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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Hospitality Properties Trust | NASDAQ:HPT | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 25.28 | 25.00 | 25.51 | 0 | 01:00:00 |
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Maryland
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04-3262075
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(State or Other Jurisdiction of
Incorporation or Organization)
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(IRS Employer Identification No.)
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Title of Each Class
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Trading Symbol
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Name of each Exchange on which Registered
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Common Shares of Beneficial Interest
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HPT
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The Nasdaq Stock Market LLC
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Large accelerated filer
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☒
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Accelerated filer
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☐
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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Page
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June 30,
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December 31,
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2019
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2018
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ASSETS
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Real estate properties:
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Land
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$
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1,674,653
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$
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1,626,239
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Buildings, improvements and equipment
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8,002,833
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7,896,734
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Total real estate properties, gross
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9,677,486
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9,522,973
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Accumulated depreciation
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(3,026,473
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)
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(2,973,384
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)
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Total real estate properties, net
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6,651,013
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6,549,589
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Cash and cash equivalents
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15,688
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25,966
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Restricted cash
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37,792
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50,037
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Due from related persons
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75,939
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91,212
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Other assets, net
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397,314
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460,275
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Total assets
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$
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7,177,746
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$
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7,177,079
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LIABILITIES AND SHAREHOLDERS’ EQUITY
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Unsecured revolving credit facility
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$
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90,000
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$
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177,000
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Unsecured term loan, net
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397,591
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397,292
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Senior unsecured notes, net
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3,602,333
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3,598,295
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Security deposits
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123,637
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132,816
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Accounts payable and other liabilities
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298,625
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211,332
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Due to related persons
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8,118
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62,913
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Total liabilities
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4,520,304
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4,579,648
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Commitments and contingencies
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Shareholders’ equity:
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Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 164,454,537 and 164,441,709 shares issued and outstanding, respectively
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1,645
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1,644
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Additional paid in capital
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4,546,737
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4,545,481
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Cumulative other comprehensive loss
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(129
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)
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(266
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)
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Cumulative net income available for common shareholders
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3,466,464
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3,231,895
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Cumulative common distributions
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(5,357,275
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)
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(5,181,323
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)
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Total shareholders’ equity
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2,657,442
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2,597,431
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Total liabilities and shareholders’ equity
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$
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7,177,746
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$
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7,177,079
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Three Months Ended June 30,
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Six Months Ended June 30,
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2019
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2018
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2019
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2018
|
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Revenues:
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Hotel operating revenues
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$
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541,668
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$
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529,599
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$
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997,053
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$
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974,875
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Rental income
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67,764
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81,018
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135,915
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163,011
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FF&E reserve income
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1,130
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1,334
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2,502
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2,698
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Total revenues
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610,562
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611,951
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1,135,470
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1,140,584
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Expenses:
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Hotel operating expenses
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381,703
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374,081
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700,828
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689,063
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Depreciation and amortization
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99,196
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99,684
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198,561
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199,301
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General and administrative
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12,207
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13,121
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24,442
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24,855
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Total expenses
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493,106
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486,886
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923,831
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913,219
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Gain on sale of real estate
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—
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—
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159,535
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—
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Dividend income
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876
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626
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1,752
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1,252
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Unrealized gains and (losses) on equity securities, net
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(60,788
