|
278,216
|
|
|
$
|
125,091
|
|
|
$
|
207,037
|
|
|
|
|
|
|
|
||||||
Net income
|
$
|
223,110
|
|
|
$
|
166,418
|
|
|
$
|
197,185
|
|
Preferred distributions
|
(20,664
|
)
|
|
(20,664
|
)
|
|
(20,664
|
)
|
|||
Net income available for common shareholders
|
$
|
202,446
|
|
|
$
|
145,754
|
|
|
$
|
176,521
|
|
|
|
|
|
|
|
||||||
Weighted average common shares outstanding (basic)
|
156,062
|
|
|
150,709
|
|
|
149,652
|
|
|||
Weighted average common shares outstanding (diluted)
|
156,088
|
|
|
151,002
|
|
|
149,817
|
|
|||
|
|
|
|
|
|
||||||
Net income available for common shareholders per common share: Basic and diluted
|
$
|
1.30
|
|
|
$
|
0.97
|
|
|
$
|
1.18
|
|
|
Series D Preferred Shares
|
|
Common Shares
|
|
Additional
Paid in Capital |
|
Cumulative
Net Income |
|
Cumulative
Other
Comprehensive
Income (Loss)
|
|
|
||||||||||||||||||||||||||
|
Number of
Shares |
|
Preferred
Shares |
|
Cumulative Preferred
|
|
Number of
Shares |
|
Common
Shares |
|
Cumulative
Common
Distributions
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
Distributions
|
|
|
|
|
|
|
|
Total
|
||||||||||||||||||||||||||
Balance at Balance at December 31, 2013
|
11,600,000
|
|
|
$
|
208,107
|
|
|
$
|
(279,985
|
)
|
|
149,606,024
|
|
|
$
|
1,496
|
|
|
$
|
(3,558,369
|
)
|
|
$
|
4,109,600
|
|
|
$
|
2,518,054
|
|
|
$
|
15,952
|
|
|
$
|
3,086,855
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
197,185
|
|
|
—
|
|
|
197,185
|
|
||||||||
Unrealized gain on investment in available for sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,852
|
|
|
9,852
|
|
||||||||
Issuance of shares, net
|
—
|
|
|
—
|
|
|
—
|
|
|
222,200
|
|
|
2
|
|
|
—
|
|
|
6,444
|
|
|
—
|
|
|
—
|
|
|
6,446
|
|
||||||||
Common share grants
|
—
|
|
|
—
|
|
|
—
|
|
|
92,225
|
|
|
1
|
|
|
—
|
|
|
2,507
|
|
|
—
|
|
|
—
|
|
|
2,508
|
|
||||||||
Distributions
|
—
|
|
|
—
|
|
|
(20,664
|
)
|
|
—
|
|
|
—
|
|
|
(292,029
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(312,693
|
)
|
||||||||
Balance at December 31, 2014
|
11,600,000
|
|
|
208,107
|
|
|
(300,649
|
)
|
|
149,920,449
|
|
|
1,499
|
|
|
(3,850,398
|
)
|
|
4,118,551
|
|
|
2,715,239
|
|
|
25,804
|
|
|
2,990,153
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
166,418
|
|
|
—
|
|
|
166,418
|
|
||||||||
Unrealized loss on investment in available for sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(41,327
|
)
|
|
(41,327
|
)
|
||||||||
Issuance of shares, net
|
—
|
|
|
—
|
|
|
—
|
|
|
1,553,119
|
|
|
15
|
|
|
—
|
|
|
45,247
|
|
|
—
|
|
|
—
|
|
|
45,262
|
|
||||||||
Common share grants
|
—
|
|
|
—
|
|
|
—
|
|
|
90,060
|
|
|
1
|
|
|
—
|
|
|
2,531
|
|
|
—
|
|
|
—
|
|
|
2,532
|
|
||||||||
Common share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,340
|
)
|
|
—
|
|
|
—
|
|
|
(418
|
)
|
|
—
|
|
|
—
|
|
|
(418
|
)
|
||||||||
Distributions
|
—
|
|
|
—
|
|
|
(20,664
|
)
|
|
—
|
|
|
—
|
|
|
(299,963
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(320,627
|
)
|
||||||||
Distribution to common shareholders of The RMR Group Inc. common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,911
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(29,911
|
)
|
||||||||
Balance at December 31, 2015
|
11,600,000
|
|
|
208,107
|
|
|
(321,313
|
)
|
|
151,547,288
|
|
|
1,515
|
|
|
(4,180,272
|
)
|
|
4,165,911
|
|
|
2,881,657
|
|
|
(15,523
|
)
|
|
2,812,082
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
223,110
|
|
|
—
|
|
|
223,110
|
|
||||||||
Unrealized gain on investment in available for sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,972
|
|
|
62,972
|
|
||||||||
Unrealized loss on investment in available for sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,866
|
)
|
|
(7,866
|
)
|
||||||||
Issuance of shares, net
|
—
|
|
|
—
|
|
|
—
|
|
|
12,650,000
|
|
|
127
|
|
|
—
|
|
|
371,829
|
|
|
—
|
|
|
—
|
|
|
371,956
|
|
||||||||
Common share grants
|
—
|
|
|
—
|
|
|
—
|
|
|
91,600
|
|
|
1
|
|
|
—
|
|
|
2,546
|
|
|
—
|
|
|
—
|
|
|
2,547
|
|
||||||||
Common share repurchases
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,689
|
)
|
|
—
|
|
|
—
|
|
|
(613
|
)
|
|
—
|
|
|
—
|
|
|
(613
|
)
|
||||||||
Distributions
|
—
|
|
|
—
|
|
|
(20,664
|
)
|
|
—
|
|
|
—
|
|
|
(314,135
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(334,799
|
)
|
||||||||
Balance at December 31, 2016
|
11,600,000
|
|
|
$
|
208,107
|
|
|
$
|
(341,977
|
)
|
|
164,268,199
|
|
|
$
|
1,643
|
|
|
$
|
(4,494,407
|
)
|
|
$
|
4,539,673
|
|
|
$
|
3,104,767
|
|
|
$
|
39,583
|
|
|
$
|
3,129,389
|
|
|
For the Year Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
|
|
||||
Net income
|
$
|
223,110
|
|
|
$
|
166,418
|
|
|
$
|
197,185
|
|
Adjustments to reconcile net income to cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|||
Depreciation and amortization
|
357,342
|
|
|
329,776
|
|
|
315,878
|
|
|||
Amortization of deferred financing costs and debt discounts as interest
|
8,151
|
|
|
5,849
|
|
|
5,491
|
|
|||
Straight line rental income
|
(13,570
|
)
|
|
(9,568
|
)
|
|
(2,111
|
)
|
|||
Security deposits replenished
|
35,759
|
|
|
20,501
|
|
|
5,204
|
|
|||
FF&E reserve income and deposits
|
(73,956
|
)
|
|
(67,967
|
)
|
|
(54,265
|
)
|
|||
Loss on early extinguishment of debt
|
228
|
|
|
—
|
|
|
855
|
|
|||
Loss on distribution to common shareholders of The RMR Group Inc. common stock
|
—
|
|
|
36,773
|
|
|
—
|
|
|||
Equity in earnings of an investee
|
(137
|
)
|
|
(21
|
)
|
|
(94
|
)
|
|||
Gain on sale of real estate
|
—
|
|
|
(11,015
|
)
|
|
(130
|
)
|
|||
Deferred income taxes
|
9
|
|
|
(69
|
)
|
|
143
|
|
|||
Other non-cash (income) expense, net
|
(3,250
|
)
|
|
(364
|
)
|
|
2,020
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Due from related persons
|
(1,213
|
)
|
|
(2,106
|
)
|
|
(609
|
)
|
|||
Other assets
|
(190
|
)
|
|
246
|
|
|
(569
|
)
|
|||
Accounts payable and other liabilities
|
8,752
|
|
|
362
|
|
|
(7,117
|
)
|
|||
Due to related persons
|
(8,515
|
)
|
|
62,078
|
|
|
(136
|
)
|
|||
Net cash provided by operating activities
|
532,520
|
|
|
530,893
|
|
|
461,745
|
|
|||
|
|
|
|
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|||
Real estate acquisitions and deposits
|
(262,955
|
)
|
|
(449,882
|
)
|
|
(60,000
|
)
|
|||
Real estate improvements
|
(187,652
|
)
|
|
(180,703
|
)
|
|
(224,621
|
)
|
|||
FF&E reserve escrow fundings
|
(3,749
|
)
|
|
(7,299
|
)
|
|
(5,910
|
)
|
|||
Net proceeds from sale of real estate
|
—
|
|
|
—
|
|
|
4,288
|
|
|||
Eminent domain proceeds
|
—
|
|
|
—
|
|
|
6,178
|
|
|||
Investment in Affiliates Insurance Company
|
—
|
|
|
—
|
|
|
(825
|
)
|
|||
Investment in The RMR Group Inc.
