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) |
Large accelerated filer ☒ | Accelerated filer ☐ | |
Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☐ |
Page | ||
September 30, | December 31, | |||||||
2016 | 2015 | |||||||
ASSETS | ||||||||
Real estate properties: | ||||||||
Land | $ | 1,550,174 | $ | 1,529,004 | ||||
Buildings, improvements and equipment | 7,047,370 | 6,732,768 | ||||||
Total real estate properties, gross | 8,597,544 | 8,261,772 | ||||||
Accumulated depreciation | (2,436,327 | ) | (2,217,135 | ) | ||||
Total real estate properties, net | 6,161,217 | 6,044,637 | ||||||
Cash and cash equivalents | 9,534 | 13,682 | ||||||
Restricted cash (FF&E reserve escrow) | 60,606 | 51,211 | ||||||
Due from related persons | 62,949 | 50,987 | ||||||
Other assets, net | 291,826 | 234,280 | ||||||
Total assets | $ | 6,586,132 | $ | 6,394,797 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Unsecured revolving credit facility | $ | 150,000 | $ | 465,000 | ||||
Unsecured term loan, net | 398,254 | 397,756 | ||||||
Senior unsecured notes, net | 2,564,476 | 2,403,439 | ||||||
Convertible senior unsecured notes | 8,478 | 8,478 | ||||||
Security deposits | 88,524 | 53,579 | ||||||
Accounts payable and other liabilities | 155,433 | 179,783 | ||||||
Due to related persons | 64,303 | 69,514 | ||||||
Dividends payable | 5,166 | 5,166 | ||||||
Total liabilities | 3,434,634 | 3,582,715 | ||||||
Commitments and contingencies | ||||||||
Shareholders’ equity: | ||||||||
Preferred shares of beneficial interest, no par value; 100,000,000 shares authorized: | ||||||||
Series D preferred shares; 7 1/8% cumulative redeemable; 11,600,000 shares issued and outstanding, aggregate liquidation preference of $290,000 | 280,107 | 280,107 | ||||||
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 164,269,211 and 151,547,288 shares issued and outstanding, respectively | 1,643 | 1,515 | ||||||
Additional paid in capital | 4,539,704 | 4,165,911 | ||||||
Cumulative net income | 3,041,581 | 2,881,657 | ||||||
Cumulative other comprehensive income (loss) | 35,904 | (15,523 | ) | |||||
Cumulative preferred distributions | (336,811 | ) | (321,313 | ) | ||||
Cumulative common distributions | (4,410,630 | ) | (4,180,272 | ) | ||||
Total shareholders’ equity | 3,151,498 | 2,812,082 | ||||||
Total liabilities and shareholders’ equity | $ | 6,586,132 | $ | 6,394,797 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Revenues: | ||||||||||||||||
Hotel operating revenues | $ | 464,173 | $ | 437,171 | $ | 1,332,586 | $ | 1,243,744 | ||||||||
Rental income | 78,278 | 73,747 | 231,830 | 207,561 | ||||||||||||
FF&E reserve income | 1,065 | 968 | 3,517 | 3,159 | ||||||||||||
Total revenues | 543,516 | 511,886 | 1,567,933 | 1,454,464 | ||||||||||||
Expenses: | ||||||||||||||||
Hotel operating expenses | 322,012 | 308,603 | 923,239 | 870,689 | ||||||||||||
Depreciation and amortization | 90,139 | 84,261 | 266,192 | 243,812 | ||||||||||||
General and administrative | 37,739 | 19,831 | 91,127 | 53,820 | ||||||||||||
Acquisition related costs | 156 | 851 | 885 | 1,986 | ||||||||||||
Total expenses | 450,046 | 413,546 | 1,281,443 | 1,170,307 | ||||||||||||
Operating income | 93,470 | 98,340 | 286,490 | 284,157 | ||||||||||||
Dividend income | 626 | — | 1,375 | — | ||||||||||||
Interest income | 89 | 11 | 227 | 32 | ||||||||||||
Interest expense (including amortization of debt issuance costs and debt discounts of $2,122, $1,458, $6,114 and $4,374, respectively) | (41,280 | ) | (36,628 | ) | (124,564 | ) | (107,918 | ) | ||||||||
Loss on early extinguishment of debt | (158 | ) | — | (228 | ) | — | ||||||||||
Income before income taxes, equity in earnings (losses) of an investee and gain on sale of real estate | 52,747 | 61,723 | 163,300 | 176,271 | ||||||||||||
Income tax expense | (948 | ) | (514 | ) | (3,483 | ) | (1,445 | ) | ||||||||
Equity in earnings (losses) of an investee | 13 | (24 | ) | 107 | 71 | |||||||||||
Income before gain on sale of real estate | 51,812 | 61,185 | 159,924 | 174,897 | ||||||||||||
Gain on sale of real estate | — | — | — | 11,015 | ||||||||||||
Net income | 51,812 | 61,185 | 159,924 | 185,912 | ||||||||||||
Other comprehensive income (loss): | ||||||||||||||||
Unrealized gain (loss) on investment securities | 14,032 | (15,458 | ) | 51,253 | (7,832 | ) | ||||||||||
Equity interest in investee’s unrealized gains (losses) | 80 | (72 | ) | 175 | (91 | ) | ||||||||||
Other comprehensive income (loss) | 14,112 | (15,530 | ) | 51,428 | (7,923 | ) | ||||||||||
Comprehensive income | $ | 65,924 | $ | 45,655 | $ | 211,352 | $ | 177,989 | ||||||||
Net income | $ | 51,812 | $ | 61,185 | $ | 159,924 | $ | 185,912 | ||||||||
Preferred distributions | (5,166 | ) | (5,166 | ) | (15,498 | ) | (15,498 | ) | ||||||||
Net income available for common shareholders | $ | 46,646 | $ | 56,019 | $ | 144,426 | $ | 170,414 | ||||||||
Weighted average common shares outstanding (basic) | 157,217 | 151,359 | 153,357 | 150,476 | ||||||||||||
Weighted average common shares outstanding (diluted) | 157,263 | 151,386 | 153,390 | 150,863 | ||||||||||||
Net income available for common shareholders per common share: | ||||||||||||||||
Basic and diluted | $ | 0.30 | $ | 0.37 | $ | 0.94 | $ | 1.13 |
For the Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 159,924 | $ | 185,912 | ||||
Adjustments to reconcile net income to cash provided by operating activities: | ||||||||
Depreciation and amortization | 266,192 | 243,812 | ||||||
Amortization of debt issuance costs and debt discounts as interest | 6,114 | 4,374 | ||||||
Straight line rental income | (10,377 | ) | (5,807 | ) | ||||
Security deposits received or replenished | 34,945 | 20,098 | ||||||
FF&E reserve income and deposits | (57,890 | ) | (51,840 | ) | ||||
Loss on early extinguishment of debt | 228 | — | ||||||
Equity in earnings of an investee | (107 | ) | (71 | ) | ||||
Gain on sale of real estate | — | (11,015 | ) | |||||
Other non-cash (income) expense, net | (2,298 | ) | 650 | |||||
Changes in assets and liabilities: | ||||||||
Due from related persons | (1,909 | ) | (1,629 | ) | ||||
Other assets | (8,284 | ) | (7,479 | ) | ||||
Accounts payable and other liabilities | (20,823 | ) | (19,838 | ) | ||||
Due to related persons | (5,637 | ) | 17,739 | |||||
Net cash provided by operating activities | 360,078 | 374,906 | ||||||
Cash flows from investing activities: | ||||||||
Real estate acquisitions and deposits | (206,745 | ) | (380,926 | ) | ||||
Real estate improvements | (122,239 | ) | (172,627 | ) | ||||
FF&E reserve escrow fundings | (2,265 | ) | (6,505 | ) | ||||
Investment in The RMR Group Inc. | — | (15,196 | ) | |||||
Net cash used in investing activities | (331,249 | ) | (575,254 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from issuance of common shares, net | 371,956 | — | ||||||
Proceeds from issuance of senior unsecured notes, net of discounts | 737,612 | — | ||||||
Repayment of senior unsecured notes | (575,000 | ) | — | |||||
Borrowings under unsecured revolving credit facility | 643,000 | 611,000 | ||||||
Repayments of unsecured revolving credit facility | (958,000 | ) | (175,000 | ) | ||||
Payment of debt issuance costs | (6,106 | ) | (5 | ) | ||||
Repurchase of common shares | (583 | ) | (419 | ) | ||||
Distributions to preferred shareholders | (15,498 | ) | (15,497 | ) | ||||
Distributions to common shareholders | (230,358 | ) | (224,190 | ) | ||||
Net cash (used in) provided by financing activities | (32,977 | ) | 195,889 | |||||
Decrease in cash and cash equivalents | (4,148 | ) | (4,459 | ) | ||||
Cash and cash equivalents at beginning of period | 13,682 | 11,834 | ||||||
Cash and cash equivalents at end of period | $ | 9,534 | $ | 7,375 | ||||
Supplemental cash flow information: | ||||||||
Cash paid for interest | $ | 137,007 | $ | 119,885 | ||||
Cash paid for income taxes | 2,464 | 2,289 | ||||||
Non-cash investing activities: | ||||||||
Hotel managers’ deposits in FF&E reserve | $ | 55,518 | $ | 49,774 | ||||
Hotel managers’ purchases with FF&E reserve | (48,388 | ) | (45,965 | ) | ||||
Investment in The RMR Group Inc. paid in common shares | — | 43,285 | ||||||
Real estate acquisitions | — | (45,042 | ) | |||||
Sales of real estate | — | 45,042 |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
(in thousands) | ||||||||||||
Weighted average common shares for basic earnings per share | 157,217 | 151,359 | 153,357 | 150,476 | ||||||||
Effect of dilutive securities: | ||||||||||||
Contingently issuable common shares | — | — | — | 360 | ||||||||
Unvested share awards | 46 | 27 | 33 | 27 | ||||||||
Weighted average common shares for diluted earnings per share | 157,263 | 151,386 | 153,390 | 150,863 |
Acquisition Date | Location | Purchase Price (1) | Land | Land Improvements | Building and Improvements | Furniture, Fixtures and Equipment | ||||||||||||||||
2/1/2016 | Various (2) (3) | $ | 12,000 | $ | 1,953 | $ | 654 | $ | 8,153 | $ | 1,240 | |||||||||||
3/16/2016 | Portland, OR (2) (4) | 114,000 | 5,657 | 3 | 100,535 | 7,805 | ||||||||||||||||
3/31/2016 | Hillsboro, TX (5) | 19,683 | 4,834 | 4,196 | 10,653 | — | ||||||||||||||||
6/22/2016 | Various (6) | 23,876 | 3,170 | 9,280 | 11,426 | — | ||||||||||||||||
6/30/2016 | Wilmington, IL (7) | 22,297 | 6,523 | 3,364 | 12,410 | — | ||||||||||||||||
9/14/2016 | Holbrook, AZ (8) | 325 | 325 | — | — | — | ||||||||||||||||
9/30/2016 | Caryville, TN (9) | 16,557 | 2,068 | 6,082 | 8,407 | — | ||||||||||||||||
$ | 208,738 | $ | 24,530 | $ | 23,579 | $ | 151,584 | $ | 9,045 |
(1) | Excludes acquisition related costs. |
(2) | We accounted for these transactions as business combinations. The pro forma impact of including the results of operations of these acquisitions from the beginning of the year is not material to our condensed consolidated financial statements. |
(3) | On February 1, 2016, we acquired two extended stay hotels with 262 suites located in Cleveland and Westlake, OH for an aggregate purchase price of $12,000. We converted these hotels to the Sonesta ES Suites® brand and entered management agreements for these hotels with Sonesta International Hotels Corporation, or Sonesta. See Notes 10 and 11 for further information regarding our Sonesta agreements. |
(4) | On March 16, 2016, we acquired the Kimpton Hotel Monaco, a full service lifestyle hotel with 221 rooms located in Portland, OR, for a purchase price of $114,000. We added this hotel to our agreement with InterContinental Hotels Group, plc, or InterContinental. See Note 11 for further information regarding our InterContinental agreement. |
(5) | On March 31, 2016, we acquired a newly developed travel center located in Hillsboro, TX for $19,683. We added this TA® branded travel center to our TA No. 4 lease. See Notes 10 and 11 for further information regarding this transaction and our TA leases. We accounted for this transaction as an asset acquisition. |
(6) | On June 22, 2016, we acquired two travel centers located in Remington and Brazil, IN for an aggregate purchase price of $23,876. We added these Petro Stopping Centers® branded travel centers to our TA No. 1 and No. 3 leases, respectively. See Notes 10 and 11 for further information regarding these transactions and our TA leases. We accounted for these transactions as asset acquisitions. |
(7) | On June 30, 2016, we acquired a newly developed travel center located in Wilmington, IL for $22,297. We added this Petro Stopping Centers® branded travel center to our TA No. 2 lease. See Notes 10 and 11 for further information regarding this transaction and our TA leases. We accounted for this transaction as an asset acquisition. |
(8) | On September 14, 2016, we acquired land adjacent to a travel center that we own in Holbrook, AZ for $325. We added this property to our TA No. 4 lease. See Notes 10 and 11 for further information regarding this transaction and our TA leases. We accounted for this transaction as an asset acquisition. We capitalized acquisition related costs of $7 related to this transaction. |
(9) | On September 30, 2016, we acquired a newly developed travel center located in Caryville, TN for $16,557. We added this TA® branded travel center to our TA No. 2 lease. See Notes 10 and 11 for further information regarding this transaction and our TA leases. We accounted for this transaction as an asset acquisition. |
For the Three Months Ended September 30, 2016 | ||||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Hotel operating revenues | $ | 464,173 | $ | — | $ | — | $ | 464,173 | ||||||||
Rental income | 8,412 | 69,866 | — | 78,278 | ||||||||||||
FF&E reserve income | 1,065 | — | — | 1,065 | ||||||||||||
Total revenues | 473,650 | 69,866 | — | 543,516 | ||||||||||||
Expenses: | ||||||||||||||||
Hotel operating expenses | 322,012 | — | — | 322,012 | ||||||||||||
Depreciation and amortization | 56,397 | 33,742 | — | 90,139 | ||||||||||||
General and administrative | — | — | 37,739 | 37,739 | ||||||||||||
Acquisition related costs | 156 | — | — | 156 | ||||||||||||
Total expenses | 378,565 | 33,742 | 37,739 | 450,046 | ||||||||||||
Operating income (loss) | 95,085 | 36,124 | (37,739 | ) | 93,470 | |||||||||||
Dividend income | — | — | 626 | 626 | ||||||||||||
Interest income | — | — | 89 | 89 | ||||||||||||
Interest expense | — | — | (41,280 | ) | (41,280 | ) | ||||||||||
Loss on early extinguishment of debt | — | — | (158 | ) | (158 | ) | ||||||||||
Income (loss) before income taxes and equity in earnings of an investee | 95,085 | 36,124 | (78,462 | ) | 52,747 | |||||||||||
Income tax expense | — | — | (948 | ) | (948 | ) | ||||||||||
Equity in earnings of an investee | — | — | 13 | 13 | ||||||||||||
Net income (loss) | $ | 95,085 | $ | 36,124 | $ | (79,397 | ) | $ | 51,812 | |||||||
For the Nine Months Ended September 30, 2016 | ||||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Hotel operating revenues | $ | 1,332,586 | $ | — | $ | — | $ | 1,332,586 | ||||||||
Rental income | 24,880 | 206,950 | — | 231,830 | ||||||||||||
FF&E reserve income | 3,517 | — | — | 3,517 | ||||||||||||
Total revenues | 1,360,983 | 206,950 | — | 1,567,933 | ||||||||||||
Expenses: | ||||||||||||||||
Hotel operating expenses | 923,239 | — | — | 923,239 | ||||||||||||
Depreciation and amortization | 167,485 | 98,707 | — | 266,192 | ||||||||||||
General and administrative | — | — | 91,127 | 91,127 | ||||||||||||
Acquisition related costs | 885 | — | — | 885 | ||||||||||||
Total expenses | 1,091,609 | 98,707 | 91,127 | 1,281,443 | ||||||||||||
Operating income (loss) | 269,374 | 108,243 | (91,127 | ) | 286,490 | |||||||||||
Dividend income | — | — | 1,375 | 1,375 | ||||||||||||
Interest income | — | — | 227 | 227 | ||||||||||||
Interest expense | — | — | (124,564 | ) | (124,564 | ) | ||||||||||
Loss on early extinguishment of debt | — | — | (228 | ) | (228 | ) | ||||||||||
Income (loss) before income taxes and equity in earnings of an investee | 269,374 | 108,243 | (214,317 | ) | 163,300 | |||||||||||
Income tax expense | — | — | (3,483 | ) | (3,483 | ) | ||||||||||
Equity in earnings of an investee | — | — | 107 | 107 | ||||||||||||
Net income (loss) | $ | 269,374 | $ | 108,243 | $ | (217,693 | ) | $ | 159,924 | |||||||
As of September 30, 2016 | ||||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | |||||||||||||
Total assets | $ | 3,965,330 | $ | 2,504,865 | $ | 115,937 | $ | 6,586,132 |
For the Three Months Ended September 30, 2015 | ||||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Hotel operating revenues | $ | 437,171 | $ | — | $ | — | $ | 437,171 | ||||||||
Rental income | 8,199 | 65,548 | — | 73,747 | ||||||||||||
FF&E reserve income | 968 | — | — | 968 | ||||||||||||
Total revenues | 446,338 | 65,548 | — | 511,886 | ||||||||||||
Expenses: | ||||||||||||||||
Hotel operating expenses | 308,603 | — | — | 308,603 | ||||||||||||
Depreciation and amortization | 54,100 | 30,161 | — | 84,261 | ||||||||||||
General and administrative | — | — | 19,831 | 19,831 | ||||||||||||
