10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-11527

HOSPITALITY PROPERTIES TRUST

(Exact Name of Registrant as Specified in Its Charter)

Maryland	04-3262075
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458

(Address of Principal Executive Offices) (Zip Code)

617-964-8389

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b–2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as of May 5, 2014: 149,741,487

HOSPITALITY PROPERTIES TRUST

FORM 10-Q

March 31, 2014

INDEX

		Page
PART I	Financial Information (unaudited)
	Item 1. Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets — March 31, 2014 and December 31, 2013	1
	Condensed Consolidated Statements of Income and Comprehensive Income — Three Months Ended March 31, 2014 and 2013	2
	Condensed Consolidated Statements of Cash Flows — Three Months Ended March 31, 2014 and 2013	3
	Notes to Condensed Consolidated Financial Statements	4
	Item 2.
	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
	Item 3.
	Quantitative and Qualitative Disclosures About Market Risk	34
	Item 4.
	Controls and Procedures	35
	Warning Concerning Forward Looking Statements	37
	Statement Concerning Limited Liability	41
PART II	Other Information
	Item 2.
	Unregistered Sales of Equity Securities and Use of Proceeds	42
	Item 6.
	Exhibits	43
	Signatures	45

References in this Form 10-Q to “HPT”, “we”, “us” or “our” include Hospitality Properties Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

Part IFinancial Information

Item 1.  Financial Statements

HOSPITALITY PROPERTIES TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(amounts in thousands, except share data)

	March 31,			December 31,
	2014			2013
ASSETS
Real estate properties, at cost:
Land	$	1,470,513		$	1,470,513
Buildings, improvements and equipment	5,968,554			5,946,852
	7,439,067			7,417,365
Accumulated depreciation	(1,812,007		)	(1,757,151		)
	5,627,060			5,660,214
Cash and cash equivalents	33,830			22,500
Restricted cash (FF&E reserve escrow)	26,863			30,873
Due from related persons	38,503			38,064
Other assets, net	209,931			215,893
	$	5,936,187		$	5,967,544
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured term loan	400,000			400,000
Senior notes, net of discounts	2,345,151			2,295,527
Convertible senior notes	8,478			8,478
Security deposits	29,718			27,876
Accounts payable and other liabilities	94,053			130,448
Due to related persons	8,145			13,194
Dividends payable	5,166			5,166
Total liabilities	2,890,711			2,880,689
Commitments and contingencies
Shareholders’ equity:
Preferred shares of beneficial interest, no par value, 100,000,000 shares authorized:
Series D preferred shares; 7 1/8% cumulative redeemable; 11,600,000 shares issued and outstanding, aggregate liquidation preference of $290,000	280,107			280,107
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 149,730,332 and 149,606,024 shares issued and outstanding, respectively	1,497			1,496
Additional paid in capital	4,113,065			4,109,600
Cumulative net income	2,555,604			2,518,054
Cumulative other comprehensive income	10,534			15,952
Cumulative preferred distributions	(285,151		)	(279,985		)
Cumulative common distributions	(3,630,180		)	(3,558,369		)
Total shareholders’ equity	3,045,476			3,086,855
	$	5,936,187		$	5,967,544

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HOSPITALITY PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share data)

	Three Months Ended March 31,
	2014			2013
Revenues:
Hotel operating revenues	$	329,936		$	291,651
Rental income	63,386			62,212
FF&E reserve income	928			603
Total revenue	394,250			354,466
Expenses:
Hotel operating expenses	230,617			206,649
Depreciation and amortization	78,287			72,280
General and administrative	11,465			12,144
Acquisition related costs	61			276
Total expenses	320,430			291,349
Operating income	73,820			63,117
Interest income	25			19
Interest expense (including amortization of deferred financing costs and debt discounts of $1,831 and $1,512, respectively)	(35,368		)	(35,188		)
Loss on early extinguishment of debt	(214		)	—
Income before income taxes and equity in earnings (losses) of an investee	38,263			27,948
Income tax expense	(616		)	(518		)
Equity in earnings (losses) of an investee	(97		)	76
Net income	37,550			27,506
Preferred distributions	(5,166		)	(8,097		)
Net income available for common shareholders	$	32,384		$	19,409
Net income	$	37,550		$	27,506
Other comprehensive income (loss):
Unrealized gain (loss) on TravelCenters of America common shares	(5,438		)	12,420
Equity interest in investee’s unrealized gains (losses)	19			(8		)
Other comprehensive income (loss)	(5,419		)	12,412
Comprehensive income	$	32,131		$	39,918
Weighted average common shares outstanding	149,636			125,426
Basic and diluted earnings per common shares:
Net income available for common shareholders	$	0.22		$	0.15

The accompanying notes are an integral part of these condensed consolidated financial statements.

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HOSPITALITY PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	For the Three Months Ended March 31,
	2014			2013
Cash flows from operating activities:
Net income	$	37,550		$	27,506
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	78,287			72,280
Amortization of deferred financing costs and debt discounts as interest	1,831			1,512
Straight line rental income	(42		)	(62		)
Security deposits replenished (applied to payment shortfalls)	1,837			(5,917		)
FF&E reserve income and deposits	(12,556		)	(6,845		)
Loss on extinguishment of debt	214			—
Equity in (earnings) losses of an investee	97			(76		)
Deferred income taxes	—			(212		)
Other non-cash (income) expense, net	252			(1,100		)
Changes in assets and liabilities:
(Increase) decrease in due from related persons	(2		)	260
Increase in other assets	(1,382		)	(12,063		)
Decrease in accounts payable and other liabilities	(25,183		)	(23,734		)
Decrease in due to related persons	(1,833		)	(3,346		)
Cash provided by operating activities	79,070			48,203
Cash flows from investing activities:
Real estate acquisitions and deposits	5,000			(3,000		)
Real estate improvements	(41,607		)	(49,364		)
FF&E reserve fundings	(769		)	(15,111		)
Eminent domain proceeds	6,178			—
Cash used in investing activities	(31,198		)	(67,475		)
Cash flows from financing activities:
Proceeds from issuance of common shares, net	—			393,473
Proceeds from issuance of senior notes, net of discount	346,616			—
Repayment of senior notes	(300,000		)	—
Borrowings under revolving credit facility	370,000			95,000
Repayments of revolving credit facility	(370,000		)	(405,000		)
Deferred financing costs	(6,181		)	—
Distributions to preferred shareholders	(5,166		)	(8,097		)
Distributions to common shareholders	(71,811		)	(58,110		)
Cash (used in) provided by financing activities	(36,542		)	17,266
Increase (decrease) in cash and cash equivalents	11,330			(2,006		)
Cash and cash equivalents at beginning of period	22,500			20,049
Cash and cash equivalents at end of period	$	33,830		$	18,043
Supplemental cash flow information:
Cash paid for interest	$	54,116		$	55,064
Cash paid for income taxes	1,737			132
Non-cash investing activities:
Hotel managers’ deposits in FF&E reserve	$	9,745		$	5,891
Hotel managers’ purchases with FF&E reserve	(14,524		)	(23,816		)

The accompanying notes are an integral part of these condensed consolidated financial statements.

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Note 1.  Basis of Presentation

The accompanying condensed consolidated financial statements of Hospitality Properties Trust and its subsidiaries, or HPT, we, our or us, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2013, or our 2013 Annual Report.  In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included in these condensed consolidated financial statements.  These condensed consolidated financial statements include the accounts of HPT and its subsidiaries, all of which are 100% owned directly or indirectly by HPT.  All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods and those of our managers and tenants are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates.  Significant estimates in our condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets.

We have determined that each of our taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards CodificationTM.   We have concluded that we must consolidate each of our TRSs because we are the entity with the power to direct the activities that most significantly impact the VIEs’ performance and we have the obligation to absorb the majority of the potential variability in gains and losses of each VIE, with the primary focus on losses, and are, therefore, the primary beneficiary of each VIE.  The assets of our TRSs were $28,341 as of March 31, 2014 and consist primarily of amounts due from certain of their hotel managers and working capital advances to certain of their hotel managers.  These assets can be used to settle obligations of both us and our TRSs.  The liabilities of our TRSs were $41,702 as of March 31, 2014 and consist primarily of security deposits they hold and amounts payable to certain of their hotel managers.  Creditors have recourse to both us and our TRSs for these liabilities.

Note 2.  New Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.  This update amends the criteria for reporting discontinued operations to, among other things, change the criteria for disposals to qualify as discontinued operations. The update is effective for interim and annual reporting periods beginning after December 15, 2014 with early adoption permitted.  The implementation of this update is not expected to cause any changes to our condensed consolidated financial statements.

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Note 3.  Revenue Recognition

We report hotel operating revenues for managed hotels in our condensed consolidated statements of income and comprehensive income. We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when services are provided. Our share of the net operating results of our managed hotels in excess of the minimum returns due to us and certain other amounts as provided under the management agreements, or additional returns, are generally determined annually. We recognize additional returns due to us under our management agreements at year end when all contingencies are met and the income is earned. We had no deferred additional returns for the three months ended March 31, 2014 and 2013.

We recognize rental income from operating leases on a straight line basis over the term of the lease agreements except for one lease in which there is uncertainty regarding the collection of future rent increases.  Rental income includes $42 and $62 for the three months ended March 31, 2014 and 2013, respectively, of adjustments necessary to record rent on the straight line basis.  Other assets, net, include $5,492 and $5,450 of straight line rent receivables at March 31, 2014 and December 31, 2013, respectively.

We determine percentage rent due to us under our leases annually and recognize it at year end when all contingencies have been met and the rent is earned. We had deferred percentage rent of $874 and $610 for the three months ended March 31, 2014 and 2013, respectively.

We own all the capital expenditure reserves, or FF&E reserves, for our hotels. We do not report the amounts which are escrowed as FF&E reserves for our managed hotels as FF&E reserve income. We report deposits by our third party hotel tenants into the escrow accounts as FF&E reserve income.

Note 4.  Per Common Share Amounts

We compute per common share amounts using the weighted average number of our common shares outstanding during the period. We had no dilutive common shares during the periods presented.

Note 5.  Shareholders’ Equity

Common Share Issuances

During the three months ended March 31, 2014 and the period April 1, 2014 to May 5, 2014, we issued 21,772 and 11,155, respectively, of our common shares to Reit Management & Research LLC, or RMR, as part of its compensation under our business management agreement.  In March 2014, we also issued 102,536 of our common shares to RMR for the incentive fee for 2013 pursuant to the business management agreement.  See Note 10 for further information regarding this agreement.

Distributions

On January 15, 2014, we paid a $0.4453 per share distribution to our Series D preferred shareholders.  On March 3, 2014, we declared a $0.4453 per share distribution to our Series D preferred shareholders of record on March 31, 2014. We paid this amount on April 15, 2014.

On February 20, 2014, we paid a $0.48 per share distribution to our common shareholders.  On April 8, 2014, we declared a $0.49 per share distribution to our common shareholders of record on April 25, 2014. We expect to pay this amount on or about May 21, 2014.

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Other Comprehensive Income (Loss)

Other comprehensive income (loss) represents the unrealized gain (loss) on the TravelCenters of America LLC, or TA, shares we own and our share of the comprehensive income (loss) of Affiliates Insurance Company, or AIC.  See Note 10 for further information regarding these investments.

Note 6.  Indebtedness

Our principal debt obligations at March 31, 2014 were: (1) our $400,000 unsecured term loan; (2) an aggregate principal amount of $2,355,000 of public issuances of unsecured senior notes; and (3) our public issuance of $8,478 outstanding principal amount of convertible senior notes due 2027.  As of both March 31, 2014 and May 5, 2014, we had no amounts outstanding and $750,000 available under our revolving credit facility.

On January 8, 2014, we amended the agreements governing our unsecured revolving credit facility and unsecured term loan with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of other lenders.

As a result of the amendment, the stated maturity date of our $750,000 revolving credit facility was extended from September 7, 2015 to July 15, 2018. Subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date by an additional one year to July 15, 2019. The amended credit agreement provides that we can borrow, repay and reborrow funds available under the revolving credit facility until maturity, and no principal repayment is due until maturity. The $750,000 maximum amount of our revolving credit facility and the $400,000 amount of the term loan remained unchanged by the amendment. The amended credit agreement includes a feature under which maximum borrowings under the revolving credit facility and term loan may be increased to up to $2,300,000 on a combined basis in certain circumstances. Under the amendment, the interest rate paid on borrowings under the revolving credit facility was reduced from LIBOR plus a premium of 130 basis points to LIBOR plus a premium of 110 basis points, and the facility fee was reduced from 30 basis points to 20 basis points per annum on the total amount of lending commitments. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. The weighted average interest rate for borrowings under our revolving credit facility was 1.25% and 1.51% for the three months ended March 31, 2014 and 2013, respectively.

As a result of the amendment, the stated maturity date of our $400,000 unsecured term loan was extended from March 13, 2017 to April 15, 2019. Our term loan is prepayable without penalty at any time. Under the amendment, the interest rate paid on borrowings under the term loan agreement was reduced from LIBOR plus a premium of 145 basis points to LIBOR plus a premium of 120 basis points. The interest rate premium is subject to adjustment based on changes to our credit ratings. As of March 31, 2014, the interest rate for the amount outstanding under our term loan was 1.35%. The weighted average interest rate for the amount outstanding under our term loan was 1.38% and 1.66% for the three months ended March 31, 2014 and 2013, respectively.

As a result of the amendments to our revolving credit facility and term loan, we recorded a loss on early extinguishment of debt of $214 during the three months ended March 31, 2014.

Our borrowings under the amended credit facilities continue to be unsecured. Prior to the effectiveness of the amendment, certain of our subsidiaries had guaranteed our obligations under the revolving credit facility and term loan. As a result of the amendment, none of those subsidiary guarantees remain in effect. The amended credit agreement provides that, with certain exceptions, a subsidiary of ours is required to guaranty our obligations under the revolving credit facility and term loan only if that subsidiary has separately incurred debt (other than nonrecourse debt), within the meaning specified in the amended credit agreement, or provided a guarantee of debt incurred by us or any of our other subsidiaries.

Our revolving credit facility and term loan agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes RMR ceasing to act as our business manager. Our revolving credit facility and term loan agreement contains a number of covenants that restrict our ability to incur debt in excess of calculated amounts, restrict our ability to make distributions under certain circumstances and generally require us to maintain certain financial ratios. We believe we

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

were in compliance with the terms and conditions of the agreement governing our revolving credit facility and term loan at March 31, 2014.

On February 15, 2014, we redeemed at par all of our outstanding 7.875% senior notes due 2014 for $300,000 plus accrued and unpaid interest (an aggregate of $311,813).

On March 12, 2014, we issued $350,000 of 4.65% unsecured senior notes due 2024 in a public offering for net proceeds of $345,999 after underwriting discounts and other offering expenses.

Note 7.  Real Estate Properties

At March 31, 2014, we owned 291 hotels and owned or leased 185 travel centers which are operated under 11 operating agreements.

During the three months ended March 31, 2014, we funded $42,376 of improvements to certain of our properties that pursuant to the terms of our management and lease agreements with our hotel managers and tenants resulted in increases in our contractual annual minimum returns and rents of $3,068.  See Notes 10 and 11 for further information about our fundings of improvements to certain of our properties.

One of the travel centers we leased to TA under our TA No. 1 lease, located in Roanoke, VA, was taken in August 2013 by eminent domain proceedings brought by the Virginia Department of Transportation, or the VDOT, in connection with certain highway construction.  In January 2014, we received $6,178 of proceeds from the VDOT in connection with the taking.  See Note 10 for more information regarding this transaction.

On February 27, 2014, we terminated a previously disclosed agreement to acquire a hotel located in Orlando, FL which had a contract purchase price of $21,000.  We terminated this agreement based upon our diligence findings.

On March 31, 2014, we entered an agreement to acquire a 240 room full service hotel located in Ft. Lauderdale, FL for a contract purchase price of $65,000, excluding closing costs. We currently expect to acquire this hotel during the second quarter of 2014.  We plan to convert this hotel to a Sonesta branded hotel and add it to our Sonesta agreement (see Notes 10 and 11 for more information regarding this transaction and the Sonesta agreement).

On April 29, 2014, we sold our Sonesta ES Suites branded hotel in Myrtle Beach, SC for $4,500, excluding closing costs.  See Notes 10 and 12 for further information regarding this transaction.

Note 8. Income Taxes

We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, and, accordingly are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements.  We are subject to income tax in Canada, Puerto Rico and certain states despite our REIT status.  Also, we lease our managed hotels to our wholly owned TRSs that, unlike most of our other subsidiaries, file separate consolidated federal corporate income tax returns and are subject to federal, state and foreign income taxes.  Our consolidated income tax provision included in our condensed consolidated statements of income and comprehensive income includes the income tax provision related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our REIT status.

During the three months ended March 31, 2014, we recognized income tax expense of $616, which includes $31 of foreign taxes and $585 of certain state taxes that are payable without regard to our REIT status and TRS tax loss carry forwards.

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Note 9.  Segment Information

	For the Three Months Ended March 31, 2014
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	329,936	$	—	$	—		$	329,936
Rental income	8,103		55,283		—			63,386
FF&E reserve income	928		—		—			928
Total revenues	338,967		55,283		—			394,250
Hotel operating expenses	230,617		—		—			230,617
Depreciation and amortization	53,016		25,271		—			78,287
General and administrative	—		—		11,465			11,465
Acquisition related costs	61		—		—			61
Total expenses	283,694		25,271		11,465			320,430
Operating income (loss)	55,273		30,012		(11,465		)	73,820
Interest income	—		—		25			25
Interest expense	—		—		(35,368		)	(35,368		)
Loss on early extinguishment of debt	—		—		(214		)	(214		)
Income (loss) before income taxes and equity in losses of an investee	55,273		30,012		(47,022		)	38,263
Income tax expense	—		—		(616		)	(616		)
Equity in losses of an investee	—		—		(97		)	(97		)
Net income (loss)	$	55,273	$	30,012	$	(47,735	)	$	37,550

	As of March 31, 2014
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,681,451	$	2,193,969	$	60,767	$	5,936,187

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

	For the Three Months Ended March 31, 2013
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	291,651	$	—	$	—		$	291,651
Rental income	8,688		53,524		—			62,212
FF&E reserve income	603		—		—			603
Total revenues	300,942		53,524		—			354,466
Hotel operating expenses	206,649		—		—			206,649
Depreciation and amortization	48,677		23,603		—			72,280
General and administrative	—		—		12,144			12,144
Acquisition related costs	276		—		—			276
Total expenses	255,602		23,603		12,144			291,349
Operating income (loss)	45,340		29,921		(12,144		)	63,117
Interest income	—		—		19			19
Interest expense	—		—		(35,188		)	(35,188		)
Gain on sale of real estate	—		—		—			—
Income (loss) before income taxes and equity in earnings of an investee	45,340		29,921		(47,313		)	27,948
Income tax expense	—		—		(518		)	(518		)
Equity in earnings of an investee	—		—		76			76
Net income (loss)	$	45,340	$	29,921	$	(47,755	)	$	27,506

	As of December 31, 2013
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,701,850	$	2,223,337	$	42,357	$	5,967,544

Note 10. Related Person Transactions

TA

TA is our former 100% owned subsidiary and our largest tenant, and we are TA’s largest shareholder. TA was created as a separate public company in 2007 as a result of its spin-off from us. As of March 31, 2014, we owned 3,420,000 common shares, representing approximately 9.1% of TA’s outstanding common shares. TA is the lessee of 36% of our real estate properties, at cost, as of March 31, 2014.  Mr. Barry Portnoy, one of our Managing Trustees, is a managing director of TA. Mr. Thomas O’Brien, an officer of RMR and a former officer of ours prior to the TA spin-off, is President and Chief Executive Officer and the other managing director of TA. Mr. Arthur Koumantzelis, who was one of our Independent Trustees prior to the TA spin-off, serves as an independent director of TA. RMR provides management services to both us and TA.

Financial information about TA may be found on the Securities and Exchange Commission’s, or the SEC, website by entering TA’s name at http://www.sec.gov/edgar/searchedgar/companysearch.html. Reference to TA’s financial information on this external website is presented to comply with applicable accounting regulations of the SEC.  Except for such financial information contained therein as is required to be included herein under such regulations, TA’s public filings and other information located in external websites are not incorporated by reference into these financial statements.  TA has not yet filed its Annual Report on Form 10-K for the year ended December 31, 2013.  TA has publicly disclosed that the delay is due to unanticipated delays encountered in connection with TA’s accounting for income taxes as well as general delays encountered in connection with the completion of the TA’s accounting processes and procedures.  There is no assurance as to when TA’s Annual Report on Form 10-K for the year ended December 31, 2013 will be completed and filed with the SEC.

TA has two leases with us, the TA No. 1 lease and the TA No. 2 lease, pursuant to which TA leases 185 travel centers from us. The TA No. 1 lease is for 145 travel centers that TA operates under the “TravelCenters of America” or “TA”

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

brand names. The TA No. 2 lease is for 40 travel centers that TA operates under the “Petro” brand name. The TA No. 1 lease expires on December 31, 2022.  The TA No. 2 lease expires on June 30, 2024, and may be extended by TA for up to two additional periods of 15 years each.

