☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2018 | |
or | |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland (State of Organization) | 04-3262075 (IRS Employer Identification No.) |
Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634 (Address of Principal Executive Offices) (Zip Code) |
Title Of Each Class | Name Of Each Exchange On Which Registered | |
Common Shares of Beneficial Interest | The Nasdaq Stock Market LLC |
Large accelerated filer ☒ | Accelerated filer ☐ | |
Non-accelerated filer ☐ | Smaller reporting company ☐ | |
Emerging growth company ☐ |
• | OUR HOTEL MANAGERS’ OR TENANTS’ ABILITIES TO PAY THE CONTRACTUAL AMOUNTS OF RETURNS OR RENTS DUE TO US, |
• | OUR ABILITY TO COMPETE FOR ACQUISITIONS EFFECTIVELY, |
• | OUR POLICIES AND PLANS REGARDING INVESTMENTS, FINANCINGS AND DISPOSITIONS, |
• | OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO SUSTAIN THE AMOUNT OF SUCH DISTRIBUTIONS, |
• | OUR ABILITY TO RAISE DEBT OR EQUITY CAPITAL, |
• | OUR ABILITY TO APPROPRIATELY BALANCE OUR USE OF DEBT AND EQUITY CAPITAL, |
• | OUR INTENT TO MAKE IMPROVEMENTS TO CERTAIN OF OUR PROPERTIES AND THE SUCCESS OF OUR HOTEL RENOVATIONS, |
• | OUR ABILITY TO ENGAGE AND RETAIN QUALIFIED MANAGERS AND TENANTS FOR OUR HOTELS AND TRAVEL CENTERS ON SATISFACTORY TERMS, |
• | THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY, |
• | OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT, |
• | OUR CREDIT RATINGS, |
• | THE ABILITY OF TRAVELCENTERS OF AMERICA LLC, OR TA, TO PAY CURRENT AND DEFERRED RENT AMOUNTS AND OTHER OBLIGATIONS DUE TO US, |
• | OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH THE RMR GROUP INC., OR RMR INC., |
• | OUR EXPECTATION THAT WE BENEFIT FROM OUR OWNERSHIP INTEREST IN AND OTHER RELATIONSHIPS WITH AFFILIATES INSURANCE COMPANY, OR AIC, AND FROM OUR PARTICIPATION IN INSURANCE PROGRAMS ARRANGED BY AIC, |
• | OUR QUALIFICATION FOR TAXATION AS A REAL ESTATE INVESTMENT TRUST, OR REIT, |
• | CHANGES IN FEDERAL OR STATE TAX LAWS, AND |
• | OTHER MATTERS. |
• | THE IMPACT OF CONDITIONS IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR MANAGERS AND TENANTS, |
• | COMPETITION WITHIN THE REAL ESTATE, HOTEL, TRANSPORTATION AND TRAVEL CENTER INDUSTRIES, PARTICULARLY IN THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED, |
• | COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS, |
• | LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO 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 INTERNATIONAL HOTELS CORPORATION, OR SONESTA, RMR INC., THE RMR GROUP LLC, OR RMR LLC, AIC AND OTHERS AFFILIATED WITH THEM. |
• | OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS TO OUR SHAREHOLDERS AND TO MAKE PAYMENTS OF PRINCIPAL AND INTEREST ON OUR INDEBTEDNESS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS, THE CAPITAL COSTS WE INCUR TO MAINTAIN OUR PROPERTIES AND OUR WORKING CAPITAL REQUIREMENTS. WE MAY BE UNABLE TO PAY OUR DEBT OBLIGATIONS OR TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS ON OUR COMMON SHARES AND FUTURE DISTRIBUTIONS MAY BE REDUCED OR ELIMINATED, |
• | THE SECURITY DEPOSITS WHICH WE HOLD ARE NOT IN SEGREGATED CASH ACCOUNTS OR OTHERWISE SEPARATE FROM OUR OTHER ASSETS AND LIABILITIES. ACCORDINGLY, WHEN WE RECORD INCOME BY REDUCING OUR SECURITY DEPOSIT LIABILITIES, WE DO NOT RECEIVE ANY ADDITIONAL CASH PAYMENT. BECAUSE WE DO NOT RECEIVE ANY ADDITIONAL CASH PAYMENT AS WE APPLY SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS, THE FAILURE OF OUR MANAGERS OR TENANTS TO PAY MINIMUM RETURNS OR RENTS DUE TO US MAY REDUCE OUR CASH FLOWS AND OUR ABILITY TO PAY DISTRIBUTIONS TO SHAREHOLDERS, |
• | AS OF DECEMBER 31, 2018, APPROXIMATELY 74% OF OUR AGGREGATE ANNUAL MINIMUM RETURNS AND RENTS WERE SECURED BY GUARANTEES OR SECURITY DEPOSITS FROM OUR MANAGERS AND TENANTS. THIS MAY IMPLY THAT THESE MINIMUM RETURNS AND RENTS WILL BE PAID. IN FACT, CERTAIN OF THESE GUARANTEES AND SECURITY DEPOSITS ARE LIMITED IN AMOUNT AND DURATION AND ALL THE GUARANTEES ARE SUBJECT TO THE GUARANTORS’ ABILITIES AND WILLINGNESS TO PAY. WE CANNOT BE SURE OF THE FUTURE FINANCIAL PERFORMANCE OF OUR PROPERTIES AND WHETHER SUCH PERFORMANCE WILL COVER OUR MINIMUM RETURNS AND RENTS, WHETHER THE GUARANTEES OR SECURITY DEPOSITS WILL BE ADEQUATE TO COVER FUTURE SHORTFALLS IN THE MINIMUM RETURNS OR RENTS DUE TO US WHICH THEY GUARANTEE OR SECURE, OR REGARDING OUR MANAGERS’, TENANTS’ OR GUARANTORS’ FUTURE ACTIONS IF AND WHEN THE GUARANTEES AND SECURITY DEPOSITS EXPIRE OR ARE DEPLETED OR THEIR ABILITIES OR WILLINGNESS TO PAY MINIMUM RETURNS AND RENTS OWED TO US. MOREOVER, THE SECURITY DEPOSITS WE HOLD ARE NOT SEGREGATED FROM OUR OTHER ASSETS AND THE APPLICATION OF SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS WILL RESULT IN US RECORDING INCOME, BUT WILL NOT RESULT IN US RECEIVING ADDITIONAL CASH. THE BALANCE OF OUR ANNUAL MINIMUM RETURNS AND RENTS AS OF DECEMBER 31, 2018 WAS NOT SECURED BY GUARANTEES OR SECURITY DEPOSITS, |
• | THE $35.7 MILLION LIMITED GUARANTY FROM WYNDHAM HOTELS & RESORTS, INC., OR WYNDHAM, WAS DEPLETED DURING THE YEAR ENDED DECEMBER 31, 2017 AND REMAINS DEPLETED. WE DO NOT HOLD A SECURITY DEPOSIT WITH RESPECT TO AMOUNTS DUE UNDER THE WYNDHAM AGREEMENT. WYNDHAM HAS PAID 85% OF THE MINIMUM RETURNS DUE TO US FOR THE YEAR ENDED DECEMBER 31, 2018 AND FOR JANUARY AND FEBRUARY 2019. WE CANNOT BE SURE AS TO WHETHER WYNDHAM WILL CONTINUE TO PAY AT LEAST THE GREATER OF AVAILABLE |
• | WE HAVE NO GUARANTEES OR SECURITY DEPOSITS FOR THE MINIMUM RETURNS DUE TO US FROM OUR MARRIOTT NO. 1 OR OUR SONESTA AGREEMENT. ACCORDINGLY, WE MAY RECEIVE AMOUNTS THAT ARE LESS THAN THE CONTRACTUAL MINIMUM RETURNS STATED IN THESE AGREEMENTS, |
• | WE HAVE RECENTLY RENOVATED CERTAIN HOTELS AND ARE CURRENTLY RENOVATING ADDITIONAL HOTELS. WE CURRENTLY EXPECT TO FUND APPROXIMATELY $260.0 MILLION IN 2019 AND $39.0 MILLION IN 2020 FOR RENOVATIONS AND OTHER CAPITAL IMPROVEMENT COSTS AT CERTAIN OF OUR HOTELS. THE COST OF CAPITAL PROJECTS ASSOCIATED WITH SUCH RENOVATIONS MAY BE GREATER THAN WE CURRENTLY ANTICIPATE. OPERATING RESULTS AT OUR HOTELS MAY DECLINE AS A RESULT OF HAVING ROOMS OUT OF SERVICE OR OTHER DISRUPTIONS DURING RENOVATIONS. ALSO, WHILE OUR FUNDING OF THESE CAPITAL PROJECTS WILL CAUSE OUR CONTRACTUAL MINIMUM RETURNS TO INCREASE, THE HOTELS’ OPERATING RESULTS MAY NOT INCREASE OR MAY NOT INCREASE TO THE EXTENT THAT THE MINIMUM RETURNS INCREASE. ACCORDINGLY, COVERAGE OF OUR MINIMUM RETURNS AT THESE HOTELS MAY REMAIN DEPRESSED FOR AN EXTENDED PERIOD, |
• | OUR EXPECTATION THAT WE WILL RENOVATE FEWER HOTELS IN 2019 THAN IN RECENT PAST YEARS MAY IMPLY THAT OUR HOTEL REVPAR AND OPERATING INCOME FROM OUR COMPARABLE HOTELS WILL IMPROVE. HOWEVER, OUR COMPARABLE HOTEL REVPAR AND OUR OPERATING INCOME MAY NOT IMPROVE AND MAY DECLINE, AND THE NUMBER OF HOTELS WE RENOVATE IN 2019 MAY EXCEED OUR EXPECTATIONS DUE TO VARIOUS POSSIBLE REASONS, INCLUDING CHANGED CONDITIONS AND COMPETITIVE DEMANDS, |
• | WE CURRENTLY EXPECT TO PURCHASE FROM TA DURING 2019 APPROXIMATELY $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, |
• | WE EXPECT TO RECOGNIZE A GAIN OF APPROXIMATELY $160.0 MILLION FROM OUR SALE OF 20 TRAVEL CENTERS TO TA IN THE FIRST QUARTER OF 2019. ANY GAIN WE MAY RECOGNIZE MAY BE LESS THAN THE AMOUNT WE CURRENTLY EXPECT, |
• | HOTEL ROOM DEMAND AND TRUCKING ACTIVITY ARE OFTEN REFLECTIONS OF THE GENERAL ECONOMIC ACTIVITY IN THE COUNTRY AND IN THE GEOGRAPHIC AREAS WHERE OUR PROPERTIES ARE LOCATED. IF ECONOMIC ACTIVITY DECLINES, HOTEL ROOM DEMAND AND TRUCKING ACTIVITY MAY DECLINE AND THE OPERATING RESULTS OF OUR HOTELS AND TRAVEL CENTERS MAY DECLINE, THE FINANCIAL RESULTS OF OUR HOTEL MANAGERS AND OUR TENANTS, INCLUDING TA, MAY SUFFER AND THESE MANAGERS AND TENANTS MAY BE UNABLE TO PAY OUR RETURNS OR RENTS. ALSO, DEPRESSED OPERATING RESULTS FROM OUR PROPERTIES FOR EXTENDED PERIODS MAY RESULT IN THE OPERATORS OF SOME OR ALL OF OUR HOTELS AND OUR TRAVEL CENTERS BECOMING UNABLE OR UNWILLING TO MEET THEIR OBLIGATIONS OR THEIR GUARANTEES AND SECURITY DEPOSITS WE HOLD MAY BE EXHAUSTED, |
• | HOTEL AND OTHER COMPETITIVE FORMS OF TEMPORARY LODGING SUPPLY (FOR EXAMPLE, AIRBNB) HAVE BEEN INCREASING AND MAY AFFECT OUR HOTEL OPERATORS' ABILITY TO GROW AVERAGE DAILY RATE, OR ADR, AND OCCUPANCY, AND ADR AND OCCUPANCY COULD DECLINE DUE TO INCREASED COMPETITION WHICH MAY CAUSE OUR HOTEL OPERATORS TO BECOME UNABLE TO PAY OUR RETURNS OR RENTS, |
• | IF THE CURRENT LEVEL OF COMMERCIAL ACTIVITY IN THE COUNTRY DECLINES, IF THE PRICE OF DIESEL FUEL INCREASES SIGNIFICANTLY, IF FUEL CONSERVATION MEASURES ARE INCREASED, IF FREIGHT BUSINESS IS DIRECTED AWAY FROM TRUCKING, IF TA IS UNABLE TO EFFECTIVELY COMPETE OR OPERATE ITS BUSINESS, IF FUEL EFFICIENCIES, THE USE OF ALTERNATIVE FUELS OR |
• | OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES THAT GENERATE RETURNS OR CAN BE LEASED FOR RENTS WHICH EXCEED OUR OPERATING AND CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE AND WE MAY FAIL TO REACH AGREEMENT WITH THE SELLERS AND COMPLETE THE PURCHASES OF ANY PROPERTIES WE DO WANT TO ACQUIRE. IN ADDITION, ANY PROPERTIES WE MAY ACQUIRE MAY NOT GENERATE RETURNS OR RENTS WHICH EXCEED OUR OPERATING AND CAPITAL COSTS, |
• | WE BELIEVE THAT OUR PORTFOLIO AGREEMENTS INCLUDE DIVERSE GROUPS OF PROPERTIES. OUR PORTFOLIO AGREEMENTS MAY NOT INCREASE THE SECURITY OF OUR CASH FLOWS OR INCREASE THE LIKELIHOOD OUR AGREEMENTS WILL BE RENEWED AS WE EXPECT, |
• | CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND ANY EXPECTED ACQUISITIONS AND SALES AND ANY RELATED MANAGEMENT OR LEASE ARRANGEMENTS WE EXPECT TO ENTER MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS OR ARRANGEMENTS MAY CHANGE, |
• | AT DECEMBER 31, 2018, WE HAD $26.0 MILLION OF CASH AND CASH EQUIVALENTS, $823.0 MILLION AVAILABLE UNDER OUR $1.0 BILLION REVOLVING CREDIT FACILITY AND SECURITY DEPOSITS AND GUARANTEES COVERING SOME OF OUR MINIMUM RETURNS AND RENTS. THESE STATEMENTS MAY IMPLY THAT WE HAVE ABUNDANT WORKING CAPITAL AND LIQUIDITY. HOWEVER, OUR MANAGERS AND TENANTS MAY NOT BE ABLE TO FUND MINIMUM RETURNS AND RENTS DUE TO US FROM OPERATING OUR PROPERTIES OR FROM OTHER RESOURCES; IN THE PAST AND CURRENTLY, CERTAIN OF OUR TENANTS AND HOTEL MANAGERS HAVE IN FACT NOT PAID THE MINIMUM AMOUNTS DUE TO US FROM THEIR OPERATIONS OF OUR LEASED OR MANAGED PROPERTIES. ALSO, CERTAIN OF THE SECURITY DEPOSITS AND GUARANTEES WE HAVE TO COVER ANY SUCH SHORTFALLS ARE LIMITED IN AMOUNT AND DURATION, AND ANY SECURITY DEPOSITS WE APPLY FOR SUCH SHORTFALLS DO NOT RESULT IN ADDITIONAL CASH FLOWS TO US. OUR PROPERTIES REQUIRE, AND WE HAVE AGREED TO PROVIDE, SIGNIFICANT FUNDING FOR CAPITAL IMPROVEMENTS, RENOVATIONS AND OTHER MATTERS. ACCORDINGLY, WE MAY NOT HAVE SUFFICIENT WORKING CAPITAL OR LIQUIDITY, |
• | WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE, |
• | WE INTEND TO CONDUCT OUR BUSINESS ACTIVITIES IN A MANNER THAT WILL AFFORD US REASONABLE ACCESS TO CAPITAL FOR INVESTMENT AND FINANCING ACTIVITIES. HOWEVER, WE MAY NOT SUCCEED IN THIS REGARD AND WE MAY NOT HAVE REASONABLE ACCESS TO CAPITAL, |
• | CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND OTHER CREDIT FACILITY CONDITIONS THAT WE MAY BE UNABLE TO SATISFY, |
• | ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY OR OTHER FLOATING RATE DEBT WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF FEES AND EXPENSES ASSOCIATED WITH SUCH DEBT, |
• | THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN MAY BE INCREASED TO UP TO $2.3 BILLION ON A COMBINED BASIS IN CERTAIN CIRCUMSTANCES; HOWEVER, INCREASING THE MAXIMUM BORROWING AVAILABILITY UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR, |
• | THE PREMIUMS USED TO DETERMINE THE INTEREST RATE PAYABLE ON OUR REVOLVING CREDIT FACILITY AND TERM LOAN AND THE FACILITY FEE PAYABLE ON OUR REVOLVING CREDIT FACILITY ARE BASED ON OUR CREDIT RATINGS. CHANGES IN OUR CREDIT RATINGS MAY CAUSE THE INTEREST AND FEES WE PAY TO INCREASE, |
• | WE HAVE THE OPTION TO EXTEND THE MATURITY DATE OF OUR REVOLVING CREDIT FACILITY UPON PAYMENT OF A FEE AND MEETING OTHER CONDITIONS; HOWEVER, THE APPLICABLE CONDITIONS MAY NOT BE MET, |
• | THE BUSINESS AND PROPERTY MANAGEMENT AGREEMENTS BETWEEN US AND RMR LLC HAVE CONTINUING 20 YEAR TERMS. HOWEVER, THOSE AGREEMENTS PERMIT EARLY TERMINATION IN CERTAIN CIRCUMSTANCES. ACCORDINGLY, WE CANNOT BE SURE THAT THESE AGREEMENTS WILL REMAIN IN EFFECT FOR CONTINUING 20 YEAR TERMS, |
• | WE BELIEVE THAT OUR RELATIONSHIPS WITH OUR RELATED PARTIES, INCLUDING RMR LLC, RMR INC., TA, SONESTA, AIC AND OTHERS AFFILIATED WITH THEM MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS. HOWEVER, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE, |
• | RMR INC. MAY REDUCE THE AMOUNT OF ITS DISTRIBUTIONS TO ITS SHAREHOLDERS, INCLUDING US, AND |
• | MARRIOTT INTERNATIONAL, INC., OR MARRIOTT, HAS NOTIFIED US THAT IT DOES NOT INTEND TO EXTEND ITS LEASE FOR OUR RESORT HOTEL ON KAUAI, HAWAII WHEN THAT LEASE EXPIRES ON DECEMBER 31, 2019 AND WE ARE HAVING DISCUSSIONS WITH MARRIOTT ABOUT THE FUTURE OF THIS HOTEL. THESE STATEMENTS MAY IMPLY THAT MARRIOTT WILL NOT OPERATE THIS HOTEL IN THE FUTURE OR THAT WE MAY RECEIVE LESS CASH FLOWS FROM THIS HOTEL IN THE FUTURE. AT THIS TIME WE CANNOT PREDICT HOW OUR DISCUSSIONS WITH MARRIOTT WILL IMPACT THE FUTURE OF THIS HOTEL. FOR EXAMPLE, THIS HOTEL MAY CONTINUE TO BE OPERATED BY MARRIOTT ON DIFFERENT CONTRACT TERMS THAN THE CURRENT LEASE, WE MAY IDENTIFY A DIFFERENT OPERATOR FOR THIS HOTEL OR THE CASH FLOWS WHICH WE RECEIVE FROM OUR OWNERSHIP OF THIS HOTEL MAY BE DIFFERENT THAN THE RENT WE NOW RECEIVE. ALSO, ALTHOUGH THE CURRENT LEASE EXPIRES ON DECEMBER 31, 2019, WE AND MARRIOTT MAY AGREE UPON A DIFFERENT TERMINATION DATE. |
Page | ||
Number of | Number of | ||||||||||
Brand | Manager | Properties | Rooms or Suites | Investment (1) | |||||||
Courtyard by Marriott® | Marriott | 71 | 10,264 | $ | 994,555 | ||||||
Royal Sonesta Hotels® | Sonesta | 6 | 2,332 | 703,124 | |||||||
Sonesta ES Suites® | Sonesta | 39 | 4,730 | 642,050 | |||||||
Crowne Plaza® | IHG | 10 | 3,941 | 587,488 | |||||||
Candlewood Suites® | IHG | 61 | 7,553 | 586,546 | |||||||
Residence Inn by Marriott® | Marriott | 35 | 4,488 | 545,029 | |||||||
Sonesta Hotels & Resorts® | Sonesta | 6 | 1,800 | 350,635 | |||||||
Staybridge Suites® | IHG | 20 | 2,481 | 347,592 | |||||||
Hyatt Place® | Hyatt | 22 | 2,724 | 301,942 | |||||||
Wyndham Hotels and Resorts® and Wyndham Grand® | Wyndham | 6 | 1,823 | 294,557 | |||||||
Kimpton® Hotels & Restaurants | IHG | 3 | 825 | 282,586 | |||||||
InterContinental Hotels and Resorts® | IHG | 3 | 800 | 218,469 | |||||||
Radisson® Hotels & Resorts and Radisson Blu® | Radisson | 5 | 1,329 | 196,703 | |||||||
Marriott Hotels and Resorts® | Marriott | 2 | 748 | 131,303 | |||||||
TownePlace Suites by Marriott® | Marriott | 12 | 1,321 | 112,979 | |||||||
Hawthorn Suites® | Wyndham | 16 | 1,756 | 102,125 | |||||||
Country Inns & Suites® by Radisson | Radisson | 4 | 610 | 73,402 | |||||||
Holiday Inn® | IHG | 3 | 754 | 73,331 | |||||||
SpringHill Suites by Marriott® | Marriott | 2 | 264 | 24,914 | |||||||
Total Hotels | 326 | 50,543 | $ | 6,569,330 |
(1) | Represents historical cost of our properties plus capital improvements funded by us less impairment write-downs, if any, and excludes capital improvements made from FF&E reserves, funded from hotel operations that do not result in increases in minimum returns or rents. |
Service Level | ||||||||||||
Chain Scale (1) | Full Service | Select Service | Extended Stay | Total | ||||||||
Luxury | 4 | — | — | 4 | ||||||||
Upper Upscale | 7 | — | — | 7 | ||||||||
Upscale | 30 | 95 | 55 | 180 | ||||||||
Upper Midscale | 7 | — | 51 | 58 | ||||||||
Midscale | — | — | 77 | 77 | ||||||||
Totals | 48 | 95 | 183 | 326 |
(1) | Chain scales are defined by STR. Chain scale segments are grouped primarily according to average room rates. |
• | Minimum Returns or Minimum Rent. All of our agreements require our managers or tenants to pay to us annual minimum returns or minimum rent. |
• | Additional Returns or Percentage Rent. In addition, our hotel management agreements provide for payment of additional returns to us generally based on excess cash flows after payment of hotel operating expenses, funding the FF&E reserve, if any, payment of our minimum returns, payment of management fees and, in certain instances, replenishment of the security deposit or guarantee. Certain of our lease agreements require payment of percentage rent to us based on increases in certain gross property revenues over threshold amounts. |
• | Long Terms. Our management agreements and leases generally have initial terms of 15 years or more. The weighted average term remaining for our agreements (weighted by our investment) as of December 31, 2018 is 13.4 years, without giving effect to any renewal options our managers or tenants may have. |
• | Pooled Agreements. All but one of our properties are included in one of 12 portfolio agreements. In all but one of our portfolio agreements, the manager’s or tenant’s obligations to us with respect to each property in a portfolio agreement are subject to cross default with the obligations with respect to all the other properties in the same portfolio agreement. The smallest portfolio agreement includes nine hotels in which we have invested $270.1 million; the largest portfolio agreement includes 100 hotels in which we have invested $2.1 billion. |
• | Geographic Diversification. The properties included in each portfolio agreement are geographically diversified. |
• | Strategic Locations. Our properties are located in the vicinity of major demand generators such as large suburban office parks, urban centers, airports, medical or educational facilities or major tourist attractions for hotels and typically at or near exits along interstate highways for travel centers. |
• | All or None Renewals. All manager or tenant renewal options for each portfolio agreement of our properties may only be exercised on an all or none basis and not for separate properties. |
• | Property Maintenance. Most of our hotel agreements require the deposit of 5% to 6% of annual gross hotel revenues into escrows to fund periodic renovations. Our travel center leases require the tenants to maintain the leased travel centers, including structural and non-structural components. |
• | Security Features. Most of our management agreements and leases include various terms intended to secure the payments to us, including some or all of the following: cash security deposits which we receive but do not escrow; subordination of management fees payable to the operator to some or all of our minimum return or rent; and full or limited guarantees from the manager’s or tenant’s parent company. As of December 31, 2018, nine of our 12 portfolio agreements and one hotel leased to a third party, a total of 200 hotels and 199 travel centers, have minimum returns or minimum rents payable to us which are subject to full or limited guarantees or are backed by security deposits. These properties represent 73.9% of our total minimum returns and minimum rents at December 31, 2018. We do not have any security deposits or guarantees for three of our seven hotel portfolio agreements, a total of 126 hotels, representing 26.1% of our total annual minimum returns and minimum rents as of December 31, 2018. Accordingly, the minimum returns we are paid under these agreements will depend exclusively upon the performance of the hotels. |
• | Management Fees. Management fees under most of our management agreements are subordinate to payment of our annual minimum returns. Our managers also have the ability to earn incentive management fees generally based on excess cash flows after payment of hotel operating expenses, funding of the required FF&E reserve, if any, payment of our minimum returns, payment of management fees and in certain instances, replenishment of the security deposit or guarantee. |
• | Historical and projected cash flows; |
• | The competitive market environment and the current or potential market position of each property; |
• | The tax and regulatory circumstances of the market area in which the property is located; |
• | The availability of a qualified manager or lessee; |
• | The financial strength of the proposed manager or lessee; |
• | The amount and type of financial support available from the proposed manager or lessee; |
• | The property’s design, construction quality, physical condition and age and expected capital expenditures that may be needed to maintain the property or to enhance its operation; |
• | The size of the property; |
• | The location and type of property; |
• | The estimated replacement cost, capital improvement requirements and proposed acquisition price of the property; |
• | Our weighted average long term cost of capital compared to projected returns we may realize by owning the property; |
• | The reputation of any operator with which the property is or may become affiliated; |
• | The level of services and amenities offered at the property; |
• | The proposed management agreement or lease terms; |
• | The brand under which the property operates or is expected to operate; |
• | The strategic fit of the property or investment with the rest of our portfolio and our own plans; and |
• | The existence of alternative sources, uses or needs for our capital and our debt leverage. |
• | The property’s current and expected future performance; |
• | The proposed or expected sale price; |
• | The capital required to maintain the property; |
• | The strategic fit of the property with the rest of our portfolio and with our plans; |
• | The manager’s or tenant’s desire to operate the property; |
• | The manager’s or tenant’s desire to cease operation of the property; |
• | Our intended use of the proceeds we may realize from the sale of a property; |
• | The existence of alternative sources, uses or needs for our capital and our debt leverage; and |
• | The tax implications to us and our shareholders of any proposed disposition. |
• | a bank, insurance company or other financial institution; |
• | a regulated investment company or REIT; |
• | a subchapter S corporation; |
• | a broker, dealer or trader in securities or foreign currencies; |
• | a person who marks-to-market our shares for U.S. federal income tax purposes; |
• | a U.S. shareholder (as defined below) that has a functional currency other than the U.S. dollar; |
• | a person who acquires or owns our shares in connection with employment or other performance of services; |
• | a person subject to alternative minimum tax; |
• | a person who acquires or owns our shares as part of a straddle, hedging transaction, constructive sale transaction, constructive ownership transaction or conversion transaction, or as part of a “synthetic security” or other integrated financial transaction; |
• | a person who owns 10% or more (by vote or value, directly or constructively under the IRC) of any class of our shares; |
• | a U.S. expatriate; |
• | a non-U.S. shareholder (as defined below) whose investment in our shares is effectively connected with the conduct of a trade or business in the United States; |
• | a nonresident alien individual present in the United States for 183 days or more during an applicable taxable year; |
• | a “qualified shareholder” (as defined in Section 897(k)(3)(A) of the IRC); |
• | a “qualified foreign pension fund” (as defined in Section 897(l)(2) of the IRC) or any entity wholly owned by one or more qualified foreign pension funds; |
• | a person subject to special tax accounting rules as a result of their use of applicable financial statements (within the meaning of Section 451(b)(3) of the IRC); or |
• | except as specifically described in the following summary, a trust, estate, tax-exempt entity or foreign person. |
• | an individual who is a citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under the federal income tax laws; |
• | an entity treated as a corporation for federal income tax purposes that is created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
• | an estate the income of which is subject to federal income taxation regardless of its source; or |
• | a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or, to the extent provided in Treasury regulations, a trust in existence on August 20, 1996 that has elected to be treated as a domestic trust; |
• | We will be taxed at regular corporate income tax rates on any undistributed “real estate investment trust taxable income,” determined by including our undistributed ordinary income and net capital gains, if any. |
• | If we have net income from the disposition of “foreclosure property,” as described in Section 856(e) of the IRC, that is held primarily for sale to customers in the ordinary course of a trade or business or other nonqualifying income from foreclosure property, we will be subject to tax on this income at the highest regular corporate income tax rate. |
• | If we have net income from “prohibited transactions”—that is, dispositions at a gain of inventory or property held primarily for sale to customers in the ordinary course of a trade or business other than dispositions of foreclosure property and other than dispositions excepted by statutory safe harbors—we will be subject to tax on this income at a 100% rate. |
• | If we fail to satisfy the 75% gross income test or the 95% gross income test discussed below, due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to tax at a 100% rate on the greater of the amount by which we fail the 75% gross income test or the 95% gross income test, with adjustments, multiplied by a fraction intended to reflect our profitability for the taxable year. |
• | If we fail to satisfy any of the REIT asset tests described below (other than a de minimis failure of the 5% or 10% asset tests) due to reasonable cause and not due to willful neglect, but nonetheless maintain our qualification for taxation as a REIT because of specified cure provisions, we will be subject to a tax equal to the greater of $50,000 or the highest regular corporate income tax rate multiplied by the net income generated by the nonqualifying assets that caused us to fail the test. |
• | If we fail to satisfy any provision of the IRC that would result in our failure to qualify for taxation as a REIT (other than violations of the REIT gross income tests or violations of the REIT asset tests described below) due to reasonable cause and not due to willful neglect, we may retain our qualification for taxation as a REIT but will be subject to a penalty of $50,000 for each failure. |
• | If we fail to distribute for any calendar year at least the sum of 85% of our REIT ordinary income for that year, 95% of our REIT capital gain net income for that year and any undistributed taxable income from prior periods, we will be subject to a 4% nondeductible excise tax on the excess of the required distribution over the amounts actually distributed. |
• | If we acquire a REIT asset where our adjusted tax basis in the asset is determined by reference to the adjusted tax basis of the asset in the hands of a C corporation, under specified circumstances we may be subject to federal income taxation on all or part of the built-in gain (calculated as of the date the property ceased being owned by the C corporation) on such asset. We generally have not sold and do not expect to sell assets if doing so would result in the imposition of a material built-in gains tax liability; but if and when we do sell assets that may have associated built-in gains tax exposure, then we expect to make appropriate provision for the associated tax liabilities on our financial statements. |
• | If we acquire a corporation in a transaction where we succeed to its tax attributes, to preserve our qualification for taxation as a REIT we must generally distribute all of the C corporation earnings and profits inherited in that acquisition, if any, no later than the end of our taxable year in which the acquisition occurs. However, if we fail to do so, relief provisions would allow us to maintain our qualification for taxation as a REIT provided we distribute any subsequently discovered C corporation earnings and profits and pay an interest charge in respect of the period of delayed distribution. |
• | Our subsidiaries that are C corporations, including our TRSs, generally will be required to pay federal corporate income tax on their earnings, and a 100% tax may be imposed on any transaction between us and one of our TRSs that does not reflect arm’s length terms. |
(1) | that is managed by one or more trustees or directors; |
(2) | the beneficial ownership of which is evidenced by transferable shares or by transferable certificates of beneficial interest; |
(3) | that would be taxable, but for Sections 856 through 859 of the IRC, as a domestic C corporation; |
(4) | that is not a financial institution or an insurance company subject to special provisions of the IRC; |
(5) | the beneficial ownership of which is held by 100 or more persons; |
(6) | that is not “closely held,” meaning that during the last half of each taxable year, not more than 50% in value of the outstanding shares are owned, directly or indirectly, by five or fewer “individuals” (as defined in the IRC to include specified tax-exempt entities); and |