Acquisition related costs | 851 | — | — | 851 | ||||||||||||
Total expenses | 363,554 | 30,161 | 19,831 | 413,546 | ||||||||||||
Operating income (loss) | 82,784 | 35,387 | (19,831 | ) | 98,340 | |||||||||||
Interest income | — | — | 11 | 11 | ||||||||||||
Interest expense | — | — | (36,628 | ) | (36,628 | ) | ||||||||||
Income (loss) before income taxes and equity in losses of an investee | 82,784 | 35,387 | (56,448 | ) | 61,723 | |||||||||||
Income tax expense | — | — | (514 | ) | (514 | ) | ||||||||||
Equity in losses of an investee | — | — | (24 | ) | (24 | ) | ||||||||||
Net income (loss) | $ | 82,784 | $ | 35,387 | $ | (56,986 | ) | $ | 61,185 | |||||||
For the Nine Months Ended September 30, 2015 | ||||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | |||||||||||||
Revenues: | ||||||||||||||||
Hotel operating revenues | $ | 1,243,744 | $ | — | $ | — | $ | 1,243,744 | ||||||||
Rental income | 24,339 | 183,222 | — | 207,561 | ||||||||||||
FF&E reserve income | 3,159 | — | — | 3,159 | ||||||||||||
Total revenues | 1,271,242 | 183,222 | — | 1,454,464 | ||||||||||||
Expenses: | ||||||||||||||||
Hotel operating expenses | 870,689 | — | — | 870,689 | ||||||||||||
Depreciation and amortization | 159,421 | 84,391 | — | 243,812 | ||||||||||||
General and administrative | — | — | 53,820 | 53,820 | ||||||||||||
Acquisition related costs | 1,986 | — | — | 1,986 | ||||||||||||
Total expenses | 1,032,096 | 84,391 | 53,820 | 1,170,307 | ||||||||||||
Operating income (loss) | 239,146 | 98,831 | (53,820 | ) | 284,157 | |||||||||||
Interest income | — | — | 32 | 32 | ||||||||||||
Interest expense | — | — | (107,918 | ) | (107,918 | ) | ||||||||||
Income (loss) before income taxes, equity in earnings of an investee and gain on sale of real estate | 239,146 | 98,831 | (161,706 | ) | 176,271 | |||||||||||
Income tax expense | — | — | (1,445 | ) | (1,445 | ) | ||||||||||
Equity in earnings of an investee | — | — | 71 | 71 | ||||||||||||
Income (loss) before gain on sale of real estate | 239,146 | 98,831 | (163,080 | ) | 174,897 | |||||||||||
Gain on sale of real estate | — | 11,015 | — | 11,015 | ||||||||||||
Net income (loss) | $ | 239,146 | $ | 109,846 | $ | (163,080 | ) | $ | 185,912 | |||||||
As of December 31, 2015 | ||||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | |||||||||||||
Total assets | $ | 3,892,316 | $ | 2,440,393 | $ | 62,088 | $ | 6,394,797 |
• | On March 31, 2016, we purchased one of the development properties from TA for $19,683 and we and TA amended our TA No. 4 agreement to add this property and our annual minimum rent under our TA No. 4 agreement increased by $1,673. |
• | On June 22, 2016, we purchased two existing travel centers then owned by TA for an aggregate of $23,876 and we and TA amended our TA No. 1 agreement and TA No. 3 agreement to add these properties, respectively, and our annual minimum rent under our TA No. 1 agreement and TA No. 3 agreement increased by $1,121 and $908, respectively. We and TA also amended our TA No. 5 agreement to extend its term to 2032. |
• | On June 30, 2016, we purchased one of the development properties from TA for $22,297 and we and TA amended our TA No. 2 agreement to add this property and our annual minimum rent under our TA No. 2 agreement increased by $1,895. |
• | On September 30, 2016, we purchased one of the two remaining development properties from TA for $16,557 and we and TA amended our TA No. 2 agreement to add this property and our annual minimum rent under our TA No. 2 agreement increased by $1,407. |
• | We currently expect to purchase the one remaining development property from TA in the first quarter of 2017 at a purchase price equal to its development cost not to exceed $29,000. |
Number of Travel Centers | Initial Term End (1) | Minimum Annual Rent as of September 30, 2016 | Deferred Rent (2) (3) (4) | |||||||||
TA No. 1 Lease | 40 | December 31, 2029 | $ | 50,885 | $ | 27,421 | ||||||
TA No. 2 Lease | 40 | December 31, 2028 | 51,696 | 29,107 | ||||||||
TA No. 3 Lease | 39 | December 31, 2026 | 52,262 | 29,324 | ||||||||
TA No. 4 Lease | 39 | December 31, 2030 | 49,629 | 21,233 | ||||||||
TA No. 5 Lease | 40 | June 30, 2032 | 66,685 | 42,915 | ||||||||
198 | $ | 271,157 | $ | 150,000 |
(1) | TA has two renewal options of 15 years each under each of our TA leases. |
(2) | Deferred rent for the TA Nos. 1, 2, 3 and 4 leases is due and payable on the respective initial term end dates noted above. |
(3) | Deferred rent for the TA No. 5 lease is due and payable on June 30, 2024. |
(4) | Deferred rent is subject to acceleration at our option upon an uncured default by, or a change in control of, TA. |
Fair Value at September 30, 2016 Using | ||||||||||||||||
Quoted Prices in | ||||||||||||||||
Active Markets for | Significant Other | Significant | ||||||||||||||
Carrying Value at | Identical Assets | Observable Inputs | Unobservable Inputs | |||||||||||||
Description | September 30, 2016 | (Level 1) | (Level 2) | (Level 3) | ||||||||||||
Investment in TA (1) | $ | 24,487 | $ | 24,487 | $ | — | $ | — | ||||||||
Investment in RMR Inc.(2) | $ | 94,993 | $ | 94,993 | $ | — | $ | — |
(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 September 30, 2016. The unrealized gain of $7,080 for these shares as of September 30, 2016 is included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets. |
(2) | Our 2,503,777 shares of class A common stock of RMR Inc., which are included in other assets in our 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 September 30, 2016. The unrealized gain of $28,619 for these shares as of September 30, 2016 is included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets. |
September 30, 2016 | December 31, 2015 | |||||||||||||||
Carrying | Fair | Carrying | Fair | |||||||||||||
Value (1) | Value | Value (1) | Value | |||||||||||||
Senior Unsecured Notes, due 2016 at 6.30% (2) | — | — | $ | 274,869 | $ | 275,813 | ||||||||||
Senior Unsecured Notes, due 2017 at 5.625% (3) | — | — | 299,576 | 311,181 | ||||||||||||
Senior Unsecured Notes, due 2018 at 6.70% | 349,246 | 363,426 | 348,821 | 370,438 | ||||||||||||
Senior Unsecured Notes, due 2021 at 4.25% (4) | 393,697 | 425,874 | — | — | ||||||||||||
Senior Unsecured Notes, due 2022 at 5.00% | 492,884 | 544,650 | 491,974 | 515,760 | ||||||||||||
Senior Unsecured Notes, due 2023 at 4.50% | 298,062 | 311,609 | 297,845 | 295,709 | ||||||||||||
Senior Unsecured Notes, due 2024 at 4.65% | 346,978 | 361,205 | 346,674 | 346,010 | ||||||||||||
Senior Unsecured Notes, due 2025 at 4.50% | 344,196 | 356,846 | 343,680 | 338,426 | ||||||||||||
Senior Unsecured Notes, due 2026 at 5.25% (4) | 339,415 | 372,173 | — | — | ||||||||||||
Convertible Unsecured Senior Notes, due 2027 at 3.8% | 8,478 | 8,553 | 8,478 | 8,697 | ||||||||||||
Total financial liabilities | $ | 2,572,956 | $ | 2,744,336 | $ | 2,411,917 | $ | 2,462,034 |
(1) | Carrying value includes unamortized discounts and certain issuance costs. |
(2) | These senior notes were redeemed at par plus accrued interest in March 2016. |
(3) | These senior notes were redeemed at par plus accrued interest in September 2016. |
(4) | These senior notes were issued in February 2016. |
For the Three Months Ended September 30, | |||||||||||||||
Increase | % Increase | ||||||||||||||
2016 | 2015 | (Decrease) | (Decrease) | ||||||||||||
Revenues: | |||||||||||||||
Hotel operating revenues | $ | 464,173 | $ | 437,171 | $ | 27,002 | 6.2 | % | |||||||
Rental income - hotels | 8,412 | 8,199 | 213 | 2.6 | % | ||||||||||
Rental income - travel centers | 69,866 | 65,548 | 4,318 | 6.6 | % | ||||||||||
Total rental income | 78,278 | 73,747 | 4,531 | 6.1 | % | ||||||||||
FF&E reserve income | 1,065 | 968 | 97 | 10.0 | % | ||||||||||
Expenses: | |||||||||||||||
Hotel operating expenses | 322,012 | 308,603 | 13,409 | 4.3 | % | ||||||||||
Depreciation and amortization - hotels | 56,397 | 54,100 | 2,297 | 4.2 | % | ||||||||||
Depreciation and amortization - travel centers | 33,742 | 30,161 | 3,581 | 11.9 | % | ||||||||||
Total depreciation and amortization | 90,139 | 84,261 | 5,878 | 7.0 | % | ||||||||||
General and administrative | 37,739 | 19,831 | 17,908 | 90.3 | % | ||||||||||
Acquisition related costs | 156 | 851 | (695 | ) | (81.7 | )% | |||||||||
Operating income | 93,470 | 98,340 | (4,870 | ) | (5.0 | )% | |||||||||
Dividend income | 626 | — | 626 | n/m | |||||||||||
Interest income | 89 | 11 | 78 | 709.1 | % | ||||||||||
Interest expense | (41,280 | ) | (36,628 | ) | (4,652 | ) | 12.7 | % | |||||||
Loss on early extinguishment of debt | (158 | ) | — | (158 | ) | n/m | |||||||||
Income before income taxes and equity earnings (losses) of an investee | 52,747 | 61,723 | (8,976 | ) | (14.5 | )% | |||||||||
Income tax expense | (948 | ) | (514 | ) | (434 | ) | 84.4 | % | |||||||
Equity in earnings (losses) of an investee | 13 | (24 | ) | 37 | n/m | ||||||||||
Net income | 51,812 | 61,185 | (9,373 | ) | (15.3 | )% | |||||||||
Preferred distributions | (5,166 | ) | (5,166 | ) | — | — | % | ||||||||
Net income available for common shareholders | $ | 46,646 | $ | 56,019 | $ | (9,373 | ) | (16.7 | )% | ||||||
— | |||||||||||||||
Weighted average shares outstanding (basic) | 157,217 | 151,359 | 5,858 | 3.9 | % | ||||||||||
Weighted average shares outstanding (diluted) | 157,263 | 151,386 | 5,877 | 3.9 | % | ||||||||||
Net income available for common shareholders per common share (basic and diluted) | $ | 0.30 | $ | 0.37 | $ | (0.07 | ) | (18.9 | )% |
For the Nine Months Ended September 30, | |||||||||||||||
Increase | % Increase | ||||||||||||||
2016 | 2015 | (Decrease) | (Decrease) | ||||||||||||
Revenues: | |||||||||||||||
Hotel operating revenues | $ | 1,332,586 | $ | 1,243,744 | $ | 88,842 | 7.1 | % | |||||||
Rental income - hotels | 24,880 | 24,339 | 541 | 2.2 | % | ||||||||||
Rental income - travel centers | 206,950 | 183,222 | 23,728 | 13.0 | % | ||||||||||
Total rental income | 231,830 | 207,561 | 24,269 | 11.7 | % | ||||||||||
FF&E reserve income | 3,517 | 3,159 | 358 | 11.3 | % | ||||||||||
Expenses: | |||||||||||||||
Hotel operating expenses | 923,239 | 870,689 | 52,550 | 6.0 | % | ||||||||||
Depreciation and amortization - hotels | 167,485 | 159,421 | 8,064 | 5.1 | % | ||||||||||
Depreciation and amortization - travel centers | 98,707 | 84,391 | 14,316 | 17.0 | % | ||||||||||
Total depreciation and amortization | 266,192 | 243,812 | 22,380 | 9.2 | % | ||||||||||
General and administrative | 91,127 | 53,820 | 37,307 | 69.3 | % | ||||||||||
Acquisition related costs | 885 | 1,986 | (1,101 | ) | (55.4 | )% | |||||||||
Operating income | 286,490 | 284,157 | 2,333 | 0.8 | % | ||||||||||
Dividend income | 1,375 | — | 1,375 | n/m | |||||||||||
Interest income | 227 | 32 | 195 | 609.4 | % | ||||||||||
Interest expense | (124,564 | ) | (107,918 | ) | (16,646 | ) | 15.4 | % | |||||||
Loss on early extinguishment of debt | (228 | ) | — | (228 | ) | n/m | |||||||||
Income before income taxes, equity earnings of an investee and gain on sale of real estate | 163,300 | 176,271 | (12,971 | ) | (7.4 | )% | |||||||||
Income tax expense | (3,483 | ) | (1,445 | ) | (2,038 | ) | 141.0 | % | |||||||
Equity in earnings of an investee | 107 | 71 | 36 | 50.7 | % | ||||||||||
Income before gain on sale of real estate | 159,924 | 174,897 | (14,973 | ) | (8.6 | )% | |||||||||
Gain on sale of real estate | — | 11,015 | (11,015 | ) | n/m | ||||||||||
Net income | 159,924 | 185,912 | (25,988 | ) | (14.0 | )% | |||||||||
Preferred distributions | (15,498 | ) | (15,498 | ) | — | — | % | ||||||||
Net income available for common shareholders | $ | 144,426 | $ | 170,414 | $ | (25,988 | ) | (15.2 | )% | ||||||
Weighted average shares outstanding (basic) | 153,357 | 150,476 | 2,881 | 1.9 | % | ||||||||||
Weighted average shares outstanding (diluted) | 153,390 | 150,863 | 2,527 | 1.7 | % | ||||||||||
Net income available for common shareholders per common share (basic and diluted) | $ | 0.94 | $ | 1.13 | $ | (0.19 | ) | (16.8 | )% |
• | During the nine months ended September 30, 2016, we funded $2,265 for capital improvements to hotels included in our Marriott No. 1 agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund $750 for capital improvements under this agreement during the 2016 fourth quarter using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the annual minimum returns payable to us increase. |
• | We did not make any fundings for capital improvements to hotels under our Marriott No. 234 agreement during the nine months ended September 30, 2016. We currently expect to fund $9,000 for capital improvements under this agreement during the 2016 fourth quarter using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the annual minimum returns payable to us increase. |
• | We did not make any fundings for capital improvements to hotels under our InterContinental agreement during the nine months ended September 30, 2016. We currently expect to fund $17,500 for capital improvements under this agreement during the 2016 fourth quarter using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the annual minimum returns payable to us increase. |
• | Our Sonesta agreement does not require FF&E escrow deposits. Under our Sonesta agreement, we are required to fund capital expenditures made at our hotels. During the nine months ended September 30, 2016, we funded $44,017 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 $23,860 for capital improvements under this agreement during the 2016 fourth quarter using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the annual minimum returns payable to us increase to the extent amounts funded exceed threshold amounts, as defined in our Sonesta agreement. |
• | Our Wyndham agreement requires FF&E escrow deposits only if there are excess cash flows after payment of our minimum returns. No FF&E escrow deposits were required during the nine months ended September 30, 2016. During the nine months ended September 30, 2016, we funded $2,439 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 $2,000 for capital improvements under this agreement during the 2016 fourth quarter using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the minimum returns payable to us increase. |
Rent / Return Coverage (3) | ||||||||||||||||||||||
Number of | Annual | Three Months Ended | Twelve Months Ended | |||||||||||||||||||
Operating Agreement | Number of | Rooms / | Minimum | September 30, | September 30, | |||||||||||||||||
Reference Name | Properties | Suites | Investment (1) | Return/Rent (2) | 2016 | 2015 | 2016 | 2015 | ||||||||||||||
Marriott (No. 1) (4) | 53 | 7,610 | $ | 690,765 | $ | 68,583 | 1.59x | 1.56x | 1.39x | 1.29x | ||||||||||||
Marriott (No. 234) (5) | 68 | 9,120 | 1,000,439 | 106,243 | 1.23x | 1.20x | 1.13x | 1.07x | ||||||||||||||
Marriott (No. 5) (6) | 1 | 356 | 90,078 | 10,116 | 0.89x | 0.45x | 0.73x | 0.51x | ||||||||||||||
Subtotal / Average Marriott | 122 | 17,086 | 1,781,282 | 184,942 | 1.34x | 1.29x | 1.21x | 1.12x | ||||||||||||||
InterContinental (7) | 94 | 14,403 | 1,677,641 | 160,338 | 1.35x | 1.26x | 1.22x | 1.18x | ||||||||||||||
Sonesta (8) | 33 | 6,093 | 1,140,710 | 85,964 | 0.88x | 0.69x | 0.73x | 0.70x | ||||||||||||||
Wyndham (9) | 22 | 3,579 | 384,354 | 28,171 | 1.17x | 1.09x | 0.94x | 0.87x | ||||||||||||||
Hyatt (10) | 22 | 2,724 | 301,942 | 22,037 | 1.12x | 1.17x | 1.17x | 1.04x | ||||||||||||||
Carlson (11) | 11 | 2,090 | 209,895 | 12,920 | 1.72x | 1.55x | 1.27x | 1.30x | ||||||||||||||
Morgans (12) | 1 | 372 | 120,000 | 7,595 | 1.13x | 1.63x | 1.07x | 1.09x | ||||||||||||||
Subtotal / Average Hotels | 305 | 46,347 | 5,615,824 | 501,967 | 1.25x | 1.18x | 1.11x | 1.06x | ||||||||||||||
TA (No. 1) (13) | 40 | N/A | 654,945 | 50,885 | 1.88x | 1.78x | 1.68x | 1.85x | ||||||||||||||
TA (No. 2) (14) | 40 | N/A | 657,701 | 51,696 | 1.73x | 1.78x | 1.53x | 1.94x | ||||||||||||||
TA (No. 3) (15) | 39 | N/A | 615,505 | 52,262 | 1.83x | 1.72x | 1.58x | 1.97x | ||||||||||||||