Both of these leases require TA to: (1) make payments to us of minimum rents; (2) pay us percentage rent equal to 3% of non-fuel revenues and 0.3% of fuel revenues above applicable base year revenues subject to certain limitations; (3) pay us at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on our leased sites; and (4) maintain the leased travel centers, including structural and non-structural components. In addition to minimum and percentage rent, TA is obligated to pay us ground rent of approximately $5,233 per year under the TA No. 1 lease. Previously deferred rent due from TA of $107,085 and $42,915 is due in December 2022 and June 2024, respectively; however, we have not recognized any of the deferred rent as rental income or as rents receivable due to uncertainties regarding future collection.

We recognized rental income of $55,283 and $53,524 for the three months ended March 31, 2014 and 2013, respectively, under our leases with TA. Rental income for the three months ended March 31, 2014 and 2013 includes ($88) and ($73), respectively, of adjustments necessary to record the scheduled rent increase on our TA No. 1 lease and the estimated future payment to us by TA for the cost of removing underground storage tanks on a straight line basis. As of March 31, 2014 and December 31, 2013, we had accruals for unpaid amounts of $38,177 and $37,034, respectively, owed to us by TA (excluding any deferred rents), which amounts are included in due from related persons on our condensed consolidated balance sheets. We had deferred percentage rent under our TA No. 1 lease of $874 and $610 for the three months ended March 31, 2014 and 2013, respectively. We have waived an estimated $495 of percentage rent under our TA No. 2 lease as of March 31, 2014 because we previously agreed to waive the first $2,500 of percentage rents under the TA No. 2 lease. We determine percentage rent due under our TA leases annually and recognize it at year end when all contingencies are met.

Under the TA No. 1 and No. 2 leases, TA may request that we fund approved amounts for renovations, improvements and equipment at leased travel centers in return for increases in TA’s minimum annual rent. We are not required to fund these improvements and TA is not required to sell them to us. For the three months ended March 31, 2014, we funded $6,063 for capital improvements purchased from TA under this lease provision; and, as a result, TA’s minimum annual rent payable to us increased by approximately $515.

On August 13, 2013, a travel center located in Roanoke, VA that we leased to TA under the TA No. 1 lease was taken by eminent domain proceedings brought by the VDOT in connection with certain highway construction. Our TA No. 1 lease provides that the annual rent payable by TA to us is reduced by 8.5% of the amount of the proceeds we receive from the taking or, at our option, the fair market value rent of the property on the commencement date of the TA No. 1 lease. In January 2014, we received proceeds from the VDOT of $6,178, which is a portion of the VDOT’s estimate of the value of the property, and as a result the annual rent payable by TA to us under the TA No. 1 lease was reduced by $525 effective January 6, 2014. We and TA intend to challenge the VDOT’s estimate of the property’s value. We have entered a lease agreement with the VDOT to lease this property through August 2014 for $40 per month, and under the terms of the TA No. 1 lease TA will be responsible to pay this ground lease rent. We entered into a sublease for this property with TA, and TA plans to continue operating it as a travel center through August 2014.

RMR

We have no employees. Personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management and administrative services to us: (i) a business management agreement, which relates to our business generally, and (ii) a property management agreement, which relates to the property level operations of the office building component of only one property in Baltimore, MD, which also includes a Royal Sonesta hotel.

One of our Managing Trustees, Mr. Barry Portnoy, is Chairman, majority owner and an employee of RMR. Our other Managing Trustee, Mr. Adam Portnoy, is the son of Mr. Barry Portnoy, and an owner, President, Chief Executive Officer and a director of RMR. Each of our executive officers is also an officer of RMR, including Mr. Ethan Bornstein,

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

who is the son-in-law of Mr. Barry Portnoy and the brother-in-law of Mr. Adam Portnoy. Certain of TA’s and Sonesta’s executive officers are officers of RMR. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR provides management services. Mr. Barry Portnoy serves as a managing director or managing trustee of a majority of those companies and Mr. Adam Portnoy serves as a managing trustee of a majority of those companies. In addition, officers of RMR serve as officers of those companies.

We incurred aggregate business management, property management and incentive fees of $9,659 and $9,893 for the three months ended March 31, 2014 and 2013. The fees for the three months ended March 31, 2014, include $851 of estimated 2014 incentive fees payable in common shares in 2015 based on our common share total return. These amounts are included in general and administrative expenses in our condensed consolidated financial statements. In accordance with the terms of our business management agreement, as amended in December 2013, we issued 32,927 of our common shares to RMR for the three months ended March 31, 2014 as payment for a portion of the base business management fee we recognized for such period. In March 2014, we also issued 102,536 of our common shares to RMR for the incentive fee for 2013 pursuant to the business management agreement.

Sonesta

The stockholders of Sonesta are Mr. Barry Portnoy and Mr. Adam Portnoy, who are our Managing Trustees, and they also serve as directors of Sonesta. Sonesta’s Chairman and Chief Executive Officer is an officer of RMR and formerly was our Director of Internal Audit, and other officers and employees of Sonesta are former employees of RMR. In addition, RMR also provides certain services to Sonesta.

In 2012, pursuant to a series of transactions, we purchased the entities that owned the Royal Sonesta Hotel Boston in Cambridge, MA, or the Cambridge Hotel, and leased the Royal Sonesta Hotel New Orleans in New Orleans, LA, or the New Orleans Hotel, for approximately $150,500. In connection with these transactions, we entered into hotel management agreements with Sonesta International Hotels Corporation, or Sonesta, that provide for Sonesta to manage for us each of the Cambridge Hotel and the New Orleans Hotel. Since that time, we have rebranded additional hotels we own to Sonesta brands and management, and as of March 31, 2014, Sonesta was managing 22 of our hotels pursuant to long term management agreements. We currently lease all hotels that we own and which are managed by Sonesta to one of our TRSs.

On June 28, 2013, we acquired the fee interest in the New Orleans Hotel from the third party owner from which we previously leased that hotel and, as a result, the lease with the third party terminated. Simultaneous with this acquisition, we and Sonesta amended and restated the prior management agreement we had with Sonesta for this hotel. The terms of the amended and restated management agreement are substantially the same as those contained in our other management agreements with Sonesta relating to full service hotels.

In April 2012, we entered into a pooling agreement with Sonesta that combined our management agreements with Sonesta for hotels that we owned for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and the calculation of minimum returns due to us. We previously referred to this agreement and combination of hotels and management agreements as our Sonesta No. 1 agreement. The management agreements for all of our hotels then managed by Sonesta, excluding, until June 28, 2013, the New Orleans Hotel, were included in the Sonesta No. 1 agreement. The amended and restated management agreement we entered with Sonesta for the New Orleans Hotel upon our acquiring the fee interest in that hotel was added to our pooling agreement with Sonesta. We now refer to the pooling agreement and combination of our Sonesta branded hotels and management agreements as our Sonesta agreement. See Note 11 for further information about our management agreements with Sonesta.

Pursuant to our management agreements with Sonesta, we incurred management, system and reservation fees payable to Sonesta of $2,625 and $2,073 for the three months ended March 31, 2014 and 2013, respectively. These amounts are included in hotel operating expenses in our condensed consolidated financial statements. In addition, we also incurred procurement and construction supervision fees payable to Sonesta in connection with capital expenditures at our hotels managed by Sonesta of $547 and $484 for the three months ended March 31, 2014 and 2013, respectively. These

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

amounts have been capitalized in our condensed consolidated financial statements. Under our hotel management agreements with Sonesta, routine property maintenance, which is expensed, is an operating expense of the hotels and improvements and periodic renovations, which are capitalized, are funded by us, except in the case of the New Orleans Hotel for capital expenditures incurred prior to June 28, 2013, which were borne in large part by the former lessor.  As of March 31, 2014 and December 31, 2013, we had accruals for unpaid amounts of $326 and $893, respectively, owed to us by Sonesta, which amounts are included in due from related persons in our condensed consolidated balance sheets.  As of March 31, 2014 and December 31, 2013 we had accrued amounts due to Sonesta for capital expenditure reimbursements of $4,121 and $6,625, respectively, which amounts are included in due to related persons in our condensed consolidated balance sheets.

On March 31, 2014, we agreed to acquire a hotel in Ft. Lauderdale, FL for a purchase price of $65,000, excluding closing costs. Upon acquisition of this hotel, we intend to rebrand the hotel as a Sonesta hotel.  This acquisition is subject to completion of diligence and other closing conditions and we can provide no assurance that we will acquire this property or that terms of the acquisition will not change. We expect to enter into a hotel management agreement with Sonesta for this property on terms consistent with our other applicable hotel management agreements with Sonesta and to add that management agreement to our Sonesta agreement.

On April 29, 2014, we sold our Sonesta ES Suites in Myrtle Beach, SC. In connection with this sale, the hotel management agreement with Sonesta for this property was terminated and removed from our Sonesta agreement.

AIC

We, RMR, TA and five other companies to which RMR provides management services each currently own approximately 12.5% of Affiliates Insurance Company, or AIC, an Indiana insurance company. All of our Trustees and most of the trustees and directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC.

We and the other shareholders of AIC have purchased property insurance providing $500,000 of coverage pursuant to an insurance program arranged by AIC and with respect to which AIC is a reinsurer of certain coverage amounts. This program currently expires in June 2014, and we may determine to renew our participation in this program at that time. As of March 31, 2014, we have invested $5,209 in AIC since its formation in 2008. Although we own less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC as all of our Trustees are also directors of AIC. Our investment in AIC had a carrying value of $5,835 and $5,913 as of March 31, 2014 and December 31, 2013, respectively, which amounts are included in other assets on our condensed consolidated balance sheet. We recognized a loss of $97 and income of $76 related to our investment in AIC for the three months ended March 31, 2014 and 2013, respectively.

On March 25, 2014, as a result of the removal, without cause, of all of the trustees of CommonWealth REIT, or CWH, CWH underwent a change in control, as defined in the shareholders agreement among us, the other shareholders of AIC and AIC. As a result of that change in control and in accordance with the terms of the shareholders agreement, we provided notice of exercise of our right to purchase shares of AIC CWH then owned.  We expect that we and the other non-CWH shareholders will purchase pro rata all of the AIC shares CWH owns.  As such, we expect to purchase 2,857 of those shares for $825, and that following these purchases, we and the other remaining six shareholders will then each own approximately 14.3% of AIC.

Note 11. Hotel Management Agreements and Leases and Renovation Funding

As of March 31, 2014, 288 of our hotels are leased to our TRSs and managed by independent hotel operating companies and three are leased to third parties.

Marriott No. 1 agreement.  Our management agreement with Marriott International Inc., or Marriott, for 53 hotels provides that we are paid a fixed annual minimum return of $67,612, to the extent that gross revenues of the hotels, after

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

payment of hotel operating expenses, are sufficient to do so.  We do not have any security deposits or guarantees for the 53 hotels included in our Marriott No. 1 agreement.  Accordingly, the returns we receive from these hotels managed by Marriott are limited to available hotel cash flows after payment of operating expenses. We realized returns of $15,036 during the three months ended March 31, 2014 under this agreement.  Marriott’s management and incentive fees are only earned after we receive our minimum returns.

We currently expect to fund $4,400 of capital improvements during 2014 at certain of the hotels included in our Marriott No. 1 agreement. We funded $769 of this amount during the three months ended March 31, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 10% of the amounts funded.

Marriott No. 234 agreement. During the three months ended March 31, 2014, the payments we received under our Marriott No. 234 agreement, which requires annual minimum returns to us of $105,793, were $2,635 less than the minimum amounts contractually required. Pursuant to our Marriott No. 234 agreement, Marriott provided us with a limited guarantee for shortfalls up to 90% of our minimum returns through 2019. During the three months ended March 31, 2014, Marriott made $2,548 of guaranty payments to us.  We realized returns of $23,806 during the three months ended March 31, 2014 under this agreement.  The available balance of this guaranty was $28,124 as of March 31, 2014. Also, during the period from March 31, 2014 to May 5, 2014, the payments we received for these hotels were $1,756 less than the contractual minimum returns due to us.

We currently expect to fund $7,050 of capital improvements during 2014 to complete renovations at certain of the hotels included in our Marriott No. 234 agreement. We did not make any of these renovation fundings during the three months ended March 31, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 9% of the amounts funded.

InterContinental agreement. During the three months ended March 31, 2014, the payments we received under our agreement with InterContinental Hotels Group, plc, or InterContinental, covering 91 hotels and requiring annual minimum returns to us of $139,498, were $2,446 less than the minimum amounts contractually required.  We applied the available security deposit to cover these shortfalls.

Under this agreement, InterContinental is required to maintain a minimum security deposit of $30,000 in 2014 and $37,000 thereafter. We were advised by InterContinental that it expects interim period shortfalls during 2014 and 2015 in the required minimum security deposit balance under the agreement. As a result, on January 6, 2014, we entered into a letter agreement with InterContinental under which the minimum security deposit balance required to be maintained during 2014 and 2015 will be reduced by two dollars for every dollar of additional security deposit InterContinental provides to us. Beginning January 1, 2016, any resulting reductions to the minimum security deposit amount will cease to be in effect and the minimum deposit balance required under the InterContinental agreement will revert to $37,000. Since January 1, 2014, InterContinental has provided $4,283 of additional security deposits, which reduced the minimum security deposit amount required to $21,434.  Also, during the period from March 31, 2014 to May 5, 2014, the minimum return payments we received under our InterContinental agreement were $2,446 more than the minimum amounts due to us.  We replenished the available security deposit by the additional amounts received.  The remaining balance of the security deposit was $32,046 as of May 5, 2014.

When we reduce the amounts of the security deposits we hold for this agreement or any other operating agreements for payment deficiencies, we record income equal to the amounts by which the deposit is reduced up to the minimum return or minimum rent due to us. However, reducing the security deposits does not result in additional cash flow to us of the deficiency amounts, but reducing amounts of security deposits may reduce the refunds due to the respective lessees or managers who have provided us with these deposits upon expiration of the respective lease or management agreement.  The security deposits are non-interest bearing and are not held in escrow. Under all of our hotel contracts that include a security deposit, any amounts of the security deposits which are applied to payment deficits may be replenished from future cash flows from the applicable hotel operations pursuant to the terms of the respective contracts.

We currently expect to fund $22,990 of capital improvements in 2014 to complete renovations at certain of the hotels included in our InterContinental agreement. We did not make any of these renovation fundings during the three months

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

ended March 31, 2014.  As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded.

Sonesta agreement. Our management agreement with Sonesta provides that we are paid a fixed minimum return equal to 8% of our invested capital, as defined in the management agreement ($60,104 as of March 31, 2014), to the extent that gross revenues of the hotels, after payment of hotel operating expenses and base management fees to Sonesta, are sufficient to do so.  We do not have any security deposits or guarantees for our hotels managed by Sonesta.  Accordingly, the returns we receive from hotels managed by Sonesta are limited to available hotel cash flows after payment of operating expenses. Sonesta’s incentive management fees, but not its other fees, are only earned after we receive our minimum returns, and we may cancel these management agreements if approximately 75% of our minimum returns are not paid for certain periods. We realized returns of $2,096 during the three months ended March 31, 2014 under this agreement.

In addition to recurring capital expenditures, we currently expect to fund approximately $108,200 in 2014 and $22,800 in 2015 for renovations and other improvements at certain of the hotels included in our Sonesta agreement. We funded $20,179 of these amounts during the three months ended March 31, 2014. The annual minimum returns due to us under the Sonesta agreement increase by 8% of the amounts funded in excess of threshold amounts, as defined therein. See Note 10 for further information regarding our relationship with Sonesta.

Wyndham agreement. We currently expect to fund approximately $27,500 of capital improvements in 2014 and $10,075 in 2015 to complete renovations at certain of the hotels included in our Wyndham Hotel Group, or Wyndham, agreement. We funded $15,286 of these amounts during the three months ended March 31, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded.

Other management agreement and lease matters.  As of May 5, 2014, all payments due to us from our managers and tenants under our other operating agreements were current.  Minimum return and minimum rent payments due to us under some of these other hotel management agreements and leases are supported by guarantees.  The guarantee provided by Wyndham with respect to 22 hotels managed by Wyndham is limited to $35,656 ($8,524 remaining at March 31, 2014), subject to an annual payment limit of $17,828 and expires on July 28, 2020.  The guarantee provided by Hyatt Hotels Corporation, or Hyatt, with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($13,066 remaining at March 31, 2014). The guarantee provided by Carlson Hotels Worldwide, or Carlson, with respect to the 11 hotels managed by Carlson is limited to $40,000 ($20,078 remaining at March 31, 2014).  The guarantee provided by Wyndham with respect to the lease with Wyndham Vacation Resorts, Inc., or Wyndham Vacation, for part of one hotel is unlimited. The guarantee provided by Marriott with respect to the one hotel leased by Marriott (Marriott No. 5 agreement) is unlimited.

Guarantees and security deposits generally.  Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $28,095 and $33,007 less than the minimum returns due to us for the three months ended March 31, 2014 and 2013, respectively. When managers of these hotels are required to fund the shortfalls under the terms of our operating agreements or their guarantees, we reflect such fundings (including security deposit applications) in our condensed consolidated statements of income and comprehensive income as a reduction of hotel operating expenses. The reduction to hotel operating expenses was $10,876 and $14,908 in the three months ended March 31, 2014 and 2013, respectively. We had shortfalls in the minimum returns at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our operating agreements of $17,219 and $18,099 during the three months ended March 31, 2014 and 2013, respectively, which represents the unguaranteed portion of our minimum returns from Marriott and Sonesta.  Certain of our guarantees and our security deposits under the InterContinental and Marriott No. 234 agreements may be replenished by future cash flows from the hotels in excess of our minimum returns.

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Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Note 12.  Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at March 31, 2014, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

			Fair Value at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Investment securities (1)	$	27,873	$	27,873	$	—	$	—
Property held for sale (2)	$	4,074	$	—	$	—	$	4,074

(1)Our investment securities, consisting of our 3,420,000 shares of TA, which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs).  Our historical cost basis for these securities is $17,407.  The unrealized gain for these securities as of March 31, 2014 is included in cumulative other comprehensive income in our condensed consolidated balance sheets.

(2)Our property held for sale consists of one Sonesta ES Suites hotel in Myrtle Beach, SC we sold on April 29, 2014. We estimated the fair value less costs to sell this hotel using standard industry valuation techniques and estimates of value developed by hotel brokerage firms (Level 3 inputs).

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, unsecured term loan, senior notes and security deposits. At March 31, 2014 and December 31, 2013, the fair values of these additional financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows:

	March 31, 2014					December 31, 2013
	Carrying			Fair		Carrying			Fair
	Amount			Value		Amount			Value
Senior Notes, due 2014 at 7.875%	$	—		$	—	$	300,000		$	304,035
Senior Notes, due 2015 at 5.125%	280,000			283,965		280,000			283,150
Senior Notes, due 2016 at 6.3%	275,000			296,049		275,000			297,443
Senior Notes, due 2017 at 5.625%	300,000			331,071		300,000			327,681
Senior Notes, due 2018 at 6.7%	350,000			397,968		350,000			399,560
Senior Notes, due 2022 at 5%	500,000			521,475		500,000			524,810
Senior Notes, due 2023 at 4.5%	300,000			298,932		300,000			289,950
Senior Notes, due 2024 at 4.65%	350,000			356,101		—			—
Convertible Senior Notes, due 2027 at 3.8%	8,478			8,860		8,478			8,983
Unamortized discounts	(9,849		)	—		(11,120		)	—
Total financial liabilities	$	2,353,629		$	2,494,421	$	2,302,358		$	2,435,612

At March 31, 2014, we estimated the fair values of our unsecured senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 1 inputs).  We estimated the fair value of our convertible unsecured senior notes using discounted cash flow analyses and currently prevailing market interest rates (Level 3 inputs) because no market quotes were available at March 31, 2014 and December 31, 2013.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and with our 2013 Annual Report.  We are a REIT organized under Maryland law.

Overview (dollar amounts in thousands, except per share amounts)

Hotel operations. During the quarter ended March 31, 2014, the U.S. hotel industry generally realized improvements in average daily revenue, or ADR, occupancy and revenue per available room, or RevPAR, when compared to the same period in 2013.  We believe certain of our hotels have benefited from recent renovations and, as a result, have produced year over year gains in RevPAR in excess of the hotel industry generally.  However, certain of our hotels were negatively impacted by the disruption and displacement caused by our renovation activities at those hotels during the first quarter of 2014. We expect the majority of our hotel renovation activities to be completed by the end of 2014.

For the quarter ended March 31, 2014 compared to the same period in 2013 for our 289 comparable hotels: ADR increased 3.3% to $110.11; occupancy increased 4.4 percentage points to 70.7%; and RevPAR increased 10.1% to $77.85.

During the quarter ended March 31, 2014, we had 18 comparable hotels under renovation for all or part of the quarter.  For the quarter ended March 31, 2014 compared to the same period in 2013 for our 18 hotels under renovation: ADR increased 6.3% to $113.44; occupancy decreased 6.6 percentage points to 59.8%; and RevPAR decreased 4.2% to $67.84.

For the quarter ended March 31, 2014 compared to the same period in 2013 for our 271 comparable hotels not under renovation: ADR increased 3.0% to $109.82; occupancy increased 5.5 percentage points to 71.8%; and RevPAR increased 11.6% to $78.85.