(7) | that meets other tests regarding the nature of its income and assets and the amount of its distributions, all as described below. |
(1) | not directly or indirectly operate or manage a lodging facility or a health care facility; and |
(2) | not directly or indirectly provide to any person, under a franchise, license or otherwise, rights to any brand name under which any lodging facility or health care facility is operated, except that in limited circumstances a subfranchise, sublicense or similar right can be granted to an independent contractor to operate or manage a lodging facility or a health care facility. |
• | The amount of rent received generally must not be based on the income or profits of any person, but may be based on a fixed percentage or percentages of receipts or sales. |
• | Rents do not qualify if the REIT owns 10% or more by vote or value of stock of the tenant (or 10% or more of the interests in the assets or net profits of the tenant, if the tenant is not a corporation), whether directly or after application of attribution rules. We generally do not intend to lease property to any party if rents from that property would not qualify as “rents from real property,” but application of the 10% ownership rule is dependent upon complex attribution rules and circumstances that may be beyond our control. In this regard, we already own close to, but less than, 10% of the outstanding common shares of TA, and TA has undertaken to limit its redemptions and repurchases of outstanding common shares so that we do not come to own 10% or more of its outstanding common shares. Our declaration of trust and bylaws generally disallow transfers or purported acquisitions, directly or by attribution, of our shares to the extent necessary to maintain our qualification for taxation as a REIT under the IRC. Nevertheless, we cannot be sure that these restrictions will be effective to prevent our qualification for taxation as a REIT from being jeopardized under the 10% affiliated tenant rule. Furthermore, we cannot be sure that we will be able to monitor and enforce these restrictions, nor will our shareholders necessarily be aware of ownership of our shares attributed to them under the IRC’s attribution rules. |
• | There is a limited exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant where the tenant is a TRS. If at least 90% of the leased space of a property is leased to tenants other than TRSs and 10% affiliated tenants, and if the TRS’s rent to the REIT for space at that property is substantially comparable to the rents paid by nonaffiliated tenants for comparable space at the property, then otherwise qualifying rents paid by the TRS to the REIT will not be disqualified on account of the rule prohibiting 10% affiliated tenants. |
• | There is an additional exception to the above prohibition on earning “rents from real property” from a 10% affiliated tenant. For this additional exception to apply, a real property interest in a “qualified lodging facility” must be leased by the REIT to its TRS, and the facility must be operated on behalf of the TRS by a person who is an “eligible independent contractor,” all as described in Sections 856(d)(8)-(9) of the IRC. As described below, we believe our leases with our TRSs have satisfied and will continue to satisfy these requirements. |
• | In order for rents to qualify, we generally must not manage the property or furnish or render services to the tenants of the property, except through an independent contractor from whom we derive no income or through one of our TRSs. There is an exception to this rule permitting a REIT to perform customary management and tenant services of the sort that a tax-exempt organization could perform without being considered in receipt of “unrelated business taxable income” as defined in Section 512(b)(3) of the IRC, or UBTI. In addition, a de minimis amount of noncustomary services will not disqualify income as “rents from real property” as long as the value of the impermissible tenant services does not exceed 1% of the gross income from the property. |
• | If rent attributable to personal property leased in connection with a lease of real property is 15% or less of the total rent received under the lease, then the rent attributable to personal property will qualify as “rents from real property”; if this 15% threshold is exceeded, the rent attributable to personal property will not so qualify. The portion of rental income treated as attributable to personal property is determined according to the ratio of the fair market value of the personal property to the total fair market value of the real and personal property that is rented. |
• | In addition, “rents from real property” includes both charges we receive for services customarily rendered in connection with the rental of comparable real property in the same geographic area, even if the charges are separately stated, as well as charges we receive for services provided by our TRSs when the charges are not separately stated. Whether separately stated charges received by a REIT for services that are not geographically customary and provided by a TRS are included in “rents from real property” has not been addressed clearly by the IRS in published authorities; however, our counsel, Sullivan & Worcester LLP, is of the opinion that, although the matter is not free from doubt, “rents from real property” also includes charges we receive for services provided by our TRSs when the charges are separately stated, even if the services are not geographically customary. Accordingly, we believe that our revenues from TRS-provided services, whether the charges are separately stated or not, qualify as “rents from real property” because the services satisfy the geographically customary standard, because the services have been provided by a TRS, or for both reasons. |
• | that is acquired by a REIT as a result of the REIT having bid on such property at foreclosure, or having otherwise reduced such property to ownership or possession by agreement or process of law, after there was a default or when default was imminent on a lease of such property or on indebtedness that such property secured; |
• | for which any related loan acquired by the REIT was acquired at a time when the default was not imminent or anticipated; and |
• | for which the REIT makes a proper election to treat the property as foreclosure property. |
• | on which a lease is entered into for the property that, by its terms, will give rise to income that does not qualify for purposes of the 75% gross income test (disregarding income from foreclosure property), or any nonqualified income under the 75% gross income test is received or accrued by the REIT, directly or indirectly, pursuant to a lease entered into on or after such day; |
• | on which any construction takes place on the property, other than completion of a building or any other improvement where more than 10% of the construction was completed before default became imminent and other than specifically exempted forms of maintenance or deferred maintenance; or |
• | which is more than 90 days after the day on which the REIT acquired the property and the property is used in a trade or business which is conducted by the REIT, other than through an independent contractor from whom the REIT itself does not derive or receive any income or a TRS. |
• | At least 75% of the value of our total assets must consist of “real estate assets,” defined as real property (including interests in real property and interests in mortgages on real property or on interests in real property), ancillary personal property to the extent that rents attributable to such personal property are treated as rents from real property in accordance with the rules described above, cash and cash items, shares in other REITs, debt instruments issued by “publicly offered REITs” as defined in Section 562(c)(2) of the IRC, government securities and temporary investments of new capital (that is, any stock or debt instrument that we hold that is attributable to any amount received by us (a) in exchange for our stock or (b) in a public offering of our five-year or longer debt instruments, but in each case only for the one-year period commencing with our receipt of the new capital). |
• | Not more than 25% of the value of our total assets may be represented by securities other than those securities that count favorably toward the preceding 75% asset test. |
• | Of the investments included in the preceding 25% asset class, the value of any one non-REIT issuer’s securities that we own may not exceed 5% of the value of our total assets. In addition, we may not own more than 10% of the vote or value of any one non-REIT issuer’s outstanding securities, unless the securities are “straight debt” securities or otherwise excepted as discussed below. Our stock and other securities in a TRS are exempted from these 5% and 10% asset tests. |
• | Not more than 20% of the value of our total assets may be represented by stock or other securities of our TRSs. |
• | Not more than 25% of the value of our total assets may be represented by “nonqualified publicly offered REIT debt instruments” as defined in Section 856(c)(5)(L)(ii) of the IRC. |
(1) | the sum of 90% of our “real estate investment trust taxable income” and 90% of our net income after tax, if any, from property received in foreclosure, over |
(2) | the amount by which our noncash income (e.g., imputed rental income or income from transactions inadvertently failing to qualify as like-kind exchanges) exceeds 5% of our “real estate investment trust taxable income.” |
(1) | long-term capital gains, if any, recognized on the disposition of our shares; |
(2) | our distributions designated as long-term capital gain dividends (except to the extent attributable to real estate depreciation recapture, in which case the distributions are subject to a maximum 25% federal income tax rate); |
(3) | our dividends attributable to dividend income, if any, received by us from C corporations such as TRSs; |
(4) | our dividends attributable to earnings and profits that we inherit from C corporations; and |
(5) | our dividends to the extent attributable to income upon which we have paid federal corporate income tax (such as taxes on foreclosure property income or on built-in gains), net of the corporate income taxes thereon. |
(1) | we will be taxed at regular corporate capital gains tax rates on retained amounts; |
(2) | each of our U.S. shareholders will be taxed on its designated proportionate share of our retained net capital gains as though that amount were distributed and designated as a capital gain dividend; |
(3) | each of our U.S. shareholders will receive a credit or refund for its designated proportionate share of the tax that we pay; |
(4) | each of our U.S. shareholders will increase its adjusted basis in our shares by the excess of the amount of its proportionate share of these retained net capital gains over the U.S. shareholder’s proportionate share of the tax that we pay; and |
(5) | both we and our corporate shareholders will make commensurate adjustments in our respective earnings and profits for federal income tax purposes. |
• | provides the U.S. shareholder’s correct taxpayer identification number; |
• | certifies that the U.S. shareholder is exempt from backup withholding because (a) it comes within an enumerated exempt category, (b) it has not been notified by the IRS that it is subject to backup withholding, or (c) it has been notified by the IRS that it is no longer subject to backup withholding; and |
• | certifies that it is a U.S. citizen or other U.S. person. |
• | their investment in our shares or other securities satisfies the diversification requirements of ERISA; |
• | the investment is prudent in light of possible limitations on the marketability of our shares; |
• | they have authority to acquire our shares or other securities under the applicable governing instrument and Title I of ERISA; and |
• | the investment is otherwise consistent with their fiduciary responsibilities. |
• | any restriction on or prohibition against any transfer or assignment that would result in a termination or reclassification for federal or state tax purposes, or would otherwise violate any state or federal law or court order; |
• | any requirement that advance notice of a transfer or assignment be given to the issuer and any requirement that either the transferor or transferee, or both, execute documentation setting forth representations as to compliance with any restrictions on transfer that are among those enumerated in the regulation as not affecting free transferability, including those described in the preceding clause of this sentence; |
• | any administrative procedure that establishes an effective date, or an event prior to which a transfer or assignment will not be effective; and |
• | any limitation or restriction on transfer or assignment that is not imposed by the issuer or a person acting on behalf of the issuer. |
• | competition from other hotels in our markets, or an oversupply or over building of hotels in our markets; |
• | competition from alternative lodging options such as cruise ships, timeshares, vacation rentals or sharing services such as Airbnb, in our markets; |
• | changes in marketing and distribution for the industry including the ability of third party internet and other travel intermediaries to attract and retain customers; |
• | increased operating costs, including wages, benefits, insurance, property taxes and energy, due to inflation, increased minimum wages and other factors, which may not be offset in the future by increased room rates; |
• | competition from other hotel operators or others to attract and retain qualified employees; |
• | low unemployment in the U.S. and a lack of suitable employees for certain job classifications, especially those for less skilled positions, which may drive up costs or affect service levels; |
• | labor strikes, disruptions or lockouts that may impact operating performance; |
• | dependence on demand from business and leisure travelers, which may fluctuate and be seasonal; |
• | increases in energy costs, airline fares and other expenses related to travel, which may negatively affect traveling; |
• | decreases in demand for business and leisure travel due to terrorism, terrorism alerts and warnings, military actions, pandemics or other medical events; |
• | decreases in demand for business travel due to use of technologies that enhance interpersonal communication and interaction without the need to travel or meet in person; and |
• | changes in customer preferences for various types of hotels or hotel locations. |
• | Increasing truck fuel efficiency may adversely impact TA’s business. Government regulation and increasing and volatile fuel prices are causing truck manufacturers and TA’s trucking customers to remain focused on fuel efficiency. The largest part of TA’s revenue is derived from selling motor fuel. If TA’s trucking customers purchase less motor fuel because their trucks are operated more fuel efficiently, TA’s financial results will decline unless it is sufficiently able to offset those declines by selling substitute or other products or services, gaining market share, increasing its gross margins per gallon of fuel sold or reducing its operating costs. |
• | TA’s operating margins are narrow, and fuel sales comprise the majority of TA’s revenues. Historically, TA’s fuel margins per gallon have declined during periods of rising fuel prices, and during the most recent U.S. recession and the periods of historically high and volatile fuel prices, TA realized large operating losses. |
• | The trucking industry is the primary customer for TA’s goods and services. When the U.S. economy declines, demand for goods moved by trucks declines, and in turn demand for TA’s products and services typically declines. |
• | TA’s indebtedness and rent obligations are substantial. A decline in TA’s revenues or an increase in its expenses may make it difficult or impossible for TA to make payments of interest and principal on its debt or meet all of its rent obligations. TA’s substantial indebtedness and rent obligations may also place TA at a disadvantage in relation to competitors that have lower relative debt levels. |
• | Increasing fuel prices and fuel price volatility have various adverse impacts upon TA’s business. For example, high fuel prices result in higher truck shipping costs, which causes shippers to consider alternative means for transporting freight and therefore reduces trucking business and, in turn, TA’s business. Higher fuel prices may also result in less disposable income for TA’s customers to purchase TA’s non-fuel goods and services. Higher and more volatile fuel commodity prices increase the working capital needed to maintain TA’s fuel inventory and receivables, and this increases TA’s costs of doing business. Further, increases in fuel prices may place TA at a cost disadvantage to its competitors that may have larger fuel inventory or forward contracts executed during periods of lower fuel prices. |
• | The travel center industry is highly competitive and principally consists of a small number of large competitors. These competitive pressures could result in a reduction of TA's gross margins or an increase in TA's expenses or capital improvement costs, which could negatively affect TA's profitability and liquidity. |
• | If the trucking industry fails to satisfy market demands for transporting goods, other means for transporting goods may be chosen, which may result in reduced business for the trucking industry and may negatively impact TA’s business, results of operations and liquidity. |
• | TA's labor costs may increase due to increased demand for labor in the market and for higher skilled personnel, such as technicians, that TA requires. This increased demand may increase TA's labor costs and prevent TA from fully staffing its positions. Further, legislation that increases the minimum wage may further increase TA's labor |
• | To mitigate the risks arising from fuel price volatility, TA generally maintains limited fuel inventory. Accordingly, an interruption in TA’s fuel supplies, which may be caused by local conditions, such as a malfunction in a particular pipeline or terminal, by weather related events, such as hurricanes in the areas where petroleum or natural gas is extracted or refined, or by national or international conditions, such as government rationing, acts of terrorism, wars and the like, would materially adversely affect TA’s business. |
• | Increased use of efficient and alternative fuels and any widespread adoption of alternative transportation technologies may reduce demand for TA's products and services; for example, electronic or battery powered trucks may reduce the demand for petroleum based fuels which are TA's principal products or driverless trucks may reduce the number of people who are employed as professional drivers who are TA's principal customers. |
• | TA’s business is subject to laws relating to the protection of the environment. The travel centers TA operates include fueling areas, truck repair and maintenance facilities and tanks for the storage and dispensing of petroleum products, natural gas, waste and other hazardous substances, all of which create the potential for environmental damage. As a result, TA regularly incurs environmental clean up costs. TA cannot predict what environmental legislation or regulations may be enacted or how existing laws or regulations will be administered or interpreted; more stringent laws, more vigorous enforcement policies or stricter interpretation of existing laws in the future could cause TA to expend significant amounts or experience losses. |
• | Climate change and other environmental legislation and regulation, and market reaction to such legislation and regulation, may decrease demand for TA's major product, diesel fuel, and require TA to make significant changes to its business and to make capital or other expenditures, which may adversely affect its business. |
• | TA or franchisees of TA's travel centers may incur significant costs and losses as a result of severe weather, both in terms of operating, preparing and repairing the travel centers in anticipation of, during and after a severe weather event and in terms of lost business due to the interruption in operating TA's travel centers or decreased truck movements. |
• | Investors may consider whether to buy or sell our common shares based upon the distribution rate on our common shares relative to the then prevailing market interest rates. If market interest rates go up, investors may expect a higher distribution rate than we are able to pay, which may increase our cost of capital, or they may sell our |
• | Amounts outstanding under our revolving credit facility and term loans require interest to be paid at floating interest rates. When interest rates increase, our interest costs will increase, which could adversely affect our cash flows, our ability to pay principal and interest on our debt, our cost of refinancing our fixed rate debts when they become due and our ability to make or sustain distributions to our shareholders. |
• | Property values are often determined, in part, based upon a capitalization of rental income formula. When market interest rates increase, property investors often demand higher capitalization rates and that causes property values to decline. Increases in interest rates could lower the value of our properties and cause the value of our securities to decline. |
• | competition from other investors, including publicly traded and private REITs, numerous financial institutions, individuals, foreign investors and other public and private companies; |
• | our long term cost of capital; |
• | contingencies in our acquisition agreements; and |
• | the availability and terms of financing. |
• | we do not believe that it is possible to understand fully a property before it is owned and operated for a reasonable period of time, and, notwithstanding pre-acquisition due diligence, we could acquire a property that contains undisclosed defects in design or construction or which was not properly staffed; |
• | the market in which an acquired property is located may experience unexpected changes that adversely affect the property’s value; |
• | the occupancy of and rents or returns from properties that we acquire may decline during our ownership; |
• | property operating costs for our acquired properties may be higher than anticipated and our acquired properties may not yield expected returns; |
• | we may acquire properties subject to unknown liabilities and without any recourse, or with limited recourse, such as liability for the clean up of undisclosed environmental contamination or for claims by tenants, vendors or other persons related to actions taken by former owners of the properties; and |
• | acquired properties might require significant management attention that would otherwise be devoted to our other business activities. |
• | the illiquid nature of real estate markets, which limits our ability to sell our assets rapidly to respond to changing market conditions; |
• | the subjectivity of real estate valuations and changes in such valuations over time; |
• | costs that may be incurred relating to property maintenance and repair, and the need to make expenditures due to changes in government regulations; and |
• | liabilities and litigations arising from injuries on our properties or otherwise incidental to the ownership of our properties. |
• | Laws affecting the operations of hotels in foreign countries may require us to assume responsibility for payments due to employees of hotels we own or in which we invest. |
• | Foreign laws affecting real estate may restrict the ability of entities organized or controlled by persons outside those countries, like us, to own or make management decisions affecting the properties in which we invest. |
• | In most foreign countries, we will not have the same or similar tax status as we have in the United States, we will be subject to local taxes, and our net earnings may be less than we would realize by making investments in the United States. |
• | Most of the hotels located in foreign countries in which we would invest will conduct business in local currencies rather than in U.S. dollars. We may be able to mitigate some of the risk of changing comparative currency valuations by funding our foreign investments in local currencies; however, it is unlikely we will be able to completely mitigate such foreign currency exchange rate risk. |
• | Some foreign countries do not have judicial dispute resolution processes which are as efficient or impartial as the U.S. judicial system generally. We may mitigate this risk by making the resolution of disputes which may arise from our foreign investments subject to arbitration; however, the enforcement of arbitration awards will remain subject to local judicial processes and there may be no way for us to mitigate the risks of our dealings in a foreign legal system. |
• | Investments by U.S. entities like us in foreign countries may be particularly subject to terrorism risks as it relates to the ownership of prominently identified properties such as hotels. |
• | The political systems in certain foreign countries are less stable than in the United States, and certain foreign governments have in the past expropriated properties owned by U.S. entities like us without paying fair compensation. |
• | the division of our Trustees into three classes, with the term of one class expiring each year, which could delay a change of control of us; |
• | the authority of our Board of Trustees, and not our shareholders, to adopt, amend or repeal our bylaws and to fill vacancies on our Board of Trustees; |
• | shareholder voting standards which require a supermajority for approval of certain actions; |
• | the fact that only our Board of Trustees, or, if there are no Trustees, our officers, may call shareholder meetings and that shareholders are not entitled to act without a meeting; |
• | required qualifications for an individual to serve as a Trustee and a requirement that certain of our Trustees be “Managing Trustees” and other Trustees be “Independent Trustees,” as defined in our governing documents; |
• | limitations on the ability of our shareholders to propose nominees for election as Trustees and propose other business to be considered at a meeting of our shareholders; |
• | limitations on the ability of our shareholders to remove our Trustees; |
• | requirements that shareholders comply with regulatory requirements (including Nevada and Louisiana gaming and Indiana insurance licensing requirements) affecting us which could effectively limit share ownership of us, including in some cases, to 5% of our outstanding shares; |
• | the authority of our Board of Trustees to create and issue new classes or series of shares (including shares with voting rights and other rights and privileges that may deter a change in control) and issue additional common shares; |
• | restrictions on business combinations between us and an interested shareholder that have not first been approved by our Board of Trustees (including a majority of Trustees not related to the interested shareholder); and |
• | the authority of our Board of Trustees, without shareholder approval, to implement certain takeover defenses. |
• | actual receipt of an improper benefit or profit in money, property or services; or |
• | active and deliberate dishonesty by the Trustee or officer that was established by a final judgment as being material to the cause of action adjudicated. |
• | our TRSs may not directly or indirectly operate or manage a lodging facility, as defined by the IRC; |
• | the leases to our TRSs must be respected as true leases for federal income tax purposes and not as service contracts, partnerships, joint ventures, financings or other types of arrangements; |
• | the leased properties must constitute qualified lodging facilities (including customary amenities and facilities) under the IRC; |
• | our leased properties must be managed and operated on behalf of the TRSs by independent contractors who are less than 35% affiliated with us and who are actively engaged (or have affiliates so engaged) in the trade or business of managing and operating qualified lodging facilities for persons unrelated to us; and |
• | the rental and other terms of the leases must be arm’s length. |
• | our ability to make or sustain the rate of distributions will be adversely affected if any of the risks described in this Annual Report on Form 10-K occur; |
• | our making of distributions is subject to compliance with restrictions contained in our credit agreement and may be subject to restrictions in future debt obligations we may incur; and |