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)
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20,940
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(39,811
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)
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45,895
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Interest income
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449
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323
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1,086
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615
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Interest expense (including amortization of debt issuance costs and debt discounts and premiums of $2,570, $2,559, $5,140 and $5,037, respectively)
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(49,601
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)
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(48,741
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)
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(99,367
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)
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(96,281
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)
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Loss on early extinguishment of debt
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—
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(160
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)
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—
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(160
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)
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Income before income taxes and equity in earnings of an investee
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8,392
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98,053
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234,834
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178,686
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Income tax benefit (expense)
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260
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(771
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)
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(799
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)
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(1,242
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)
|
||||
Equity in earnings of an investee
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130
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7
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534
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51
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Net income
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8,782
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97,289
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234,569
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177,495
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Other comprehensive income (loss):
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Equity interest in investee's unrealized gains (losses)
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71
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|
10
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137
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|
|
(83
|
)
|
||||
Other comprehensive income (loss)
|
|
71
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|
|
10
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|
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137
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|
|
(83
|
)
|
||||
Comprehensive income
|
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$
|
8,853
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|
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$
|
97,299
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|
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$
|
234,706
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|
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$
|
177,412
|
|
|
|
|
|
|
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|
||||||||
Weighted average common shares outstanding (basic)
|
|
164,284
|
|
|
164,205
|
|
|
164,281
|
|
|
164,202
|
|
||||
Weighted average common shares outstanding (diluted)
|
|
164,326
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|
|
164,243
|
|
|
164,324
|
|
|
164,226
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||||
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||||||||
Net income per common share (basic and diluted)
|
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$
|
0.05
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$
|
0.59
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$
|
1.43
|
|
|
$
|
1.08
|
|
|
Common Shares
|
|
Additional
Paid in Capital |
|
Cumulative
Net Income
Available for
Common
Shareholders
|
|
Cumulative
Other
Comprehensive
Income (Loss)
|
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|
|||||||||||||||||
|
Number of
Shares |
|
Common
Shares |
|
Cumulative
Common
Distributions
|
|
|
|
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|
||||||||||||||||
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Total
|
|||||||||||||||||||
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|||||||||||||
Balance at December 31, 2018
|
164,441,709
|
|
|
$
|
1,644
|
|
|
$
|
(5,181,323
|
)
|
|
$
|
4,545,481
|
|
|
$
|
3,231,895
|
|
|
$
|
(266
|
)
|
|
$
|
2,597,431
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
225,787
|
|
|
—
|
|
|
225,787
|
|
||||||
Equity interest in investee’s unrealized gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
66
|
|
|
66
|
|
||||||
Common share grants
|
—
|
|
|
—
|
|
|
—
|
|
|
436
|
|
|
—
|
|
|
—
|
|
|
436
|
|
||||||
Distributions
|
—
|
|
|
—
|
|
|
(87,154
|
)
|
|
—
|
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|
—
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|
|
—
|
|
|
(87,154
|
)
|
||||||
Balance at March 31, 2019
|
164,441,709
|
|
|
$
|
1,644
|
|
|
$
|
(5,268,477
|
)
|
|
$
|
4,545,917
|
|
|
$
|
3,457,682
|
|
|
$
|
(200
|
)
|
|
$
|
2,736,566
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,782
|
|
|
—
|
|
|
8,782
|
|
||||||
Equity interest in investee’s unrealized gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
71
|
|
|
71
|
|
||||||
Common share grants
|
15,000
|
|
|
1
|
|
|
—
|
|
|
868
|
|
|
—
|
|
|
—
|
|
|
869
|
|
||||||
Common share repurchases and forfeitures
|
(2,172
|
)
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
|
—
|
|
|
—
|
|
|
(48
|
)
|
||||||
Distributions
|
—
|
|
|
—
|
|
|
(88,798
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(88,798
|
)
|
||||||
Balance at June 30, 2019
|
164,454,537
|
|
|
$
|
1,645
|
|
|
$
|
(5,357,275
|
)
|
|
$
|
4,546,737
|
|
|
$
|
3,466,464
|
|
|
$
|
(129
|
)
|
|
$
|
2,657,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2017
|
164,349,141
|
|
|
$
|
1,643
|
|
|
$
|
(4,834,491
|
)
|
|
$
|
4,542,307
|
|
|
$
|
2,966,605
|
|
|
$
|
79,358
|
|
|
$
|
2,755,422
|
|
Cumulative effect of accounting change
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
79,556
|
|
|
(79,556
|
)
|
|
—
|
|
||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,206
|
|
|
—
|
|
|
80,206
|
|
||||||
Equity interest in investee’s unrealized losses
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(93
|
)
|
|
(93
|
)
|
||||||
Common share repurchases
|
(3,394
|
)
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
||||||
Distributions
|
—
|
|
|
—
|
|
|
(85,460
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85,460
|
)
|
||||||
Balance at March 31, 2018
|
164,345,747
|
|
|
$
|
1,643
|
|
|
$
|
(4,919,951
|
)
|
|
$
|
4,542,206
|
|
|
$
|
3,126,367
|
|
|
$
|
(291
|
)
|
|
$
|
2,749,974
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
97,289
|
|
|
—
|
|
|
97,289
|
|
||||||
Equity interest in investee’s unrealized gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
||||||
Common share grants
|
18,000
|
|
|
1
|
|
|
—
|
|
|
500
|
|
|
—
|
|
|
—
|
|
|
501
|
|
||||||
Distributions
|
—
|
|
|
—
|
|
|
(87,105
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(87,105
|
)
|
||||||
Balance at June 30, 2018
|
164,363,747
|
|
|
$
|
1,644
|
|
|
$
|
(5,007,056
|
)
|
|
$
|
4,542,706
|
|
|
$
|
3,223,656
|
|
|
$
|
(281
|
)
|
|
$
|
2,760,669
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
|
|
(in thousands)
|
||||||||||
Weighted average common shares for basic earnings per share
|
|
164,284
|
|
|
164,205
|
|
|
164,281
|
|
|
164,202
|
|
Effect of dilutive securities: Unvested share awards
|
|
42
|
|
|
38
|
|
|
43
|
|
|
24
|
|
Weighted average common shares for diluted earnings per share
|
|
164,326
|
|
|
164,243
|
|
|
164,324
|
|
|
164,226
|
|
Acquisition Date
|
|
Location
|
|
Purchase Price
|
|
Land
|
|
Land Improvements
|
|
Building and Improvements
|
|
Furniture, Fixtures and Equipment
|
||||||||||
2/22/2019
|
|
Washington, D.C.
(1)
|
|
$
|
143,742
|
|
|
$
|
44,972
|
|
|
$
|
151
|
|
|
$
|
93,412
|
|
|
$
|
5,207
|
|
5/7/2019
|
|
Milwaukee, WI
(2)
|
|
30,235
|
|
|
3,442
|
|
|
1,053
|
|
|
25,132
|
|
|
608
|
|
|||||
|
|
|
|
$
|
173,977
|
|
|
$
|
48,414
|
|
|
$
|
1,204
|
|
|
$
|
118,544
|
|
|
$
|
5,815
|
|
(1)
|
On
February 22, 2019
, we acquired the
335
room Hotel Palomar located in Washington, D.C. for a purchase price of
$143,742
, including capitalized acquisition costs of
$2,292
. We added this Kimpton
®
branded hotel to our management agreement with InterContinental Hotels Group, plc, or IHG.
|
(2)
|
On
May 7, 2019
, we acquired the
198
room Crowne Plaza Milwaukee West hotel in Milwaukee, WI for a purchase price of
$30,235
, including capitalized acquisition costs of
$235
. We added this Crowne Plaza
®
branded hotel to our management agreement with IHG.
|
•
|
In
January 2019
, we sold to TA
20
travel center properties, which TA previously leased from us, for a total purchase price of
$308,200
.
|
•
|
Upon completing these sales, these travel center properties were removed from the TA leases and TA's annual minimum rent payable to us decreased by
$43,148
.
|
•
|
Commencing on
April 1, 2019
, TA paid us the first of
16
quarterly installments of approximately
$4,400
each (an aggregate of
$70,458
) to fully satisfy and discharge its
$150,000
deferred rent obligation to us that otherwise would have become due in five installments between
2024
and
2030
.
|
•
|
Commencing with the year ending
December 31, 2020
, TA will be obligated to pay to us an additional amount of percentage rent equal to one-half percent (
0.5%
) of the excess of its annual non-fuel revenues at leased sites over the non-fuel revenues for each respective site for the year ending
December 31, 2019
.
|
•
|
The term of each TA lease was extended by
three years
.
|
•
|
Certain of the
179
travel center properties that TA continues to lease from us were reallocated among the TA leases.
|
|
|
||
2019
|
$
|
141,816
|
|
2020
|
273,098
|
|
|
2021
|
272,801
|
|
|
2022
|
271,222
|
|
|
2023
|
258,065
|
|
|
Thereafter
|
2,357,802
|
|
|
Total
|
$
|
3,574,804
|
|
2019
|
$
|
3,630
|
|
2020
|
6,896
|
|
|
2021
|
6,195
|
|
|
2022
|
5,694
|
|
|
2023
|
5,548
|
|
|
Thereafter
|
145,892
|
|
|
Total lease payments
|
173,855
|
|
|
Less: imputed interest
|
(96,832
|
)
|
|
Present value of lease liabilities
(1)
|
$
|
77,023
|
|
(1)
|
The weighted average discount rate used to calculate the lease liability and the weighted average remaining term for our ground leases (assuming all extension options) and our hotel operating leases are approximately
5.49%
and
32 years
(range of
12
to
68 years
) and
5.58%
and
29 years
(range of
1 month
to
55 years
), respectively.