|
—
|
|
|
(15,955
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(454,356
|
)
|
|
(653,839
|
)
|
|
(280,890
|
)
|
|||
|
|
|
|
|
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|||
Proceeds from issuance of common shares, net
|
371,956
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from issuance of senior unsecured notes, net of discounts
|
737,612
|
|
|
—
|
|
|
690,071
|
|
|||
Repayment of senior unsecured notes
|
(575,000
|
)
|
|
—
|
|
|
(580,000
|
)
|
|||
Borrowings under unsecured revolving credit facility
|
764,000
|
|
|
702,000
|
|
|
783,000
|
|
|||
Repayments of unsecured revolving credit facility
|
(1,038,000
|
)
|
|
(255,000
|
)
|
|
(765,000
|
)
|
|||
Deferred financing costs
|
(6,106
|
)
|
|
(1,157
|
)
|
|
(6,899
|
)
|
|||
Repurchase of common shares
|
(613
|
)
|
|
(418
|
)
|
|
—
|
|
|||
Distributions to preferred shareholders
|
(20,664
|
)
|
|
(20,664
|
)
|
|
(20,664
|
)
|
|||
Distributions to common shareholders
|
(314,135
|
)
|
|
(299,967
|
)
|
|
(292,029
|
)
|
|||
Net cash provided by (used in) financing activities
|
(80,950
|
)
|
|
124,794
|
|
|
(191,521
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
(2,786
|
)
|
|
1,848
|
|
|
(10,666
|
)
|
|||
Cash and cash equivalents at beginning of year
|
13,682
|
|
|
11,834
|
|
|
22,500
|
|
|||
Cash and cash equivalents at end of year
|
$
|
10,896
|
|
|
$
|
13,682
|
|
|
$
|
11,834
|
|
|
|
|
|
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets:
|
|
|
|
||||
Tradenames and trademarks
|
$
|
89,375
|
|
|
$
|
89,375
|
|
Below market ground leases, net of accumulated amortization of $21,508 and $18,985, respectively
|
16,800
|
|
|
18,940
|
|
||
Other, net of accumulated amortization of $542 and $435, respectively
|
2,374
|
|
|
2,537
|
|
||
|
$
|
108,549
|
|
|
$
|
110,852
|
|
Liabilities:
|
|
|
|
||||
Above market ground leases, net of accumulated amortization of $4,525 and $4,070, respectively
|
$
|
2,196
|
|
|
$
|
2,651
|
|
|
Below
Market
Ground
Leases &
Other
|
|
Above
Market
Ground
Leases
|
||||
2017
|
$
|
2,306
|
|
|
$
|
(455
|
)
|
2018
|
2,128
|
|
|
(455
|
)
|
||
2019
|
1,752
|
|
|
(447
|
)
|
||
2020
|
1,479
|
|
|
(443
|
)
|
||
2021
|
1,465
|
|
|
(354
|
)
|
||
Thereafter
|
10,044
|
|
|
(42
|
)
|
||
|
$
|
19,174
|
|
|
$
|
(2,196
|
)
|
|
For the Year Ended December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
|
(in thousands)
|
|||||||
Weighted average common shares for basic earnings per share
|
156,062
|
|
|
150,709
|
|
|
149,652
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|||
Contingently issuable common shares
|
—
|
|
|
269
|
|
|
141
|
|
Unvested share awards
|
26
|
|
|
24
|
|
|
24
|
|
Weighted average common shares for diluted earnings per share
|
156,088
|
|
|
151,002
|
|
|
149,817
|
|
|
|
|
|
|
|
|
|
Purchase Price Allocation
|
||||||||||||||||||||
Acquisition Date
|
|
Location
|
|
Type
|
|
Purchase Price
(1)
|
|
Land
|
|
Land Improvements
|
|
Building and Improvements
|
|
Furniture, Fixtures and Equipment
|
|
Intangible Assets
|
||||||||||||
2/1/2016
|
|
Various
(2) (3)
|
|
Hotels
|
|
$
|
12,000
|
|
|
$
|
1,953
|
|
|
$
|
654
|
|
|
$
|
8,153
|
|
|
$
|
1,240
|
|
|
$
|
—
|
|
3/16/2016
|
|
Portland, OR
(2) (4)
|
|
Hotel
|
|
114,000
|
|
|
5,657
|
|
|
3
|
|
|
100,535
|
|
|
7,805
|
|
|
—
|
|
||||||
3/31/2016
|
|
Hillsboro, TX
(5)
|
|
Travel Center
|
|
19,683
|
|
|
4,834
|
|
|
4,196
|
|
|
10,653
|
|
|
—
|
|
|
—
|
|
||||||
6/22/2016
|
|
Various
(5)
|
|
Travel Centers
|
|
23,876
|
|
|
3,170
|
|
|
9,280
|
|
|
11,426
|
|
|
—
|
|
|
—
|
|
||||||
6/30/2016
|
|
Wilmington, IL
(5)
|
|
Travel Center
|
|
22,297
|
|
|
6,523
|
|
|
3,364
|
|
|
12,410
|
|
|
—
|
|
|
—
|
|
||||||
9/14/2016
|
|
Holbrook, AZ
(6)
|
|
Land
|
|
325
|
|
|
325
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
9/30/2016
|
|
Caryville, TN
(5)
|
|
Travel Center
|
|
16,557
|
|
|
2,068
|
|
|
6,082
|
|
|
8,407
|
|
|
—
|
|
|
—
|
|
||||||
12/5/2016
|
|
Milpitas, CA
(2)(7)
|
|
Hotel
|
|
46,000
|
|
|
$
|
13,089
|
|
|
$
|
823
|
|
|
$
|
29,748
|
|
|
$
|
2,340
|
|
|
—
|
|
||
|
|
|
|
|
|
$
|
254,738
|
|
|
$
|
37,619
|
|
|
$
|
24,402
|
|
|
$
|
181,332
|
|
|
$
|
11,385
|
|
|
$
|
—
|
|
Acquisition Date
|
|
Location
|
|
Type
|
|
Purchase Price
(1)
|
|
Land
|
|
Land Improvements
|
|
Building and Improvements
|
|
Furniture, Fixtures and Equipment
|
|
Intangible Assets
|
||||||||||||
3/16/2015
|
|
Rosemont, IL
(2)(8)
|
|
Hotel
|
|
$
|
35,500
|
|
|
$
|
2,375
|
|
|
$
|
219
|
|
|
$
|
31,182
|
|
|
$
|
1,463
|
|
|
$
|
261
|
|
4/28/2015
|
|
Ft. Lauderdale, FL
(9)
|
|
Land
|
|
750
|
|
|
165
|
|
|
—
|
|
|
585
|
|
|
—
|
|
|
—
|
|
||||||
5/15/2015
|
|
Denver, CO
(2)(10)
|
|
Hotel
|
|
77,250
|
|
|
8,193
|
|
|
181
|
|
|
61,005
|
|
|
7,871
|
|
|
—
|
|
||||||
6/1/2015
|
|
Various
(5)
|
|
Travel Centers
|
|
227,877
|
|
|
26,286
|
|
|
67,161
|
|
|
134,388
|
|
|
42
|
|
|
—
|
|
||||||
7/23/2015
|
|
Various
(2)(11)
|
|
Hotels
|
|
85,000
|
|
|
13,165
|
|
|
—
|
|
|
64,338
|
|
|
7,497
|
|
|
—
|
|
||||||
9/23/2015
|
|
Various
(5)
|
|
Travel Centers
|
|
51,506
|
|
|
9,165
|
|
|
21,266
|
|
|
21,075
|
|
|
—
|
|
|
—
|
|
||||||
10/30/2015
|
|
Waterloo, NY
(12)
|
|
Land
|
|
15,000
|
|
|
1,500
|
|
|
4,500
|
|
|
9,000
|
|
|
—
|
|
|
—
|
|
||||||
|
|
|
|
|
|
$
|
492,883
|
|
|
$
|
60,849
|
|
|
$
|
93,327
|
|
|
$
|
321,573
|
|
|
$
|
16,873
|
|
|
$
|
261
|
|
Acquisition Date
|
|
Location
|
|
Type
|
|
Purchase Price
(1)
|
|
Land
|
|
Land Improvements
|
|
Building and Improvements
|
|
Furniture, Fixtures and Equipment
|
|
Intangible Assets
|
||||||||||||
5/30/2014
|
|
Ft. Lauderdale, FL
(2)(13)
|
|
Hotel
|
|
$
|
65,000
|
|
|
$
|
14,592
|
|
|
$
|
—
|
|
|
$
|
40,525
|
|
|
$
|
9,883
|
|
|
$
|
—
|
|
|
|
|
|
|
|
$
|
65,000
|
|
|
$
|
14,592
|
|
|
$
|
—
|
|
|
$
|
40,525
|
|
|
$
|
9,883
|
|
|
$
|
—
|
|
(1)
|
Excludes acquisition related costs.
|
(2)
|
We accounted for these transactions as business combinations. The pro forma impact of including the results of operations of these acquisitions from the beginning of the year is not material to our consolidated financial statements.
|
(3)
|
On February 1, 2016, we acquired
two
extended stay hotels with
262
suites located in Cleveland and Westlake, OH for an aggregate purchase price of
$12,000
. We converted these hotels to the Sonesta ES Suites
®
brand and entered management agreements for these hotels with Sonesta. See Notes 6 and 10 for further information regarding our Sonesta agreement.
|
(4)
|
On March 16, 2016, we acquired the Kimpton Hotel Monaco, a full service hotel with
221
rooms located in Portland, OR for a purchase price of
$114,000
. We added this hotel to our management agreement with InterContinental. See Note 6 for further information regarding our InterContinental agreement.
|
(5)
|
On June 1, 2015, we entered into a transaction agreement with TA pursuant to which, among other things, we agreed to acquire from, and lease back to, TA
14
travel centers owned by TA and certain assets owned by TA at
11
properties we own and lease to TA for
$279,383
, in aggregate, excluding acquisition related costs. Pursuant to this transaction agreement, during June 2015, we acquired
12
of these travel centers from TA and assets owned by TA at
10
properties we own and lease to TA for
$227,887
, in aggregate, excluding acquisition related costs; and on September 23, 2015, we acquired from TA the remaining
two
of these travel centers and assets owned by TA at
one
property we own and lease to TA for
$51,506
, in aggregate, excluding acquisition related costs. Simultaneously with these acquisitions, we leased these travel centers and assets back to TA under leases that we and TA entered into pursuant to the transaction agreement, which replaced our previously existing leases with TA.
