|
|
|
|
|
Maryland
|
|
04-3262075
|
(State or Other Jurisdiction of
Incorporation or Organization)
|
|
(IRS Employer Identification No.)
|
Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458
|
(Address of Principal Executive Offices) (Zip Code)
|
|
|
|
|
|
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|
Page
|
|
||
|
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|
|
|
|
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|
|
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|
||
|
|
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|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
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|
||
|
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|
|
June 30,
|
|
December 31,
|
||||
|
|
2018
|
|
2017
|
||||
ASSETS
|
|
|
|
|
||||
Real estate properties:
|
|
|
|
|
||||
Land
|
|
$
|
1,673,113
|
|
|
$
|
1,668,797
|
|
Buildings, improvements and equipment
|
|
7,899,636
|
|
|
7,758,862
|
|
||
Total real estate properties, gross
|
|
9,572,749
|
|
|
9,427,659
|
|
||
Accumulated depreciation
|
|
(2,909,488
|
)
|
|
(2,784,478
|
)
|
||
Total real estate properties, net
|
|
6,663,261
|
|
|
6,643,181
|
|
||
Cash and cash equivalents
|
|
16,549
|
|
|
24,139
|
|
||
Restricted cash
|
|
73,279
|
|
|
73,357
|
|
||
Due from related persons
|
|
84,786
|
|
|
78,513
|
|
||
Other assets, net
|
|
387,487
|
|
|
331,195
|
|
||
Total assets
|
|
$
|
7,225,362
|
|
|
$
|
7,150,385
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
|
|
||||
Unsecured revolving credit facility
|
|
$
|
122,000
|
|
|
$
|
398,000
|
|
Unsecured term loan, net
|
|
396,994
|
|
|
399,086
|
|
||
Senior unsecured notes, net
|
|
3,594,256
|
|
|
3,203,962
|
|
||
Security deposits
|
|
131,071
|
|
|
126,078
|
|
||
Accounts payable and other liabilities
|
|
207,685
|
|
|
184,788
|
|
||
Due to related persons
|
|
12,687
|
|
|
83,049
|
|
||
Total liabilities
|
|
4,464,693
|
|
|
4,394,963
|
|
||
|
|
|
|
|
||||
Commitments and contingencies
|
|
|
|
|
||||
|
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
||||
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 164,363,747 and 164,349,141 shares issued and outstanding, respectively
|
|
1,644
|
|
|
1,643
|
|
||
Additional paid in capital
|
|
4,542,706
|
|
|
4,542,307
|
|
||
Cumulative net income
|
|
3,567,068
|
|
|
3,310,017
|
|
||
Cumulative other comprehensive income (loss)
|
|
(281
|
)
|
|
79,358
|
|
||
Cumulative preferred distributions
|
|
(343,412
|
)
|
|
(343,412
|
)
|
||
Cumulative common distributions
|
|
(5,007,056
|
)
|
|
(4,834,491
|
)
|
||
Total shareholders’ equity
|
|
2,760,669
|
|
|
2,755,422
|
|
||
Total liabilities and shareholders’ equity
|
|
$
|
7,225,362
|
|
|
$
|
7,150,385
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Hotel operating revenues
|
|
$
|
529,599
|
|
|
$
|
489,209
|
|
|
$
|
974,875
|
|
|
$
|
897,445
|
|
Rental income
|
|
81,018
|
|
|
80,239
|
|
|
163,011
|
|
|
159,378
|
|
||||
FF&E reserve income
|
|
1,334
|
|
|
1,155
|
|
|
2,698
|
|
|
2,382
|
|
||||
Total revenues
|
|
611,951
|
|
|
570,603
|
|
|
1,140,584
|
|
|
1,059,205
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
||||||||
Hotel operating expenses
|
|
374,081
|
|
|
339,549
|
|
|
689,063
|
|
|
622,272
|
|
||||
Depreciation and amortization
|
|
99,684
|
|
|
95,155
|
|
|
199,301
|
|
|
188,606
|
|
||||
General and administrative
|
|
13,121
|
|
|
30,347
|
|
|
24,855
|
|
|
62,693
|
|
||||
Total expenses
|
|
486,886
|
|
|
465,051
|
|
|
913,219
|
|
|
873,571
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income
|
|
125,065
|
|
|
105,552
|
|
|
227,365
|
|
|
185,634
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
|
626
|
|
|
626
|
|
|
1,252
|
|
|
1,252
|
|
||||
Unrealized gains and losses on equity securities, net
|
|
20,940
|
|
|
—
|
|
|
45,895
|
|
|
—
|
|
||||
Interest income
|
|
323
|
|
|
122
|
|
|
615
|
|
|
379
|
|
||||
Interest expense (including amortization of debt issuance costs and debt discounts and premiums of $2,559, $2,194, $5,037 and $4,346, respectively)
|
|
(48,741
|
)
|
|
(45,189
|
)
|
|
(96,281
|
)
|
|
(88,755
|
)
|
||||
Loss on early extinguishment of debt
|
|
(160
|
)
|
|
—
|
|
|
(160
|
)
|
|
—
|
|
||||
Income before income taxes and equity in earnings of an investee
|
|
98,053
|
|
|
61,111
|
|
|
178,686
|
|
|
98,510
|
|
||||
Income tax expense
|
|
(771
|
)
|
|
(786
|
)
|
|
(1,242
|
)
|
|
(1,142
|
)
|
||||
Equity in earnings of an investee
|
|
7
|
|
|
374
|
|
|
51
|
|
|
502
|
|
||||
Net income
|
|
97,289
|
|
|
60,699
|
|
|
177,495
|
|
|
97,870
|
|
||||
Other comprehensive income:
|
|
|
|
|
|
|
|
|
||||||||
Unrealized gain (loss) on investment securities
|
|
—
|
|
|
(8,968
|
)
|
|
—
|
|
|
12,650
|
|
||||
Equity interest in investee’s unrealized gains (losses)
|
|
10
|
|
|
58
|
|
|
(83
|
)
|
|
179
|
|
||||
Other comprehensive income (loss)
|
|
10
|
|
|
(8,910
|
)
|
|
(83
|
)
|
|
12,829
|
|
||||
Comprehensive income
|
|
$
|
97,299
|
|
|
$
|
51,789
|
|
|
$
|
177,412
|
|
|
$
|
110,699
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income
|
|
$
|
97,289
|
|
|
$
|
60,699
|
|
|
$
|
177,495
|
|
|
$
|
97,870
|
|
Preferred distributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,435
|
)
|
||||
Excess of liquidation preference over carrying value of preferred shares redeemed
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,893
|
)
|
||||
Net income available for common shareholders
|
|
$
|
97,289
|
|
|
$
|
60,699
|
|
|
$
|
177,495
|
|
|
$
|
86,542
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding (basic)
|
|
164,205
|
|
|
164,123
|
|
|
164,202
|
|
|
164,121
|
|
||||
Weighted average common shares outstanding (diluted)
|
|
164,243
|
|
|
164,165
|
|
|
164,226
|
|
|
164,157
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Net income available for common shareholders per common share (basic and diluted)
|
|
$
|
0.59
|
|
|
$
|
0.37
|
|
|
$
|
1.08
|
|
|
$
|
0.53
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||
|
|
(in thousands)
|
||||||||||
Weighted average common shares for basic earnings per share
|
|
164,205
|
|
|
164,123
|
|
|
164,202
|
|
|
164,121
|
|
Effect of dilutive securities: Unvested share awards
|
|
38
|
|
|
42
|
|
|
24
|
|
|
36
|
|
Weighted average common shares for diluted earnings per share
|
|
164,243
|
|
|
164,165
|
|
|
164,226
|
|
|
164,157
|
|
|
|
Three Months Ended June 30, 2018
|
||||||||||
|
|
Unrealized Gain
|
|
Equity in
|
|
|
||||||
|
|
(Loss) on Investment
|
|
Unrealized Gain
|
|
|
||||||
|
|
Securities, net
|
|
(loss) of Investees
|
|
Total
|
||||||
Balance at March 31, 2018
|
|
$
|
—
|
|
|
$
|
550
|
|
|
$
|
550
|
|
Amounts reclassified from cumulative other comprehensive income to retained earnings
|
|
—
|
|
|
(841
|
)
|
|
(841
|
)
|
|||
Current period other comprehensive income
|
|
—
|
|
|
10
|
|
|
10
|
|
|||
Balance at June 30, 2018
|
|
$
|
—
|
|
|
$
|
(281
|
)
|
|
$
|
(281
|
)
|
|
|
Six Months Ended June 30, 2018
|
||||||||||
|
|
Unrealized Gain
|
|
Equity in
|
|
|
||||||
|
|
(Loss) on Investment
|
|
Unrealized Gain
|
|
|
||||||
|
|
Securities, net
|
|
(loss) of Investees
|
|
Total
|
||||||
Balance at December 31, 2017
|
|
$
|
78,715
|
|
|
$
|
643
|
|
|
$
|
79,358
|
|
Amounts reclassified from cumulative other comprehensive income to retained earnings
|
|
(78,715
|
)
|
|
(841
|
)
|
|
(79,556
|
)
|
|||
Current period other comprehensive loss
|
|
—
|
|
|
(83
|
)
|
|
(83
|
)
|
|||
Balance at June 30, 2018
|
|
$
|
—
|
|
|
$
|
(281
|
)
|
|
$
|
(281
|
)
|
Acquisition Date
|
|
Location
|
|
Purchase Price
|
|
Land
|
|
Land Improvements
|
|
Building and Improvements
|
|
Furniture, Fixtures and Equipment
|
||||||||||
6/15/2018
|
|
Minneapolis, MN
(1)
|
|
75,438
|
|
|
$
|
2,192
|
|
|
$
|
—
|
|
|
$
|
68,263
|
|
|
$
|
4,983
|
|
|
6/15/2018
|
|
Baton Rouge, LA
(2)
|
|
16,015
|
|
|
2,241
|
|
|
173
|
|
|
12,836
|
|
|
765
|
|
|||||
|
|
|
|
$
|
91,453
|
|
|
$
|
4,433
|
|
|
$
|
173
|
|
|
$
|
81,099
|
|
|
$
|
5,748
|
|
(1)
|
On
June 15, 2018
, we acquired the
360
room Radisson Blu
®
hotel in Minneapolis, MN for a purchase price of
$75,438
, including capitalized acquisition costs of
$438
. We added this hotel to our management agreement with Radisson Hospitality, Inc., or Radisson.