|
|
|
For the Three Months Ended June 30, 2019
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Hotel operating revenues
|
|
$
|
541,668
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
541,668
|
|
Rental income
|
|
5,084
|
|
|
62,680
|
|
|
—
|
|
|
67,764
|
|
||||
FF&E reserve income
|
|
1,130
|
|
|
—
|
|
|
—
|
|
|
1,130
|
|
||||
Total revenues
|
|
547,882
|
|
|
62,680
|
|
|
—
|
|
|
610,562
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Hotel operating expenses
|
|
381,703
|
|
|
—
|
|
|
—
|
|
|
381,703
|
|
||||
Depreciation and amortization
|
|
67,021
|
|
|
32,175
|
|
|
—
|
|
|
99,196
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
12,207
|
|
|
12,207
|
|
||||
Total expenses
|
|
448,724
|
|
|
32,175
|
|
|
12,207
|
|
|
493,106
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
|
—
|
|
|
—
|
|
|
876
|
|
|
876
|
|
||||
Unrealized losses on equity securities
|
|
—
|
|
|
—
|
|
|
(60,788
|
)
|
|
(60,788
|
)
|
||||
Interest income
|
|
216
|
|
|
—
|
|
|
233
|
|
|
449
|
|
||||
Interest expense
|
|
—
|
|
|
—
|
|
|
(49,601
|
)
|
|
(49,601
|
)
|
||||
Income (loss) before income taxes and equity in earnings of an investee
|
|
99,374
|
|
|
30,505
|
|
|
(121,487
|
)
|
|
8,392
|
|
||||
Income tax benefit
|
|
—
|
|
|
—
|
|
|
260
|
|
|
260
|
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
130
|
|
|
130
|
|
||||
Net income (loss)
|
|
$
|
99,374
|
|
|
$
|
30,505
|
|
|
$
|
(121,097
|
)
|
|
$
|
8,782
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
For the Six Months Ended June 30, 2019
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
|
||||||||
Hotel operating revenues
|
|
$
|
997,053
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
997,053
|
|
Rental income
|
|
10,159
|
|
|
125,756
|
|
|
—
|
|
|
135,915
|
|
||||
FF&E reserve income
|
|
2,502
|
|
|
—
|
|
|
—
|
|
|
2,502
|
|
||||
Total revenues
|
|
1,009,714
|
|
|
125,756
|
|
|
—
|
|
|
1,135,470
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Hotel operating expenses
|
|
700,828
|
|
|
—
|
|
|
—
|
|
|
700,828
|
|
||||
Depreciation and amortization
|
|
133,604
|
|
|
64,957
|
|
|
—
|
|
|
198,561
|
|
||||
General and administrative
|
|
—
|
|
|
—
|
|
|
24,442
|
|
|
24,442
|
|
||||
Total expenses
|
|
834,432
|
|
|
64,957
|
|
|
24,442
|
|
|
923,831
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Gain on sale of real estate
|
|
—
|
|
|
159,535
|
|
|
—
|
|
|
159,535
|
|
||||
Dividend income
|
|
—
|
|
|
—
|
|
|
1,752
|
|
|
1,752
|
|
||||
Unrealized losses on equity securities
|
|
—
|
|
|
—
|
|
|
(39,811
|
)
|
|
(39,811
|
)
|
||||
Interest income
|
|
427
|
|
|
—
|
|
|
659
|
|
|
1,086
|
|
||||
Interest expense
|
|
—
|
|
|
—
|
|
|
(99,367
|
)
|
|
(99,367
|
)
|
||||
Income (loss) before income taxes and equity in earnings of an investee
|
|
175,709
|
|
|
220,334
|
|
|
(161,209
|
)
|
|
234,834
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(799
|
)
|
|
(799
|
)
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
534
|
|
|
534
|
|
||||
Net income (loss)
|
|
$
|
175,709
|
|
|
$
|
220,334
|
|
|
$
|
(161,474
|
)
|
|
$
|
234,569
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
As of June 30, 2019
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Total assets
|
|
$
|
4,806,796
|
|
|
$
|
2,192,789
|
|
|
$
|
178,161
|
|
|
$
|
7,177,746
|
|
|
|
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
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
|
—
|
|
|
—
|
|
|
626
|
|
|
626
|
|
||||
Unrealized gains and losses on equity securities, net
|
|
—
|
|
|
—
|
|
|
20,940
|
|
|
20,940
|
|
||||
Interest income
|
|
210
|
|
|
—
|
|
|
113
|
|
|
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
|
|
100,659
|
|
|
37,737
|
|
|
(40,343
|
)
|
|
98,053
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(771
|
)
|
|
(771
|
)
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
||||
Net income (loss)
|
|
$
|
100,659
|
|
|
$
|
37,737
|
|
|
$
|
(41,107
|
)
|
|
$
|
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
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
|
—
|
|
|
—
|
|
|
1,252
|
|
|
1,252
|
|
||||
Unrealized gains and losses on equity securities, net
|
|
—
|
|
|
—
|
|
|
45,895
|
|
|
45,895
|
|
||||
Interest income
|
|
403
|
|
|
—
|
|
|
212
|
|
|
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
|
|
177,864
|
|
|
74,759
|
|
|
(73,937
|
)
|
|
178,686
|
|
||||
Income tax expense
|
|
—
|
|
|
—
|
|
|
(1,242
|
)
|
|
(1,242
|
)
|
||||
Equity in earnings of an investee
|
|
—
|
|
|
—
|
|
|
51
|
|
|
51
|
|
||||
Net income (loss)
|
|
$
|
177,864
|
|
|
$
|
74,759
|
|
|
$
|
(75,128
|
)
|
|
$
|
177,495
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
As of December 31, 2018
|
||||||||||||||
|
|
Hotels
|
|
Travel Centers
|
|
Corporate
|
|
Consolidated
|
||||||||
Total assets
|
|
$
|
4,586,709
|
|
|
$
|
2,398,118
|
|
|
$
|
192,252
|
|
|
$
|
7,177,079
|
|
|
|
|
|
|
Fair Value at Reporting Date Using
|
|||||||||||
|
|
|
|
Quoted Prices in
|
|
|
|
|
||||||||
|
|
|
|
Active Markets for
|
|
Significant Other
|
|
Significant
|
||||||||
|
|
Carrying Value at
|
|
Identical Assets
|
|
Observable Inputs
|
|
Unobservable Inputs
|
||||||||
Description
|
|
June 30, 2019
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
Recurring Fair Value Measurement Assets:
|
|
|
|
|
|
|
||||||||||
Investment in TA
(1)
|
|
$
|
12,380
|
|
|
$
|
12,380
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Investment in RMR Inc.
(2)
|
|
$
|
117,627
|
|
|
$
|
117,627
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Non-recurring Fair Value Measurement Liabilities:
|
|
|
|
|
|
|
||||||||||
Other Liability
(2)
|
|
$
|
(17,476
|
)
|
|
$
|
—
|
|
|
$
|
(17,476
|
)
|
|
$
|
—
|
|
(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, 2019
. During the three and
six
months ended
June 30, 2019
, we recorded unrealized losses of
$1,676
and
$479
, respectively, and 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 its fair value.
|
(2)
|
Our
2,503,777
shares of class A common stock of RMR Inc. are included in other assets, net and had a fair value at
June 30, 2019
of
$117,627
, based on quoted market prices (Level 1 inputs as defined by the fair value hierarchy under GAAP). On June 26, 2019, we entered into a transaction to sell all of our shares of RMR Inc. class A common stock in an underwritten public offering at a price of
$40.00
per share. We completed that sale on July 1, 2019 in accordance with the terms of the underwriting agreement. See Note
10
for additional information regarding this sale. We have elected to account for the agreement to sell our shares of RMR Inc. class A common stock using the fair value option, based upon the difference between the contractual offering price (Level 2 inputs as defined in the fair value hierarchy under GAAP) and the fair value of the underlying assets at
June 30, 2019
. Our historical cost basis for these shares is
$66,374
as of
June 30, 2019
. During the three and
six
months ended
June 30, 2019
, we recorded unrealized losses of
$35,053
and
$15,273
, respectively, to adjust our investment in RMR Inc. shares to its fair value. In addition, during the three and
six
months ended
June 30, 2019
, we recorded a loss of
$17,476
and estimated expenses of
$6,583
related to the agreement to sell our shares of RMR Inc. class A common stock, both of which are included in accounts payable and other liabilities in our condensed consolidated balance sheets and in unrealized gains and (losses) on equity securities, net in our condensed consolidated statements of comprehensive income.