TA (No. 4) (16) | 39 | N/A | 562,563 | 49,629 | 1.78x | 1.76x | 1.56x | 1.97x | ||||||||||||||
TA (No. 5) (17) | 40 | N/A | 852,253 | 66,685 | 1.69x | 1.68x | 1.59x | 1.87x | ||||||||||||||
Subtotal / Average TA | 198 | N/A | 3,342,967 | 271,157 | 1.78x | 1.74x | 1.59x | 1.91x | ||||||||||||||
Total / Average | 503 | 46,347 | $ | 8,958,791 | $ | 773,124 | 1.44x | 1.37x | 1.28x | 1.34x |
(1) | Represents the historical cost of our properties plus capital improvements funded by us less impairment writedowns, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations. |
(2) | Each of our management agreements or leases provides for payment to us of an annual minimum return or minimum rent, respectively. Certain of these minimum payment amounts are secured by full or limited guarantees or security deposits as more fully described below. In addition, certain of our hotel management agreements provide for payment to us of additional amounts to the extent of available cash flows as defined in the management agreement. Payments of these additional amounts are not guaranteed or secured by deposits. Annualized minimum rent amounts represent cash rent amounts due to us and exclude adjustments necessary to record rent on a straight line basis. |
(3) | We define coverage as combined total property level revenues minus all property level expenses and FF&E reserve escrows which are not subordinated to minimum returns and minimum rent payments due to us (which data is provided to us by our managers or tenants), divided by the |
(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. 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. Marriott has four renewal options for 15 years each. This lease is guaranteed by Marriott and provides for increases in the annual minimum rent payable to us based on changes in the consumer price index. |
(7) | We lease 93 InterContinental branded hotels (19 Staybridge Suites®, 61 Candlewood Suites®, two InterContinental®, seven Crowne Plaza®, three Holiday Inn® and one Kimpton® Hotels & Restaurants) in 28 states in the U.S. and Ontario, Canada to one of our TRSs. These 93 hotels are managed by subsidiaries of InterContinental under a combination management agreement. We lease one additional InterContinental® branded hotel in Puerto Rico to a subsidiary of InterContinental. The annual minimum return amount presented in the table on page 32 includes $7,899 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 33 Sonesta branded hotels (four Royal Sonesta Hotels®, four Sonesta Hotels & Resorts® and 25 Sonesta ES Suites® hotels) in 18 states to one of our TRSs. The hotels are managed by Sonesta under a combination management agreement which expires in 2037; Sonesta has two renewal options for 15 years each for all, but not less than all, of the hotels. |
(9) | We lease our 22 Wyndham branded hotels (six Wyndham Hotels and Resorts® and 16 Hawthorn Suites® hotels) in 14 states to one of our TRSs. The hotels are managed by a subsidiary of Wyndham under a combination management agreement which expires in 2038; Wyndham has two renewal options for 15 years each for all, but not less than all, of the hotels. We also lease 48 vacation units in one of the hotels to Wyndham Vacation, under a lease that expires in 2037; Wyndham Vacation has two renewal options for 15 years each for all, but not less than all, of the vacation units. The lease is guaranteed by Wyndham and provides for rent increases of 3% per annum. The annual minimum return amount presented in the table on page 32 includes $1,366 of minimum rent related to the Wyndham Vacation lease. |
(10) | We lease our 22 Hyatt Place® branded hotels in 14 states to one of our TRSs. The hotels are managed by a subsidiary of Hyatt under a combination management agreement that expires in 2030; Hyatt has two renewal options for 15 years each for all, but not less than all, of the hotels. |
(11) | We lease our 11 Carlson branded hotels (five Radisson® Hotels & Resorts, one Park Plaza® Hotels & Resorts and five Country Inns & Suites® hotels) in seven states to one of our TRSs. The hotels are managed by a subsidiary of Carlson under a combination management agreement that expires in 2030; Carlson has two renewal options for 15 years each for all, but not less than all, of the hotels. |
(12) | We lease the Clift Hotel, a full service hotel in San Francisco, CA, to a subsidiary of Morgans under a lease agreement that expires in 2103. The lease currently provides for annual rent to us of $7,595. On October 14, 2019, and on each fifth anniversary thereafter during the lease term, the rent due to us will be increased based on changes in the consumer price index with minimum increases of 10% and maximum increases of 20%. Although the contractual lease terms would qualify this lease as a direct financing lease under GAAP, we account for this lease as an operating lease due to uncertainty regarding the collection of future rent increases and we recognize rental income from this lease on a cash basis, in accordance with GAAP. |
(13) | We lease 40 travel centers (36 TravelCenters of America® branded travel centers and four Petro Stopping Centers® branded travel centers) in 29 states to a subsidiary of TA under a lease that expires in 2029; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, beginning in 2016, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2015 non-fuel revenues). TA’s previously deferred rent of $27,421 is due at the expiration of the initial term of this lease. This lease is guaranteed by TA. |
(14) | We lease 40 travel centers (38 TravelCenters of America® branded travel centers and two Petro Stopping Centers® branded travel centers) in 27 states to a subsidiary of TA under a lease that expires in 2028; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, beginning in 2016, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2015 non-fuel revenues). TA’s previously deferred rent of $29,107 is due at the expiration of the initial term of this lease. This lease is guaranteed by TA. |
(15) | We lease 39 travel centers (38 TravelCenters of America® branded travel centers and one Petro Stopping Centers® branded travel center) in 29 states to a subsidiary of TA under a lease that expires in 2026; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, beginning in 2016, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2015 non-fuel revenues). TA’s previously deferred rent of $29,324 is due at the expiration of the initial term of this lease. This lease is guaranteed by TA. |
(16) | We lease 39 travel centers (37 TravelCenters of America® branded travel centers and two Petro Stopping Centers® branded travel centers) in 28 states to a subsidiary of TA under a lease that expires in 2030; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, beginning in 2016, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year 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. |
(17) | We lease 40 Petro Stopping Centers® branded travel centers in 25 states to a subsidiary of TA under a lease that expires in 2032; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers. In addition to the payment of our minimum rent, this lease provides for payment to us of percentage rent based on increases in total non-fuel revenues over base year levels (3% of non-fuel revenues above 2012 non-fuel revenues). We have waived an aggregate of $2,500 of percentage rent as of September 30, 2016, the full amount we previously agreed to waive under the TA No. 5 lease. TA’s previously deferred rent of $42,915 is due on June 30, 2024. This lease is guaranteed by TA. |
No. of | No. of Rooms / | Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
Hotels | Suites | 2016 | 2015 | Change | 2016 | 2015 | Change | |||||||||||||||||||||
ADR | ||||||||||||||||||||||||||||
Marriott (No. 1) | 53 | 7,610 | $ | 134.12 | $ | 130.38 | 2.9 | % | $ | 133.42 | $ | 129.15 | 3.3 | % | ||||||||||||||
Marriott (No. 234) | 68 | 9,120 | 132.04 | 128.66 | 2.6 | % | 130.64 | 127.52 | 2.4 | % | ||||||||||||||||||
Marriott (No. 5) | 1 | 356 | 254.86 | 243.56 | 4.6 | % | 253.20 | 239.67 | 5.6 | % | ||||||||||||||||||
Subtotal / Average Marriott | 122 | 17,086 | 135.98 | 132.00 | 3.0 | % | 134.82 | 130.91 | 3.0 | % | ||||||||||||||||||
InterContinental (1) | 94 | 14,403 | 116.44 | 112.68 | 3.3 | % | 116.22 | 111.73 | 4.0 | % | ||||||||||||||||||
Sonesta (1) | 33 | 6,093 | 145.33 | 139.61 | 4.1 | % | 145.18 | 140.87 | 3.1 | % | ||||||||||||||||||
Wyndham | 22 | 3,579 | 102.00 | 100.04 | 2.0 | % | 99.18 | 97.78 | 1.4 | % | ||||||||||||||||||
Hyatt | 22 | 2,724 | 108.31 | 105.43 | 2.7 | % | 109.73 | 107.31 | 2.3 | % | ||||||||||||||||||
Carlson | 11 | 2,090 | 115.19 | 111.22 | 3.6 | % | 111.90 | 109.15 | 2.5 | % | ||||||||||||||||||
Morgans | 1 | 372 | 271.14 | 287.76 | (5.8 | %) | 269.78 | 271.12 | (0.5 | %) | ||||||||||||||||||
All Hotels Total / Average | 305 | 46,347 | $ | 126.69 | $ | 123.05 | 3.0 | % | $ | 125.94 | $ | 122.19 | 3.1 | % | ||||||||||||||
OCCUPANCY | ||||||||||||||||||||||||||||
Marriott (No. 1) | 53 | 7,610 | 74.7 | % | 76.6 | % | -1.9 pts | 72.1 | % | 72.5 | % | -0.4 pts | ||||||||||||||||
Marriott (No. 234) | 68 | 9,120 | 78.8 | % | 78.8 | % | 0.0 pts | 77.8 | % | 76.5 | % | 1.3 pts | ||||||||||||||||
Marriott (No. 5) | 1 | 356 | 91.8 | % | 84.0 | % | 7.8 pts | 88.6 | % | 86.2 | % | 2.4 pts | ||||||||||||||||
Subtotal / Average Marriott | 122 | 17,086 | 77.2 | % | 77.9 | % | -0.7 pts | 75.5 | % | 74.9 | % | 0.6 pts | ||||||||||||||||
InterContinental (1) | 94 | 14,403 | 86.3 | % | 86.0 | % | 0.3 pts | 83.2 | % | 83.8 | % | -0.6 pts | ||||||||||||||||
Sonesta (1) | 33 | 6,093 | 72.7 | % | 70.3 | % | 2.4 pts | 68.5 | % | 69.5 | % | -1.0 pts | ||||||||||||||||
Wyndham | 22 | 3,579 | 77.2 | % | 75.4 | % | 1.8 pts | 73.9 | % | 72.1 | % | 1.8 pts | ||||||||||||||||
Hyatt | 22 | 2,724 | 82.7 | % | 82.1 | % | 0.6 pts | 82.2 | % | 80.0 | % | 2.2 pts | ||||||||||||||||
Carlson | 11 | 2,090 | 78.9 | % | 76.4 | % | 2.5 pts | 73.7 | % | 75.1 | % | -1.4 pts | ||||||||||||||||
Morgans | 1 | 372 | 94.3 | % | 96.5 | % | -2.2 pts | 94.2 | % | 92.5 | % | 1.7 pts | ||||||||||||||||
All Hotels Total / Average | 305 | 46,347 | 80.0 | % | 79.6 | % | 0.4 pts | 77.3 | % | 77.2 | % | 0.1 pts | ||||||||||||||||
RevPAR | ||||||||||||||||||||||||||||
Marriott (No. 1) | 53 | 7,610 | $ | 100.19 | $ | 99.87 | 0.3 | % | $ | 96.20 | $ | 93.63 | 2.7 | % | ||||||||||||||
Marriott (No. 234) | 68 | 9,120 | 104.05 | 101.38 | 2.6 | % | 101.64 | 97.55 | 4.2 | % | ||||||||||||||||||
Marriott (No. 5) | 1 | 356 | 233.96 | 204.59 | 14.4 | % | 224.34 | 206.60 | 8.6 | % | ||||||||||||||||||
Subtotal / Average Marriott | 122 | 17,086 | 104.98 | 102.83 | 2.1 | % | 101.79 | 98.05 | 3.8 | % | ||||||||||||||||||
InterContinental (1) | 94 | 14,403 | 100.49 | 96.90 | 3.7 | % | 96.70 | 93.63 | 3.3 | % | ||||||||||||||||||
Sonesta (1) | 33 | 6,093 | 105.65 | 98.15 | 7.6 | % | 99.45 | 97.90 | 1.6 | % | ||||||||||||||||||
Wyndham | 22 | 3,579 | 78.74 | 75.43 | 4.4 | % | 73.29 | 70.50 | 4.0 | % | ||||||||||||||||||
Hyatt | 22 | 2,724 | 89.57 | 86.56 | 3.5 | % | 90.20 | 85.85 | 5.1 | % | ||||||||||||||||||
Carlson | 11 | 2,090 | 90.88 | 84.97 | 7.0 | % | 82.47 | 81.97 | 0.6 | % | ||||||||||||||||||
Morgans | 1 | 372 | 255.69 | 277.69 | (7.9 | %) | 254.13 | 250.79 | 1.3 | % | ||||||||||||||||||
All Hotels Total / Average | 305 | 46,347 | $ | 101.35 | $ | 97.95 | 3.5 | % | $ | 97.35 | $ | 94.33 | 3.2 | % |
(1) | Operating data includes data for periods prior to our ownership of certain hotels. |
For the Three Months Ended September 30, | For the Nine Months Ended September 30, | ||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||
Net income available for common shareholders | $ | 46,646 | $ | 56,019 | $ | 144,426 | $ | 170,414 | |||||||||
Add (less): | Depreciation and amortization expense | 90,139 | 84,261 | 266,192 | 243,812 | ||||||||||||
Gain on sale of real estate | — | — | — | (11,015 | ) | ||||||||||||
FFO available for common shareholders | 136,785 | 140,280 | 410,618 | 403,211 | |||||||||||||
Add: | Acquisition related costs (1) | 156 | 851 | 885 | 1,986 | ||||||||||||
Estimated business management incentive fees (2) | 25,036 | 8,561 | 56,272 | 17,383 | |||||||||||||
Loss on early extinguishment of debt | 158 | — | 228 | — | |||||||||||||
Normalized FFO available for common shareholders | $ | 162,135 | $ | 149,692 | $ | 468,003 | $ | 422,580 | |||||||||
Weighted average shares outstanding (basic) | 157,217 | 151,359 | 153,357 | 150,476 | |||||||||||||
Weighted average shares outstanding (diluted) (3) | 157,263 | 151,386 | 153,390 | 150,863 | |||||||||||||
Basic and diluted per common share amounts: | |||||||||||||||||
Net income available for common shareholders (basic and diluted) | $ | 0.30 | $ | 0.37 | $ | 0.94 | $ | 1.13 | |||||||||
FFO available for common shareholders (basic) | $ | 0.87 | $ | 0.93 | $ | 2.68 | $ | 2.68 | |||||||||
FFO available for common shareholders (diluted) | $ | 0.87 | $ | 0.93 | $ | 2.68 | $ | 2.67 | |||||||||
Normalized FFO available for common shareholders (basic) | $ | 1.03 | $ | 0.99 | $ | 3.05 | $ | 2.81 | |||||||||
Normalized FFO available for common shareholders (diluted) | $ | 1.03 | $ | 0.99 | $ | 3.05 | $ | 2.80 | |||||||||
Distributions declared per share | $ | 0.51 | $ | 0.50 | $ | 1.52 | $ | 1.49 |
(1) | Represents costs associated with our acquisition activities. |
(2) | Estimated incentive fees under our business management agreement calculated based on common share total return, as defined, 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, each quarter. Although we recognize this expense, if any, each quarter 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 actual expense amount for the year is determined. Incentive fees for 2016, if any, will be paid in cash in January 2017. |
(3) | Represents weighted average common shares adjusted to reflect the potential dilution of unvested share awards and, through May 2015, contingently issuable common shares under our business management agreement with RMR LLC. |
Principal Balance | Annual Interest Rate | Annual Interest Expense | Maturity | Interest Payments Due | ||||||||||
$ | 350,000 | 6.700 | % | $ | 23,450 | 2018 | Semi-Annually | |||||||
400,000 | 4.250 | % | 17,000 | 2021 | Semi-Annually | |||||||||
500,000 | 5.000 | % | 25,000 | 2022 | Semi-Annually | |||||||||
300,000 | 4.500 | % | 13,500 | 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 | |||||||||
8,478 | 3.800 | % | 322 | 2027 | (1) | Semi-Annually | ||||||||
$ | 2,608,478 | $ | 129,672 |
(1) | The convertible senior notes are convertible, if certain conditions are met (including certain changes in control). Upon conversion, the holder of notes is entitled to receive cash in an amount equal to the principal amount of the notes and, to the extent the market price of our common shares then exceeds the conversion price of $49.70 per share, subject to adjustment, at our option either cash or our common shares valued based on such market price for such excess amount. Holders of our convertible senior notes may require us to repurchase all or a portion of the notes on March 15, 2017 and March 15, 2022, or upon the occurrence of certain change in control events. |
Impact of Increase in Interest Rates | |||||||||||||||
Interest Rate Per Year (1) | Outstanding Debt | Total Interest Expense Per Year | Annual Per Common Share Impact (2) | ||||||||||||
At September 30, 2016 | 1.70 | % | $ | 550,000 | $ | 9,350 | $ | 0.06 | |||||||
100 basis point increase | 2.70 | % | $ | 550,000 | $ | 14,850 | $ | 0.09 |
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 September 30, 2016 | 1.65 | % | $ | 1,400,000 | $ | 23,100 | $ | 0.15 | |||||||
100 basis point increase | 2.65 | % | $ | 1,400,000 | $ | 37,100 | $ | 0.24 |
(1) | Weighted average based on the interest rates and the respective outstanding borrowings (assuming fully drawn) as of September 30, 2016. |