|
(2)
|
On
June 15, 2018
, we acquired the
117
suite Staybridge Suites
®
at Louisiana State University in Baton Rouge, LA for a purchase price of
$16,015
including capitalized acquisition costs of
$265
. We added this hotel to our management agreement with InterContinental Hotels Group, plc, or InterContinental.
|
|
|
For the Three Months Ended June 30, 2018
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Hotel operating revenues
|
|
$
|
529,599
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
529,599
|
|
Rental income
|
|
6,550
|
|
|
74,468
|
|
|
—
|
|
|
81,018
|
|
||||
FF&E reserve income
|
|
1,334
|
|
|
—
|
|
|
—
|
|
|
1,334
|
|
||||
Total revenues
|
|
537,483
|
|
|
74,468
|
|
|
—
|
|
|
611,951
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Hotel operating expenses
|
|
374,081
|
|
|
—
|
|
|
—
|
|
|
374,081
|
|
||||
Depreciation and amortization
|
|
62,953
|
|
|
36,731
|
|
|
—
|
|
|
99,684
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
13,121
|
|
|
13,121
|
|
||||
Total expenses
|
|
437,034
|
|
|
36,731
|
|
|
13,121
|
|
|
486,886
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
100,449
|
|
|
37,737
|
|
|
(13,121
|
)
|
|
125,065
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
|
—
|
|
|
—
|
|
|
626
|
|
|
626
|
|
||||
Unrealized gains and losses on equity securities, net
|
|
—
|
|
|
—
|
|
|
20,940
|
|
|
20,940
|
|
||||
Interest income
|
|
—
|
|
|
—
|
|
|
323
|
|
|
323
|
|
||||
Interest expense
|
|
—
|
|
|
—
|
|
|
(48,741
|
)
|
|
(48,741
|
)
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
(160
|
)
|
|
(160
|
)
|
||||
Income (loss) before income taxes and equity in earnings of an investee
|
|
100,449
|
|
|
37,737
|
|
|
(40,133
|
)
|
|
98,053
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(771
|
)
|
|
(771
|
)
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||
Net income (loss)
|
|
$
|
100,449
|
|
|
$
|
37,737
|
|
|
$
|
(40,897
|
)
|
|
$
|
97,289
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
For the Six Months Ended June 30, 2018
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Hotel operating revenues
|
|
$
|
974,875
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
974,875
|
|
Rental income
|
|
14,350
|
|
|
148,661
|
|
|
—
|
|
|
163,011
|
|
||||
FF&E reserve income
|
|
2,698
|
|
|
—
|
|
|
—
|
|
|
2,698
|
|
||||
Total revenues
|
|
991,923
|
|
|
148,661
|
|
|
—
|
|
|
1,140,584
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Hotel operating expenses
|
|
689,063
|
|
|
—
|
|
|
—
|
|
|
689,063
|
|
||||
Depreciation and amortization
|
|
125,399
|
|
|
73,902
|
|
|
—
|
|
|
199,301
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
24,855
|
|
|
24,855
|
|
||||
Total expenses
|
|
814,462
|
|
|
73,902
|
|
|
24,855
|
|
|
913,219
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
177,461
|
|
|
74,759
|
|
|
(24,855
|
)
|
|
227,365
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
|
—
|
|
|
—
|
|
|
1,252
|
|
|
1,252
|
|
||||
Unrealized gains and losses on equity securities, net
|
|
—
|
|
|
—
|
|
|
45,895
|
|
|
45,895
|
|
||||
Interest income
|
|
—
|
|
|
—
|
|
|
615
|
|
|
615
|
|
||||
Interest expense
|
|
—
|
|
|
—
|
|
|
(96,281
|
)
|
|
(96,281
|
)
|
||||
Loss on early extinguishment of debt
|
|
—
|
|
|
—
|
|
|
(160
|
)
|
|
(160
|
)
|
||||
Income (loss) before income taxes and equity in earnings of an investee
|
|
177,461
|
|
|
74,759
|
|
|
(73,534
|
)
|
|
178,686
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(1,242
|
)
|
|
(1,242
|
)
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
51
|
|
|
51
|
|
||||
Net income (loss)
|
|
$
|
177,461
|
|
|
$
|
74,759
|
|
|
$
|
(74,725
|
)
|
|
$
|
177,495
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
As of June 30, 2018
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Total assets
|
|
$
|
4,542,777
|
|
|
$
|
2,436,855
|
|
|
$
|
245,730
|
|
|
$
|
7,225,362
|
|
|
|
For the Three Months Ended June 30, 2017
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Hotel operating revenues
|
|
$
|
489,209
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
489,209
|
|
Rental income
|
|
7,623
|
|
|
72,616
|
|
|
—
|
|
|
80,239
|
|
||||
FF&E reserve income
|
|
1,155
|
|
|
—
|
|
|
—
|
|
|
1,155
|
|
||||
Total revenues
|
|
497,987
|
|
|
72,616
|
|
|
—
|
|
|
570,603
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Hotel operating expenses
|
|
339,549
|
|
|
—
|
|
|
—
|
|
|
339,549
|
|
||||
Depreciation and amortization
|
|
59,403
|
|
|
35,752
|
|
|
—
|
|
|
95,155
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
30,347
|
|
|
30,347
|
|
||||
Total expenses
|
|
398,952
|
|
|
35,752
|
|
|
30,347
|
|
|
465,051
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
99,035
|
|
|
36,864
|
|
|
(30,347
|
)
|
|
105,552
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
|
—
|
|
|
—
|
|
|
626
|
|
|
626
|
|
||||
Interest income
|
|
—
|
|
|
—
|
|
|
122
|
|
|
122
|
|
||||
Interest expense
|
|
—
|
|
|
—
|
|
|
(45,189
|
)
|
|
(45,189
|
)
|
||||
Income (loss) before income taxes and equity in earnings of an investee
|
|
99,035
|
|
|
36,864
|
|
|
(74,788
|
)
|
|
61,111
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(786
|
)
|
|
(786
|
)
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
374
|
|
|
374
|
|
||||
Net income (loss)
|
|
$
|
99,035
|
|
|
$
|
36,864
|
|
|
$
|
(75,200
|
)
|
|
$
|
60,699
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
For the Six Months Ended June 30, 2017
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Hotel operating revenues
|
|
$
|
897,445
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
897,445
|
|
Rental income
|
|
15,237
|
|
|
144,141
|
|
|
—
|
|
|
159,378
|
|
||||
FF&E reserve income
|
|
2,382
|
|
|
—
|
|
|
—
|
|
|
2,382
|
|
||||
Total revenues
|
|
915,064
|
|
|
144,141
|
|
|
—
|
|
|
1,059,205
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Hotel operating expenses
|
|
622,272
|
|
|
—
|
|
|
—
|
|
|
622,272
|
|
||||
Depreciation and amortization
|
|
117,506
|
|
|
71,100
|
|
|
—
|
|
|
188,606
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
62,693
|
|
|
62,693
|
|
||||
Total expenses
|
|
739,778
|
|
|
71,100
|
|
|
62,693
|
|
|
873,571
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Operating income (loss)
|
|
175,286
|
|
|
73,041
|
|
|
(62,693
|
)
|
|
185,634
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
|
—
|
|
|
—
|
|
|
1,252
|
|
|
1,252
|
|
||||
Interest income
|
|
—
|
|
|
—
|
|
|
379
|
|
|
379
|
|
||||
Interest expense
|
|
—
|
|
|
—
|
|
|
(88,755
|
)
|
|
(88,755
|
)
|
||||
Income (loss) before income taxes and equity in earnings of an investee
|
|
175,286
|
|
|
73,041
|
|
|
(149,817
|
)
|
|
98,510
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(1,142
|
)
|
|
(1,142
|
)
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
502
|
|
|
502
|
|
||||
Net income (loss)
|
|
$
|
175,286
|
|
|
$
|
73,041
|
|
|
$
|
(150,457
|
)
|
|
$
|
97,870
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
As of December 31, 2017
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Total assets
|
|
$
|
4,477,512
|
|
|
$
|
2,476,073
|
|
|
$
|
196,800
|
|
|
$
|
7,150,385
|
|
|
|
|
|
|
Fair Value at June 30, 2018 Using
|
|||||||||||
|
|
|
|
Quoted Prices in
|
|
|
|
|
||||||||
|
|
|
|
Active Markets for
|
|
Significant Other
|
|
Significant
|
||||||||
|
|
Carrying Value at
|
|
Identical Assets
|
|
Observable Inputs
|
|
Unobservable Inputs
|
||||||||
Description
|
|
June 30, 2018
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Recurring Fair Value Measurement Assets:
|
|
|
|
|
|
|
||||||||||
Investment in TA
(1)
|
|
$
|
11,970
|
|
|
$
|
11,970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment in RMR Inc.