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||||||||||
|
|
Carrying
|
|
Fair
|
|
Carrying
|
|
Fair
|
||||||||
|
|
Value
(1)
|
|
Value
|
|
Value
(1)
|
|
Value
|
||||||||
Senior Unsecured Notes, due 2021 at 4.25%
|
|
$
|
397,659
|
|
|
$
|
404,246
|
|
|
$
|
396,938
|
|
|
$
|
404,582
|
|
Senior Unsecured Notes, due 2022 at 5.00%
|
|
496,215
|
|
|
524,240
|
|
|
495,609
|
|
|
510,658
|
|
||||
Senior Unsecured Notes, due 2023 at 4.50%
|
|
499,350
|
|
|
517,670
|
|
|
499,268
|
|
|
503,295
|
|
||||
Senior Unsecured Notes, due 2024 at 4.65%
|
|
348,092
|
|
|
360,607
|
|
|
347,890
|
|
|
349,741
|
|
||||
Senior Unsecured Notes, due 2025 at 4.50%
|
|
346,087
|
|
|
350,137
|
|
|
345,743
|
|
|
341,114
|
|
||||
Senior Unsecured Notes, due 2026 at 5.25%
|
|
342,519
|
|
|
358,549
|
|
|
341,955
|
|
|
354,060
|
|
||||
Senior Unsecured Notes, due 2027 at 4.95%
|
|
394,271
|
|
|
403,314
|
|
|
393,893
|
|
|
391,660
|
|
||||
Senior Unsecured Notes, due 2028 at 3.95%
|
|
390,184
|
|
|
376,436
|
|
|
389,610
|
|
|
361,232
|
|
||||
Senior Unsecured Notes, due 2030 at 4.375%
|
|
387,956
|
|
|
382,804
|
|
|
387,389
|
|
|
367,110
|
|
||||
Total financial liabilities
|
|
$
|
3,602,333
|
|
|
$
|
3,678,003
|
|
|
$
|
3,598,295
|
|
|
$
|
3,583,452
|
|
(1)
|
Carrying value includes unamortized discounts and premiums and issuance costs.
|
|
|
For the Three Months Ended June 30,
|
|||||||||||||
|
|
|
|
|
|
Increase
|
|
% Increase
|
|||||||
|
|
2019
|
|
2018
|
|
(Decrease)
|
|
(Decrease)
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Hotel operating revenues
|
|
$
|
541,668
|
|
|
$
|
529,599
|
|
|
$
|
12,069
|
|
|
2.3
|
%
|
Rental income - hotels
|
|
5,084
|
|
|
6,550
|
|
|
(1,466
|
)
|
|
(22.4
|
)%
|
|||
Rental income - travel centers
|
|
62,680
|
|
|
74,468
|
|
|
(11,788
|
)
|
|
(15.8
|
)%
|
|||
Total rental income
|
|
67,764
|
|
|
81,018
|
|
|
(13,254
|
)
|
|
(16.4
|
)%
|
|||
FF&E reserve income
|
|
1,130
|
|
|
1,334
|
|
|
(204
|
)
|
|
(15.3
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Hotel operating expenses
|
|
381,703
|
|
|
374,081
|
|
|
7,622
|
|
|
2.0
|
%
|
|||
Depreciation and amortization - hotels
|
|
67,021
|
|
|
62,953
|
|
|
4,068
|
|
|
6.5
|
%
|
|||
Depreciation and amortization - travel centers
|
|
32,175
|
|
|
36,731
|
|
|
(4,556
|
)
|
|
(12.4
|
)%
|
|||
Total depreciation and amortization
|
|
99,196
|
|
|
99,684
|
|
|
(488
|
)
|
|
(0.5
|
)%
|
|||
General and administrative
|
|
12,207
|
|
|
13,121
|
|
|
(914
|
)
|
|
(7.0
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Dividend income
|
|
876
|
|
|
626
|
|
|
250
|
|
|
39.9
|
%
|
|||
Unrealized gains and (losses) on equity securities, net
|
|
(60,788
|
)
|
|
20,940
|
|
|
(81,728
|
)
|
|
(390.3
|
)%
|
|||
Interest income
|
|
449
|
|
|
323
|
|
|
126
|
|
|
39.0
|
%
|
|||
Interest expense
|
|
(49,601
|
)
|
|
(48,741
|
)
|
|
(860
|
)
|
|
1.8
|
%
|
|||
Loss on early extinguishment of debt
|
|
—
|
|
|
(160
|
)
|
|
160
|
|
|
(100.0
|
)%
|
|||
Income before income taxes and equity earnings of an investee
|
|
8,392
|
|
|
98,053
|
|
|
(89,661
|
)
|
|
(91.4
|
)%
|
|||
Income tax benefit (expense)
|
|
260
|
|
|
(771
|
)
|
|
1,031
|
|
|
(133.7
|
)%
|
|||
Equity in earnings of an investee
|
|
130
|
|
|
7
|
|
|
123
|
|
|
1,757.1
|
%
|
|||
Net income
|
|
$
|
8,782
|
|
|
$
|
97,289
|
|
|
$
|
(88,507
|
)
|
|
(91.0
|
)%
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding (basic)
|
|
164,284
|
|
|
164,205
|
|
|
79
|
|
|
n/m
|
|
|||
Weighted average shares outstanding (diluted)
|
|
164,326
|
|
|
164,243
|
|
|
83
|
|
|
0.1
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Net income per common share (basic and diluted)
|
|
$
|
0.05
|
|
|
$
|
0.59
|
|
|
$
|
(0.54
|
)
|
|
(91.5
|
)%
|
|
|
For the Six Months Ended June 30,
|
|||||||||||||
|
|
|
|
|
|
Increase
|
|
% Increase
|
|||||||
|
|
2019
|
|
2018
|
|
(Decrease)
|
|
(Decrease)
|
|||||||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|||||
Hotel operating revenues
|
|
$
|
997,053
|
|
|
$
|
974,875
|
|
|
$
|
22,178
|
|
|
2.3
|
%
|
Rental income - hotels
|
|
10,159
|
|
|
14,350
|
|
|
(4,191
|
)
|
|
(29.2
|
)%
|
|||
Rental income - travel centers
|
|
125,756
|
|
|
148,661
|
|
|
(22,905
|
)
|
|
(15.4
|
)%
|
|||
Total rental income
|
|
135,915
|
|
|
163,011
|
|
|
(27,096
|
)
|
|
(16.6
|
)%
|
|||
FF&E reserve income
|
|
2,502
|
|
|
2,698
|
|
|
(196
|
)
|
|
(7.3
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Hotel operating expenses
|
|
700,828
|
|
|
689,063
|
|
|
11,765
|
|
|
1.7
|
%
|
|||
Depreciation and amortization - hotels
|
|
133,604
|
|
|
125,399
|
|
|
8,205
|
|
|
6.5
|
%
|
|||
Depreciation and amortization - travel centers
|
|
64,957
|
|
|
73,902
|
|
|
(8,945
|
)
|
|
(12.1
|
)%
|
|||
Total depreciation and amortization
|
|
198,561
|
|
|
199,301
|
|
|
(740
|
)
|
|
(0.4
|
)%
|
|||
General and administrative
|
|
24,442
|
|
|
24,855
|
|
|
(413
|
)
|
|
(1.7
|
)%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Gain on sale of real estate
|
|
159,535
|
|
|
—
|
|
|
159,535
|
|
|
n/m
|
|
|||
Dividend income
|
|
1,752
|
|
|
1,252
|
|
|
500
|
|
|
39.9
|
%
|
|||
Unrealized gains and (losses) on equity securities, net
|
|
(39,811
|
)
|
|
45,895
|
|
|
(85,706
|
)
|
|
(186.7
|
)%
|
|||
Interest income
|
|
1,086
|
|
|
615
|
|
|
471
|
|
|
76.6
|
%
|
|||
Interest expense
|
|
(99,367
|
)
|
|
(96,281
|
)
|
|
(3,086
|
)
|
|
3.2
|
%
|
|||
Loss on early extinguishment of debt
|
|
—
|
|
|
(160
|
)
|
|
160
|
|
|
(100.0
|
)%
|
|||
Income before income taxes and equity earnings of an investee
|
|
234,834
|
|
|
178,686
|
|
|
56,148
|
|
|
31.4
|
%
|
|||
Income tax expense
|
|
(799
|
)
|
|
(1,242
|
)
|
|
443
|
|
|
(35.7
|
)%
|
|||
Equity in earnings of an investee
|
|
534
|
|
|
51
|
|
|
483
|
|
|
947.1
|