• | the timing and amount of any distributions will be determined at the discretion of our Board of Trustees and will depend on various factors that our Board of Trustees deems relevant, including our financial condition, our results of operations, our liquidity, our capital requirements, our funds from operations, or FFO, our Normalized FFO, restrictive covenants in our financial or other contractual arrangements, general economic conditions in the United States, requirements under the IRC to remain qualified for taxation as a REIT and restrictions under the laws of Maryland. |
• | the extent of investor interest in our securities; |
• | the general reputation of REITs and externally managed companies and the attractiveness of our equity securities in comparison to other equity securities, including securities issued by other real estate based companies or by other issuers less sensitive to rises in interest rates; |
• | our underlying asset value; |
• | investor confidence in the stock and bond markets, generally; |
• | market interest rates; |
• | national economic conditions; |
• | changes in tax laws; |
• | changes in our credit ratings; and |
• | general market conditions. |
Hotels | Travel Centers | All Properties | |||||||||||||||||||||||||||||||
Number of Properties | Undepreciated Carrying Value | Depreciated Carrying Value | Number of Properties | Undepreciated Carrying Value | Depreciated Carrying Value | Total Number of Properties | Total Undepreciated Carrying Value | Total Depreciated Carrying Value | |||||||||||||||||||||||||
Location of Properties | |||||||||||||||||||||||||||||||||
United States | |||||||||||||||||||||||||||||||||
Alabama | 6 | $ | 50,504 | $ | 36,812 | 4 | $ | 78,283 | $ | 50,736 | 10 | $ | 128,787 | $ | 87,548 | ||||||||||||||||||
Arkansas | — | — | — | 4 | 95,884 | 55,567 | 4 | 95,884 | 55,567 | ||||||||||||||||||||||||
Arizona | 15 | 212,534 | 142,465 | 7 | 161,146 | 105,520 | 22 | 373,680 | 247,985 | ||||||||||||||||||||||||
California | 36 | 905,892 | 608,160 | 10 | 186,713 | 150,516 | 46 | 1,092,605 | 758,676 | ||||||||||||||||||||||||
Colorado | 6 | 148,573 | 118,414 | 3 | 43,169 | 26,444 | 9 | 191,742 | 144,858 | ||||||||||||||||||||||||
Connecticut | 1 | 5,048 | 3,562 | 3 | 35,694 | 16,659 | 4 | 40,742 | 20,221 | ||||||||||||||||||||||||
Delaware | 2 | 31,910 | 24,522 | — | — | — | 2 | 31,910 | 24,522 | ||||||||||||||||||||||||
Florida | 14 | 283,022 | 192,813 | 7 | 143,588 | 100,526 | 21 | 426,610 | 293,339 | ||||||||||||||||||||||||
Georgia | 23 | 456,718 | 335,079 | 8 | 120,770 | 82,147 | 31 | 577,488 | 417,226 | ||||||||||||||||||||||||
Hawaii | 1 | 87,255 | 48,314 | — | — | — | 1 | 87,255 | 48,314 | ||||||||||||||||||||||||
Iowa | 2 | 18,297 | 9,744 | 1 | 10,935 | 7,045 | 3 | 29,232 | 16,789 | ||||||||||||||||||||||||
Idaho | — | — | — | 1 | 16,288 | 11,439 | 1 | 16,288 | 11,439 | ||||||||||||||||||||||||
Illinois | 16 | 392,376 | 302,726 | 10 | 134,015 | 96,587 | 26 | 526,391 | 399,313 | ||||||||||||||||||||||||
Indiana | 3 | 32,915 | 17,580 | 8 | 113,424 | 88,507 | 11 | 146,339 | 106,087 | ||||||||||||||||||||||||
Kansas | 4 | 30,822 | 17,737 | 1 | 14,994 | 12,471 | 5 | 45,816 | 30,208 | ||||||||||||||||||||||||
Kentucky | 1 | 3,034 | 2,026 | 3 | 47,598 | 28,353 | 4 | 50,632 | 30,379 | ||||||||||||||||||||||||
Louisiana | 3 | 232,627 | 190,036 | 6 | 118,255 | 78,571 | 9 | 350,882 | 268,607 | ||||||||||||||||||||||||
Massachusetts | 14 | 328,545 | 228,997 | — | — | — | 14 | 328,545 | 228,997 | ||||||||||||||||||||||||
Maryland | 7 | 161,986 | 109,852 | 3 | 51,979 | 31,114 | 10 | 213,965 | 140,966 | ||||||||||||||||||||||||
Michigan | 12 | 99,747 | 69,740 | 4 | 50,546 | 37,912 | 16 | 150,293 | 107,652 | ||||||||||||||||||||||||
Minnesota | 5 | 124,931 | 107,557 | — | — | — | 5 | 124,931 | 107,557 | ||||||||||||||||||||||||
Missouri | 7 | 165,124 | 138,676 | 4 | 56,208 | 33,785 | 11 | 221,332 | 172,461 | ||||||||||||||||||||||||
Mississippi | — | — | — | 1 | 22,962 | 13,034 | 1 | 22,962 | 13,034 | ||||||||||||||||||||||||
North Carolina | 14 | 175,879 | 124,421 | 3 | 43,022 | 28,825 | 17 | 218,901 | 153,246 | ||||||||||||||||||||||||
Nebraska | 2 | 12,361 | 9,498 | 3 | 44,464 | 21,944 | 5 | 56,825 | 31,442 | ||||||||||||||||||||||||
New Hampshire | — | — | — | 1 | 6,742 | 4,597 | 1 | 6,742 | 4,597 | ||||||||||||||||||||||||
New Jersey | 15 | 303,188 | 212,744 | 3 | 98,306 | 66,358 | 18 | 401,494 | 279,102 | ||||||||||||||||||||||||
New Mexico | 2 | 27,102 | 15,345 | 6 | 99,041 | 52,262 | 8 | 126,143 | 67,607 | ||||||||||||||||||||||||
Nevada | 3 | 50,365 | 30,717 | 5 | 161,487 | 120,271 | 8 | 211,852 | 150,988 | ||||||||||||||||||||||||
New York | 5 | 121,169 | 73,228 | 5 | 42,556 | 31,574 | 10 | 163,725 | 104,802 | ||||||||||||||||||||||||
Ohio | 11 | 162,801 | 137,105 | 13 | 180,297 | 116,160 | 24 | 343,098 | 253,265 | ||||||||||||||||||||||||
Oklahoma | 3 | 32,732 | 22,133 | 3 | 30,268 | 21,104 | 6 | 63,000 | 43,237 | ||||||||||||||||||||||||
Oregon | 1 | 114,948 | 104,603 | 2 | 32,860 | 23,054 | 3 | 147,808 | 127,657 | ||||||||||||||||||||||||
Pennsylvania | 10 | 201,715 | 125,943 | 9 | 136,068 | 88,337 | 19 | 337,783 | 214,280 | ||||||||||||||||||||||||
Rhode Island | 2 | 27,384 | 20,330 | — | — | — | 2 | 27,384 | 20,330 | ||||||||||||||||||||||||
South Carolina | 3 | 75,843 | 46,236 | 4 | 77,477 | 60,221 | 7 | 153,320 | 106,457 | ||||||||||||||||||||||||
Tennessee | 9 | 154,873 | 91,047 | 6 | 88,384 | 64,716 | 15 | 243,257 | 155,763 | ||||||||||||||||||||||||
Texas | 36 | 519,255 | 316,378 | 15 | 363,465 | 226,918 | 51 | 882,720 | 543,296 | ||||||||||||||||||||||||
Utah | 3 | 68,495 | 36,474 | 2 | 19,470 | 10,544 | 5 | 87,965 | 47,018 | ||||||||||||||||||||||||
Virginia | 15 | 181,518 | 103,966 | 3 | 54,498 | 37,907 | 18 | 236,016 | 141,873 | ||||||||||||||||||||||||
Vermont | 1 | 14,440 | 12,371 | — | — | — | 1 | 14,440 | 12,371 | ||||||||||||||||||||||||
Washington | 8 | 195,997 | 154,494 | 2 | 8,024 | 4,474 | 10 | 204,021 | 158,968 | ||||||||||||||||||||||||
Wisconsin | 1 | 14,698 | 8,711 | 1 | 10,111 | 6,497 | 2 | 24,809 | 15,208 | ||||||||||||||||||||||||
West Virginia | 1 | 11,012 | 6,236 | 1 | 7,578 | 5,833 | 2 | 18,590 | 12,069 | ||||||||||||||||||||||||
Wyoming | — | — | — | 4 | 74,221 | 42,296 | 4 | 74,221 | 42,296 | ||||||||||||||||||||||||
323 | 6,237,635 | 4,356,792 | 179 | 3,080,790 | 2,060,825 | 502 | 9,318,425 | 6,417,617 | |||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||||||||
Ontario, Canada | 2 | 49,438 | 32,239 | — | — | — | 2 | 49,438 | 32,239 | ||||||||||||||||||||||||
Puerto Rico | 1 | 155,110 | 99,733 | — | — | — | 1 | 155,110 | 99,733 | ||||||||||||||||||||||||
3 | 204,548 | 131,972 | — | — | — | 3 | 204,548 | 131,972 | |||||||||||||||||||||||||
Total | 326 | 6,442,183 | 4,488,764 | 179 | 3,080,790 | 2,060,825 | 505 | 9,522,973 | 6,549,589 |
Hotels | Travel Centers | All Properties | |||||||||||||||||||||||||||||||
Number of Properties | Undepreciated Carrying Value | Depreciated Carrying Value | Number of Properties | Undepreciated Carrying Value | Depreciated Carrying Value | Total Number of Properties | Total Undepreciated Carrying Value | Total Depreciated Carrying Value | |||||||||||||||||||||||||
Location of Properties | |||||||||||||||||||||||||||||||||
Held For Sale | |||||||||||||||||||||||||||||||||
California | — | — | — | 1 | 11,658 | 7,429 | 1 | 11,658 | 7,429 | ||||||||||||||||||||||||
Indiana | — | — | — | 3 | 44,694 | 31,456 | 3 | 44,694 | 31,456 | ||||||||||||||||||||||||
Louisiana | — | — | — | 1 | 10,481 | 5,215 | 1 | 10,481 | 5,215 | ||||||||||||||||||||||||
Michigan | — | — | — | 1 | 3,717 | 2,110 | 1 | 3,717 | 2,110 | ||||||||||||||||||||||||
Minnesota | — | — | — | 1 | 7,164 | 5,051 | 1 | 7,164 | 5,051 | ||||||||||||||||||||||||
Missouri | — | — | — | 1 | 7,714 | 4,301 | 1 | 7,714 | 4,301 | ||||||||||||||||||||||||
New Jersey | — | — | — | 1 | 15,832 | 9,845 | 1 | 15,832 | 9,845 | ||||||||||||||||||||||||
New York | — | — | — | 1 | 9,357 | 5,571 | 1 | 9,357 | 5,571 | ||||||||||||||||||||||||
Ohio | — | — | — | 1 | 12,109 | 8,237 | 1 | 12,109 | 8,237 | ||||||||||||||||||||||||
Oklahoma | — | — | — | 1 | 18,582 | 10,081 | 1 | 18,582 | 10,081 | ||||||||||||||||||||||||
Oregon | — | — | — | 1 | 9,764 | 6,069 | 1 | 9,764 | 6,069 | ||||||||||||||||||||||||
Tennessee | — | — | — | 2 | 23,031 | 16,677 | 2 | 23,031 | 16,677 | ||||||||||||||||||||||||
Texas | — | — | — | 3 | 36,777 | 21,170 | 3 | 36,777 | 21,170 | ||||||||||||||||||||||||
Wisconsin | — | — | — | 1 | 9,371 | 5,700 | 1 | 9,371 | 5,700 | ||||||||||||||||||||||||
West Virginia | — | — | — | 1 | 8,184 | 5,096 | 1 | 8,184 | 5,096 | ||||||||||||||||||||||||
— | — | — | 20 | 228,435 | 144,008 | 20 | 228,435 | 144,008 | |||||||||||||||||||||||||
Grand Total | 326 | $ | 6,442,183 | $ | 4,488,764 | 199 | $ | 3,309,225 | $ | 2,204,833 | 525 | $ | 9,751,408 | $ | 6,693,597 |
14 hotels (1) | $ | 196,555 | |
15 travel centers (2) | 86,800 | ||
Total | $ | 283,355 |
Year Ended December 31, | |||||||||||||||||||
2018 | 2017 | 2016 | 2015 | 2014 | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||
Income Statement Data: | |||||||||||||||||||
Revenues: | |||||||||||||||||||
Hotel operating revenues | $ | 1,960,958 | $ | 1,843,501 | $ | 1,733,103 | $ | 1,636,834 | $ | 1,476,919 | |||||||||
Rental income | 328,446 | 323,764 | 309,600 | 280,935 | 255,900 | ||||||||||||||
FF&E reserve income | 5,132 | 4,670 | 4,508 | 4,135 | 3,503 | ||||||||||||||
Total revenues | 2,294,536 | 2,171,935 | 2,047,211 | 1,921,904 | 1,736,322 | ||||||||||||||
Expenses: | |||||||||||||||||||
Hotel operating expenses | 1,392,355 | 1,279,547 | 1,202,538 | 1,143,981 | 1,035,138 | ||||||||||||||
Depreciation and amortization | 403,077 | 386,659 | 357,342 | 329,776 | 315,878 | ||||||||||||||
General and administrative | 104,862 | 125,402 | 99,105 | 109,837 | 45,897 | ||||||||||||||
Acquisition related costs | — | — | 1,367 | 2,375 | 239 | ||||||||||||||
Total expenses | 1,900,294 | 1,791,608 | 1,660,352 | 1,585,969 | 1,397,152 | ||||||||||||||
Gain on sale of real estate | — | 9,348 | — | 11,015 | 130 | ||||||||||||||
Dividend income | 2,754 | 2,504 | 2,001 | 2,640 | — | ||||||||||||||
Unrealized losses on equity securities | (16,737 | ) | — | — | — | — | |||||||||||||
Interest income | 1,528 | 798 | 274 | 44 | 77 | ||||||||||||||
Interest expense | (195,213 | ) | (181,579 | ) | (161,913 | ) | (144,898 | ) | (139,486 | ) | |||||||||
Loss on distribution to common shareholders of The RMR Group Inc. common stock | — | — | — | (36,773 | ) | — | |||||||||||||
Loss on early extinguishment of debt | (160 | ) | (146 | ) | (228 | ) | — | (855 | ) | ||||||||||
Income before income taxes and equity in earnings of an investee | 186,414 | 211,252 | 226,993 | 167,963 | 199,036 | ||||||||||||||
Income tax benefit (expense) | (1,195 | ) | 3,284 | (4,020 | ) | (1,566 | ) | (1,945 | ) | ||||||||||
Equity in earnings of an investee | 515 | 607 | 137 | 21 | 94 | ||||||||||||||
Net income | 185,734 | 215,143 | 223,110 | 166,418 | 197,185 | ||||||||||||||
Preferred distributions | — | (1,435 | ) | (20,664 | ) | (20,664 | ) | (20,664 | ) | ||||||||||
Excess of liquidation preference over carrying value of preferred shares redeemed | — | (9,893 | ) | — | — | — | |||||||||||||
Net income available for common shareholders | $ | 185,734 | $ | 203,815 | $ | 202,446 | $ | 145,754 | $ | 176,521 | |||||||||
Common distributions paid (1) | $ | 346,832 | $ | 340,084 | $ | 314,135 | $ | 299,967 | $ | 292,029 | |||||||||
Weighted average common shares outstanding (basic) | 164,229 | 164,146 | 156,062 | 150,709 | 149,652 | ||||||||||||||
Weighted average common shares outstanding (diluted) | 164,258 | 164,175 | 156,088 | 151,002 | 149,817 | ||||||||||||||
Per Common Share Data: | |||||||||||||||||||
Net income available for common shareholders (basic and diluted) | $ | 1.13 | $ | 1.24 | $ | 1.30 | $ | 0.97 | $ | 1.18 | |||||||||
Distributions paid per common share (1) | $ | 2.11 | $ | 2.07 | $ | 2.03 | $ | 1.99 | $ | 1.95 | |||||||||
Balance Sheet Data (as of December 31): | |||||||||||||||||||
Real estate properties, gross | $ | 9,522,973 | $ | 9,427,659 | $ | 8,723,389 | $ | 8,261,772 | $ | 7,656,193 | |||||||||
Real estate properties, net | 6,549,589 | 6,643,181 | 6,209,393 | 6,044,637 | 5,674,160 | ||||||||||||||
Total assets | 7,177,079 | 7,150,385 | 6,634,228 | 6,394,797 | 5,967,127 | ||||||||||||||
Debt, net of discounts and certain issuance costs | 4,172,587 | 4,001,048 | 3,163,807 | 3,274,673 | 2,823,178 | ||||||||||||||
Shareholders’ equity | 2,597,431 | 2,755,422 | 3,129,389 | 2,812,082 | 2,990,153 | ||||||||||||||
(1) Excludes a non-cash distribution of $0.1974 per share related to the distribution of shares of RMR Inc. class A common stock to our shareholders on December 14, 2015. |
For the Year Ended December 31, | ||||||||||||||
Increase (Decrease) | % Increase (Decrease) | |||||||||||||
2018 | 2017 | |||||||||||||
Revenues: | ||||||||||||||
Hotel operating revenues | $ | 1,960,958 | $ | 1,843,501 | $ | 117,457 | 6.4 | % | ||||||
Rental income - hotels | 26,137 | 30,491 | (4,354 | ) | (14.3 | )% | ||||||||
Rental income - travel centers | 302,309 | 293,273 | 9,036 | 3.1 | % | |||||||||
Total rental income | 328,446 | 323,764 | 4,682 | 1.4 | % | |||||||||
FF&E reserve income | 5,132 | 4,670 | 462 | 9.9 | % | |||||||||
Expenses: | ||||||||||||||
Hotel operating expenses | 1,392,355 | 1,279,547 | 112,808 | 8.8 | % | |||||||||
Depreciation and amortization - hotels | 255,759 | 242,829 | 12,930 | 5.3 | % | |||||||||
Depreciation and amortization - travel centers | 147,318 | 143,830 | 3,488 | 2.4 | % | |||||||||
Total depreciation and amortization | 403,077 | 386,659 | 16,418 | 4.2 | % | |||||||||
General and administrative | 104,862 | 125,402 | (20,540 | ) | (16.4 | )% | ||||||||
Gain on sale of real estate | — | 9,348 | (9,348 | ) | (100.0 | )% | ||||||||
Dividend income | 2,754 | 2,504 | 250 | 10.0 | % | |||||||||
Unrealized losses on equity securities | (16,737 | ) | — | (16,737 | ) | n/m | ||||||||
Interest income | 1,528 | 798 | 730 | 91.5 | % | |||||||||
Interest expense | (195,213 | ) | (181,579 | ) | (13,634 | ) | 7.5 | % | ||||||
Loss on early extinguishment of debt | (160 | ) | (146 | ) | (14 | ) | 9.6 | % | ||||||
Income before income taxes and equity earnings of an investee | 186,414 | 211,252 | (24,838 | ) | (11.8 | )% | ||||||||
Income tax benefit (expense) | (1,195 | ) | 3,284 | (4,479 | ) | (136.4 | )% | |||||||
Equity in earnings of an investee | 515 | 607 | (92 | ) | (15.2 | )% | ||||||||
Net income | 185,734 | 215,143 | (29,409 | ) | (13.7 | )% | ||||||||
Preferred distributions | — | (1,435 | ) | 1,435 | (100.0 | )% | ||||||||
Excess of liquidation preference over carrying value of preferred shares redeemed | — | (9,893 | ) | 9,893 | (100.0 | )% | ||||||||
Net income available for common shareholders | $ | 185,734 | $ | 203,815 | $ | (18,081 | ) | (8.9 | )% | |||||
Weighted average shares outstanding (basic) | 164,229 | 164,146 | 83 | 0.1 | % | |||||||||
Weighted average shares outstanding (diluted) | 164,258 | 164,175 | 83 | 0.1 | % | |||||||||
Net income available for common shareholders per common share: basic and diluted | $ | 1.13 | $ | 1.24 | $ | (0.11 | ) | (8.9 | )% |
For the Year Ended December 31, | ||||||||||||||
Increase (Decrease) | % Increase (Decrease) | |||||||||||||
2017 | 2016 | |||||||||||||
Revenues: | ||||||||||||||
Hotel operating revenues | $ | 1,843,501 | $ | 1,733,103 | $ | 110,398 | 6.4 | % | ||||||
Rental income—hotels | 30,491 | 30,425 | 66 | 0.2 | % | |||||||||
Rental income—travel centers | 293,273 | 279,175 | 14,098 | 5.0 | % | |||||||||
Total rental income | 323,764 | 309,600 | 14,164 | 4.6 | % | |||||||||
FF&E reserve income | 4,670 | 4,508 | 162 | 3.6 | % | |||||||||
Expenses: | ||||||||||||||
Hotel operating expenses | 1,279,547 | 1,202,538 | 77,009 | 6.4 | % | |||||||||
Depreciation and amortization—hotels | 242,829 | 224,335 | 18,494 | 8.2 | % | |||||||||
Depreciation and amortization—travel centers | 143,830 | 133,007 | 10,823 | 8.1 | % | |||||||||
Total depreciation and amortization | 386,659 | 357,342 | 29,317 | 8.2 | % | |||||||||
General and administrative | 125,402 | 99,105 | 26,297 | 26.5 | % | |||||||||
Acquisition related costs | — | 1,367 | (1,367 | ) | (100.0 | )% | ||||||||
Gain on sale of real estate | 9,348 | — | 9,348 | n/m | ||||||||||
Dividend income | 2,504 | 2,001 | 503 | 25.1 | % | |||||||||
Interest income | 798 | 274 | 524 | 191.2 | % | |||||||||
Interest expense | (181,579 | ) | (161,913 | ) | (19,666 | ) | 12.1 | % | ||||||
Loss on early extinguishment of debt | (146 | ) | (228 | ) | 82 | (36.0 | )% | |||||||
Income before income taxes and equity in earnings of an investee | 211,252 | 226,993 | (15,741 | ) | (6.9 | )% | ||||||||
Income tax benefit (expense) | 3,284 | (4,020 | ) | 7,304 | (181.7 | )% | ||||||||
Equity in earnings of an investee | 607 | 137 | 470 | 343.1 | % | |||||||||
Net income | 215,143 | 223,110 | (7,967 | ) | (3.6 | )% | ||||||||
Preferred distributions | (1,435 | ) | (20,664 | ) | 19,229 | (93.1 | )% | |||||||
Excess of liquidation preference over carrying value of preferred shares redeemed | $ | (9,893 | ) | $ | — | (9,893 | ) | n/m | ||||||
Net income available for common shareholders | $ | 203,815 | $ | 202,446 | $ | 1,369 | 0.7 | % | ||||||
Weighted average shares outstanding (basic) | 164,146 | 156,062 | 8,084 | 5.2 | % | |||||||||
Weighted average shares outstanding (diluted) | 164,175 | 156,088 | 8,087 | 5.2 | % | |||||||||
Net income available for common shareholders per common share: (basic and diluted) | $ | 1.24 | $ | 1.30 | $ | (0.06 | ) | (4.6 | )% |
• | During the year ended December 31, 2018, we funded $9,050 for capital improvements to certain hotels under our Marriott No. 1 agreement using cash on hand and borrowings under our revolving credit facility. We currently |
• | During the year ended December 31, 2018, we funded $9,030 for capital improvements to certain hotels under our Marriott No. 234 agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately $45,000 for capital improvements under this agreement during 2019 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase. |
• | During the year ended December 31, 2018, we funded $39,668 for capital improvements to certain hotels under our IHG agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately $61,000 for capital improvements under this agreement during 2019 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase. |
• | Our Sonesta agreement does not require FF&E escrow deposits. Under our Sonesta agreement, we are required to fund capital expenditures made at our hotels. During the year ended December 31, 2018, we funded $82,329 for capital improvements to certain hotels included in our Sonesta agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately $100,000 during 2019 and $33,000 during 2020 for capital improvements under this agreement using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase to the extent amounts funded exceed threshold amounts, as defined in our Sonesta agreement. |
• | Our Wyndham agreement requires FF&E escrow deposits only if there are excess cash flows after payment of our minimum returns. No FF&E escrow deposits were required during the year ended December 31, 2018. During the year ended December 31, 2018, we funded $2,882 for capital improvements to certain hotels included in our Wyndham agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately $15,000 for capital improvements under this agreement during 2019 using cash on hand or borrowings under our revolving credit facility. As we fund these improvements, the contractual minimum returns payable to us increase. |
• | Pursuant to an agreement we entered into with Radisson in June 2017, we have agreed to fund up to $35,000 for renovation costs at certain hotels under our Radisson agreement. We did not fund any renovation costs to hotels under our Radisson agreement during the year ended December 31, 2018. We currently expect to fund approximately $22,000 during 2019 and $6,000 during 2020 for these renovations using cash on hand or borrowings under our revolving credit facility. As we fund these excess renovation costs, the contractual minimum returns payable to us will increase. |
Payment due by period | ||||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1 - 3 years | 3 - 5 years | More than 5 years | |||||||||||||||
Long-term debt obligations | $ | 4,227,000 | $ | — | $ | 400,000 | $ | 1,577,000 | $ | 2,250,000 | ||||||||||
Ground lease obligations (1) | 114,191 | 12,190 | 21,267 | 12,153 | 68,581 | |||||||||||||||
Security deposits (2) | 132,816 | — | — | — | 132,816 | |||||||||||||||
Capital improvements (3) | 329,000 | 290,000 | 39,000 | — | — | |||||||||||||||
Projected interest expense (4) | 1,184,524 | 189,918 | 371,337 | 291,419 | 331,850 | |||||||||||||||
Business management incentive fee expense (5) | 53,635 | 53,635 | — | — | — | |||||||||||||||
Total | $ | 6,041,166 | $ | 545,743 | $ | 831,604 | $ | 1,880,572 | $ | 2,783,247 |
(1) | 14 of our hotels and 15 of our travel centers are on land leased partially or in its entirety. In each case the ground lessors are unrelated to us. Pursuant to the terms of our management agreements and leases, payments of ground lease obligations are generally made by our managers or tenants. However, if a manager or tenant fails to perform obligations under a ground lease or elects not to renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected hotel or travel center. We have included the future rent expense under these ground leases in the table above. |
(2) | Represents the security deposit balance as of December 31, 2018. We may draw upon security deposits to cover any rent or return shortfalls thereby decreasing the potential obligation to repay some of these deposits. |
(3) | Represents amounts we expect to fund for capital improvements to our hotels in excess of amounts available in FF&E reserves and to our travel centers as of December 31, 2018. |
(4) | Projected interest expense is interest attributable to only debt obligations listed above at existing rates as of December 31, 2018 and is not intended to project future interest costs which may result from debt prepayments, additional borrowings under our revolving credit facility, new debt issuances or changes in interest rates. |
(5) | Represents business management incentive fees due to RMR LLC under our business management agreement for 2018. This fee was paid to RMR LLC in January 2019. |
• | variable interest entities, or VIEs; |
• | allocation of purchase prices between various asset categories and the related impact on the recognition of depreciation and amortization expenses; |
• | assessment of the carrying values and impairments of real estate, intangible assets and equity investments; |
• | classification of leases and the related impact to our financial statements; and |
• | income taxes. |
Number of Rooms or Suites (Hotels) / Land Acreage (Travel Centers) | Rent / Return Coverage (3) | |||||||||||||||||
Annual Minimum Return/Rent (2) | Year Ended December 31, | |||||||||||||||||
Operating Agreement | Number of Properties | |||||||||||||||||
Reference Name | Investment (1) | 2018 | 2017 | |||||||||||||||
Marriott (No. 1) (4) | 53 | 7,609 | $ | 706,308 | $ | 70,137 | 1.20x | 1.25x | ||||||||||
Marriott (No. 234) (5) | 68 | 9,120 | 1,012,394 | 107,350 | 1.09x | 1.13x | ||||||||||||
Marriott (No. 5) (6) | 1 | 356 | 90,078 | 10,321 | 1.05x | 0.91x | ||||||||||||
Subtotal / Average Marriott | 122 | 17,085 | 1,808,780 | 187,808 | 1.13x | 1.16x | ||||||||||||
IHG (7) | 100 | 16,354 | 2,096,012 | 193,695 | 1.06x | 1.15x | ||||||||||||
Sonesta (8) | 51 | 8,862 | 1,695,809 | 127,089 | 0.66x | 0.78x | ||||||||||||
Wyndham (9) | 22 | 3,579 | 396,682 | 29,283 | 0.67x | 0.84x | ||||||||||||
Hyatt (10) | 22 | 2,724 | 301,942 | 22,037 | 1.04x | 1.13x | ||||||||||||
Radisson (11) | 9 | 1,939 | 270,105 | 18,920 | 1.11x | 1.15x | ||||||||||||
Subtotal / Average Hotels | 326 | 50,543 | 6,569,330 | 578,832 | 0.97x | 1.06x | ||||||||||||
TA (No. 1) (12) | 40 | 825 | 688,204 | 53,712 | 1.66x | 1.57x | ||||||||||||
TA (No. 2) (12) | 40 | 957 | 694,852 | 54,855 | 1.67x | 1.50x | ||||||||||||
TA (No. 3) (12) | 39 | 909 | 644,820 | 54,754 | 1.63x | 1.49x | ||||||||||||
TA (No. 4) (12) | 40 | 1,091 | 629,193 | 55,363 | 1.51x | 1.38x | ||||||||||||
TA (No. 5) (12) | 40 | 1,148 | 897,685 | 70,547 | 1.67x | 1.55x | ||||||||||||
Subtotal / Average Travel Centers | 199 | 4,930 | 3,554,754 | 289,231 | 1.63x | 1.50x | ||||||||||||
Total / Average | 525 | 50,543 / 4,930 | $ | 10,124,084 | $ | 868,063 | 1.19x | 1.20x |
(1) | Represents the historical cost of our properties plus capital improvements funded by us less impairment writedowns, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations which do not result in increases in minimum returns or rents. |
(2) | Each of our management agreements or leases provides for payment to us of an annual minimum return or rent, respectively. Certain of these minimum payment amounts are secured by full or limited guarantees or security deposits as more fully described below. In addition, certain of our hotel management agreements provide for payment to us of additional amounts to the extent of available cash flows as defined in the management agreement. Payments of these additional amounts are not guaranteed or secured by deposits. Annualized minimum rent amounts represent cash rent amounts due to us and exclude adjustments necessary to record rent on a straight line basis. |
(3) | We define coverage as combined total property level revenues minus all property level expenses and FF&E reserve escrows which are not subordinated to minimum returns or rents due to us (which data is provided to us by our managers or tenants), divided by the minimum returns or rents due to us. Coverage amounts for our IHG, Sonesta and Radisson agreements and our TA No. 4 lease include data for periods prior to our ownership of certain properties. Coverage amounts for our Sonesta agreement include data for one hotel prior to when it was managed by Sonesta. Coverage amounts for our Radisson agreement exclude data for periods prior to our sale of certain hotels. |
(4) | We lease 53 Courtyard by Marriott® branded hotels in 24 states to one of our TRSs. The hotels are managed by a subsidiary of Marriott under a combination management agreement which expires in 2024; Marriott has two renewal options for 12 years each for all, but not less than all, of the hotels. |
(5) | We lease 68 of our Marriott® branded hotels (one full service Marriott®, 35 Residence Inn by Marriott®, 18 Courtyard by Marriott®, 12 TownePlace Suites by Marriott® and two SpringHill Suites by Marriott® hotels) in 22 states to one of our TRSs. The hotels are managed by subsidiaries of Marriott under a combination management agreement which expires in 2025; Marriott has two renewal options for 10 years each for all, but not less than all, of the hotels. |
(6) | We lease one Marriott® branded hotel in Kauai, HI to a subsidiary of Marriott under a lease that expires in 2019. Marriott has four renewal options for 15 years each. On August 31, 2016, Marriott notified us that it will not exercise its renewal option at the expiration of the current lease term ending on December 31, 2019. This lease is guaranteed by Marriott and provides for increases in the annual minimum rent payable to us based on changes in the consumer price index. |
(7) | We lease 99 IHG branded hotels (20 Staybridge Suites®, 61 Candlewood Suites®, two InterContinental®, 10 Crowne Plaza®, three Holiday Inn® and three Kimpton® Hotels & Restaurants) in 29 states in the U.S. and Ontario, Canada to one of our TRSs. These 99 hotels are managed by subsidiaries of IHG under a combination management agreement. We lease one additional InterContinental® branded hotel in Puerto Rico to a subsidiary of IHG. The annual minimum return amount presented in the table on page 70 includes $7,908 of minimum rent related to the leased Puerto Rico hotel. The management agreement and the lease expire in 2036; IHG has two renewal options for 15 years each for all, but not less than all, of the hotels. |
(8) | We lease our 51 Sonesta branded hotels (six Royal Sonesta® Hotels, six Sonesta Hotels & Resorts® and 39 Sonesta ES Suites® hotels) in 26 states to one of our TRSs. The hotels are managed by Sonesta under a combination management agreement which expires in 2037; Sonesta has two renewal options for 15 years each for all, but not less than all, of the hotels. |
(9) | We lease our 22 Wyndham branded hotels (six Wyndham Hotels and Resorts® and 16 Hawthorn Suites® hotels) in 14 states to one of our TRSs. The hotels are managed by 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. |
(10) | We lease our 22 Hyatt Place® branded hotels in 14 states to one of our TRSs. The hotels are managed by a subsidiary of Hyatt under a combination management agreement that expires in 2030; Hyatt has two renewal options for 15 years each for all, but not less than all, of the hotels. |
(11) | We lease our nine Radisson branded hotels (four Radisson® Hotels & Resorts, four Country Inns & Suites® by Radisson and one Radisson Blu® hotel) in six states to one of our TRSs and these hotels are managed by a subsidiary of Radisson under a combination management agreement which expires in 2035 and Radisson has two 15 year renewal options for all, but not less than all, of the hotels. |