(2) | Based on diluted weighted average shares outstanding for the nine months ended September 30, 2016. |
• | OUR HOTEL MANAGERS’ OR TENANTS’ ABILITIES TO PAY THE CONTRACTUAL AMOUNTS OF RETURNS OR RENTS DUE TO US, |
• | OUR ABILITY TO MAKE ACQUISITIONS OF PROPERTIES AND OTHER INVESTMENTS, |
• | OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS, |
• | OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND THE AMOUNT OF SUCH DISTRIBUTIONS, |
• | OUR ABILITY TO RAISE EQUITY OR DEBT 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 RENOVATION PROGRAM, |
• | 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 DUE TO US, |
• | OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP OF RMR INC., |
• | OUR EXPECTATION THAT WE BENEFIT FINANCIALLY BY PARTICIPATING IN AIC AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC, |
• | OUR QUALIFICATION FOR TAXATION AS A REIT, AND |
• | OTHER MATTERS. |
• | THE IMPACT OF 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 AND THE CAPITAL COSTS WE INCUR TO MAINTAIN OUR PROPERTIES. WE MAY BE UNABLE TO PAY OUR DEBT OBLIGATIONS OR TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS ON OUR COMMON AND PREFERRED SHARES AND FUTURE DISTRIBUTIONS MAY BE REDUCED OR ELIMINATED, |
• | 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 SEPTEMBER 30, 2016, APPROXIMATELY 79% OF OUR AGGREGATE ANNUAL MINIMUM RETURNS AND RENTS WERE SECURED BY GUARANTEES OR SECURITY DEPOSITS FROM OUR MANAGERS AND TENANTS. THIS MAY IMPLY THAT THESE MINIMUM RETURNS AND RENTS WILL BE PAID. IN FACT, CERTAIN OF THESE GUARANTEES AND SECURITY DEPOSITS ARE LIMITED IN AMOUNT AND DURATION AND ALL THE GUARANTEES ARE SUBJECT TO THE GUARANTORS’ ABILITY AND WILLINGNESS TO PAY. THE BALANCE OF OUR ANNUAL MINIMUM RETURNS AND RENTS AS OF SEPTEMBER 30, 2016 WAS NOT GUARANTEED NOR DO WE HOLD A SECURITY DEPOSIT WITH RESPECT TO THOSE AMOUNTS. WE CANNOT BE SURE OF THE FUTURE FINANCIAL PERFORMANCE OF OUR PROPERTIES AND WHETHER SUCH PERFORMANCE WILL COVER OUR MINIMUM RETURNS AND RENTS, WHETHER THE GUARANTEES OR SECURITY DEPOSITS WILL BE ADEQUATE TO COVER FUTURE SHORTFALLS IN THE MINIMUM RETURNS OR RENTS DUE TO US, OR REGARDING OUR MANAGERS’, TENANTS’ OR GUARANTORS’ FUTURE ACTIONS IF AND WHEN THE GUARANTEES AND SECURITY DEPOSITS EXPIRE OR ARE DEPLETED OR THEIR ABILITY OR WILLINGNESS TO PAY MINIMUM RETURNS AND RENTS OWED TO US, |
• | WE HAVE RECENTLY RENOVATED CERTAIN HOTELS AND ARE CURRENTLY RENOVATING ADDITIONAL HOTELS. WE EXPECT TO FUND APPROXIMATELY $53.1 MILLION FOR RENOVATIONS AND OTHER CAPITAL IMPROVEMENT COSTS AT OUR HOTELS DURING THE 2016 FOURTH QUARTER. THE COST OF CAPITAL PROJECTS ASSOCIATED WITH SUCH RENOVATIONS MAY BE GREATER THAN WE NOW ANTICIPATE. WHILE OUR FUNDING OF THESE CAPITAL PROJECTS WILL CAUSE OUR CONTRACTUAL MINIMUM RETURNS TO INCREASE, THE HOTELS’ OPERATING RESULTS MAY NOT INCREASE OR MAY NOT INCREASE TO THE EXTENT THAT THE MINIMUM RETURNS INCREASE. ACCORDINGLY, COVERAGE OF OUR MINIMUM RETURNS AT THESE HOTELS MAY REMAIN DEPRESSED FOR AN EXTENDED PERIOD, |
• | WE EXPECT TO PURCHASE FROM TA DURING THE 2016 FOURTH QUARTER UP TO $30.0 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. IF ECONOMIC ACTIVITY IN THE COUNTRY DECLINES, HOTEL ROOM DEMAND AND TRUCKING ACTIVITY MAY DECLINE AND THE OPERATING RESULTS OF OUR HOTELS AND TRAVEL CENTERS MAY DECLINE, THE FINANCIAL RESULTS OF OUR HOTEL MANAGERS AND OUR TENANTS, INCLUDING TA, MAY SUFFER AND THESE MANAGERS AND TENANTS MAY BE UNABLE TO PAY OUR RETURNS OR RENTS. ALSO, DEPRESSED OPERATING RESULTS FROM OUR PROPERTIES FOR EXTENDED PERIODS MAY RESULT IN THE OPERATORS OF SOME OR ALL OF OUR HOTELS AND OUR TRAVEL CENTERS BECOMING UNABLE OR UNWILLING TO MEET THEIR OBLIGATIONS OR THEIR GUARANTEES AND SECURITY DEPOSITS WE HOLD MAY BE EXHAUSTED, |
• | 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 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 OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING, MANAGEMENT CONTRACTS OR LEASE TERMS FOR NEW PROPERTIES, |
• | WE HAVE AGREED TO ACQUIRE FROM AND LEASE BACK TO TA A TRAVEL CENTER WHICH TA IS DEVELOPING. WE AGREED TO PURCHASE THIS PROPERTY AT TA’S COST (INCLUDING HISTORICAL LAND COST) UP TO $29 MILLION IF THE DEVELOPMENT IS SUBSTANTIALLY COMPLETED PRIOR TO JUNE 30, 2017. TA HAS BEGUN CONSTRUCTION AT THIS TRAVEL CENTER. IT IS DIFFICULT TO ESTIMATE THE COST AND TIMING TO DEVELOP A NEW TRAVEL CENTER. CONSTRUCTION OF THE NEW TRAVEL CENTER MAY BE DELAYED FOR VARIOUS REASONS SUCH AS LABOR STRIFE, WEATHER CONDITIONS, THE UNAVAILABILITY OF CONSTRUCTION MATERIALS, ETC. THE PURCHASE AND LEASE BACK OF THIS TRAVEL CENTER MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF THE TRANSACTION MAY CHANGE, |
• | CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING ACQUISITIONS AND SALES AND ANY RELATED MANAGEMENT ARRANGEMENTS WE MAY EXPECT TO ENTER INTO MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS OR ARRANGEMENTS MAY CHANGE, |
• | AT SEPTEMBER 30, 2016, WE HAD $9.5 MILLION OF CASH AND CASH EQUIVALENTS, $850.0 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 |
• | WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE, |
• | CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CUSTOMARY CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY, |
• | ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY OR OTHER FLOATING RATE CREDIT FACILITIES WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF OTHER FEES AND EXPENSES ASSOCIATED WITH SUCH FACILITIES, |
• | 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 MANAGEMENT AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS INCLUDE TERMS WHICH PERMIT EARLY TERMINATION IN CERTAIN CIRCUMSTANCES. ACCORDINGLY, WE CANNOT BE SURE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR CONTINUING 20 YEAR TERMS OR FOR SHORTER TERMS, |
• | 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, 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 FLOW FROM THIS HOTEL IN THE FUTURE. OUR DISCUSSIONS WITH MARRIOTT HAVE ONLY RECENTLY BEGUN. AT THIS TIME WE CANNOT PREDICT HOW OUR DISCUSSIONS WITH MARRIOTT WILL IMPACT THE FUTURE OF THIS HOTEL. FOR EXAMPLE, THIS HOTEL MAY CONTINUE TO BE OPERATED BY MARRIOTT ON DIFFERENT CONTRACT TERMS THAN THE CURRENT LEASE, WE MAY IDENTIFY A DIFFERENT OPERATOR FOR THIS HOTEL, OR THE CASH FLOW WHICH WE RECEIVE FROM OUR OWNERSHIP OF THIS HOTEL MAY BE DIFFERENT THAN THE RENT WE NOW RECEIVE. |
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 | |||||||
September 2016 | 19,677 | $ | 29.64 | $ | — | $ | — | ||||
Total | 19,677 | $ | 29.64 | $ | — | $ | — |
(1) | During September 2016, all common share purchases were made to satisfy certain of our officers’ and other RMR LLC employees’ tax withholding and payment obligations in connection with the vesting of awards of our common shares. We repurchased these shares at their fair market value based upon the closing trading price of our common shares on the repurchase date. |
Exhibit Number | Description | ||
3.1 | Composite Copy of Amended and Restated Declaration of Trust dated as of August 21, 1995, as amended to date. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014.) | ||
3.2 | Articles Supplementary dated as of January 13, 2012. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 13, 2012.) | ||
3.3 | Amended and Restated Bylaws of the Company adopted September 7, 2016. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 7, 2016.) | ||
4.1 | Form of Common Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.) | ||
4.2 | Form of 7.125% Series D Cumulative Redeemable Preferred Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.) | ||
4.3 | Indenture, dated as of February 25, 1998, between the Company and State Street Bank and Trust Company. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File Number 001-11527.) | ||
4.4 | Supplemental Indenture No. 10, dated as of March 7, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 3.80% Convertible Senior Notes due 2027, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 2, 2007, File Number 001-11527.) | ||
4.5 | Supplemental Indenture No. 11, dated as of March 12, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 5.625% Senior Notes due 2017, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 7, 2007, File Number 001-11527.) | ||
4.6 | Supplemental Indenture No. 12, dated as of September 28, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 6.70% Senior Notes due 2018, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File Number 001-11527.) | ||
4.7 | Supplemental Indenture No. 14, dated as of August 16, 2012, between the Company and U.S. Bank National Association, relating to the Company’s 5.000% Senior Notes due 2022, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.) | ||
4.8 | Supplemental Indenture No. 15, dated as of June 6, 2013, between the Company and U.S. Bank National Association, relating to the Company’s 4.500% Senior Notes due 2023, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013.) | ||
4.9 | Supplemental Indenture No. 16, dated as of March 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.650% Senior Notes due 2024, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.) | ||
4.10 | Supplemental Indenture No. 17, dated as of September 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.50% Senior Notes due 2025, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014.) | ||
4.11 | Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 3, 2016.) | ||
4.12 | First Supplemental Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association, relating to the Company’s 4.25% Senior Notes due 2021, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 3, 2016.) | ||
4.13 | Second Supplemental Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association, relating to the Company’s 5.25% Senior Notes due 2026, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 3, 2016.) | ||
4.14 | Registration Rights and Lock-Up Agreement, dated as of June 5, 2015, among the Company, ABP Trust, Barry M. Portnoy and Adam D. Portnoy. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 5, 2015.) | ||
10.1 | Form of Share Award Agreement. (Filed herewith.) | ||
10.2 | Sixth Amendment to Amended and Restated Lease Agreement No. 4, dated September 14, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Filed herewith.) | ||
10.3 | Sixth Amendment to Amended and Restated Lease Agreement No. 2, dated September 30, 2016, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 30, 2016.) |
10.4 | Development Property Agreement, dated September 30, 2016, between HPT TA Properties Trust and TA Operating LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated September 30, 2016.) | ||
12.1 | Computation of Ratio of Earnings to Fixed Charges. (Filed herewith.) | ||
12.2 | Computation of Ratio of Earnings to Fixed Charges and Preferred Distributions. (Filed herewith.) | ||
31.1 | Rule 13a-14(a) Certification. (Filed herewith.) | ||
31.2 | Rule 13a-14(a) Certification. (Filed herewith.) | ||
31.3 | Rule 13a-14(a) Certification. (Filed herewith.) | ||
31.4 | Rule 13a-14(a) Certification. (Filed herewith.) | ||
32.1 | Section 1350 Certification. (Furnished herewith.) | ||
101.1 | The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 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 Operating Officer | |
Dated: November 9, 2016 | |
/s/ Mark L. Kleifges | |
Mark L. Kleifges | |
Chief Financial Officer and Treasurer | |
(Principal Financial and Accounting Officer) | |
Dated: November 9, 2016 |
To the Recipient: | To the Recipient’s address as set forth on the signature page hereof. |
LANDLORD: | |
HPT TA PROPERTIES TRUST | |
By: | /s/ John G. Murray |
John G. Murray | |
President |
HPT TA PROPERTIES LLC | |
By: | /s/ John G. Murray |
John G. Murray | |
President |
TENANT: | |
TA OPERATING LLC | |
By: | /s/ Mark R. Young |
Mark R. Young | |
Executive Vice President |
TRAVELCENTERS OF AMERICA LLC | |
By: | /s/ Mark R. Young |
Mark R. Young | |
Executive Vice President |
TRAVELCENTERS OF AMERICA HOLDING COMPANY LLC | |
By: | /s/ Mark R. Young |
Mark R. Young | |
Executive Vice President |
Nine Months Ended September 30, | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||
Income from continuing operations (including gains on sales of properties, if any) before income tax expense and equity in earnings (losses) of an investee | $ | 163,300 | $ | 167,963 | $ | 199,036 | $ | 127,750 | $ | 153,219 | $ | 191,803 | ||||||||||||
Fixed Charges | 124,564 | 144,898 | 139,486 | 145,954 | 136,111 | 134,110 | ||||||||||||||||||
Adjusted Earnings | $ | 287,864 | $ | 312,861 | $ | 338,522 | $ | 273,704 | $ | 289,330 | $ | 325,913 | ||||||||||||
Fixed Charges: | ||||||||||||||||||||||||
Interest on indebtedness and amortization of debt issuance costs and debt discounts | $ | 124,564 | $ | 144,898 | $ | 139,486 | $ | 145,954 | $ | 136,111 | $ | 134,110 | ||||||||||||
Ratio of Earnings to Fixed Charges | 2.31x | 2.16x | 2.43x | 1.88x | 2.13x | 2.43x |
Nine Months Ended September 30, | Year Ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||||||
Income from continuing operations (including gains on sales of properties, if any) before income tax expense and equity in earnings (losses) of an investee | $ | 163,300 | $ | 167,963 | $ | 199,036 | $ | 127,750 | $ | 153,219 | $ | 191,803 | ||||||||||||
Fixed Charges | 124,564 | 144,898 | 139,486 | 145,954 | 136,111 | 134,110 | ||||||||||||||||||
Adjusted Earnings | $ | 287,864 | $ | 312,861 | $ | 338,522 | $ | 273,704 | $ | 289,330 | $ | 325,913 | ||||||||||||
Fixed Charges: | ||||||||||||||||||||||||
Interest on indebtedness and amortization of debt issuance costs and debt discounts | $ | 124,564 | $ | 144,898 | $ | 139,486 | $ | 145,954 | $ | 136,111 | $ | 134,110 | ||||||||||||
Preferred distributions | 15,498 | 20,664 | 20,664 | 26,559 | 40,145 | 29,880 | ||||||||||||||||||
Combined Fixed Charges and Preferred distributions | $ | 140,062 | $ | 165,562 | $ | 160,150 | $ | 172,513 | $ | 176,256 | $ | 163,990 | ||||||||||||
Ratio of Earnings to Fixed Charges and Preferred distributions | 2.06x | 1.89x | 2.11x | 1.59x | 1.64x | 1.99x |
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; |
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: November 9, 2016 | /s/ Barry M. Portnoy |
Barry M. Portnoy | |
Managing Trustee |
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; |
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: November 9, 2016 | /s/ Adam D. Portnoy |
Adam D. Portnoy | |
Managing Trustee |
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; |
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: November 9, 2016 | /s/ John G. Murray |
John G. Murray | |
President and Chief Operating Officer |
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; |
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: November 9, 2016 | /s/ Mark L. Kleifges |
Mark L. Kleifges | |
Chief Financial Officer and Treasurer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Barry M. Portnoy | /s/ John G. Murray | |
Barry M. Portnoy | John G. Murray | |
Managing Trustee | President and Chief Operating Officer | |
/s/ Adam D. Portnoy | /s/ Mark L. Kleifges | |
Adam D. Portnoy | Mark L. Kleifges | |
Managing Trustee | Chief Financial Officer and Treasurer | |
Date: November 9, 2016 |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 09, 2016 |
|
Document and Entity Information | ||
Entity Registrant Name | HOSPITALITY PROPERTIES TRUST | |
Entity Central Index Key | 0000945394 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity filer Category | Large Accelerated Filer | |
Entity common Stock, Shares Outstanding | 164,269,211 | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Preferred shares, par value (in dollars per share) | $ 0 | $ 0 |
Preferred shares, shares authorized | 100,000,000 | 100,000,000 |
Common shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized | 200,000,000 | 200,000,000 |