%
|
|||
Net income
|
|
$
|
234,569
|
|
|
$
|
177,495
|
|
|
$
|
57,074
|
|
|
32.2
|
%
|
|
|
|
|
|
|
|
|
|
|||||||
Weighted average shares outstanding (basic)
|
|
164,281
|
|
|
164,202
|
|
|
79
|
|
|
n/m
|
|
|||
Weighted average shares outstanding (diluted)
|
|
164,324
|
|
|
164,226
|
|
|
98
|
|
|
0.1
|
%
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Net income per common share (basic and diluted)
|
|
$
|
1.43
|
|
|
$
|
1.08
|
|
|
$
|
0.35
|
|
|
32.4
|
%
|
•
|
During the
six
months ended
June 30, 2019
, we funded
$14,527
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
$2,500
for capital improvements under this agreement during the last
six
months of
2019
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, 2019
, we funded
$18,600
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
$19,400
for capital improvements under this agreement during the last
six
months of
2019
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 IHG agreement during the
six
months ended
June 30, 2019
. We currently expect to fund approximately
$66,100
during the last
six
months of
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, 2019
, we funded
$34,306
for capital improvements to certain hotels included in our Sonesta agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$76,200
during the last
six
months of
2019
and
$27,000
during
2020
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 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, 2019
. During the
six
months ended
June 30, 2019
, we funded
$2,278
for capital improvements to certain hotels included in our Wyndham agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$1,700
for capital improvements under this agreement during the last
six
months of
2019
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, 2019
, we funded
$17,143
for capital improvements to certain hotels under our Radisson agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately
$10,400
during the last
six
months of
2019
and
$500
during
2020
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 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)
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Marriott (No. 1)
(4)
|
|
53
|
|
|
7,609
|
|
|
$
|
720,834
|
|
|
$
|
71,589
|
|
|
1.44x
|
|
1.52x
|
|
1.18x
|
|
1.23x
|
Marriott (No. 234)
(5)
|
|
68
|
|
|
9,120
|
|
|
1,030,994
|
|
|
109,024
|
|
|
1.22x
|
|
1.30x
|
|
1.06x
|
|
1.11x
|
||
Marriott (No. 5)
(6)
|
|
1
|
|
|
356
|
|
|
90,078
|
|
|
10,518
|
|
|
0.96x
|
|
1.19x
|
|
0.97x
|
|
1.07x
|
||
Subtotal / Average Marriott
|
|
122
|
|
|
17,085
|
|
|
1,841,906
|
|
|
191,131
|
|
|
1.29x
|
|
1.37x
|
|
1.10x
|
|
1.16x
|
||
IHG
(7)
|
|
102
|
|
|
16,887
|
|
|
2,267,462
|
|
|
207,411
|
|
|
1.09x
|
|
1.29x
|
|
0.97x
|
|
1.13x
|
||
Sonesta
(8)
|
|
51
|
|
|
8,862
|
|
|
1,730,121
|
|
|
129,017
|
|
|
0.87x
|
|
0.93x
|
|
0.62x
|
|
0.71x
|
||
Wyndham
(9)
|
|
22
|
|
|
3,583
|
|
|
398,960
|
|
|
29,466
|
|
|
0.90x
|
|
0.98x
|
|
0.59x
|
|
0.79x
|
||
Hyatt
(10)
|
|
22
|
|
|
2,724
|
|
|
301,942
|
|
|
22,037
|
|
|
1.20x
|
|
1.43x
|
|
0.95x
|
|
1.13x
|
||
Radisson
(11)
|
|
9
|
|
|
1,939
|
|
|
287,249
|
|
|
20,292
|
|
|
1.13x
|
|
1.32x
|
|
0.93x
|
|
1.15x
|
||
Subtotal / Average Hotels
|
|
328
|
|
|
51,080
|
|
|
6,827,640
|
|
|
599,354
|
|
|
1.10x
|
|
1.23x
|
|
0.92x
|
|
1.03x
|
||
TA (No. 1)
(12)
|
|
36
|
|
|
747
|
|
|
668,375
|
|
|
49,018
|
|
|
1.99x
|
|
1.88x
|
|
1.88x
|
|
1.81x
|
||
TA (No. 2)
(12)
|
|
36
|
|
|
879
|
|
|
626,390
|
|
|
44,663
|
|
|
1.91x
|
|
1.88x
|
|
1.84x
|
|
1.77x
|
||
TA (No. 3)
(12)
|
|
35
|
|
|
885
|
|
|
578,630
|
|
|
42,404
|
|
|
1.90x
|
|
1.88x
|
|
1.82x
|
|
1.77x
|
||
TA (No. 4)
(12)
|
|
37
|
|
|
930
|
|
|
594,794
|
|
|
48,381
|
|
|
1.98x
|
|
1.93x
|
|
1.90x
|
|
1.82x
|
||
TA (No. 5)
(12)
|
|
35
|
|
|
1,039
|
|
|
834,559
|
|
|
61,617
|
|
|
1.80x
|
|
1.92x
|
|
1.75x
|
|
1.79x
|
||
Subtotal / Average TA
|
|
179
|
|
|
4,480
|
|
|
3,302,748
|
|
|
246,083
|
|
|
1.91x
|
|
1.90x
|
|
1.84x
|
|
1.79x
|
||
Total / Average
|
|
507
|
|
|
51,080 / 4,480
|
|
|
$
|
10,130,388
|
|
|
$
|
845,437
|
|
|
1.34x
|
|
1.43x
|
|
1.19x
|
|
1.26x
|
(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 and payments by TA of previously deferred rent.
|
(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 IHG, Sonesta and Radisson agreements include data for periods prior to our ownership of certain properties. Coverage amounts for our Sonesta agreement include data for one hotel prior to when it was managed by Sonesta. Coverage amounts for our Radisson agreement and TA leases exclude data for certain properties we sold during the periods presented. Coverage amounts for our TA leases exclude payments of previously deferred rent.
|
(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
101
IHG branded hotels (20 Staybridge Suites
®
, 61 Candlewood Suites
®
, two InterContinental
®
, 11 Crowne Plaza
®
, four Kimpton
®
Hotels & Restaurants
and three Holiday Inn
®
) in 30 states in the U.S., the District of Columbia and Ontario, Canada to one of our TRSs. These
101
hotels are managed by subsidiaries of IHG under a combination management agreement. We lease
one
additional InterContinental
®
branded hotel in Puerto Rico to a subsidiary of IHG. The annual minimum return amount presented in the table on page
33
includes
$7,908
of minimum rent related to the leased Puerto Rico hotel. The management agreement and the lease expire in 2036; IHG has two renewal options for 15 years each for all, but not less than all, of the hotels.
|
(8)
|
We lease our
51
Sonesta branded hotels (six Royal Sonesta
®
Hotels, six 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 subsidiaries 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.