Our hotel tenants and managers.  Many of our hotel operating agreements contain security features, such as guarantees and security deposits, which are intended to protect minimum returns and rents due to us in accordance with our operating agreements regardless of hotel performance. However, the effectiveness of various security features to provide us uninterrupted receipt of minimum returns and rents is not assured, particularly if the profitability of our hotels takes an extended period to recover from the severe declines experienced during the recent recession, if economic conditions generally decline, or if our hotel renovation activities described above do not result in improved operating results at our hotels. Also, certain of the guarantees that we hold are limited in amount and duration and do not provide for payment of the entire amount of the applicable minimum returns. If our tenants, managers or guarantors do not earn or pay the minimum returns and rents due to us, our cash flows will decline and we may be unable to pay distributions to our shareholders, repay our debt or fund our debt service obligations.

Marriott No. 1 agreement.  Additional details of this agreement are set forth in Note 11 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

Our management agreement with Marriott for 53 hotels provides that we are paid a fixed annual minimum return of $67,612, to the extent that gross revenues of the hotels, after payment of hotel operating expenses, are sufficient to do so.  We do not have any security deposits or guarantees for the 53 hotels included in our Marriott No. 1 agreement.  Accordingly, the returns we receive from these hotels managed by Marriott are limited to available hotel cash flows after payment of operating expenses. We realized returns of $15,036 during the three months ended March 31, 2014 under this agreement.  Marriott’s management and incentive fees are only earned after we receive our minimum returns.

Marriott No. 234 agreement.  Additional details of this agreement are set forth in Note 11 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

During the three months ended March 31, 2014, the payments we received under our Marriott No. 234 agreement, which requires annual minimum returns to us of $105,793, were $2,635 less than the minimum amounts contractually required. Pursuant to our Marriott No. 234 agreement, Marriott provided us with a limited guarantee for shortfalls up to 90% of our minimum returns through 2019. During the three months ended March 31, 2014, Marriott made $2,548 of guaranty payments to us.  We realized returns of $23,806 during the three months ended March 31, 2014 under this agreement.  The available balance of this guaranty was $28,124 as of March 31, 2014. Also, during the period from March 31, 2014 to May 5, 2014, the payments we received for these hotels were $1,756 less than the contractual minimum returns due to us.

InterContinental agreement.  Additional details of this agreement are set forth in Note 11 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

During the three months ended March 31, 2014, the payments we received under our agreement with InterContinental, covering 91 hotels and requiring annual minimum returns to us of $139,498, were $2,446 less than the minimum amounts contractually required.  We applied the available security deposit to cover these shortfalls.

Under this agreement, InterContinental is required to maintain a minimum security deposit of $30,000 in 2014 and $37,000 thereafter. We were advised by InterContinental that it expects interim period shortfalls during 2014 and 2015 in the required minimum security deposit balance under the agreement. As a result, on January 6, 2014, we entered into a letter agreement with InterContinental under which the minimum security deposit balance required to be maintained during 2014 and 2015 will be reduced by two dollars for every dollar of additional security deposit InterContinental provides to us. Beginning January 1, 2016, any resulting reductions to the minimum security deposit amount will cease to be in effect and the minimum deposit balance required under the InterContinental agreement will revert to $37,000. Since January 1, 2014, InterContinental has provided $4,283 of additional security deposits, which reduced the minimum security deposit amount required to $21,434.  Also, during the period from March 31, 2014 to May 5, 2014, the minimum return payments we received under our InterContinental agreement were $2,446 more than the minimum amounts due to us.  We replenished the available security deposit by the additional amounts received.  The remaining balance of the security deposit was $32,046 as of May 5, 2014.

Sonesta agreement. Additional details of this agreement are set forth in Note 11 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

Our management agreement with Sonesta provides that we are paid a fixed minimum annual return equal to 8% of our invested capital, as defined in the management agreement ($60,104 as of March 31, 2014), to the extent that gross revenues of the hotels, after payment of hotel operating expenses and base management fees to Sonesta, are sufficient to do so.  We do not have any security deposits or guarantees for our hotels managed by Sonesta.  Accordingly, the returns we receive from hotels managed by Sonesta are limited to available hotel cash flows after payment of operating expenses. Sonesta’s incentive management fees, but not its other fees, are only earned after we receive our minimum returns, and we may cancel these management agreements if approximately 75% of our minimum returns are not paid for certain periods. We realized returns of $2,096 during the three months ended March 31, 2014 under this agreement.

Other management agreement and lease matters. As of May 5, 2014, all payments due to us from our managers and tenants under our other operating and lease agreements were current.  Additional details of our guarantees from Hyatt, Carlson and Wyndham and our other agreements with Marriott, Morgans and TA are set forth in Notes 10 and 11 to our condensed consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

Management Agreements and Leases

At March 31, 2014, we owned 291 hotels operated under nine operating agreements; 288 of these hotels are leased by us to our wholly owned TRSs and managed by hotel operating companies and three are leased to hotel operating

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

companies.  At March 31, 2014, our 184 owned travel centers and one travel center we lease through August 31, 2014 are leased to TA under two agreements. Our condensed consolidated statements of income and comprehensive income include operating revenues and expenses of our managed hotels and rental income from our third party leased hotels and travel centers.  Additional information regarding the terms of our management agreements and leases is included in the table and notes thereto on pages 27 through 30.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (amounts in thousands, except per share amounts)

Three Months Ended March 31, 2014 Compared to the Three Months Ended March 31, 2013

	For the Three Months Ended March 31,
							Increase			% Increase
	2014			2013			(Decrease)			(Decrease)
Revenues:
Hotel operating revenues	$	329,936		$	291,651		$	38,285		13.1%
Rental income:
Minimum rents - hotels	8,103			8,688			(585		)	(6.7)%
Minimum rents - travel centers	55,283			53,524			1,759			3.3%
Total rental income	63,386			62,212			1,174			1.9%
FF&E reserve income	928			603			325			53.9%
Expenses:
Hotel operating expenses	230,617			206,649			23,968			11.6%
Depreciation and amortization - hotels	53,016			48,677			4,339			8.9%
Depreciation and amortization - travel centers	25,271			23,603			1,668			7.1%
Total depreciation and amortization	78,287			72,280			6,007			8.3%
General and administrative	11,465			12,144			(679		)	(5.6)%
Acquisition related costs	61			276			(215		)	(77.9)%
Operating income	73,820			63,117			10,703			17.0%
Interest income	25			19			6			31.6%
Interest expense	(35,368		)	(35,188		)	(180		)	(0.5)%
Loss on extinguishment of debt	(214		)	—			(214		)	—
Income before income taxes and equity earnings (losses) of an investee	38,263			27,948			10,315			36.9%
Income tax benefit (expense)	(616		)	(518		)	(98		)	(18.9)%
Equity in earnings (losses) of an investee	(97		)	76			(173		)	(227.6)%
Net income	37,550			27,506			10,044			36.5%
Preferred distributions	(5,166		)	(8,097		)	2,931			(36.2)%
Net income available for common shareholders	32,384			19,409			12,975			66.9%
Weighted average shares outstanding	149,636			125,426			24,210			19.3%
Net income available for common shareholders per common share	$	0.22		$	0.15		$	0.07		46.7%

References to changes in the income and expense categories below relate to the comparison of results for the three month period ended March 31, 2014, compared to the three month period ended March 31, 2013.

The increase in hotel operating revenues is a result of increased revenues at certain of our managed hotels due to increases in ADR and higher occupancies ($34,854) and the effects of our hotel acquisitions since January 1, 2013 ($6,906).  These increases were partially offset by decreased revenues at certain of our managed hotels undergoing renovations during the 2014 period due to lower occupancies ($3,475).  Additional operating statistics of our hotels are included in the table on page 30.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The decrease in rental income - hotels is a result of the conversion of 53 hotels from leased to managed in January 2013 ($676) partially offset by contractual rent increases under certain of our hotel leases ($25) and increases in the minimum rents due to us as we funded improvements at certain of our leased hotels since January 1, 2013 ($66). Rental income for the 2014 and 2013 periods includes $130 and $135 of adjustments to record rent on a straight line basis, respectively.

The increase in rental income - travel centers is primarily a result of increases in the minimum rents due to us from TA for improvements we purchased at certain of our travel centers since January 1, 2013. Rental income for our travel centers for the 2014 and 2013 periods includes ($88) and ($73) of adjustments to record rent on a straight line basis, respectively.

FF&E reserve income represents amounts paid by certain of our hotel tenants into restricted accounts owned by us, the purpose of which is to accumulate funds for future capital expenditures. The terms of our hotel leases require these amounts to be calculated as a percentage of total sales at our hotels. The increase in FF&E reserve income is primarily the result of increased FF&E contributions by certain of our tenants ($325).  We do not report the amounts, if any, which are escrowed as FF&E reserves for our managed hotels as FF&E reserve income.

The increase in hotel operating expenses was primarily caused by increased expenses at certain of our managed hotels resulting primarily from higher occupancies ($16,504), the effect of our acquisitions since January 1, 2013 ($6,906) and the reduction in the amount of minimum return shortfalls funded by our managers ($4,032), partially offset by operating expense decreases at certain properties undergoing renovations during the 2014 period due to lower occupancies ($3,474).  Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $28,095 and $33,007 less than the minimum returns due to us in the three months ended March 31, 2014 and 2013, respectively.  When the managers of these hotels fund the shortfalls under the terms of our operating agreements or their guarantees, we reflect such fundings (including security deposit applications) in our condensed consolidated statements of income and comprehensive income as a reduction of hotel operating expenses. The reduction to operating expenses was $10,876 and $14,908 in the three months ended March 31, 2014 and 2013, respectively.  We had shortfalls at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our operating agreements of $17,219 and $18,099 during the three months ended March 31, 2014 and 2013, respectively, which represents the unguaranteed portion of our minimum returns from Marriott and Sonesta.

The increase in depreciation and amortization - hotels is primarily due to the depreciation and amortization of assets acquired with funds from our FF&E reserves or directly funded by us since January 1, 2013 ($6,377) and the effect of our hotel acquisitions since January 1, 2013 ($1,059), partially offset by certain of our depreciable assets becoming fully depreciated since January 1, 2013 ($3,097).

The increase in depreciation and amortization - travel centers is due to the depreciation and amortization of improvements made to our travel centers since January 1, 2013.

The decrease in general and administrative costs is primarily due to a decrease in business management fees resulting from our December 2013 amendment to our business management agreement with RMR and lower professional services costs, partially offset by higher state franchise taxes.

Acquisition related costs represent legal and other costs incurred in connection with our hotel acquisition activities.

The increase in operating income is primarily due to the revenue and expense changes discussed above during the 2014 period compared to the 2013 period.

The increase in interest income is due to higher average cash balances during the 2014 period.

Interest expense is essentially unchanged with higher average borrowings being offset by a lower weighted average interest rate in the 2014 period.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We recorded a $214 loss on early extinguishment of debt in the first quarter of 2014 in connection with amending the terms of our revolving credit facility and term loan.

We recognized higher state income taxes during the 2014 period primarily due to increased taxable income in certain jurisdictions, partially offset by decreased federal taxes related to our TRSs in the 2014 period.

Equity in earnings (losses) of an investee represents our proportionate share of earnings (losses) of AIC.

The decrease in preferred distributions is the result of our redemption of our Series C cumulative redeemable preferred shares in July 2013.

The increases in net income, net income available for common shareholders and net income available for common shareholders per common share in the three months ended March 31, 2014, compared to the prior year period, are primarily a result of the changes discussed above.  The percentage increase in net income available for common shareholders per share is lower primarily as a result of our issuance of common shares pursuant to public offerings in March 2013 and November 2013.

Liquidity and Capital Resources (dollar amounts in thousands, except per share amounts)

Our Managers and Tenants

As of March 31, 2014, 289 of our hotels are included in one of seven portfolio agreements and two hotels are not included in a portfolio and are leased to hotel operating companies. Our 184 owned travel centers and one travel center we lease through August 31, 2014 are leased under two portfolio agreements. All costs of operating and maintaining our properties are paid by the hotel managers as agents for us or by our tenants for their own account. Our hotel managers and tenants derive their funding for property operating expenses and for returns and rents due to us generally from property operating revenues and, to the extent that these parties themselves fund our minimum returns and minimum rents, from their separate resources. Our hotel managers and tenants include Marriott, InterContinental, Sonesta, Wyndham, Hyatt, Carlson and Morgans Hotel Group, or Morgans. Our travel centers are leased to TA.

We define coverage for each of our hotel management agreements or leases as total property level revenues minus FF&E reserve escrows, if any, and all property level expenses which are not subordinated to the minimum returns and minimum rents due to us divided by the minimum returns or minimum rent payments due to us. More detail regarding coverage, guarantees and other features of our hotel operating agreements is presented in the tables and related notes on pages 27 through 30. For the twelve months ended March 31, 2014, six of our nine hotel operating agreements generated coverage of less than 1.0x (with a range among those six hotel operating agreements of 0.35x to 0.91x); our Marriott No. 1, InterContinental and Morgans agreements generated coverage of 1.07x, 1.04x and 1.00x for the twelve months ended March 31, 2014, respectively.

We define coverage for our travel center leases as property level revenues minus all property level expenses divided by the minimum rent payments due to us.  Coverage data for the twelve months ended March 31, 2014 is currently not available from our tenant TA. Because a large percentage of TA’s business is conducted at properties leased from us, property level rent coverage may not be an appropriate way to evaluate TA’s ability to pay rents due to us. We believe property level rent coverage is nonetheless one useful indicator of the performance and value of our properties as we believe it is what an operator interested to acquire these properties or the leaseholds might use to evaluate the contribution of these properties to their earnings before corporate level expenses.

Three hundred nine (309) of our properties, representing 61% of our total historical investments at cost as of March 31, 2014, are operated under seven management arrangements or leases which are subject to full or limited guarantees. These guarantees may provide us with continued payments if the property level cash flows fail to equal or exceed guaranteed amounts due to us. Our minimum returns and minimum rents for 91 hotels, representing 18% of our total historical investments at cost as of March 31, 2014, are secured by a security deposit which we control. Some of our

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

managers and tenants, or their affiliates, may also supplement cash flow from our properties in order to make payments to us and preserve their rights to continue operating our properties even if they are not required to do so by guarantees. Guarantee payments, security deposit applications or supplemental payments to us, if any, made under any of our management agreements or leases do not subject us to repayment obligations, but, under some of our agreements, the manager or tenant may recover these guarantee or supplemental payments and the security deposits may be replenished from the future cash flows from our properties after our future minimum returns and minimum rents are paid.

Certain of our agreements are generating cash flows that are less than the minimum amounts contractually required and we have been utilizing the applicable security features in our agreements to cover some of these shortfalls. However, several of the guarantees and all the security deposits we hold are for limited amounts and are for limited durations and may be exhausted or expire, especially if the profitability of our hotels does not fully recover from the recent recession in a reasonable time period or if our hotel renovation and rebranding activities do not result in improved operating results at these hotels. Accordingly, the effectiveness of our various security features to provide uninterrupted payments to us is not assured. If any of our hotel managers, tenants or guarantors default in their payment obligations to us, our cash flows will decline and we may become unable to continue to pay distributions to our shareholders.

Our Operating Liquidity and Capital Resources

Our principal source of funds for current expenses and distributions to shareholders are minimum returns from our managed hotels and minimum rents from our leased hotels and travel centers. We receive minimum returns and minimum rents from our managers and tenants monthly. We receive additional returns, percentage returns and rents and our share of the operating profits of our managed hotels after payment of management fees and other deductions, if any, either monthly or quarterly. This flow of funds has historically been sufficient for us to pay our operating expenses, interest expense on our debt and distributions to shareholders declared by our Board of Trustees. We believe that our operating cash flow will be sufficient to meet our operating expenses, interest expense and distribution payments declared by our Board of Trustees for the next twelve months and the foreseeable future thereafter. However, because of the impact of the weak U.S. economy on the hotel and travel center industries, our managers and tenants may become unable to pay minimum returns and minimum rents to us when due, in which case our cash flow and net income will decline and we may need to reduce the amount of, or even eliminate, our distributions to common shareholders.

Changes in our cash flows in the three months ended March 31, 2014 compared to the same period in 2013 were as follows: (1) cash flow provided by operating activities increased from $48,203 in 2013 to $79,070 in 2014; (2) cash used in investing activities decreased from $67,475 in 2013 to $31,198 in 2014; and (3) cash flows from financing activities changed from $17,266 of cash provided by investing activities in 2013 to a ($36,542) use of cash from investing activities in 2014.

The increase in cash provided by operating activities for the three months ended March 31, 2014 as compared to the prior year period is due primarily to an increase in the minimum returns and rents paid to us during 2014 due to our funding of improvements to our hotels and travel centers, our 2013 hotel acquisitions, a decrease in the application of security deposits to fund payment shortfalls due to the improved operating performance of certain of our hotels and changes in working capital. The decrease in cash used in investing activities for the three months ended March 31, 2014 as compared to the prior year period is primarily due to lower FF&E reserve fundings and real estate improvements in 2014 compared to 2013. The decrease in cash provided by financing activities for the three months ended March 31, 2014 as compared to the prior year is primarily due to lower proceeds from the issuance of common shares and senior notes and increased debt repayments in the 2014 period compared to 2013 and increased distributions to common shareholders in 2014.

We maintain our status as a REIT under the Internal Revenue Code by meeting certain requirements. As a REIT, we do not expect to pay federal income taxes on the majority of our income; however, the income realized by our TRSs in excess of the rent they pay to us is subject to U.S. federal income tax at corporate tax rates. In addition, the income we receive from our hotels in Canada and Puerto Rico is subject to taxes in those jurisdictions and we are subject to taxes in certain states where we have properties, despite our REIT status.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Investment and Financing Liquidity and Capital Resources

Various percentages of total sales at some of our hotels are escrowed as FF&E reserves to fund future capital improvements. During the three months ended March 31, 2014, our hotel managers and hotel tenants deposited $9,745 to these accounts and $14,524 was spent from the FF&E reserve escrow accounts to renovate and refurbish our hotels.  As of March 31, 2014, there was $26,863 on deposit in these escrow accounts, which was held directly by us and is reflected on our condensed consolidated balance sheets as restricted cash.

Our hotel operating agreements generally provide that, if necessary, we may provide our managers and tenants with funding for capital improvements to our hotels in excess of amounts otherwise available in escrowed FF&E reserves or when no FF&E reserves are available. To the extent we make such additional fundings, our annual minimum returns or minimum rents generally increase by a percentage of the amount we fund. During the three months ended March 31, 2014, we funded $36,234 for capital improvements in excess of FF&E reserve fundings available from hotel operations to our hotels as follows:

·During the three months ended March 31, 2014, we funded $769 for improvements to hotels included in our Marriott No. 1 agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately $3,600 for capital improvements under this agreement during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. As we fund these improvements, the minimum return payable to us increases.

·Pursuant to the June 2011 and May 2012 agreements we entered with Marriott for management of 68 hotels (our Marriott No. 234 agreement), we expect to provide an aggregate of $129,000 of funding for renovations of certain of these hotels and for other improvements. As of March 31, 2014, $121,950 has been funded. We made no fundings during the three months ended March 31, 2014. We currently expect to fund the remaining $7,050 during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. As we fund these improvements, the minimum return payable to us increases.

·Pursuant to the July 2011 agreement we entered with InterContinental for management of 91 hotels, we expect to provide an aggregate of $290,000 of funding for renovations of certain of these hotels and other improvements. As of March 31, 2014, $267,010 has been funded. We made no fundings during the three months ended March 31, 2014. We currently expect to fund the remaining $22,990 during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. As we fund these improvements, the minimum return payable to us increases.

·Our Sonesta management agreements do not require FF&E escrow deposits. Under our Sonesta agreement, we are required to fund capital expenditures made at our hotels. In addition to recurring capital expenditures, we currently expect to provide an aggregate of $247,000 of funding for rebranding, renovations and other improvements to the 22 hotels included in our Sonesta agreement through 2015. As of March 31, 2014, $136,000 has been funded. We funded $20,179 during the three months ended March 31, 2014 using existing cash balances and borrowings under our revolving credit facility. We currently expect to fund approximately $88,000 during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. We currently expect to fund the remainder of this commitment in 2015. As we fund these improvements, the minimum returns payable to us increase to the extent amounts funded exceed threshold amounts, as defined in our Sonesta agreement.

·Pursuant to our agreement with Wyndham for the management of 22 hotels, we expect to provide an aggregate of $103,000 for refurbishment and rebranding of these hotels. As of March 31, 2014, $80,700 has been funded. We funded $15,286 during the three months ended March 31, 2014 using existing cash balances and borrowings under our revolving credit facility. We currently expect to fund approximately $12,200 during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. We currently expect to fund the remainder of this commitment in 2015. As we fund these improvements, the minimum return payable to us increases.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our travel center leases with TA do not require FF&E escrow deposits. However, TA is required to maintain the leased travel centers, including structural and non-structural components. Under both of our leases with TA, TA may request that we purchase qualifying capital improvements to the leased facilities in return for minimum rent increases. However, TA is not obligated to request and we are not obligated to purchase any such improvements. We funded $6,063 for purchases of capital improvements under these lease provisions during the three months ended March 31, 2014, resulting in TA’s minimum rent payable to us increasing by $515 pursuant to the leases.

On January 15, 2014, we paid a $0.4453 per share distribution, or $5,166, to our Series D preferred shareholders.  On March 3, 2014, we declared a $0.4453 per share distribution, or $5,166, to our Series D preferred shareholders of record on March 31, 2014. We paid this amount on April 15, 2014. We funded these distributions using cash on hand and borrowings under our revolving credit facility.