(2)
|
|
$
|
196,421
|
|
|
$
|
196,421
|
|
|
$
|
—
|
|
|
$
|
—
|
|
(1)
|
Our
3,420,000
common shares of TA, which are included in other assets in our condensed 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
June 30, 2018
. During the
three and six
months ended
June 30, 2018
, we recorded unrealized losses of
$342
and
$2,052
, respectively, to adjust the carrying value of our investment in TA shares to their fair value as of
June 30, 2018
.
|
(2)
|
Our
2,503,777
shares of class A common stock of RMR Inc., which are included in other assets in our condensed 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
June 30, 2018
. During the
three and six
months ended
June 30, 2018
, we recorded unrealized gains of
$21,282
and
$47,947
, respectively, to adjust the carrying value of our investment in RMR Inc. shares to their fair value as of
June 30, 2018
.
|
|
|
June 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
|
Value
(1)
|
|
Value
|
|
Value
(1)
|
|
Value
|
||||||||
Senior Unsecured Notes, due 2021 at 4.25%
|
|
$
|
396,218
|
|
|
$
|
404,978
|
|
|
$
|
395,497
|
|
|
$
|
413,676
|
|
Senior Unsecured Notes, due 2022 at 5.00%
|
|
495,004
|
|
|
516,013
|
|
|
494,398
|
|
|
533,908
|
|
||||
Senior Unsecured Notes, due 2023 at 4.50%
|
|
499,186
|
|
|
504,185
|
|
|
499,104
|
|
|
523,275
|
|
||||
Senior Unsecured Notes, due 2024 at 4.65%
|
|
347,687
|
|
|
350,730
|
|
|
347,484
|
|
|
368,804
|
|
||||
Senior Unsecured Notes, due 2025 at 4.50%
|
|
345,399
|
|
|
342,886
|
|
|
345,055
|
|
|
363,589
|
|
||||
Senior Unsecured Notes, due 2026 at 5.25%
|
|
341,391
|
|
|
357,082
|
|
|
340,826
|
|
|
377,431
|
|
||||
Senior Unsecured Notes, due 2027 at 4.95%
|
|
393,514
|
|
|
396,806
|
|
|
393,137
|
|
|
422,914
|
|
||||
Senior Unsecured Notes, due 2028 at 3.95%
|
|
389,035
|
|
|
364,276
|
|
|
388,461
|
|
|
390,930
|
|
||||
Senior Unsecured Notes, due 2030 at 4.375%
|
|
386,822
|
|
|
370,932
|
|
|
—
|
|
|
—
|
|
||||
Total financial liabilities
|
|
$
|
3,594,256
|
|
|
$
|
3,607,888
|
|
|
$
|
3,203,962
|
|
|
$
|
3,394,527
|
|
(1)
|
Carrying value includes unamortized discounts and premiums and issuance costs.
|
|
|
For the Three Months Ended June 30,
|
|||||||||||||
|
|
|
|
|
|
Increase
|
|
% Increase
|
|||||||
|
|
2018
|
|
2017
|
|
(Decrease)
|
|
(Decrease)
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Hotel operating revenues
|
|
$
|
529,599
|
|
|
$
|
489,209
|
|
|
$
|
40,390
|
|
|
8.3
|
%
|
Rental income - hotels
|
|
6,550
|
|
|
7,623
|
|
|
(1,073
|
)
|
|
(14.1
|
)%
|
|||
Rental income - travel centers
|
|
74,468
|
|
|
72,616
|
|
|
1,852
|
|
|
2.6
|
%
|
|||
Total rental income
|
|
81,018
|
|
|
80,239
|
|
|
779
|
|
|
1.0
|
%
|
|||
FF&E reserve income
|
|
1,334
|
|
|
1,155
|
|
|
179
|
|
|
15.5
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Hotel operating expenses
|
|
374,081
|
|
|
339,549
|
|
|
34,532
|
|
|
10.2
|
%
|
|||
Depreciation and amortization - hotels
|
|
62,953
|
|
|
59,403
|
|
|
3,550
|
|
|
6.0
|
%
|
|||
Depreciation and amortization - travel centers
|
|
36,731
|
|
|
35,752
|
|
|
979
|
|
|
2.7
|
%
|
|||
Total depreciation and amortization
|
|
99,684
|
|
|
95,155
|
|
|
4,529
|
|
|
4.8
|
%
|
|||
General and administrative
|
|
13,121
|
|
|
30,347
|
|
|
(17,226
|
)
|
|
(56.8
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Operating income
|
|
125,065
|
|
|
105,552
|
|
|
19,513
|
|
|
18.5
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Dividend income
|
|
626
|
|
|
626
|
|
|
—
|
|
|
—
|
|
|||
Unrealized gains and losses on equity securities, net
|
|
20,940
|
|
|
—
|
|
|
20,940
|
|
|
—
|
|
|||
Interest income
|
|
323
|
|
|
122
|
|
|
201
|
|
|
164.8
|
%
|
|||
Interest expense
|
|
(48,741
|
)
|
|
(45,189
|
)
|
|
(3,552
|
)
|
|
7.9
|
%
|
|||
Loss on early extinguishment of debt
|
|
(160
|
)
|
|
—
|
|
|
(160
|
)
|
|
—
|
|
|||
Income before income taxes and equity earnings of an investee
|
|
98,053
|
|
|
61,111
|
|
|
36,942
|
|
|
60.5
|
%
|
|||
Income tax expense
|
|
(771
|
)
|
|
(786
|
)
|
|
15
|
|
|
(1.9
|
)%
|
|||
Equity in earnings of an investee
|
|
7
|
|
|
374
|
|
|
(367
|
)
|
|
(98.1
|
)%
|
|||
Net income available for common shareholders
|
|
$
|
97,289
|
|
|
$
|
60,699
|
|
|
$
|
36,590
|
|
|
60.3
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding (basic)
|
|
164,205
|
|
|
164,123
|
|
|
82
|
|
|
n/m
|
|
|||
Weighted average shares outstanding (diluted)
|
|
164,243
|
|
|
164,165
|
|
|
78
|
|
|
n/m
|
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Net income available for common shareholders per common share (basic and diluted)
|
|
$
|
0.59
|
|
|
$
|
0.37
|
|
|
$
|
0.22
|
|
|
59.5
|
%
|
|
|
For the Six Months Ended June 30,
|
|||||||||||||
|
|
|
|
|
|
Increase
|
|
% Increase
|
|||||||
|
|
2018
|
|
2017
|
|
(Decrease)
|
|
(Decrease)
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|||||
Hotel operating revenues
|
|
$
|
974,875
|
|
|
$
|
897,445
|
|
|
$
|
77,430
|
|
|
8.6
|
%
|
Rental income - hotels
|
|
14,350
|
|
|
15,237
|
|
|
(887
|
)
|
|
(5.8
|
)%
|
|||
Rental income - travel centers
|
|
148,661
|
|
|
144,141
|
|
|
4,520
|
|
|
3.1
|
%
|
|||