|
(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)
|
TA No. 1:
We lease
36
travel centers (32 TravelCenters of America
®
branded travel centers and four Petro Stopping Centers
®
branded travel centers) in 26 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 2015 non-fuel revenues). Commencing in
2020
, this lease provides for payment of an additional half percent (
0.5%
) of non-fuel revenues above
2019
non-fuel base year revenues. TA’s remaining deferred rent obligation of
$13,289
is being paid in quarterly installments of
$886
through January 31, 2023.
|
|
|
No. of
|
|
No. of Rooms /
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||
|
|
Hotels
|
|
Suites
|
|
2019
|
|
2018
|
|
Change
|
|
2019
|
|
2018
|
|
Change
|
||||||||||||
ADR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marriott (No. 1)
|
|
53
|
|
|
7,609
|
|
|
$
|
135.73
|
|
|
$
|
132.85
|
|
|
2.2
|
%
|
|
$
|
135.14
|
|
|
$
|
131.93
|
|
|
2.4
|
%
|
Marriott (No. 234)
|
|
68
|
|
|
9,120
|
|
|
135.22
|
|
|
135.26
|
|
|
—
|
%
|
|
135.53
|
|
|
133.69
|
|
|
1.4
|
%
|
||||
Marriott (No. 5)
|
|
1
|
|
|
356
|
|
|
295.59
|
|
|
290.83
|
|
|
1.6
|
%
|
|
303.31
|
|
|
285.60
|
|
|
6.2
|
%
|
||||
Subtotal / Average Marriott
|
|
122
|
|
|
17,085
|
|
|
139.22
|
|
|
138.04
|
|
|
0.9
|
%
|
|
139.68
|
|
|
137.02
|
|
|
1.9
|
%
|
||||
IHG
(1)
|
|
102
|
|
|
16,887
|
|
|
123.27
|
|
|
128.21
|
|
|
(3.9
|
%)
|
|
122.88
|
|
|
126.12
|
|
|
(2.6
|
%)
|
||||
Sonesta
(1) (2)
|
|
51
|
|
|
8,862
|
|
|
154.21
|
|
|
154.75
|
|
|
(0.3
|
%)
|
|
151.33
|
|
|
150.77
|
|
|
0.4
|
%
|
||||
Wyndham
|
|
22
|
|
|
3,583
|
|
|
101.19
|
|
|
104.93
|
|
|
(3.6
|
%)
|
|
96.00
|
|
|
99.64
|
|
|
(3.7
|
%)
|
||||
Hyatt
|
|
22
|
|
|
2,724
|
|
|
110.52
|
|
|
115.16
|
|
|
(4.0
|
%)
|
|
111.68
|
|
|
114.31
|
|
|
(2.3
|
%)
|
||||
Radisson
(1)
|
|
9
|
|
|
1,939
|
|
|
137.14
|
|
|
134.70
|
|
|
1.8
|
%
|
|
133.74
|
|
|
130.70
|
|
|
2.3
|
%
|
||||
All Hotels Total / Average
|
|
328
|
|
|
51,080
|
|
|
$
|
131.94
|
|
|
$
|
133.68
|
|
|
(1.3
|
%)
|
|
$
|
131.03
|
|
|
$
|
131.40
|
|
|
(0.3
|
%)
|
OCCUPANCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marriott (No. 1)
|
|
53
|
|
|
7,609
|
|
|
73.0
|
%
|
|
75.0
|
%
|
|
-2.0 pts
|
|
|
66.6
|
%
|
|
68.9
|
%
|
|
-2.3 pts
|
|
||||
Marriott (No. 234)
|
|
68
|
|
|
9,120
|
|
|
78.3
|
%
|
|
80.1
|
%
|
|
-1.8 pts
|
|
|
73.6
|
%
|
|
75.9
|
%
|
|
-2.3 pts
|
|
||||
Marriott (No. 5)
|
|
1
|
|
|
356
|
|
|
86.1
|
%
|
|
91.8
|
%
|
|
-5.7 pts
|
|
|
87.2
|
%
|
|
94.1
|
%
|
|
-6.9 pts
|
|
||||
Subtotal / Average Marriott
|
|
122
|
|
|
17,085
|
|
|
76.1
|
%
|
|
78.1
|
%
|
|
-2.0 pts
|
|
|
70.8
|
%
|
|
73.2
|
%
|
|
-2.4 pts
|
|
||||
IHG
(1)
|
|
102
|
|
|
16,887
|
|
|
80.6
|
%
|
|
82.5
|
%
|
|
-1.9 pts
|
|
|
76.6
|
%
|
|
79.0
|
%
|
|
-2.4 pts
|
|
||||
Sonesta
(1) (2)
|
|
51
|
|
|
8,862
|
|
|
73.1
|
%
|
|
71.2
|
%
|
|
1.9 pts
|
|
|
68.1
|
%
|
|
67.6
|
%
|
|
0.5 pts
|
|
||||
Wyndham
|
|
22
|
|
|
3,583
|
|
|
72.8
|
%
|
|
71.7
|
%
|
|
1.1 pts
|
|
|
66.8
|
%
|
|
68.2
|
%
|
|
-1.4 pts
|
|
||||
Hyatt
|
|
22
|
|
|
2,724
|
|
|
82.8
|
%
|
|
84.3
|
%
|
|
-1.5 pts
|
|
|
78.7
|
%
|
|
80.8
|
%
|
|
-2.1 pts
|
|
||||
Radisson
(1)
|
|
9
|
|
|
1,939
|
|
|
75.2
|
%
|
|
74.5
|
%
|
|
0.7 pts
|
|
|
69.3
|
%
|
|
74.2
|
%
|
|
-4.9 pts
|
|
||||
All Hotels Total / Average
|
|
328
|
|
|
51,080
|
|
|
77.2
|
%
|
|
78.1
|
%
|
|
-0.9 pts
|
|
|
72.3
|
%
|
|
74.2
|
%
|
|
-1.9 pts
|
|
||||
RevPAR
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Marriott (No. 1)
|
|
53
|
|
|
7,609
|
|
|
$
|
99.08
|
|
|
$
|
99.64
|
|
|
(0.6
|
%)
|
|
$
|
90.00
|
|
|
$
|
90.90
|
|
|
(1.0
|
%)
|
Marriott (No. 234)
|
|
68
|
|
|
9,120
|
|
|
105.88
|
|
|
108.34
|
|
|
(2.3
|
%)
|
|
99.75
|
|
|
101.47
|
|
|
(1.7
|
%)
|
||||
Marriott (No. 5)
|
|
1
|
|
|
356
|
|
|
254.50
|
|
|
266.98
|
|
|
(4.7
|
%)
|
|
264.49
|
|
|
268.75
|
|
|
(1.6
|
%)
|
||||
Subtotal / Average Marriott
|
|
122
|
|
|
17,085
|
|
|
105.95
|
|
|
107.81
|
|
|
(1.7
|
%)
|
|
98.89
|
|
|
100.30
|
|
|
(1.4
|
%)
|
||||
IHG
(1)
|
|
102
|
|
|
16,887
|
|
|
99.36
|
|
|
105.77
|
|
|
(6.1
|
%)
|
|
94.13
|
|
|
99.63
|
|
|
(5.5
|
%)
|
||||
Sonesta
(1) (2)
|
|
51
|
|
|
8,862
|
|
|
112.73
|
|
|
110.18
|
|
|
2.3
|
%
|
|
103.06
|
|
|
101.92
|
|
|
1.1
|
%
|
||||
Wyndham
|
|
22
|
|
|
3,583
|
|
|
73.67
|
|
|
75.23
|
|
|
(2.1
|
%)
|
|
64.13
|
|
|
67.95
|
|
|
(5.6
|
%)
|
||||
Hyatt
|
|
22
|
|
|
2,724
|
|
|
91.51
|
|
|
97.08
|
|
|
(5.7
|
%)
|
|
87.89
|
|
|
92.36
|
|
|
(4.8
|
%)
|
||||
Radisson
(1)
|
|
9
|
|
|
1,939
|
|
|
103.13
|
|
|
100.35
|
|
|
2.8
|
%
|
|
92.68
|
|
|
96.98
|
|
|
(4.4
|
%)
|
||||
All Hotels Total / Average
|
|
328
|
|
|
51,080
|
|
|
$
|
101.86
|
|
|
$
|
104.40
|
|
|
(2.4
|
%)
|
|
$
|
94.73
|
|
|
$
|
97.50
|
|
|
(2.8
|
%)
|
(1)
|
Operating data includes data for certain hotels for periods prior to when we acquired them.
