Concentration

Geographic Concentration

At December 31, 2016, our 504 properties were located in 45 states in the United States, Ontario, Canada and Puerto Rico. Between 5% and 12% of our properties, by investment, were located in each of California, Georgia, Florida, Illinois, New Jersey and Texas. Our two hotels in Ontario, Canada and our hotel in Puerto Rico represent 1% and 2% of our hotels, by investment, respectively.

Credit Concentration

All of our managers and tenants are subsidiaries of other companies. The percentage of our annual minimum returns and rents, for each management or lease agreement is shown below, as of December 31, 2016.



Agreement Reference Name	Number of Properties	Annual Minimum Returns/Rents		% of Total		Investment⁽¹⁾		% of Total
Marriott (No. 1)	53	$	68,636	9	%	$	691,298	9	%
Marriott (No. 234)	68	106,360		13	%	1,001,389		11	%
Marriott (No. 5)	1	10,116		1	%	90,078		1	%
Subtotal Marriott	122	185,112		23	%	1,782,765		21	%
InterContinental⁽²⁾	94	161,789		21	%	1,695,778		19	%
Sonesta	34	90,171		11	%	1,196,797		13	%
Wyndham⁽³⁾	22	28,404		4	%	386,758		4	%
Hyatt	22	22,037		3	%	301,942		3	%
Carlson	11	12,920		2	%	209,895		2	%
Morgans	1	7,595		1	%	120,000		1	%
Subtotal Hotels	306	508,028		65	%	5,693,935		63	%
TA (No. 1)	40	51,435		6	%	661,417		7	%
TA (No. 2)	40	52,327		7	%	665,127		7	%
TA (No. 3)	39	52,665		7	%	620,240		7	%
TA (No. 4)⁽⁴⁾	39	50,117		6	%	568,098		6	%
TA (No. 5)	40	67,573		9	%	862,697		10	%
Subtotal TA	198	274,117		35	%	3,377,579		37	%
Total	504	$	782,145	100	%	$	9,071,514	100	%


(1)	Represents historical cost of our properties plus capital improvements funded by us less impairment writedowns, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations.


(2)	The annual minimum return/minimum rent amount presented includes $7,904 of rent related to our lease with InterContinental for one hotel in Puerto Rico.


(3)	The annual minimum return/minimum rent amount presented includes $1,407 of rent related to our lease with Wyndham Vacation for 48 vacation units in one hotel.


(4)	The annual minimum rent amount for our TA No. 4 agreement includes approximately $2,120 of ground rent paid by TA for a property we lease and sublease to TA.

Minimum return and minimum rent payments due to us under some of these hotel management agreements and leases are supported by guarantees. The guarantee provided by Marriott with respect to the 68 hotels managed by Marriott under our Marriott No. 234 agreement is limited to $40,000 ( $30,672 remaining at December 31, 2016) and expires on December 31, 2019. The guarantee provided by Wyndham with respect to the 22 hotels managed by Wyndham is limited to $35,656 ( $1,090 remaining at December 31, 2016) and expires on July 28, 2020. The guarantee provided by Hyatt with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($18,309 remaining at December 31, 2016). The guarantee provided by Carlson with respect to the 11 hotels managed by Carlson is limited to $40,000 ( $28,829 remaining at December 31, 2016). These guarantees may be replenished by future cash flows from the hotels in excess of our minimum returns. The guarantee provided by Wyndham for the lease with Wyndham Vacation is unlimited. The guarantee provided by Marriott with respect to the one hotel leased by Marriott (Marriott No. 5 agreement) is unlimited.

Security deposits support minimum return and minimum rent payments that may be due to us under some of our management agreements and leases. As of December 31, 2016, we hold security deposits for our 94 hotels managed or leased by InterContinental ($72,747) and for the 68 hotels included in our Marriott No. 234 agreement ($16,480). These deposits may be replenished further in the future from available cash flows.

Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $28,421, $28,644 and $47,026 less than the minimum returns due to us for the years ended December 31, 2016, 2015, and 2014, respectively. When managers of these hotels are required to fund the shortfalls under the terms of our operating agreements or their guarantees, we reflect such fundings (including security deposit applications) in our consolidated statements of comprehensive income as a reduction of hotel operating expenses. The reduction to hotel operating expenses was $2,918, $2,574 and $9,499 in the years ended December 31, 2016, 2015 and 2014, respectively. When we reduce the amounts of the security deposits we hold for any of our operating agreements for payment deficiencies, it does not result in additional cash flows to us of the deficiency amounts, but reduces the refunds due to the respective lessees or managers who have provided us with these deposits upon expiration of the respective management agreement. The security deposits are non-interest bearing and are not held in escrow. 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 $25,503, $26,070 and $37,527 during the years ended December 31, 2016, 2015 and 2014, respectively, which represents the unguaranteed portion of our minimum returns from Marriott and Sonesta.

Certain of our managed hotel portfolios had net operating results that were in the aggregate, $81,227, $68,597 and $22,447 more than the minimum returns due to us during the years ended December 31, 2016, 2015 and 2014, respectively. Certain of our guarantees and our security deposits may be replenished by a share of future cash flows from the applicable hotel operations in excess of the minimum returns due to us pursuant to the terms of the respective agreements. When our guarantees and our security deposits are replenished by cash flows from hotel operations, we reflect such replenishments in our consolidated statements of comprehensive income as an increase to hotel operating expenses. We had $34,148, $27,231 and $5,727 of guarantee and security deposit replenishments during the years ended December 31, 2016, 2015 and 2014, respectively.