Total rental income
|
|
163,011
|
|
|
159,378
|
|
|
3,633
|
|
|
2.3
|
%
|
|||
FF&E reserve income
|
|
2,698
|
|
|
2,382
|
|
|
316
|
|
|
13.3
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Hotel operating expenses
|
|
689,063
|
|
|
622,272
|
|
|
66,791
|
|
|
10.7
|
%
|
|||
Depreciation and amortization - hotels
|
|
125,399
|
|
|
117,506
|
|
|
7,893
|
|
|
6.7
|
%
|
|||
Depreciation and amortization - travel centers
|
|
73,902
|
|
|
71,100
|
|
|
2,802
|
|
|
3.9
|
%
|
|||
Total depreciation and amortization
|
|
199,301
|
|
|
188,606
|
|
|
10,695
|
|
|
5.7
|
%
|
|||
General and administrative
|
|
24,855
|
|
|
62,693
|
|
|
(37,838
|
)
|
|
(60.4
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Operating income
|
|
227,365
|
|
|
185,634
|
|
|
41,731
|
|
|
22.5
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Dividend income
|
|
1,252
|
|
|
1,252
|
|
|
—
|
|
|
—
|
|
|||
Unrealized gains and losses on equity securities, net
|
|
45,895
|
|
|
—
|
|
|
45,895
|
|
|
—
|
|
|||
Interest income
|
|
615
|
|
|
379
|
|
|
236
|
|
|
62.3
|
%
|
|||
Interest expense
|
|
(96,281
|
)
|
|
(88,755
|
)
|
|
(7,526
|
)
|
|
8.5
|
%
|
|||
Loss on early extinguishment of debt
|
|
(160
|
)
|
|
—
|
|
|
(160
|
)
|
|
—
|
|
|||
Income before income taxes and equity earnings of an investee
|
|
178,686
|
|
|
98,510
|
|
|
80,176
|
|
|
81.4
|
%
|
|||
Income tax expense
|
|
(1,242
|
)
|
|
(1,142
|
)
|
|
(100
|
)
|
|
8.8
|
%
|
|||
Equity in earnings of an investee
|
|
51
|
|
|
502
|
|
|
(451
|
)
|
|
(89.8
|
)%
|
|||
Net income
|
|
177,495
|
|
|
97,870
|
|
|
79,625
|
|
|
81.4
|
%
|
|||
Preferred distributions
|
|
—
|
|
|
(1,435
|
)
|
|
1,435
|
|
|
—
|
|
|||
Excess of liquidation preference over carrying value of preferred shares redeemed
|
|
—
|
|
|
(9,893
|
)
|
|
9,893
|
|
|
—
|
|
|||
Net income available for common shareholders
|
|
$
|
177,495
|
|
|
$
|
86,542
|
|
|
$
|
90,953
|
|
|
105.1
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding (basic)
|
|
164,202
|
|
|
164,121
|
|
|
81
|
|
|
n/m
|
|
|||
Weighted average shares outstanding (diluted)
|
|
164,226
|
|
|
164,157
|
|
|
69
|
|
|
n/m
|
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Net income available for common shareholders per common share (basic and diluted)
|
|
$
|
1.08
|
|
|
$
|
0.53
|
|
|
$
|
0.55
|
|
|
103.8
|
%
|
•
|
During the
six
months ended
June 30, 2018
, we funded
$854
for capital improvements to certain hotels under our Marriott No. 1 agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$10,300
for capital improvements under this agreement during the last six months of
2018
using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase.
|
•
|
During the
six
months ended
June 30, 2018
, we funded
$3,680
for capital improvements to certain hotels under our Marriott No. 234 agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$5,600
for capital improvements under this agreement during the last six months of
2018
using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase.
|
•
|
We did not fund any capital improvements to hotels under our InterContinental agreement during the
six
months ended
June 30, 2018
. We currently expect to fund approximately
$52,000
during the last six months of
2018
and approximately
$42,500
during
2019
for capital improvements under this agreement using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual 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
six
months ended
June 30, 2018
, we funded
$36,875
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
$63,100
during the last six months of
2018
and approximately
$72,200
during
2019
for capital improvements under this agreement using cash on hand or borrowings under our revolving credit facility. These investments primarily relate to planned renovations to the 15 hotels we acquired in 2017 and one hotel added to the portfolio in 2018 and converted to Sonesta brands. As we fund these improvements, the contractual 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 returns. No FF&E escrow deposits were required during the
six
months ended
June 30, 2018
. During the
six
months ended
June 30, 2018
, we funded
$660
for capital improvements to hotels included in our Wyndham agreement using cash on hand or borrowings under our revolving credit facility. We currently expect to fund approximately
$8,300
for capital improvements under this agreement during the last six months of
2018
using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase.
|
•
|
Pursuant to an agreement we entered into with Radisson in June 2017, we have agreed to fund up to
$35,000
for renovation costs at certain hotels under our Radisson agreement. We did not fund any renovation costs to hotels under our Radisson agreement during the
six
months ended
June 30, 2018
. We currently expect to fund approximately
$6,100
during the last six months of
2018
and approximately
$28,900
during
2019
for these renovations using cash on hand or borrowings under our revolving credit facility. As we fund these renovations, the contractual minimum returns payable to us will increase.