(12) | As of December 31, 2018, we leased to TA a total of 199 travel centers under five leases that expired between 2026 and 2032 and required aggregate annual minimum rents of $289,231. Pursuant to a rent deferral agreement with TA, TA previously deferred as of December 31, 2010 a total of $150,000 of rent payable to us, which remained outstanding as of December 31, 2018. This deferred rent obligation was allocated among our TA leases and, as of December 31, 2018, was due at the end of the initial terms of the respective leases, except for our TA No. 5 lease, in which case the applicable deferred rent was due and payable on June 30, 2024. The information in the table on page 70 is as of December 31, 2018. |
No. of Rooms/ Suites | Year Ended December 31, | ||||||||||||||||
No. of Hotels | 2018 | 2017 | Change | ||||||||||||||
ADR | |||||||||||||||||
Marriott (No. 1) | 53 | 7,609 | $ | 131.36 | $ | 130.44 | 0.7 | % | |||||||||
Marriott (No. 234) | 68 | 9,120 | 133.39 | 131.93 | 1.1 | % | |||||||||||
Marriott (No. 5) | 1 | 356 | 292.19 | 268.41 | 8.9 | % | |||||||||||
Subtotal / Average Marriott | 122 | 17,085 | 136.65 | 134.74 | 1.4 | % | |||||||||||
IHG (1) | 100 | 16,354 | 122.78 | 120.10 | 2.2 | % | |||||||||||
Sonesta (1) (2) | 51 | 8,862 | 147.94 | 146.67 | 0.9 | % | |||||||||||
Wyndham | 22 | 3,579 | 101.00 | 100.84 | 0.2 | % | |||||||||||
Hyatt | 22 | 2,724 | 111.17 | 109.09 | 1.9 | % | |||||||||||
Radisson (1) (3) | 9 | 1,939 | 133.45 | 128.44 | 3.9 | % | |||||||||||
All Hotels Total / Average | 326 | 50,543 | $ | 129.80 | $ | 127.66 | 1.7 | % | |||||||||
OCCUPANCY | |||||||||||||||||
Marriott (No. 1) | 53 | 7,609 | 68.3 | % | 68.9 | % | -0.6 pts | ||||||||||
Marriott (No. 234) | 68 | 9,120 | 74.7 | % | 75.3 | % | -0.6 pts | ||||||||||
Marriott (No. 5) | 1 | 356 | 89.9 | % | 87.9 | % | 2.0 pts | ||||||||||
Subtotal / Average Marriott | 122 | 17,085 | 72.2 | % | 72.7 | % | -0.5 pts | ||||||||||
IHG (1) | 100 | 16,354 | 78.5 | % | 80.4 | % | -1.9 pts | ||||||||||
Sonesta (1) (2) | 51 | 8,862 | 67.8 | % | 69.9 | % | -2.1 pts | ||||||||||
Wyndham | 22 | 3,579 | 66.6 | % | 70.3 | % | -3.7 pts | ||||||||||
Hyatt | 22 | 2,724 | 78.2 | % | 81.3 | % | -3.1 pts | ||||||||||
Radisson (1) (3) | 9 | 1,939 | 71.5 | % | 75.4 | % | -3.9 pts | ||||||||||
All Hotels Total / Average | 326 | 50,543 | 73.3 | % | 75.1 | % | -1.8 pts | ||||||||||
RevPAR | |||||||||||||||||
Marriott (No. 1) | 53 | 7,609 | $ | 89.72 | $ | 89.87 | (0.2 | )% | |||||||||
Marriott (No. 234) | 68 | 9,120 | 99.64 | 99.34 | 0.3 | % | |||||||||||
Marriott (No. 5) | 1 | 356 | 262.68 | 235.93 | 11.3 | % | |||||||||||
Subtotal / Average Marriott | 122 | 17,085 | 98.66 | 97.96 | 0.7 | % | |||||||||||
IHG (1) | 100 | 16,354 | 96.38 | 96.56 | (0.2 | )% | |||||||||||
Sonesta (1) (2) | 51 | 8,862 | 100.30 | 102.52 | (2.2 | )% | |||||||||||
Wyndham | 22 | 3,579 | 67.27 | 70.89 | (5.1 | )% | |||||||||||
Hyatt | 22 | 2,724 | 86.93 | 88.69 | (2.0 | )% | |||||||||||
Radisson (1) (3) | 9 | 1,939 | 95.42 | 96.84 | (1.5 | )% | |||||||||||
All Hotels Total / Average | 326 | 50,543 | $ | 95.14 | $ | 95.87 | (0.8 | )% |
(1) | Operating data includes data for certain hotels for periods prior to when we acquired them. |
(2) | Operating data includes data for one hotel prior to when it was managed by Sonesta. |
(3) | Operating data excludes data for certain hotels we sold during the periods presented. |
For the Year Ended December 31, | ||||||||||||
2018 | 2017 | 2016 | ||||||||||
Net income available for common shareholders | $ | 185,734 | $ | 203,815 | $ | 202,446 | ||||||
Add (Less): | Depreciation and amortization expense | 403,077 | 386,659 | 357,342 | ||||||||
Gain on sale of real estate (1) | — | (9,348 | ) | — | ||||||||
FFO available for common shareholders | 588,811 | 581,126 | 559,788 | |||||||||
Add (Less): | Acquisition related costs (2) | — | — | 1,367 | ||||||||
Loss on early extinguishment of debt (3) | 160 | 146 | 228 | |||||||||
Excess of liquidation preference over carrying value of preferred shares redeemed (4) | — | 9,893 | — | |||||||||
Unrealized losses on equity securities (5) | 16,737 | — | — | |||||||||
Deferred tax benefit (6) | — | (5,431 | ) | — | ||||||||
Normalized FFO available for common shareholders | $ | 605,708 | $ | 585,734 | $ | 561,383 | ||||||
Weighted average shares outstanding (basic) | 164,229 | 164,146 | 156,062 | |||||||||
Weighted average shares outstanding (diluted) (7) | 164,258 | 164,175 | 156,088 | |||||||||
Basic and diluted per common share amounts: | ||||||||||||
Net income available for common shareholders | $ | 1.13 | $ | 1.24 | $ | 1.30 | ||||||
FFO available for common shareholders | $ | 3.59 | $ | 3.54 | $ | 3.59 | ||||||
Normalized FFO available for common shareholders | $ | 3.69 | $ | 3.57 | $ | 3.60 | ||||||
Distributions declared per share | $ | 2.11 | $ | 2.07 | $ | 2.03 |
(1) | We recorded a $9,348 gain on sale of real estate during the year ended December 31, 2017 in connection with the sales of three hotels. |
(2) | Represents costs associated with our acquisition activities. Acquisition related costs incurred during the 2018 and 2017 periods have been capitalized in purchase accounting pursuant to a change in GAAP. |
(3) | We recorded a loss of $160 on early extinguishment of debt during the year ended December 31, 2018 in connection with the amendment of our revolving credit facility and term loan. We recorded losses of $146 and $228 on early extinguishment of debt during the years ended December 31, 2017 and 2016, respectively, in connection with the redemption of certain senior unsecured notes. |
(4) | In February 2017, we redeemed all 11,600,000 of our outstanding 7.125% Series D cumulative redeemable preferred shares at the stated liquidation preference of $25.00 per share plus accrued and unpaid distributions to the date of redemption (an aggregate of $291,435). The liquidation preference of the redeemed shares exceeded the carrying amount for the redeemed shares as of the date of redemption by $9,893 and we reduced net income available for common shareholders in the year ended December 31, 2017 by that excess amount. |
(5) | Unrealized losses on equity securities represent the adjustment required to adjust the carrying value of our investments in RMR Inc. and TA common shares to their fair value as of December 31, 2018 in accordance with new GAAP standards effective January 1, 2018. |
(6) | We realized a $5,431 tax benefit in the year ended December 31, 2017 related to the enactment of the Tax Act. |
(7) | Represents weighted average common shares adjusted to reflect the potential dilution of unvested share awards. |
Principal Balance | Annual Interest Rate | Annual Interest Expense | Maturity | Interest Payments Due | |||||||||
$ | 400,000 | 4.250 | % | $ | 17,000 | 2021 | Semi-Annually | ||||||
500,000 | 5.000 | % | 25,000 | 2022 | Semi-Annually | ||||||||
500,000 | 4.500 | % | 22,500 | 2023 | Semi-Annually | ||||||||
350,000 | 4.650 | % | 16,275 | 2024 | Semi-Annually | ||||||||
350,000 | 4.500 | % | 15,750 | 2025 | Semi-Annually | ||||||||
350,000 | 5.250 | % | 18,375 | 2026 | Semi-Annually | ||||||||
400,000 | 4.950 | % | 19,800 | 2027 | Semi-Annually | ||||||||
400,000 | 3.950 | % | 15,800 | 2028 | Semi-Annually | ||||||||
400,000 | 4.375 | % | 17,500 | 2030 | Semi-Annually | ||||||||
$ | 3,650,000 | $ | 168,000 |
Impact of Increase in Interest Rates | ||||||||||||||
Interest Rate Per Year (1) | Outstanding Debt | Total Interest Expense Per Year | Annual Per Share Impact (2) | |||||||||||
At December 31, 2018 | 3.44 | % | $ | 577,000 | $ | 19,849 | $ | 0.12 | ||||||
One percentage point increase | 4.44 | % | $ | 577,000 | $ | 25,619 | $ | 0.16 |
(1) | Weighted average based on the interest rates and the respective outstanding borrowings as of December 31, 2018. |
(2) | Based on diluted weighted average common shares outstanding for the year ending December 31, 2018. |
Impact of Increase in Interest Rates | ||||||||||||||
Interest Rate Per Year (1) | Outstanding Debt | Total Interest Expense Per Year | Annual Per Share Impact (2) | |||||||||||
At December 31, 2018 | 3.43 | % | $ | 1,400,000 | $ | 48,020 | $ | 0.29 | ||||||
One percentage point increase | 4.43 | % | $ | 1,400,000 | $ | 62,020 | $ | 0.38 |
(1) | Weighted average based on the interest rates and the respective outstanding borrowings (assuming fully drawn) as of December 31, 2018. |
(2) | Based on diluted weighted average common shares outstanding for the year ending December 31, 2018. |
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | |||
(a) | (b) | (c) | ||||
Equity compensation plans approved by security holders—2012 Plan | None. | None. | 2,412,017 (1) | |||
Equity compensation plans not approved by security holders | None. | None. | None. | |||
Total | None. | None. | 2,412,017 (1) |
(1) | Consists of common shares available for issuance pursuant to the terms of the 2012 Plan. Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2012 Plan. |
(a) | Index to Financial Statements and Financial Statement Schedules |
Page | ||
(b) | Exhibits |
Exhibit Number | Description | ||
3.1 | |||
3.2 | |||
4.1 | |||
4.2 | |||
4.3 | |||
4.4 | |||
4.5 | |||
4.6 | |||
4.7 | |||
4.8 | |||
4.9 | |||
4.10 | |||
4.11 | |||
4.12 | |||
4.13 | |||
4.14 | |||
8.1 |
10.20 | |||
10.21 | |||
10.22 | |||
10.23 | |||
10.24 | |||
10.25 | |||
10.26 | |||
10.27 | |||
10.28 | |||
10.29 | |||
10.30 | |||
10.31 | |||
10.32 | |||
10.33 | |||
10.34 | |||
10.35 | |||
10.36 | |||
10.37 | |||
10.38 |
10.39 | |||
10.40 | |||
10.41 | |||
10.42 | |||
10.43 | |||
10.44 | |||
10.45 | |||
10.46 | |||
10.47 | |||
10.48 | |||
10.49 | |||
10.50 | |||
10.51 | |||
10.52 | |||
10.53 | |||
10.54 | |||
10.55 | |||
10.56 | |||
10.57 |
10.58 | |||
10.59 | |||
10.60 | |||
10.61 | |||
10.62 | |||
10.63 | |||
10.64 | |||
10.65 | |||
10.66 | |||
10.67 | |||
10.68 | |||
10.69 | |||
10.70 | |||
10.71 | |||
10.72 | |||
10.73 | |||
10.74 |
10.75 | |||
10.76 | |||
21.1 | |||
23.1 | |||
23.2 | |||
31.1 | |||
31.2 | |||
32.1 | |||
99.1 | |||
99.2 | |||
101.1 | The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Statements of Shareholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.) |
As of December 31, | |||||||
2018 | 2017 | ||||||
ASSETS | |||||||
Real estate properties: | |||||||
Land | $ | 1,626,239 | $ | 1,668,797 | |||
Buildings, improvements and equipment | 7,896,734 | 7,758,862 | |||||
Total real estate properties, gross | 9,522,973 | 9,427,659 | |||||
Accumulated depreciation | (2,973,384 | ) | (2,784,478 | ) | |||
Total real estate properties, net | 6,549,589 | 6,643,181 | |||||
Cash and cash equivalents | 25,966 | 24,139 | |||||
Restricted cash | 50,037 | 73,357 | |||||
Due from related persons | 91,212 | 78,513 | |||||
Other assets, net | 460,275 | 331,195 | |||||
Total assets | $ | 7,177,079 | $ | 7,150,385 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Unsecured revolving credit facility | $ | 177,000 | $ | 398,000 | |||
Unsecured term loan, net | 397,292 | 399,086 | |||||
Senior unsecured notes, net | 3,598,295 | 3,203,962 | |||||
Security deposits | 132,816 | 126,078 | |||||
Accounts payable and other liabilities | 211,332 | 184,788 | |||||
Due to related persons | 62,913 | 83,049 | |||||
Total liabilities | 4,579,648 | 4,394,963 | |||||
Commitments and contingencies | |||||||
Shareholders’ equity: | |||||||
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 164,441,709 and 164,349,141 shares issued and outstanding, respectively | 1,644 | 1,643 | |||||
Additional paid in capital | 4,545,481 | 4,542,307 | |||||
Cumulative net income | 3,575,307 | 3,310,017 | |||||
Cumulative other comprehensive income (loss) | (266 | ) | 79,358 | ||||
Cumulative preferred distributions | (343,412 | ) | (343,412 | ) | |||
Cumulative common distributions | (5,181,323 | ) | (4,834,491 | ) | |||
Total shareholders’ equity | 2,597,431 | 2,755,422 | |||||
Total liabilities and shareholders’ equity | $ | 7,177,079 | $ | 7,150,385 |
Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Revenues: | |||||||||||
Hotel operating revenues | $ | 1,960,958 | $ | 1,843,501 | $ | 1,733,103 | |||||
Rental income | 328,446 | 323,764 | 309,600 | ||||||||
FF&E reserve income | 5,132 | 4,670 | 4,508 | ||||||||
Total revenues | 2,294,536 | 2,171,935 | 2,047,211 | ||||||||
Expenses: | |||||||||||
Hotel operating expenses | 1,392,355 | 1,279,547 | 1,202,538 | ||||||||
Depreciation and amortization | 403,077 | 386,659 | 357,342 | ||||||||
General and administrative | 104,862 | 125,402 | 99,105 | ||||||||
Acquisition related costs | — | — | 1,367 | ||||||||
Total expenses | 1,900,294 | 1,791,608 | 1,660,352 | ||||||||
Gain on sale of real estate | — | 9,348 | — | ||||||||
Dividend income | 2,754 | 2,504 | 2,001 | ||||||||
Unrealized losses on equity securities | (16,737 | ) | — | — | |||||||
Interest income | 1,528 | 798 | 274 | ||||||||
Interest expense (including amortization of debt issuance costs and debt discounts and premiums of $10,177, $8,871 and $8,151, respectively) | (195,213 | ) | (181,579 | ) | (161,913 | ) | |||||
Loss on early extinguishment of debt | (160 | ) | (146 | ) | (228 | ) | |||||
Income before income taxes and equity in earnings of an investee | 186,414 | 211,252 | 226,993 | ||||||||
Income tax benefit (expense) | (1,195 | ) | 3,284 | (4,020 | ) | ||||||
Equity in earnings of an investee | 515 | 607 | 137 | ||||||||
Net income | 185,734 | 215,143 | 223,110 | ||||||||
Other comprehensive income (loss): | |||||||||||
Unrealized gain on investment in available for sale securities | — | 39,315 | 54,954 | ||||||||
Equity interest in investee’s unrealized gains (losses) | (68 | ) | 460 | 152 | |||||||
Other comprehensive income (loss) | (68 | ) | 39,775 | 55,106 | |||||||
Comprehensive income | $ | 185,666 | $ | 254,918 | $ | 278,216 | |||||
Net income | $ | 185,734 | $ | 215,143 | $ | 223,110 | |||||
Preferred distributions | — | (1,435 | ) | (20,664 | ) | ||||||
Excess of liquidation preference over carrying value of preferred shares redeemed | — | (9,893 | ) | — | |||||||
Net income available for common shareholders | $ | 185,734 | $ | 203,815 | $ | 202,446 | |||||
Weighted average common shares outstanding (basic) | 164,229 | 164,146 | 156,062 | ||||||||
Weighted average common shares outstanding (diluted) | 164,258 | 164,175 | 156,088 | ||||||||
Net income available for common shareholders per common share: Basic and diluted | $ | 1.13 | $ | 1.24 | $ | 1.30 |
Series D Preferred Shares | Common Shares | Additional Paid in Capital | Cumulative Net Income | Cumulative Other Comprehensive Income (Loss) | |||||||||||||||||||||||||||||||||
Number of Shares | Preferred Shares | Cumulative Preferred | Number of Shares | Common Shares | Cumulative Common Distributions | ||||||||||||||||||||||||||||||||
Distributions | Total | ||||||||||||||||||||||||||||||||||||
Balance at December 31, 2015 | 11,600,000 | $ | 280,107 | $ | (321,313 | ) | 151,547,288 | $ | 1,515 | $ | (4,180,272 | ) | $ | 4,165,911 | $ | 2,881,657 | $ | (15,523 | ) | $ | 2,812,082 | ||||||||||||||||
Net income | — | — | — | — | — | — | — | 223,110 | — | 223,110 | |||||||||||||||||||||||||||
Unrealized gain on investment in available for sale securities | — | — | — | — | — | — | — | — | 55,106 | 55,106 | |||||||||||||||||||||||||||
Issuance of common shares, net | — | — | — | 12,650,000 | 127 | — | 371,829 | — | — | 371,956 | |||||||||||||||||||||||||||
Common share grants | — | — | — | 91,600 | 1 | — | 2,546 | — | — | 2,547 | |||||||||||||||||||||||||||
Common share repurchases | — | — | — | (20,689 | ) | — | — | (613 | ) | — | — | (613 | ) | ||||||||||||||||||||||||
Distributions | — | — | (20,664 | ) | — | — | (314,135 | ) | — | — | — | (334,799 | ) | ||||||||||||||||||||||||
Balance at December 31, 2016 | 11,600,000 | 280,107 | (341,977 | ) | 164,268,199 | 1,643 | (4,494,407 | ) | 4,539,673 | 3,104,767 | 39,583 | 3,129,389 | |||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | 215,143 | — | 215,143 | |||||||||||||||||||||||||||
Unrealized gain on investment in available for sale securities | — | — | — | — | — | — | — | — | 39,775 | 39,775 | |||||||||||||||||||||||||||
Redemption of preferred shares, net | (11,600,000 | ) | (280,107 | ) | — | — | — | — | — | — | — | (280,107 | ) | ||||||||||||||||||||||||
Common share grants | — | — | — | 100,000 | 1 | — | 3,168 | — | — | 3,169 | |||||||||||||||||||||||||||
Common share repurchases | — | — | — | (19,058 | ) | (1 | ) | — | (534 | ) | — | — | (535 | ) | |||||||||||||||||||||||
Excess of liquidation preference over carrying value of preferred shares redeemed | — | — | — | — | — | — | — | (9,893 | ) | — | (9,893 | ) | |||||||||||||||||||||||||
Distributions | — | — | (1,435 | ) | — | — | (340,084 | ) | — | — | — | (341,519 | ) | ||||||||||||||||||||||||
Balance at December 31, 2017 | — | — | (343,412 | ) | 164,349,141 | 1,643 | (4,834,491 | ) | 4,542,307 | 3,310,017 | 79,358 | 2,755,422 | |||||||||||||||||||||||||
Cumulative effect of accounting change | — | — | — | — | — | — | — | 79,556 | (79,556 | ) | — | ||||||||||||||||||||||||||
Net income | — | — | — | — | — | — | — | 185,734 | — | 185,734 | |||||||||||||||||||||||||||
Equity interest in investee’s unrealized losses | — | — | — | — | — | — | — | — | (68 | ) | (68 | ) | |||||||||||||||||||||||||
Common share grants | — | — | — | 115,000 | 1 | — | 3,780 | — | — | 3,781 | |||||||||||||||||||||||||||
Common share repurchases and forfeitures | — | — | — | (22,432 | ) | — | — | (606 | ) | — | — | (606 | ) | ||||||||||||||||||||||||
Distributions | — | — | — | — | — | (346,832 | ) | — | — | — | (346,832 | ) | |||||||||||||||||||||||||
Balance at December 31, 2018 | — | $ | — | $ | (343,412 | ) | 164,441,709 | $ | 1,644 | $ | (5,181,323 | ) | $ | 4,545,481 | $ | 3,575,307 | $ | (266 | ) | $ | 2,597,431 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | 185,734 | $ | 215,143 | $ | 223,110 | |||||
Adjustments to reconcile net income to cash provided by operating activities: | |||||||||||
Depreciation and amortization | 403,077 | 386,659 | 357,342 | ||||||||
Amortization of debt issuance costs and debt discounts and premiums as interest | 10,177 | 8,871 | 8,151 | ||||||||
Straight line rental income | (12,509 | ) | (12,378 | ) | (13,570 | ) | |||||
Security deposits received or replenished | 6,740 | 36,743 | 35,759 | ||||||||
Loss on early extinguishment of debt | 160 | 146 | 228 | ||||||||
Unrealized losses on equity securities | 16,737 | — | — | ||||||||
Equity in earnings of an investee | (515 | ) | (607 | ) | (137 | ) | |||||
Gain on sale of real estate | — | (9,348 | ) | — | |||||||
Deferred income taxes | (1,047 | ) | (236 | ) | 9 | ||||||
Other non-cash (income) expense, net | (2,713 | ) | (3,233 | ) | (3,250 | ) | |||||
Changes in assets and liabilities: | |||||||||||
Due from related persons | (572 | ) | (1,215 | ) | (1,213 | ) | |||||
Other assets | 6,200 | (13,117 | ) | 730 | |||||||
Accounts payable and other liabilities | 5,824 | (572 | ) | 8,752 | |||||||
Due to related persons | (20,340 | ) | 21,639 | (8,515 | ) | ||||||
Net cash provided by operating activities | 596,953 | 628,495 | 607,396 | ||||||||
Cash flows from investing activities: | |||||||||||
Real estate acquisitions and deposits | (127,703 | ) | (594,693 | ) | (262,955 | ) | |||||
Real estate improvements | (182,862 | ) | (131,120 | ) | (187,652 | ) | |||||
Hotel managers' purchases with restricted cash | (135,177 | ) | (92,733 | ) | (69,380 | ) | |||||
Hotel manager's deposit of insurance proceeds into restricted cash | 18,000 | — | — | ||||||||
Net proceeds from sale of real estate | — | 23,438 | — | ||||||||
Net cash used in investing activities | (427,742 | ) | (795,108 | ) | (519,987 | ) | |||||
Cash flows from financing activities: | |||||||||||
Proceeds from issuance of common shares, net | — | — | 371,956 | ||||||||
Proceeds from issuance of senior unsecured notes, after discounts and premiums | 389,976 | 989,890 | 737,612 | ||||||||
Repayment of senior unsecured notes | — | (350,000 | ) | (575,000 | ) | ||||||
Redemption of preferred shares | — | (290,000 | ) | — | |||||||
Repurchase of convertible senior notes | — | (8,478 | ) | — | |||||||
Borrowings under unsecured revolving credit facility | 517,000 | 1,102,000 | 764,000 | ||||||||
Repayments of unsecured revolving credit facility | (738,000 | ) | (895,000 | ) | (1,038,000 | ) | |||||
Deferred financing costs | (12,242 | ) | (8,437 | ) | (6,106 | ) | |||||
Repurchase of common shares | (606 | ) | (533 | ) | (613 | ) | |||||
Distributions to preferred shareholders | — | (6,601 | ) | (20,664 | ) | ||||||
Distributions to common shareholders | (346,832 | ) | (340,084 | ) | (314,135 | ) | |||||
Net cash provided by (used in) financing activities | (190,704 | ) | 192,757 | (80,950 | ) | ||||||
Increase (decrease) in cash and cash equivalents and restricted cash | (21,493 | ) | 26,144 | 6,459 | |||||||
Cash and cash equivalents and restricted cash at beginning of year | 97,496 | 71,352 | 64,893 | ||||||||
Cash and cash equivalents and restricted cash at end of year | $ | 76,003 | $ | 97,496 | $ | 71,352 | |||||
Supplemental disclosure of cash and cash equivalents and restricted cash: | |||||||||||
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the amount shown in the consolidated statements of cash flows: | |||||||||||
Cash and cash equivalents | $ | 25,966 | $ | 24,139 | $ | 10,896 | |||||
Restricted cash | 50,037 | 73,357 | 60,456 | ||||||||
Total cash and cash equivalents and restricted cash | $ | 76,003 | $ | 97,496 | $ | 71,352 | |||||
Supplemental cash flow information: | |||||||||||
Cash paid for interest | $ | 174,158 | $ | 172,558 | $ | 146,399 | |||||
Cash paid for income taxes | 3,218 | 2,827 | 2,727 |
As of December 31, | |||||||
2018 | 2017 | ||||||
Assets: | |||||||
Tradenames and trademarks | $ | 89,375 | $ | 89,375 | |||
Below market ground leases, net of accumulated amortization of $21,985 and $23,648, respectively | 12,698 | 14,660 | |||||
Other, net of accumulated amortization of $1,451 and $1,216, respectively | 3,676 | 4,254 | |||||
$ | 105,749 | $ | 108,289 | ||||
Liabilities: | |||||||
Above market ground leases, net of accumulated amortization of $5,441 and $6,628, respectively | $ | 1,301 | $ | 1,741 |
Below Market Ground Leases & Other | Above Market Ground Leases & Other | ||||||
2019 | $ | 1,954 | $ | (450 | ) | ||
2020 | 1,591 | (447 | ) | ||||
2021 | 1,572 | (358 | ) | ||||
2022 | 1,569 | (21 | ) | ||||
2023 | 1,740 | (25 | ) | ||||
Thereafter | 7,948 | — | |||||
$ | 16,374 | $ | (1,301 | ) |
For the Year Ended December 31, | ||||||||
2018 | 2017 | 2016 | ||||||
(in thousands) | ||||||||
Weighted average common shares for basic earnings per share | 164,229 | 164,146 | 156,062 | |||||
Effect of dilutive securities: Unvested share awards | 29 | 29 | 26 | |||||
Weighted average common shares for diluted earnings per share | 164,258 | 164,175 | 156,088 |
2018 | 2017 | 2016 | ||||||||||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | Number of Shares | Weighted Average Grant Date Fair Value | |||||||||||||||
Unvested shares, beginning of year | 146,605 | $ | 27.93 | 148,535 | $ | 29.40 | 147,004 | $ | 25.95 | |||||||||||
Shares granted | 115,000 | 28.80 | 100,000 | 28.39 | 91,600 | 28.15 | ||||||||||||||
Shares vested | (96,375 | ) | 28.73 | (101,930 | ) | 28.52 | (90,069 | ) | 28.07 | |||||||||||
Shares forfeited | (1,230 | ) | — | — | — | — | — | |||||||||||||
Unvested shares, end of year | 164,000 | $ | 28.39 | 146,605 | $ | 27.93 | 148,535 | $ | 29.40 |
Year Ended December 31, 2018 | ||||||||||||
Unrealized Gain | Equity in | |||||||||||
(Loss) on Investment | Unrealized Gain | |||||||||||
Securities, net | (Loss) of Investees | Total | ||||||||||
Balance at December 31, 2017 | $ | 78,715 | $ | 643 | $ | 79,358 | ||||||
Amounts reclassified from cumulative other comprehensive income to retained earnings | (78,715 | ) | (841 | ) | (79,556 | ) | ||||||
Current year other comprehensive income | — | (68 | ) | (68 | ) | |||||||
Balance at December 31, 2018 | $ | — | $ | (266 | ) | $ | (266 | ) |
Properties acquired during the year ended December 31, 2018 (1) | ||||||||||||||||||||||||||||
Acquisition Date | Location | Type | Purchase Price | Land | Land Improvements | Building and Improvements | Furniture, Fixtures and Equipment | Intangible Assets | ||||||||||||||||||||
6/15/2018 | Minneapolis, MN (2) | Hotel | $ | 75,576 | $ | 2,196 | $ | — | $ | 68,388 | $ | 4,992 | $ | — | ||||||||||||||
6/15/2018 | Baton Rouge, LA (3) | Hotel | 16,022 | 2,242 | 173 | 12,842 | 765 | — | ||||||||||||||||||||
10/30/2018 | Scottsdale, AZ (4) | Hotel | 35,999 | 6,450 | 833 | 25,898 | 2,818 | — | ||||||||||||||||||||
$ | 127,597 | $ | 10,888 | $ | 1,006 | $ | 107,128 | $ | 8,575 | $ | — | |||||||||||||||||
Properties acquired during the year ended December 31, 2017 (1) | ||||||||||||||||||||||||||||
2/1/2017 | Chicago, IL (5) | Hotel | $ | 86,201 | $ | 13,609 | $ | 40 | $ | 58,929 | $ | 11,926 | $ | 1,697 | ||||||||||||||
3/31/2017 | Seattle, WA (6) | Hotel | $ | 73,041 | $ | 24,562 | $ | 30 | $ | 47,103 | $ | 898 | $ | 448 | ||||||||||||||
5/3/2017 | Columbia, SC (7) | Travel Center | $ | 27,604 | $ | 4,040 | $ | 7,172 | $ | 16,392 | $ | — | $ | — | ||||||||||||||
6/2/2017 | St. Louis, MO (8) | Hotel | $ | 88,080 | $ | 4,250 | $ | 161 | $ | 79,737 | $ | 3,394 | $ | 538 | ||||||||||||||
6/29/2017 | Atlanta, GA (9) | Hotel | $ | 88,748 | $ | 16,612 | $ | 483 | $ | 68,864 | $ | 2,789 | $ | — | ||||||||||||||
8/1/2017 | Columbus, OH (10) | Hotel | $ | 49,188 | $ | 6,100 | $ | 49 | $ | 40,678 | $ | 2,361 | $ | — | ||||||||||||||
8/23/2017 | Charlotte, NC (11) | Hotel | $ | 44,000 | $ | 2,684 | $ | 1,012 | $ | 35,288 | $ | 5,016 | $ | — | ||||||||||||||
9/8/2017 | Atlanta, GA (12) | Land | $ | 940 | $ | 940 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
9/26/2017 | Various (13) | Hotels | $ | 139,923 | $ | 30,720 | $ | 6,392 | $ | 93,899 | $ | 8,912 | $ | — | ||||||||||||||
9/28/2017 | Sayre, OK (14) | Travel Center | $ | 8,672 | $ | 1,031 | $ | — | $ | 7,641 | $ | — | $ | — | ||||||||||||||
$ | 606,397 | $ | 104,548 | $ | 15,339 | $ | 448,531 | $ | 35,296 | $ | 2,683 | |||||||||||||||||
Properties acquired during the year ended December 31, 2016 (15) | ||||||||||||||||||||||||||||
2/1/2016 | Various (16)(17) | Hotels | $ | 12,000 | $ | 1,953 | $ | 654 | $ | 8,153 | $ | 1,240 | $ | — | ||||||||||||||
3/16/2016 | Portland, OR (16)(18) | Hotel | $ | 114,000 | $ | 5,657 | $ | 3 | $ | 100,535 | $ | 7,805 | $ | — | ||||||||||||||
3/31/2016 | Hillsboro, TX (1)(7) | Travel Center | $ | 19,683 | $ | 4,834 | $ | 4,196 | $ | 10,653 | $ | — | $ | — | ||||||||||||||
6/22/2016 | Various (1)(7) | Travel Centers | $ | 23,876 | $ | 3,170 | $ | 9,280 | $ | 11,426 | $ | — | $ | — | ||||||||||||||
6/30/2016 | Wilmington, IL (1)(7) | Travel Center | $ | 22,297 | $ | 6,523 | $ | 3,364 | $ | 12,410 | $ | — | $ | — | ||||||||||||||
9/14/2016 | Holbrook, AZ (1)(19) | Land | $ | 325 | $ | 325 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
9/30/2016 | Caryville, TN (1)(7) | Travel Center | $ | 16,557 | $ | 2,068 | $ | 6,082 | $ | 8,407 | $ | — | $ | — | ||||||||||||||
12/5/2016 | Milpitas, CA (16)(20) | Hotel | $ | 46,000 | $ | 13,089 | $ | 823 | $ | 29,748 | $ | 2,340 | $ | — | ||||||||||||||
$ | 254,738 | $ | 37,619 | $ | 24,402 | $ | 181,332 | $ | 11,385 | $ | — |
(1) | We accounted for these transactions as acquisitions of assets. |
(2) | On June 15, 2018, we acquired the 360 room Radisson Blu® hotel in Minneapolis, MN for a purchase price of $75,576, including capitalized acquisition costs of $576. We added this hotel to our management agreement with Radisson. |
(3) | On June 15, 2018, we acquired the 117 suite Staybridge Suites® at Louisiana State University in Baton Rouge, LA for a purchase price of $16,022, including capitalized acquisition costs of $272. We added this hotel to our management agreement with IHG. |
(4) | On October 30, 2018, we acquired a hotel with 164 suites in Scottsdale, AZ for a purchase price of $35,999, including capitalized acquisition costs of $114. We converted this hotel to the Sonesta Suites® brand and entered into a management agreement for this hotel with Sonesta. |
(5) | On February 1, 2017, we acquired the 483 room Hotel Allegro in Chicago, IL for a purchase price of $86,201, including capitalized acquisition costs of $707. We added this Kimpton® branded hotel to our management agreement with IHG. |
(6) | On March 31, 2017, we acquired the 121 room Hotel Alexis in Seattle, WA for a purchase price of $73,041, including capitalized acquisition costs of $1,416. We added this Kimpton® branded hotel to our management agreement with IHG. |
(7) | Pursuant to a transaction agreement we entered into with TA in June 2015, we agreed to acquire from, and lease back to, TA four travel centers owned by TA that were under development for purchase prices equal to TA’s development costs and two additional travel centers TA then owned. On March 31, 2016, we acquired one of these properties from TA for $19,683. On June 22, 2016, we acquired the two travel centers TA then owned from TA for an aggregate purchase price of $23,876. On June 30, 2016, we acquired from TA another of the properties for $22,297. On September 30, 2016, we acquired from TA another of the properties for $16,557. On May 3, 2017, we acquired from TA the remaining property for $27,604. Simultaneously with these acquisitions, we leased these travel centers back to TA under our TA leases. |