|
(6)
|
On September 14, 2016, we acquired land adjacent to a travel center that we own in Holbrook, AZ for
$325
. We added this property to our TA No. 4 lease. See Notes 6 and 10 for further information regarding this transaction and our TA leases. We capitalized acquisition related costs of
$7
related to this transaction.
|
(7)
|
On December 5, 2016, we acquired a full service hotel with
236
rooms located in Milpitas, CA for a purchase price of
$46,000
. We converted this hotel to the Sonesta
®
brand and entered a management agreement for this hotel with Sonesta. See Notes 6 and 10 for further information regarding our Sonesta agreement. The allocation of purchase price is based on preliminary estimates and may change upon completion of third party appraisals.
|
(8)
|
On March 16, 2015, we acquired a
300
room hotel located in Rosemont, IL for a purchase price of
$35,500
. We added this Holiday Inn and Suites
®
branded hotel to our management agreement with InterContinental. See Note 6 for further information regarding our InterContinental agreement.
|
(9)
|
On April 28, 2015, we acquired land and improvements adjacent to the Sonesta hotel in Fort Lauderdale, FL, referenced in footnote 13 to this table, for
$750
. This land and improvements are included with the Fort Lauderdale hotel under our Sonesta agreement. We capitalized acquisition related costs of
$41
related to this transaction.
|
(10)
|
On May 15, 2015, we acquired a
364
room full service hotel located in Denver, CO for a purchase price of
$77,250
. We added this Crowne Plaza
®
branded hotel to our management agreement with InterContinental. See Note 6 for further information regarding our InterContinental agreement.
|
(11)
|
On July 23, 2015, we acquired a portfolio of
nine
extended stay hotels with
1,095
suites located in eight states for an aggregate purchase price of
$85,000
. We converted these hotels to Sonesta ES Suites
®
branded hotels and added them to our management agreement with Sonesta. See Notes 6 and 10 for further information regarding this transaction and our Sonesta agreement.
|
(12)
|
On October 30, 2015, we acquired the land and certain improvements at a travel center located in Waterloo, NY that we leased from a third party and subleased to TA for an aggregate purchase price of
$15,000
. These assets were added to one of our leases with TA and TA is now directly leasing these assets from us with rent for these assets now directly paid to us.
|
(13)
|
On May 30, 2014, we acquired a
240
room full service hotel located in Fort Lauderdale, FL for a price of
$65,000
. We converted this hotel to a Sonesta
®
branded hotel and added it to our Sonesta agreement. See Notes 6 and 10 for further information regarding this transaction and our Sonesta agreement.
|
|
Number of Travel Centers
|
Initial Term End
(1)
|
Annual Minimum Rent as of December 31, 2016
|
Deferred Rent
(2)
|
||||
TA No. 1 Lease
|
40
|
December 31, 2029
|
$
|
51,435
|
|
$
|
27,421
|
|
TA No. 2 Lease
|
40
|
December 31, 2028
|
52,327
|
|
29,107
|
|
||
TA No. 3 Lease
|
39
|
December 31, 2026
|
52,665
|
|
29,324
|
|
||
TA No. 4 Lease
|
39
|
December 31, 2030
|
50,117
|
|
21,233
|
|
||
TA No. 5 Lease
|
40
|
June 30, 2032
|
67,573
|
|
42,915
|
|
||
|
198
|
|
$
|
274,117
|
|
$
|
150,000
|
|
(1)
|
TA has
two
renewal options of
15 years
each under each of our TA leases.
|
(2)
|
Pursuant to a rent deferral agreement with TA, from July 2008 through December 31, 2010, we deferred a total of
$150,000
of rent payable by TA, which remained outstanding as of December 31, 2016. This deferred rent obligation was subsequently allocated among our TA leases and is due at the end of the initial terms of the respective leases as noted above, except for our TA No. 5 lease, in which case the applicable deferred rent is due and payable on June 30, 2024. These deferred rent obligations are subject to acceleration at our option upon an uncured default or a change in control of TA, each as provided under our TA leases.
|
|
|
||
2017
|
$
|
301,188
|
|
2018
|
301,232
|
|
|
2019
|
301,466
|
|
|
2020
|
291,966
|
|
|
2021
|
291,484
|
|
|
Thereafter
|
4,123,801
|
|
|
Total
|
$
|
5,611,137
|
|
•
|
Base Management Fee
. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of:
|
◦
|
the sum of (a)
0.7%
of the average aggregate historical cost of our real estate investments up to
$250,000
, plus (b)
0.5%
of the average aggregate historical cost of our real estate investments exceeding
$250,000
; and
|
◦
|
the sum of (a)
0.7%
of the average closing price per share of our common shares on the applicable stock exchange on which such shares are principally traded, during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to
$250,000
, plus (b)
0.5%
of our Average Market Capitalization exceeding
$250,000
.
|
•
|
Incentive Fee
. The incentive fee which may be earned by RMR LLC for an annual period is calculated as follows:
|
◦
|
An amount, subject to a cap based on the value of our common shares outstanding, equal to
12%
of the product of:
|
-
|
our equity market capitalization on the last trading day of the year immediately prior to the relevant measurement period, and
|
-
|
the amount (expressed as a percentage) by which the total returns per share realized by our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the SNL U.S. REIT Hotel Index (in each case subject to certain adjustments) for the relevant measurement period.
|
◦
|
The measurement periods are generally
three
year periods ending with the year for which the incentive fee is being calculated, with shorter periods applicable in the case of the calculation of the incentive fee for 2015 (
two years
) and 2014 (
one year
).
|
◦
|
The benchmark return per share is adjusted if our total return per share exceeds
12%
per year in any measurement period and, generally, no incentive management fee is payable by us unless our total return per share during the measurement period is positive.
|
◦
|
The incentive management fee is subject to a cap equal to the value of
1.5%
of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the
10
consecutive trading days having the highest average closing prices during the final
30
trading days of the relevant measurement period.
|
◦
|
If our financial statements are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC, for one or more periods in respect of which RMR LLC received an incentive management fee, the incentive management fee payable with respect to periods for which there has been a restatement shall be recalculated by, and approved by a majority vote of, our Independent Trustees, and RMR LLC may be required to pay us an amount equal to the value in excess of that which RMR LLC would have received based upon the incentive management fee as recalculated, either in cash or our common shares.
|
•
|
Property Management and Construction Supervision Fees.
The property management fees payable to RMR LLC by us for each applicable period are equal to
3%
of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to
5%
of construction costs for the office building component of one of our hotels that is subject to our property management agreement with RMR LLC.
|
2017
|
$
|
—
|
|
|
|
2018
|
541,000
|
|
|
||
2019
|
400,000
|
|
|
||
2020
|
—
|
|
|
||
2021
|
400,000
|
|
|
||
Thereafter
|
1,858,478
|
|
(1
|
)
|
|
|
$
|
3,199,478
|
|
|
(1)
|
Includes our
$8,478
convertible senior notes due 2027. Holders of our convertible senior notes may require us to repurchase all or a portion of the notes on March 15, 2017 and March 15, 2022, or upon the occurrence of certain change in control events.
|
|
For the Year Ended
December 31,
|
|||||||
|
2016
|
|
2015
|
|
2014
|
|||
Taxes at statutory U.S. federal income tax rate
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
Nontaxable income of HPT
|
(35
|
)%
|
|
(35
|
)%
|
|
(35
|
)%
|
State and local income taxes, net of federal tax benefit
|
0.8
|
%
|
|
0.8
|
%
|
|
1.0
|
%
|
Foreign taxes
|
1.0
|
%
|
|
0.1
|
%
|
|
0.1
|
%
|
Change in valuation allowance
|
0.8
|
%
|
|
3.7
|
%
|
|
4.0
|
%
|
Other differences, net
|
(0.8
|
)%
|
|
(3.7
|
)%
|
|
(3.9
|
)%
|
Effective tax rate
|
1.8
|
%
|
|
0.9
|
%
|
|
1.2
|
%
|
|
For the Year Ended
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
||||
Tax credits
|
$
|
11,727
|
|
|
$
|
11,877
|
|
Tax loss carryforwards
|
129,808
|
|
|
130,314
|
|
||
Other
|
3,686
|
|
|
3,723
|
|
||
|
145,221
|
|
|
145,914
|
|
||
Valuation allowance
|
(144,593
|
)
|
|
(145,259
|
)
|
||
|
628
|
|
|
655
|
|
||
Deferred tax liabilities:
|
|
|
|
||||
Property basis difference
|
(9,086
|
)
|
|
(9,104
|
)
|
||
Net deferred tax liabilities
|
$
|
(8,458
|
)
|
|
$
|
(8,449
|
)
|
•
|
We contributed
1,490,000
of our common shares and
$12,622
in cash to RMR Inc. and RMR Inc. issued
5,019,121
shares of its class A common stock to us.
|
•
|
We agreed to distribute approximately half of the shares of class A common stock of RMR Inc. issued to us in the Up-C Transaction to our shareholders as a special distribution.
|
•
|
We entered into amended and restated business and property management agreements with RMR LLC which, among other things, amended the term, termination and termination fee provisions of those agreements. See Note 7 for further information regarding our management agreements with RMR LLC.
|
•
|
We entered into a registration rights agreement with RMR Inc. covering the shares of class A common stock of RMR Inc. issued to us in the Up-C Transaction, pursuant to which we received demand and piggyback registration rights, subject to certain limitations.
|
•
|
We entered into a lock up and registration rights agreement with ABP Trust, Adam Portnoy and Barry Portnoy pursuant to which they agreed not to transfer the
1,490,000
of our common shares ABP Trust received in the Up-C Transaction for a
10
year period ending on June 5, 2025 and we granted them certain registration rights, subject, in each case, to certain exceptions.