On February 20, 2014, we paid a $0.48 per share distribution, or $71,811, to our common shareholders.  We funded this distribution using cash on hand and borrowings under our revolving credit facility.  On April 8, 2014, we declared a $0.49 per share distribution, or $73,373, to our common shareholders of record on April 25, 2014. We expect to pay this amount on or about May 21, 2014 using cash on hand and borrowings under our revolving credit facility.

On February 15, 2014, we redeemed at par all of our outstanding 7.875% senior notes due 2014 for $300,000 plus accrued and unpaid interest (an aggregate of $311,813). We funded this redemption with cash on hand and borrowings under our revolving credit facility.

On March 12, 2014, we issued $350,000 of 4.65% unsecured senior notes due 2024 in a public offering.  Net proceeds from this offering of $345,999 after underwriting discounts and other offering expenses were used to repay amounts outstanding under our revolving credit facility including amounts drawn to fund the redemption of our 7.875% Senior Notes due 2014 described above.

On March 31, 2014, we entered an agreement to acquire a 240 room full service hotel located in Ft. Lauderdale, FL for a contract purchase price of $65,000, excluding closing costs.  We currently expect to acquire this hotel during the second quarter of 2014 using cash on hand and borrowings under our revolving credit facility.  This acquisition is subject to closing conditions typical of commercial real estate transactions, and accordingly, we can provide no assurance that we will acquire this property or that this acquisition will not be delayed or that the terms of the acquisition will not change.

On April 29, 2014, we sold our Sonesta ES Suites branded hotel in Myrtle Beach, SC for $4,500, excluding closing costs.  We expect to use the proceeds from this sale for general business purposes.

In order to fund capital improvements to our properties and acquisitions and to meet cash needs that may result from timing differences between our receipt of returns and rents and our desire or need to pay operating expenses, debt service and distributions, we maintain a $750,000 revolving credit facility. On January 8, 2014, we amended the agreements governing our unsecured revolving credit facility and unsecured term loan with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of other lenders. As a result of the amendment, the stated maturity date of the revolving credit facility was extended from September 7, 2015 to July 15, 2018 and the stated maturity date of the term loan was extended from March 13, 2017 to April 15, 2019. Subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date of the revolving credit facility by an additional one year to July 15, 2019. The amended credit agreement provides that we can borrow, repay and reborrow funds available under the revolving credit facility until maturity, and no principal repayment is due until maturity. Our term loan is prepayable without penalty at any time. The $750,000 maximum amount of our revolving credit facility and the $400,000 amount of the term loan remained unchanged by the amendment. The amended credit agreement includes a feature under which maximum borrowings under the revolving credit facility and term loan may be increased to up to $2,300,000 on a combined basis in certain circumstances.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition, as a result of the amendment, the interest rate paid on borrowings under the revolving credit facility was reduced from LIBOR plus a premium of 130 basis points to LIBOR plus a premium of 110 basis points, and the facility fee was reduced from 30 basis points to 20 basis points per annum on the total amount of lending commitments under the revolving credit facility. Also as a result of the amendment, the interest rate paid on borrowings under the term loan was reduced from LIBOR plus a premium of 145 basis points to LIBOR plus a premium of 120 basis points. Both the interest rate premiums and the facility fee are subject to adjustment based upon changes to our credit ratings. The weighted average interest rate for borrowings under our revolving credit facility was 1.25% and 1.51% for the three months ended March 31, 2014 and 2013, respectively. As of both March 31, 2014 and May 5, 2014, we had no amounts outstanding and $750,000 available under our revolving credit facility and $400,000 outstanding under our term loan. As of March 31, 2014, the interest rate for the amount outstanding under our term loan was 1.35%. The weighted average interest rate for the amount outstanding under our term loan was 1.38% and 1.66% for the three months ended March 31, 2014 and 2013, respectively.

Our borrowings under the revolving credit facility and term loan continue to be unsecured. Prior to the effectiveness of the amendment, certain of our subsidiaries had guaranteed our obligations under the revolving credit facility and term loan. As a result of the amendment, none of those subsidiary guarantees remain in effect. The amended credit agreement provides that, with certain exceptions, a subsidiary of ours is required to guaranty our obligations under the revolving credit facility and term loan only if that subsidiary has separately incurred debt (other than nonrecourse debt), within the meaning specified in the amended credit agreement, or provided a guarantee of debt incurred by us or any of our other subsidiaries.

Our term debt maturities (other than our revolving credit facility and term loan) as of March 31, 2014 were as follows: $280,000 in 2015, $275,000 in 2016, $300,000 in 2017, $350,000 in 2018, $500,000 in 2022, $300,000 in 2023, $350,000 in 2024 and $8,478 in 2027. Our $8,478 of 3.8% convertible senior notes due 2027 are convertible into our common shares, if certain conditions are met (including certain changes in control), into cash equal to the principal amount of the notes and, to the extent the market price of our common shares exceeds the exchange price of $50.50 per share, subject to adjustment, either cash or our common shares at our option with a value based on such excess amount. Holders of our convertible senior notes may require us to repurchase all or a portion of the notes on March 15, 2017 and March 15, 2022, or upon the occurrence of certain change in control events. None of our other debt obligations require principal or sinking fund payments prior to their maturity dates.

We expect to use existing cash balances, the cash flow from our operations, borrowings under our revolving credit facility, net proceeds from any property sales and net proceeds of offerings of equity or debt securities to fund future debt maturities, property acquisitions and improvements and other general business purposes. Although we have not historically done so, we may also assume mortgage debt on properties we may acquire or obtain mortgage financing on our existing properties.

When significant amounts are outstanding for an extended period of time under our revolving credit facility and as the maturity dates of our revolving credit facility and term debts approach, we currently expect to explore alternatives for the repayment of amounts due or renewal or extension of the maturity dates. Such alternatives in the short term and long term may include incurring additional debt and issuing new equity securities. We have an effective shelf registration statement that allows us to issue public securities on an expedited basis, but it does not assure that there will be buyers for such securities.

While we believe we will have access to various types of financings, including debt or equity, to fund our future acquisitions and to pay our debts and other obligations, there can be no assurance that we will be able to complete any debt or equity offerings or that our cost of any future public or private financings will be reasonable.

Off Balance Sheet Arrangements

As of March 31, 2014, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Debt Covenants

Our debt obligations at March 31, 2014, consist of our $400,000 unsecured term loan and $2,363,478 of publicly issued unsecured term debt and convertible notes. Our publicly issued unsecured term debt and convertible notes are governed by an indenture. This indenture and related supplements and our revolving credit facility and term loan agreement contain a number of financial ratio covenants which generally restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts, require us to maintain a minimum net worth, restrict our ability to make distributions under certain circumstances and require us to maintain various financial ratios. Our revolving credit facility and term loan agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes RMR ceasing to act as our business manager.  As of March 31, 2014, we believe we were in compliance with all of the covenants under our indenture and its supplements and our revolving credit facility and term loan agreement.

Neither our indenture and its supplements nor our revolving credit facility and term loan agreement contain provisions for acceleration which could be triggered by our debt ratings. However, under our revolving credit facility and term loan agreement, our highest senior unsecured debt rating is used to determine the fees and interest rates we pay.  Accordingly, if that debt rating is downgraded by certain credit rating agencies, our interest expense and related costs under our revolving credit facility and term loan would increase.

Our public debt indenture and its supplements contain cross default provisions to any other debts of $20,000 or more. Similarly, our revolving credit facility and term loan agreement has cross default provisions to other indebtedness that is recourse of $25,000 or more and indebtedness that is non-recourse of $75,000 or more.

Management Agreements, Leases and Operating Statistics (dollar amounts in thousands)

As of March 31, 2014, 289 of our hotels are included in one of seven portfolio agreements and two hotels are not included in a portfolio and are leased to hotel operating companies. Our 184 owned travel centers and one travel center we lease through August 31, 2014 are leased under two portfolio agreements. Our hotels are managed by or leased to separate affiliates of hotel operating companies including InterContinental, Marriott, Hyatt, Carlson, Sonesta, Wyndham and Morgans under nine agreements. Our 185 travel centers are leased to and operated by TA under two agreements.

The table and related notes on pages 27 to 30 summarize significant terms of our leases and management agreements as of March 31, 2014. The tables on pages 27 and 30 also include statistics reported to us or derived from information reported to us by our managers and tenants. These statistics include coverage of our minimum returns or minimum rents and occupancy, ADR and RevPAR for our hotel properties. We consider these statistics and the management agreement or lease security features also presented in the tables on the following pages, to be important measures of our managers’ and tenants’ success in operating our properties and their ability to continue to pay us.  However, none of this third party reported information is a direct measure of our financial performance and we have not independently verified this data.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

							Rent / Return Coverage (3)
		Number of			Annual		Three Months Ended		Twelve Months Ended
Operating Agreement	Number of	Rooms /			Minimum		March 31,		March 31,
Reference Name	Properties	Suites	Investment (1)		Return/Rent(2)		2014	2013	2014	2013
Marriott (No. 1)(4)	53	7,610	$	681,060	$	67,612	0.88x	0.84x	1.07x	1.00x
Marriott (No. 234) (5)	68	9,120	995,439		105,793		0.80x	0.82x	0.91x	0.93x
Marriott (No. 5) (6)	1	356	90,078		10,004		0.23x	0.33x	0.35x	0.39x
Subtotal / Average Marriott	122	17,086	1,766,577		183,409		0.80x	0.80x	0.94x	0.93x
InterContinental (7)	91	13,516	1,417,146		139,498		1.00x	0.88x	1.04x	0.85x
Sonesta(8)	22	4,610	787,641		60,104		0.14x	0.13x	0.35x	0.38x
Wyndham(9)	22	3,579	364,230		26,550		0.09x	-0.01x	0.42x	0.47x
Hyatt (10)	22	2,724	301,942		22,037		0.84x	0.80x	0.87x	0.85x
Carlson (11)	11	2,090	209,895		12,920		0.89x	0.68x	0.89x	0.75x
Morgans(12)	1	372	120,000		5,956		0.75x	0.55x	1.00x	0.70x
Subtotal / Average Hotels	291	43,977	4,967,431		450,474		0.74x	0.70x	0.86x	0.80x
TA (No. 1)(13)	145	—	2,002,314		160,883		(15)	1.30x	(15)	1.68x
TA (No. 2)(14)	40	—	777,789		60,903		(15)	1.34x	(15)	1.67x
Subtotal / Average TA	185	—	2,780,103		221,786		(15)	1.31x	(15)	1.68x
Total / Average	476	43,977	$	7,747,534	$	672,260		0.90x		1.10x

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

(2)Each of our management agreements or leases provides for payment to us of an annual minimum return or minimum rent, respectively. Certain of these minimum payment amounts are secured by full or limited guarantees or security deposits as more fully described below. In addition, certain of our hotel management agreements provide for payment to us of additional amounts to the extent of available cash flow as defined in the management agreement. Payment of these additional amounts are not guaranteed or secured by deposits.

(3)We define coverage as combined total property level revenues minus the required FF&E reserve escrows, if any, and all property level expenses which are not subordinated to minimum returns and minimum rent payments to us (which data is provided to us by our managers or tenants), divided by the minimum return or minimum rent payments due to us. Coverage amounts for our Sonesta, Wyndham and Morgans agreements include data for periods prior to our ownership or leasing of certain hotels. Coverage amounts for our Sonesta and Wyndham agreements include data for periods certain rebranded hotels were not operated by the current manager.

(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.

We have no security deposit or guaranty from Marriott for these 53 hotels.  Accordingly, payment by Marriott of the minimum return due to us under this management agreement is limited to available hotel cash flow after payment of operating expenses.  In addition to our minimum return, this agreement provides for payment to us of 50% of available cash flow after payment of hotel operating expenses, funding of the required FF&E reserve, payment of our minimum return and payment of certain management fees.

(5)We lease 68 of our Marriott branded hotels (1 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.

We originally held a security deposit of $64,700 under this agreement.  As of March 31, 2014, we have fully exhausted this security deposit covering shortfalls in the payments of our minimum return.  This security deposit may be replenished from future cash flows from these hotels in excess of our minimum return and certain management fees.  Marriott has also provided us with a $40,000 limited guaranty for payment shortfalls up to 90% of our minimum return, which expires in 2019.  As of March 31, 2014, the available Marriott guaranty was $28,124.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to our minimum return, this agreement provides for payment to us of 62.5% of excess cash flow after payment of hotel operating expenses, funding of the required FF&E reserve, payment of our minimum return, payment of certain management fees and replenishment of the security deposit. This additional return amount is not guaranteed or secured by the security deposit.

(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. 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 90 InterContinental branded hotels (19 Staybridge Suites®, 61 Candlewood Suites®, two InterContinental®, six Crowne Plaza® and two Holiday Inn® hotels) in 27 states in the U.S. and Ontario, Canada to one of our TRSs.  These 90 hotels are managed by subsidiaries of InterContinental under a combination management agreement.  We lease one additional InterContinental® branded hotel in Puerto Rico to a subsidiary of InterContinental. The annual minimum return amount presented in the table on page 27 includes $7,601 of minimum rent related to the leased Puerto Rico property.  The management agreement and the lease expire in 2036; InterContinental has two renewal options for 15 years each for all, but not less than all, of the hotels.

We originally held a security deposit of $73,872 under this agreement.  As of March 31, 2014, we have applied $44,272 of the security deposit to cover shortfalls in the payments of our minimum return and rent.  As of March 31, 2014, the balance of this security deposit was $29,600.  This security deposit may be replenished and increased up to $100,000 from future cash flows from these hotels in excess of our minimum return and rent and certain management fees.

Under this agreement, InterContinental is required to maintain a minimum security deposit of $30,000 in 2014 and $37,000 thereafter.  We were advised by InterContinental that it expects interim period shortfalls during 2014 and 2015 in the required minimum security deposit balance under the agreement.  As a result, on January 6, 2014, we entered into a letter agreement with InterContinental under which the minimum security deposit balance required to be maintained during 2014 and 2015 will be reduced by two dollars for every dollar of additional security deposit InterContinental provides to us.  Beginning January 1, 2016, any resulting reductions to the minimum security deposit amount will cease to be in effect and the minimum deposit balance required under the InterContinental agreement will revert to $37,000.  Since January 1, 2014, InterContinental has provided $4,283 of additional security deposit, which reduced the minimum security deposit amount to $21,434.

In addition to our minimum return, this management agreement provides for an annual additional return payment to us of $12,067 to the extent of available cash flow after payment of hotel operating expenses, funding of the required FF&E reserve, if any, payment of our minimum return, payment of certain management fees and replenishment and expansion of the security deposit.  In addition, the agreement provides for payment to us of 50% of the available cash flow after payment to us of the annual additional return amount.  These additional return amounts are not guaranteed or secured by the security deposit.

(8)We lease 22 of our Sonesta branded hotels (four Royal Sonesta®, three Sonesta® and 15 Sonesta ES Suites® hotels) in 13 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.

We have no security deposit or guaranty from Sonesta.  Accordingly, payment by Sonesta of the minimum return due to us under this management agreement is limited to available hotel cash flow after the payment of operating expenses, including certain management fees, and we are financially responsible for operating cash flow deficits, if any.

In addition to our minimum return, this management agreement provides for payment to us of 80% of available cash flow after payment of hotel operating expenses, management fees to Sonesta, our minimum return and reimbursement of operating loss or working capital advances, if any.

(9)We lease our 22 Wyndham branded hotels (six Wyndham Hotels and Resorts® and 16 Hawthorn Suites® hotels) in 14 states to one of our TRSs.  The hotels are managed by a subsidiary of Wyndham under a combination management agreement which expires in 2038; Wyndham has two renewal options for 15 years each for all, but not less than all, of the hotels.  We also lease 48 vacation units in one of the hotels to Wyndham Vacation under a lease that expires in 2037; Wyndham Vacation has two renewal options for 15 years each for all, but not less than all, of the vacation units.  The lease is guaranteed by Wyndham and provides for rent increases of 3% per annum. The annual minimum return amount presented in the table on page 27 includes $1,288 of minimum rent related to the Wyndham Vacation lease.

We had a guaranty of $35,656 under this agreement for payment shortfalls of minimum return, subject to an annual payment limit of $17,828.  As of March 31, 2014, the available Wyndham guaranty was $8,524.  This guaranty expires in 2020.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to our minimum return, this management agreement provides for payment to us of 50% of available cash flow after payment of hotel operating expenses, payment of our minimum return, funding of the FF&E reserve, if any, payment of certain management fees and reimbursement of any Wyndham guaranty advances.  This additional return amount is not guaranteed.  Amounts reimbursed to Wyndham for guaranty advances replenish the amount of the Wyndham guaranty available to us.

(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.

We originally had a guaranty of $50,000 under this agreement for payment shortfalls of our minimum return.  As of March 31, 2014, the available Hyatt guaranty was $13,066.  The guaranty is limited in amount but does not expire in time and may be replenished from future cash flows from the hotels in excess of our minimum return.

In addition to our minimum return, this management agreement provides for payment to us of 50% of available cash flow after payment of operating expenses, funding the required FF&E reserve, payment of our minimum return and reimbursement to Hyatt of working capital and guaranty advances, if any.  This additional return is not guaranteed.

(11)We lease our 11 Carlson branded hotels (five Radisson® Hotels & Resorts, one Park Plaza® Hotels & Resorts and five Country Inns & Suites® hotels) in seven states to one of our TRSs.  The hotels are managed by a subsidiary of Carlson under a combination management agreement that expires in 2030; Carlson has two renewal options for 15 years each for all, but not less than all, of the hotels.

We originally had a limited guaranty of $40,000 under this agreement for payment shortfalls of our minimum return.  As of March 31, 2014, the available Carlson guaranty was $20,078.  The guaranty is limited in amount but does not expire in time and may be replenished from future cash flows from the hotels in excess of our minimum return.

In addition to our minimum return, this management agreement provides for payment to us of 50% of available cash flow after payment of operating expenses, funding the required FF&E reserve, payment of our minimum return and reimbursement to Carlson of working capital and guaranty advances, if any.  This additional return is not guaranteed.

(12)We lease the Clift Hotel, a full service hotel in San Francisco, CA, to a subsidiary of Morgans under a lease agreement that expires in 2103. The lease provides for annual initial rent to us of $5,956.  On October 14, 2014, the rent due to us will be increased based on changes in the consumer price index with a minimum increase of 20% of the current rent amount and a maximum increase of 40% as described in the lease.  On each fifth anniversary thereafter during the lease term, the rent due to us will be increased further based on changes in the consumer price index with minimum increases of 10% and maximum increases of 20%.  Although the contractual lease terms would qualify this lease as a direct financing lease under GAAP, we account for this lease as an operating lease due to uncertainty regarding the collection of future rent increases and we recognize rental income from this lease on a cash basis, in accordance with GAAP.

(13)On August 13, 2013, a travel center located in Roanoke, VA that we leased to TA under the TA No. 1 lease was taken by eminent domain proceedings brought by the VDOT in connection with certain highway construction. Our TA No. 1 lease provides that the annual rent payable by TA to us is reduced by 8.5% of the amount of the proceeds we receive from the taking or, at our option, the fair market value rent of the property on the commencement date of the TA No. 1 lease. In January 2014, we received proceeds from the VDOT of $6,178, which is a portion of the VDOT’s estimate of the value of the property, and as a result the annual rent payable by TA to us under the TA No. 1 lease was reduced by $525 effective January 6, 2014. We and TA intend to challenge the VDOT’s estimate of the property’s value. We have entered a lease agreement with the VDOT to lease this property through August 2014 for $40 per month, and under the terms of the TA No. 1 lease TA will be responsible to pay this ground lease rent. We entered into a sublease for this property with TA, and TA plans to continue operating it as a travel center through August 2014.

We lease our 145 TravelCenters of America® branded travel centers in 39 states, including the Roanoke, VA travel center described above, to a subsidiary of TA under a lease that expires in 2022; TA has no renewal option.  In addition to the payment of our minimum rent, this lease agreement provides for payment to us of percentage rent based on increases in total revenues over base year levels (3% of non-fuel revenues and 0.3% of fuel revenues above 2011 revenues subject to certain limits).  The annual minimum rent amount presented in the table on page 27 for our TA No. 1 lease includes approximately $5,233 of ground rent paid by TA for properties we lease and sublease to TA.  This lease is guaranteed by TA.

(14)We lease our 40 Petro Stopping Centers® branded travel centers in 25 states to a subsidiary of TA under a lease that expires in 2024; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers.  In addition to the payment of our minimum rent, this lease agreement provides for payment to us of percentage rent based on increases in total revenues over base year

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

levels (3% of non-fuel revenues and 0.3% of fuel revenues above 2012 revenues subject to certain limits).  We have agreed to waive payment of the first $2,500 of percentage rent that may become due under the TA No. 2 lease. We have waived $495 of percentage rent as of March 31, 2014.  This lease is guaranteed by TA.

(15)Data for the periods subsequent to September 30, 2013 is currently not available from our tenant, TA.

The following tables summarize the operating statistics, including ADR, occupancy and RevPAR reported to us by our hotel managers or tenants by management agreement or lease for the periods indicated. All operating data presented are based upon the operating results provided by our managers and tenants for the indicated periods. We have not independently verified our managers’ or tenants’ operating data.