Common shares, shares issued | 164,269,211 | 151,547,288 |
Common shares, shares outstanding | 164,269,211 | 151,547,288 |
Series D preferred shareholders' | ||
Preferred shares, dividend yield (as a percent) | 7.125% | 7.125% |
Preferred shares, shares issued | 11,600,000 | 11,600,000 |
Preferred shares, shares outstanding | 11,600,000 | 11,600,000 |
Preferred shares, aggregate liquidation preference (in dollars) | $ 290,000 | $ 290,000 |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement [Abstract] | ||||
Interest expense, amortization of deferred financing costs and debt discounts | $ 2,122 | $ 1,458 | $ 6,114 | $ 4,374 |
Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements of Hospitality Properties Trust and its subsidiaries, or HPT, we, our or us, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2015, or our 2015 Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included in these condensed consolidated financial statements. These condensed consolidated financial statements include the accounts of HPT and our subsidiaries, all of which are 100% owned directly or indirectly by HPT. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods and those of our managers and tenants are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior years’ condensed consolidated financial statements to conform to the current year’s presentation. The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets, impairment of real estate and the valuation of intangible assets. We have determined that each of our taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification™. We have concluded that we must consolidate each of our TRSs because we are the entity with the power to direct the activities that most significantly impact the VIEs’ economic performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE, and are, therefore, the primary beneficiary of each VIE. The assets of our TRSs were $35,150 and $26,559 as of September 30, 2016 and December 31, 2015, respectively, and consist primarily of amounts due from, and working capital advances to, certain of their hotel managers. The liabilities of our TRSs were $100,848 and $68,921 as of September 30, 2016 and December 31, 2015, respectively, and consist primarily of security deposits they hold from and amounts payable to certain of their hotel managers. The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs. |
New Accounting Pronouncements |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements On January 1, 2016, we adopted the FASB Accounting Standards Update, or ASU, No. 2015-02, Consolidation. Among other things, this update changed how an entity determines the primary beneficiary of a VIE. The implementation of this update did not have an impact in our condensed consolidated financial statements. On January 1, 2016, we adopted FASB ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheets as a direct deduction from the associated debt liability, and ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, which addresses the presentation of debt issuance costs related to line of credit arrangements. The implementation of these updates resulted in the reclassification of certain of our capitalized debt issuance costs as an offset to the associated debt liability in our condensed consolidated balance sheets. The classification of capitalized debt issuance costs related to our unsecured revolving credit facility remains unchanged in accordance with ASU No. 2015-15. As of December 31, 2015, debt issuance costs related to our unsecured term loan and senior unsecured notes of $2,244 and $10,556, respectively, were reclassified from assets to an offset to the associated debt liability in our condensed consolidated balance sheets. On January 1, 2016, we adopted FASB ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement for an acquirer in a business combination to account for measurement period adjustments retrospectively. Instead, acquirers must recognize measurement period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. The implementation of this update did not have an impact in our condensed consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This update is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair value of these investments are recorded through other comprehensive income. Under this ASU, these changes will be recorded through earnings. We are continuing to evaluate this guidance, but we expect the implementation of this guidance will affect how changes in the fair value of available for sale equity investments we hold are presented in our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU No. 2016-09 is effective for reporting periods beginning after December 15, 2016. We are currently assessing the potential impact that the adoption of ASU No. 2016-09 will have in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact that adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently assessing the potential impact that adoption of ASU No. 2016-15 will have in our condensed consolidated financial statements. |
Revenue Recognition |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | Revenue Recognition We report hotel operating revenues for managed hotels in our condensed consolidated statements of comprehensive income. We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when goods and services are provided. We report rental income for leased hotels and travel centers in our condensed consolidated statements of comprehensive income. We recognize rental income from operating leases on a straight line basis over the term of the lease agreements except for one lease in which there is uncertainty regarding the collection of scheduled future rent increases. Rental income includes $2,932 and $10,377 for the three and nine months ended September 30, 2016, respectively, and $3,752 and $5,807 for the three and nine months ended September 30, 2015, respectively, of adjustments necessary to record scheduled rent increases under certain of our leases, the deferred rent obligations payable to us under our leases with TravelCenters of America LLC, or TA, and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks on a straight line basis. See Note 10 for further information regarding our TA leases. Due from related persons includes $39,175 and $29,122 and other assets, includes $2,165 and $1,841 of straight line rent receivables at September 30, 2016 and December 31, 2015, respectively. We determine percentage rent due to us under our leases annually and recognize it when all contingencies have been met and the rent is earned. We had deferred estimated percentage rent of $408 and $937 for the three and nine months ended September 30, 2016, respectively. We had no deferred estimated percentage rent for the three and nine months ended September 30, 2015. In connection with our June 2015 lease modification with TA, we recorded $2,048 of percentage rent during the nine months ended September 30, 2015 because the amount was no longer contingent. See Note 10 for further information regarding our TA leases. We own all the FF&E reserve escrows for our hotels. We report deposits by our third party tenants into the escrow accounts as FF&E reserve income. We do not report the amounts which are escrowed as FF&E reserves for our managed hotels as FF&E reserve income. |
Weighted Average Common Shares |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Weighted Average Common Shares | Weighted Average Common Shares The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share:
|
Shareholders' Equity |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Shareholders' Equity | Shareholders’ Equity Distributions On each of January 15, 2016, April 15, 2016, July 15, 2016 and October 17, 2016, we paid a $0.4453 per share distribution, or $5,166, to our Series D preferred shareholders. On February 23, 2016, we paid a regular quarterly distribution to common shareholders of record on January 22, 2016 of $0.50 per share, or $75,774. On May 19, 2016, we paid a regular quarterly distribution to common shareholders of record on April 25, 2016 of $0.51 per share, or $77,289. On August 17, 2016, we paid a regular quarterly distribution to common shareholders of record on July 22, 2016 of $0.51 per share, or $77,295. On October 11, 2016, we declared a regular quarterly distribution payable to common shareholders of record on October 21, 2016 of $0.51 per share, or $83,777. We expect to pay this amount on or about November 17, 2016. Share Issuance and Purchases On May 25, 2016, we granted 2,500 of our common shares, valued at $25.50 per share, the closing price of our common shares on the New York Stock Exchange on that day, to each of our five Trustees as part of their annual compensation. On August 19, 2016, we sold 11,000,000 of our common shares at a price of $30.75 per share in a public offering. On August 26, 2016, we sold 1,650,000 of our common shares at a price of $30.75 per share pursuant to an overallotment option granted to the underwriters. Net proceeds from these sales were $371,956 after underwriters' discount and other offering expenses. On September 15, 2016, pursuant to our 2012 Equity Compensation Plan, we granted an aggregate of 79,100 of our common shares to our officers and to other employees of our manager, The RMR Group LLC, or RMR LLC, valued at $28.57 per share, the closing price of our common shares on The NASDAQ Stock Market LLC, or Nasdaq, on that day. On September 26, 2016, we purchased an aggregate of 19,677 of our common shares for $29.64 per common share, the closing price of our common shares on the Nasdaq on that day, from certain of our officers and other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. Cumulative Other Comprehensive Income (Loss) Cumulative other comprehensive income (loss) represents the unrealized gain (loss) on our available for sale equity investments and our share of the comprehensive income (loss) of Affiliates Insurance Company, or AIC. See Notes 10 and 12 for further information regarding these investments. |
Indebtedness |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Indebtedness | Indebtedness Our principal debt obligations at September 30, 2016 were: (1) $150,000 of outstanding borrowings under our $1,000,000 unsecured revolving credit facility; (2) our $400,000 unsecured term loan; (3) an aggregate outstanding principal amount of $2,600,000 of public issuances of unsecured senior notes; and (4) our public issuance of $8,478 outstanding principal amount of convertible senior unsecured notes. Our $1,000,000 revolving credit facility is available for general business purposes, including acquisitions. The maturity date of our revolving credit facility is July 15, 2018 and, subject to our payment of an extension fee and meeting other conditions, we have the option to extend the stated maturity date of our revolving credit facility by one year to July 15, 2019. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. We are required to pay interest on borrowings under our revolving credit facility at an annual rate of LIBOR plus a premium, which was 110 basis points as of September 30, 2016. We also pay a facility fee on the total amount of lending commitments, which was 20 basis points per annum at September 30, 2016 under our revolving credit facility. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of September 30, 2016, the annual interest rate for the amount outstanding under our revolving credit facility was 1.62%. The weighted average annual interest rate for borrowings under our revolving credit facility was 1.60% and 1.55% for the three and nine months ended September 30, 2016, respectively, and 1.30% and 1.28% for the three and nine months ended September 30, 2015, respectively. As of September 30, 2016 and November 8, 2016, we had $150,000 and $70,000 outstanding under our revolving credit facility, respectively. Our $400,000 term loan, which matures on April 15, 2019, is prepayable without penalty at any time. We are required to pay interest on the amounts under our term loan at a rate of LIBOR plus a premium, which was 120 basis points as of September 30, 2016. The interest rate premium is subject to adjustment based on changes to our credit ratings. As of September 30, 2016, the annual interest rate for the amount outstanding under our term loan was 1.72%. The weighted average annual interest rate for borrowings under our term loan was 1.69% and 1.65% for the three and nine months ended September 30, 2016, respectively, and 1.39% and 1.38% for the three and nine months ended September 30, 2015, respectively. Our credit agreement for our revolving credit facility and term loan also includes a feature under which maximum aggregate borrowings may be increased up to $2,300,000 on a combined basis in certain circumstances. Our credit agreement for our revolving credit facility and term loan and our notes indentures and their supplements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR LLC ceasing to act as our business manager. Our credit agreement for our revolving credit facility and term loan and our senior notes indentures and their supplements also contain a number of covenants, including covenants that restrict our ability to incur debts or to make distributions under certain circumstances and generally require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of our credit agreement for our revolving credit facility and term loan and our senior notes indentures and their supplements at September 30, 2016. On February 3, 2016, we issued $750,000 aggregate principal amount of senior notes in public offerings, which included $400,000 aggregate principal amount of 4.25% senior notes due 2021 and $350,000 aggregate principal amount 5.25% senior notes due 2026. Net proceeds from these offerings were $731,506 after original issue discounts and offering expenses. On March 11, 2016, we redeemed at par all of our outstanding 6.30% senior notes due 2016 for a redemption price equal to the principal amount of $275,000, plus accrued and unpaid interest (an aggregate of $279,139). As a result of the redemption, we recorded a loss on early extinguishment of debt of $70 in the nine months ended September 30, 2016, which represented the unamortized discounts and issuance costs of these notes. On September 26, 2016, we redeemed at par all of our outstanding 5.625% senior notes due 2017 for a redemption price equal to the principal amount of $300,000, plus accrued and unpaid interest (an aggregate of $300,516). As a result of the redemption, we recorded a loss on early extinguishment of debt of $158 in the three and nine months ended September 30, 2016, which represented the unamortized discounts and issuance costs of these notes. |
Real Estate Properties |
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Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Properties | Real Estate Properties At September 30, 2016, we owned 305 hotels and 198 travel centers, which are operated under 14 agreements. During the nine months ended September 30, 2016, we funded $124,504 for improvements to certain of our properties which, pursuant to the terms of our management and lease agreements with our hotel managers and tenants, resulted in increases in our contractual annual minimum returns and rents of $9,489. See Notes 10 and 11 for further information about our management and lease agreements and our fundings of improvements to certain of our properties. During the nine months ended September 30, 2016, we acquired three hotels, five travel centers and a land parcel adjacent to a travel center that we own. Our allocation of the purchase price of each of these acquisitions based on the estimated fair value of the acquired assets is presented in the table below. The allocations of purchase prices are based on preliminary estimates and may change upon completion of third party appraisals.