(8) | On June 2, 2017, we acquired the 389 room Chase Park Plaza Hotel in St. Louis, MO for a purchase price of $88,080, including capitalized acquisition costs of $466. We converted this hotel to the Royal Sonesta® hotel brand and entered into a management agreement for this hotel with Sonesta. |
(9) | On June 29, 2017, we acquired the 495 room Crowne Plaza Ravinia hotel located in Atlanta, GA for a purchase price of $88,748, including capitalized acquisition costs of $144. We added this Crowne Plaza® branded hotel to our management agreement with IHG. |
(10) | On August 1, 2017, we acquired the 419 room Crowne Plaza & Lofts hotel in Columbus, OH for a purchase price of $49,188, including capitalized acquisition costs of $198. We added this Crowne Plaza® branded hotel to our management agreement with IHG. |
(11) | On August 23, 2017, we acquired the 300 room Crowne Plaza hotel in Charlotte, NC for a purchase price of $44,000, including capitalized acquisition costs of $143. We added this Crowne Plaza® branded hotel to our management agreement with IHG. |
(12) | On September 8, 2017, we acquired a land parcel adjacent to our Crowne Plaza hotel located in Atlanta, GA for a purchase price of $940, including capitalized acquisition costs of $40. |
(13) | On September 26, 2017, we acquired 14 extended stay hotels with 1,653 suites located in 12 states for a purchase price of $139,923, including capitalized acquisition costs of $1,923. In connection with this acquisition, we converted these hotels to the Sonesta ES Suites® brand and entered into management agreements for these hotels with Sonesta. |
(14) | On September 28, 2017, we acquired land and certain improvements at a travel center located in Sayre, OK that we previously leased from a third party and subleased to TA for a purchase price of $8,672, including capitalized acquisition costs of $72. We now directly lease this land and these improvements to TA under our TA No. 4 lease. |
(15) | The purchase prices for acquisitions for the year ended December 31, 2016 excludes acquisition related costs. |
(16) | We accounted for these transactions as business combinations under previous GAAP guidance. The pro forma impact of including the results of operations of these acquisitions from the beginning of the year is not material to our consolidated financial statements. |
(17) | 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 into management agreements for these hotels with Sonesta. |
(18) | On March 16, 2016, we acquired the Hotel Monaco, a full service hotel with 221 rooms located in Portland, OR for a purchase price of $114,000. We added this Kimpton® branded hotel to our management agreement with IHG. |
(19) | On September 14, 2016, we acquired land adjacent to a travel center that we own in Holbrook, AZ for $325. We capitalized acquisition related costs of $7 related to this transaction. We now directly lease this land to TA under our TA No. 4 lease. |
(20) | On December 5, 2016, we acquired a full service hotel with 236 rooms located in Milpitas, CA for a purchase price of $46,000. We converted this hotel to the Sonesta® brand and entered into a management agreement for this hotel with Sonesta. |
• | We sold to TA 20 travel center properties for a total purchase price of $308,200. TA previously leased those properties from us. |
• | Upon completing these transactions, these travel center properties were removed from the TA leases. |
• | Commencing on April 1, 2019, TA will pay to us 16 quarterly installments of approximately $4,400 each (an aggregate of $70,458) to fully satisfy and discharge its $150,000 deferred rent obligation to us that otherwise would have become due in five installments between 2024 and 2030. |
• | Commencing with the year ending December 31, 2020, TA will be obligated to pay to us an additional amount of percentage rent equal to one-half percent (0.5%) of the excess of its annual nonfuel revenues at leased sites over the nonfuel revenues for each respective site for the year ending December 31, 2019. |
• | The term of each TA lease was extended by three years. |
• | Certain of the 179 travel center properties that TA continues to lease from us were reallocated among the TA leases. |
Number of Travel Centers (1) | Initial Term End (2) | Annual Minimum Rent (1) | Deferred Rent (3) | |||||
TA No. 1 Lease | 36 | December 31, 2032 | $ | 49,018 | $ | 14,175 | ||
TA No. 2 Lease | 36 | December 31, 2031 | 44,663 | 12,847 | ||||
TA No. 3 Lease | 35 | December 31, 2029 | 42,404 | 12,603 | ||||
TA No. 4 Lease | 37 | December 31, 2033 | 48,381 | 12,961 | ||||
TA No. 5 Lease | 35 | June 30, 2035 | 61,617 | 17,872 | ||||
179 | $ | 246,083 | $ | 70,458 |
(1) | Pursuant to the Transaction Agreements, in January 2019, we sold to TA 20 travel center properties we leased to TA as of December 31, 2018. As of December 31, 2018, of these 20 travel centers, five were included in TA No. 1 lease, four were included in TA No. 2 lease, five were included in TA No. 3 lease, one was included in TA No. 4 lease and five were included in TA No. 5 lease. In addition, certain properties were re-allocated amongst the lease pools to balance the portfolios' financial profile and maintain geographic diversity. Upon the sale of these 20 travel centers, the properties were removed from the applicable leases and the annual minimum rent payable to us by TA under TA Nos. 1, 2, 3, 4 and 5 lease was reduced by $4,694, $10,192, $12,350, $6,982 and $8,930, respectively. |
(2) | TA has two renewal options of 15 years each under each of our TA leases. Pursuant to the Transaction Agreements, the term of each of the TA leases was extended by three years from their previous expiration dates. The lease terms listed in the table include the extended three year terms. |
(3) | Pursuant to the Transaction Agreements, TA agreed to make 16 quarterly installments of $4,400 each commencing April 1, 2019, or $70,458 in aggregate, to repay and fully satisfy and discharge the $150,000 in deferred rent TA owed us. |
2019 | $ | 309,099 | |
2020 | 298,828 | ||
2021 | 298,335 | ||
2022 | 296,756 | ||
2023 | 296,809 | ||
Thereafter | 2,017,031 | ||
Total | $ | 3,516,858 |
• | Base Management Fee. The annual base management fee payable to RMR LLC by us for each applicable period is equal to the lesser of: |
◦ | the sum of (a) 0.7% of the average aggregate historical cost of our real estate investments up to $250,000, plus (b) 0.5% of the average aggregate historical cost of our real estate investments exceeding $250,000; and |
◦ | the sum of (a) 0.7% of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded, during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $250,000, plus (b) 0.5% of our Average Market Capitalization exceeding $250,000. |
• | Incentive Management Fee. The incentive management fee which may be earned by RMR LLC for an annual period is calculated as follows: |
◦ | An amount, subject to a cap based on the value of our common shares outstanding, equal to 12% of the product of: |
- | our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and |
- | the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the SNL U.S. REIT Hotel Index, or the benchmark return per share, for the relevant measurement period. |
◦ | The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if additional common shares are issued during the measurement period. |
◦ | No incentive management fee is payable by us unless our total return per share during the measurement period is positive. |
◦ | The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated. |
◦ | If our total return per share exceeds 12% per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the SNL U.S. REIT Hotel Index for such measurement period and 12% per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the SNL U.S. REIT Hotel Index by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the SNL U.S. REIT Hotel Index. |
◦ | The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5% of the number of our common shares then outstanding |
◦ | Incentive management fees we paid to RMR LLC for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR LLC and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements. |
• | Property Management and Construction Supervision Fees. The property management fees payable to RMR LLC by us for each applicable period are equal to 3.0% of gross collected rents and the construction supervision fees payable to RMR LLC by us for each applicable period are equal to 5.0% of construction costs for the office building component of one of our hotels that is subject to our property management agreement with RMR LLC. |
• | Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred by RMR LLC on our behalf. We are generally not responsible for payment of RMR LLC’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR LLC employees assigned to work exclusively or partly at the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR LLC's centralized accounting personnel, our share of RMR LLC’s costs for providing our internal audit function, and as otherwise agreed. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR LLC. We reimbursed RMR LLC $226, $206 and $171 for property management related expenses related to the office building component of one of our hotels for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included in hotel operating expenses in our consolidated statements of comprehensive income for these periods. Our Audit Committee appoints our Director of Internal Audit and our Compensation Committee approves the costs of our internal audit function. The amounts recognized as expense for internal audit costs were $173, $276 and $235 for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included in general and administrative expenses in our consolidated statements of comprehensive income for these periods. |
• | Term. Our management agreements with RMR LLC have terms that end on December 31, 2039, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension. |
• | Termination Rights. We have the right to terminate one or both of our management agreements with RMR LLC: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR |
• | Termination Fee. If we terminate one or both of our management agreements with RMR LLC for convenience, or if RMR LLC terminates one or both of our management agreements for good reason, we have agreed to pay RMR LLC a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR LLC for a performance reason, we have agreed to pay RMR LLC the termination fee calculated as described above, but assuming a 10 year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR LLC for cause or as a result of a change of control of RMR LLC. |
• | Transition Services. RMR LLC has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR LLC, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable. |
• | Vendors. Pursuant to our management agreements with RMR LLC, RMR LLC may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR LLC and other companies to which RMR LLC or its subsidiaries provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers. |
• | Investment Opportunities. Under our business management agreement with RMR LLC, we acknowledge that RMR LLC may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR LLC. |
2019 | $ | — | |
2020 | — | ||
2021 | 400,000 | ||
2022 | 677,000 | ||
2023 | 900,000 | ||
Thereafter | 2,250,000 | ||
$ | 4,227,000 |
For the Year Ended December 31, | |||||||||||
2018 | 2017 | 2016 | |||||||||
Current: | |||||||||||
Federal (1) | $ | — | $ | (5,431 | ) | $ | — | ||||
State | 1,575 | 1,713 | 1,631 | ||||||||
Foreign | 667 | 670 | 2,380 | ||||||||
2,242 | (3,048 | ) | 4,011 | ||||||||
Deferred: | |||||||||||
Foreign | (1,047 | ) | (236 | ) | 9 | ||||||
(1,047 | ) | (236 | ) | 9 | |||||||
$ | 1,195 | $ | (3,284 | ) | $ | 4,020 |
For the Year Ended December 31, | ||||||||
2018 | 2017 | 2016 | ||||||
Taxes at statutory U.S. federal income tax rate | 21.0 | % | 35.0 | % | 35.0 | % | ||
Nontaxable income of HPT | (21.0 | )% | (35.0 | )% | (35.0 | )% | ||
Minimum tax credit refund | 0.0 | % | (2.6 | )% | 0.0 | % | ||
State and local income taxes, net of federal tax benefit | 0.8 | % | 0.8 | % | 0.8 | % | ||
Foreign taxes | (0.2 | )% | 0.2 | % | 1.0 | % | ||
Tax Act adjustment | 0.0 | % | 21.8 | % | 0.0 | % | ||
Change in valuation allowance | 0.0 | % | (21.8 | )% | 0.0 | % | ||
Other differences, net | 0.0 | % | 0.0 | % | 0.0 | % | ||
Effective tax rate | 0.6 | % | (1.6 | )% | 1.8 | % |
For the Year Ended December 31, | |||||||
2018 | 2017 | ||||||
Deferred tax assets: | |||||||
Tax credits | $ | 5,492 | $ | 5,984 | |||
Tax loss carryforwards | 90,816 | 85,661 | |||||
Other | 2,829 | 3,047 | |||||
99,137 | 94,692 | ||||||
Valuation allowance | (99,137 | ) | (94,692 | ) | |||
— | — | ||||||
Deferred tax liabilities: | |||||||
Property basis difference | (7,174 | ) | (8,221 | ) | |||
Net deferred tax liabilities | $ | (7,174 | ) | $ | (8,221 | ) |
Agreement Reference Name | Number of Properties | Annual Minimum Returns/Rents | % of Total | Investment(1) | % of Total | ||||||||||||
Marriott (No. 1) | 53 | $ | 70,137 | 8 | % | $ | 706,308 | 7 | % | ||||||||
Marriott (No. 234) | 68 | 107,350 | 13 | % | 1,012,394 | 10 | % | ||||||||||
Marriott (No. 5) | 1 | 10,321 | 1 | % | 90,078 | 1 | % | ||||||||||
Subtotal Marriott | 122 | 187,808 | 22 | % | 1,808,780 | 18 | % | ||||||||||
IHG (2) | 100 | 193,695 | 22 | % | 2,096,012 | 21 | % | ||||||||||
Sonesta | 51 | 127,089 | 14 | % | 1,695,809 | 16 | % | ||||||||||
Wyndham(3) | 22 | 29,283 | 4 | % | 396,682 | 4 | % | ||||||||||
Hyatt | 22 | 22,037 | 3 | % | 301,942 | 3 | % | ||||||||||
Radisson | 9 | 18,920 | 2 | % | 270,105 | 3 | % | ||||||||||
Subtotal Hotels | 326 | 578,832 | 67 | % | 6,569,330 | 65 | % | ||||||||||
TA (No. 1) | 40 | 53,712 | 6 | % | 688,204 | 7 | % | ||||||||||
TA (No. 2) | 40 | 54,855 | 6 | % | 694,852 | 7 | % | ||||||||||
TA (No. 3) | 39 | 54,754 | 6 | % | 644,820 | 6 | % | ||||||||||
TA (No. 4)(4) | 40 | 55,363 | 7 | % | 629,193 | 6 | % | ||||||||||
TA (No. 5) | 40 | 70,547 | 8 | % | 897,685 | 9 | % | ||||||||||
Subtotal TA | 199 | 289,231 | 33 | % | 3,554,754 | 35 | % | ||||||||||
Total | 525 | $ | 868,063 | 100 | % | $ | 10,124,084 | 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 which do not result in increases to minimum returns or rents. |
(2) | The annual minimum return/minimum rent amount presented includes $7,908 of rent related to our lease with IHG for one hotel in Puerto Rico. |
(3) | The annual minimum return/minimum rent amount presented includes $1,493 of rent related to our lease with Destinations for 48 vacation units in one hotel. |
(4) | The annual minimum rent amount for our TA No. 4 lease includes approximately $2,175 of ground rent paid by TA for a property we lease and sublease to TA. |
2018 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Revenues | $ | 528,633 | $ | 611,951 | $ | 603,153 | $ | 550,799 | |||||||
Net income (loss) | 80,206 | 97,289 | 117,099 | (108,860 | ) | ||||||||||
Net income (loss) available for common shareholders | 80,206 | 97,289 | 117,099 | (108,860 | ) | ||||||||||
Net income (loss) available for common shareholders per share (basic and diluted)(1) | 0.49 | 0.59 | 0.71 | (0.66 | ) | ||||||||||
Distributions per common share(2) | 0.52 | 0.53 | 0.53 | 0.53 |
2017 | |||||||||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | ||||||||||||
Revenues | $ | 488,602 | $ | 570,603 | $ | 577,588 | $ | 535,142 | |||||||
Net income | 37,171 | 60,699 | 85,728 | 31,545 | |||||||||||
Net income available for common shareholders | 25,843 | 60,699 | 85,728 | 31,545 | |||||||||||
Net income available for common shareholders per share (basic and diluted)(1) | 0.16 | 0.37 | 0.52 | 0.19 | |||||||||||
Distributions per common share(2) | 0.51 | 0.52 | 0.52 | 0.52 |
(1) | The sum of per common share amounts for the four quarters differs from annual per share amounts due to the required method of computing weighted average number of shares in interim periods and rounding. |
(2) | Amounts represent distributions paid in the periods shown. |
For the Year Ended December 31, 2018 | |||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | ||||||||||||
Hotel operating revenues | $ | 1,960,958 | $ | — | $ | — | $ | 1,960,958 | |||||||
Rental income | 26,137 | 302,309 | — | 328,446 | |||||||||||
FF&E reserve income | 5,132 | — | — | 5,132 | |||||||||||
Total revenues | 1,992,227 | 302,309 | — | 2,294,536 | |||||||||||
Hotel operating expenses | 1,392,355 | — | — | 1,392,355 | |||||||||||
Depreciation and amortization | 255,759 | 147,318 | — | 403,077 | |||||||||||
General and administrative | — | — | 104,862 | 104,862 | |||||||||||
Total expenses | 1,648,114 | 147,318 | 104,862 | 1,900,294 | |||||||||||
Dividend income | — | — | 2,754 | 2,754 | |||||||||||
Unrealized losses on equity securities | — | — | (16,737 | ) | (16,737 | ) | |||||||||
Interest income | 990 | — | 538 | 1,528 | |||||||||||
Interest expense | — | — | (195,213 | ) | (195,213 | ) | |||||||||
Loss on early extinguishment of debt | — | — | (160 | ) | (160 | ) | |||||||||
Income (loss) before income taxes and equity in earnings of an investee | 345,103 | 154,991 | (313,680 | ) | 186,414 | ||||||||||
Income tax expense | — | — | (1,195 | ) | (1,195 | ) | |||||||||
Equity in earnings of an investee | — | — | 515 | 515 | |||||||||||
Net income (loss) | $ | 345,103 | $ | 154,991 | $ | (314,360 | ) | $ | 185,734 |
As of December 31, 2018 | |||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | ||||||||||||
Total assets | $ | 4,586,709 | $ | 2,398,118 | $ | 192,252 | $ | 7,177,079 |
For the Year Ended December 31, 2017 | |||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | ||||||||||||
Hotel operating revenues | $ | 1,843,501 | $ | — | $ | — | $ | 1,843,501 | |||||||
Rental income | 30,491 | 293,273 | — | 323,764 | |||||||||||
FF&E reserve income | 4,670 | — | — | 4,670 | |||||||||||
Total revenues | 1,878,662 | 293,273 | — | 2,171,935 | |||||||||||
Hotel operating expenses | 1,279,547 | — | — | 1,279,547 | |||||||||||
Depreciation and amortization | 242,829 | 143,830 | — | 386,659 | |||||||||||
General and administrative | — | — | 125,402 | 125,402 | |||||||||||
Total expenses | 1,522,376 | 143,830 | 125,402 | 1,791,608 | |||||||||||
Gain on sale of real estate | 9,348 | — | — | 9,348 | |||||||||||
Dividend income | — | — | 2,504 | 2,504 | |||||||||||
Interest income | 401 | — | 397 | 798 | |||||||||||
Interest expense | — | — | (181,579 | ) | (181,579 | ) | |||||||||
Loss on early extinguishment of debt | — | — | (146 | ) | (146 | ) | |||||||||
Income (loss) before income taxes, equity in earnings of an investee and gain on sale of real estate | 366,035 | 149,443 | (304,226 | ) | 211,252 | ||||||||||
Income tax benefit | — | — | 3,284 | 3,284 | |||||||||||
Equity in earnings of an investee | — | — | 607 | 607 | |||||||||||
Net income (loss) | $ | 366,035 | $ | 149,443 | $ | (300,335 | ) | $ | 215,143 |
As of December 31, 2017 | |||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | ||||||||||||
Total assets | $ | 4,477,512 | $ | 2,476,073 | $ | 196,800 | $ | 7,150,385 |
For the Year Ended December 31, 2016 | |||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | ||||||||||||
Hotel operating revenues | $ | 1,733,103 | $ | — | $ | — | $ | 1,733,103 | |||||||
Rental income | 30,425 | 279,175 | — | 309,600 | |||||||||||
FF&E reserve income | 4,508 | — | — | 4,508 | |||||||||||
Total revenues | 1,768,036 | 279,175 | — | 2,047,211 | |||||||||||
Hotel operating expenses | 1,202,538 | — | — | 1,202,538 | |||||||||||
Depreciation and amortization | 224,335 | 133,007 | — | 357,342 | |||||||||||
General and administrative | — | — | 99,105 | 99,105 | |||||||||||
Acquisition related costs | 1,367 | — | — | 1,367 | |||||||||||
Total expenses | 1,428,240 | 133,007 | 99,105 | 1,660,352 | |||||||||||
Dividend income | — | — | 2,001 | 2,001 | |||||||||||
Interest income | 94 | — | 180 | 274 | |||||||||||
Interest expense | — | — | (161,913 | ) | (161,913 | ) | |||||||||
Loss on early extinguishment of debt | — | — | (228 | ) | (228 | ) | |||||||||
Income (loss) before income taxes, equity in earnings of an investee and gain on sale of real estate | 339,890 | 146,168 | (259,065 | ) | 226,993 | ||||||||||
Income tax expense | — | — | (4,020 | ) | (4,020 | ) | |||||||||
Equity in earnings of an investee | — | — | 137 | 137 | |||||||||||
Net income (loss) | $ | 339,890 | $ | 146,168 | $ | (262,948 | ) | $ | 223,110 |
As of December 31, 2016 | |||||||||||||||
Hotels | Travel Centers | Corporate | Consolidated | ||||||||||||
Total assets | $ | 4,005,481 | $ | 2,483,718 | $ | 145,029 | $ | 6,634,228 |
Fair Value at Reporting Date Using | ||||||||||||||||
Description | Carrying Value at December 31, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Recurring Fair Value Measurement Assets: | ||||||||||||||||
Investment in TA(1) | $ | 12,859 | $ | 12,859 | $ | — | $ | — | ||||||||
Investment in RMR Inc.(2) | $ | 132,900 | $ | 132,900 | $ | — | $ | — |
(1) | Our 3,420,000 common shares of TA, which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $17,407 as of December 31, 2018. During the year ended December 31, 2018, we recorded unrealized losses of $1,163 to adjust the carrying value of our investment in TA shares to their fair value as of December 31, 2018. |
(2) | Our 2,503,777 shares of class A common stock of RMR Inc., which are included in other assets in our consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs). Our historical cost basis for these shares is $66,374 as of December 31, 2018. During the year ended December 31, 2018, we recorded unrealized losses of $15,573 to adjust the carrying value of our investment in RMR Inc. shares to their fair value as of December 31, 2018. |
December 31, 2018 | December 31, 2017 | ||||||||||||||
Carrying | Fair | Carrying | Fair | ||||||||||||
Amount (1) | Value | Amount (1) | Value | ||||||||||||
Senior Unsecured Notes, due 2021 at 4.25% | $ | 396,938 | $ | 404,582 | $ | 395,497 | $ | 413,676 | |||||||
Senior Unsecured Notes, due 2022 at 5.00% | 495,609 | 510,658 | 494,398 | 533,908 | |||||||||||
Senior Unsecured Notes, due 2023 at 4.50% | 499,268 | 503,295 | 499,104 | 523,275 | |||||||||||
Senior Unsecured Notes, due 2024 at 4.65% | 347,890 | 349,741 | 347,484 | 368,804 | |||||||||||
Senior Unsecured Notes, due 2025 at 4.50% | 345,743 | 341,114 | 345,055 | 363,589 | |||||||||||
Senior Unsecured Notes, due 2026 at 5.25% | 341,955 | 354,060 | 340,826 | 377,431 | |||||||||||
Senior Unsecured Notes, due 2027 at 4.95% | 393,893 | 391,660 | 393,137 | 422,914 | |||||||||||
Senior Unsecured Notes, due 2028 at 3.95% | 389,610 | 361,232 | 388,461 | 390,930 | |||||||||||
Senior Unsecured Notes, due 2030 at 4.375% | 387,389 | 367,110 | — | — | |||||||||||
Total financial liabilities | $ | 3,598,295 | $ | 3,583,452 | $ | 3,203,962 | $ | 3,394,527 |
(1) | Carrying value includes unamortized discounts and premiums and certain issuance costs. |
Initial Cost to Company | Costs Capitalized Subsequent to Acquisition | Gross Amount at which Carried at Close of Period | |||||||||||||||||||||||||||||
Land | Building & Improvements | Improvements | Impairment | Cost Basis Adjustment(1) | Land | Building & Improvements | Total(2) | ||||||||||||||||||||||||
134 TravelCenters of America | $ | 567 | $ | 939 | $ | 510 | $ | — | $ | (2 | ) | $ | 567 | $ | 1,447 | $ | 2,014 | ||||||||||||||
45 Petro Stopping Centers | 260 | 522 | 213 | — | — | 260 | 735 | 995 | |||||||||||||||||||||||
71 Courtyards | 125 | 643 | 241 | (8 | ) | (10 | ) | 125 | 866 | 991 | |||||||||||||||||||||
6 Royal Sonesta | 96 | 460 | 81 | (16 | ) | (9 | ) | 96 | 516 | 612 | |||||||||||||||||||||
35 Residence Inns | 68 | 326 | 134 | (3 | ) | (3 | ) | 68 | 454 | 522 | |||||||||||||||||||||
10 Crowne Plaza | 69 | 348 | 101 | — | — | 69 | 449 | 518 | |||||||||||||||||||||||
39 Sonesta ES Suites | 80 | 297 | 199 | (35 | ) | (27 | ) | 80 | 434 | 514 | |||||||||||||||||||||
61 Candlewood Hotels | 71 | 383 | 76 | (14 | ) | (7 | ) | 71 | 438 | 509 | |||||||||||||||||||||
20 Staybridge Suites | 53 | 224 | 29 | — | — | 53 | 253 | 306 | |||||||||||||||||||||||
6 Sonesta Hotels & Resorts | 55 | 178 | 90 | (15 | ) | (5 | ) | 55 | 248 | 303 | |||||||||||||||||||||
3 Kimpton Hotels | 45 | 208 | 6 | — | — | 45 | 214 | 259 | |||||||||||||||||||||||
6 Wyndham Hotels and Resorts and Wyndham Grand | 35 | 175 | 62 | (26 | ) | (8 | ) | 35 | 203 | 238 | |||||||||||||||||||||
22 Hyatt Place | 24 | 185 | 14 | — | — | 24 | 199 | 223 | |||||||||||||||||||||||
3 InterContinental | 14 | 100 | 100 | — | — | 14 | 200 | 214 | |||||||||||||||||||||||
5 Radisson | 8 | 148 | 18 | — | — | 8 | 166 | 174 | |||||||||||||||||||||||
2 Marriott Full Service | 10 | 69 | 52 | — | — | 10 | 121 | 131 | |||||||||||||||||||||||
12 TownePlace Suites | 17 | 78 | 24 | (15 | ) | (18 | ) | 17 | 69 | 86 | |||||||||||||||||||||
3 Holiday Inn | 7 | 33 | 30 | — | — | 7 | 63 | 70 | |||||||||||||||||||||||
4 Country Inn and Suites | 5 | 52 | 5 | — | — | 5 | 57 | 62 | |||||||||||||||||||||||
16 Hawthorn Suites | 14 | 77 | 19 | (33 | ) | (18 | ) | 14 | 45 | 59 | |||||||||||||||||||||
2 SpringHill Suites | 3 | 15 | 2 | — | — | 3 | 17 | 20 | |||||||||||||||||||||||
1,626 | 5,460 | 2,006 | (165 | ) | (107 | ) | 1,626 | 7,194 | 8,820 | ||||||||||||||||||||||
Assets Held for Sale | |||||||||||||||||||||||||||||||
15 TravelCenters of America | 40 | 54 | 64 | — | — | 40 | 118 | 158 | |||||||||||||||||||||||
5 Petro Stopping Centers | 13 | 31 | 18 | — | — | 13 | 49 | 62 | |||||||||||||||||||||||
Total (525 properties) | $ | 1,679 | $ | 5,545 | $ | 2,088 | $ | (165 | ) | $ | (107 | ) | $ | 1,679 | $ | 7,361 | $ | 9,040 |
(1) | Represents reclassifications between accumulated depreciation and building & improvements made to record certain properties at fair value in accordance with GAAP. |
(2) | Excludes $703 of personal property classified in our consolidated balance sheets as furniture, fixtures and equipment. |
Accumulated Depreciation(1) | Date of Construction | Date Acquired | Life on which Depreciation in Latest Income Statement is Computed | ||||||
134 TravelCenters of America | $ | (644 | ) | 1962 through 2017 | 2007 through 2017 | 10 - 40 Years | |||
71 Courtyards | (420 | ) | 1987 through 2000 | 1995 through 2003 | 10 - 40 Years | ||||
45 Petro Stopping Centers | (310 | ) | 1975 through 2017 | 2007 through 2017 | 10 - 40 Years | ||||
35 Residence Inns | (212 | ) | 1989 through 2002 | 1996 through 2005 | 10 - 40 Years | ||||
61 Candlewood Hotels | (192 | ) | 1996 through 2000 | 1997 through 2003 | 10 - 40 Years | ||||
20 Staybridge Suites | (104 | ) | 1989 through 2009 | 1996 through 2018 | 10 - 40 Years | ||||
22 Hyatt Place | (100 | ) | 1992 through 2000 | 1997 through 2002 | 10 - 40 Years | ||||
6 Royal Sonesta | (89 | ) | 1913 through 1987 | 2005 through 2017 | 10 - 40 Years | ||||
10 Crowne Plaza | (84 | ) | 1971 through 1988 | 2006 and 2017 | 10 - 40 Years | ||||
39 Sonesta ES Suites | (72 | ) | 1984 through 2000 | 1996 through 2017 | 10 - 40 Years | ||||
3 InterContinental | (70 | ) | 1924 through 1989 | 2006 | 10 - 40 Years | ||||
2 Marriott Full Service | (58 | ) | 1972 through 1995 | 1998 through 2001 | 10 - 40 Years | ||||
5 Radisson | (47 | ) | 1987 through 1990 | 1996 through 2018 | 10 - 40 Years | ||||
6 Wyndham Hotels and Resorts and Wyndham Grand | (39 | ) | 1960 through 1988 | 2006 through 2013 | 10 - 40 Years | ||||
6 Sonesta Hotels and Resorts | (38 | ) | 1924 through 1999 | 2005 through 2018 | 10 - 40 Years | ||||
4 Country Inn and Suites | (27 | ) | 1987 through 1997 | 1996 and 2005 | 10 - 40 Years | ||||
12 TownePlace Suites | (23 | ) | 1997 through 2000 | 1998 through 2001 | 10 - 40 Years | ||||
3 Holiday Inn | (13 | ) | 1984 through 2001 | 2006 | 10 - 40 Years | ||||
16 Hawthorn Suites | (12 | ) | 1996 through 2000 | 1997 through 2006 | 10 - 40 Years | ||||
3 Kimpton Hotels | (12 | ) | 1901 through 1927 | 2016 through 2017 | 10 - 40 Years | ||||
2 SpringHill Suites | (8 | ) | 1997 through 2000 | 2000 through 2001 | 10 - 40 Years | ||||
(2,574 | ) | ||||||||
Assets Held for Sale | |||||||||
15 TravelCenters of America | (52 | ) | |||||||
5 Petro Stopping Centers | (25 | ) | |||||||
Total (525 properties) | $ | (2,651 | ) |
(1) | Excludes accumulated depreciation of $399 related to personal property classified in our consolidated balance sheets as furniture, fixtures and equipment. |
(A) | The change in total cost of properties for the period from January 1, 2016 to December 31, 2018 is as follows: |
2018 | 2017 | 2016 | |||||||||
Balance at beginning of year | $ | 8,778,907 | $ | 8,100,844 | $ | 7,684,059 | |||||
Additions: acquisitions and capital expenditures | 324,227 | 743,340 | 455,373 | ||||||||
Dispositions | (62,923 | ) | (71,054 | ) | (31,261 | ) | |||||
Reclassification of properties held for sale | (219,865 | ) | 5,777 | (7,327 | ) | ||||||
Balance at close of year | $ | 8,820,346 | $ | 8,778,907 | $ | 8,100,844 |