		No. of	Three Months Ended
	No. of	Rooms /	March 31, (1)
	Hotels	Suites	2014		2013		Change
ADR
Marriott (No. 1)	53	7,610	$	119.27	$	117.36	1.6%
Marriott (No. 234)	68	9,120	115.02		111.63		3.0%
Marriott (No. 5)	1	356	224.98		219.88		2.3%
Subtotal / Average Marriott	122	17,086	119.57		117.04		2.2%
InterContinental	91	13,516	101.37		97.34		4.1%
Sonesta	22	4,610	129.46		124.60		3.9%
Wyndham	22	3,579	79.95		72.52		10.2%
Hyatt	22	2,724	98.78		95.40		3.5%
Carlson	11	2,090	97.54		93.97		3.8%
Morgans	1	372	250.81		235.60		6.5%
All hotels Total / Average	291	43,977	$	110.11	$	106.74	3.2%
OCCUPANCY
Marriott (No. 1)	53	7,610	63.0%		61.3%		1.7 pts
Marriott (No. 234)	68	9,120	71.0%		66.8%		4.2 pts
Marriott (No. 5)	1	356	82.4%		86.2%		-3.8 pts
Subtotal / Average Marriott	122	17,086	67.7%		64.7%		3.0 pts
InterContinental	91	13,516	79.9%		71.1%		8.8 pts
Sonesta	22	4,610	56.1%		59.7%		-3.6 pts
Wyndham	22	3,579	61.6%		57.4%		4.2 pts
Hyatt	22	2,724	76.5%		73.4%		3.1 pts
Carlson	11	2,090	69.9%		65.6%		4.3 pts
Morgans	1	372	83.2%		79.7%		3.5 pts
All hotels Total / Average	291	43,977	70.5%		66.3%		4.2 pts
RevPAR
Marriott (No. 1)	53	7,610	$	75.14	$	71.94	4.4%
Marriott (No. 234)	68	9,120	81.66		74.57		9.5%
Marriott (No. 5)	1	356	185.38		189.54		-2.2%
Subtotal / Average Marriott	122	17,086	80.95		75.72		6.9%
InterContinental	91	13,516	80.99		69.21		17.0%
Sonesta	22	4,610	72.63		74.39		-2.4%
Wyndham	22	3,579	49.25		41.63		18.3%
Hyatt	22	2,724	75.57		70.02		7.9%
Carlson	11	2,090	68.18		61.64		10.6%
Morgans	1	372	208.67		187.77		11.1%
All hotels Total / Average	291	43,977	$	77.63	$	70.77	9.7%

(1)Operating data for our Sonesta and Wyndham agreements include data for periods prior to our ownership of certain hotels.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seasonality

Our hotels and travel centers have historically experienced seasonal differences typical of their industries with higher revenues in the second and third quarters of calendar years compared with the first and fourth quarters. This seasonality is not expected to cause material fluctuations in our income or cash flow because most of our management agreements and leases require our managers and tenants to make the substantial portion of our return payments and rents to us in equal amounts throughout a year. Seasonality may affect our hotel operating revenues and our net cash flows from our Sonesta managed hotels and our hotels included in our Marriott No. 1 agreement, but we do not expect seasonal variations to have a material impact upon our financial results of operations or upon our managers’ or tenants’ ability to meet their contractual obligations to us.

Related Person Transactions

We have relationships and historical and continuing transactions with our Trustees, our executive officers, RMR, TA, Sonesta, AIC and other companies to which RMR provides management services and others affiliated with them. For example, we have no employees and personnel and various services we require to operate our business are provided to us by RMR pursuant to management agreements; and RMR is owned by our Managing Trustees. Also, as a further example, we have relationships with other companies to which RMR provides management services and which have trustees, directors and officers who are also trustees, directors or officers of ours or RMR or with entities affiliated with RMR, including: TA is our former subsidiary and our largest tenant and we are TA’s largest shareholder; Sonesta manages several of our hotels for our TRSs; we previously sold two hotels to affiliates of RMR; and we, RMR, TA and five other companies to which RMR provides management services each currently own approximately 12.5% of AIC, an Indiana insurance company, and we and the other shareholders of AIC have property insurance in place providing $500,000 of coverage pursuant to an insurance program arranged by AIC and with respect to which AIC is a reinsurer of certain coverage amounts. For further information about these and other such relationships and related person transactions, please see Note 10 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference. In addition, for more information about these transactions and relationships, please see elsewhere in this Quarterly Report on Form 10-Q, including “Warning Concerning Forward Looking Statements” in Part I, and our 2013 Annual Report, our Proxy Statement for our 2014 Annual Meeting of Shareholders, or our Proxy Statement, and our other filings with the SEC, including Note 8 to our consolidated financial statements included in our 2013 Annual Report, the sections captioned “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions” and “Warning Concerning Forward Looking Statements” of our 2013 Annual Report and the section captioned “Related Person Transactions” and the information regarding our Trustees and executive officers in our Proxy Statement. In addition, please see the section captioned “Risk Factors” of our 2013 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships. Our filings with the SEC, including our 2013 Annual Report and our Proxy Statement, are available at the SEC’s website at www.sec.gov. Copies of certain of our agreements with these related parties, including our business management agreement and property management agreement with RMR, various agreements we have entered with TA and Sonesta, our purchase and sale agreements with affiliates of RMR and our shareholders agreement with AIC and its shareholders, are publicly available as exhibits to our public filings with the SEC and accessible at the SEC’s website.

We believe that our agreements with RMR, TA, Sonesta and AIC are on commercially reasonable terms. We also believe that our relationships with RMR, TA, Sonesta and AIC and their affiliated and related persons and entities benefit us, and, in fact, provide us with competitive advantages in operating and growing our business.

Non-GAAP Measures

We provide below calculations of our funds from operations, or FFO, and Normalized FFO for the three months ended March 31, 2014 and 2013. These measures should be considered in conjunction with net income, net income available for common shareholders, operating income and cash flow from operating activities as presented in our condensed consolidated statements of income and comprehensive income and condensed consolidated statements of cash flows. These measures do not represent cash generated by operating activities in accordance with GAAP and should not be

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

considered as alternatives to net income, net income available to common shareholders, operating income or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs. Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.

Funds From Operations and Normalized Funds From Operations

We calculate FFO and Normalized FFO as shown below.  FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is net income, calculated in accordance with GAAP, excluding any gain or loss on sale of properties, loss on impairment of real estate assets, plus real estate depreciation and amortization, as well as certain other adjustments currently not applicable to us.  Our calculation of Normalized FFO differs from NAREIT’s definition of FFO because we include estimated percentage rent in the period to which we estimate that it relates rather than when it is recognized as income in accordance with GAAP and exclude acquisition related costs, estimated business management incentive fees and loss on early extinguishment of debt.  We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income, net income available for common shareholders, operating income and cash flow from operating activities.  We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO may facilitate a comparison of our operating performance between periods and with other REITs.  FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to shareholders.  Other factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving credit facility and term loan agreement and public debt covenants, the availability of debt and equity capital, our expectation of our future capital requirements and operating performance, and our expected needs and availability of cash to pay our obligations. FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, operating income, net income available for common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.  These measures should be considered in conjunction with net income, operating income, net income available for common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of income and comprehensive income and condensed consolidated statements of cash flows.  Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.

Our calculations of FFO and Normalized FFO for the three months ended March 31, 2014 and 2013 and reconciliations of FFO and Normalized FFO to net income available for common shareholders, the most directly comparable financial measure under GAAP reported in our consolidated financial statements, appear in the following table.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

	For the Three Months Ended March 31,
	2014		2013
Net income available for common shareholders	$	32,384	$	19,409
Depreciation and amortization expense	78,287		72,280
FFO	110,671		91,689
Acquisition related costs (1)	61		276
Estimated business management incentive fees (2)	851		627
Loss on early extinguishment of debt (3)	214		—
Deferred percentage rent (4)	874		610
Normalized FFO	$	112,671	$	93,202
Weighted average shares outstanding	149,636		125,426
FFO available for common shareholders per share	$	0.74	$	0.73
Normalized FFO available for common shareholders per share	$	0.75	$	0.74
Distributions declared per share	$	0.48	$	0.47

(1)Represents costs associated with our hotel acquisition activities.

(2)Amounts represent estimated incentive fees under our business management agreement payable in common shares after the end of each calendar year calculated: (i) prior to 2014 based upon increases in annual cash available for distribution per share, as defined and (ii) beginning in 2014 based on common share total return.  In calculating net income in accordance with GAAP, we recognize estimated business management incentive fee expense each quarter.  Although we recognize this expense each quarter for purposes of calculating net income, we do not include these amounts in the calculation of Normalized FFO until the fourth quarter, which is when the actual expense amount for the year is determined. Adjustments were made to prior period amounts to conform to the current period Normalized FFO calculation.

(3)We recorded a $214 loss on early extinguishment of debt in the first quarter of 2014 in connection with amending the terms of our unsecured revolving credit facility and unsecured term loan.

(4)In calculating net income in accordance with GAAP, we recognize percentage rental income received for the first, second and third quarters in the fourth quarter, which is when all contingencies have been met and the income is earned. Although we defer recognition of this revenue until the fourth quarter for purposes of calculating net income, we include these estimated amounts in the calculation of Normalized FFO for each quarter of the year. The fourth quarter Normalized FFO calculation excludes the amounts recognized during the first three quarters.

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Item 3.  Quantitative and Qualitative Disclosures About Market Risk (dollar amounts in thousands)

We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategy to manage exposure to changes in interest rates has not materially changed since December 31, 2013. Other than as described below, we do not currently foresee any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.

As of March 31, 2014, our outstanding publicly tradable debt consisted of seven issues of fixed rate, senior unsecured notes and one issue of fixed rate, convertible senior notes:

Principal Balance		Annual Interest Rate	Annual Interest Expense		Maturity		Interest Payments Due
$	280,000	5.125%	14,350		2015		Semi-Annually
275,000		6.300%	17,325		2016		Semi-Annually
300,000		5.625%	16,875		2017		Semi-Annually
350,000		6.700%	23,450		2018		Semi-Annually
500,000		5.000%	25,000		2022		Semi-Annually
300,000		4.500%	13,500		2023		Semi-Annually
350,000		4.650%	16,275		2024		Semi-Annually
8,478		3.800%	322		2027	(1)	Semi-Annually
$	2,363,478		$	127,097

(1)    The convertible senior notes are convertible, if certain conditions are met (including certain changes in control), into cash equal to the principal amount of the notes and, to the extent the market price of our common shares exceeds the initial exchange price of $50.50 per share, subject to adjustment, either cash or our common shares at our option with a value based on such excess amount. Holders of our convertible senior notes may require us to repurchase all or a portion of the notes on March 15, 2017 and March 15, 2022, or upon the occurrence of certain change in control events.

Except as described in note 1 to the table above, no principal repayments are due under these notes until maturity. Because these notes bear interest at fixed rates, changes in market interest rates during the term of these debts will not affect our interest obligations. If these notes were refinanced at interest rates which are 100 basis points higher than the rates shown above, our per annum interest cost would increase by approximately $23,635. Changes in market interest rates would affect the fair value of our fixed rate debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at March 31, 2014, and discounted cash flow analyses through the respective maturity dates, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligations, a hypothetical immediate 100 basis point increase in interest rates would change the fair value of those debt obligations by approximately $109,519. Changes in the trading price of our common shares may also affect the fair value of our convertible senior notes.

Each of these fixed rate unsecured debt arrangements allows us to make repayments earlier than the stated maturity date. We are generally allowed to make prepayments only at a premium equal to a make whole amount, as defined, which is generally designed to preserve a stated yield to the note holder. Also, we have in the past repurchased and retired some of our outstanding debts and we may do so again in the future. These prepayment rights and our ability to repurchase and retire outstanding debt may afford us opportunities to mitigate the risks of refinancing our debts at their maturities at higher rates by refinancing prior to maturity.

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At March 31, 2014, our floating rate debt consisted of our $750,000 unsecured revolving credit facility (no amounts outstanding at March 31, 2014) and our $400,000 unsecured term loan.  In January 2014, we amended the agreements governing our unsecured revolving credit facility and unsecured term loan. Under the amendment, the maturity date of our revolving credit facility was extended from September 7, 2015 to July 15, 2018, and subject to our meeting certain conditions, including our payment of an extension fee, we have the option to extend the stated maturity by one year to July 15, 2019. Also under the amendment, we extended the maturity date of our unsecured term loan from March 13, 2017 to April 15, 2019. No principal repayments are required under our revolving credit facility or term loan prior to maturity, and prepayments may be made, and redrawn subject to conditions at any time without penalty. Borrowings under our revolving credit facility and term loan are in U.S. dollars and bear interest at LIBOR plus a premium that is subject to adjustment based upon changes to our credit ratings. Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically LIBOR. There have been recent governmental inquiries regarding the setting of LIBOR, which may result in changes to the process that could have the effect of increasing LIBOR. In addition, upon renewal or refinancing of our revolving credit facility or our term loan, we are vulnerable to increases in interest rate premiums due to market conditions or our perceived credit risk. Generally, a change in interest rates would not affect the value of this floating rate debt but would affect our operating results.

The following table presents the impact a 100 basis points increase in interest rates would have on our annual floating rate interest expense as of March 31, 2014:

	Impact of Increase in Interest Rates
	Interest Rate	Outstanding		Total Interest		Annual Per Common
	Per Year (1)	Debt		Expense Per Year		Share Impact(2)
At March 31, 2014	1.35%	$	400,000	$	5,400	$	0.04
100 basis point increase	2.35%	$	400,000	$	9,400	$	0.06

(1)Weighted average based on the outstanding borrowings as of March 31, 2014.

(2)Based on weighted average shares outstanding for the three months ended March 31, 2014.

The following table presents the impact that a 100 basis point increase in interest rates would have on our annual floating rate interest expense at March 31, 2014 if we were fully drawn on our revolving credit facility and term loan remained outstanding:

	Impact of Increase in Interest Rates
	Interest Rate	Outstanding		Total Interest		Annual Per Common
	Per Year (1)	Debt		Expense Per Year		Share Impact(2)
At March 31, 2014	1.29%	$	1,150,000	$	14,835	$	0.10
100 basis point increase	2.29%	$	1,150,000	$	26,335	$	0.18

(1)Weighted average based on the outstanding borrowings as of March 31, 2014.

(2)Based on weighted average shares outstanding for the three months ended March 31, 2014.

The foregoing tables show the impact of an immediate change in floating interest rates. If interest rates were to change gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our revolving credit facility or other floating rate debt, if any. Although we have no present plans to do so, we may in the future enter into hedge arrangements from time to time to mitigate our exposure to changes in interest rates.

Item 4.  Controls and Procedures

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, President and Chief Operating Officer and Treasurer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to the Securities Exchange Act

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of 1934, as amended, Rules 13a-15 and 15d-15. Based upon that evaluation, our Managing Trustees, President and Chief Operating Officer and Treasurer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:

·OUR HOTEL MANAGERS’ OR TENANTS’ ABILITIES TO PAY THE CONTRACTUAL AMOUNTS OF RETURNS OR RENTS DUE TO US,

·OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND THE AMOUNT OF SUCH DISTRIBUTIONS,

·THE ABILITY OF TA TO PAY CURRENT AND DEFERRED RENT AMOUNTS DUE TO US,

·THE SUCCESS OF OUR REBRANDED HOTELS,

·OUR ABILITY TO RETAIN QUALIFIED MANAGERS AND TENANTS FOR OUR HOTELS AND TRAVEL CENTERS ON SATISFACTORY TERMS,

·OUR ABILITY TO RAISE EQUITY OR DEBT CAPITAL,

·OUR INTENT TO REFURBISH OR MAKE IMPROVEMENTS TO CERTAIN OF OUR PROPERTIES,

·THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY,

·OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT,

·OUR POLICIES AND PLANS REGARDING INVESTMENTS AND FINANCINGS,

·OUR TAX STATUS AS A REIT,

·OUR ABILITY TO MAKE ACQUISITIONS OF PROPERTIES AND OTHER INVESTMENTS,

·OUR EXPECTATION THAT WE WILL BENEFIT FINANCIALLY BY PARTICIPATING IN AIC WITH RMR AND COMPANIES TO WHICH RMR PROVIDES MANAGEMENT SERVICES, AND

·OTHER MATTERS.

OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FORWARD LOOKING STATEMENTS AND UPON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, FFO, NORMALIZED FFO, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO:

·THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR MANAGERS AND TENANTS,

·LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY AS A REIT FOR U.S. FEDERAL INCOME TAX PURPOSES,

·COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS AFFECTING THE REAL ESTATE, HOTEL, TRANSPORTATION AND TRAVEL CENTER INDUSTRIES, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS,

·COMPETITION WITHIN THE REAL ESTATE INDUSTRY, PARTICULARLY IN THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED,

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·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 MANAGING TRUSTEES, TA, SONESTA, RMR, AIC AND THEIR RELATED PERSONS AND ENTITIES.

FOR EXAMPLE:

·OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS. WE MAY BE UNABLE TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS ON OUR COMMON AND PREFERRED SHARES AND FUTURE DISTRIBUTIONS MAY BE SUSPENDED,

·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 AND BECAUSE THE AMOUNT OF THE SECURITY DEPOSITS AVAILABLE FOR FUTURE USE IS REDUCED AS WE APPLY SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS, THE FAILURE OF OUR TENANTS OR MANAGERS TO PAY MINIMUM RETURNS OR RENTS DUE TO US MAY REDUCE OUR CASH FLOWS AND OUR ABILITY TO PAY DISTRIBUTIONS TO SHAREHOLDERS,

·WE EXPECT THAT, WHILE THE SECURITY DEPOSIT FOR OUR MARRIOTT NO. 234 AGREEMENT IS EXHAUSTED, MARRIOTT WILL PAY US UP TO 90% OF OUR MINIMUM RETURNS UNDER A LIMITED GUARANTY. THIS STATEMENT MAY IMPLY THAT MARRIOTT WILL FULFILL ITS OBLIGATION UNDER THIS GUARANTY OR THAT FUTURE SHORTFALLS WILL NOT EXHAUST THE GUARANTY. HOWEVER, THIS GUARANTY EXPIRES ON DECEMBER 31, 2019, AND WE CAN PROVIDE NO ASSURANCE WITH REGARD TO MARRIOTT’S FUTURE ACTIONS OR THE FUTURE PERFORMANCE OF OUR HOTELS TO WHICH THE MARRIOTT LIMITED GUARANTY APPLIES,

·WE EXPECT THAT INTERCONTINENTAL WILL CONTINUE TO PAY US THE MINIMUM RETURNS INCLUDED IN OUR MANAGEMENT AGREEMENT WITH INTERCONTINENTAL AND THAT WE WILL UTILIZE THE SECURITY DEPOSIT WE HOLD FOR ANY PAYMENT SHORTFALLS. HOWEVER, THE SECURITY DEPOSIT WE HOLD FOR INTERCONTINENTAL’S OBLIGATIONS TO US IS FOR A LIMITED AMOUNT AND WE CAN PROVIDE NO ASSURANCE THAT THE SECURITY DEPOSIT WILL BE ADEQUATE TO COVER FUTURE PAYMENT SHORTFALLS FROM OUR INTERCONTINENTAL HOTELS,

·WYNDHAM HAS AGREED TO PARTIALLY GUARANTEE ANNUAL MINIMUM RETURNS PAYABLE TO US BY WYNDHAM. WYNDHAM’S GUARANTEE IS LIMITED BY TIME TO ANNUAL MINIMUM RETURN PAYMENTS DUE THROUGH 2020, AND AS OF MARCH 31, 2014, IT IS LIMITED TO NET PAYMENTS FROM WYNDHAM OF $35.7 MILLION (OF WHICH $8.5 MILLION REMAINED) AND IS SUBJECT TO AN ANNUAL PAYMENT LIMIT OF $17.8 MILLION. ACCORDINGLY, THERE IS NO ASSURANCE THAT WE WILL RECEIVE THE ANNUAL MINIMUM RETURNS DURING THE TERM OF OUR WYNDHAM AGREEMENT,

·THE ANNUAL RENT DUE TO US UNDER A LEASE WITH A SUBSIDIARY OF MORGANS IS $6.0 MILLION, SUBJECT TO FUTURE INCREASES. WE CAN PROVIDE NO ASSURANCE THAT MORGANS WILL FULFILL ITS OBLIGATIONS UNDER THIS LEASE OR WITH REGARD TO THE FUTURE PERFORMANCE OF THE HOTEL WE LEASE TO MORGANS,

·WE HAVE RECENTLY RENOVATED CERTAIN HOTELS AND ARE CURRENTLY RENOVATING ADDITIONAL HOTELS. THE COST OF CAPITAL PROJECTS ASSOCIATED WITH SUCH RENOVATIONS MAY BE GREATER THAN WE NOW ANTICIPATE. WHILE THE CAPITAL PROJECTS WILL CAUSE OUR CONTRACTUAL MINIMUM RETURNS TO INCREASE, THE HOTEL’S OPERATING RESULTS MAY NOT INCREASE OR MAY NOT INCREASE TO THE EXTENT THAT THE MINIMUM RETURNS INCREASE. ACCORDINGLY, COVERAGE OF OUR

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MINIMUM RETURNS AT THESE HOTELS MAY REMAIN DEPRESSED FOR AN EXTENDED PERIOD,