|
|
|
|
|
Number of
|
|
|
|
|
|
Rent / Return Coverage
(3)
|
||||||||||||
|
|
|
|
Rooms or
|
|
|
|
|
|
Three Months
|
|
Twelve Months
|
||||||||||
|
|
|
|
Suites (Hotels) /
|
|
|
|
Annual
|
|
Ended
|
|
Ended
|
||||||||||
Operating Agreement
|
|
Number of
|
|
Land Acreage
|
|
|
|
Minimum
|
|
June 30,
|
|
June 30,
|
||||||||||
Reference Name
|
|
Properties
|
|
(Travel Centers)
|
|
Investment
(1)
|
|
Return/Rent
(2)
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||
Marriott (No. 1)
(4)
|
|
53
|
|
|
7,609
|
|
|
$
|
698,111
|
|
|
$
|
69,317
|
|
|
1.52x
|
|
1.51x
|
|
1.23x
|
|
1.28x
|
Marriott (No. 234)
(5)
|
|
68
|
|
|
9,120
|
|
|
1,007,044
|
|
|
106,869
|
|
|
1.30x
|
|
1.30x
|
|
1.11x
|
|
1.12x
|
||
Marriott (No. 5)
(6)
|
|
1
|
|
|
356
|
|
|
90,078
|
|
|
10,321
|
|
|
1.19x
|
|
0.76x
|
|
1.07x
|
|
0.80x
|
||
Subtotal / Average Marriott
|
|
122
|
|
|
17,085
|
|
|
1,795,233
|
|
|
186,507
|
|
|
1.37x
|
|
1.35x
|
|
1.16x
|
|
1.16x
|
||
InterContinental
(7)
|
|
100
|
|
|
16,354
|
|
|
2,055,918
|
|
|
190,521
|
|
|
1.27x
|
|
1.29x
|
|
1.13x
|
|
1.17x
|
||
Sonesta
(8)
|
|
50
|
|
|
8,698
|
|
|
1,614,354
|
|
|
121,451
|
|
|
0.93x
|
|
1.08x
|
|
0.71x
|
|
0.80x
|
||
Wyndham
(9)
|
|
22
|
|
|
3,579
|
|
|
394,460
|
|
|
29,063
|
|
|
0.98x
|
|
1.19x
|
|
0.79x
|
|
0.83x
|
||
Hyatt
(10)
|
|
22
|
|
|
2,724
|
|
|
301,942
|
|
|
22,037
|
|
|
1.43x
|
|
1.37x
|
|
1.13x
|
|
1.13x
|
||
Radisson
(11)
|
|
9
|
|
|
1,939
|
|
|
270,101
|
|
|
18,920
|
|
|
1.25x
|
|
1.33x
|
|
1.07x
|
|
1.11x
|
||
Subtotal / Average Hotels
|
|
325
|
|
|
50,379
|
|
|
6,432,008
|
|
|
568,499
|
|
|
1.22x
|
|
1.26x
|
|
1.03x
|
|
1.07x
|
||
TA (No. 1)
(12)
|
|
40
|
|
|
825
|
|
|
681,819
|
|
|
53,169
|
|
|
1.70x
|
|
1.68x
|
|
1.65x
|
|
1.60x
|
||
TA (No. 2)
(13)
|
|
40
|
|
|
957
|
|
|
688,613
|
|
|
54,324
|
|
|
1.70x
|
|
1.59x
|
|
1.61x
|
|
1.51x
|
||
TA (No. 3)
(14)
|
|
39
|
|
|
909
|
|
|
642,315
|
|
|
54,541
|
|
|
1.66x
|
|
1.59x
|
|
1.58x
|
|
1.51x
|
||
TA (No. 4)
(15)
|
|
40
|
|
|
1,091
|
|
|
623,007
|
|
|
54,810
|
|
|
1.58x
|
|
1.52x
|
|
1.50x
|
|
1.44x
|
||
TA (No. 5)
(16)
|
|
40
|
|
|
1,148
|
|
|
891,495
|
|
|
70,021
|
|
|
1.77x
|
|
1.63x
|
|
1.68x
|
|
1.54x
|
||
Subtotal / Average TA
|
|
199
|
|
|
4,930
|
|
|
3,527,249
|
|
|
286,865
|
|
|
1.69x
|
|
1.60x
|
|
1.61x
|
|
1.52x
|
||
Total / Average
|
|
524
|
|
|
50,379 / 4,930
|
|
|
$
|
9,959,257
|
|
|
$
|
855,364
|
|
|
1.38x
|
|
1.38x
|
|
1.22x
|
|
1.22x
|
(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 which do not result in increases in minimum returns or rents.
|
(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 or rents due to us (which data is provided to us by our managers or tenants), divided by the minimum returns or rents due to us. Coverage amounts for our InterContinental, Sonesta and Radisson agreements and our TA Nos. 2 and 4 leases include data for periods prior to our ownership of certain properties. Coverage amounts for our Radisson agreement exclude data for periods prior to our sale of certain hotels.
|
(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
99
InterContinental branded hotels (20 Staybridge Suites
®
, 61 Candlewood Suites
®
, two InterContinental
®
, 10 Crowne Plaza
®
, three Holiday Inn
®
and three Kimpton
®
Hotels & Restaurants) in 29 states in the U.S. and Ontario, Canada to one of our TRSs. These
99
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
31
includes
$7,912
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
50
Sonesta branded hotels (six Royal Sonesta
®
Hotels, five Sonesta Hotels & Resorts
®
and 39 Sonesta ES Suites
®
hotels) in 26 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 Destinations under a lease that expires in 2037; Destinations has two renewal options for 15 years each for all, but not less than all, of the vacation units. The lease is guaranteed by Destinations and provides for rent increases of
3%
per annum. The annual minimum return amount presented in the table on page
31
includes
$1,449
of minimum rent related to the Destinations 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
nine
Radisson branded hotels (four Radisson
®
Hotels & Resorts, four Country Inns & Suites
®
by Radisson and one Radisson Blu
®
hotel) in six states to one of our TRSs and these hotels are managed by a subsidiary of Radisson under a combination management agreement which expires in 2035 and Radisson has two 15 year renewal options for all, but not less than all, of the hotels.
|
(12)
|
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
|
(13)
|
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, 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.
|
(14)
|
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, 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.
|
(15)
|
We lease
40
travel centers (37 TravelCenters of America
®
branded travel centers and three 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, 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
$21,233
is due at the expiration of the initial term of this lease. This lease is guaranteed by TA.
|
(16)
|
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). TA’s previously deferred rent of
$42,915
is due on June 30, 2024. This lease is guaranteed by TA.
|
|
|
No. of
|
|
No. of Rooms /
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
|
Hotels
|
|
Suites
|
|
2018
|
|
2017
|
|
Change
|
|
2018
|
|
2017
|
|
Change
|
||||||||||||
ADR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marriott (No. 1)
|
|
53
|
|
|
7,609
|
|
|
$
|
132.85
|
|
|
$
|
132.53
|
|
|
0.2
|
%
|
|
$
|
131.93
|
|
|
$
|
131.98
|
|
|
—
|
%
|
Marriott (No. 234)
|
|
68
|
|
|
9,120
|
|
|
135.26
|
|
|
133.13
|
|
|
1.6
|
%
|
|
133.69
|
|
|
132.11
|
|
|
1.2
|
%
|
||||
Marriott (No. 5)
|
|
1
|
|
|
356
|
|
|
290.83
|
|
|
263.73
|
|
|
10.3
|
%
|
|
285.60
|
|
|
266.89
|
|
|
7.0
|
%
|
||||
Subtotal / Average Marriott
|
|
122
|
|
|
17,085
|
|
|
138.04
|
|
|
135.88
|
|
|
1.6
|
%
|
|
137.02
|
|
|
135.42
|
|
|
1.2
|
%
|
||||
InterContinental
(1)
|
|
100
|
|
|
16,354
|
|
|
125.77
|
|
|
120.56
|
|
|
4.3
|
%
|
|
124.33
|
|
|
119.42
|
|
|
4.1
|
%
|
||||
Sonesta
(1)
|
|
50
|
|
|
8,698
|
|
|
154.39
|
|
|
151.61
|
|
|
1.8
|
%
|
|
149.14
|
|
|
147.56
|
|
|
1.1
|
%
|
||||
Wyndham
|
|
22
|
|
|
3,579
|
|
|
104.93
|
|
|
103.57
|
|
|
1.3
|
%
|
|
99.64
|
|
|
98.56
|
|
|
1.1
|
%
|
||||
Hyatt
|
|
22
|
|
|
2,724
|
|
|
115.16
|
|
|
111.71
|
|
|
3.1
|
%
|
|
114.31
|
|
|
110.92
|
|
|
3.1
|
%
|
||||
Radisson
(1)
(2)
|
|
9
|
|
|
1,939
|
|
|
134.70
|
|
|
133.67
|
|
|
0.8
|
%
|
|
130.70
|
|
|
128.06
|
|
|
2.1
|
%
|
||||
All Hotels Total / Average
|
|
325
|
|
|
50,379
|
|
|
$
|
132.78
|
|
|
$
|
129.65
|
|
|
2.4
|
%
|
|
$
|
130.52
|
|
|
$