(B) | The change in accumulated depreciation for the period from January 1, 2016 to December 31, 2018 is as follows: |
2018 | 2017 | 2016 | |||||||||
Balance at beginning of year | $ | 2,409,416 | $ | 2,176,537 | $ | 1,938,823 | |||||
Additions: depreciation expense | 304,224 | 278,353 | 270,285 | ||||||||
Dispositions | (62,923 | ) | (45,474 | ) | (31,261 | ) | |||||
Reclassification of properties held for sale | (76,420 | ) | — | (1,310 | ) | ||||||
Balance at close of year | $ | 2,574,297 | $ | 2,409,416 | $ | 2,176,537 |
(C) | The aggregate cost tax basis for federal income tax purposes of our real estate properties was $6,475,473 on December 31, 2018. |
Hospitality Properties Trust | ||
By: | /s/ John G. Murray | |
John G. Murray President and Chief Executive Officer |
Signature | Title | Date | ||
/s/ John G. Murray | Managing Trustee, President and Chief Executive Officer | February 27, 2019 | ||
John G. Murray | ||||
/s/ Brian E. Donley | Chief Financial Officer and Treasurer (Principal Financial and Accounting Officer) | February 27, 2019 | ||
Brian E. Donley | ||||
/s/ Donna D. Fraiche | Independent Trustee | February 27, 2019 | ||
Donna D. Fraiche | ||||
/s/ John L. Harrington | Independent Trustee | February 27, 2019 | ||
John L. Harrington | ||||
/s/ William A. Lamkin | Independent Trustee | February 27, 2019 | ||
William A. Lamkin | ||||
/s/ Adam D. Portnoy | Managing Trustee | February 27, 2019 | ||
Adam D. Portnoy | ||||
(a) | “Board” means the board of trustees of the Company. |
(a) | If to Indemnitee, to: The address set forth on the signature page hereto. |
(b) | If to the Company to: |
Inf | HOSPITALITY PROPERTIES TRUST | |
By: | ||
Name: | ||
Title: | ||
[INDEMNITEE] | ||
Indemnitee’s Address: | ||
[ ] |
WITNESS: | ||
Print name of witness | Print name of Indemnitee |
Name of Signatory | Date |
Ethan S. Bornstein | June 14, 2018 |
Brian E. Donley | January 1, 2019 |
Donna D. Fraiche | June 14, 2018 |
John L. Harrington | June 14, 2018 |
Mark L. Kleifges | June 14, 2018 |
William A. Lamkin | June 14, 2018 |
John G. Murray | June 14, 2018 |
Adam D. Portnoy | June 14, 2018 |
Name | State of Formation, Organization or Incorporation | |
Cambridge TRS, Inc. | Maryland | |
Candlewood Jersey City-Urban Renewal, L.L.C. | New Jersey | |
Harbor Court Associates, LLC | Maryland | |
HPT Cambridge LLC | Massachusetts | |
HPT Clift TRS LLC | Maryland | |
HPT CW MA Realty Trust (Nominee Trust) | Massachusetts | |
HPT CY TRS, Inc. | Maryland | |
HPT Geary ABC Holdings LLC | Maryland | |
HPT Geary Properties Trust | Maryland | |
HPT IHG Canada Corporation | New Brunswick | |
HPT IHG Canada Properties Trust | Delaware | |
HPT IHG GA Properties LLC | Maryland | |
HPT IHG PR, Inc. | Puerto Rico | |
HPT IHG-2 Properties Trust | Maryland | |
HPT IHG-3 Properties LLC | Maryland | |
HPT PSC Properties LLC | Maryland | |
HPT PSC Properties Trust | Maryland | |
HPT SN Holding, Inc. | New York | |
HPT Suite Properties Trust | Maryland | |
HPT TA Properties LLC | Maryland | |
HPT TA Properties Trust | Maryland | |
HPT TRS IHG-2, Inc. | Maryland | |
HPT TRS Inc. | Maryland | |
HPT TRS MRP, Inc. | Maryland | |
HPT TRS SPES II, Inc. | Maryland | |
HPT TRS WYN, Inc. | Maryland | |
HPTCY Properties Trust | Maryland | |
HPTMI Hawaii, Inc. | Delaware | |
HPTMI Properties Trust | Maryland | |
HPTWN Properties Trust | Maryland | |
Royal Sonesta, Inc. | Louisiana |
/s/ Ernst & Young LLP |
1. | I have reviewed this Annual Report on Form 10-K of Hospitality Properties Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 27, 2019 | /s/ John G. Murray |
John G. Murray | |
Managing Trustee, President and Chief Executive Officer |
1. | I have reviewed this Annual Report on Form 10-K of Hospitality Properties Trust; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a. | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a. | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b. | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: February 27, 2019 | /s/ Brian E. Donley |
Brian E. Donley | |
Chief Financial Officer and Treasurer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ John G. Murray | /s/ Brian E. Donley | |
John G. Murray | Brian E. Donley | |
Managing Trustee, President and | Chief Financial Officer and Treasurer | |
Chief Executive Officer | ||
Date: February 27, 2019 |
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Document and Entity Information - USD ($) $ in Billions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Feb. 26, 2019 |
Jun. 29, 2018 |
|
Document and Entity Information | |||
Entity Registrant Name | HOSPITALITY PROPERTIES TRUST | ||
Entity Central Index Key | 0000945394 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Small Business | false | ||
Entity Public Float | $ 4.6 | ||
Entity Common Stock, Shares Outstanding | 164,441,709 | ||
Document Fiscal Year Focus | 2018 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common shares, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common shares, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common shares, shares issued (in shares) | 164,441,709 | 164,349,141 |
Common shares, shares outstanding (in shares) | 164,441,709 | 164,349,141 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Income Statement [Abstract] | |||
Interest expense, amortization of debt issuance costs and debt discounts and premiums | $ 10,177 | $ 8,871 | $ 8,151 |
Organization |
12 Months Ended |
---|---|
Dec. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Note 1. Organization Hospitality Properties Trust, or we, us or our, is a real estate investment trust, or REIT, organized on February 7, 1995, under the laws of the State of Maryland, which invests in hotels and travel related real estate. At December 31, 2018, we, directly and through subsidiaries, owned 326 hotels and 199 travel centers. At December 31, 2018, our properties were leased, managed or operated by subsidiaries of the following companies: Marriott International, Inc., or Marriott, InterContinental Hotels Group, plc, or IHG, Sonesta International Hotels Corporation, or Sonesta, Wyndham Hotels & Resorts, Inc., or Wyndham, Hyatt Hotels Corporation, or Hyatt, Radisson Hospitality, Inc., or Radisson, and TravelCenters of America LLC, or TA. Hereinafter these companies are sometimes referred to as managers and/or tenants or, collectively, operators. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation. We have determined that each of our wholly owned 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™, or the Codification. We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIEs’ 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 $31,917 and $33,305 as of December 31, 2018 and 2017, respectively, and consist primarily of amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $148,459 and $140,897 as of December 31, 2018 and 2017, respectively, and consist primarily of security deposits they hold and amounts payable to certain of our hotel managers. The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs. We account for our investment in Affiliates Insurance Company, or AIC, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us and AIC. One of our Managing Trustees, Adam D. Portnoy, is the sole trustee of ABP Trust, which is the controlling shareholder of The RMR Group Inc., or RMR Inc. Mr. Portnoy is also a managing director and president and chief executive officer of RMR Inc. and an officer and employee of The RMR Group LLC, or RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, is also an officer and employee of RMR LLC. RMR LLC also provides management and administrative services to AIC, and each of our Trustees (other than Mr. Murray) is a director of AIC. See Note 10 for a further discussion of our relationships and transactions with RMR Inc. and RMR LLC and our investment in AIC. Real Estate Properties. We record real estate properties at cost less impairments, if any. We record the cost of real estate acquired at the relative fair value of building, land, furniture, fixtures and equipment, and, if applicable, acquired in place leases, above or below market leases and customer relationships. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We depreciate real estate properties on a straight line basis over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property and we amortize finite lived intangible assets over the shorter of their useful lives or the term of the associated lease. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our real estate properties. These indicators may include weak or declining operating profitability, cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life or market or industry changes that could permanently reduce the value of our investments. If there is an indication that the carrying value of a property is not recoverable, we estimate the projected undiscounted cash flows of the asset to determine if an impairment loss should be recognized. We determine the amount of an impairment loss by comparing the historical carrying value of the property to its estimated fair value. We estimate fair value by evaluating recent financial performance and projecting discounted cash flows of properties using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our real estate properties. If we change estimated lives, we depreciate or amortize the carrying values of affected assets over the revised remaining lives. Intangible Assets and Liabilities. Intangible assets consist primarily of acquired trademarks and tradenames and acquired below market ground leases for which we are the tenant or lessee. Intangible liabilities consist of acquired above market ground leases for which we are the tenant or lessee. We include intangible assets in other assets, net, and intangible liabilities in accounts payable and other liabilities in our consolidated balance sheets. At December 31, 2018 and 2017, our intangible assets and liabilities were as follows:
We amortize above and below market ground leases on a straight line basis over the term of the associated lease (3 and 6 years on a weighted average basis for intangible liabilities and assets, respectively). For the years ended December 31, 2018, 2017 and 2016 amortization relating to intangible assets was $2,542, $2,814 and $2,303, respectively, and amortization relating to intangible liabilities was $455 for each of these years. As of December 31, 2018, we estimate future amortization relating to intangible assets and liabilities as follows:
We do not amortize our indefinite lived trademarks and tradenames, but we review the assets at least annually for impairment and reassess their classification as indefinite lived assets. In addition, we regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in value. We determine the amount of an impairment loss, if any, by comparing the carrying value of the intangible asset to its estimated fair value. Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents. Restricted Cash. Restricted cash, or FF&E reserve escrows, consists of amounts escrowed pursuant to the terms of our management agreements and leases to fund periodic renovations and improvements at our hotels. Equity Securities. As of December 31, 2018, we owned 3,420,000 common shares of TA and 2,503,777 shares of class A common stock of RMR Inc. Our equity securities are recorded at fair value based on their quoted market price at the end of each reporting period. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with FASB Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to January 1, 2018, unrealized gains and losses on equity securities were recorded as a component of cumulative comprehensive income (loss) in shareholders' equity. As further described in Note 10, we initially acquired 2,503,777 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $55,922. We concluded, for accounting purposes, that the cash and share consideration we paid for our investment in these shares represented a discount to the fair value of these shares. We initially accounted for this investment under the cost method of accounting and recorded this investment at its estimated fair value of $129,722 as of June 5, 2015 using Level 3 inputs, as defined in the fair value hierarchy under United States generally accepted accounting principles, or GAAP. As a result, 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 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 and property management fee expense. We amortized $3,585 of this liability during each of the years ended December 31, 2018, 2017 and 2016. As of December 31, 2018, the remaining unamortized amount of this liability was $61,006. Future amortization of this liability as of December 31, 2018, is estimated to be $3,585 for each of the years 2019 through 2023 and $43,081 thereafter. Debt Issuance Costs. Debt issuance costs consist of capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective debt. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets, net in our consolidated balance sheets. As of December 31, 2018 and 2017, debt issuance costs for our revolving credit facility were $6,822 and $7,476, respectively, and accumulated amortization of debt issuance costs for our revolving credit facility were $1,005 and $6,126, respectively. Debt issuance costs, net of accumulated amortization, for our term loan and senior notes are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2018 and 2017, debt issuance costs, net of accumulated amortization, for our term loan and senior notes were $22,243 and $20,226, respectively. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, term loan and senior notes as of December 31, 2018, are estimated to be $5,593 in 2019, $5,593 in 2020, $5,039 in 2021, $4,201 in 2022, $2,394 in 2023 and $5,240 thereafter. Revenue Recognition. We report hotel operating revenues for managed hotels in our 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 consolidated statements of comprehensive income. We recognize rental income from operating leases on a straight line basis over the term of the lease agreements. Rental income includes $12,509, $12,378, and $13,570 of adjustments necessary to record scheduled rent increases under certain of our leases, the deferred rent obligations payable to us under our leases with TA and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis in 2018, 2017 and 2016, respectively. See Notes 5, 6 and 10 for further information regarding our TA leases. Due from related persons includes $66,347 and $54,219 and other assets, net, includes $3,073 and $2,691 of straight line rent receivables at December 31, 2018 and 2017, respectively. We determine percentage rent due to us under our leases annually and recognize it when all contingencies are met and the rent is earned. We earned percentage rental income of $3,695, $2,106 and $1,303 in 2018, 2017 and 2016, respectively. 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 reserves established for the regular refurbishment of our hotels, or FF&E reserves, for our managed hotels as FF&E reserve income. Per Common Share Amounts. We calculate basic earnings per common share by dividing allocable net income available for common shareholders by the weighted average number of common shares outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, including contingently issuable common shares under the previous terms of our business management agreement with RMR LLC, if any, and the related impact on earnings, are considered when calculating diluted earnings per share. 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 consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of real estate and impairment of long lived assets. Segment Information. As of December 31, 2018, we had two reportable segments: hotel investments and travel center investments. Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, as such, 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. Further, we lease our managed hotels to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated tax return and are subject to federal, state and foreign income taxes. Our consolidated income tax provision (or benefit) 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. The Income Taxes Topic of the Codification prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Tax benefits are recognized to the extent that it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized upon settlement. Our tax returns filed for the 2015 through 2018 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated statements of comprehensive income as a component of general and administrative expense. New Accounting Pronouncements. On January 1, 2018, we adopted FASB ASU No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. The majority of our revenue is from hotels managed under TRS structures. The adoption of this update did not have a material impact on the amount or timing of our revenue recognition for revenues from room, food and beverage, and other hotel level sales of our managed hotels in our consolidated financial statements. A lesser portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. On January 1, 2018, we adopted FASB 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. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our available for sale equity securities of $78,715 from cumulative other comprehensive income to cumulative net income. We also reclassified $841 from cumulative other comprehensive income to cumulative net income for our share of cumulative other comprehensive income of our equity method investee. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01. On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash, which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The implementation of ASU No. 2016-18 resulted in an increase of $74,272 and $74,876 of net cash provided by operating activities and an increase of $61,371 and $65,631 of net cash used in investing activities for the years ended December 31, 2017 and 2016, respectively. This update also requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheets. Restricted cash consisting of amounts escrowed by our hotel operators pursuant to the terms of our management agreements and leases to fund periodic renovations and improvements at our hotels totaled $50,037 and $73,357 as of December 31, 2018 and 2017, respectively. See Note 6 for further information regarding our FF&E reserves. The adoption of this update did not change our balance sheet presentation. On October 1, 2018, we adopted FASB ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the measurement and classification guidance for share based payments to nonemployees with the guidance for share based payments to employees, with certain exceptions. The adoption of this standard did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. In December 2018, the FASB issued ASU No. 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors. Collectively, these standards set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). These standards require 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. 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. These standards are effective as of January 1, 2019. Upon adoption, we applied the package of practical expedients that allows an entity to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we applied the optional transition method in ASU No. 2018-11 which allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if any. Additionally, our leases met the criteria in ASU No. 2018-11 to not separate non-lease components from the related lease component, therefore the accounting for these leases remained largely unchanged from the previous standard. For leases where we are the lessee, we are required to record a right of use asset and a lease liability for all leases with a term greater than 12 months. As of December 31, 2018, 14 of our hotels were subject to ground leases where we are the lessee. In addition, our hotel operators enter various leases on our behalf in the normal course of business at our hotels. We believe that application of these standards will result in us recording a right of use asset and the related lease liability of between $65,000 and $75,000 for our future obligations under our ground leases and other lease agreements for which we are the lessee. The actual amounts we record upon adoption of the ASUs will vary depending on changes in discount rates, lease terms and the practical expedients we elect as discussed above. We do not expect the ASUs to have a material effect on our consolidated statements of comprehensive income or consolidated statements of cash flows. 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 the adoption of ASU No. 2016-13 will have in our consolidated financial statements. |
Weighted Average Common Shares |
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Weighted Average Common Shares | Note 3. 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:
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Shareholders' Equity |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Note 4. Shareholders' Equity Common Share Issuances 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. Aggregate net proceeds from these sales were $372,217 after underwriters' discount and other offering expenses. Common Share Awards We have common shares available for issuance under the terms of our 2012 Equity Compensation Plan, or our Share Award Plan. During the years ended December 31, 2018, 2017 and 2016, we granted 97,000 of our common shares with an aggregate market value of $2,810, 85,000 of our common shares with an aggregate market value of $2,387 and 79,100 of our common shares with an aggregate market value of $2,260, respectively, to our officers and certain other employees of our manager, RMR LLC, pursuant to the Share Award Plan. The value of the share grants was based upon the closing price of our common stock on The Nasdaq Stock Market LLC, or Nasdaq, or the New York Stock Exchange, or the NYSE, as applicable, on the date of the grant. See Note 10 for a further discussion of the grants we made to our officers and certain other employees of RMR LLC. On April 12, 2018, we granted 3,000 of our common shares with an aggregate market value of $75 to one of our Managing Trustees who was elected as a Managing Trustee that day. In addition, we granted each of our then Trustees 3,000 of our common shares in each of 2018 and 2017 and 2,500 of our common shares in 2016 with an aggregate market value of $427 ($85 per trustee), $452 ($90 per trustee) and $319 ($64 per trustee), respectively, as part of their annual compensation. The values of the share grants were based upon the closing price of our common shares on Nasdaq or NYSE, as applicable, on the dates of the grants. The shares granted to our Trustees vest immediately. The shares granted to our officers and certain other employees of RMR LLC vest in five annual installments beginning on the date of grant. Share grants are expensed ratably over the vesting period and the value of such share grants are included in general and administrative expense in our consolidated statements of comprehensive income. A summary of shares granted, vested, forfeited and unvested under the terms of the Share Award Plan for the years ended December 31, 2018, 2017 and 2016 is as follows:
The 164,000 unvested shares as of December 31, 2018 are scheduled to vest as follows: 74,070 shares in 2019, 42,540 shares in 2020, 30,370 shares in 2021 and 17,020 shares in 2022. As of December 31, 2018, the estimated future compensation expense for the unvested shares was $3,669. The weighted average period over which the compensation expense will be recorded is approximately 23 months. During the years ended December 31, 2018, 2017 and 2016, we recorded $3,187, $2,759 and $2,834, respectively, of compensation expense related to the Share Award Plan. At December 31, 2018, 2,412,017 of our common shares remain reserved for issuance under our current Share Award Plan. Stock Repurchases During 2018, we purchased an aggregate of 21,202 of our common shares valued at a weighted average price per common share of $28.59, based on the closing price of our common shares on Nasdaq, on the date of repurchase, from certain of our officers and certain current or former employees of RMR LLC, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. During 2017, we purchased an aggregate of 19,058 of our common shares valued at a weighted average price per common share of $28.01, based on the closing price of our common shares on Nasdaq, on the date of repurchase, from certain of our officers and certain current or former employees of RMR LLC, in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. During 2016, we purchased an aggregate of 20,689 of our common shares valued at a weighted average price per common share of $29.64, based on the closing price of our common shares on Nasdaq, on the dates of repurchase, from certain of our officers and certain other employees of RMR LLC in satisfaction of tax withholding and payment obligations in connection with the vesting of awards of our common shares. Preferred Shares On February 10, 2017, we redeemed all 11,600,000 of our outstanding 7.125% Series D cumulative redeemable preferred shares at the stated liquidation preference of $25.00 per share plus accrued and unpaid dividends to the date of redemption (an aggregate of $291,435). We reduced net income available for common shareholders in 2017 by $9,893, which represents the amount by which the liquidation preference for our Series D cumulative redeemable preferred shares that were redeemed exceeded our carrying amount for those preferred shares as of the date of redemption. Common Share Distributions Cash distributions paid or payable by us to our common shareholders for the years ended December 31, 2018, 2017 and 2016 were $2.11 per share, or $346,832, $2.07 per share, or $340,084, and $2.03 per share, or $314,135, respectively. The characterization of our distributions paid in 2018 was 100.00% ordinary income. The characterization of our distributions paid in 2017 was 94.69% ordinary income, 4.39% return of capital and 0.92% qualified dividend. The characterization of our distributions paid in 2016 was 93.23% ordinary income, 6.17% return of capital and 0.60% qualified dividend. On January 18, 2019, we declared a distribution of $0.53 per common share, or $87,154, which we paid on February 21, 2019, to shareholders of record on January 28, 2019 using cash on hand and borrowings under our revolving credit facility. Cumulative Other Comprehensive Income (Loss) Cumulative other comprehensive income (loss), as of December 31, 2018, represents our share of the comprehensive loss of AIC. See Note 10 for further information regarding this investment. The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the year ended December 31, 2018:
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Real Estate Properties |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Real Estate Properties | Note 5. Real Estate Properties As of December 31, 2018, we owned 326 hotels and 199 travel centers. Our real estate properties, at cost after impairments, consisted of land of $1,626,239, buildings and improvements of $7,194,758 and furniture, fixtures and equipment of $701,976, as of December 31, 2018; and land of $1,668,797, buildings and improvements of $7,110,761 and furniture, fixtures and equipment of $648,101, as of December 31, 2017. During 2018, 2017 and 2016, we funded $200,044, $162,482 and $191,401, respectively, for improvements to certain of our properties, which pursuant to the terms of our management and lease agreements with our managers and tenants, resulted in increases in our contractual annual minimum returns and rents of $14,888, $10,274 and $14,740 in 2018, 2017 and 2016, respectively. See Note 6 for further information about our management and lease agreements and our fundings of improvements to certain of our properties. At December 31, 2018, 14 of our hotels were on land we leased partially or entirely from unrelated third parties. The average remaining term of the ground leases (including renewal options) is approximately 38 years (range of 20 to 69 years). Ground rent payable under nine of the ground leases is generally calculated as a percentage of hotel revenues. Twelve (12) of the 14 ground leases require annual minimum rents averaging $260 per year; future rents under two ground leases have been prepaid. Fifteen (15) of our travel centers are on land we leased partially or entirely from unrelated third parties. The remaining terms on the leases range from four months to 32 years with rents averaging $492 per year. Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant did not perform obligations under a ground lease or did not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Any pledge, sale or transfer of our interests in a ground lease may require the consent of the applicable ground lessor and its lenders. Acquisitions Our allocation of the purchase price of each of our acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.