In July 2016, we entered into an agreement to acquire a full service hotel with 236 rooms located in Milpitas, CA for $52,000. We subsequently terminated that agreement and in October 2016 we entered into a new agreement to acquire this hotel for $46,000, excluding acquisition related costs. We currently expect to complete this acquisition during the fourth quarter of 2016. We plan to add this hotel to our management agreement with Sonesta. In October 2016, we entered into an agreement to acquire a full service hotel with 101 rooms located in Addison, TX for a purchase price of $9,000, excluding acquisition related costs. We currently expect to complete this acquisition in the first quarter of 2017. We plan to add this Radisson branded hotel to our management agreement with Carlson Hotels Worldwide, or Carlson. In November 2016, we entered into an agreement to acquire a full service hotel with 483 rooms located in Chicago, IL for a purchase price of $86,700, excluding acquisition related costs. We currently expect to complete this acquisition in the first quarter of 2017. We plan to add this Kimpton branded hotel to our management agreement with InterContinental. See Note 10 for information regarding our commitment to purchase a newly developed travel center from TA. Our pending acquisitions are subject to conditions; accordingly, we cannot be sure that we will complete these acquisitions or that these acquisitions will not be delayed or the terms of these acquisitions will not change. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, and, accordingly, are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements. We are subject to income tax in Canada, Puerto Rico and certain states despite our qualification for taxation as a REIT. Also, we lease our managed hotels to our wholly owned TRSs that, unlike most of our other subsidiaries, file separate consolidated federal corporate income tax returns and are subject to federal, state and foreign income taxes. Our consolidated income tax provision (or benefit) included in our condensed consolidated statements of comprehensive income includes the income tax provision (or benefit) related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our qualification for taxation as a REIT. During the three and nine months ended September 30, 2016, we recognized income tax expense of $948 and $3,483, respectively, which includes $415 and $2,018, respectively, of foreign taxes, ($59) and $32, respectively, of federal taxes and $592 and $1,433, respectively, of state taxes. During the three and nine months ended September 30, 2015, we recognized income tax expense of $514, and $1,445, respectively, which includes $79 and $155, respectively, of foreign taxes and $435 and $1,290, respectively, of state taxes. |
Segment Information |
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Segment Information | Note 9. Segment Information We operate in two reportable business segments: hotel investments and travel center investments.
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Related Person Transactions |
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Related Person Transactions | Related Person Transactions We have relationships and historical and continuing transactions with TA, RMR LLC, Sonesta and others related to them, including other companies to which RMR LLC provides management services and which have trustees, directors and officers who are also our Trustees or officers. For further information about these and other such relationships and certain other related person transactions, please refer to our 2015 Annual Report. TA: TA was our 100% owned subsidiary until we distributed its common shares to our shareholders in 2007. TA is our largest tenant and property operator, leasing 37% of our gross carrying value of real estate properties as of September 30, 2016. We are TA’s largest shareholder; as of September 30, 2016, we owned 3,420,000 of TA’s common shares, representing approximately 8.8% of TA’s outstanding common shares. Our investment in TA shares, which is included in other assets in our condensed consolidated balance sheets, is recorded at fair value with the related unrealized gain (loss) included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets. We recognize the increase or decrease in the fair value of our TA shares each reporting period as unrealized gain (loss) on investment securities, which is a component of other comprehensive income (loss) in our condensed consolidated statements of comprehensive income. See Note 12 for further information regarding our investment in TA. On June 1, 2015, we entered a transaction agreement with TA. On June 22, 2016, we and TA amended the transaction agreement. We refer to the amended transaction agreement as the Transaction Agreement. Under the Transaction Agreement, among other things, we agreed to purchase from TA four travel centers upon the completion of their development at a purchase price equal to their development costs, including the cost of the land, and two existing travel centers then owned by TA and we agreed to lease back these properties to TA under our TA leases. In connection with the Transaction Agreement, as amended:
Because of the relationships between us and TA, the terms of the Transaction Agreement, as amended, were negotiated and approved by special committees of our Board of Trustees and the TA board of directors composed of our Independent Trustees and TA’s independent directors who are not also trustees or directors of the other party, which committees were represented by separate counsel. On September 14, 2016, we purchased a vacant land parcel adjacent to a property in Holbrook, AZ that we own and lease to TA for $325 and we and TA amended our TA No. 4 agreement to add this parcel and our annual minimum rent under our TA No. 4 agreement increased by $28. As of September 30, 2016, we leased to TA a total of 198 travel centers. As of September 30, 2016, the number of travel centers leased, the terms, the annual minimum rents and the deferred rent balances under each of our TA leases were as follows:
We recognized rental income from TA of $69,866 and $65,548 for the three months ended September 30, 2016 and 2015, respectively, and $206,950 and $183,222 for the nine months ended September 30, 2016 and 2015, respectively. Rental income for the three months ended September 30, 2016 and 2015 includes $2,823 and $3,647, respectively, and the nine months ended September 30, 2016 and 2015 includes $10,053 and $5,452, respectively, of adjustments necessary to record the deferred rent obligations under our TA leases and the estimated future payments to us by TA for the cost of removing underground storage tanks on a straight line basis. Rental income for the nine months ended September 30, 2015 includes $2,048 of percentage rent recorded because the amount was no longer contingent as a result of the modifications to our TA leases in connection with the Transaction Agreement. As of September 30, 2016 and December 31, 2015, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $62,655 and $40,988, respectively. These amounts are included in due from related persons in our condensed consolidated balance sheets. We funded $20,255 and $29,734 for the three months ended September 30, 2016 and 2015, respectively, and $75,314 and $70,150 for the nine months ended September 30, 2016 and 2015, respectively, of qualifying capital improvements under our TA leases. As a result, TA’s annual minimum rent payable to us increased by $1,722, and $2,527 for the three months ended September 30, 2016 and 2015, respectively, and $6,402 and $5,963 for the nine months ended September 30, 2016 and 2015, respectively. We determine percentage rent due under our TA leases annually and recognize any resulting amount as rental income when all contingencies are met. We had aggregate deferred percentage rent under our TA leases of $408 and $937 for the three and nine months ended September 30, 2016, respectively, net of any waived percentage rent. We had no deferred percentage rent for the three and nine months ended September 30, 2015. As of June 30, 2016, we had cumulatively waived all of the $2,500 of percentage rent we previously agreed to waive. We waived percentage rent of $271 for the three months ended September 30, 2015 and $372 and $819 for the nine months ended September 30, 2016 and 2015, respectively. RMR LLC: Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $34,942 and $17,383 for the three months ended September 30, 2016 and 2015, respectively, and $83,547 and $45,832 for the nine months ended September 30, 2016 and 2015, respectively. The business management fees for the three and nine months ended September 30, 2016 include estimated 2016 incentive fees of $25,036 and $56,272, respectively, based on our common share total return as of September 30, 2016. The actual amount of incentive fees payable to RMR LLC for 2016, if any, will be based on our common share total return, as defined, for the three year period ending December 31, 2016, and will be payable in 2017. The net business management fees we recognized for the three and nine months ended September 30, 2015 included $8,561 and $17,383, respectively, of then estimated 2015 incentive fees; in January 2016, we paid RMR LLC an incentive fee of $62,263 for 2015. The net business management fees we recognized for the 2016 and 2015 periods are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. In accordance with the terms of our business management agreement, we issued 63,119 of our common shares to RMR LLC for the period from January 1, 2015 through May 31, 2015 as payment for a part of the business management fee we recognized for that period. Beginning June 1, 2015, all management fees under our business management agreement are paid in cash. Pursuant to our property management agreement with RMR LLC, we recognized property management fees of $9 for both of the three months ended September 30, 2016 and 2015 and $34 and $24 for the nine months ended September 30, 2016 and 2015, respectively. These fees are payable to RMR LLC in connection with the management of the office building component of one of our hotels. These amounts are included in hotel operating expenses in our condensed consolidated statements of comprehensive income. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. We reimbursed RMR LLC $45 and $38 for property management related expenses related to the office building component of one of our hotels for the three months ended September 30, 2016 and 2015, respectively, and $129 and $104 for the nine months ended September 30, 2016 and 2015, respectively. These amounts are included in hotel operating expenses in our condensed consolidated statements of comprehensive income. We have historically awarded share grants to certain RMR LLC employees under our equity compensation plans. In September 2016 and 2015, we awarded annual share grants of 79,100 and 76,250 of our common shares, respectively, to our officers and to other employees of RMR LLC. In September 2016, we purchased 19,677 of our common shares, at the closing price of our common shares on the Nasdaq on the date of purchase, from our officers and other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. In addition, under our business management agreement we reimburse RMR LLC for our allocable costs for internal audit services. The amounts recognized as expense for share grants to RMR LLC employees and internal audit costs were $1,019 and $713 for the three months ended September 30, 2016 and 2015, respectively, and $2,125 and $1,838 for the nine months ended September 30, 2016 and 2015, respectively. These amounts are included in general and administrative expenses in our condensed consolidated statements of comprehensive income. We lease office space to RMR LLC in the office building component of one of our hotels. Pursuant to our lease agreement with RMR LLC, we recognized rental income from RMR LLC for leased office space of $9 and $26 for the three and nine months ended September 30, 2016 and 2015, respectively. RMR Inc.: In connection with our June 2015 acquisition of shares of class A common stock of The RMR Group Inc., or RMR Inc., we recorded a liability for the amount by which the estimated fair value of these shares exceeded the price we paid for these shares. This liability is included in accounts payable and other liabilities in our condensed consolidated balance sheets. This liability is being amortized on a straight line basis through December 31, 2035 as an allocated reduction to our business management fee expense. We amortized $896 and $2,689 of this liability, respectively, for the three and nine months ended September 30, 2016, and $911 and $1,142 of this liability, respectively, for the three and nine months ended September 30, 2015. These amounts are included in the net business management fee amounts for such periods. As of September 30, 2016, the remaining unamortized amount of this liability was $69,073. As of September 30, 2016, we owned 2,503,777 shares of class A common stock of RMR Inc. We receive dividends on our RMR Inc. class A common shares as declared and paid by RMR Inc. to all holders of its class A common shares. We received a dividend of $749 on our RMR Inc. class A common shares during the three months ended June 30, 2016, which was for the period from December 14, 2015 through March 31, 2016. We received a dividend of $626 on our RMR Inc. class A common shares during the three months ended September 30, 2016, which was for the period from April 1, 2016 through June 30, 2016. On October 11, 2016, RMR Inc. declared a regular quarterly dividend of $0.25 per class A common share payable to shareholders of record on October 21, 2016. RMR Inc. has stated that it expects to pay this dividend on or about November 17, 2016. Our investment in RMR Inc. class A common shares is included in other assets in our condensed consolidated balance sheets and is recorded at fair value with the related unrealized gain (loss) included in cumulative other comprehensive income (loss) in our condensed consolidated balance sheets. We recognize the increase or decrease in the fair value of our RMR Inc. class A common shares each reporting period as unrealized gain (loss) on investment securities, which is a component of other comprehensive income (loss) in our condensed consolidated statements of comprehensive income. See Note 12 for further information on our investment in RMR Inc. Sonesta: Sonesta is owned by our Managing Trustees. As of September 30, 2016, Sonesta managed 33 of our hotels pursuant to management and pooling agreements. On February 1, 2016, we acquired two extended stay hotels with 262 suites located in Cleveland and Westlake, OH for $12,000, excluding acquisition related costs, and entered into a long term management agreement with Sonesta for each hotel on terms substantially consistent with those of our existing management agreements with Sonesta for extended stay hotels. These management agreements were added to our existing pooling agreement with Sonesta. Pursuant to our Sonesta agreement, we recognized management, system and reservation fees and the cost to reimburse Sonesta for certain guest loyalty, marketing program and third party reservation transmission fees aggregating $6,712 and $5,742 for the three months ended September 30, 2016 and 2015, respectively, and $19,007 and $16,143 for the nine months ended September 30, 2016 and 2015, respectively. In addition, we recognized procurement and construction supervision fees to Sonesta of $344 and $496 for the three months ended September 30, 2016 and 2015, respectively, and $1,268 and $1,172 for the nine months ended September 30, 2016 and 2015, respectively. These amounts are included in hotel operating expenses or have been capitalized, as appropriate, in our condensed consolidated financial statements. On January 4, 2016, we and Sonesta amended our pooling agreement and management agreements. Under the amended pooling agreement, a hotel may be designated as “non-economic” and removed from the pooling agreement and subject to sale and we have an early termination right under each management agreement, in each case if the applicable hotel does not meet certain criteria for the stipulated measurement period. Pursuant to the amendment, these stipulated measurement periods begin on the later of January 1, 2017 and January 1st of the year beginning at least 18 months following the effective date of the applicable management agreement. The amendment to the pooling agreement and management agreements with Sonesta were negotiated and recommended by a Special Committee of our Board of Trustees comprised solely of our Independent Trustees, and were approved by our Independent Trustees and also by our Board of Trustees. In July 2016, we entered into an agreement to acquire a full service hotel with 236 rooms located in Milpitas, CA for a purchase price of $52,000, excluding acquisition related costs. We subsequently terminated that agreement and in October 2016 we entered into a new agreement to acquire this hotel for $46,000, excluding acquisition related costs. We currently expect to complete this acquisition during the fourth quarter of 2016. This acquisition is subject to closing conditions; accordingly, we cannot be sure that we will acquire this property or that its acquisition will not be delayed or the terms of the acquisition will not change. Upon acquisition of this hotel, we intend to rebrand this hotel as a Sonesta hotel, to enter into a hotel management agreement with Sonesta for this property on terms consistent with our other Sonesta hotel management agreements. See Note 11 for further information regarding our Sonesta agreement. AIC: We and six other companies to which RMR LLC provides management services each own AIC in equal amounts. We and the other AIC shareholders participate in a combined property insurance program arranged and reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of approximately $3,975 in connection with this insurance program for the policy year ending June 30, 2017, which amount may be adjusted from time to time as we acquire and dispose of properties that are included in this insurance program. As of September 30, 2016 and December 31, 2015, our investment in AIC had a carrying value of $7,117 and $6,834, respectively. These amounts are included in other assets in our condensed consolidated balance sheets. We recognized income (loss) of $13 and ($24) related to our investment in AIC for the three months ended September 30, 2016 and 2015, respectively, and $107 and $71 for the nine months ended September 30, 2016 and 2015, respectively. Our other comprehensive income includes our proportionate part of unrealized gains (losses) on securities which are owned by AIC of $80 and ($72) for the three months ended September 30, 2016 and 2015, respectively, and $175 and ($91) for the nine months ended September 30, 2016 and 2015, respectively. Directors’ and Officers’ Liability Insurance: We, RMR Inc., RMR LLC and certain companies to which RMR LLC provides management services participate in a combined directors’ and officers’ liability insurance policy. In September 2016, we participated in a one year extension of this combined directors’ and officers’ insurance policy through September 2018. Our premium for this policy extension was approximately $141. See Note 11 for additional information about our agreements with TA and Sonesta. |