|
127.74
|
|
|
2.2
|
%
|
OCCUPANCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marriott (No. 1)
|
|
53
|
|
|
7,609
|
|
|
75.0
|
%
|
|
74.2
|
%
|
|
0.8 pts
|
|
|
68.9
|
%
|
|
68.6
|
%
|
|
0.3 pts
|
|
||||
Marriott (No. 234)
|
|
68
|
|
|
9,120
|
|
|
80.1
|
%
|
|
80.1
|
%
|
|
0.0 pts
|
|
|
75.9
|
%
|
|
76.4
|
%
|
|
-0.5 pts
|
|
||||
Marriott (No. 5)
|
|
1
|
|
|
356
|
|
|
91.8
|
%
|
|
85.7
|
%
|
|
6.1 pts
|
|
|
94.1
|
%
|
|
87.8
|
%
|
|
6.3 pts
|
|
||||
Subtotal / Average Marriott
|
|
122
|
|
|
17,085
|
|
|
78.1
|
%
|
|
77.6
|
%
|
|
0.5 pts
|
|
|
73.2
|
%
|
|
73.2
|
%
|
|
0.0 pts
|
|
||||
InterContinental
(1)
|
|
100
|
|
|
16,354
|
|
|
82.4
|
%
|
|
85.3
|
%
|
|
-2.9 pts
|
|
|
79.0
|
%
|
|
80.9
|
%
|
|
-1.9 pts
|
|
||||
Sonesta
(1)
|
|
50
|
|
|
8,698
|
|
|
71.1
|
%
|
|
76.2
|
%
|
|
-5.1 pts
|
|
|
67.5
|
%
|
|
71.0
|
%
|
|
-3.5 pts
|
|
||||
Wyndham
|
|
22
|
|
|
3,579
|
|
|
71.7
|
%
|
|
74.8
|
%
|
|
-3.1 pts
|
|
|
68.2
|
%
|
|
69.6
|
%
|
|
-1.4 pts
|
|
||||
Hyatt
|
|
22
|
|
|
2,724
|
|
|
84.3
|
%
|
|
86.4
|
%
|
|
-2.1 pts
|
|
|
80.8
|
%
|
|
83.0
|
%
|
|
-2.2 pts
|
|
||||
Radisson
(1) (2)
|
|
9
|
|
|
1,939
|
|
|
74.5
|
%
|
|
76.5
|
%
|
|
-2.0 pts
|
|
|
74.2
|
%
|
|
75.6
|
%
|
|
-1.4 pts
|
|
||||
All Hotels Total / Average
|
|
325
|
|
|
50,379
|
|
|
78.0
|
%
|
|
80.0
|
%
|
|
-2.0 pts
|
|
|
74.2
|
%
|
|
75.6
|
%
|
|
-1.4 pts
|
|
||||
RevPAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Marriott (No. 1)
|
|
53
|
|
|
7,609
|
|
|
$
|
99.64
|
|
|
$
|
98.34
|
|
|
1.3
|
%
|
|
$
|
90.90
|
|
|
$
|
90.54
|
|
|
0.4
|
%
|
Marriott (No. 234)
|
|
68
|
|
|
9,120
|
|
|
108.34
|
|
|
106.64
|
|
|
1.6
|
%
|
|
101.47
|
|
|
100.93
|
|
|
0.5
|
%
|
||||
Marriott (No. 5)
|
|
1
|
|
|
356
|
|
|
266.98
|
|
|
226.02
|
|
|
18.1
|
%
|
|
268.75
|
|
|
234.33
|
|
|
14.7
|
%
|
||||
Subtotal / Average Marriott
|
|
122
|
|
|
17,085
|
|
|
107.81
|
|
|
105.44
|
|
|
2.2
|
%
|
|
100.30
|
|
|
99.13
|
|
|
1.2
|
%
|
||||
InterContinental
(1)
|
|
100
|
|
|
16,354
|
|
|
103.63
|
|
|
102.84
|
|
|
0.8
|
%
|
|
98.22
|
|
|
96.61
|
|
|
1.7
|
%
|
||||
Sonesta
(1)
|
|
50
|
|
|
8,698
|
|
|
109.77
|
|
|
115.53
|
|
|
(5.0
|
%)
|
|
100.67
|
|
|
104.77
|
|
|
(3.9
|
%)
|
||||
Wyndham
|
|
22
|
|
|
3,579
|
|
|
75.23
|
|
|
77.47
|
|
|
(2.9
|
%)
|
|
67.95
|
|
|
68.60
|
|
|
(0.9
|
%)
|
||||
Hyatt
|
|
22
|
|
|
2,724
|
|
|
97.08
|
|
|
96.52
|
|
|
0.6
|
%
|
|
92.36
|
|
|
92.06
|
|
|
0.3
|
%
|
||||
Radisson
(1) (2)
|
|
9
|
|
|
1,939
|
|
|
100.35
|
|
|
102.26
|
|
|
(1.9
|
%)
|
|
96.98
|
|
|
96.81
|
|
|
0.2
|
%
|
||||
All Hotels Total / Average
|
|
325
|
|
|
50,379
|
|
|
$
|
103.57
|
|
|
$
|
103.72
|
|
|
(0.1
|
%)
|
|
$
|
96.85
|
|
|
$
|
96.57
|
|
|
0.3
|
%
|
(1)
|
Operating data includes data for certain hotels for periods prior to when we acquired them.
|
(2)
|
Operating data excludes data for certain hotels we sold during the periods presented.
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||
Net income available for common shareholders
|
|
$
|
97,289
|
|
|
$
|
60,699
|
|
|
$
|
177,495
|
|
|
$
|
86,542
|
|
|
Add:
|
Depreciation and amortization expense
|
|
99,684
|
|
|
95,155
|
|
|
199,301
|
|
|
188,606
|
|
||||
FFO available for common shareholders
|
|
196,973
|
|
|
155,854
|
|
|
376,796
|
|
|
275,148
|
|
|||||
Add (Less):
|
Estimated business management incentive fees
(1)
|
|
—
|
|
|
17,750
|
|
|
—
|
|
|
37,370
|
|
||||
|
Loss on early extinguishment of debt
(2)
|
|
160
|
|
|
—
|
|
|
160
|
|
|
—
|
|
||||
|
Excess of liquidation preference over carrying value of preferred shares redeemed
(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,893
|
|
||||
|
Unrealized gains and losses on equity securities, net
(4)
|
|
(20,940
|
)
|
|
—
|
|
|
(45,895
|
)
|
|
—
|
|
||||
Normalized FFO available for common shareholders
|
|
$
|
176,193
|
|
|
$
|
173,604
|
|
|
$
|
331,061
|
|
|
$
|
322,411
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average shares outstanding (basic)
|
|
164,205
|
|
|
164,123
|
|
|
164,202
|
|
|
164,121
|
|
||||
|
Weighted average shares outstanding (diluted)
(5)
|
|
164,243
|
|
|
164,165
|
|
|
164,226
|
|
|
164,157
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted per common share amounts:
|
|
|
|
|
|
|
|
|
|||||||||
|
Net income available for common shareholders
|
|
$
|
0.59
|
|
|
$
|
0.37
|
|
|
$
|
1.08
|
|
|
$
|
0.53
|
|
|
FFO available for common shareholders
|
|
$
|
1.20
|
|
|
$
|
0.95
|
|
|
$
|
2.29
|
|
|
$
|
1.68
|
|
|
Normalized FFO available for common shareholders
|
|
$
|
1.07
|
|
|
$
|
1.06
|
|
|
$
|
2.02
|
|
|
$
|
1.96
|
|
|
Distributions declared per share
|
|
$
|
0.53
|
|
|
$
|
0.52
|
|
|
$
|
1.05
|
|
|
$
|
1.03
|
|
(1)
|
Incentive fees under our business management agreement with RMR LLC are payable after the end of each calendar year, are calculated based on common share total return, as defined, and are included in general and administrative expense in our condensed consolidated statements of comprehensive income. In calculating net income in accordance with GAAP, we recognize estimated business management incentive fee expense, if any, in the first, second and third quarters. Although we recognize this expense, if any, in the first, second and third quarters for purposes of calculating net income, we do not include these amounts in the calculation of Normalized FFO available for common shareholders until the fourth quarter, which is when the business management incentive fee expense amount for the year, if any, is determined. Incentive fees for
2018
, if any, will be paid in cash in January
2019
.
|
(2)
|
We recorded a loss of
$160
on early extinguishment of debt in the three months ended
June 30, 2018
in connection with the amendment of our revolving credit facility and term loan.
|
(3)
|
In February 2017, we redeemed all 11,600,000 of our outstanding
7.125%
Series D cumulative redeemable preferred shares at the stated liquidation preference of
$25.00
per share plus accrued and unpaid distributions to the date of redemption (an aggregate of $291,435). The liquidation preference of the redeemed shares exceeded the carrying amount for the redeemed shares as of the date of redemption by
$9,893
, or $0.06 per share, and we reduced net income available to common shareholders in the
six
months ended
June 30, 2017
by that excess amount.
|
(4)
|
Unrealized gains and losses on equity securities, net represent the adjustment required to adjust the carrying value of our investments in RMR Inc. and TA common shares to their fair value as of
June 30, 2018
in accordance with new GAAP standards effective January 1, 2018.
|
(5)
|
Represents weighted average common shares adjusted to reflect the potential dilution of unvested share awards.