On February 22, 2019, we acquired the 335 room Hotel Palomar located in Washington, D.C. for a purchase price of $141,450, excluding acquisition related costs. We added this Kimpton® branded hotel to our management agreement with IHG. See Note 6 for further information regarding our IHG and Radisson agreements. See Notes 6 and 10 for further information regarding our relationship, agreements and transactions with Sonesta and TA. Dispositions In January 2019, in a series of transactions, we sold 20 travel centers in 15 states to TA for $308,200. We currently expect to record a gain of approximately $160,000 in the first quarter of 2019 as a result of these sales. As of December 31, 2018, the carrying value of these travel centers of $144,008 was classified as held for sale and included in other assets, net in our consolidated balance sheet. See Notes 6 and 10 for further information regarding these transactions, our relationship and agreements with TA. During the year ended December 31, 2017, we sold three of our Radisson branded hotels. On August 1, 2017, we sold our 159 room Radisson hotel located in Chandler, AZ for net proceeds of $9,085. On August 31, 2017, we sold our 143 room Country Inn & Suites hotel located in Naperville, IL for net proceeds of $6,313. On September 22, 2017, we sold our 209 room Park Plaza hotel located in Bloomington, MN for net proceeds of $8,030. As a result of these sales, we recorded a $9,348 gain on sale of real estate in the year ended December 31, 2017. In December 2017, we received, net of expenses, $1,030 as the final payment with respect to a travel center we previously owned in Roanoke, VA that we leased to TA and which was taken by eminent domain proceedings brought by the Virginia Department of Transportation in 2014. This final payment was allocated to TA as set forth in the lease. |
Management Agreements and Leases |
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Management Agreements and Leases | Note 6. Management Agreements and Leases As of December 31, 2018, we owned 326 hotels and 199 travel centers, which are included in 13 operating agreements. We do not operate any of our properties. As of December 31, 2018, 324 of our hotels are leased to our TRSs and managed by independent hotel operating companies and two hotels are leased to third parties. As of December 31, 2018, our hotel properties were managed by or leased to separate subsidiaries of Marriott, IHG, Sonesta, Wyndham, Hyatt and Radisson under eight agreements. These hotel agreements have initial terms expiring between 2019 and 2038. Each of these agreements is for between one and 100 of our hotels. In general, the agreements contain renewal options for all, but not less than all, of the affected properties included in each agreement, and the renewal terms range between 20 to 60 years. Most of these agreements require the third party manager or tenant to: (1) make payments to us of minimum returns or minimum rents; (2) deposit a percentage of total hotel sales into FF&E reserves; and (3) for our managed hotels, make payments to our TRSs of additional returns to the extent of available cash flows after payment of operating expenses, funding of the FF&E reserves, payment of our minimum returns, payment of certain management fees and replenishment of security deposits or guarantees. Some of our managers or tenants or their affiliates have provided deposits or guarantees to secure their obligations to pay us. Marriott No. 1 agreement. Our management agreement with Marriott for 53 hotels, or our Marriott No. 1 agreement, provides that, as of December 31, 2018, we are to be paid an annual minimum return of $70,137 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. Marriott’s base and incentive management fees are only earned after we receive our minimum returns. We realized minimum returns of $69,325, $68,944 and $68,514 during the years ended December 31, 2018, 2017 and 2016, respectively, under this agreement. We also realized additional returns of $4,457, $6,180 and $10,202 during the years ended December 31, 2018, 2017 and 2016, respectively, which represent our share of hotel cash flows in excess of the minimum returns due to us for those years. 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 the hotels' available cash flows after payment of operating expenses and funding of the FF&E reserve. We funded $9,050 for capital improvements to certain of the hotels included in our Marriott No. 1 agreement during the year ended December 31, 2018. We currently expect to fund approximately $17,000 for capital improvements to certain hotels under our Marriott No. 1 agreement during 2019. 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, or our Marriott No. 234 agreement, provides that, as of December 31, 2018, we are to be paid an annual minimum return of $107,350. We realized minimum returns of $106,978, $106,405 and $106,275 during the years ended December 31, 2018, 2017 and 2016, 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 a share of hotel cash flows in excess of the minimum returns due to us. Marriott’s base and incentive management fees are only earned after we receive our minimum returns. During the year ended December 31, 2018, our available security deposit was replenished by $6,740 from a share of hotel cash flows in excess of the minimum returns due to us for the year. The available balance of this deposit was $32,711 as of December 31, 2018. Pursuant to our Marriott No. 234 agreement, Marriott has also provided us with a limited guaranty 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 guaranty was $30,672 as of December 31, 2018. We funded $9,030 for capital improvements to certain of the hotels included in our Marriott No. 234 agreement during the year ended December 31, 2018. We currently expect to fund approximately $45,000 for capital improvements to certain hotels under our Marriott No. 234 agreement during 2019. 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 which requires that, as of December 31, 2018, we are paid annual minimum rents of $10,321. This lease is guaranteed by Marriott and we realized $10,321, $10,159 and $10,116 of rent for this hotel during the years ended December 31, 2018, 2017 and 2016, respectively. The guaranty provided by Marriott with respect to this leased hotel is unlimited. Marriott has four renewal options for 15 years each. On August 31, 2016, Marriott notified us that it will not exercise its renewal option at the expiration of the current lease term ending on December 31, 2019. IHG agreement. Our management agreement with IHG for 100 hotels, or our IHG agreement, provides that, as of December 31, 2018, we are to be paid annual minimum returns and rents of $193,695. We realized minimum returns and rents of $189,981, $178,883 and $158,464 during the years ended December 31, 2018, 2017 and 2016, respectively, under this agreement. We also realized additional returns under this agreement of $12,250 and $7,013 during the years ended December 31, 2017 and 2016, respectively, from our share of hotel cash flows in excess of the minimum returns and rents due to us for those years. There were no additional returns realized under this agreement during the year ended December 31, 2018. Pursuant to our IHG agreement, IHG has provided us with a security deposit to cover minimum payment shortfalls, if any. Under this agreement, IHG 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 rents. The available balance of the IHG security deposit remained at the maximum contractual amount of $100,000 as of December 31, 2018. In connection with the February 2019 acquisition of the Hotel Palomar described in Note 5, IHG will provide us $5,000 to supplement the existing security deposit. We funded $39,668 for capital improvements to certain of the hotels included in our IHG agreement during the year ended December 31, 2018. We currently expect to fund approximately $61,000 for capital improvements to certain hotels under our IHG agreement during 2019. As we fund these improvements, the annual minimum returns and rents payable to us increase by 8% of the amounts funded. Sonesta agreement. As of December 31, 2018, Sonesta managed 12 of our full service hotels and 39 of our limited service hotels pursuant to management agreements for each of the hotels, which we refer to collectively as our Sonesta agreement, and a pooling agreement, which combines those management agreements for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and minimum returns due to us. See Notes 5 and 10 for further information regarding our relationship, agreements and transactions with Sonesta. Our Sonesta agreement provides that we are paid a fixed annual minimum return equal to 8% of our invested capital, as defined therein, which was $127,089, as of December 31, 2018, if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. Our Sonesta agreement further provides that we are paid an additional return based upon operating profits, as defined therein, after payment of Sonesta’s incentive fee, if applicable. We realized returns of $78,076, $70,576 and $59,618 during the years ended December 31, 2018, 2017 and 2016, respectively, under our Sonesta agreement. We do not have any security deposits or guarantees for our Sonesta hotels. Accordingly, the returns we receive from our Sonesta hotels are limited to the hotels' available cash flows after payment of operating expenses including management and related fees. Our Sonesta agreement provides that Sonesta is entitled to receive, after payment of hotel operating expenses, a base management fee equal to 3.0% of gross revenues for our full service Sonesta hotels and 5.0% of gross revenues for our limited service Sonesta hotels. Additionally, Sonesta is entitled to a reservation fee equal to 1.5% of gross room revenues, as defined in the Sonesta agreement, a system fee for centralized services of 1.5% of gross revenues, a procurement and construction supervision fee equal to 3.0% of third party costs of capital expenditures and an incentive management fee equal to 20.0% of operating profits remaining after reimbursement to us and to Sonesta of certain advances and payment of our minimum returns. Sonesta’s incentive management fee, but not its other fees, is earned only after our minimum returns are paid. Our Sonesta agreement also provides that the costs incurred by Sonesta for advertising, marketing, promotional and public relations programs and campaigns, including “frequent stay” rewards programs, for the benefit of our Sonesta hotels are subject to reimbursement by us or are otherwise treated as hotel operating expenses, subject to our approval. We incurred base management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing program and third party reservation transmission fees of $34,821, $28,238 and $24,194 for the years ended December 31, 2018, 2017 and 2016, respectively, under our Sonesta agreement. In addition, we recognized procurement and construction supervision fees of $2,374, $1,080 and $1,468 for the years ended December 31, 2018, 2017 and 2016, respectively, under our Sonesta agreement. These amounts are included in hotel operating expenses or have been capitalized, as appropriate, in our consolidated financial statements. Our Sonesta agreement does not require FF&E escrow deposits, but does require us to fund capital expenditures that we approve at our Sonesta hotels. We funded $82,329, $34,933 and $54,105 for renovations and other capital improvements to hotels included in our Sonesta agreement during the years ended December 31, 2018, 2017 and 2016, respectively. We currently expect to fund approximately $100,000 and $33,000 during 2019 and 2020, respectively, for renovations and other capital improvements to certain hotels under our Sonesta agreement. We owed Sonesta $5,703 and $4,582 for capital expenditure reimbursements and for a previously estimated overpayment of minimum returns advanced at December 31, 2018 and 2017, respectively. Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our consolidated balance sheets, respectively. Our Sonesta agreement expires in January 2037, and will be extended automatically for up to two successive 15 year renewal terms unless Sonesta elects not to renew any such agreement. Under the pooling agreement, if Sonesta elects not to renew a management agreement, that will be deemed to be a notice of non-renewal for all our management agreements with Sonesta. We generally have the right to terminate a management agreement with Sonesta after three to four years without cause upon payment of a termination fee. We also have the right to terminate a management agreement with Sonesta without a termination fee if our minimum return is less than 6% of our invested capital during any three of four applicable consecutive years. Both we and Sonesta have the right to terminate any management agreement included in our Sonesta agreement upon a change in control, as defined therein, of the other party, and under certain other circumstances that, in the case of termination by Sonesta, may require that we pay a termination fee to Sonesta. Under the pooling agreement, if we terminate or Sonesta terminates a management agreement following a change of control, that will be deemed a termination of all of our management agreements with Sonesta. Under our Sonesta agreement, if we terminate without cause, or if Sonesta terminates under certain circumstances, the termination fee is an amount equal to the present value of the payments that would have been made to Sonesta as a base management fee, reservation fee, system fee and incentive management fee, each as defined therein, between the date of termination of the applicable agreement and the scheduled expiration date of the term that was remaining prior to such termination, which present value is calculated based upon the average of each of such fees earned in each of the three years ended prior to the date of termination, discounted at an annual rate equal to 8%. We may designate a hotel as “non-economic” under the pooling agreement, in which case the hotel would be subject to sale and the applicable Sonesta management agreement would be terminated, and we have an early termination right under each of the management agreements included in our Sonesta agreement if the applicable hotel does not meet certain criteria for the stipulated measurement period. 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. On May 8, 2018, we rebranded The Clift Hotel in San Francisco, CA to the Royal Sonesta® brand and added it to our Sonesta agreement. We previously leased this hotel to a third party. On May 8, 2018, pursuant to a settlement agreement with that third party, the lease was terminated. On November 15, 2017, we and Sonesta converted approximately half of the rooms in the Sonesta Gwinnett hotel in Duluth, GA into limited service rooms, and amended the applicable management agreement with respect to the base management fees Sonesta earns on those rooms. See Note 5 for information regarding the effects of certain of our property acquisitions on our management agreements with Sonesta. Morgans agreement. Prior to May 8, 2018, we leased The Clift Hotel in San Francisco, CA to Morgans Hotel Group, or Morgans. This lease was scheduled to expire in 2103 and required annual rent to us of $7,595. During the period of January 1, 2018 through May 8, 2018, all contractual rent due to us under the Morgans lease was paid to us. On May 8, 2018, pursuant to a settlement agreement with Morgans and SBE Entertainment Group, LLC, our Morgans lease was terminated and Morgans surrendered possession of the hotel to us. We rebranded this hotel to the Royal Sonesta® brand and added it to our management agreement with Sonesta. The terms of the management agreement were consistent with the terms of our other management agreements with Sonesta for full service hotels. Wyndham agreements. Our management agreement with Wyndham for 22 hotels, or our Wyndham agreement, provides that, as of December 31, 2018, we are to be paid annual minimum returns of $27,790. Pursuant to our Wyndham agreement, Wyndham has provided us with a guaranty which was limited to $35,656, subject to an annual payment limit of $17,828, and expires on July 28, 2020. This guaranty was depleted during 2017 and remained depleted as of December 31, 2018. This guaranty may be replenished from a share of future cash flows from these hotels in excess of our minimum returns. The Wyndham agreement provides that if the hotel cash flows available after payment of hotel operating expenses are less than the minimum returns due to us and if the guaranty is depleted, to avoid a default Wyndham is required to pay us the greater of the available hotel cash flows after payment of hotel operating expenses and 85% of the contractual amount due to us. We cannot be sure as to whether Wyndham will continue to pay at least the greater of available hotel cash flows after payment of hotel operating expenses and 85% of the minimum returns due to us or if Wyndham will default on its payments. During the year ended December 31, 2018, we realized returns of $23,562, which represents 85% of the returns due for the year, under this agreement. During the years ended December 31, 2017 and 2016, we realized returns of $27,452 and $26,862, respectively, under this agreement. Our Wyndham agreement requires FF&E escrow deposits equal to 5% of total hotel sales for all hotels included in the agreement subject to available cash flows after payment of our minimum return. No FF&E escrow deposits were made during the year ended December 31, 2018. We funded $2,882 for capital improvements to certain of the hotels included in our Wyndham agreement during the year ended December 31, 2018. We currently expect to fund approximately $15,000 for capital improvements to certain hotels under our Wyndham agreement during 2019. As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded. We also lease 48 vacation units in one of our hotels to Destinations which requires that, as of December 31, 2018, we are paid annual minimum rents of $1,493. The guaranty provided by Destinations with respect to the Destinations lease for part of one hotel is unlimited. We recognized the contractual rents of $1,814 during each of the years ended December 31, 2018, 2017 and 2016 under our Destinations lease agreement. Rental income for the years ended December 31, 2018, 2017 and 2016 for this lease includes $358, $400 and $441, respectively, of adjustments necessary to record rent on a straight line basis. Hyatt agreement. Our management agreement with Hyatt for 22 hotels, or our Hyatt agreement, provides that, as of December 31, 2018, we are to be paid an annual minimum return of $22,037. We realized minimum returns of $22,037 during each of the years ended December 31, 2018, 2017 and 2016 under this agreement. Pursuant to our Hyatt agreement, Hyatt has provided us with a guaranty, which is limited to $50,000. During the year ended December 31, 2018, our available guaranty was replenished by $809 from a share of hotel cash flows in excess of the minimum returns due to us. The available balance of the guaranty was $21,915 as of December 31, 2018. Radisson agreement. Our management agreement with Radisson for nine hotels, or our Radisson agreement, provides that, as of December 31, 2018, we are to be paid an annual minimum return of $18,920. We realized minimum returns of $16,183 during the year ended December 31, 2018 and $12,920 during each of the years ended December 31, 2017 and 2016. In connection with our acquisition of the Radisson Blu® hotel described in Note 5, the available balance of the guaranty under our Radisson agreement was increased by $6,000 and the guaranty cap was increased to $46,000. During the year ended December 31, 2018, our available guaranty was replenished by $3,195 from a share of hotel cash flows in excess of the minimum returns due to us. The available balance of the guarantee was $42,559 at December 31, 2018. In June 2017, we amended our Radisson agreement and agreed to sell three of our then 11 Radisson hotels. During the year ended December 31, 2017, we completed the sale of these three hotels and deposited $23,438 of the net sales proceeds into the FF&E reserve escrow account for our Radisson agreement. See Note 5 for further information regarding these sales. The net proceeds from these sales will be used to fund certain renovations to the remaining nine hotels operated under our Radisson agreement and we have agreed to fund up to $35,000 for renovation costs in excess of the net sales proceeds and available FF&E reserves. We currently expect to fund approximately $22,000 during 2019 and approximately $6,000 during 2020 for these renovations. Our annual minimum returns and the limited guaranty cap under our Radisson agreement will each increase by 8% of any amounts we fund (excluding the net sales proceeds described above). In addition, as part of our June 2017 agreement with Radisson, the initial term of the management agreement and the limited guaranty provided by Radisson were extended to December 31, 2035. TA leases. As of December 31, 2018, we leased to TA a total of 199 travel centers under five leases that expired between 2026 and 2032 and required aggregate annual minimum rents of $289,231. Pursuant to a rent deferral agreement with TA, TA previously deferred as of December 31, 2010 a total of $150,000 of rent payable to us, which remained outstanding as of December 31, 2018. This deferred rent obligation was allocated among our TA leases and, as of December 31, 2018, was due at the end of the initial terms of the respective leases, except for our TA No. 5 lease, in which case the applicable deferred rent was due and payable on June 30, 2024. On January 16, 2019, we entered agreements with TA, or the Transaction Agreements, pursuant to which in January 2019:
The number of travel centers, the terms, the annual minimum rent and the deferred rent balances owed to us by TA under our TA leases as of February 26, 2019, were as follows:
Our TA leases are “triple net” leases that require TA to pay all costs incurred in the operation of the leased travel centers, including personnel, utility, inventory, customer service and insurance expenses, real estate and personal property taxes, environmental related expenses, underground storage tank removal costs and ground lease payments at those travel centers at which we lease the property and sublease it to TA. Our TA leases generally require TA to indemnify us for certain environmental matters and for liabilities that arise during the terms of the leases from ownership or operation of the leased travel centers. In addition, TA is obligated to pay us at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on the leased properties. Our TA leases do not require FF&E escrow deposits. However, TA is required to maintain the leased travel centers, including structural and non-structural components. Under our TA leases, TA generally cannot own, franchise, finance, operate, lease or manage any travel center or similar property that is not owned by us within 75 miles in either direction along the primary interstate on which a travel center owned by us is located without our consent. We recognized rental income of $302,309, $293,273 and $279,175 for the years ended December 31, 2018, 2017 and 2016, respectively, under our TA leases. Rental income for the years ended December 31, 2018, 2017 and 2016 includes $12,127, $11,966 and $13,132, 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, in each case, on a straight line basis. As of December 31, 2018 and 2017, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $91,212 and $78,513, respectively. These amounts are included in due from related persons in our consolidated balance sheets. We recognized the deferred rent obligations under our TA leases as rental income on a straight line basis over periods to 2024 through 2030, depending on the applicable lease terms because we believed the future payment of these amounts to us by TA was reasonably assured. Beginning in January 2019, our recognition of the amended deferred rent obligations were recorded on a straight line basis over the new lease terms of our TA leases. In addition to the payment of annual minimum rent, our TA Nos. 1, 2, 3 and 4 leases provide 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, and, pursuant to the Transaction Agreements, an additional half percent (0.5%) of non-fuel revenues above 2019 non-fuel revenues beginning with the year ending December 31, 2020) and our TA No. 5 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, and, pursuant to the Transaction Agreements, an additional 0.5% of non-fuel revenues above 2019 non-fuel revenues beginning with the year ending December 31, 2020). We waived $372 of percentage rent under our TA No. 5 lease for the year ended December 31, 2016 pursuant to a prior agreement. As of December 31, 2016, we cumulatively waived all of the $2,500 of percentage rent we previously agreed to waive. The total amount of percentage rent from TA that we recognized (which, for the year ended December 31, 2016, is net of the amount waived for that period) was $3,548, $2,106 and $1,303 for the years ended December 31, 2018, 2017 and 2016, respectively. Under our TA leases, TA may request that we fund capital improvements in return for increases in TA’s annual minimum rent according to the following formula: the annual minimum rent is increased by an amount equal to the amount funded by us multiplied by the greater of (1) 8.5% or (2) a benchmark U.S. Treasury interest rate plus 3.5%. TA is not obligated to request and we are not obligated to fund any such improvements. We funded $56,346, $84,632 and $109,926 during the years ended December 31, 2018, 2017 and 2016, respectively, for capital improvements to our travel center properties and, as a result, TA’s annual minimum rent payable to us increased by $4,789, $7,194 and $9,344, respectively. We currently expect to fund $30,000 for renovations and other capital improvements to our travel centers during the year ending December 31, 2019. See Note 5 for further information regarding the effects of certain of our property acquisitions and dispositions on our leases with TA. As of December 31, 2018, the average remaining current terms of our management agreements and leases with parties other than our TRSs, weighted based on minimum returns or rents, was approximately 13.0 years. As of December 31, 2018, our leases with parties other than our TRSs provide for contractual minimum rents to be paid to us during the remaining current terms as follows:
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Business and Property Management Agreements with RMR LLC |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business and Property Management Agreements with RMR LLC | Note 7. Business and Property Management Agreements with RMR LLC We have no employees. The personnel and various services we require to operate our business are provided to us by RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of the office building component of one of our hotels. See Note 10 for further information regarding our relationship, agreements and transactions with RMR LLC. Management Agreements with RMR LLC. Our management agreements with RMR LLC provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:
The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves.
For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the 10 consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.
Pursuant to our business management agreement with RMR LLC, we recognized net business management fees of $39,942, $40,694 and $36,802 for the years ended December 31, 2018, 2017 and 2016, respectively. The net business management fees we recognized are included in general and administrative expenses in our consolidated statements of comprehensive income for these periods. The net business management fees we recognized for each of the years ended December 31, 2018, 2017 and 2016 reflect a reduction of $3,585 for each of those years for the amortization of the liability we recorded in connection with the Up-C Transaction, as further described in Note 2. Pursuant to our business management agreement, in January 2019, 2018 and 2017, we paid RMR LLC an incentive management fee of $53,635, $74,573 and $52,407 for the years ended December 31, 2018, 2017 and 2016, respectively. In calculating the incentive management fee payable by us, our total shareholder return per share was adjusted in accordance with the business management agreement to reflect aggregate net increases in the number of our common shares outstanding as a result of certain share issuances and repurchases by us during the three year measurement period. In addition, the calculation of our benchmark return per share was also adjusted for these issuances and repurchases in accordance with the business management agreement in 2018, 2017 and 2016, respectively.
Pursuant to our property management agreement with RMR LLC, we recognized aggregate property management and construction supervision fees of $64, $45 and $64 for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are included in hotel operating expenses in our consolidated statements of comprehensive income.
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Indebtedness | Note 8. Indebtedness Our principal debt obligations at December 31, 2018 were: (1) $177,000 of outstanding borrowings under our $1,000,000 unsecured revolving credit facility; (2) our $400,000 unsecured term loan; and (3) $3,650,000 aggregate outstanding principal amount of senior unsecured notes. Our revolving credit facility and our term loan are governed by a credit agreement with a syndicate of institutional lenders. We have a $1,000,000 revolving credit facility that is available for general business purposes, including acquisitions. Our revolving credit facility provides that we can borrow, repay and reborrow funds available under our revolving credit facility until maturity, and no principal repayment is due until maturity. On May 10, 2018, we amended and restated the credit agreement governing our revolving credit facility and our term loan. As a result of the amendment, the interest rate payable on borrowings under our revolving credit facility was reduced from a rate of LIBOR plus a premium of 110 basis points per annum to a rate of LIBOR plus a premium of 100 basis points per annum. The facility fee remained unchanged at 20 basis points per annum on the total amount of lending commitments under this facility. The interest rate premium and facility fee are each subject to adjustment based upon changes to our credit ratings. Also as a result of the amendment, the stated maturity date of this facility was extended from July 15, 2018 to July 15, 2022, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the maturity date of the facility for two additional six month periods. As a result of this amendment, we recognized a loss on early extinguishment of debt related to the revolving credit facility of $90 during the year ended December 31, 2018 to write off unamortized debt issuance costs. As of December 31, 2018, the annual interest rate payable on borrowings under our revolving credit facility was 3.42%. The weighted average annual interest rate for borrowings under our revolving credit facility was 3.06%, 2.24% and 1.60% for the years ended December 31, 2018, 2017 and 2016, respectively. As of December 31, 2018, we had $177,000 outstanding and $823,000 available under our revolving credit facility. As of February 26, 2019, we had $161,000 outstanding and $839,000 available to borrow under our revolving credit facility. As a result of the amendment to our credit agreement, the interest rate payable on borrowings under our term loan was reduced from a rate of LIBOR plus a premium of 120 basis points per annum to a rate of LIBOR plus a premium of 110 basis points per annum, subject to adjustment based upon changes to our credit ratings. Also as a result of the amendment, the stated maturity date of the term loan was extended from April 15, 2019 to July 15, 2023. Our term loan is prepayable without penalty at any time. As a result of this amendment, we recognized a loss on early extinguishment of debt related to the term loan of $70 during the year ended December 31, 2018 to write off unamortized debt issuance costs. As of December 31, 2018, the annual interest rate for the amount outstanding under our term loan was 3.45%. The weighted average annual interest rate for borrowings under our term loan was 3.12%, 2.27% and 1.68% for the years ended December 31, 2018, 2017 and 2016, respectively. Our credit agreement also includes a feature under which maximum aggregate borrowings may be increased to up to $2,300,000 on a combined basis in certain circumstances. Our credit agreement and our unsecured senior 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 and our unsecured 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 and our unsecured senior notes indentures and their supplements at December 31, 2018. On January 13, 2017, we issued $600,000 aggregate principal amount of senior notes in public offerings, which included $200,000 aggregate principal amount of 4.500% senior notes due 2023 and $400,000 aggregate principal amount 4.950% senior notes due 2027. Net proceeds from these offerings were $593,228 after discounts, premiums and expenses. On March 15, 2017, we repurchased at par plus accrued interest $8,431 of the outstanding principal amount of our 3.80% convertible senior notes due 2027, which were tendered by the holders of these notes for repurchase by us. On April 24, 2017, we redeemed at par plus accrued interest the remaining $47 of the outstanding principal amount of these notes. On October 26, 2017, we issued $400,000 principal amount of 3.950% senior notes due 2028 in a public offering. Net proceeds from this offering were $388,244 after discounts and expenses. On October 29, 2017, we redeemed at par all of our outstanding 6.700% senior notes due 2018 for a redemption price equal to the principal amount of $350,000, plus accrued and unpaid interest (an aggregate of $356,774). As a result of the redemption, we recorded a loss on early extinguishment of debt of $146 in the year ended December 31, 2017, which represented the unamortized discounts and issuance costs of these notes. On February 2, 2018, we issued $400,000 principal amount of 4.375% senior notes due 2030 in a public offering. Net proceeds from this offering were $386,400 after discounts and expenses. All of our senior notes are prepayable at any time prior to their maturity date at par plus accrued interest plus a premium equal to a make whole amount, as defined, generally designed to preserve a stated yield to the noteholder. Interest on all of our senior notes is payable semi-annually in arrears. None of our debt obligations require sinking fund payments prior to their maturity dates. The required principal payments due during the next five years and thereafter under all our outstanding debt at December 31, 2018 are as follows:
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Note 9. Income Taxes Our provision (benefit) for income taxes consists of the following:
(1) We realized a $5,431 tax benefit in 2017 related to the enactment of the Tax Cuts and Jobs Act, or the Tax Act. A reconciliation of our effective tax rate and the current U.S. Federal statutory income tax rate is as follows:
Deferred income tax balances generally reflect the net tax effects of temporary differences between the carrying amounts of certain of our assets and liabilities in our consolidated balance sheets and the amounts used for income tax purposes and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. Significant components of our deferred tax assets and liabilities are as follows:
Net deferred tax liabilities are included in accounts payable and other liabilities in the accompanying consolidated balance sheets. On January 31, 2007, we succeeded to certain tax attributes in connection with our acquisition of TravelCenters of America, Inc., including net operating loss carryforwards and tax credit carryforwards. At December 31, 2018 and 2017, we had a net deferred tax asset, prior to any valuation allowance, of $33,871 and $37,800, respectively, related to these carryover tax attributes. Because of the uncertainty surrounding our ability to realize the future benefit of these assets we have provided a 100% valuation allowance as of December 31, 2018 and 2017. As of December 31, 2018 these carryover tax attributes consist of: (i) net operating loss carryforwards for federal income tax purposes of approximately $119,724 which begin to expire in 2026 if unused and (ii) general business tax credits of $5,492 which began to expire in 2009. The utilization of these tax loss carryforwards and tax credits is subject to limitations under Section 382 of the IRC. At December 31, 2018 and 2017, our consolidated TRS had a net deferred tax asset, prior to any valuation allowance, of $59,892 and $51,589 respectively, which consists primarily of the tax benefit of net operating loss carryforwards and tax credits. Because of the uncertainty surrounding our ability to realize the future benefit of these assets, we have provided a 100% valuation allowance as of December 31, 2018 and 2017. As of December 31, 2018, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $239,005 which begin to expire in 2023 if unused. |
Related Person Transactions |
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Dec. 31, 2018 | |
Related Party Transactions [Abstract] | |
Related Person Transactions | Note 10. Related Person Transactions We have relationships and historical and continuing transactions with TA, Sonesta, RMR LLC, The RMR Group Inc., or RMR Inc., AIC and others related to them, including other companies to which RMR LLC or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. RMR is a majority owned subsidiary of RMR Inc. One of our Managing Trustees, Adam D. Portnoy, is the sole trustee of ABP Trust, is the controlling shareholder of RMR Inc. and is a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR LLC. Barry M. Portnoy was our other Managing Trustee and a managing director and an officer of RMR Inc. and an officer and employee of RMR LLC until his death on February 25, 2018. Mr. Mark L. Kleifges, our Chief Financial Officer and Treasurer, resigned from his positions with us effective December 31, 2018. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, and each of our other officers is also an officer and employee of RMR LLC, including Ethan S. Bornstein, the brother-in-law of Adam Portnoy, and Brian E. Donley, who succeeded Mark L. Kleifges as our Chief Financial Officer and Treasurer effective January 1, 2019. Certain of TA’s and Sonesta’s executive officers are officers and employees of RMR LLC. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR LLC or its subsidiaries provide management services. Adam Portnoy serves, and, until his death, Barry Portnoy served, as a managing director or managing trustee of these companies and other officers of RMR LLC serve as managing trustees or managing directors of certain of these companies. In addition, officers of RMR LLC and RMR Inc. serve as our officers and officers of other companies to which RMR LLC or its subsidiaries provide management services. Our Manager, RMR LLC. We have two agreements with RMR LLC to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of the office building component of one of our hotels. See Note 7 for further information regarding our management agreements with RMR LLC. Lease With RMR LLC. We lease office space to RMR LLC in the office building component of one of our hotels. We recognized rental income from RMR LLC for leased office space of $35 for each of the years ended December 31, 2018, 2017 and 2016. Our office space lease with RMR LLC is terminable by RMR LLC if our management agreements with RMR LLC are terminated. Share Awards to RMR LLC Employees. As described in Note 4, we award shares to our officers and other employees of RMR LLC annually. Generally, one fifth of these awards vest on the grant date and one fifth vests on each of the next four anniversaries of the grant dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR LLC. These awards to RMR LLC employees are in addition to the share awards granted to our current and former Managing Trustees, as Trustee compensation, and the fees we paid to RMR LLC. See Note 4 for information regarding our share awards and activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligation on vesting share awards. Ownership Interest in RMR Inc. and Registration and Lock-up Agreements. We currently hold 2,503,777 shares of class A common stock of RMR Inc. which we acquired in June 2015 in a transaction pursuant to which, among other things, we and three other REITs then managed by RMR LLC acquired class A common stock of RMR Inc. and entered into amended and restated business and property management agreements with RMR LLC. We are party to a registration rights agreement with RMR Inc. covering the shares of class A common stock of RMR Inc. issued to us in this transaction, pursuant to which we have demand and piggyback registration rights, subject to certain limitations. We are also party to a lock up and registration rights agreement with ABP Trust, Adam Portnoy and Barry Portnoy pursuant to which they (on behalf of themselves and their permitted transferees) agreed not to transfer the 1,490,000 of our common shares ABP Trust received in this transaction for a 10 year period ending on June 5, 2025 and we granted them certain registration rights, subject, in each case, to certain exceptions. 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 32% of our gross carrying value of real estate properties as of December 31, 2018. We are TA’s largest shareholder; as of December 31, 2018, we owned 3,420,000 common shares, representing approximately 8.5% of TA’s outstanding common shares. One of our Managing Trustees, Adam Portnoy, is a managing director of TA. Barry Portnoy served as a managing director of TA until his death on February 25, 2018. Thomas O’Brien, TA's former managing director and former president and chief executive officer, who resigned effective December 31, 2017, was also an officer of RMR LLC until December 31, 2017, and was an executive officer of ours until 2007. TA’s chief executive officer, president and chief operating officer, executive vice president, chief financial officer and treasurer and executive vice president and general counsel are also officers and employees of RMR LLC. RMR LLC provides management services to both us and TA. As of December 31, 2018, RMR LLC owned 1,492,691 common shares, representing approximately 3.7% of TA’s outstanding common shares. Spin-Off of TA. In connection with TA’s spin-off, we entered a transaction agreement with TA and RMR LLC, pursuant to which TA granted us a right of first refusal to purchase, lease, mortgage or otherwise finance any interest TA owns in a travel center before it sells, leases, mortgages or otherwise finances that travel center to or with another party, and TA also granted us and any other company managed by RMR LLC a right of first refusal to acquire or finance any real estate of the types in which we or they invest before TA does. TA also agreed that for so long as TA is a tenant of ours it will not permit: the acquisition by any person or group of beneficial ownership of 9.8% or more of the voting shares or the power to direct the management and policies of TA or any of its subsidiary tenants or guarantors under its leases with us; the sale of a material part of the assets of TA or any such tenant or guarantor; or the cessation of certain continuing directors constituting a majority of the board of directors of TA or any such tenant or guarantor. TA also agreed not to take any action that might reasonably be expected to have a material adverse impact on our ability to qualify as a REIT and to indemnify us for any liabilities we may incur relating to TA’s assets and business. Lease Arrangements with TA. We lease all of our travel centers to TA under the TA leases. See Notes 5 and 6 for further information regarding our relationships, agreements and transactions with TA. Sonesta. Sonesta is a private company majority owned by one of our Managing Trustees, Adam Portnoy, who also serves as Sonesta’s director. Barry Portnoy also served as a director of Sonesta and was the other shareholder of Sonesta until his death on February 25, 2018. Sonesta’s other director serves as RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary. Sonesta’s chief executive officer and chief financial officer are officers of RMR LLC. Certain other officers and employees of Sonesta are former employees of RMR LLC. RMR LLC also provides certain services to Sonesta. As of December 31, 2018, Sonesta managed 51 of our hotels pursuant to our Sonesta agreement. See Notes 5 and 6 for further information regarding our relationships, agreements and transactions with Sonesta. AIC. We, ABP Trust, TA and four other companies to which RMR LLC provides management services currently own AIC, an Indiana insurance company, in equal amounts and are parties to a shareholders agreement regarding AIC. All our Trustees (other than John G. Murray) and all the independent trustees and independent directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR LLC provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC. Pursuant to this agreement, AIC pays to RMR LLC a service fee equal to 3% of the total annual net earned premiums payable under then active policies issued or underwritten by AIC or by a vendor or an agent of AIC on its behalf or in furtherance of AIC’s business. We and the other AIC shareholders participate in a combined property insurance program arranged and insured or reinsured in part by AIC. We paid aggregate annual premiums, including taxes and fees, of $5,738, $6,387 and $4,004 in connection with this insurance program for the policy years ending June 30, 2019, 2018 and 2017, respectively, which amount for the policy year ending June 30, 2019 may be adjusted from time to time as we acquire or dispose of properties that are included in this insurance program. As of December 31, 2018, 2017 and 2016, our investment in AIC had a carrying value of $8,639, $8,192 and $7,123, respectively. These amounts are included in other assets in our consolidated balance sheets. We recognized income of $515, $607 and $137 related to our investment in AIC for the years ended December 31, 2018, 2017 and 2016, respectively. These amounts are presented as equity in earnings of an investee in our consolidated statements of comprehensive income. Our other comprehensive income (loss) includes our proportionate part of unrealized gains (losses) on securities which are owned and held for sale by AIC of $(68), $460 and $152 related to our investment in AIC for the years ended December 31, 2018, 2017 and 2016, respectively. Directors’ and Officers’ Liability Insurance. We, RMR Inc., RMR LLC and certain other companies to which RMR LLC or its subsidiaries provide management services, including TA, participate in a combined directors’ and officers’ liability insurance policy. The current combined policy expires in September 2020. We paid aggregate premiums of $247, $253 and $141 in 2018, 2017 and 2016, respectively, for these policies. |
Concentration |
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Risks and Uncertainties [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration | Note 11. Concentration Geographic Concentration At December 31, 2018, our 525 properties were located in 45 states in the United States, Ontario, Canada and Puerto Rico. Between 5% and 11% of our properties, by investment, were located in each of California, Texas, Georgia and Illinois. Our two hotels in Ontario, Canada and our hotel in Puerto Rico represent 2% of our hotels, by investment, in the aggregate at December 31, 2018. 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, 2018.