|
Agreement Reference Name
|
|
Number of
Properties
|
|
Annual Minimum
Returns/Rents
|
|
% of Total
|
|
Investment
(1)
|
|
% of Total
|
|||||||
Marriott (No. 1)
|
|
53
|
|
|
$
|
68,636
|
|
|
9
|
%
|
|
$
|
691,298
|
|
|
9
|
%
|
Marriott (No. 234)
|
|
68
|
|
|
106,360
|
|
|
13
|
%
|
|
1,001,389
|
|
|
11
|
%
|
||
Marriott (No. 5)
|
|
1
|
|
|
10,116
|
|
|
1
|
%
|
|
90,078
|
|
|
1
|
%
|
||
Subtotal Marriott
|
|
122
|
|
|
185,112
|
|
|
23
|
%
|
|
1,782,765
|
|
|
21
|
%
|
||
InterContinental
(2)
|
|
94
|
|
|
161,789
|
|
|
21
|
%
|
|
1,695,778
|
|
|
19
|
%
|
||
Sonesta
|
|
34
|
|
|
90,171
|
|
|
11
|
%
|
|
1,196,797
|
|
|
13
|
%
|
||
Wyndham
(3)
|
|
22
|
|
|
28,404
|
|
|
4
|
%
|
|
386,758
|
|
|
4
|
%
|
||
Hyatt
|
|
22
|
|
|
22,037
|
|
|
3
|
%
|
|
301,942
|
|
|
3
|
%
|
||
Carlson
|
|
11
|
|
|
12,920
|
|
|
2
|
%
|
|
209,895
|
|
|
2
|
%
|
||
Morgans
|
|
1
|
|
|
7,595
|
|
|
1
|
%
|
|
120,000
|
|
|
1
|
%
|
||
Subtotal Hotels
|
|
306
|
|
|
508,028
|
|
|
65
|
%
|
|
5,693,935
|
|
|
63
|
%
|
||
TA (No. 1)
|
|
40
|
|
|
51,435
|
|
|
6
|
%
|
|
661,417
|
|
|
7
|
%
|
||
TA (No. 2)
|
|
40
|
|
|
52,327
|
|
|
7
|
%
|
|
665,127
|
|
|
7
|
%
|
||
TA (No. 3)
|
|
39
|
|
|
52,665
|
|
|
7
|
%
|
|
620,240
|
|
|
7
|
%
|
||
TA (No. 4)
(4)
|
|
39
|
|
|
50,117
|
|
|
6
|
%
|
|
568,098
|
|
|
6
|
%
|
||
TA (No. 5)
|
|
40
|
|
|
67,573
|
|
|
9
|
%
|
|
862,697
|
|
|
10
|
%
|
||
Subtotal TA
|
|
198
|
|
|
274,117
|
|
|
35
|
%
|
|
3,377,579
|
|
|
37
|
%
|
||
Total
|
|
504
|
|
|
$
|
782,145
|
|
|
100
|
%
|
|
$
|
9,071,514
|
|
|
100
|
%
|
(1)
|
Represents historical cost of our properties plus capital improvements funded by us less impairment writedowns, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations.
|
(2)
|
The annual minimum return/minimum rent amount presented includes
$7,904
of rent related to our lease with InterContinental for one hotel in Puerto Rico.
|
(3)
|
The annual minimum return/minimum rent amount presented includes
$1,407
of rent related to our lease with Wyndham Vacation for
48
vacation units in one hotel.
|
(4)
|
The annual minimum rent amount for our TA No. 4 agreement includes approximately
$2,120
of ground rent paid by TA for a property we lease and sublease to TA.
|
|
2016
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Revenues
|
$
|
474,118
|
|
|
$
|
550,299
|
|
|
$
|
543,516
|
|
|
$
|
479,278
|
|
Net income
|
52,051
|
|
|
56,061
|
|
|
51,812
|
|
|
63,186
|
|
||||
Net income available for common shareholders
|
46,885
|
|
|
50,895
|
|
|
46,646
|
|
|
58,020
|
|
||||
Net income available for common shareholders per share (basic and diluted)
(1)
|
0.31
|
|
|
0.34
|
|
|
0.30
|
|
|
0.35
|
|
||||
Distributions per common share
(2)
|
0.50
|
|
|
0.51
|
|
|
0.51
|
|
|
0.51
|
|
|
2015
|
||||||||||||||
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Revenues
|
$
|
435,512
|
|
|
$
|
507,066
|
|
|
$
|
511,886
|
|
|
$
|
467,440
|
|
Net income (loss)
|
41,581
|
|
|
83,146
|
|
|
61,185
|
|
|
(19,494
|
)
|
||||
Net income (loss) available for common shareholders
|
36,415
|
|
|
77,980
|
|
|
56,019
|
|
|
(24,660
|
)
|
||||
Net income (loss) available for common shareholders per share (basic and diluted)
(1)
|
0.24
|
|
|
0.52
|
|
|
0.37
|
|
|
(0.16
|
)
|
||||
Distributions per common share
(2)
|
0.49
|
|
|
0.50
|
|
|
0.50
|
|
|
0.70
|
|
(1)
|
The sum of per common share amounts for the four quarters differs from annual per share amounts due to the required method of computing weighted average number of shares in interim periods and rounding.
|
(2)
|
Amounts represent distributions paid in the periods shown. The fourth quarter of 2015 includes a non-cash distribution of
$0.1974
per share related to the distribution of shares of RMR Inc. class A common stock to our shareholders on December 14, 2015.
|
|
For the Year Ended December 31, 2016
|
||||||||||||||
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Hotel operating revenues
|
$
|
1,730,326
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,730,326
|
|
Rental income
|
33,202
|
|
|
279,175
|
|
|
—
|
|
|
312,377
|
|
||||
FF&E reserve income
|
4,508
|
|
|
—
|
|
|
—
|
|
|
4,508
|
|
||||
Total revenues
|
1,768,036
|
|
|
279,175
|
|
|
—
|
|
|
2,047,211
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Hotel operating expenses
|
1,202,538
|
|
|
—
|
|
|
—
|
|
|
1,202,538
|
|
||||
Depreciation and amortization
|
224,335
|
|
|
133,007
|
|
|
—
|
|
|
357,342
|
|
||||
General and administrative
|
—
|
|
|
—
|
|
|
99,105
|
|
|
99,105
|
|
||||
Acquisition related costs
|
1,367
|
|
|
—
|
|
|
—
|
|
|
1,367
|
|
||||
Total expenses
|
1,428,240
|
|
|
133,007
|
|
|
99,105
|
|
|
1,660,352
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
339,796
|
|
|
146,168
|
|
|
(99,105
|
)
|
|
386,859
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
—
|
|
|
—
|
|
|
2,001
|
|
|
2,001
|
|
||||
Interest income
|
—
|
|
|
—
|
|
|
274
|
|
|
274
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
(161,913
|
)
|
|
(161,913
|
)
|
||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
(228
|
)
|
|
(228
|
)
|
||||
Income (loss) before income taxes and equity in earnings of an investee
|
339,796
|
|
|
146,168
|
|
|
(258,971
|
)
|
|
226,993
|
|
||||
Income tax expense
|
—
|
|
|
—
|
|
|
(4,020
|
)
|
|
(4,020
|
)
|
||||
Equity in earnings of an investee
|
—
|
|
|
—
|
|
|
137
|
|
|
137
|
|
||||
Net income (loss)
|
$
|
339,796
|
|
|
$
|
146,168
|
|
|
$
|
(262,854
|
)
|
|
$
|
223,110
|
|
|
As of December 31, 2016
|
||||||||||||||
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Total assets
|
$
|
4,005,481
|
|
|
$
|
2,508,000
|
|
|
$
|
120,747
|
|
|
$
|
6,634,228
|
|
|
For the Year Ended December 31, 2015
|
||||||||||||||
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Hotel operating revenues
|
$
|
1,634,654
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,634,654
|
|
Rental income
|
32,533
|
|
|
250,582
|
|
|
—
|
|
|
283,115
|
|
||||
FF&E reserve income
|
4,135
|
|
|
—
|
|
|
—
|
|
|
4,135
|
|
||||
Total revenues
|
1,671,322
|
|
|
250,582
|
|
|
—
|
|
|
1,921,904
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Hotel operating expenses
|
1,143,981
|
|
|
—
|
|
|
—
|
|
|
1,143,981
|
|
||||
Depreciation and amortization
|
213,964
|
|
|
115,812
|
|
|
—
|
|
|
329,776
|
|
||||
General and administrative
|
—
|
|
|
—
|
|
|
109,837
|
|
|
109,837
|
|
||||
Acquisition related costs
|
2,259
|
|
|
—
|
|
|
116
|
|
|
2,375
|
|
||||
Total expenses
|
1,360,204
|
|
|
115,812
|
|
|
109,953
|
|
|
1,585,969
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
311,118
|
|
|
134,770
|
|
|
(109,953
|
)
|
|
335,935
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
—
|
|
|
—
|
|
|
2,640
|
|
|
2,640
|
|
||||
Interest income
|
—
|
|
|
—
|
|
|
44
|
|
|
44
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
(144,898
|
)
|
|
(144,898
|
)
|
||||
Loss on distribution to shareholders of The RMR Group Inc. common stock
|
—
|
|
|
—
|
|
|
(36,773
|
)
|
|
(36,773
|
)
|
||||
Income (loss) before income taxes, equity in earnings of an investee and gain on sale of real estate
|
311,118
|
|
|
134,770
|
|
|
(288,940
|
)
|
|
156,948
|
|
||||
Income tax expense
|
—
|
|
|
—
|
|
|
(1,566
|
)
|
|
(1,566
|
)
|
||||
Equity in earnings of an investee
|
—
|
|
|
—
|
|
|
21
|
|
|
21
|
|
||||
Income (loss) before gain on sale of real estate
|
311,118
|
|
|
134,770
|
|
|
(290,485
|
)
|
|
155,403
|
|
||||
Gain on sale of real estate
|
—
|
|
|
11,015
|
|
|
—
|
|
|
11,015
|
|
||||
Net income (loss)
|
$
|
311,118
|
|
|
$
|
145,785
|
|
|
$
|
(290,485
|
)
|
|
$
|
166,418
|
|
|
As of December 31, 2015
|
||||||||||||||
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Total assets
|
$
|
3,892,316
|
|
|
$
|
2,440,393
|
|
|
$
|
62,088
|
|
|
$
|
6,394,797
|
|
|
For the Year Ended December 31, 2014
|
||||||||||||||
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Hotel operating revenues
|
$
|
1,474,757
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,474,757
|
|
Rental income
|
32,668
|
|
|
225,394
|
|
|
—
|
|
|
258,062
|
|
||||
FF&E reserve income
|
3,503
|
|
|
—
|
|
|
—
|
|
|
3,503
|
|
||||
Total revenues
|
1,510,928
|
|
|
225,394
|
|
|