Hotel Management Agreements and Leases |
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Leases [Abstract] | |
Hotel Management Agreements and Leases | Hotel Management Agreements and Leases As of September 30, 2016, 302 of our hotels are leased to our TRSs and managed by independent hotel operating companies and three of our hotels are leased. Marriott No. 1 agreement. Our management agreement with Marriott International, Inc., or Marriott, for 53 hotels provides that as of September 30, 2016 we are to be paid an annual minimum return of $68,583 to the extent that gross revenues of the hotels, after payment of hotel operating expenses and funding of the FF&E reserve, are sufficient to do so. We do not have any security deposits or guarantees for our minimum returns from the 53 hotels included in our Marriott No. 1 agreement. Accordingly, the minimum returns we receive from these hotels managed by Marriott are limited to available hotel cash flows after payment of operating expenses and funding of the FF&E reserve. Marriott’s base and incentive management fees are only earned after we receive our minimum returns. We realized minimum returns of $17,126 and $17,046 during the three months ended September 30, 2016 and 2015, respectively, and minimum returns of $51,361 and $51,080 during the nine months ended September 30, 2016 and 2015, respectively, under this agreement. We also realized additional returns of $4,372 and $10,621 during the three and nine months ended September 30, 2016, respectively, which represents our share of hotel cash flows in excess of the minimum returns due to us for the period. We realized additional returns of $3,149 under this agreement during the three and nine months ended September 30, 2015. We funded $2,265 for capital improvements at certain of the hotels included in our Marriott No. 1 agreement during the nine months ended September 30, 2016. We currently expect to fund $750 for capital improvements during the 2016 fourth quarter under this agreement. As we fund these improvements, the annual minimum returns payable to us increase by 10% of the amounts funded. Marriott No. 234 agreement. Our management agreement with Marriott for 68 hotels provides that as of September 30, 2016 we are to be paid an annual minimum return of $106,243. We realized minimum returns of $26,571 and $26,553 during the three months ended September 30, 2016 and 2015, respectively, and minimum returns of $79,682 and $79,586 during the nine months ended September 30, 2016 and 2015, respectively, under this agreement. Pursuant to our Marriott No. 234 agreement, Marriott has provided us with a security deposit to cover minimum return payment shortfalls, if any. Under this agreement, this security deposit may be replenished and increased up to $64,700 from our share of hotel cash flows in excess of the minimum returns due to us and certain management fees. Marriott’s base and incentive management fees are only earned after we receive our minimum returns. During the nine months ended September 30, 2016, our available security deposit was replenished by $11,198 from our share of hotel cash flows in excess of the minimum returns due to us for the period. The available balance of this deposit was $17,449 as of September 30, 2016. Pursuant to our Marriott No. 234 agreement, Marriott has also provided us with a limited guarantee which expires in 2019 for shortfalls up to 90% of our minimum returns, if and after the available security deposit has been depleted. The available balance of the guarantee was $30,672 as of September 30, 2016. We did not make any fundings for capital improvements to our Marriott No. 234 hotels during the nine months ended September 30, 2016. We currently expect to fund $9,000 for capital improvements to certain hotels under our Marriott No. 234 agreement during the 2016 fourth quarter. As we fund these improvements, the annual minimum returns payable to us increase by 9% of the amounts funded. Marriott No. 5 agreement. We lease one hotel in Kauai, HI to Marriott. This lease is guaranteed by Marriott and we realized $2,529 of rent for this hotel during each of the three months ended September 30, 2016 and 2015, and $7,587 of rent during each of the nine months ended September 30, 2016 and 2015. The guarantee provided by Marriott with respect to this leased hotel is unlimited. 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. Marriott has four renewal options for 15 years each. InterContinental agreement. Our management agreement with InterContinental for 94 hotels provides that as of September 30, 2016, we are to be paid annual minimum returns and rents of $160,338. We realized minimum returns and rents of $40,084 and $37,444 during the three months ended September 30, 2016 and 2015, respectively, and minimum returns and rents of $118,372 and $109,461 during the nine months ended September 30, 2016 and 2015, respectively, under this agreement. We also realized additional returns under this agreement of $3,563 and $2,607 during the three months ended September 30, 2016 and 2015, respectively, and of $7,467and $5,784 during the nine months ended September 30, 2016 and 2015, respectively, from our share of hotel cash flows in excess of our minimum returns and rents due to us for those periods. Pursuant to our InterContinental agreement, InterContinental has provided us with a security deposit to cover minimum payment shortfalls, if any. Under this agreement, InterContinental is required to maintain a minimum security deposit of $37,000 and this security deposit may be replenished and increased up to $100,000 from a share of future cash flows from the hotels, in excess of our minimum returns and certain management fees. On March 16, 2016, we amended our management agreement with InterContinental in connection with our acquisition of the Kimpton Hotel Monaco located in Portland, OR. See Note 7 for further information regarding this acquisition. As a result of the amendment, the annual minimum returns due to us increased by an aggregate of 8% of our investment in the hotel ($9,120) and InterContinental provided us $9,000 to supplement the existing security deposit. During the nine months ended September 30, 2016, the available security deposit was replenished by $23,747 from a share of the hotels’ cash flows in excess of the minimum payments due to us for the period. The available balance of this security deposit was $70,963 as of September 30, 2016. We did not make any fundings for capital improvements to our InterContinental hotels during the nine months ended September 30, 2016. We currently expect to fund $17,500 for capital improvements to certain hotels under our InterContinental agreement during the 2016 fourth quarter. As we fund these improvements, the annual minimum returns and rents payable to us increase by 8% of the amounts funded. Sonesta agreement. Our Sonesta agreement provides that we are to be paid an annual minimum return ($85,964 as of September 30, 2016) equal to 8% of our invested capital, as defined in the agreement, to the extent that gross revenues of the hotels, after payment of hotel operating expenses, including certain management fees to Sonesta, are sufficient to do so. We do not have a security deposit or guarantee for our hotels managed by Sonesta. Accordingly, the returns we currently receive from hotels managed by Sonesta are limited to available hotel cash flows after payment of operating expenses. Sonesta’s incentive management fees, but not its other fees, are only earned after we receive our minimum returns and an imputed FF&E escrow. We realized returns of $19,133 and $13,186 during the three months ended September 30, 2016 and 2015, respectively, and returns of $51,279 and $39,985 during the nine months ended September 30, 2016 and 2015, respectively, under this agreement. Our Sonesta agreement does not require FF&E escrow deposits and we are required to fund capital expenditures made at our Sonesta hotels. We funded $44,017 for renovations and other capital improvements to hotels included in our Sonesta agreement during the nine months ended September 30, 2016. We currently expect to fund $23,860 for renovations and other capital improvements during the 2016 fourth quarter under this agreement. The annual minimum returns due to us under the Sonesta agreement increase by 8% of the amounts funded in excess of threshold amounts, as defined therein. See Note 10 for further information regarding our relationship with Sonesta. Wyndham agreements. Our management agreement with Wyndham Hotel Group, or Wyndham, for 22 hotels provides that as of September 30, 2016, we are to be paid annual minimum returns of $26,805. We realized returns of $6,687 and $6,599 during the three months ended September 30, 2016 and 2015, respectively, and returns of $20,009 and $19,706 during the nine months ended September 30, 2016 and 2015, respectively, under this agreement. Pursuant to our Wyndham agreement, Wyndham has provided us with a guarantee, which is limited to $35,656 ($3,416 remaining at September 30, 2016), subject to an annual payment limit of $17,828, and expires on July 28, 2020. During the nine months ended September 30, 2016, Wyndham made $592 of guaranty payments to us. We also lease 48 vacation units in one of our hotels to Wyndham Vacation Resorts, Inc., a subsidiary of Wyndham, or Wyndham Vacation, which requires annual minimum rents to us of $1,366. The guarantee provided by Wyndham with respect to the Wyndham Vacation lease for part of one hotel is unlimited. We realized rents of $341 and $332 during the three months ended September 30, 2016 and 2015, respectively, and rents of $1,024 and $994 during the nine months ended September 30, 2016 and 2015, respectively, under our Wyndham agreements. Under our Wyndham agreement, the FF&E reserve funding required for all hotels included in the agreement is subject to available cash flows after payment of our minimum return. The reserve amount is 4% of total hotel sales in 2016 and increases to 5% of total hotel sales in 2017 through the end of the agreement term in 2038. No FF&E escrow deposits were made during the nine months ended September 30, 2016 due to insufficient available cash flows generated at these hotels. We funded $2,439 for capital improvements to certain hotels included in our Wyndham agreement during the nine months ended September 30, 2016. We currently expect to fund $2,000 for capital improvements to certain hotels during the 2016 fourth quarter under this agreement. As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded. TA agreements. Our 198 owned travel centers are leased to and operated by a subsidiary of TA under five agreements. Our TA Nos. 1, 2 and 5 leases for 40 travel centers each expire in 2029, 2028 and 2032, respectively, and have two 15 year renewal options. Our TA Nos. 3 and 4 leases for 39 travel centers each expire in 2026 and 2030, respectively, and each have two 15 year renewal options. TA has guaranteed its subsidiary tenants’ obligations under these leases. Our travel center leases with TA do not require FF&E escrow deposits. However, TA is required to maintain the leased travel centers, including structural and non-structural components. Under all of our TA leases, TA may request that we fund capital improvements to the leased facilities in return for minimum rent increases. TA is not obligated to request and we are not obligated to fund any such improvements. We funded $75,314 for capital improvements to our travel center properties during the nine months ended September 30, 2016. We currently expect to fund approximately $30,000 for renovations and other capital improvements during the 2016 fourth quarter. As we fund these improvements, the annual minimum rents payable to us increase by 8.5% of the amounts funded. See Note 10 for further information about our TA leases. Other management agreement and lease matters. As of November 8, 2016, all payments due to us from our managers and tenants under our other operating agreements were current. Minimum return and minimum rent payments due to us under some of these other hotel management agreements and leases are supported by guarantees. The guarantee provided by Hyatt Hotels Corporation, or Hyatt, with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($18,654 remaining at September 30, 2016). The guarantee provided by Carlson with respect to the 11 hotels managed by Carlson is limited to $40,000 ($29,047 remaining at September 30, 2016). Guarantees and security deposits generally. When we reduce the amounts of the security deposits we hold for payment deficiencies at our managed and leased hotels, we record income equal to the amounts by which this deposit is reduced up to the minimum return or minimum rent due to us. However, reducing the security deposits does not result in additional cash flows to us of the deficiency amounts, but reducing amounts of security deposits may reduce the refunds due to the respective lessees or managers who have provided us with these deposits upon expiration of the respective lease or management agreement. The security deposits are non-interest bearing and are not held in escrow. Under these agreements, any amount of the security deposits which are applied to payment deficits may be replenished from a share of future cash flows from the applicable hotel operations pursuant to the terms of the respective agreements. Net operating results of our managed hotel portfolios exceeded the minimum returns due to us in both the three months ended September 30, 2016 and 2015. Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $2,248 and $6,560 less than the minimum returns due to us in the three months ended September 30, 2016 and 2015, respectively, and $12,618 and $17,395 less than the minimum returns due to us for the nine months ended September 30, 2016 and 2015, respectively. When the managers of these hotels fund these shortfalls under the terms of our operating agreements or their guarantees, we reflect such fundings (including security deposit applications) in our condensed consolidated statements of comprehensive income as a reduction of hotel operating expenses. There was no reduction to hotel operating expenses in the three months ended September 30, 2016 and 2015, and reductions of $592 and $1,295 in the nine months ended September 30, 2016 and 2015, respectively, as a result of such fundings. We had shortfalls at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our operating agreements of $2,248 and $6,560, and $12,026 and $16,100 in the three and nine months ended September 30, 2016 and 2015, respectively, which represent the unguaranteed portions of our minimum returns from Sonesta. Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $35,123 and $28,969 more than the minimum returns due to us in the three months ended September 30, 2016 and 2015, respectively, and $80,867 and $65,973 more than the minimum returns due to us in the nine months ended September 30, 2016 and 2015, respectively. Certain of our guarantees and our security deposits may be replenished by a share of these excess cash flows from the applicable hotel operations in excess of the minimum returns due to us pursuant to the terms of the respective operating agreements. When our guarantees and our security deposits are replenished by cash flows from hotel operations, we reflect such replenishments in our condensed consolidated statements of comprehensive income as an increase to hotel operating expenses. Hotel operating expenses were increased by $15,103 and $11,970 in the three months ended September 30, 2016 and 2015, respectively, and $33,897 and $27,551 in the nine months ended September 30, 2016 and 2015, respectively, as a result of such replenishments. |
Fair Value of Assets and Liabilities |
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Fair Value of Assets and Liabilities | Fair Value of Assets and Liabilities The table below presents certain of our assets carried at fair value at September 30, 2016, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.