|
(2)
|
Operating data includes data for one hotel prior to when it was managed by Sonesta.
|
|
|
|
For the Three Months Ended June 30,
|
|
For the Six Months Ended June 30,
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
Net income
|
|
$
|
8,782
|
|
|
$
|
97,289
|
|
|
$
|
234,569
|
|
|
$
|
177,495
|
|
|
Add (Less):
|
Depreciation and amortization expense
|
|
99,196
|
|
|
99,684
|
|
|
198,561
|
|
|
199,301
|
|
||||
|
Gain on sale of real estate
(1)
|
|
—
|
|
|
—
|
|
|
(159,535
|
)
|
|
—
|
|
||||
|
Unrealized (gains) and losses on equity securities, net
(2)
|
|
60,788
|
|
|
(20,940
|
)
|
|
39,811
|
|
|
(45,895
|
)
|
||||
FFO
|
|
168,766
|
|
|
176,033
|
|
|
313,406
|
|
|
330,901
|
|
|||||
Add:
|
Loss on early extinguishment of debt
(3)
|
|
—
|
|
|
160
|
|
|
—
|
|
|
160
|
|
||||
Normalized FFO
|
|
$
|
168,766
|
|
|
$
|
176,193
|
|
|
$
|
313,406
|
|
|
$
|
331,061
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average shares outstanding (basic)
|
|
164,284
|
|
|
164,205
|
|
|
164,281
|
|
|
164,202
|
|
||||
|
Weighted average shares outstanding (diluted)
(4)
|
|
164,326
|
|
|
164,243
|
|
|
164,324
|
|
|
164,226
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted per common share amounts:
|
|
|
|
|
|
|
|
|
|||||||||
|
Net income
|
|
$
|
0.05
|
|
|
$
|
0.59
|
|
|
$
|
1.43
|
|
|
$
|
1.08
|
|
|
FFO and Normalized FFO
|
|
$
|
1.03
|
|
|
$
|
1.07
|
|
|
$
|
1.91
|
|
|
$
|
2.02
|
|
|
Distributions declared per share
|
|
$
|
0.54
|
|
|
$
|
0.53
|
|
|
$
|
1.07
|
|
|
$
|
1.05
|
|
(1)
|
We recorded a
$159,535
gain on sale of real estate during the three months ended March 31, 2019 in connection with the sales of 20 travel centers.
|
(2)
|
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 the end of the period.
|
(3)
|
We recorded a loss of
$160
on early extinguishment of debt in the three months ended June 30, 2018 in connection with amending our revolving credit facility and term loan.
|
(4)
|
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
Share Impact
(2)
|
|||||||
At June 30, 2019
|
|
3.51
|
%
|
|
$
|
490,000
|
|
|
$
|
17,199
|
|
|
$
|
0.10
|
|
One percentage point increase
|
|
4.51
|
%
|
|
$
|
490,000
|
|
|
$
|
22,099
|
|
|
$
|
0.13
|
|
|
|
Impact of Increase in Interest Rates
|
|
|
|||||||||||
|
|
Interest Rate
Per Year
(1)
|
|
Outstanding
Debt
|
|
Total Interest
Expense Per Year
|
|
Annual Per
Share Impact
(2)
|
|||||||
At June 30, 2019
|
|
3.42
|
%
|
|
$
|
1,400,000
|
|
|
$
|
47,880
|
|
|
$
|
0.29
|
|
One percentage point increase
|
|
4.42
|
%
|
|
$
|
1,400,000
|
|
|
$
|
61,880
|
|
|
$
|
0.38
|
|
(1)
|
Weighted average based on the interest rates and the respective outstanding borrowings (assuming fully drawn) as of
June 30, 2019
.
|
(2)
|
Based on diluted weighted average common shares outstanding for the
six
months ended
June 30, 2019
.
|
•
|
Our hotel managers’ or tenants’ abilities to pay the contractual amounts of returns or rents due to us,
|
•
|
Our sales and acquisition of properties,
|
•
|
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 relationships with RMR Inc.,
|
•
|
Our qualification for taxation as a REIT,
|
•
|
Changes in federal or state tax laws, and
|
•
|
Other matters.
|
•
|
The impact of conditions 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, accounting rules, tax laws and similar matters,
|
•
|
Limitations imposed on our business and our ability to satisfy complex rules in order for us to maintain our qualification 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 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 increase or 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, 2019
, approximately
73%
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 guarantee 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, although the application of security deposits to cover payment shortfalls will result in us recording income, it will not result in us receiving additional cash. The balance of our annual minimum returns and rents as of
June 30, 2019
was not secured by guarantees or security deposits,
|
•
|
We have no guarantees or security deposits for the minimum returns due to us from our Marriott No. 1 or our Sonesta agreement and the guaranty from Wyndham has been depleted. Accordingly, we may receive amounts that are less than the contractual minimum returns stated in these agreements. If cash flows from our Wyndham managed hotels continue to be less than minimum returns, we cannot be sure 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 recently renovated certain hotels and are currently renovating additional hotels. We currently expect to fund approximately
$176.3 million
during the last
six
months of
2019
and
$27.5 million
in
2020
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 currently 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,
|
•
|
Although we currently do not expect to purchase from TA during
2019
any capital improvements it may make to the travel centers we lease to TA, that may change and we may purchase capital improvements from TA during
2019
at, above or below amounts we have historically purchased from TA,
|
•
|
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 or for various other reasons, TA may become unable to pay current and deferred rents due to us,
|
•
|
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 and we may fail to reach agreement with the sellers and complete the purchases of any properties we do want to acquire. In addition, any properties we may acquire may not generate returns or rents which exceed our operating and capital costs,
|
•
|
We believe that our portfolio agreements include diverse groups of properties. Our portfolio agreements may not increase the security of our cash flows or increase the likelihood our agreements will be renewed as we expect,
|
•
|
We expect that most of our acquisition efforts will focus on hotel and net leased service-oriented based properties; however, the focus of our acquisition efforts may include other types of 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, 2019
, we had
$15.7 million
of cash and cash equivalents,
$910.0 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. 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 certain circumstances. Accordingly, we cannot be sure that these agreements will remain in effect for continuing 20 year terms,
|
•
|
We believe that our relationships with our related parties, including RMR LLC, RMR Inc., TA, Sonesta 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,
|
•
|
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. We are in negotiations with Marriott regarding this hotel and other hotels managed by Marriott. If we and Marriott are unable to reach agreement, we will evaluate alternatives for the Kauai hotel, which may include rebranding or selling the hotel. These statements may imply that Marriott will not operate the Kauai hotel in the future or that we may have other alternatives for this hotel that may be more beneficial to maintaining Marriott as the operator of that hotel if we are unable to reach agreement with Marriott. At this time we cannot predict how our negotiations with Marriott will impact the future of the Kauai hotel or our disposition plans for certain hotels. For example, the Kauai 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. Our discussions with Marriott are ongoing and we cannot be certain we will achieve our goals or reach any agreements at all with Marriott and our disposition plans may change or we may sell more or less assets than we currently intend or none at all. There can be no assurance we can find buyers for our properties or sell them at attractive prices,