—
|
|
|
1,736,322
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Hotel operating expenses
|
1,035,138
|
|
|
—
|
|
|
—
|
|
|
1,035,138
|
|
||||
Depreciation and amortization
|
213,527
|
|
|
102,351
|
|
|
—
|
|
|
315,878
|
|
||||
General and administrative
|
—
|
|
|
—
|
|
|
45,897
|
|
|
45,897
|
|
||||
Acquisition related costs
|
239
|
|
|
—
|
|
|
—
|
|
|
239
|
|
||||
Total expenses
|
1,248,904
|
|
|
102,351
|
|
|
45,897
|
|
|
1,397,152
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
262,024
|
|
|
123,043
|
|
|
(45,897
|
)
|
|
339,170
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Interest income
|
—
|
|
|
—
|
|
|
77
|
|
|
77
|
|
||||
Interest expense
|
—
|
|
|
—
|
|
|
(139,486
|
)
|
|
(139,486
|
)
|
||||
Loss on early extinguishment of debt
|
—
|
|
|
—
|
|
|
(855
|
)
|
|
(855
|
)
|
||||
Income (loss) before income taxes, equity in earnings of an investee and gain on sale of real estate
|
262,024
|
|
|
123,043
|
|
|
(186,161
|
)
|
|
198,906
|
|
||||
Income tax expense
|
—
|
|
|
—
|
|
|
(1,945
|
)
|
|
(1,945
|
)
|
||||
Equity in earnings of an investee
|
—
|
|
|
—
|
|
|
94
|
|
|
94
|
|
||||
Income (loss) before gain on sale of real estate
|
262,024
|
|
|
123,043
|
|
|
(188,012
|
)
|
|
197,055
|
|
||||
Gain on sale of real estate
|
130
|
|
|
—
|
|
|
—
|
|
|
130
|
|
||||
Net income (loss)
|
$
|
262,154
|
|
|
$
|
123,043
|
|
|
$
|
(188,012
|
)
|
|
$
|
197,185
|
|
|
As of December 31, 2014
|
||||||||||||||
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Total assets
|
$
|
3,748,062
|
|
|
$
|
2,194,682
|
|
|
$
|
24,383
|
|
|
$
|
5,967,127
|
|
|
|
|
|
Fair Value at Reporting Date Using
|
||||||||||||
Description
|
|
Carrying Value at
December 31, 2016
|
|
Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
|
|
Significant Other
Observable Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
Recurring Fair Value Measurement Assets:
|
|
|
|
|
|
|
||||||||||
Investment in TA
(1)
|
|
$
|
24,282
|
|
|
$
|
24,282
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment in RMR Inc.
(2)
|
|
$
|
98,899
|
|
|
$
|
98,899
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Our
3,420,000
common shares of TA, which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is
$17,407
as of
December 31, 2016
. The unrealized gain of
$6,875
for these shares as of
December 31, 2016
is included in cumulative other comprehensive income (loss) in our consolidated balance sheets.
|
(2)
|
Our
2,503,777
shares of class A common stock of RMR Inc., which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is
$66,374
as of
December 31, 2016
. The unrealized gain of
$32,525
for these shares as of
December 31, 2016
is included in cumulative other comprehensive income (loss) in our consolidated balance sheets.
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
|
Carrying
Amount
(1)
|
|
Fair
Value
|
|
Carrying
Amount
(1)
|
|
Fair
Value
|
||||||||
Senior Unsecured Notes, due 2016 at 6.30%
(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
274,869
|
|
|
$
|
275,813
|
|
Senior Unsecured Notes, due 2017 at 5.625%
(3)
|
—
|
|
|
—
|
|
|
299,576
|
|
|
311,181
|
|
||||
Senior Unsecured Notes, due 2018 at 6.70%
|
349,387
|
|
|
358,740
|
|
|
348,821
|
|
|
370,438
|
|
||||
Senior Unsecured Notes, due 2021 at 4.25%
(4)
|
394,056
|
|
|
413,790
|
|
|
—
|
|
|
—
|
|
||||
Senior Unsecured Notes, due 2022 at 5.00%
|
493,187
|
|
|
527,945
|
|
|
491,974
|
|
|
515,760
|
|
||||
Senior Unsecured Notes, due 2023 at 4.50%
|
298,134
|
|
|
298,845
|
|
|
297,845
|
|
|
295,709
|
|
||||
Senior Unsecured Notes, due 2024 at 4.65%
|
347,079
|
|
|
348,523
|
|
|
346,674
|
|
|
346,010
|
|
||||
Senior Unsecured Notes, due 2025 at 4.50%
|
344,368
|
|
|
341,439
|
|
|
343,680
|
|
|
338,426
|
|
||||
Senior Unsecured Notes, due 2026 at 5.25%
(4)
|
339,697
|
|
|
354,772
|
|
|
—
|
|
|
—
|
|
||||
Convertible Senior Unsecured Notes, due 2027 at 3.8%
|
8,478
|
|
|
8,599
|
|
|
8,478
|
|
|
8,697
|
|
||||
Total financial liabilities
|
$
|
2,574,386
|
|
|
$
|
2,652,653
|
|
|
$
|
2,411,917
|
|
|
$
|
2,462,034
|
|
(1)
|
Carrying value includes unamortized discounts and certain issuance costs.
|
(2)
|
These senior notes were redeemed at par plus accrued interest in March 2016.
|
(3)
|
These senior notes were redeemed at par plus accrued interest in September 2016.
|
(4)
|
These senior notes were issued in February 2016.
|
|
Initial Cost to
Company
|
|
Costs Capitalized
Subsequent to Acquisition
|
|
Gross Amount at which Carried
at Close of Period
|
||||||||||||||||||||||||||
|
Land
|
|
Building &
Improvements
|
|
Improvements
|
|
Impairment
|
|
Cost Basis
Adjustment
(1)
|
|
Land
|
|
Building &
Improvements
|
|
Total
(2)
|
||||||||||||||||
148 TravelCenters of America
|
$
|
586
|
|
|
$
|
981
|
|
|
$
|
537
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
586
|
|
|
$
|
1,518
|
|
|
$
|
2,104
|
|
49 Petro Stopping Centers
|
255
|
|
|
529
|
|
|
211
|
|
|
—
|
|
|
—
|
|
|
255
|
|
|
740
|
|
|
995
|
|
||||||||
71 Courtyards by Marriott
|
127
|
|
|
643
|
|
|
200
|
|
|
(8
|
)
|
|
(10
|
)
|
|
127
|
|
|
825
|
|
|
952
|
|
||||||||
35 Residence Inns by Marriott
|
67
|
|
|
326
|
|
|
116
|
|
|
(3
|
)
|
|
(3
|
)
|
|
67
|
|
|
436
|
|
|
503
|
|
||||||||
61 Candlewood Suites
|
73
|
|
|
383
|
|
|
66
|
|
|
(14
|
)
|
|
(7
|
)
|
|
73
|
|
|
428
|
|
|
501
|
|
||||||||
4 Royal Sonesta Hotels
|
63
|
|
|
300
|
|
|
72
|
|
|
(16
|
)
|
|
(9
|
)
|
|
63
|
|
|
347
|
|
|
410
|
|
||||||||
25 Sonesta ES Suites
|
46
|
|
|
197
|
|
|
159
|
|
|
(35
|
)
|
|
(27
|
)
|
|
46
|
|
|
294
|
|
|
340
|
|
||||||||
7 Crowne Plazas
|
44
|
|
|
202
|
|
|
77
|
|
|
—
|
|
|
—
|
|
|
44
|
|
|
279
|
|
|
323
|
|
||||||||
19 Staybridge Suites
|
54
|
|
|
211
|
|
|
23
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
234
|
|
|
288
|
|
||||||||
5 Sonesta Hotels and Resorts
|
48
|
|
|
151
|
|
|
68
|
|
|
(15
|
)
|
|
(5
|
)
|
|
48
|
|
|
199
|
|
|
247
|
|
||||||||
22 Hyatt Places
|
24
|
|
|
185
|
|
|
31
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
216
|
|
|
240
|
|
||||||||
6 Wyndham Hotels and Resorts and Wyndham Grand
|
35
|
|
|
175
|
|
|
55
|
|
|
(26
|
)
|
|
(8
|
)
|
|
35
|
|
|
196
|
|
|
231
|
|
||||||||
1 Kimpton Hotels and Resorts
|
6
|
|
|
101
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
101
|
|
|
107
|
|
||||||||
2 Marriott Hotels and Resorts
|
10
|
|
|
69
|
|
|
54
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
123
|
|
|
133
|
|
||||||||
3 InterContinental Hotels and Resorts
|
17
|
|
|
100
|
|
|
95
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|
195
|
|
|
212
|
|
||||||||
1 Clift Hotel
|
28
|
|
|
80
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|
80
|
|
|
108
|
|
||||||||
5 Radisson Hotels and Resorts
|
7
|
|
|
88
|
|
|
9
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
97
|
|
|
104
|
|
||||||||
12 TownePlace Suites by Marriott
|
17
|
|
|
78
|
|
|
23
|
|
|
(15
|
)
|
|
(18
|
)
|
|
17
|
|
|
68
|
|
|
85
|
|
||||||||
3 Holiday Inns
|
5
|
|
|
33
|
|
|
30
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
63
|
|
|
68
|
|
||||||||
5 Country Inn and Suites by Carlson
|
6
|
|
|
58
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
6
|
|
|
56
|
|
|
62
|
|
||||||||
16 Hawthorn Suites
|
14
|
|
|
77
|
|
|
19
|
|
|
(33
|
)
|
|
(18
|
)
|
|
14
|
|
|
45
|
|
|
59
|
|
||||||||
2 SpringHill Suites by Marriott
|
3
|
|
|
15
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
17
|
|
|
20
|
|
||||||||
1 Park Plaza Hotels & Resorts
|
1
|
|
|
9
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
1
|
|
|
8
|
|
|
9
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Assets Held for Sale
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
1 TravelCenters of America
|
3
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
4
|
|
|
7
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Total (504 properties)
|
$
|
1,539
|
|
|
$
|
4,995
|
|
|
$
|
1,844
|
|
|
$
|
(165
|
)
|
|
$
|
(105
|
)
|
|
$
|
1,539
|
|
|
$
|
6,569
|
|
|
$
|
8,108
|
|
(1)
|
Represents reclassifications between accumulated depreciation and building & improvements made to record certain properties at fair value in accordance with GAAP.