|
Principal Balance
|
|
Annual Interest
Rate
|
|
Annual Interest
Expense
|
|
Maturity
|
|
Interest Payments
Due
|
|||||
$
|
400,000
|
|
|
4.250
|
%
|
|
$
|
17,000
|
|
|
2021
|
|
Semi-Annually
|
500,000
|
|
|
5.000
|
%
|
|
25,000
|
|
|
2022
|
|
Semi-Annually
|
||
500,000
|
|
|
4.500
|
%
|
|
22,500
|
|
|
2023
|
|
Semi-Annually
|
||
350,000
|
|
|
4.650
|
%
|
|
16,275
|
|
|
2024
|
|
Semi-Annually
|
||
350,000
|
|
|
4.500
|
%
|
|
15,750
|
|
|
2025
|
|
Semi-Annually
|
||
350,000
|
|
|
5.250
|
%
|
|
18,375
|
|
|
2026
|
|
Semi-Annually
|
||
400,000
|
|
|
4.950
|
%
|
|
19,800
|
|
|
2027
|
|
Semi-Annually
|
||
400,000
|
|
|
3.950
|
%
|
|
15,800
|
|
|
2028
|
|
Semi-Annually
|
||
400,000
|
|
|
4.375
|
%
|
|
17,500
|
|
|
2030
|
|
Semi-Annually
|
||
$
|
3,650,000
|
|
|
|
|
|
$
|
168,000
|
|
|
|
|
|
|
|
Impact of Increase in Interest Rates
|
|
|
|||||||||||
|
|
Interest Rate
Per Year
(1)
|
|
Outstanding
Debt
|
|
Total Interest
Expense Per Year
|
|
Annual Per Common
Share Impact
(2)
|
|||||||
At June 30, 2018
|
|
3.06
|
%
|
|
$
|
522,000
|
|
|
$
|
15,973
|
|
|
$
|
0.10
|
|
One percentage point increase
|
|
4.06
|
%
|
|
$
|
522,000
|
|
|
$
|
21,193
|
|
|
$
|
0.13
|
|
|
|
Impact of Increase in Interest Rates
|
|
|
|||||||||||
|
|
Interest Rate
Per Year
(1)
|
|
Outstanding
Debt
|
|
Total Interest
Expense Per Year
|
|
Annual Per Common
Share Impact
(2)
|
|||||||
At June 30, 2018
|
|
3.01
|
%
|
|
$
|
1,400,000
|
|
|
$
|
42,140
|
|
|
$
|
0.26
|
|
One percentage point increase
|
|
4.01
|
%
|
|
$
|
1,400,000
|
|
|
$
|
56,140
|
|
|
$
|
0.34
|
|
(1)
|
Weighted average based on the interest rates and the respective outstanding borrowings (assuming fully drawn) as of
June 30, 2018
.
|
(2)
|
Based on diluted weighted average common shares outstanding for the
six
months ended
June 30, 2018
.
|
•
|
OUR HOTEL MANAGERS’ OR TENANTS’ ABILITIES TO PAY THE CONTRACTUAL AMOUNTS OF RETURNS OR RENTS DUE TO US,
|
•
|
OUR ABILITY TO COMPETE FOR ACQUISITIONS EFFECTIVELY,
|
•
|
OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS,
|
•
|
OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO SUSTAIN THE AMOUNT OF SUCH DISTRIBUTIONS,
|
•
|
OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL,
|
•
|
OUR ABILITY TO APPROPRIATELY BALANCE OUR USE OF DEBT AND EQUITY CAPITAL,
|
•
|
OUR INTENT TO MAKE IMPROVEMENTS TO CERTAIN OF OUR PROPERTIES AND THE SUCCESS OF OUR HOTEL RENOVATIONS,
|
•
|
OUR ABILITY TO ENGAGE AND RETAIN QUALIFIED MANAGERS AND TENANTS FOR OUR HOTELS AND TRAVEL CENTERS ON SATISFACTORY TERMS,
|
•
|
THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY,
|
•
|
OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT,
|
•
|
OUR CREDIT RATINGS,
|
•
|
THE ABILITY OF TA TO PAY CURRENT AND DEFERRED RENT AMOUNTS AND OTHER OBLIGATIONS DUE TO US,
|
•
|
OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH RMR INC.,
|
•
|
OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH AIC AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC,
|
•
|
OUR QUALIFICATION FOR TAXATION AS A REIT,
|
•
|
CHANGES IN FEDERAL OR STATE TAX LAWS, AND
|
•
|
OTHER MATTERS.
|
•
|
THE IMPACT OF CONDITIONS AND CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR MANAGERS AND TENANTS,
|
•
|
COMPETITION WITHIN THE REAL ESTATE, HOTEL, TRANSPORTATION AND TRAVEL CENTER INDUSTRIES, PARTICULARLY IN THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED,
|
•
|
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,
|
•
|
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,
|
•
|
ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL, AND
|
•
|
ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR RELATED PARTIES, INCLUDING OUR MANAGING TRUSTEES, TA, SONESTA, RMR INC., RMR LLC, AIC AND OTHERS AFFILIATED WITH THEM.
|
•
|
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, 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 SHARES AND FUTURE DISTRIBUTIONS MAY BE REDUCED OR ELIMINATED,
|
•
|
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,
|
•
|
AS OF
JUNE 30, 2018
, APPROXIMATELY
74%
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’ ABILITIES AND WILLINGNESS TO PAY. 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 WHICH THEY GUARANTY OR SECURE, OR REGARDING OUR MANAGERS', TENANTS' OR GUARANTORS' FUTURE ACTIONS IF AND WHEN THE GUARANTEES AND SECURITY DEPOSITS EXPIRE OR ARE DEPLETED OR THEIR ABILITIES OR WILLINGNESS TO PAY MINIMUM RETURNS AND RENTS OWED TO US. MOREOVER, THE SECURITY DEPOSITS WE HOLD ARE NOT SEGREGATED FROM OUR OTHER ASSETS AND THE APPLICATION OF SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS WILL RESULT IN US
|
•
|
THE
$35.7
MILLION LIMITED GUARANTY FROM WYNDHAM WAS DEPLETED DURING THE YEAR ENDED
DECEMBER 31, 2017
. WE DO NOT HOLD A SECURITY DEPOSIT WITH RESPECT TO AMOUNTS DUE UNDER THE WYNDHAM AGREEMENT. WYNDHAM HAS PAID 85% OF THE MINIMUM RETURNS DUE TO US FOR EACH OF THE THREE AND SIX MONTHS ENDED
JUNE 30, 2018
. WE CAN PROVIDE NO ASSURANCE AS TO WHETHER WYNDHAM WILL CONTINUE TO PAY AT LEAST THE GREATER OF AVAILABLE HOTEL CASH FLOWS AFTER PAYMENT OF HOTEL OPERATING EXPENSES AND 85% OF THE MINIMUM RETURNS DUE TO US OR IF WYNDHAM WILL DEFAULT ON ITS PAYMENTS,
|
•
|
WE HAVE NO GUARANTEES OR SECURITY DEPOSITS FOR THE MINIMUM RETURNS DUE TO US FROM OUR MARRIOTT NO. 1 OR OUR SONESTA HOTEL AGREEMENTS. ACCORDINGLY, WE MAY RECEIVE AMOUNTS THAT ARE LESS THAN THE CONTRACTUAL MINIMUM RETURNS STATED IN THESE AGREEMENTS,
|
•
|
WE HAVE RECENTLY RENOVATED CERTAIN HOTELS AND ARE CURRENTLY RENOVATING ADDITIONAL HOTELS. WE CURRENTLY EXPECT TO FUND APPROXIMATELY
$145.4
MILLION DURING THE LAST SIX MONTHS OF
2018
AND
$143.6
MILLION IN
2019
FOR RENOVATIONS AND OTHER CAPITAL IMPROVEMENT COSTS AT CERTAIN OF OUR HOTELS. THE COST OF CAPITAL PROJECTS ASSOCIATED WITH SUCH RENOVATIONS MAY BE GREATER THAN WE NOW ANTICIPATE. OPERATING RESULTS AT OUR HOTELS MAY DECLINE AS A RESULT OF HAVING ROOMS OUT OF SERVICE OR OTHER DISRUPTIONS DURING RENOVATIONS. ALSO, 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,
|
•
|
WE CURRENTLY EXPECT TO PURCHASE FROM TA DURING THE LAST SIX MONTHS OF
2018
APPROXIMATELY
$22.8
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,
|
•
|
HOTEL ROOM DEMAND AND TRUCKING ACTIVITY ARE OFTEN REFLECTIONS OF THE GENERAL ECONOMIC ACTIVITY IN THE COUNTRY AND IN THE GEOGRAPHIC AREAS WHERE OUR PROPERTIES ARE LOCATED. IF ECONOMIC ACTIVITY 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,
|
•
|
HOTEL AND OTHER COMPETITIVE FORMS OF TEMPORARY LODGING SUPPLY (FOR EXAMPLE, AIRBNB) HAVE BEEN INCREASING AND MAY AFFECT OUR HOTEL OPERATORS' ABILITY TO GROW ADR AND OCCUPANCY, AND ADR AND OCCUPANCY COULD DECLINE DUE TO INCREASED COMPETITION WHICH MAY CAUSE OUR HOTEL OPERATORS TO BECOME UNABLE TO PAY OUR RETURNS OR RENTS,
|
•
|
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
|
•
|
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 THEIR 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,
|
•
|
CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND ANY EXPECTED ACQUISITIONS AND SALES AND ANY RELATED MANAGEMENT OR LEASE ARRANGEMENTS WE EXPECT TO ENTER MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS OR ARRANGEMENTS MAY CHANGE,
|
•
|
AT
JUNE 30, 2018
, WE HAD
$16.5
MILLION OF CASH AND CASH EQUIVALENTS,
$878.0
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. 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,
|
•
|
WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE,
|
•
|
WE INTEND TO CONDUCT OUR BUSINESS ACTIVITIES IN A MANNER THAT WILL AFFORD US REASONABLE ACCESS TO CAPITAL FOR INVESTMENT AND FINANCING ACTIVITIES. HOWEVER, WE MAY NOT SUCCEED IN THIS REGARD AND WE MAY NOT HAVE REASONABLE ACCESS TO CAPITAL,
|
•
|
CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY,
|
•
|
ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY OR OTHER FLOATING RATE DEBT WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH SUCH DEBT,
|
•
|
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,
|
•
|
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,
|
•
|
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,
|
•
|
THE BUSINESS AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS PERMIT EARLY TERMINATION IN
|
•
|
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,
|
•
|
RMR INC. MAY REDUCE THE AMOUNT OF DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US, AND
|
•
|
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 FLOWS FROM THIS HOTEL IN THE FUTURE. OUR DISCUSSIONS WITH MARRIOTT HAVE 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.