|
•
|
We currently expect to exit our relationship with Wyndham and to rebrand or sell our
22
hotels currently managed by Wyndham. There can be no assurance that rebranding any of these hotels will result in improved performance. In fact, rebranding hotels will result in short term disruption to operations. In addition, we cannot be sure we will be able to sell any of these hotels and any sales we may complete may be at prices less than we expect and less than net book value. We may incur losses in connection with any sales of these hotels or as a result of any plan to sell these hotels,
|
•
|
We have agreed to acquire a net lease portfolio from SMTA and expect the SMTA Transaction to close during the third quarter of 2019. The consummation of the SMTA Transaction is subject to customary conditions, including approval by the affirmative vote of a majority of the common shares of beneficial interest of SMTA entitled to vote on the matter. We cannot be sure that such conditions will be satisfied. Accordingly, the SMTA Transaction may not close during the third quarter of 2019 or at all, or the terms of the SMTA Transaction may change,
|
•
|
We expect to refinance the term loan we plan to obtain in connection with the SMTA Transaction with a combination of longer-term unsecured senior notes, borrowings under our existing credit facility, the sale of assets following closing of the SMTA Transaction or other sources. We may not be able to raise a sufficient amount of debt, or at attractive prices, or at all, or sell the assets we may seek to sell and at acceptable prices, and our leverage and interest costs may increase above amounts we currently expect, and
|
•
|
We estimate the debt prepayment penalties associated with the redemption of notes issued by certain subsidiaries of SMTA under their asset-backed securitization platform that we agreed to pay in order to extinguish the SMTA subsidiaries’ existing mortgage debt on the portfolio to be approximately
$78.0 million
. This is an estimate based on interest rate assumptions and timing of closing which could increase or decrease the prepayment penalty amount. The actual amount of these prepayment penalties may be more or less than this estimate.
|
•
|
we may be required to pay some or all of our costs relating to the SMTA Transaction, such as legal, accounting and financial advisory fees, whether or not the SMTA Transaction is completed, and
|
•
|
the time and attention committed by our management to matters relating to the SMTA Transaction could otherwise have been devoted to pursuing other opportunities.
|
•
|
increasing our vulnerability to general adverse economic and business conditions;
|
•
|
increasing the costs to us of incurring additional debt;
|
•
|
increasing our exposure to floating interest rates;
|
•
|
limiting our ability to compete with other companies that are not as highly leveraged, as we may be less capable of responding to adverse economic and industry conditions;
|
•
|
restricting us from making strategic acquisitions, developing properties or exploiting business opportunities;
|
•
|
restricting the way in which we conduct our business because of financial and operating covenants in the agreements governing our existing and future indebtedness;
|
•
|
exposing us to potential events of default (if not cured or waived) under covenants contained in debt instruments that could have a material adverse effect on our business, financial condition and operating results;
|
•
|
limiting our ability to react to changing market conditions in our industry;
|
•
|
limiting our ability to obtain additional financing to fund future acquisitions, working capital, capital expenditures and other general business requirements;
|
•
|
requiring the use of a substantial portion of our cash flow from operations for the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund working capital, acquisitions, capital expenditures, distributions to our shareholders and general operating requirements; and
|
•
|
limiting our flexibility in planning for, or reacting to, changes in our business.
|
•
|
Our ability to pay distributions may be adversely affected if any of the risks described herein or in our 2018 Annual Report, or other significant events, occur;
|
•
|
Our declaration and payment of distributions is subject to compliance with restrictions contained in our revolving credit facility and term loan agreement and may be subject to restrictions governing future debt that we may incur, including the Term Loan and the terms of any bonds issued to finance or refinance the SMTA Transaction;
|
•
|
We may desire to retain cash to obtain, maintain or improve our credit ratings, to reduce leverage or pursue other business opportunities; and
|
•
|
We have no obligation to pay distributions, and each distribution is made at the discretion of our Board of Trustees and the payment of a distribution depends on various factors that our Board of Trustees at the time deems relevant, including among other things, requirements to maintain our qualification for taxation as a REIT, limitations in our credit agreement and public debt covenants, the availability to us of debt and equity capital, our dividend yield and the dividend yield of other REITs, our expectation of our future capital requirements and operating performance and our expected needs for and availability of cash to pay our obligations.
|
|
|
|
|
|
|
|
|
|
|
|
Maximum
|
|
|
|
|
|
|
|
|
Total Number of
|
|
|
Approximate Dollar
|
|
|
|
|
|
|
|
|
Shares Purchased
|
|
|
Value of Shares that
|
|
|
Number of
|
|
|
|
|
|
as Part of Publicly
|
|
|
May Yet Be Purchased
|
|
|
Shares
|
|
Average Price
|
|
|
Announced Plans
|
|
|
Under the Plans or
|
|
Calendar Month
|
|
Purchased
(1)
|
|
Paid per Share
|
|
or Programs
|
|
Programs
|
|||
April 2019
|
|
1,642
|
|
$
|
26.64
|
|
$
|
—
|
|
$
|
—
|
Total
|
|
1,642
|
|
$
|
26.64
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
These common share withholdings and purchases were made to satisfy the tax withholding and payment obligations of a former officer of RMR LLC in connection with the vesting of awards of our common shares. We withheld and purchased these shares at their fair market value based upon the trading price of our common shares at the close of trading on Nasdaq on the purchase date.
|
Exhibit
Number
|
|
Description
|
|
2.1
|
|
|
|
3.1
|
|
|
|
3.2
|
|
|
|
3.3
|
|
|
|
4.1
|
|
|
|
4.2
|
|
|
|
4.3
|
|
|
|
4.4
|
|
|
|
4.5
|
|
|
|
4.6
|
|
|
|
4.7
|
|
|
|
4.8
|
|
|
Exhibit
Number
|
|
Description
|
|
4.9
|
|
|
|
4.10
|
|
|
|
4.11
|
|
|
|
4.12
|
|
|
|
4.13
|
|
|
|
4.14
|
|
|
|
10.1
|
|
|
|
10.2
|
|
|
|
31.1
|
|
|
|
31.2
|
|
|
|
32.1
|
|
|
|
101.INS
|
|
|
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
|
101.SCH
|
|
|
XBRL Taxonomy Extension Schema Document.
|
101.CAL
|
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
101.DEF
|
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
101.LAB
|
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
101.PRE
|
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
104
|
|
|
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
|
|
|
|
HOSPITALITY PROPERTIES TRUST
|
|
|
|
|
|
/s/ John G. Murray
|
|
John G. Murray
|
|
President and Chief Executive Officer
|
|
Dated: August 9, 2019
|
|
|
|
|
|
/s/ Brian E. Donley
|
|
Brian E. Donley
|
|
Chief Financial Officer and Treasurer
|
|
(Principal Financial and Accounting Officer)
|
|
Dated: August 9, 2019
|
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