|
(2)
|
Excludes
$615
of personal property classified in our consolidated balance sheets as furniture, fixtures and equipment.
|
|
Accumulated
Depreciation
(1)
|
|
Date of
Construction
|
|
Date
Acquired
|
|
Life on which
Depreciation in
Latest Income
Statement is
Computed
|
||
148 TravelCenters of America
|
$
|
(560
|
)
|
|
1962 through 2016
|
|
2007 through 2016
|
|
10 - 40 Years
|
71 Courtyards
|
(369
|
)
|
|
1987 through 2000
|
|
1995 through 2003
|
|
10 - 40 Years
|
|
49 Petro Stopping Centers
|
(250
|
)
|
|
1975 through 2016
|
|
2007 through 2016
|
|
10 - 40 Years
|
|
35 Residence Inns
|
(183
|
)
|
|
1989 through 2002
|
|
1996 through 2005
|
|
10 - 40 Years
|
|
61 Candlewood Hotels
|
(164
|
)
|
|
1996 through 2000
|
|
1997 through 2003
|
|
10 - 40 Years
|
|
22 Hyatt Place
|
(106
|
)
|
|
1992 through 2000
|
|
1997 through 2002
|
|
10 - 40 Years
|
|
19 Staybridge Suites
|
(89
|
)
|
|
1989 through 2002
|
|
1996 through 2006
|
|
10 - 40 Years
|
|
7 Crowne Plaza
|
(65
|
)
|
|
1971 through 1987
|
|
2006
|
|
10 - 40 Years
|
|
3 InterContinental
|
(61
|
)
|
|
1924 through 1989
|
|
2006
|
|
10 - 40 Years
|
|
2 Marriott Full Service
|
(53
|
)
|
|
1972 through 1995
|
|
1998 through 2001
|
|
10 - 40 Years
|
|
4 Royal Sonesta
|
(52
|
)
|
|
1969 through 1987
|
|
2005 through 2013
|
|
10 - 40 Years
|
|
25 Sonesta ES Suites
|
(46
|
)
|
|
1987 through 2000
|
|
1996 through 2016
|
|
10 - 40 Years
|
|
5 Radisson
|
(45
|
)
|
|
1987 through 1990
|
|
1996 through 1997
|
|
10 - 40 Years
|
|
5 Country Inn and Suites
|
(27
|
)
|
|
1987 through 1997
|
|
1996 and 2005
|
|
10 - 40 Years
|
|
6 Wyndham
|
(25
|
)
|
|
1960 through 1988
|
|
2006 through 2013
|
|
10 - 40 Years
|
|
5 Sonesta Hotels and Resorts
|
(25
|
)
|
|
1924 through 1989
|
|
2005 through 2016
|
|
10 - 40 Years
|
|
12 TownePlace Suites
|
(19
|
)
|
|
1997 through 2000
|
|
1998 through 2001
|
|
10 - 40 Years
|
|
3 Holiday Inn
|
(9
|
)
|
|
1984 through 2001
|
|
2006
|
|
10 - 40 Years
|
|
16 Hawthorn Suites
|
(8
|
)
|
|
1996 through 2000
|
|
1997 through 2006
|
|
10 - 40 Years
|
|
1 Clift Hotel
|
(8
|
)
|
|
1913
|
|
2012
|
|
10 - 40 Years
|
|
2 SpringHill Suites
|
(7
|
)
|
|
1997 through 2000
|
|
2000 through 2001
|
|
10 - 40 Years
|
|
1 Park Plaza
|
(4
|
)
|
|
1988
|
|
1996
|
|
10 - 40 Years
|
|
1 Kimpton Hotels
|
(2
|
)
|
|
1912
|
|
2016
|
|
10 - 40 Years
|
|
|
|
|
|
|
|
|
|
||
Assets Held for Sale
|
|
|
|
|
|
|
|
||
1 TravelCenters of America
|
(1
|
)
|
|
|
|
|
|
|
|
Total (504 properties)
|
$
|
(2,178
|
)
|
|
|
|
|
|
|
(1)
|
Excludes accumulated depreciation of
$336
related to personal property classified in our consolidated balance sheets as furniture, fixtures and equipment.
|
(A)
|
The change in total cost of properties for the period from January 1,
2014
to
December 31, 2016
is as follows:
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of year
|
$
|
7,684,059
|
|
|
$
|
7,090,078
|
|
|
$
|
6,825,627
|
|
Additions: acquisitions and capital expenditures
|
455,373
|
|
|
665,300
|
|
|
277,432
|
|
|||
Dispositions
|
(31,261
|
)
|
|
(71,319
|
)
|
|
(12,981
|
)
|
|||
Balance at close of year
|
$
|
8,108,171
|
|
|
$
|
7,684,059
|
|
|
$
|
7,090,078
|
|
(B)
|
The change in accumulated depreciation for the period from January 1, 2014 to
December 31, 2016
is as follows:
|
|
2016
|
|
2015
|
|
2014
|
||||||
Balance at beginning of year
|
$
|
1,938,823
|
|
|
$
|
1,727,032
|
|
|
$
|
1,513,482
|
|
Additions: depreciation expense
|
270,285
|
|
|
238,941
|
|
|
222,249
|
|
|||
Dispositions
|
(31,261
|
)
|
|
(27,150
|
)
|
|
(8,699
|
)
|
|||
Balance at close of year
|
$
|
2,177,847
|
|
|
$
|
1,938,823
|
|
|
$
|
1,727,032
|
|
(C)
|
The aggregate cost tax basis for federal income tax purposes of our real estate properties was
$5,852,922
on
December 31, 2016
.
|
|
Hospitality Properties Trust
|
|
|
By:
|
/s/ John G. Murray
|
|
John G. Murray
President and Chief Operating Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ John G. Murray
|
|
President and
Chief Operating Officer
(Principal Executive Officer)
|
|
March 1, 2017
|
|
John G. Murray
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Mark L. Kleifges
|
|
Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer)
|
|
March 1, 2017
|
|
Mark L. Kleifges
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Donna D. Fraiche
|
|
Independent Trustee
|
|
March 1, 2017
|
|
Donna D. Fraiche
|
|
|
|
|
|
|
|
|
|
|
|
/s/ John L. Harrington
|
|
Independent Trustee
|
|
March 1, 2017
|
|
John L. Harrington
|
|
|
|
|
|
|
|
|
|
|
|
/s/ William A. Lamkin
|
|
Independent Trustee
|
|
March 1, 2017
|
|
William A. Lamkin
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Adam D. Portnoy
|
|
Managing Trustee
|
|
March 1, 2017
|
|
Adam D. Portnoy
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Barry M. Portnoy
|
|
Managing Trustee
|
|
March 1, 2017
|
|
Barry M. Portnoy
|
|
|
|
|
|
By:
|
/s/ Mark L. Kleifges
Name: Mark L. Kleifges Title: Chief Financial Officer and Treasurer |
By:
|
/s/ David W. Doucette
Name: David W. Doucette Title: Vice President |
|
Owner
|
|
Hotel
|
|
Landlord
|
|
Date of
Agreement |
|
Effective Date
|
|
Invested
Capital Amount |
|
Section 2.02(1)
Date |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cambridge TRS, Inc.
|
|
Royal Sonesta Cambridge
40 Edwin H. Land Boulevard Cambridge, MA 02142 |
|
HPT Cambridge LLC
|
|
January 31, 2012
|
|
January 31, 2012
|
|
$
|
120,000,000
|
|
January 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cambridge TRS, Inc.
|
|
Royal Sonesta Harbor Court Baltimore
550 Light Street
Baltimore, MD
|
|
Harbor Court Associates, LLC
|
|
May 31, 2012
|
|
May 31, 2012
|
|
$
|
47,296,000
|
|
January 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cambridge TRS, Inc.