·WE HAVE NO GUARANTEE OR SECURITY DEPOSIT FOR THE MINIMUM RETURNS DUE TO US FROM SONESTA OR UNDER OUR MARRIOTT NO. 1 AGREEMENT. ACCORDINGLY, THE FUTURE RETURNS WE RECEIVE FROM HOTELS MANAGED BY SONESTA OR MANAGED BY MARRIOTT UNDER OUR MARRIOTT NO. 1 AGREEMENT ARE ENTIRELY DEPENDENT UPON THE AVAILABLE HOTEL CASH FLOW AFTER PAYMENT OF OPERATING EXPENSES OF THOSE HOTELS,

·OTHER SECURITY DEPOSITS AND GUARANTEES REFERENCED HEREIN ARE ALSO LIMITED IN DURATION AND AMOUNT AND GUARANTEES ARE SUBJECT TO THE GUARANTORS’ ABILITY AND WILLINGNESS TO PAY,

·HOTEL ROOM DEMAND AND TRUCKING ACTIVITY ARE OFTEN REFLECTIONS OF THE GENERAL ECONOMIC ACTIVITY IN THE COUNTRY. IF ECONOMIC ACTIVITY IN THE COUNTRY DECLINES, HOTEL ROOM DEMAND AND TRUCKING ACTIVITY MAY DECLINE AND THE OPERATING RESULTS OF OUR HOTELS AND TRAVEL CENTERS MAY DECLINE, THE FINANCIAL RESULTS OF OUR HOTEL MANAGERS AND OUR TENANTS, INCLUDING TA, MAY SUFFER AND THESE MANAGERS AND TENANTS MAY BE UNABLE TO PAY OUR RETURNS OR RENTS. ALSO, CONTINUED DEPRESSED OPERATING RESULTS FROM OUR PROPERTIES FOR EXTENDED PERIODS MAY RESULT IN THE OPERATORS OF SOME OR ALL OF OUR HOTELS AND TRAVEL CENTERS BECOMING UNABLE OR UNWILLING TO MEET THEIR OBLIGATIONS OR THEIR GUARANTEES AND SECURITY DEPOSITS MAY BE EXHAUSTED,

·SINCE ITS FORMATION, TA HAS NOT PRODUCED CONSISTENT OPERATING PROFITS. IF THE CURRENT LEVEL OF COMMERCIAL ACTIVITY IN THE COUNTRY DECLINES, IF THE PRICE OF DIESEL FUEL INCREASES SIGNIFICANTLY, IF FUEL CONSERVATION MEASURES ARE INCREASED, IF FREIGHT BUSINESS IS DIRECTED AWAY FROM TRUCKING, IF TA IS UNABLE TO EFFECTIVELY COMPETE OR OPERATE ITS BUSINESS OR FOR VARIOUS OTHER REASONS, TA MAY BECOME UNABLE TO PAY CURRENT AND DEFERRED RENTS DUE TO US,

·OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES THAT GENERATE RETURNS OR LEASE THEM FOR RENTS WHICH EXCEED OUR OPERATING AND CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING, MANAGEMENT CONTRACTS OR LEASE TERMS FOR NEW PROPERTIES,

·CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING PROPERTY SALES OR PENDING ACQUISITIONS AND ANY RELATED MANAGEMENT AGREEMENTS MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS MAY CHANGE,

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE AND TA INTEND TO CHALLENGE THE AMOUNT OF COMPENSATION PAID TO US BY THE VDOT WITH REGARD TO A TRAVEL CENTER WE PREVIOUSLY OWNED AND WHICH THE VDOT TOOK BY EMINENT DOMAIN PROCEEDING. THERE CAN BE NO ASSURANCE CONCERNING THE AMOUNT OF COMPENSATION PAYABLE TO US OR TA AS A RESULT OF THE TAKING OR WHAT THE FINAL REDUCTION OF RENT PAYABLE TO US BY TA WILL BE AS A RESULT OF THIS TAKING,

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE EXPECT TO FUND AN ADDITIONAL $7.1 MILLION TO RENOVATE HOTELS UNDER OUR MARRIOTT NO. 234 AGREEMENT, FUND AN ADDITIONAL $23.0 MILLION TO RENOVATE HOTELS INCLUDED IN OUR INTERCONTINENTAL AGREEMENT, FUND UP TO AN ADDITIONAL $22.3 MILLION TO

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RENOVATE 22 HOTELS INCLUDED IN OUR WYNDHAM AGREEMENT, AND FUND UP TO AN ADDITIONAL $111.0 MILLION TO RENOVATE 22 HOTELS INCLUDED IN OUR SONESTA AGREEMENT. RENOVATION COSTS ARE DIFFICULT TO PROJECT AND WE CAN PROVIDE NO ASSURANCE THAT THESE AMOUNTS WILL BE SUFFICIENT TO COMPLETE THE DESIRED RENOVATIONS OR REFURBISHMENT COSTS, OR WHAT THE FINAL AMOUNTS FUNDED WILL BE,

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT, AT MARCH 31, 2014, WE HAD $33.8 MILLION OF CASH AND CASH EQUIVALENTS, THAT THERE WAS $750.0 MILLION AVAILABLE UNDER OUR $750.0 MILLION UNSECURED REVOLVING CREDIT FACILITY AND THAT WE HAD 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 THE OPERATIONS OF OUR PROPERTIES OR FROM OTHER RESOURCES; IN THE PAST AND CURRENTLY CERTAIN OF OUR TENANTS AND HOTEL MANAGERS HAVE IN FACT NOT BEEN ABLE TO PAY THE MINIMUM AMOUNTS DUE TO US FROM THEIR OPERATIONS OF OUR LEASED OR MANAGED PROPERTIES. ALSO, 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 FLOW TO US AS WE ALREADY HOLD THOSE FUNDS. FURTHER, 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,

·CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND MEETING OTHER CUSTOMARY CREDIT FACILITY CONDITIONS,

·ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF OTHER FEES AND EXPENSES ASSOCIATED WITH THIS AGREEMENT,

·INCREASING THE MAXIMUM BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN AGREEMENT IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR,

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE MAY EXTEND THE MATURITY DATE OF OUR REVOLVING CREDIT FACILITY SUBJECT TO MEETING CERTAIN CONDITIONS AND PAYMENT OF A FEE.  WE CAN PROVIDE NO ASSURANCE THAT THE APPLICABLE CONDITIONS WILL BE MET, AND

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE BELIEVE THAT OUR CONTINUING RELATIONSHIPS WITH RMR, TA, SONESTA, AIC, AND THEIR AFFILIATED AND RELATED PERSONS AND ENTITIES MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS. IN FACT, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE.

THESE RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS NATURAL DISASTERS, CHANGES IN OUR TENANTS’ REVENUES OR EXPENSES, CHANGES IN OUR MANAGERS’ OR TENANTS’ FINANCIAL CONDITIONS OR THE MARKET DEMAND FOR HOTEL ROOMS OR FUEL, OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY.

THE INFORMATION CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q OR IN OUR FILINGS WITH THE SEC INCLUDING UNDER THE CAPTION “RISK FACTORS”, OR

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INCORPORATED HEREIN OR THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

STATEMENT CONCERNING LIMITED LIABILITY

THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING HOSPITALITY PROPERTIES TRUST, DATED AUGUST 21, 1995, AS AMENDED AND SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HOSPITALITY PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HOSPITALITY PROPERTIES TRUST. ALL PERSONS DEALING WITH HOSPITALITY PROPERTIES TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF HOSPITALITY PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

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Part II   Other Information

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On February 7, March 7 and April 7, 2014, we issued 11,328, 10,444 and 11,155 of our common shares, respectively, to RMR as payment of a portion of the management fee due to RMR pursuant to our current business management agreement with RMR. In addition, on March 14, 2014, we issued 102,536 of our common shares to RMR in payment of the incentive fee payable to RMR for services rendered by RMR during 2013 pursuant to our prior business management agreement with RMR. We issued these shares pursuant to an exemption from registration contained in Section 4(a)(2) of the Securities Act.

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Item 6.  Exhibits

Exhibit Number	Description
3.1	Composite Copy of Amended and Restated Declaration of Trust dated as of August 21, 1995, as amended to date. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 13, 2012.)
3.2	Articles Supplementary dated as of June 2, 1997. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File Number 001-11527.)
3.3	Articles Supplementary dated as of March 5, 2007. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 2, 2007, File Number 001-11527.)
3.4	Articles Supplementary dated as of January 13, 2012. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 13, 2012.)
3.5	Amended and Restated Bylaws of the Company adopted April 9, 2014. (Incorporated by reference to the Company’s Current Report on Form 8-K dated April 9, 2014.)
4.1	Form of Common Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.)
4.2	Form of 7.125% Series D Cumulative Redeemable Preferred Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.)
4.3	Indenture, dated as of February 25, 1998, between the Company and State Street Bank and Trust Company. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File Number 001-11527.)
4.4	Supplemental Indenture No. 8, dated as of February 15, 2005, between the Company and U.S. Bank National Association, relating to the Company’s 51/8% Senior Notes due 2015, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 10, 2005, File Number 001-11527.)
4.5	Supplemental Indenture No. 9, dated as of June 15, 2006, between the Company and U.S. Bank National Association, relating to the Company’s 6.30% Senior Notes due 2016, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, File Number 001-11527.)
4.6	Supplemental Indenture No. 10, dated as of March 7, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 3.80% Convertible Senior Notes due 2027, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 2, 2007, File Number 001-11527.)
4.7	Supplemental Indenture No. 11, dated as of March 12, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 5.625% Senior Notes due 2017, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 7, 2007, File Number 001-11527.)
4.8	Supplemental Indenture No. 12, dated as of September 28, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 6.70% Senior Notes due 2018, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File Number 001-11527.)
4.9	Supplemental Indenture No. 13, dated as of August 12, 2009, between the Company and U.S. Bank National Association, relating to the Company’s 7.875% Senior Notes due 2014, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.)
4.10	Supplemental Indenture No. 14, dated as of August 16, 2012, between the Company and U.S. Bank National Association, relating to the Company’s 5.000% Senior Notes due 2022, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.)
4.11	Supplemental Indenture No. 15, dated as of June 6, 2013, between the Company and U.S. Bank National Association, relating to the Company’s 4.500% Senior Notes due 2023, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.)
4.12	Supplemental Indenture No. 16, dated as of March 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.650% Senior Notes due 2024, including form thereof. (Filed herewith.)

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12.1	Computation of Ratio of Earnings to Fixed Charges. (Filed herewith.)
12.2	Computation of Ratio of Earnings to Fixed Charges and Preferred Distributions. (Filed herewith.)
31.1	Rule 13a-14(a) Certification. (Filed herewith.)
31.2	Rule 13a-14(a) Certification. (Filed herewith.)
31.3	Rule 13a-14(a) Certification. (Filed herewith.)
31.4	Rule 13a-14(a) Certification. (Filed herewith.)
32.1	Section 1350 Certification. (Furnished herewith.)
101.1	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HOSPITALITY PROPERTIES TRUST

/s/ John G. Murray

John G. Murray

President and Chief Operating Officer

Dated: May 6, 2014

/s/ Mark L. Kleifges

Mark L. Kleifges

Treasurer and Chief Financial Officer

(principal financial and accounting officer)

Dated: May 6, 2014

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EX-4.12

Exhibit 4.12

SUPPLEMENTAL INDENTURE NO. 16

by and between

HOSPITALITY PROPERTIES TRUST

and

U.S. BANK NATIONAL ASSOCIATION,

as Trustee

as of March 12, 2014

SUPPLEMENTAL TO THE INDENTURE DATED AS OF FEBRUARY 25, 1998

HOSPITALITY PROPERTIES TRUST

4.650% Senior Notes due 2024

This SUPPLEMENTAL INDENTURE NO. 16 (this “Supplemental Indenture”) made and entered into as of March 12, 2014 between HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment trust (the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association, as Trustee (the “Trustee”).

WITNESSETH THAT:

WHEREAS, the Company and the Trustee are parties to an Indenture, dated as of February 25, 1998 (the “Indenture”), relating to the Company’s issuance, from time to time, of various series of debt securities;

WHEREAS, the Company has determined to issue debt securities known as its 4.650% Senior Notes due 2024; and

WHEREAS, the Indenture provides that certain terms and conditions for each series of debt securities issued by the Company thereunder may be set forth in an indenture supplemental to the Indenture;

NOW, THEREFORE, THIS SUPPLEMENTAL INDENTURE WITNESSETH:

ARTICLE 1

DEFINED TERMS

Section 1.1Terms Defined in Indenture.  Capitalized terms used herein and not defined herein have the meanings ascribed to such terms in the Indenture.

Section 1.2Supplemental Definitions.  The following definitions supplement, and, to the extent inconsistent with, replace the definitions in Section 101 of the Indenture:

“Acquired Debt” means Debt of a Person (i) existing at the time such Person becomes a Subsidiary or (ii) assumed in connection with the acquisition of assets from such Person, in each case, other than Debt incurred in connection with, or in contemplation of, such Person becoming a Subsidiary or such acquisition.  Acquired Debt shall be deemed to be incurred on the date of the related acquisition of assets from any Person or the date the acquired Person becomes a Subsidiary.

“Additional Notes” has the meaning provided in Section 2.1(b) hereof.

“Adjusted Total Assets” has the meaning provided in clause (i) of Section 3.1(a) hereof.

“Annual Debt Service” as of any date means the maximum amount which is expensed in any 12-month period for interest on Debt of the Company and its Subsidiaries.

“Business Day” means any day other than a Saturday or Sunday or a day on which banking institutions in The City of New York or in the city in which the Corporate Trust Office of the Trustee is located are required or authorized to close.

“Capital Stock” means, with respect to any Person, any capital stock (including preferred stock), shares, interests, participation or other ownership interests (however designated) of such Person and any rights (other than debt securities convertible into or exchangeable for capital stock), warrants or options to purchase any thereof.

“Cash Equivalents” means demand deposits, certificates of deposit or repurchase agreements with banks or financial institutions, marketable obligations issued or directly and fully guaranteed as to timely payment by the United States of America or any of its agencies or instrumentalities, or any commercial paper or other obligation rated, at time of purchase, “P-2” or better by Moody’s or “A-2” or better by Standard & Poor’s.

“Consolidated Income Available for Debt Service” for any period means Earnings from Operations of the Company and its Subsidiaries plus amounts which have been deducted, and minus amounts which have been added, for the following (without duplication): (i) interest on Debt of the Company and its Subsidiaries, (ii) cash reserves made by lessees as required by the Company’s leases for periodic replacement and refurbishment of the Company’s assets, (iii) provision for taxes of the Company and its Subsidiaries based on income, (iv) amortization of debt discount and deferred financing costs, (v) provisions for gains and losses on properties and property depreciation and amortization, (vi) the effect of any noncash charge resulting from a change in accounting principles in determining Earnings from Operations for such period and (vii) amortization of deferred charges.

“Corporate Trust Office” means One Federal Street, 3rd Floor, Boston, Massachusetts 02110, or such other address as may be designated from time to time by the Trustee by providing written notice to the Company.

“Debt” of the Company or any Subsidiary means, without duplication, any indebtedness of the Company or any Subsidiary, whether or not contingent, in respect of (i) borrowed money or evidenced by bonds, notes, debentures or similar instruments, (ii) indebtedness for borrowed money secured by any Encumbrance existing on property owned by the Company or any Subsidiary, to the extent of the lesser of (x) the amount of indebtedness so secured and (y) the fair market value of the property subject to such Encumbrance, (iii) the reimbursement obligations, contingent or otherwise, in connection with any letters of credit actually issued (other than letters of credit issued to provide credit enhancement or support with respect to other indebtedness of the Company or any Subsidiary otherwise reflected as Debt hereunder) or amounts representing the balance deferred and unpaid of the purchase price of any property or services, except any such balance that constitutes an accrued expense or trade payable, or all conditional sale obligations or obligations under any title retention agreement, (iv) the principal amount of all obligations of the Company or any Subsidiary with respect to redemption, repayment or other repurchase of any Disqualified Stock, or (v) any lease of property by the Company or any Subsidiary as lessee which is reflected on the Company’s consolidated balance sheet as a capitalized lease in accordance with GAAP, to the extent, in the case of items of indebtedness under (i) through (iii) above, that any such items (other than letters of credit) would appear as a liability on the Company’s consolidated balance sheet in accordance with GAAP, and also includes, to the extent not otherwise included, any obligation by the Company or any Subsidiary to be liable for, or to pay, as obligor, guarantor or otherwise (other than for purposes of collection in the ordinary course of business), Debt of another Person (other than the

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Company or any Subsidiary) (it being understood that Debt shall be deemed to be incurred by the Company or any Subsidiary whenever the Company or such Subsidiary shall create, assume, guarantee or otherwise become liable in respect thereof).

“Depositary” has the meaning provided in Section 2.1(d) hereof.

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person which by the terms of such Capital Stock (or by the terms of any security into which it is convertible or for which it is exchangeable or exercisable), upon the happening of any event or otherwise (i) matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise (other than Capital Stock which is redeemable solely in exchange for common stock or shares), (ii) is convertible into or exchangeable or exercisable for Debt or Disqualified Stock, or (iii) is redeemable at the option of the Holder thereof, in whole or in part (other than Capital Stock which is redeemable solely in exchange for common stock or shares), in each case on or prior to the stated maturity of the Notes.

“Earnings from Operations” for any period means net earnings excluding gains and losses on sales of investments, extraordinary items, gains and losses from early extinguishment of debt and property valuation losses, as reflected in the financial statements of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“Encumbrance” means any mortgage, lien, charge, pledge or security interest of any kind.

“Interest Payment Date” has the meaning provided in Section 2.1(e) hereof.

“Joint Venture Interests” means assets of the Company and its Subsidiaries constituting an equity investment in real estate assets or other properties, or in an entity holding real estate assets or other properties, jointly owned by the Company and its Subsidiaries, on the one hand, and one or more other Persons not constituting Affiliates of the Company, on the other, excluding any entity or properties (i) which is a Subsidiary or are properties if the co-ownership thereof (if in a separate entity) would constitute or would have constituted a Subsidiary, or (ii) to which, at the time of determination, the Company’s manager at such time or an Affiliate of its manager at such time provides management services.  In no event shall Joint Venture Interests include equity securities that have readily determinable fair values or any investments in debt securities, mortgages or other Debt.

“Make-Whole Amount” means, in connection with any optional redemption or accelerated payment of any Notes prior to September 15, 2023, the excess, if any, of (i) the aggregate present value as of the date of such redemption or accelerated payment of each dollar of principal being redeemed or paid and the amount of interest (exclusive of interest accrued to the date of redemption or accelerated payment) that would have been payable in respect of such dollar if such redemption or accelerated payment had been made on September 15, 2023, determined by discounting, on a semiannual basis, such principal and interest at the Reinvestment Rate (determined on the third Business Day preceding the date such notice of redemption is given or declaration of acceleration is made) from the respective dates on which such principal and interest would have been payable if such redemption or accelerated payment had been made on

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September 15, 2023, over (ii) the aggregate principal amount of the Notes being redeemed or paid.  In the case of any redemption or accelerated payment of notes on or after September 15, 2023, the Make-Whole Amount means zero.  For purposes of this Supplemental Indenture and the Notes, references in the Indenture to the payment of the principal (and premium, if any) and interest on the Notes shall be deemed to include the payment of the Make-Whole Amount, if any, due upon redemption with respect to the Notes.  The Make-Whole Amount shall be calculated by the Company and set forth in an Officer’s Certificate delivered to the Trustee, and the Trustee shall be entitled to rely on said Officer’s Certificate.

“Moody’s” means Moody’s Investors Service, Inc., together with any successor that is a nationally recognized statistical rating organization.

“Notes” means the Company’s 4.650% Senior Notes due 2024, issued under this Supplemental Indenture and the Indenture, as amended or supplemented from time to time.  (For the avoidance of doubt, the term “Notes” shall include any Additional Notes so issued.)

“Regular Record Date” has the meaning provided in Section 2.1(e) hereof.

“Reinvestment Rate” means a rate per annum equal to the sum of 0.30% (thirty one hundredths of one percent) plus the yield on treasury securities at constant maturity under the heading “Week Ending” published in the Statistical Release under the caption “Treasury Constant Maturities” for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity (which, in the case of maturities corresponding to the principal and interest due on the notes at their maturity, shall be deemed to be September 15, 2023), as of the payment date of the principal being redeemed or paid.  If no maturity exactly corresponds to such maturity, yields for the two published maturities most closely corresponding to such maturity shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month.  For purposes of calculating the Reinvestment Rate, the most recent Statistical Release published prior to the date of determination of the Make-Whole Amount shall be used.

“Standard & Poor’s” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC business, together with any successor that is a nationally recognized statistical rating organization.

“Secured Debt” means Debt secured by any mortgage, lien, charge, pledge or security interest of any kind.

“Statistical Release” means the statistical release designated “H.15(519)” or any successor publication which is published weekly by the Federal Reserve System and which establishes yields on actively traded United States government securities adjusted to constant maturities or, if such statistical release is not published at the time of any determination under this Supplemental Indenture, then any publicly available source of similar market data which shall be designated by the Company.

“Subsidiary” means any corporation or other entity of which a majority of (i) the voting power of the voting equity securities or (ii) the outstanding equity interests of which are owned,

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directly or indirectly, by the Company or one or more other Subsidiaries of the Company.  For the purposes of this definition, “voting equity securities” means equity securities having voting power for the election of directors, whether at all times or only so long as no senior class of security has such voting power by reason of any contingency.