Minimum return and minimum rent payments due to us under some of these hotel management agreements and leases are supported by guarantees. The guaranty 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, 2018) and expires on December 31, 2019. The guaranty provided by Wyndham with respect to the 22 hotels managed by Wyndham is limited to $35,656 and expires on July 28, 2020. During the year ended December 31, 2017, the hotels under this agreement generated cash flows that were less than the minimum returns due to us and the remaining guaranty was depleted and remains depleted as of December 31, 2018. The guaranty provided by Hyatt with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($21,915 remaining at December 31, 2018). The guaranty provided by Radisson with respect to the nine hotels managed by Radisson is limited to $46,000 ( $42,559 remaining at December 31, 2018). These guarantees may be replenished by future cash flows from the hotels in excess of our minimum returns. The guaranty provided by Wyndham for the lease with Destinations is unlimited. The guaranty 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, 2018, we hold security deposits for our 100 hotels managed or leased by IHG ($100,000) and for the 68 hotels included in our Marriott No. 234 agreement ($32,711). 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, $50,203, $31,477 and $28,421 less than the minimum returns due to us for the years ended December 31, 2018, 2017, and 2016, respectively. When managers of these hotels are required to fund the shortfalls under the terms of our management 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 $5,569, $4,673 and $2,918 in the years ended December 31, 2018, 2017 and 2016, 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 tenants or managers who have provided us with these deposits upon expiration of the respective operating 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 management agreements of $44,634 during the year ended December 31, 2018 which represents the unguaranteed portion of our minimum returns from our Sonesta and Wyndham agreements. We had shortfalls at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our management agreements of $26,804 and $25,503 during the years ended December 31, 2017 and 2016, respectively, which represents the unguaranteed portion of our minimum returns from our Sonesta agreement. Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $35,464, $68,338 and $81,227 more than the minimum returns due to us during the years ended December 31, 2018, 2017 and 2016, 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 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 $10,743, $25,419 and $34,148 of guaranty and security deposit replenishments during the years ended December 31, 2018, 2017 and 2016, respectively. |
Selected Quarterly Financial Data (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (Unaudited) | Note 12. Selected Quarterly Financial Data (Unaudited)
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Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Note 13. Segment Information We aggregate our hotels and travel centers into two reportable segments, hotel investments and travel center investments, based on their similar operating and economic characteristics.
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Fair Value of Assets and Liabilities |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Assets and Liabilities | Note 14. Fair Value of Assets and Liabilities The table below presents certain of our assets carried at fair value at December 31, 2018, 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 December 31, 2018 and December 31, 2017, the fair values of these additional financial instruments approximated their carrying values in our consolidated balance sheets due to their short term nature or floating interest rates, except as follows:
At December 31, 2018 and 2017, 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). |
SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION |
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SEC Schedule, 12-28, Real Estate Companies, Investment in Real Estate and Accumulated Depreciation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION | Hospitality Properties Trust SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION December 31, 2018 (dollars in millions)
Hospitality Properties Trust SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued) December 31, 2018 (dollars in millions)
HOSPITALITY PROPERTIES TRUST NOTES TO SCHEDULE III December 31, 2018 (dollars in thousands)
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation. These consolidated financial statements include the accounts of us and our subsidiaries, all of which are 100% owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation. We have determined that each of our wholly owned 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™, or the Codification. We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIEs’ 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 $31,917 and $33,305 as of December 31, 2018 and 2017, respectively, and consist primarily of amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $148,459 and $140,897 as of December 31, 2018 and 2017, respectively, and consist primarily of security deposits they hold and amounts payable to certain of our hotel managers. The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs. We account for our investment in Affiliates Insurance Company, or AIC, using the equity method of accounting. Significant influence is present through common representation on the boards of trustees or directors of us and AIC. One of our Managing Trustees, Adam D. Portnoy, is the sole trustee of ABP Trust, which is the controlling shareholder of The RMR Group Inc., or RMR Inc. Mr. Portnoy is also a managing director and president and chief executive officer of RMR Inc. and an officer and employee of The RMR Group LLC, or RMR LLC. John G. Murray, our other Managing Trustee and our President and Chief Executive Officer, is also an officer and employee of RMR LLC. RMR LLC also provides management and administrative services to AIC, and each of our Trustees (other than Mr. Murray) is a director of AIC. See Note 10 for a further discussion of our relationships and transactions with RMR Inc. and RMR LLC and our investment in AIC. |
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Real Estate Properties | Real Estate Properties. We record real estate properties at cost less impairments, if any. We record the cost of real estate acquired at the relative fair value of building, land, furniture, fixtures and equipment, and, if applicable, acquired in place leases, above or below market leases and customer relationships. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the assets acquired to goodwill. We depreciate real estate properties on a straight line basis over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property and we amortize finite lived intangible assets over the shorter of their useful lives or the term of the associated lease. We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our real estate properties. These indicators may include weak or declining operating profitability, cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life or market or industry changes that could permanently reduce the value of our investments. If there is an indication that the carrying value of a property is not recoverable, we estimate the projected undiscounted cash flows of the asset to determine if an impairment loss should be recognized. We determine the amount of an impairment loss by comparing the historical carrying value of the property to its estimated fair value. We estimate fair value by evaluating recent financial performance and projecting discounted cash flows of properties using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our real estate properties. If we change estimated lives, we depreciate or amortize the carrying values of affected assets over the revised remaining lives. |
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Intangible Assets and Liabilities | Intangible Assets and Liabilities. Intangible assets consist primarily of acquired trademarks and tradenames and acquired below market ground leases for which we are the tenant or lessee. Intangible liabilities consist of acquired above market ground leases for which we are the tenant or lessee. We include intangible assets in other assets, net, and intangible liabilities in accounts payable and other liabilities in our consolidated balance sheets. At December 31, 2018 and 2017, our intangible assets and liabilities were as follows:
We amortize above and below market ground leases on a straight line basis over the term of the associated lease (3 and 6 years on a weighted average basis for intangible liabilities and assets, respectively). For the years ended December 31, 2018, 2017 and 2016 amortization relating to intangible assets was $2,542, $2,814 and $2,303, respectively, and amortization relating to intangible liabilities was $455 for each of these years. As of December 31, 2018, we estimate future amortization relating to intangible assets and liabilities as follows:
We do not amortize our indefinite lived trademarks and tradenames, but we review the assets at least annually for impairment and reassess their classification as indefinite lived assets. In addition, we regularly evaluate whether events or changes in circumstances have occurred that could indicate impairment in value. We determine the amount of an impairment loss, if any, by comparing the carrying value of the intangible asset to its estimated fair value. |
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Cash and Cash Equivalents | Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at date of purchase to be cash equivalents. |
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Restricted Cash | Restricted Cash. Restricted cash, or FF&E reserve escrows, consists of amounts escrowed pursuant to the terms of our management agreements and leases to fund periodic renovations and improvements at our hotels. |
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Equity Securities | Equity Securities. As of December 31, 2018, we owned 3,420,000 common shares of TA and 2,503,777 shares of class A common stock of RMR Inc. Our equity securities are recorded at fair value based on their quoted market price at the end of each reporting period. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with FASB Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities. Prior to January 1, 2018, unrealized gains and losses on equity securities were recorded as a component of cumulative comprehensive income (loss) in shareholders' equity. As further described in Note 10, we initially acquired 2,503,777 shares of class A common stock of RMR Inc. on June 5, 2015 for cash and share consideration of $55,922. We concluded, for accounting purposes, that the cash and share consideration we paid for our investment in these shares represented a discount to the fair value of these shares. We initially accounted for this investment under the cost method of accounting and recorded this investment at its estimated fair value of $129,722 as of June 5, 2015 using Level 3 inputs, as defined in the fair value hierarchy under United States generally accepted accounting principles, or GAAP. As a result, 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 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 and property management fee expense. We amortized $3,585 of this liability during each of the years ended December 31, 2018, 2017 and 2016. As of December 31, 2018, the remaining unamortized amount of this liability was $61,006. Future amortization of this liability as of December 31, 2018, is estimated to be $3,585 for each of the years 2019 through 2023 and $43,081 thereafter. |
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Debt Issuance Costs | Debt Issuance Costs. Debt issuance costs consist of capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective debt. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets, net in our consolidated balance sheets. |
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Revenue Recognition | Revenue Recognition. We report hotel operating revenues for managed hotels in our 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 consolidated statements of comprehensive income. We recognize rental income from operating leases on a straight line basis over the term of the lease agreements. Rental income includes $12,509, $12,378, and $13,570 of adjustments necessary to record scheduled rent increases under certain of our leases, the deferred rent obligations payable to us under our leases with TA and the estimated future payments to us under our TA leases for the cost of removing underground storage tanks at our travel centers on a straight line basis in 2018, 2017 and 2016, respectively. See Notes 5, 6 and 10 for further information regarding our TA leases. Due from related persons includes $66,347 and $54,219 and other assets, net, includes $3,073 and $2,691 of straight line rent receivables at December 31, 2018 and 2017, respectively. We determine percentage rent due to us under our leases annually and recognize it when all contingencies are met and the rent is earned. We earned percentage rental income of $3,695, $2,106 and $1,303 in 2018, 2017 and 2016, respectively. 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 reserves established for the regular refurbishment of our hotels, or FF&E reserves, for our managed hotels as FF&E reserve income. |
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Per Common Share Amounts | Per Common Share Amounts. We calculate basic earnings per common share by dividing allocable net income available for common shareholders by the weighted average number of common shares outstanding during the period. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, including contingently issuable common shares under the previous terms of our business management agreement with RMR LLC, if any, and the related impact on earnings, are considered when calculating diluted earnings per share. |
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Use of Estimates | 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 consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of real estate and impairment of long lived assets. |
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Segment Information | Segment Information. As of December 31, 2018, we had two reportable segments: hotel investments and travel center investments. |
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Income Taxes | Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, or the IRC, and, as such, 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. Further, we lease our managed hotels to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated tax return and are subject to federal, state and foreign income taxes. Our consolidated income tax provision (or benefit) 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. The Income Taxes Topic of the Codification prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Tax benefits are recognized to the extent that it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized upon settlement. Our tax returns filed for the 2015 through 2018 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated statements of comprehensive income as a component of general and administrative expense. |
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New Accounting Pronouncements | New Accounting Pronouncements. On January 1, 2018, we adopted FASB ASU No. 2014-09 (and related clarifying guidance issued by the FASB), Revenue From Contracts With Customers, which outlines a comprehensive model for entities to use in accounting for revenue arising from contracts with customers. ASU No. 2014-09 states that “an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.” While ASU No. 2014-09 specifically references contracts with customers, it may apply to certain other transactions such as the sale of real estate or equipment. The majority of our revenue is from hotels managed under TRS structures. The adoption of this update did not have a material impact on the amount or timing of our revenue recognition for revenues from room, food and beverage, and other hotel level sales of our managed hotels in our consolidated financial statements. A lesser portion of our revenue consists of rental income from leasing arrangements, which are specifically excluded from ASU No. 2014-09. We have adopted ASU No. 2014-09 using the modified retrospective approach. On January 1, 2018, we adopted FASB 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. The implementation of ASU No. 2016-01 resulted in the reclassification of historical changes in the fair value of our available for sale equity securities of $78,715 from cumulative other comprehensive income to cumulative net income. We also reclassified $841 from cumulative other comprehensive income to cumulative net income for our share of cumulative other comprehensive income of our equity method investee. Effective January 1, 2018, changes in the fair value of our equity securities are recorded through earnings in accordance with ASU No. 2016-01. On January 1, 2018, we adopted FASB ASU No. 2016-18, Restricted Cash, which requires companies to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The implementation of ASU No. 2016-18 resulted in an increase of $74,272 and $74,876 of net cash provided by operating activities and an increase of $61,371 and $65,631 of net cash used in investing activities for the years ended December 31, 2017 and 2016, respectively. This update also requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheets. Restricted cash consisting of amounts escrowed by our hotel operators pursuant to the terms of our management agreements and leases to fund periodic renovations and improvements at our hotels totaled $50,037 and $73,357 as of December 31, 2018 and 2017, respectively. See Note 6 for further information regarding our FF&E reserves. The adoption of this update did not change our balance sheet presentation. On October 1, 2018, we adopted FASB ASU No. 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which aligns the measurement and classification guidance for share based payments to nonemployees with the guidance for share based payments to employees, with certain exceptions. The adoption of this standard did not have a material impact on our consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases and ASU No. 2018-11, Leases (Topic 842): Targeted Improvements. In December 2018, the FASB issued ASU No. 2018-20 Leases (Topic 842), Narrow-Scope Improvements for Lessors. Collectively, these standards set out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e., lessees and lessors). These standards require 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. 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. These standards are effective as of January 1, 2019. Upon adoption, we applied the package of practical expedients that allows an entity to not reassess (i) whether any expired or existing contracts are or contain leases, (ii) lease classification for any expired or existing leases and (iii) initial direct costs for any expired or existing leases. Furthermore, we applied the optional transition method in ASU No. 2018-11 which allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, if any. Additionally, our leases met the criteria in ASU No. 2018-11 to not separate non-lease components from the related lease component, therefore the accounting for these leases remained largely unchanged from the previous standard. For leases where we are the lessee, we are required to record a right of use asset and a lease liability for all leases with a term greater than 12 months. As of December 31, 2018, 14 of our hotels were subject to ground leases where we are the lessee. In addition, our hotel operators enter various leases on our behalf in the normal course of business at our hotels. We believe that application of these standards will result in us recording a right of use asset and the related lease liability of between $65,000 and $75,000 for our future obligations under our ground leases and other lease agreements for which we are the lessee. The actual amounts we record upon adoption of the ASUs will vary depending on changes in discount rates, lease terms and the practical expedients we elect as discussed above. We do not expect the ASUs to have a material effect on our consolidated statements of comprehensive income or consolidated statements of cash flows. 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 the adoption of ASU No. 2016-13 will have in our consolidated financial statements. |
Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets and liabilities | At December 31, 2018 and 2017, our intangible assets and liabilities were as follows:
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Schedule of projected future amortization expense relating to intangible assets and liabilities | As of December 31, 2018, we estimate future amortization relating to intangible assets and liabilities as follows:
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Weighted Average Common Shares (Tables) |
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Earnings Per Share, Basic and Diluted [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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Shareholders' Equity (Tables) |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of shares granted,vested, forfeited and unvested | A summary of shares granted, vested, forfeited and unvested under the terms of the Share Award Plan for the years ended December 31, 2018, 2017 and 2016 is as follows:
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Schedule of amounts recognized in cumulative other comprehensive income (loss) | The following table presents changes in the amounts we recognized in cumulative other comprehensive income (loss) by component for the year ended December 31, 2018:
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Real Estate Properties (Tables) |
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Real Estate [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allocation of purchase prices by location | Our allocation of the purchase price of each of our acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.
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Management Agreements and Leases (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of contractual minimum rents to be paid | As of December 31, 2018, our leases with parties other than our TRSs provide for contractual minimum rents to be paid to us during the remaining current terms as follows:
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Indebtedness (Tables) |
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Required principal payments during the next five years and thereafter | The required principal payments due during the next five years and thereafter under all our outstanding debt at December 31, 2018 are as follows:
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Income Taxes (Tables) |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of provision for income taxes | Our provision (benefit) for income taxes consists of the following:
(1) We realized a $5,431 tax benefit in 2017 related to the enactment of the Tax Cuts and Jobs Act, or the Tax Act. |
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Schedule of reconciliation of effective tax rate and the U.S. Federal statutory income tax rate | A reconciliation of our effective tax rate and the current U.S. Federal statutory income tax rate is as follows:
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Schedule of significant components of deferred tax assets and liabilities | Significant components of our deferred tax assets and liabilities are as follows:
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Concentration (Tables) |
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Schedule of minimum return payments and minimum rents, for each management or lease agreement | The percentage of our annual minimum returns and rents, for each management or lease agreement is shown below, as of December 31, 2018.
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Selected Quarterly Financial Data (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (Unaudited) |
|
Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment information |
|
Fair Value of Assets and Liabilities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 December 31, 2018, 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 December 31, 2018 and December 31, 2017, the fair values of these additional financial instruments approximated their carrying values in our consolidated balance sheets due to their short term nature or floating interest rates, except as follows:
|
Organization (Details) |
Dec. 31, 2018
travel_center
hotel
property
|
---|---|
Real Estate Properties [Line Items] | |
Number of Properties | property | 525 |
Hotel operating revenues | |
Real Estate Properties [Line Items] | |
Number of Properties | hotel | 326 |
Travel centers | |
Real Estate Properties [Line Items] | |
Number of Properties | travel_center | 199 |
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
|
Property, Plant and Equipment [Line Items] | ||
Ownership interest in subsidiaries (as a percent) | 100.00% | |
Assets of TRSs | $ 31,917 | $ 33,305 |
Liabilities of TRSs | $ 148,459 | $ 140,897 |
Buildings and Improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 40 years | |
Personal Property | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 12 years |
Summary of Significant Accounting Policies - Future Amortization of Intangibles (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Below Market Ground Leases & Other | ||
Schedule of Finite-Lived Intangible Assets and Liabilities [Line Items] | ||
2019, intangible assets | $ 1,954 | |
2020, intangible assets | 1,591 | |
2021, intangible assets | 1,572 | |
2022, intangible assets | 1,569 | |
2023, intangible assets | 1,740 | |
Thereafter, intangible assets | 7,948 | |
Total future amortization, intangible assets | 16,374 | |
Above Market Ground Leases & Other | ||
Schedule of Finite-Lived Intangible Assets and Liabilities [Line Items] | ||
2019, intangible liabilities | (450) | |
2020, intangible liabilities | (447) | |
2021, intangible liabilities | (358) | |
2022, intangible liabilities | (21) | |
2023, intangible liabilities | (25) | |
Thereafter, intangible liabilities | 0 | |
Total future amortization, intangible liabilities | $ (1,301) | $ (1,741) |
Summary of Significant Accounting Policies - Debt Issuance Costs (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Accounting Policies [Abstract] | ||
Debt issuance costs for revolving credit facility | $ 6,822 | $ 7,476 |
Accumulated amortization of debt issuance costs for revolving credit facility | 1,005 | 6,126 |
Debt issuance costs, net | 22,243 | $ 20,226 |
Future amortization of debt issuance costs, 2019 | 5,593 | |
Future amortization of debt issuance costs, 2020 | 5,593 | |
Future amortization of debt issuance costs, 2021 | 5,039 | |
Future amortization of debt issuance costs, 2022 | 4,201 | |
Future amortization of debt issuance costs, 2023 | 2,394 | |
Future amortization of debt issuance costs, thereafter | $ 5,240 |
Summary of Significant Accounting Policies - Revenue Recognition and Segment Information (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
USD ($)
segment
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Accounting Policies [Abstract] | |||
Straight line rent adjustments | $ 12,509 | $ 12,378 | $ 13,570 |
Straight line rent receivable | 3,073 | 2,691 | |
Percentage rental income | $ 3,695 | 2,106 | $ 1,303 |
Number of reportable segments | segment | 2 | ||
Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Straight line rent receivables, due from related parties | $ 66,347 | $ 54,219 |
Weighted Average Common Shares (Details) - shares shares in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Earnings Per Share, Basic and Diluted [Abstract] | |||
Weighted average common shares for basic earnings per share (in shares) | 164,229 | 164,146 | 156,062 |
Effect of dilutive securities: Unvested share awards (in shares) | 29 | 29 | 26 |
Weighted average common shares for diluted earnings per share (in shares) | 164,258 | 164,175 | 156,088 |
Stockholders' Equity - Stock Repurchases (Details) - $ / shares |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Stockholders' Equity Note [Abstract] | |||
Common share repurchases (in shares) | 21,202 | 19,058 | 20,689 |
Treasury stock repurchased (in dollars per share) | $ 28.59 | $ 28.01 | $ 29.64 |
Shareholders' Equity - Preferred Shares (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
Feb. 10, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Net reduction to net income available for common shareholders | $ 0 | $ 9,893 | $ 0 | |
Series D Preferred Shares | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Number of shares redeemed (in shares) | 11,600,000 | |||
Dividend rate percentage | 7.125% | |||
Liquidation preference (in dollars per share) | $ 25 | |||
Dividends payable | $ 291,435 | |||
Net reduction to net income available for common shareholders | $ 9,893 |
Shareholders' Equity - Distributions (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Feb. 21, 2019 |
Jan. 18, 2019 |
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Common Share Distributions | |||||||||||||
Distributions per common share (in dollars per share) | $ 0.53 | $ 0.53 | $ 0.53 | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.51 | $ 2.11 | $ 2.07 | $ 2.03 | ||
Distribution value | $ 346,832 | $ 340,084 | $ 314,135 | ||||||||||
Distributions paid as percentage of ordinary income | 100.00% | 94.69% | 93.23% | ||||||||||
Distributions paid as a percentage of return of capital | 4.39% | 6.17% | |||||||||||
Distributions paid as a percentage of qualified dividend | 0.92% | 0.60% | |||||||||||
Subsequent event | |||||||||||||
Common Share Distributions | |||||||||||||
Distributions per common share (in dollars per share) | $ 0.53 | ||||||||||||
Distribution value | $ 87,154 | ||||||||||||
Cash distributions paid or payable (in dollars per share) | $ 0.53 |
Management Agreements and Leases - Marriott No. 5 (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
USD ($)
hotel
agreement
property
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Property Subject to or Available for Operating Lease [Line Items] | |||
Number of Properties | property | 525 | ||
Hotel operating revenues | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Number of Properties | hotel | 326 | ||
Hotel operating revenues | Marriott No. 5 contract | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Number of Properties | property | 1 | ||
Annual Minimum Returns/Rents | $ | $ 10,321 | ||
Realized returns and rents | $ | $ 10,321 | $ 10,159 | $ 10,116 |
Number of renewal options available | agreement | 4 | ||
Term of renewal options | 15 years |
Management Agreements and Leases - Morgans Agreement (Details) $ in Thousands |
May 07, 2018
USD ($)
|
---|---|
Hotel operating revenues | Morgans agreement | |
Property Subject to or Available for Operating Lease [Line Items] | |
Annual Minimum Returns/Rents | $ 7,595 |
Management Agreements and Leases - Hyatt Agreement (Details) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018
USD ($)
hotel
property
|
Dec. 31, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Property Subject to or Available for Operating Lease [Line Items] | |||
Number of Properties | property | 525 | ||
Hotel operating revenues | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Number of Properties | hotel | 326 | ||
Hotel operating revenues | Hyatt | |||
Property Subject to or Available for Operating Lease [Line Items] | |||
Number of Properties | hotel | 22 | ||
Annual Minimum Returns/Rents | $ 22,037 | ||
Realized returns and rents | 22,037 | $ 22,037 | $ 22,037 |
Guarantee provided to the entity, maximum | 50,000 | ||
Increase in guarantee | 809 | ||
Guarantee provided to the entity, remaining amount | $ 21,915 |
Management Agreements and Leases - Contractual Minimum Rents (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Contractual minimum rents to be received | |
2019 | $ 309,099 |
2020 | 298,828 |
2021 | 298,335 |
2022 | 296,756 |
2023 | 296,809 |
Thereafter | 2,017,031 |
Total | $ 3,516,858 |
Indebtedness - Principal Repayment (Details) $ in Thousands |
Dec. 31, 2018
USD ($)
|
---|---|
Required principal payments under outstanding debt | |
2019 | $ 0 |
2020 | 0 |
2021 | 400,000 |
2022 | 677,000 |
2023 | 900,000 |
Thereafter | 2,250,000 |
Total principal payments | $ 4,227,000 |
Income Taxes - Narrative (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2017 |
Dec. 31, 2018 |
|
Income taxes | ||
Tax Cuts and Jobs Act of 2017, provisional income tax benefit | $ 5,431 | |
Net deferred tax assets prior to valuation allowance | 94,692 | $ 99,137 |
Consolidated TRS | ||
Income taxes | ||
Net deferred tax assets prior to valuation allowance | $ 51,589 | $ 59,892 |
Valuation allowance provided (as a percent) | 100.00% | 100.00% |
Net operating loss carryforwards for federal income tax purpose, subject to expiration | $ 239,005 | |
Travel Centers of America LLC | ||
Income taxes | ||
Net deferred tax assets prior to valuation allowance | $ 37,800 | $ 33,871 |
Valuation allowance provided (as a percent) | 100.00% | 100.00% |
Net operating loss carryforwards for federal income tax purpose, subject to expiration | $ 119,724 | |
General business tax credits subject to expiration | $ 5,492 |
Income Taxes - Provision and Reconciliation (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Current: | |||
Federal | $ 0 | $ (5,431) | $ 0 |
State | 1,575 | 1,713 | 1,631 |
Foreign | 667 | 670 | 2,380 |
Current tax | 2,242 | (3,048) | 4,011 |
Deferred: | |||
Foreign | (1,047) | (236) | 9 |
Deferred tax | (1,047) | (236) | 9 |
Income tax provision (benefit) | $ 1,195 | (3,284) | $ 4,020 |
Tax Cuts and Jobs Act of 2017, provisional income tax benefit | $ 5,431 | ||
Effective Income Tax Rate Reconciliation, Percent [Abstract] | |||
Taxes at statutory U.S. federal income tax rate | 21.00% | 35.00% | 35.00% |
Nontaxable income of HPT | (21.00%) | (35.00%) | (35.00%) |
Minimum tax credit refund | (0.00%) | (2.60%) | (0.00%) |
State and local income taxes, net of federal tax benefit | 0.80% | 0.80% | 0.80% |
Foreign taxes | (0.20%) | 0.20% | 1.00% |
Tax Act adjustment | 0.00% | 21.80% | 0.00% |
Change in valuation allowance | 0.00% | (21.80%) | 0.00% |
Other differences, net | 0.00% | 0.00% | 0.00% |
Effective tax rate | 0.60% | (1.60%) | 1.80% |
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands |
Dec. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred tax assets: | ||
Tax credits | $ 5,492 | $ 5,984 |
Tax loss carryforwards | 90,816 | 85,661 |
Other | 2,829 | 3,047 |
Deferred tax assets, gross | 99,137 | 94,692 |
Valuation allowance | (99,137) | (94,692) |
Deferred income tax assets, net | 0 | 0 |
Deferred tax liabilities: | ||
Property basis difference | (7,174) | (8,221) |
Net deferred tax liabilities | $ (7,174) | $ (8,221) |
Related Person Transactions - TA Transaction Agreement (Details) |
Dec. 31, 2018
shares
|
---|---|
RMR LLC | Travel Centers of America LLC | |
Related Party Transaction [Line Items] | |
Number of common shares owned (in shares) | 1,492,691 |
Percentage of ownership | 3.70% |
Travel Centers of America LLC | |
Related Party Transaction [Line Items] | |
Ownership percentage formerly held in subsidiary | 100.00% |
Percentage of gross carrying value of real estate | 32.00% |
Number of common shares owned (in shares) | 3,420,000 |
Percentage of total shares outstanding | 8.50% |
Share ownership restrictions maximum percentage of equity shares that can be acquired without approval | 9.80% |
Related Person Transactions - Sonesta and AIC (Details) $ in Thousands |
12 Months Ended | |||||
---|---|---|---|---|---|---|
Jun. 30, 2019
USD ($)
|
Dec. 31, 2018
USD ($)
hotel
|
Jun. 30, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2016
USD ($)
|
|
Related Party Transaction [Line Items] | ||||||
Earnings (losses) recognized related to equity investments | $ 515 | $ 607 | $ 137 | |||
Sonesta International Hotels Corporation | ||||||
Related Party Transaction [Line Items] | ||||||
Number of real estate properties | hotel | 51 | |||||
Affiliates Insurance Company | ||||||
Related Party Transaction [Line Items] | ||||||
Annual premium payable service fee | 3.00% | |||||
Aggregate annual premium | $ 6,387 | $ 4,004 | ||||
Equity method investments, carrying value | $ 8,639 | 8,192 | 7,123 | |||
Earnings (losses) recognized related to equity investments | 515 | 607 | 137 | |||
Other comprehensive income, other, net of tax | $ (68) | $ 460 | $ 152 | |||
Affiliates Insurance Company | Forecast | ||||||
Related Party Transaction [Line Items] | ||||||
Aggregate annual premium | $ 5,738 |
Related Person Transactions - Directors' and Officers' Liability Insurance (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
RMR LLC | |||
Related Party Transaction [Line Items] | |||
Premium paid for combined directors' and officers' liability insurance policy | $ 247 | $ 253 | $ 141 |
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2018 |
Sep. 30, 2018 |
Jun. 30, 2018 |
Mar. 31, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenues | $ 550,799 | $ 603,153 | $ 611,951 | $ 528,633 | $ 535,142 | $ 577,588 | $ 570,603 | $ 488,602 | $ 2,294,536 | $ 2,171,935 | $ 2,047,211 |
Net income (loss) | (108,860) | 117,099 | 97,289 | 80,206 | 31,545 | 85,728 | 60,699 | 37,171 | 185,734 | 215,143 | 223,110 |
Net income (loss) available for common shareholders | $ (108,860) | $ 117,099 | $ 97,289 | $ 80,206 | $ 31,545 | $ 85,728 | $ 60,699 | $ 25,843 | $ 185,734 | $ 203,815 | $ 202,446 |
Net income (loss) available for common shareholders per common share (basic and diluted) (in dollars per share) | $ (0.66) | $ 0.71 | $ 0.59 | $ 0.49 | $ 0.19 | $ 0.52 | $ 0.37 | $ 0.16 | $ 1.13 | $ 1.24 | $ 1.30 |
Distributions per common share (in dollars per share) | $ 0.53 | $ 0.53 | $ 0.53 | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.52 | $ 0.51 | $ 2.11 | $ 2.07 | $ 2.03 |
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