|
|
Sonesta Hotel Philadelphia
1800 Market Street
Philadelphia, PA
|
|
HPT IHG-2 Properties Trust
|
|
June 18, 2012
|
|
June 18, 2012
|
|
$
|
32,500,000
|
|
January 1, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cambridge TRS, Inc.
|
|
Royal Sonesta Houston Hotel
2222 West Loop South
Houston, TX
|
|
HPT IHG-2 Properties Trust
|
|
July 16, 2012
|
|
July 16, 2012
|
|
$
|
70,671,350
|
|
January 1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cambridge TRS, Inc.
|
|
Sonesta Gwinnett Place
1775 Pleasant Hill Road Duluth, GA |
|
HPT Cambridge LLC
|
|
February 26, 2013
|
|
May 17, 2013
|
|
$
|
31,000,000
|
|
January 1, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cambridge TRS, Inc.
|
|
Royal Sonesta New Orleans
300 Bourbon Street New Orleans, LA |
|
Royal Sonesta, Inc.
|
|
June 28, 2013
|
|
June 28, 2013
|
|
$
|
151,000,000
|
|
January 1, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cambridge TRS, Inc.
|
|
Sonesta Silicon Valley
1820 Barber Lane
Milpitas, CA
|
|
HPT IHG-2 Properties Trust
|
|
December 5, 2016
|
|
December 5, 2016
|
|
$
|
46,000,000
|
|
January 1, 2020
|
|
SONESTA INTERNATIONAL HOTELS CORPORATION
|
|
|
|
|
|
|
|
|
By:
|
/s/ William J. Sheehan
|
|
|
William J. Sheehan
|
|
|
Chairman and Chief Executive Officer
|
|
|
|
|
|
|
|
CAMBRIDGE TRS, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ John G. Murray
|
|
|
John G. Murray
|
|
|
President and Chief Operating Officer
|
Owner
|
Hotel
|
Landlord
|
Cambridge TRS, Inc.
|
Royal Sonesta Cambridge
40 Edwin Land Boulevard Cambridge, MA 02142 (effective January 31, 2012) |
HPT Cambridge LLC
|
|
Sonesta Hilton Head Resort
130 Shipyard Drive
Hilton Head, SC 29928
(effective April 27, 2012)
|
HPT IHG-2 Properties Trust
|
|
Royal Sonesta Harbor Court Baltimore
550 Light Street
Baltimore, MD
(effective May 31, 2012) |
Harbor Court Associates, LLC
|
|
Sonesta ES Suites Burlington
11 Old Concord Road
Burlington, MA
(effective June 12, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta Hotel Philadelphia
1800 Market Street
Philadelphia, PA
(effective June 18, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Orlando
8480 International Drive Orlando, FL (effective July 9, 2012) |
HPT IHG-2 Properties Trust
|
|
Royal Sonesta Houston Hotel
2222 West Loop South
Houston, TX
(effective July 16, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Andover
4 Technology Drive Andover, MA (effective July 25, 2012) |
HPT IHG-2 Properties Trust
|
|
|
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Somerset
260 Davidson Avenue Somerset, NJ (effective August 1, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Princeton
4375 U.S. Route 1 South Princeton, NJ (effective August 3, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Malvern
20 Morehall Road Malvern, PA (effective August 6, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Dublin
435 Metro Place South Dublin, OH (effective August 11, 2012) |
HPTMI Properties Trust
|
|
Sonesta ES Suites Flagstaff
3440 Country Club Drive Flagstaff, AZ (effective August 11, 2012) |
HPTMI Properties Trust
|
|
Sonesta ES Suites Houston
5190 Hidalgo Street
Houston, TX
(effective August 13, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Columbia
8844 Columbia 100 Parkway Columbia, MD (effective August 14, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Charlotte
7925 Forest Pine Drive Charlotte, NC (effective August 16, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Atlanta
760 Mt. Vernon Highway, N.E. Atlanta, GA (effective August 20, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites St. Louis
1855 Craigshire Road St. Louis, MO (effective August 22, 2012) |
HPT IHG-2 Properties Trust
|
|
Sonesta Gwinnett Place
1775 Pleasant Hill Road
Duluth, GA
(effective May 17, 2013)
|
HPT Cambridge LLC
|
|
Royal Sonesta New Orleans
300 Bourbon Street New Orleans, LA 70130 (effective June 28, 2013) |
Royal Sonesta, Inc.
|
|
Sonesta Fort Lauderdale
999 North Fort Lauderdale Beach Boulevard Fort Lauderdale, FL (effective May 30, 2014) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Tucson
6477 East Speedway Boulevard Tucson, AZ (effective July 23, 2015) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Colorado Springs
3880 North Academy Boulevard Colorado Springs, CO (effective July 23, 2015) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Minneapolis
3040 Eagandale Place Eagan, MN (effective July 23, 2015) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Omaha
6990 Dodge Street Omaha, NE (effective July 23, 2015) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Princeton
4225 US Highway 1 South Brunswick - Princeton, NJ (effective July 23, 2015) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Somers Point
900 Mays Landing Road Somers Point, NJ (effective July 23, 2015) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Cinncinati
2670 Kemper Road Sharonville, OH (effective July 23, 2015) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Oklahoma City
4361 West Reno Avenue Oklahoma City, OK (effective July 23, 2015) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Burlington
35 Hurricane Lane Williston, VT (effective July 23, 2015) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Cleveland Airport
1725 Rosbough Drive Middleburg Heights, OH (effective February 1, 2016) |
HPT IHG-2 Properties Trust
|
|
Sonesta ES Suites Westlake
30100 Clemens Road Westlake, OH (effective February 1, 2016) |
HPT IHG-2 Properties Trust
|
|
Sonesta Silicon Valley
1820 Barber Lane Milpitas, CA (effective December 5, 2016) |
HPT IHG-2 Properties Trust
|
a.
|
The following new definitions are inserted in Article 1 of the Management Agreement:
|
b.
|
The definition of “
Effective Date
” set forth in Section 1.38 of the Agreement (as amended by Section 3 of the First Amendment) is deleted in its entirety and restated as follows:
|
c.
|
The definition of “
Operating Profit
” set forth in Section 1.75 of the Agreement is amended such that (i) the word “Hotel” is deleted and the phrase “Hotel or Affiliated Hotel” is inserted in lieu thereof and (ii) the word “Hotels” is deleted and the phrase “Hotels and Affiliated Hotels” is inserted in lieu thereof.
|
d.
|
The definition of “
Owner’s First Priority
” inserted by Section 6 of the First Amendment is amended to delete the phrase “Pool B Hotel” located at the end of the first sentence thereof and replace it with the phrase “Pool B Hotel or Affiliate Hotel.”
|
e.
|
The definition of “
Owner’s Pool B Priority
” inserted by Section 7 of the First Amendment is deleted in its entirety and restated as follows (with changes shown in
double underline
):
|
f.
|
The definition of “
Pooled FF&E Hotels
” set forth in Section 1.87 of the Agreement is amended such that the word “Hotels” is deleted therefrom and the phrase “Hotels and Affiliated Hotels” is inserted in lieu thereof.
|
g.
|
Non-Economic Hotels.
Section 2.6(e) is amended such that an Affiliate Hotel may also be designated a Non-Economic Hotel in accordance with and subject to the terms of Section 2.6(e) of the Management Agreement no earlier than fifth anniversary of the Effective Date for such Affiliate Hotel;
provided
,
however
, if an Affiliate Hotel is designated as a Non-Economic Hotel and the compliance with the provisions of this Agreement as to a Non-Economic Hotel triggers withdrawal liability related to any multi-employer plan under any collective bargaining agreement or causes Manager to incur costs to comply with the requirements of Section 4204 of ERISA with respect thereto, then Owner shall pay for such withdrawal liability or compliance costs (or reimburse Manager for the same) and the net proceeds of such sale (or the price of the third party offer received in the context of a Retained Hotel) shall be reduced by the amount of such withdrawal liability or such compliance costs for purposes of calculating the reduction in Owner’s First Priority and Owner’s Second Priority.
|
h.
|
Early Termination
. Any termination of the Affiliate Management Agreement for the Kimpton Hotel Allegro Chicago pursuant to Sections 5.1, 10.3, 17.2, 17.3, or 17.4 of the Affiliate Management Agreement for the Kimpton Hotel Allegro Chicago shall also result in a termination of the Management Agreement pursuant to the corresponding section of the Management Agreement.
|
i.
|
Reserve Account
. Sections 5.2 and 7.7 are amended such that the capital replacements reserve for any Affiliate Hotel shall be included in the Reserve Account, and the Reserve Account and terms of Section 5.2 and 7.7 shall apply to any Affiliate Hotel in the same manner as they apply to a Hotel. As clarification, to the extent the amount to be distributed to the Reserve Account in the Affiliate Management Agreement for the Kimpton Hotel Allegro Chicago is different than what is set forth in the Management Agreement, the amount set forth in the Affiliate Management Agreement for the Kimpton Hotel Allegro Chicago shall apply with respect to the Kimpton Hotel Allegro Chicago.
|
j.