“Total Assets” as of any date means the sum of (i) the Undepreciated Real Estate Assets and (ii) all other assets of the Company and its Subsidiaries determined in accordance with GAAP (but excluding accounts receivable and intangibles).

“Total Unencumbered Assets” means the sum of (i) the amount of Undepreciated Real Estate Assets of the Company and its Subsidiaries not securing any portion of Secured Debt and (ii) the amount of all other assets of the Company and its Subsidiaries not securing any portion of Secured Debt determined on a consolidated basis in accordance with GAAP (but excluding accounts receivable and intangibles); provided that, in determining Total Unencumbered Assets as a percentage of the aggregate outstanding principal amount of the Unsecured Debt of the Company and its Subsidiaries on a consolidated basis for purposes of the covenant set forth in Section 3.1(b) of this Supplemental Indenture, Joint Venture Interests shall be excluded from Total Unencumbered Assets to the extent such Joint Venture Interests would otherwise be included therein.  If Secured Debt secured by real estate or other property or assets of the Company or its Subsidiaries (“Secondary Collateral”) is fully defeased in accordance with the terms thereof or is also secured by cash or Cash Equivalents in an amount (determined at the lesser of (i) carrying value in accordance with GAAP or (ii) fair market value) at least equal to the outstanding principal amount of such Secured Debt, such Secondary Collateral shall be deemed not to secure any portion of such Secured Debt for purposes of this definition.

“Undepreciated Real Estate Assets” as of any date means the cost (original cost plus capital improvements) of, real estate assets of the Company and its Subsidiaries on such date, before depreciation and amortization determined on a consolidated basis in accordance with GAAP.

“Unsecured Debt” means Debt which is not secured by any of the properties of the Company or any Subsidiary.

ARTICLE 2

TERMS OF THE NOTES

Section 2.1Terms of the Notes.  Pursuant to Section 301 of the Indenture, the Notes shall have the following terms and conditions:

(a)Title.  The Notes shall be Registered Securities under the Indenture and shall be known as the Company’s “4.650% Senior Notes due 2024.”

(b)Aggregate Principal Amount.  The aggregate principal amount of Notes to be authenticated and delivered under this Supplemental Indenture shall initially be limited to $350,000,000, except as otherwise permitted by the provisions of the Indenture; provided that the Company may from time to time, without the consent of the Holders of the Notes, increase the principal amount of the Notes by issuing additional Securities in the future (the “Additional

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Notes”) having the same terms and ranking equally and ratably with the Notes in all respects and with the same CUSIP number as the Notes, except for the difference in the issue price and interest accrued prior to the issue date of such Additional Notes, provided that such Additional Notes constitute part of the same issue as the Notes for U.S. federal income tax purposes.  Any Additional Notes will be treated as a single series with the Notes under the Indenture and shall have the same terms as to status, redemption and otherwise as the Notes, and references herein to the Notes shall include any Additional Notes.

(c)Form of Notes.  The Notes (together with the Trustee’s certificate of authentication) shall be substantially in the form of Exhibit A hereto, which is hereby incorporated in and made a part of this Supplemental Indenture.  Any of the Notes may have such letters, numbers or other marks of identification and such notations, legends, endorsements or changes as the officers executing the same may approve (execution thereof to be conclusive evidence of such approval) and as are not inconsistent with the provisions of the Indenture, or as may be required by the Depositary or as may be required to comply with any applicable law or with any rule or regulation made pursuant thereto or with any rule or regulation of any securities exchange or automated quotation system on which the Notes may be listed, or to conform to usage, or to indicate any special limitations or restrictions to which any particular Notes are subject.

(d)Registered Securities in Book Entry Form.   The Notes shall be issuable in the form of one or more global Securities registered in the name of The Depository Trust Company’s nominee, and shall be deposited with, or on behalf of, The Depository Trust Company, New York, New York (including any successor depositary appointed hereunder, the “Depositary”).  The Notes may be surrendered for registration of transfer at the office or agency of the Company (including the Corporate Trust Office of the Trustee) maintained for such purpose, or at any other office or agency maintained by the Company for such purpose.

So long as the Depositary or its nominee is the registered owner of a Global Note, the Depositary or its nominee, as the case may be, will be considered the sole Holder of the Notes represented by such Global Note for all purposes under the Indenture and this Supplemental Indenture, and the beneficial owners of the Notes will be entitled only to those rights and benefits afforded to them in accordance with the Depositary’s regular operating procedures.  Except as provided below, owners of beneficial interests in a Global Note will not be entitled to have Notes registered in their names, will not receive or be entitled to receive physical delivery of Notes in certificated form and will not be considered the registered owners or Holders thereof under the Indenture or this Supplemental Indenture.

If (i) the Depositary is at any time unwilling or unable to continue as depository or if at any time the Depositary ceases to be a clearing agency registered under the Exchange Act and a successor depository is not appointed by the Company within 90 days, (ii) an Event of Default relating to the Notes has occurred and is continuing and the beneficial owners representing a majority in principal amount of the Notes advise the Depository to cease acting as depository for the Notes, or (iii) the Company, in its sole discretion, determines at any time that the Notes shall no longer be represented by a Global Note, the Company will in accordance with the Indenture issue individual Notes in certificated form of the same series and like tenor and in the applicable principal amount in exchange for the Notes represented by the Global Note.  In

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any such instance, an owner of a beneficial interest in a Global Note will be entitled to physical delivery of individual Notes in certificated form of the same series and like tenor, equal in principal amount to such beneficial interest and to have the Notes in certificated form registered in its name.  Notes so issued in certificated form will be issued in denominations of $1,000 or any integral multiple thereof and will be issued in registered form only, without coupons.

(e)Interest and Interest Rate.  The Notes will bear interest at a rate of 4.650% per annum, from March 12, 2014 (or, in the case of Additional Notes, as provided in Section 2.1(b) above), or from the immediately preceding Interest Payment Date to which interest has been paid or duly provided for, payable semi-annually in arrears on March 15 and September 15 of each year, commencing September 15, 2014, or if such day is not a Business Day, on the next succeeding Business Day (each of which shall be an “Interest Payment Date”), to the Persons in whose names the Notes are registered in the Security Register at the close of business on the day falling 14 calendar days immediately preceding the applicable Interest Payment Date (whether or not a Business Day), as the case may be (each, a “Regular Record Date”).

(f)Principal Repayment; Currency.  The stated maturity of the Notes is March 15, 2024; provided, however, the Notes may be earlier redeemed at the option of the Company as provided in paragraph (g) below.  The principal of each Note payable on its maturity date shall be paid against presentation and surrender thereof at the Corporate Trust Office of the Trustee, in such coin or currency of the United States of America as at the time of payment is legal tender for the payment of public or private debts.  The Company will not pay Additional Amounts (as defined in the Indenture) on the Notes.

(g)Redemption at the Option of the Company. The Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days’ notice to each Holder of Notes to be redeemed at its address appearing in the Security Register, at a price equal to the sum of (i) the principal amount of the Notes being redeemed, plus accrued and unpaid interest to but excluding the applicable Redemption Date, plus (ii) the Make-Whole Amount, if any (it being understood that if the notes are redeemed on or after September 15, 2023, the Make-Whole Amount equals zero).

(h)Notices.  All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Company shall be directed to it at Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458-1634, Attention: President; notices to the Trustee shall be directed to it at One Federal Street, 3rd Floor, Boston, Massachusetts 02110, Attention: Corporate Trust Department, Re: Hospitality Properties Trust 4.650% Senior Notes due 2024, or as to either party, at such other address as shall be designated by such party in a written notice to the other party.

(i)Global Note Legend.  Each Global Note shall bear the following legend on the face thereto and any other appropriate legends specified in an Officers’ Certificate:

UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR

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REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.

ARTICLE 3

ADDITIONAL COVENANTS

Section 3.1Additional Covenants of the Company.  In addition to the covenants of the Company set forth in Article Ten of the Indenture, for the benefit of the Holders of the Notes:

(a)Limitations on Incurrence of Debt.

(i)The Company will not, and will not permit any Subsidiary to, incur any Debt if, immediately after giving effect to the incurrence of such additional Debt and the application of the proceeds thereof, the aggregate principal amount of all outstanding Debt of the Company and its Subsidiaries on a consolidated basis determined in accordance with GAAP is greater than 60% of the sum (“Adjusted Total Assets”) of (without duplication) (A) the Total Assets of the Company and its Subsidiaries as of the end of the calendar quarter covered in the Company’s Annual Report on Form 10-K, or the Quarterly Report on Form 10-Q, as the case may be, most recently filed with the Securities and Exchange Commission (or, if such filing is not permitted under the Securities Exchange Act of 1934, as amended, with the Trustee) prior to the incurrence of such additional Debt and (B) the purchase price of any real estate assets or mortgages receivable acquired, and the amount of any securities offering proceeds received (to the extent that such proceeds were not used to acquire real estate assets or mortgages receivable or used to reduce Debt), by the Company or any Subsidiary since the end of such calendar quarter, including those proceeds obtained in connection with the incurrence of such additional Debt.

(ii)In addition to the foregoing limitation on the incurrence of Debt, the Company will not, and will not permit any Subsidiary to, incur any Secured Debt if, immediately after giving effect to the incurrence of such additional Secured Debt and the application of the proceeds thereof, the aggregate principal amount of all outstanding

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Secured Debt of the Company and its Subsidiaries on a consolidated basis is greater than 40% of Adjusted Total Assets.

(iii)In addition to the foregoing limitations on the incurrence of Debt, the Company will not, and will not permit any Subsidiary to, incur any Debt if the ratio of Consolidated Income Available for Debt Service to the Annual Debt Service for the four consecutive fiscal quarters most recently ended prior to the date on which such additional Debt is to be incurred shall have been less than 1.5 to 1.0, on a pro forma basis after giving effect thereto and to the application of the proceeds therefrom, and calculated on the assumption that (A) such Debt and any other Debt incurred by the Company and its Subsidiaries since the first day of such four-quarter period and the application of the proceeds therefrom, including to refinance other Debt, had occurred at the beginning of such period; (B) the repayment or retirement of any other Debt by the Company and its Subsidiaries since the first date of such four-quarter period had been repaid or retired at the beginning of such period (except that, in making such computation, the amount of Debt under any revolving credit facility shall be computed based upon the average daily balance of such Debt during such period); (C) in the case of Acquired Debt or Debt incurred in connection with any acquisition since the first day of such four-quarter period, the related acquisition had occurred as of the first day of such period with appropriate adjustments with respect to such acquisition being included in such pro forma calculation; and (D) in the case of any acquisition or disposition by the Company or its Subsidiaries of any asset or group of assets since the first day of such four-quarter period, whether by merger, stock purchase or sale, or asset purchase or sale, such acquisition or disposition or any related repayment of Debt had occurred as of the first day of such period with the appropriate adjustments with respect to such acquisition or disposition being included in such pro forma calculation. If the Debt giving rise to the need to make the foregoing calculation or any other Debt incurred after the first day of the relevant four-quarter period bears interest at a floating rate then, for purposes of calculating the Annual Debt Service, the interest rate on such Debt shall be computed on a pro forma basis as if the average interest rate which would have been in effect during the entire such four-quarter period had been the applicable rate for the entire such period.

(b)Maintenance of Total Unencumbered Assets.  The Company and its Subsidiaries will maintain at all times Total Unencumbered Assets of not less than 150% of the aggregate outstanding principal amount of the Unsecured Debt of the Company and its Subsidiaries on a consolidated basis.

ARTICLE 4

OTHER PROVISIONS

Section 4.1Additional Event of Default.  For purposes of this Supplemental Indenture and the Notes, in addition to the Events of Default set forth in Section 501 of the Indenture, it shall also constitute an “Event of Default” if a default under any bond, debenture, note or other evidence of indebtedness of the Company (including a default with respect to any other series of securities), or under any mortgage, indenture or other instrument of the Company under which there may be issued or by which there may be secured or evidenced any indebtedness for money

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borrowed by the Company (or by any Subsidiary, the repayment of which the Company has guaranteed or for which the Company is directly responsible or liable as obligor or guarantor) having an aggregate principal amount outstanding of at least $20,000,000, whether such indebtedness now exists or shall hereafter be incurred or created, which default shall have resulted in such indebtedness becoming or being declared due and payable prior to the date on which it would otherwise have become due and payable, without such indebtedness having been discharged or such acceleration having been rescinded or annulled within a period of ten days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in principal amount of the outstanding Notes, a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such acceleration to be rescinded or annulled and stating that such notice is a “Notice of Default” hereunder.

Section 4.2Make-Whole Amount Upon Acceleration.  Notwithstanding any provisions to the contrary in the Indenture, upon any acceleration of the Notes under Section 502 of the Indenture, the amount immediately due and payable in respect of the Notes shall equal the Outstanding principal amount thereof, plus accrued and unpaid interest thereon, plus, if such acceleration occurs prior to September 15, 2023, the Make-Whole Amount.

Section 4.3Modification of this Supplemental Indenture and the Notes Without the Consent of Holders.  In addition to the purposes set forth in Section 901 of the Indenture, without the consent of any Holders of Securities or coupons, the Company, when authorized by or pursuant to a Board resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures supplemental to the Indenture, in form satisfactory to the Trustee, in order to conform the terms of this Supplemental Indenture or the Notes to the descriptions thereof contained in any prospectus, prospectus supplement and free writing prospectus relating to the offer and sale of the Notes.

Section 4.4Applicability of Discharge, Defeasance and Covenant Defeasance Provisions.  The Discharge, Defeasance and Covenant Defeasance provisions in Article Fourteen of the Indenture will apply to the Notes.

ARTICLE 5

EFFECTIVENESS

This Supplemental Indenture shall be effective for all purposes as of the date and time this Supplemental Indenture has been executed and delivered by the Company and the Trustee in accordance with Article Nine of the Indenture.  As supplemented hereby, the Indenture is hereby confirmed as being in full force and effect.

ARTICLE 6

MISCELLANEOUS

Section 6.1Separability.  In the event any provision of this Supplemental Indenture shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall

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not invalidate or render unenforceable any other provision hereof or any provision of the Indenture.

Section 6.2Construction of Terms.  To the extent that any terms of this Supplemental Indenture or the Notes are inconsistent with the terms of the Indenture, the terms of this Supplemental Indenture or the Notes shall govern and supersede such inconsistent terms.

Section 6.3Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

Section 6.4Governing Law.  This Supplemental Indenture shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts.

Section 6.5Counterparts.  This Supplemental Indenture may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

[Signature Page Follows]

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IN WITNESS WHEREOF, the Company and the Trustee have caused this Supplemental Indenture to be executed as an instrument under seal in their respective corporate names as of the date first above written.

HOSPITALITY PROPERTIES TRUST
By:	/s/ John G. Murray
	Name:	John G. Murray
	Title:	President and Chief Operating Officer
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:	/s/ David Doucette
	Name:	David Doucette
	Title:	Vice President

[Signature Page to Supplemental Indenture No. 16]

EXHIBIT A

[Face of Note]

[Include only for Global Notes]

[UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

UNLESS AND UNTIL THIS NOTE IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY DTC TO A NOMINEE THEREOF OR BY A NOMINEE THEREOF TO DTC OR ANOTHER NOMINEE OF DTC OR BY DTC OR ANY SUCH NOMINEE TO A SUCCESSOR OF DTC OR A NOMINEE OF SUCH SUCCESSOR.]

4.650% Senior Note due 2024

No. $

HOSPITALITY PROPERTIES TRUST

promises to pay to                                                                                or registered assigns, the principal sum of                                              ($              ) on March 15, 2024, subject to the terms set forth on the reverse of this Note and the terms of the Indenture referred to therein.

Interest Payment Dates:  Each March 15 and September 15 (or if such day is not a Business Day, the next succeeding Business Day), commencing September 15, 2014.

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Record Dates:  The day falling 14 calendar days prior to any Interest Payment Date.

CUSIP No:  44106M AS1

ISIN No: US44106MAS17

HOSPITALITY PROPERTIES TRUST
By:
	Name:
	Title:

Attest:
By:
	Name:
	Title:
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Notes referred to in the within-mentioned Indenture:
U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:
	Authorized Officer

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[THE FOLLOWING CONSTITUTES THE REVERSE OF THE SECURITY]

HOSPITALITY PROPERTIES TRUST

4.650% Senior Note due 2024

Capitalized terms used herein have the meanings assigned to them in the Indenture (as defined below) unless otherwise indicated.

1.Interest.  Hospitality Properties Trust, a Maryland real estate investment trust (the “Company”), promises to pay interest on the principal amount of this Note at the rate and in the manner specified below.

The Company shall pay in cash interest on the principal amount of this Note at the rate per annum of 4.650%.  The Company will pay interest semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2014, or if any such day is not a Business Day (as defined in the Indenture), on the next succeeding Business Day (each an “Interest Payment Date”), to Holders of record on the day falling 14 calendar days immediately preceding such Interest Payment Date (whether or not a Business Day).

Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.  Interest shall accrue from the most recent date to which interest on the Notes has been paid or, if no interest has been paid, from March 12, 2014.

2.Method of Payment.  The Company will pay interest on the Notes (except defaulted interest) to the Persons who are registered Holders of Notes at the close of business on the record date next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date.  The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts.  The Company, however, may pay principal, premium, if any, and interest by check payable in such money.  It may mail an interest check to a Holder’s registered address.

3.Indenture.  The Company issued the Notes under an Indenture dated as of February 25, 1998 and Supplemental Indenture No. 16 dated as of March 12, 2014 (collectively, the “Indenture”), between the Company and the Trustee.  The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as in effect on the date of the Indenture and Holders of the Notes are referred to the Indenture and such Act for a statement of such terms.  The terms of the Indenture shall govern any inconsistencies between the Indenture and the Notes.  The Notes are senior unsecured general obligations of the Company initially issued in an aggregate principal amount of $350,000,000.

4.Optional Redemption.  The Notes will be subject to redemption at any time at the option of the Company, in whole or in part, upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to the sum of (i) the principal amount of the Notes being redeemed,

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plus accrued and unpaid interest to but excluding the applicable Redemption Date and (ii) the Make-Whole Amount, if any.

As used herein the term “Make-Whole Amount” means, in connection with any optional redemption or accelerated payment of any Notes prior to September 15, 2023, the excess, if any, of (i) the aggregate present value as of the date of such redemption or accelerated payment of each dollar of principal being redeemed or paid and the amount of interest (exclusive of interest accrued to the date of redemption or accelerated payment) that would have been payable in respect of such dollar if such redemption or accelerated payment had been made on September 15, 2023, determined by discounting, on a semiannual basis, such principal and interest at the Reinvestment Rate (determined on the third Business Day preceding the date such notice of redemption is given or declaration of acceleration is made) from the respective dates on which such principal and interest would have been payable if such redemption or accelerated payment had been made on September 15, 2023, over (ii) the aggregate principal amount of the Notes being redeemed or paid.  In the case of any redemption or accelerated payment of notes on or after September 15, 2023, the Make-Whole Amount means zero.  For purposes of the Indenture and the Notes, references in the Indenture to the payment of the principal (and premium, if any) and interest on the Notes shall be deemed to include the payment of the Make-Whole Amount, if any, due upon redemption with respect to the Notes.  The Make-Whole Amount shall be calculated by the Company and set forth in an Officer’s Certificate delivered to the Trustee, and the Trustee shall be entitled to rely on said Officer’s Certificate.

As used herein the term “Reinvestment Rate” means a rate per annum equal to the sum of 0.30% (thirty one hundredths of one percent) plus the yield on treasury securities at constant maturity under the heading “Week Ending” published in the Statistical Release (as defined herein) under the caption “Treasury Constant Maturities” for the maturity (rounded to the nearest month) corresponding to the remaining life to maturity (which, in the case of maturities corresponding to the principal and interest due on the Notes at their maturity, shall be deemed to be September 15, 2023), as of the payment date of the principal being redeemed or paid.  If no maturity exactly corresponds to such maturity, yields for the two published maturities most closely corresponding to such maturity shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding in each of such relevant periods to the nearest month.  For purposes of calculating the Reinvestment Rate, the most recent Statistical Release published prior to the date of determination of the Make-Whole Amount shall be used.

As used herein the term “Statistical Release” means the statistical release designated “H.15(519)” or any successor publication which is published weekly by the Federal Reserve System and which establishes yields on actively traded United States government securities adjusted to constant maturities or, if such statistical release is not published at the time of any determination under the Indenture, then any publicly available source of similar market data which shall be designated by the Company.

5.Mandatory Redemption.  The Company shall not be required to make sinking fund or redemption payments with respect to the Notes.

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6.Notice of Redemption.  Notice of redemption shall be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at its registered address.  Notes may be redeemed in part but only in whole multiples of $1,000, unless all of the Notes held by a Holder are to be redeemed.  On and after the Redemption Date, interest ceases to accrue on Notes or portions of them called for redemption.

7.Denominations, Transfer, Exchange.  The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000 in excess thereof.  The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture.  The Security Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The Security Registrar need not exchange or register the transfer of any Note or portion of a Note selected for redemption.  Also, it need not exchange or register the transfer of any Notes for a period of 15 days before the mailing of a notice of redemption of Notes, or during the period between a record date and the corresponding Interest Payment Date.

8.Defaults and Remedies.  In case an Event of Default (as defined in the Indenture) with respect to the Notes shall have occurred and be continuing, the principal hereof may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the provisions provided in the Indenture.