In addition to the investment securities included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, term loan, senior notes and security deposits. At September 30, 2016 and December 31, 2015, the fair values of these additional financial instruments approximated their carrying values in our condensed consolidated balance sheets due to their short term nature or variable interest rates, except as follows:
At September 30, 2016, we estimated the fair values of our senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 2 inputs). We estimated the fair value of our convertible senior notes using discounted cash flow analyses and currently prevailing market interest rates (Level 3 inputs) because no market quotes or other observable inputs for these notes were available at September 30, 2016 and December 31, 2015. |
New Accounting Pronouncements New Accounting Pronouncements (Policies) |
9 Months Ended |
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Sep. 30, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Basis of Accounting | The accompanying condensed consolidated financial statements of Hospitality Properties Trust and its subsidiaries, or HPT, we, our or us, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2015, or our 2015 Annual Report. In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included in these condensed consolidated financial statements. These condensed consolidated financial statements include the accounts of HPT and our subsidiaries, all of which are 100% owned directly or indirectly by HPT. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods and those of our managers and tenants are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior years’ condensed consolidated financial statements to conform to the current year’s presentation. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets, impairment of real estate and the valuation of intangible assets. |
Variable Interest Entity | We have determined that each of our taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification™. We have concluded that we must consolidate each of our TRSs because we are the entity with the power to direct the activities that most significantly impact the VIEs’ economic performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE, and are, therefore, the primary beneficiary of each VIE. |
New Accounting Pronouncements | On January 1, 2016, we adopted the FASB Accounting Standards Update, or ASU, No. 2015-02, Consolidation. Among other things, this update changed how an entity determines the primary beneficiary of a VIE. The implementation of this update did not have an impact in our condensed consolidated financial statements. On January 1, 2016, we adopted FASB ASU No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheets as a direct deduction from the associated debt liability, and ASU No. 2015-15, Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements – Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting, which addresses the presentation of debt issuance costs related to line of credit arrangements. The implementation of these updates resulted in the reclassification of certain of our capitalized debt issuance costs as an offset to the associated debt liability in our condensed consolidated balance sheets. The classification of capitalized debt issuance costs related to our unsecured revolving credit facility remains unchanged in accordance with ASU No. 2015-15. As of December 31, 2015, debt issuance costs related to our unsecured term loan and senior unsecured notes of $2,244 and $10,556, respectively, were reclassified from assets to an offset to the associated debt liability in our condensed consolidated balance sheets. On January 1, 2016, we adopted FASB ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement for an acquirer in a business combination to account for measurement period adjustments retrospectively. Instead, acquirers must recognize measurement period adjustments during the period in which they determine the amounts, including the effect on earnings of any amounts they would have recorded in previous periods if the accounting had been completed at the acquisition date. The implementation of this update did not have an impact in our condensed consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which changes how entities measure certain equity investments and present changes in the fair value of financial liabilities measured under the fair value option that are attributable to their own credit. This update is effective for interim and annual periods beginning after December 15, 2017, with early adoption permitted subject to certain conditions. Currently, changes in fair value of these investments are recorded through other comprehensive income. Under this ASU, these changes will be recorded through earnings. We are continuing to evaluate this guidance, but we expect the implementation of this guidance will affect how changes in the fair value of available for sale equity investments we hold are presented in our condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). ASU No. 2016-02 requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase of the leased asset by the lessee. This classification will determine whether the lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease. A lessee is also required to record a right of use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent to existing guidance for sales type leases, direct financing leases and operating leases. ASU No. 2016-02 is effective for reporting periods beginning after December 15, 2018, with early adoption permitted. We are currently assessing the potential impact the adoption of ASU No. 2016-02 will have in our condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation – Stock Compensation, which identifies areas for simplification involving several aspects of accounting for share based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows. ASU No. 2016-09 is effective for reporting periods beginning after December 15, 2016. We are currently assessing the potential impact that the adoption of ASU No. 2016-09 will have in our condensed consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires that entities use a new forward looking “expected loss” model that generally will result in the earlier recognition of allowance for credit losses. The measurement of expected credit losses is based upon historical experience, current conditions and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU No. 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. We are currently assessing the potential impact that adoption of ASU No. 2016-13 will have in our condensed consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently assessing the potential impact that adoption of ASU No. 2016-15 will have in our condensed consolidated financial statements. |
Weighted Average Common Shares (Tables) |
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Schedule of reconciliation weighted average common shares to calculate basic and diluted earnings per share | The following table provides a reconciliation of the weighted average number of common shares used in the calculation of basic and diluted earnings per share:
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Real Estate Properties (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Real Estate [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allocation of the acquisition cost to the estimated fair value of assets acquired |
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Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment information |
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Related Person Transactions (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Related Party Transactions [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Rent | As of September 30, 2016, the number of travel centers leased, the terms, the annual minimum rents and the deferred rent balances under each of our TA leases were as follows:
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Fair Value of Assets and Liabilities (Tables) |
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Sep. 30, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of certain of the entity's assets carried at fair value, categorized by the level of inputs used in the valuation of each asset | The table below presents certain of our assets carried at fair value at September 30, 2016, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.
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Schedule of fair value of additional financial instruments | At September 30, 2016 and December 31, 2015, the fair values of these additional financial instruments approximated their carrying values in our condensed consolidated balance sheets due to their short term nature or variable interest rates, except as follows:
|
Basis of Presentation (Details) - USD ($) $ in Thousands |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Ownership interest in subsidiaries (as a percent) | 100.00% | |
Assets of TRSs | $ 35,150 | $ 26,559 |
Liabilities of TRSs | $ 100,848 | $ 68,921 |
Revenue Recognition (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
agreement
|
Sep. 30, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Revenue Recognition [Abstract] | |||||
Number of operating leases for which rental income is not recognized on straight line basis over the term of the lease agreements | agreement | 1 | ||||
Adjustments necessary to record rent on straight line basis | $ 2,932 | $ 3,752 | $ 10,377 | $ 5,807 | |
Due from related persons | 39,175 | 39,175 | $ 29,122 | ||
Straight line rent receivables | 2,165 | 2,165 | $ 1,841 | ||
Deferred percentage rent | $ 408 | $ 0 | $ 937 | 0 | |
Percentage rent | $ 2,048 |
Weighted Average Common Shares (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Schedule of Earnings Per Share [Line Items] | ||||
Weighted average common shares outstanding (basic) (in shares) | 157,217 | 151,359 | 153,357 | 150,476 |
Weighted average common shares outstanding (diluted) (in shares) | 157,263 | 151,386 | 153,390 | 150,863 |
Contingently issuable common shares | ||||
Schedule of Earnings Per Share [Line Items] | ||||
Effect of dilutive securities, weighted average number of shares outstanding adjustment (in shares) | 360 | |||
Unvested share awards | ||||
Schedule of Earnings Per Share [Line Items] | ||||
Effect of dilutive securities, weighted average number of shares outstanding adjustment (in shares) | 46 | 27 | 33 | 27 |
Shareholders' Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands |
Oct. 17, 2016 |
Oct. 11, 2016 |
Aug. 17, 2016 |
Jul. 15, 2016 |
May 19, 2016 |
Apr. 15, 2016 |
Feb. 23, 2016 |
Jan. 15, 2016 |
---|---|---|---|---|---|---|---|---|
Distributions | ||||||||
Common stock, quarterly per share distribution (in dollars per share) | $ 0.51 | $ 0.51 | $ 0.50 | |||||
Common stock dividend | $ 77,295 | $ 77,289 | $ 75,774 | |||||
Series D preferred shareholders' | ||||||||
Distributions | ||||||||
Preferred stock, per share distribution (in dollars per share) | $ 0.4453 | $ 0.4453 | $ 0.4453 | |||||
Preferred stock dividend | $ 5,166 | $ 5,166 | $ 5,166 | |||||
Subsequent Event | ||||||||
Distributions | ||||||||
Common stock dividend | $ 83,777 | |||||||
Common stock, dividends, per share, declared (in dollars per share) | $ 0.51 | |||||||
Subsequent Event | Series D preferred shareholders' | ||||||||
Distributions | ||||||||
Preferred stock, per share distribution (in dollars per share) | $ 0.4453 | |||||||
Preferred stock dividend | $ 5,166 |
Income Taxes (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Components of provision for income taxes | ||||
Income tax expense | $ 948 | $ 514 | $ 3,483 | $ 1,445 |
Current- | ||||
Current- Foreign | 415 | 79 | 2,018 | 155 |
Current- Federal | (59) | 32 | ||
Current- State | $ 592 | $ 435 | $ 1,433 | $ 1,290 |
Related Person Transactions - RMR LLC Management Fees and Reimbursements (Details) - USD ($) $ in Thousands |
1 Months Ended | 3 Months Ended | 5 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Sep. 26, 2016 |
Sep. 15, 2016 |
Sep. 30, 2016 |
Jan. 31, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
May 31, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Related Party Transaction [Line Items] | ||||||||||
Shares granted (in shares) | 79,100 | |||||||||
Stock repurchased (in shares) | 19,677 | |||||||||
Rental income | $ 78,278 | $ 73,747 | $ 231,830 | $ 207,561 | ||||||
RMR LLC | ||||||||||
Related Party Transaction [Line Items] | ||||||||||
Business management fees incurred | 34,942 | 17,383 | 83,547 | 45,832 | ||||||
Estimated incentive fees recorded | 25,036 | 8,561 | 56,272 | 17,383 | ||||||
Incentive fees paid | $ 62,263 | |||||||||
Shares issued under the business management agreement (in shares) | 63,119 | |||||||||
Business and property management agreement expenses | 9 | 9 | 34 | 24 | ||||||
Related party reimbursement expenses | 45 | 38 | 129 | 104 | ||||||
Shares granted (in shares) | 79,100 | 76,250 | ||||||||
Stock repurchased (in shares) | 19,677 | |||||||||
Employee share grants and internal audit costs | 1,019 | 713 | 2,125 | 1,838 | ||||||
Rental income | $ 9 | $ 9 | $ 26 | $ 26 |
Related Person Transactions - REITs, for which RMR LLC provides Management Services (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2016 |
Jun. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Oct. 11, 2016 |
|
Related Party Transaction [Line Items] | ||||||
Dividend income | $ 626 | $ 1,375 | ||||
Class A common shares | RMR Inc | ||||||
Related Party Transaction [Line Items] | ||||||
Shares holding (in shares) | 2,503,777 | |||||
Dividend income | 626 | $ 749 | ||||
RMR Inc | ||||||
Related Party Transaction [Line Items] | ||||||
Amortization of other liabilities to reduce business and property management fees | 896 | $ 911 | $ 2,689 | $ 1,142 | ||
Unamortized balance of the liability | $ 69,073 | $ 69,073 | ||||
Subsequent Event | Class A common shares | RMR Inc | ||||||
Related Party Transaction [Line Items] | ||||||
Quarterly dividend payable on common stock (in dollars per share) | $ 0.25 |
Related Person Transactions - AIC (Details) $ in Thousands |
1 Months Ended | 3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2016
USD ($)
company
|
Sep. 30, 2016
USD ($)
company
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
company
|
Sep. 30, 2015
USD ($)
|
Dec. 31, 2015
USD ($)
|
|
Related Party Transaction [Line Items] | ||||||
Income (losses) recognized related to equity investments | $ 13 | $ (24) | $ 107 | $ 71 | ||
Directors and Officers liability insurance | ||||||
Related Party Transaction [Line Items] | ||||||
Directors' and officers' insurance, policy extension term | 1 year | |||||
Directors' and officers' insurance | $ 141 | |||||
AIC | ||||||
Related Party Transaction [Line Items] | ||||||
Coverage of property insurance | 3,975 | |||||
Amount invested in equity investee | $ 7,117 | 7,117 | 7,117 | $ 6,834 | ||
Income (losses) recognized related to equity investments | 13 | (24) | 107 | 71 | ||
Equity in unrealized (loss) gain of an investee | $ 80 | $ (72) | $ 175 | $ (91) | ||
RMR LLC | AIC | ||||||
Related Party Transaction [Line Items] | ||||||
Number of other companies owning outstanding shares | company | 6 | 6 | 6 |
Hotel Management Agreements and Leases - Marriott No. 1 (Details) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
hotel
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
hotel
|
Sep. 30, 2015
USD ($)
|
|
Management Agreements and Leases [Line Items] | |||||
Capital improvements from leased facilities, funded | $ 122,239 | $ 172,627 | |||
Hotels | Marriott No. 1 agreement | |||||
Management Agreements and Leases [Line Items] | |||||
Number of real estate properties leased or managed | hotel | 53 | 53 | |||
Operating agreement annual rent and return | $ 68,583 | ||||
Additional returns realized | $ 4,372 | $ 3,149 | 10,621 | 3,149 | |
Amount funded for renovation | $ 2,265 | ||||
Percentage increase in minimum returns | 10.00% | ||||
Forecast | Hotels | Marriott No. 1 agreement | |||||
Management Agreements and Leases [Line Items] | |||||
Capital improvements from leased facilities, funded | $ 750 | ||||
Minimum | Hotels | Marriott No. 1 agreement | |||||
Management Agreements and Leases [Line Items] | |||||
Realized returns and rents | $ 17,126 | $ 17,046 | $ 51,361 | $ 51,080 |
Hotel Management Agreements and Leases - Marriott No. 5 (Details) - Hotels - Marriott No 5 contract $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2016
agreement
hotel
|
Sep. 30, 2016
USD ($)
hotel
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
hotel
|
Sep. 30, 2015
USD ($)
|
|
Management Agreements and Leases [Line Items] | |||||
Number of real estate properties leased or managed | hotel | 1 | 1 | 1 | ||
Realized returns and rents | $ | $ 2,529 | $ 2,529 | $ 7,587 | $ 7,587 | |
Number of renewal options | agreement | 4 | ||||
Term of renewal options | 15 years |
Hotel Management Agreements and Leases - Sonesta (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Dec. 31, 2016 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Management Agreements and Leases [Line Items] | |||||
Capital improvements from leased facilities, funded | $ 122,239 | $ 172,627 | |||
Hotels | Sonesta agreements | |||||
Management Agreements and Leases [Line Items] | |||||
Operating agreement annual rent and return | $ 85,964 | ||||
Fixed minimum return as a percentage of invested capital | 8.00% | ||||
Realized returns and rents | $ 19,133 | $ 13,186 | $ 51,279 | $ 39,985 | |
Amount funded for renovation | $ 44,017 | ||||
Percentage increase in minimum returns | 8.00% | ||||
Forecast | Hotels | Sonesta agreements | |||||
Management Agreements and Leases [Line Items] | |||||
Capital improvements from leased facilities, funded | $ 23,860 |
Hotel Management Agreements and Leases - Hyatt, Carlson (Details) - Hotels $ in Thousands |
Sep. 30, 2016
USD ($)
hotel
|
---|---|
Hyatt Hotels Corporation | |
Management Agreements and Leases [Line Items] | |
Number of real estate properties leased or managed | hotel | 22 |
Guarantee provided to the entity, maximum | $ 50,000 |
Guarantee provided to the entity, remaining amount | $ 18,654 |
Carlson | |
Management Agreements and Leases [Line Items] | |
Number of real estate properties leased or managed | hotel | 11 |
Guarantee provided to the entity, maximum | $ 40,000 |
Guarantee provided to the entity, remaining amount | $ 29,047 |
Hotel Management Agreements and Leases (Details) - Hotels $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016
USD ($)
hotel
|
Sep. 30, 2015
USD ($)
|
Sep. 30, 2016
USD ($)
hotel
|
Sep. 30, 2015
USD ($)
|
|
Management Agreements and Leases [Line Items] | ||||
Number of properties leased to taxable REIT subsidiaries | hotel | 302 | 302 | ||
Number of properties leased to third parties | hotel | 3 | 3 | ||
Amount by which the cash flow available to pay the entity's minimum rent or return was less than the minimum amount | $ 2,248 | $ 6,560 | $ 12,618 | $ 17,395 |
Reduction of hotel operating expenses | 0 | 0 | 592 | 1,295 |
Shortfalls due to unguaranteed portions of minimum returns | 2,248 | 6,560 | 12,026 | 16,100 |
Amount by which the cash flow available to pay the entity's minimum rent or return was more than the minimum amount | 35,123 | 28,969 | 80,867 | 65,973 |
Increase in guarantee provided to the entity | $ 15,103 | $ 11,970 | $ 33,897 | $ 27,551 |
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