|
Section 10.1(b) (which was previously inserted by Section 17 of the First Amendment) is deleted in its entirety and the following is inserted in lieu thereof (with changes shown in
double underline
):
|
(1)
|
First
, to pay all Operating Costs for the Pool B Hotels
and Affiliate Hotels
;
|
(2)
|
Second
, Owner’s Pool B Priority for the Fiscal Year to which such Pool B Gross Revenues pertain, together with any accrued Owner’s Pool B Priority and interest thereof shall be paid to Owner; if the Pool B Gross Revenues are insufficient to pay Owner’s Pool B Priority and interest, if any, as aforesaid, such shortfall shall be accrued;
provided
,
however
, there shall be no accrual of Owner’s Pool B Priority to the extent any applicable shortfall is otherwise funded from the Deposit;
|
(3)
|
Third
, the Base Management Fee for the Pool B Hotels
and Affiliate Hotels
shall be paid to Manager;
|
(4)
|
Fourth
, to fund the Reserve Account, as required by
Section 5.2 (Reserve Account)
in respect of the Pool B Gross Revenues, for the previous Fiscal Month and then any amounts accrued and unpaid for prior periods, including amounts to reimburse Manager for amounts advanced by Manager under
Section 5.2(d)
;
|
(5)
|
Fifth
, if Pool B Gross Revenues are sufficient to fund the Reserve Account pursuant to Section 10.1(b)(4), remaining Pool B Gross Revenues shall be applied as follows: (i) fifty percent (50%) of the amount thereof shall be paid to Owner to replenish the Deposit up to but not in excess of the Deposit Maintenance Amount (after first taking into account any such amounts to be paid to Owner to replenish the Deposit pursuant to Section 10.1(a)(4)(i)); and (ii) fifty percent (50%) of the amount thereof shall be paid to Owner, up to but not in excess of, Owner’s Second Priority for such Fiscal Year (after taking into account any such amounts to be paid to Owner pursuant to Section 10.1(a)(5));
|
(6)
|
Sixth
, if Pool B Gross Revenues are sufficient to fund the Deposit and Owner’s Second Priority pursuant to Section 10.1(b)(5), remaining Pool B Gross Revenues shall be aggregated and shall be applied as follows: (i) fifty percent (50%) of the amount thereof shall be paid to Manager and shall also constitute the Incentive Management Fee hereunder; and (ii) fifty percent (50%) of the amount thereof shall be paid to Owner and shall also constitute Owner’s Residual Distribution hereunder.
|
k.
|
Section 19 of the First Amendment is deleted and the following is inserted in lieu thereof (with changes shown in
double underline
):
|
l.
|
Section 20 of the First Amendment is deleted and the following is inserted in lieu thereof (with changes shown in
double underline
):
|
m.
|
Section 10.3A of the Management Agreement (which was set forth in Section 18 of the First Amendment) is amended such that the reference to “Pool B Hotels” in the proviso of the fourth sentence of such Section 10.3A is deleted in its entirety and the phrase “Pool B Hotels and the Affiliate Hotels” is inserted in lieu thereof.
|
n.
|
Section 17.1 is amended to insert the following new Subsection (k) as a Manager Event of Default:
|
“(k)
|
The occurrence of an “Event of Default” by any Affiliate Manager under any Affiliate Management Agreement.”
|
1.
|
The Affiliate Hotel that is the subject of this Affiliate Hotel Designation Supplement is the [INSERT NAME AND ADDRESS OF APPLICABLE AFFILIATE HOTEL] [Kimpton Hotel Allegro having an address at 171 West Randolph, Chicago Illinois 60601].
|
2.
|
The Affiliate Management Agreement for this Affiliate Hotel is that certain [INSERT DESCRIPTION OF MANAGEMENT AGREEMENT] [Amended and Restated Management Agreement, dated as of December __, 2016, between Owner and KHRG Allegro, LLC], as the same may be amended from time to time.
|
3.
|
The Affiliate Manager for this Affiliate Hotel is [INSERT AFFILIATE MANAGER] [KHRG Allegro, LLC].
|
4.
|
The Effective Date for this Affiliate Hotel is
.
|
5.
|
The Pool B Hotel Percentage for this Affiliate Hotel shall be ______________, the approved aggregate sum of all amounts expended by Owner or Landlord or any of their affiliates in connection with this Affiliate Hotel as of the date hereof is $ ____________ and the Owner’s Pool B Base Priority for this Affiliate Hotel shall be $ _____________________.
|
6.
|
The Management Agreement remains in full force and effect and is ratified and confirmed.
|
7.
|
This Affiliate Hotel Designation Supplement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute one agreement. Any such counterpart may be delivered by facsimile or e-mail (in .pdf format), and any signature so delivered shall be deemed an original signature for all purposes.
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Income from continuing operations (including gains on sales of properties, if any) before income tax expense and equity in earnings (losses) of an investee
|
|
$
|
226,993
|
|
|
$
|
167,963
|
|
|
$
|
199,036
|
|
|
$
|
127,750
|
|
|
$
|
153,219
|
|
Fixed Charges
|
|
161,913
|
|
|
144,898
|
|
|
139,486
|
|
|
145,954
|
|
|
136,111
|
|
|||||
Adjusted Earnings
|
|
$
|
388,906
|
|
|
$
|
312,861
|
|
|
$
|
338,522
|
|
|
$
|
273,704
|
|
|
$
|
289,330
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest on indebtedness and amortization of debt issuance costs and debt discounts
|
|
$
|
161,913
|
|
|
$
|
144,898
|
|
|
$
|
139,486
|
|
|
$
|
145,954
|
|
|
$
|
136,111
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges
|
|
2.40x
|
|
|
2.16x
|
|
|
2.43x
|
|
|
1.88x
|
|
|
2.13x
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Income from continuing operations (including gains on sales of properties, if any) before income tax expense and equity in earnings (losses) of an investee
|
|
$
|
226,993
|
|
|
$
|
167,963
|
|
|
$
|
199,036
|
|
|
$
|
127,750
|
|
|
$
|
153,219
|
|
Fixed Charges
|
|
161,913
|
|
|
144,898
|
|
|
139,486
|
|
|
145,954
|
|
|
136,111
|
|
|||||
Adjusted Earnings
|
|
$
|
388,906
|
|
|
$
|
312,861
|
|
|
$
|
338,522
|
|
|
$
|
273,704
|
|
|
$
|
289,330
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest on indebtedness and amortization of debt issuance costs and debt discounts
|
|
$
|
161,913
|
|
|
$
|
144,898
|
|
|
$
|
139,486
|
|
|
$
|
145,954
|
|
|
$
|
136,111
|
|
Preferred distributions
|
|
20,664
|
|
|
20,664
|
|
|
20,664
|
|
|
26,559
|
|
|
40,145
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Combined Fixed Charges and Preferred distributions
|
|
$
|
182,577
|
|
|
$
|
165,562
|
|
|
$
|
160,150
|
|
|
$
|
172,513
|
|
|
$
|
176,256
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of Earnings to Fixed Charges and Preferred distributions
|
|
2.13x
|
|
|
1.89x
|
|
|
2.11x
|
|
|
1.59x
|
|
|
1.64x
|
|
Name
|
|
State of Formation,
Organization or Incorporation |
Cambridge TRS, Inc.
|
|
Maryland
|
Candlewood Jersey City—Urban Renewal, L.L.C.
|
|
New Jersey
|
Harbor Court Associates, LLC
|
|
Maryland
|
HPT Cambridge LLC
|
|
Massachusetts
|
HPT CW MA Realty Trust
|
|
Massachusetts
|
HPTCY Properties Trust
|
|
Maryland
|
HPT CY TRS, Inc.
|
|
Maryland
|
HPT Geary ABC Holdings LLC
|
|
Maryland
|
HPT Geary Properties Trust
|
|
Maryland
|
HPT IHG Canada Corporation
|
|
New Brunswick
|
HPT IHG Canada Properties Trust
|
|
Delaware
|
HPT IHG GA Properties LLC
|
|
Maryland
|
HPT IHG PR, Inc.
|
|
Puerto Rico
|
HPT IHG-2 Properties Trust
|
|
Maryland
|
HPT IHG-3 Properties LLC
|
|
Maryland
|
HPTMI Hawaii, Inc.
|
|
Delaware
|
HPTMI Properties Trust
|
|
Maryland
|
HPT PSC Properties LLC
|
|
Maryland
|
HPT PSC Properties Trust
|
|
Maryland
|
HPT SN Holding, Inc.
|
|
New York
|
HPT Suite Properties Trust
|
|
Maryland
|
HPT TA Properties LLC
|
|
Maryland
|
HPT TA Properties Trust
|
|
Maryland
|
HPT TRS, Inc.
|
|
Maryland
|
HPT TRS IHG-2, Inc.
|
|
Maryland
|
HPT TRS MRP, Inc.
|
|
Maryland
|
HPT TRS SPES II, Inc.
|
|
Maryland
|
HPT TRS WYN, Inc.
|
|
Maryland
|
HPTWN Properties Trust
|
|
Maryland
|
Royal Sonesta, Inc.
|
|
Louisiana
|
|
|
|
/s/ Ernst & Young LLP
|
1.
|
I have reviewed this Annual Report on Form 10-K of Hospitality Properties Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: March 1, 2017
|
/s/ Barry M. Portnoy
|
|
Barry M. Portnoy
|
|
Managing Trustee
|
1.
|
I have reviewed this Annual Report on Form 10-K of Hospitality Properties Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: March 1, 2017
|
/s/ Adam D. Portnoy
|
|
Adam D. Portnoy
|
|
Managing Trustee
|
1.
|
I have reviewed this Annual Report on Form 10-K of Hospitality Properties Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: March 1, 2017
|
/s/ John G. Murray
|
|
John G. Murray
|
|
President and Chief Operating Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Hospitality Properties Trust;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
|
Date: March 1, 2017
|
/s/ Mark L. Kleifges
|
|
Mark L. Kleifges
|
|
Chief Financial Officer and Treasurer
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
/s/ Barry M. Portnoy
|
|
/s/ John G. Murray
|
Barry M. Portnoy
|
|
John G. Murray
|
Managing Trustee
|
|
President and Chief Operating Officer
|
|
|
|
|
|
|
/s/ Adam D. Portnoy
|
|
/s/ Mark L. Kleifges
|
Adam D. Portnoy
|
|
Mark L. Kleifges
|
Managing Trustee
|
|
Chief Financial Officer and Treasurer
|
|
|
|
|
|
|
Date: March 1, 2017
|
|
|