|
Exhibit
Number
|
|
Description
|
|
3.1
|
|
|
|
3.2
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
4.5
|
|
|
|
4.6
|
|
|
|
4.7
|
|
|
|
4.8
|
|
|
|
4.9
|
|
|
|
4.10
|
|
|
|
4.11
|
|
|
|
4.12
|
|
|
|
4.13
|
|
|
|
4.14
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
10.3
|
|
|
|
10.4
|
|
|
|
10.5
|
|
|
|
12.1
|
|
|
|
12.2
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
101.1
|
|
|
The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.)
|
|
|
|
HOSPITALITY PROPERTIES TRUST
|
|
|
|
|
|
/s/ John G. Murray
|
|
John G. Murray
|
|
President and Chief Executive Officer
|
|
Dated: August 9, 2018
|
|
|
|
|
|
/s/ Mark L. Kleifges
|
|
Mark L. Kleifges
|
|
Chief Financial Officer and Treasurer
|
|
(Principal Financial and Accounting Officer)
|
|
Dated: August 9, 2018
|
Crowne Plaza White Plains
|
$
|
65,000
|
|
|
|
|
|
||
Crowne Plaza Miami
|
$
|
65,000
|
|
|
|
|
|
||
Crowne Plaza San Jose
|
$
|
65,000
|
|
|
|
|
|
||
Crowne Plaza Charlotte
|
$
|
65,000
|
|
|
|
|
|
||
Crowne Plaza Columbus
|
$
|
40,000
|
|
|
|
|
|
||
Crowne Plaza Ravinia
|
$
|
40,000
|
|
|
|
|
|
(a)
|
If to Indemnitee, to: The address set forth on the signature page hereto.
|
(b)
|
If to the Company to:
|
Inf
|
HOSPITALITY PROPERTIES TRUST
|
|
|
|
|
|
By:
|
|
|
Name:
|
|
|
Title:
|
|
|
|
|
|
|
|
|
[INDEMNITEE]
|
|
|
|
|
|
|
|
|
|
|
|
Indemnitee’s Address:
|
|
|
|
|
|
[ ]
|
WITNESS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Print name of witness
|
|
Print name of Indemnitee
|
Name of Signatory
|
Date
|
Ethan S. Bornstein
|
June 14, 2018
|
Donna D. Fraiche
|
June 14, 2018
|
John L. Harrington
|
June 14, 2018
|
Mark L. Kleifges
|
June 14, 2018
|
William A. Lamkin
|
June 14, 2018
|
John G. Murray
|
June 14, 2018
|
Adam D. Portnoy
|
June 14, 2018
|
|
|
Six Months Ended June 30,
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Income from continuing operations (including gains on sales of properties, if any) before income tax benefit (expense) and equity in earnings of an investee
|
|
$
|
178,686
|
|
|
$
|
201,904
|
|
|
$
|
226,993
|
|
|
$
|
167,963
|
|
|
$
|
199,036
|
|
|
$
|
127,750
|
|
Fixed Charges
|
|
96,281
|
|
|
181,579
|
|
|
161,913
|
|
|
144,898
|
|
|
139,486
|
|
|
145,954
|
|
||||||
Adjusted Earnings
|
|
$
|
274,967
|
|
|
$
|
383,483
|
|
|
$
|
388,906
|
|
|
$
|
312,861
|
|
|
$
|
338,522
|
|
|
$
|
273,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest on indebtedness and amortization of debt issuance costs and debt discounts and premiums
|
|
$
|
96,281
|
|
|
$
|
181,579
|
|
|
$
|
161,913
|
|
|
$
|
144,898
|
|
|
$
|
139,486
|
|
|
$
|
145,954
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of Earnings to Fixed Charges
|
|
2.86x
|
|
|
2.11x
|
|
|
2.40x
|
|
|
2.16x
|
|
|
2.43x
|
|
|
1.88x
|
|
|
|
Six Months Ended June 30,
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||||
Income from continuing operations (including gains on sales of properties, if any) before income tax benefit (expense) and equity in earnings of an investee
|
|
$
|
178,686
|
|
|
$
|
201,904
|
|
|
$
|
226,993
|
|
|
$
|
167,963
|
|
|
$
|
199,036
|
|
|
$
|
127,750
|
|
Fixed Charges
|
|
96,281
|
|
|
181,579
|
|
|
161,913
|
|
|
144,898
|
|
|
139,486
|
|
|
145,954
|
|
||||||
Adjusted Earnings
|
|
$
|
274,967
|
|
|
$
|
383,483
|
|
|
$
|
388,906
|
|
|
$
|
312,861
|
|
|
$
|
338,522
|
|
|
$
|
273,704
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed Charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest on indebtedness and amortization of debt issuance costs and debt discounts and premiums
|
|
$
|
96,281
|
|
|
$
|
181,579
|
|
|
$
|
161,913
|
|
|
$
|
144,898
|
|
|
$
|
139,486
|
|
|
$
|
145,954
|
|
Preferred distributions
|
|
—
|
|
|
1,435
|
|
|
20,664
|
|
|
20,664
|
|
|
20,664
|
|
|
26,559
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Combined Fixed Charges and Preferred distributions
|
|
$
|
96,281
|
|
|
$
|
183,014
|
|
|
$
|
182,577
|
|
|
$
|
165,562
|
|
|
$
|
160,150
|
|
|
$
|
172,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of Earnings to Fixed Charges and Preferred distributions
|
|
2.86
|
x
|
|
2.10
|
x
|
|
2.13
|
x
|
|
1.89
|
x
|
|
2.11
|
x
|
|
1.59
|
x
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q 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;
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3.
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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;
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4.
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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:
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a.
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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;
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b.
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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;
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c.
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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
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d.
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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
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5.
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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):
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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
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b.
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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.
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Date: August 9, 2018
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/s/ John G. Murray
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John G. Murray
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President and Chief Executive Officer
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1.
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I have reviewed this Quarterly Report on Form 10-Q of Hospitality Properties Trust;
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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: August 9, 2018
|
/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/ John G. Murray
|
|
/s/ Mark L. Kleifges
|
John G. Murray
|
|
Mark L. Kleifges
|
President and Chief Executive Officer
|
|
Chief Financial Officer and Treasurer
|
|
|
|
|
|
|
Date: August 9, 2018
|
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