9.Actions of Holders.  The Indenture contains provisions permitting the Holders of not less than a majority of the aggregate principal amount of the outstanding Notes, subject to certain exceptions as provided in the Indenture, on behalf of the Holders of all such Notes at a meeting duly called and held as provided in the Indenture, to make, give or take any request, demand, authorization, direction, notice, consent, waiver or other action provided in the Indenture to be made, given or taken by the Holders of the Notes, including without limitation, waiving (a) compliance by the Company with certain provisions of the Indenture, and (b) certain past defaults under the Indenture and their consequences.  Any resolution passed or decision taken at any meeting of the Holders of the Notes in accordance with the provisions of the Indenture shall be conclusive and binding upon such Holders and upon all future Holders of this Note and other Notes issued upon the registration of transfer hereof or in exchange heretofore or in lieu hereof.

10.Persons Deemed Owners.  The Company, the Trustee, and any agent of the Company or the Trustee may deem and treat the Person in whose name this Note is registered on the Security Register as its absolute owner for all purposes.

11.Authentication.  This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

12.Governing Law.  THE INTERNAL LAW OF THE COMMONWEALTH OF MASSACHUSETTS SHALL GOVERN AND BE USED TO CONSTRUE THE INDENTURE AND THE NOTES.

13.No Personal Liability.  THE DECLARATION OF TRUST OF THE COMPANY, AMENDED AND RESTATED ON AUGUST 21, 1995, A COPY OF WHICH, TOGETHER

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WITH ALL AMENDMENTS AND SUPPLEMENTS THERETO (THE “DECLARATION”), IS DULY FILED IN THE OFFICE OF THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT THE NAME “HOSPITALITY PROPERTIES TRUST” REFERS TO THE TRUSTEES UNDER THE DECLARATION OF TRUST, AS SO AMENDED AND SUPPLEMENTED, COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE COMPANY SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE COMPANY.  ALL PERSONS DEALING WITH THE COMPANY, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE COMPANY FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture.  Requests may be made to:

Hospitality Properties Trust

Two Newton Place

255 Washington Street, Suite 300

Newton, MA 02458-1634

Telecopier No.:  (617) 964-8389

Attention: President

or such other address as the Company may specify pursuant to the Indenture.

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

[I] [We] assign and transfer this Note to                                                                                                                                                           [Print or type assignee’s name, address and zip code]                                                                      [Insert assignee’s soc. sec. or tax I.D. no.] and irrevocably appoint                                                                                                                   to transfer this Note on the books of the Company.  The agent may substitute another to act for him.

Date:

Signature Guaranteed

NOTICE: Signature must be guaranteed by an eligible Guarantor Institution (banks, stockbrokers, savings and loan associations and credit unions) with membership in an approved signature guarantee medallion program pursuant to Securities and Exchange Commission Rule 17Ad-15. NOTICE: The signature to this Assignment must correspond with the name as written upon the face of the within Note in every particular, without alteration or enlargement or any change whatever.

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EX-12.1

Exhibit 12.1

Hospitality Properties Trust

Computation of Ratio of Earnings to Fixed Charges

(in thousands, except ratio amounts)

	Three  Months  Ended  March 31,		Year Ended December 31,
	2014		2013		2012		2011		2010		2009
Pre-tax Income from Continuing Operations	$	38,263	$	127,750	$	153,219	$	191,803	$	21,990	$	198,671
Fixed Charges	35,368		145,954		136,111		134,110		138,712		143,410
Adjusted Earnings	$	73,631	$	273,704	$	289,330	$	325,913	$	160,702	$	342,081
Fixed Charges:
Interest on indebtedness and amortization of deferred finance costs and debt discounts	$	35,368	$	145,954	$	136,111	$	134,110	$	138,712	$	143,410
Ratio of Earnings to Fixed Charges	2.08x		1.88x		2.13x		2.43x		1.16x		2.39x

EX-12.2

Exhibit 12.2

Hospitality Properties Trust

Computation of Ratio of Earnings to Fixed Charges and Preferred Distributions

(in thousands, except ratio amounts)

	Three  Months  Ended  March 31,		Year Ended December 31,
	2014		2013		2012		2011		2010		2009
Pre-tax Income from Continuing Operations	$	38,263	$	127,750	$	153,219	$	191,803	$	21,990	$	198,671
Fixed Charges	35,368		145,954		136,111		134,110		138,712		143,410
Adjusted Earnings	$	73,631	$	273,704	$	289,330	$	325,913	$	160,702	$	342,081
Fixed Charges:
Interest on indebtedness and amortization of deferred finance costs and debt discounts	$	35,368	$	145,954	$	136,111	$	134,110	$	138,712	$	143,410
Preferred distributions	5,166		26,559		40,145		29,880		29,880		29,880
Combined Fixed Charges and preferred distributions	$	40,534	$	172,513	$	176,256	$	163,990	$	168,592	$	173,290
Ratio of Earnings to Fixed Charges and Preferred distributions	1.82x		1.59x		1.64x		1.99x		0.95x(1)		1.97x

(1)The deficiency for this period was approximately $7,890.

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Barry M. Portnoy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hospitality Properties Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2014	/s/ Barry M. Portnoy
	Barry M. Portnoy
	Managing Trustee

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Adam D. Portnoy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hospitality Properties Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2014	/s/ Adam D. Portnoy
	Adam D. Portnoy
	Managing Trustee

EX-31.3

EXHIBIT 31.3

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, John G. Murray, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hospitality Properties Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2014	/s/ John G. Murray
	John G. Murray
	President and Chief Operating Officer

EX-31.4

EXHIBIT 31.4

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Mark L. Kleifges, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hospitality Properties Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 6, 2014	/s/ Mark L. Kleifges
	Mark L. Kleifges
	Treasurer and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification Required by 18 U.S.C. Sec. 1350

In connection with the filing by Hospitality Properties Trust (the “Company”) of the Quarterly Report on Form 10-Q for the period ended March 31, 2014 (the “Report”), each of the undersigned hereby certifies, to the best of his knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Barry M. Portnoy	/s/ John G. Murray
Barry M. Portnoy	John G. Murray
Managing Trustee	President and Chief Operating Officer
/s/ Adam D. Portnoy	/s/ Mark L. Kleifges
Adam D. Portnoy	Mark L. Kleifges
Managing Trustee	Treasurer and Chief Financial Officer
Date: May 6, 2014

XML

Indebtedness (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		3 Months Ended			3 Months Ended			0 Months Ended		0 Months Ended				3 Months Ended
	Mar. 31, 2014	Dec. 31, 2013	Mar. 31, 2014 Unsecured revolving credit facility	Mar. 31, 2013 Unsecured revolving credit facility	May 05, 2014 Unsecured revolving credit facility Subsequent event	Mar. 31, 2014 Unsecured term loan	Mar. 31, 2013 Unsecured term loan	Mar. 31, 2014 Unsecured senior notes	Feb. 15, 2014 Senior Notes, due 2014 at 7.875%	Dec. 31, 2013 Senior Notes, due 2014 at 7.875%	Mar. 12, 2014 Senior Notes, due 2024 at 4.65%	Mar. 31, 2014 Senior Notes, due 2024 at 4.65%	Mar. 31, 2014 Convertible senior notes, due 2027 at 3.8%	Dec. 31, 2013 Convertible senior notes, due 2027 at 3.8%	Mar. 31, 2014 Revolving credit facility and term loan
Indebtedness
Unsecured term loan outstanding						$ 400,000
Unsecured senior notes								2,355,000
Convertible senior notes	8,478	8,478											8,478
Current amount outstanding under revolving credit facility			0		0
Extendable term of credit facility			1 year
Amount available under revolving credit facility			750,000		750,000
Maximum borrowing capacity that may be increased															2,300,000
Debt instrument, interest rate description			LIBOR			LIBOR
Margin over base rate before amendment, in basis points (as a percent)			1.30%			1.45%
Margin over base rate, in basis points (as a percent)			1.10%			1.20%
Interest rate payable for facility fees before amendment, (as a percent)			0.30%
Interest rate payable for facility fees (as a percent)			0.20%
Weighted average interest rate for borrowings (as a percent)			1.25%	1.51%		1.38%	1.66%
Loss on extinguishment of debt	(214)														(214)
Interest rate (as a percent)						1.35%
Issuance of senior notes	2,345,151	2,295,527									350,000
Interest rate stated percentage									7.875%	7.875%	4.65%	4.65%	3.80%	3.80%
Principal balance of debt repaid									300,000
Debt redeemed									311,813
Proceeds from issuance of senior notes, net of underwriting discounts and other offering expenses	$ 346,616										$ 345,999

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Revenue Recognition

3 Months Ended

Mar. 31, 2014

Revenue Recognition

Revenue Recognition

Note 3.  Revenue Recognition

We report hotel operating revenues for managed hotels in our condensed consolidated statements of income and comprehensive income. We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when services are provided. Our share of the net operating results of our managed hotels in excess of the minimum returns due to us and certain other amounts as provided under the management agreements, or additional returns, are generally determined annually. We recognize additional returns due to us under our management agreements at year end when all contingencies are met and the income is earned. We had no deferred additional returns for the three months ended March 31, 2014 and 2013.

We recognize rental income from operating leases on a straight line basis over the term of the lease agreements except for one lease in which there is uncertainty regarding the collection of future rent increases.  Rental income includes $42 and $62 for the three months ended March 31, 2014 and 2013, respectively, of adjustments necessary to record rent on the straight line basis.  Other assets, net, include $5,492 and $5,450 of straight line rent receivables at March 31, 2014 and December 31, 2013, respectively.

We determine percentage rent due to us under our leases annually and recognize it at year end when all contingencies have been met and the rent is earned. We had deferred percentage rent of $874 and $610 for the three months ended March 31, 2014 and 2013, respectively.

We own all the capital expenditure reserves, or FF&E reserves, for our hotels. We do not report the amounts which are escrowed as FF&E reserves for our managed hotels as FF&E reserve income. We report deposits by our third party hotel tenants into the escrow accounts as FF&E reserve income.

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Related Person Transactions (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended			1 Months Ended					3 Months Ended						1 Months Ended	3 Months Ended					12 Months Ended	3 Months Ended				1 Months Ended
	Mar. 31, 2014 item	Mar. 31, 2013	Dec. 31, 2013	Jan. 31, 2014 Travel centers TA No. 1 Travel center located in Roanoke, VA	Mar. 31, 2014 Hotels Sonesta agreements property	Mar. 31, 2014 Hotels Sonesta agreements Ft. Lauderdale, FL	Mar. 31, 2014 TA item	Dec. 31, 2013 TA	Mar. 31, 2014 TA Travel centers item property	Mar. 31, 2013 TA Travel centers	Mar. 31, 2014 TA Travel centers TA No. 1 property	Mar. 31, 2013 TA Travel centers TA No. 1	Mar. 31, 2014 TA Travel centers TA No. 2 property	Mar. 31, 2014 TA Travel centers TA No. 2 Maximum item	Mar. 31, 2014 RMR item property agreement	Mar. 31, 2014 RMR item property agreement	Mar. 31, 2013 RMR	Mar. 31, 2014 Sonesta Sonesta agreements	Mar. 31, 2013 Sonesta Sonesta agreements	Dec. 31, 2013 Sonesta Sonesta agreements	Dec. 31, 2012 Sonesta SNSTA	Mar. 31, 2014 AIC item	Mar. 31, 2013 AIC	Mar. 25, 2014 AIC	Dec. 31, 2013 AIC	Mar. 31, 2014 AIC Expected item	Mar. 31, 2014 AIC Maximum
Related Person Transactions
Percentage of ownership formerly held in subsidiary							100.00%
Number of common shares owned							3,420,000
Common shares of TA held by company as a percent of total TA shares outstanding							9.10%
Lessee as percentage of real estate properties							36.00%
Number of Managing Trustees who are Managing Directors							1
Number of Independent Trustees who are Independent Directors							1
Number of management agreements or leases	11								2
Number of properties leased									185		145		40
Number of renewal options available														2
Term of renewal option													15 years
Percentage of non-fuel revenue over threshold amounts									3.00%
Percentage of fuel revenue over threshold amounts									0.30%
Ground rent payable per year											$ 5,233
Deferred rent due in December 2022									107,085
Deferred rent due in June 2024									42,915
Rental income	63,386	62,212							55,283	53,524
Adjustments included in rental income necessary to record rent on the straight line basis	42	62									(88)	(73)
Accruals for unpaid rent, excluding any deferred rents							38,177	37,034
Deferred rent accrued	874	610									874	610
Estimated annual percentage rent waived													495
Annual percentage rent to be waived													2,500
Capital improvements from leased facilities, funded									6,063
Increase (decrease) in minimum annual rent	3,068			(525)					515
Rate of increase in minimum annual amount (as a percent)									8.50%
Proceeds received from the VDOT in connection with the eminent domain taking	6,178			6,178
Ground lease monthly rent to be paid				40
Number of employees	0
Number of agreements to provide management and administrative services															2	2
Number of properties under property management agreement					22										1	1
Number of Managing Trustees who are Chairmen, majority owners and employees of RMR															1	1
Business management, property management																9,659	9,893	2,625	2,073
Incentive fee expected to be paid in common shares															851	851
Common shares issued for services rendered by RMR															102,536	32,927
Aggregate purchase price advanced																					150,500
Procurement and construction supervision fees																		547	484
Accruals for unpaid amount	38,503		38,064															326		893
Amount owed for capital expenditure reimbursements	8,145		13,194															4,121		6,625
Purchase price including closing costs						65,000
Number of other companies to which management services are provided holding shares in related party																						5				6
Equity method investments, ownership percentage																						12.50%		14.30%			20.00%
Coverage of property insurance policy																						500,000
Amount invested in equity investee																						5,209
Earnings (losses) recognized related to equity investments	(97)	76																				(97)	76
Equity method investments, carrying value																						5,835			5,913
Shares purchased																								2,857
Price of shares purchased																								$ 825

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Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013
Segment Information
Hotel operating revenues	$ 329,936	$ 291,651
Rental income	63,386	62,212
FF&E reserve income	928	603
Total revenue	394,250	354,466
Hotel operating expenses	230,617	206,649
Depreciation and amortization	78,287	72,280
General and administrative	11,465	12,144
Acquisition related costs	61	276
Total expenses	320,430	291,349
Operating income (loss)	73,820	63,117
Interest income	25	19
Interest expense	(35,368)	(35,188)
Loss on extinguishment of debt	(214)
Income before income taxes and equity in earnings (losses) of an investee	38,263	27,948
Income tax expense	(616)	(518)
Earnings (losses) recognized related to equity investments	(97)	76
Net income	37,550	27,506
Total assets	5,936,187		5,967,544
Corporate
Segment Information
General and administrative	11,465	12,144
Total expenses	11,465	12,144
Operating income (loss)	(11,465)	(12,144)
Interest income	25	19
Interest expense	(35,368)	(35,188)
Loss on extinguishment of debt	(214)
Income before income taxes and equity in earnings (losses) of an investee	(47,022)	(47,313)
Income tax expense	(616)	(518)
Earnings (losses) recognized related to equity investments	(97)	76
Net income	(47,735)	(47,755)
Total assets	60,767		42,357
Hotels
Segment Information
Hotel operating revenues	329,936	291,651
Rental income	8,103	8,688
FF&E reserve income	928	603
Total revenue	338,967	300,942
Hotel operating expenses	230,617	206,649
Depreciation and amortization	53,016	48,677
Acquisition related costs	61	276
Total expenses	283,694	255,602
Operating income (loss)	55,273	45,340
Income before income taxes and equity in earnings (losses) of an investee	55,273	45,340
Net income	55,273	45,340
Total assets	3,681,451		3,701,850
Travel Centers
Segment Information
Rental income	55,283	53,524
Total revenue	55,283	53,524
Depreciation and amortization	25,271	23,603
Total expenses	25,271	23,603
Operating income (loss)	30,012	29,921
Income before income taxes and equity in earnings (losses) of an investee	30,012	29,921
Net income	30,012	29,921
Total assets	$ 2,193,969		$ 2,223,337

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Hotel Management Agreements and Leases and Renovation Funding (Details) (USD $)	3 Months Ended			3 Months Ended			1 Months Ended	3 Months Ended	12 Months Ended	3 Months Ended	1 Months Ended	3 Months Ended			12 Months Ended			3 Months Ended	12 Months Ended		3 Months Ended	12 Months Ended
	Mar. 31, 2014	Mar. 31, 2013	Dec. 31, 2013	Mar. 31, 2014 Hotels property	Mar. 31, 2013 Hotels	Mar. 31, 2014 Hotels Marriott No. 1 agreement property	May 05, 2014 Hotels Marriott No. 234 agreement	Mar. 31, 2014 Hotels Marriott No. 234 agreement	Dec. 31, 2014 Hotels Marriott No. 234 agreement Forecast	Mar. 31, 2014 Hotels Marriott No. 234 agreement Maximum	May 05, 2014 Hotels InterContinental agreement	Mar. 31, 2014 Hotels InterContinental agreement property	Jan. 06, 2014 Hotels InterContinental agreement	Jan. 03, 2014 Hotels InterContinental agreement	Dec. 31, 2014 Hotels InterContinental agreement Forecast	Mar. 31, 2014 Hotels InterContinental agreement Minimum	Jan. 03, 2014 Hotels InterContinental agreement Minimum	Mar. 31, 2014 Hotels Sonesta agreements	Dec. 31, 2015 Hotels Sonesta agreements Forecast	Dec. 31, 2014 Hotels Sonesta agreements Forecast	Mar. 31, 2014 Hotels Wyndham agreement property	Dec. 31, 2015 Hotels Wyndham agreement Forecast	Dec. 31, 2014 Hotels Wyndham agreement Forecast	Mar. 31, 2014 Hotels Hyatt Hotels Corporation property	Mar. 31, 2014 Hotels Carlson property	Mar. 31, 2014 Hotels Marriott No 5 contract property
Management Agreements and Leases
Number of properties leased to TRSs				288
Number of properties leased to third parties				3																	1
Number of real estate properties leased or managed						53						91									22			22	11	1
Operating agreement annual rent and return						$ 67,612,000		$ 105,793,000				$ 139,498,000						$ 60,104,000
Realized returns						15,036,000		23,806,000										2,096,000
Security deposit balance required to be maintained with the entity in 2014																30,000,000
Security deposit balance required to be maintained with the entity after 2014																37,000,000
Reduction in the minimum security deposit balance required to be maintained with the entity during 2014 and 2015 for every dollar of additional security deposit paid													2
Security deposit balance required to be maintained with the entity beginning January 1, 2016																37,000,000
Additional security deposits paid														4,283,000
Security deposit balance required to be maintained with the entity																	21,434,000
Amount by which the cash flow available to pay the entity's minimum rent or return was less than the minimum amount	28,095,000	33,007,000					1,756,000	2,635,000			2,446,000	2,446,000
Reduction of hotel operating expenses				10,876,000	14,908,000
Shortfalls due to unguaranteed portions of minimum returns				17,219,000	18,099,000
Percentage of minimum returns for which limited guarantee has been provided										90.00%
Guaranty payments made								2,548,000
Guarantee provided to the entity, remaining amount								28,124,000													8,524,000			13,066,000	20,078,000
Amount expected to be provided for renovation						4,400,000			7,050,000						22,990,000				22,800,000	108,200,000		10,075,000	27,500,000
Amount funded for renovation						769,000												20,179,000			15,286,000
Percentage increase in minimum returns after funding for renovation of hotels						10.00%		9.00%				8.00%						8.00%			8.00%
Security deposit balance	29,718,000		27,876,000								32,046,000
Fixed minimum return as a percentage of invested capital																		8.00%
Percentage of minimum returns not paid for cancellation of management agreements																		75.00%
Guarantee provided to the entity, maximum																					35,656,000			50,000,000	40,000,000
Annual guarantee provided to the entity, maximum																					$ 17,828,000

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Fair Value of Assets and Liabilities (Details) (USD $) In Thousands, except Share data, unless otherwise specified	Apr. 30, 2014 Sonesta ES Suites property	Mar. 31, 2014 TA	Mar. 31, 2014 Quoted Prices in Active Markets for Identical Assets (Level 1) TA	Mar. 31, 2014 Recurring Fair Value	Mar. 31, 2014 Recurring Quoted Prices in Active Markets for Identical Assets (Level 1)	Mar. 31, 2014 Nonrecurring Significant Unobservable Inputs (Level 3)
Fair Value of Assets and Liabilities
Investment securities				$ 27,873	$ 27,873
Property held for sale				4,074		4,074
Shares included in investment securities		3,420,000	3,420,000
Historical cost of securities			$ 17,407
Number of properties classified as held for sale	1

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New Accounting Pronouncements

3 Months Ended

Mar. 31, 2014

New Accounting Pronouncements

New Accounting Pronouncements

Note 2.  New Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.  This update amends the criteria for reporting discontinued operations to, among other things, change the criteria for disposals to qualify as discontinued operations. The update is effective for interim and annual reporting periods beginning after December 15, 2014 with early adoption permitted.  The implementation of this update is not expected to cause any changes to our condensed consolidated financial statements.

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Fair Value of Assets and Liabilities (Details 2) (USD $) In Thousands, unless otherwise specified	Feb. 15, 2014 Senior Notes, due 2014 at 7.875%	Dec. 31, 2013 Senior Notes, due 2014 at 7.875%	Mar. 31, 2014 Senior Notes, due 2015 at 5.125%	Dec. 31, 2013 Senior Notes, due 2015 at 5.125%	Mar. 31, 2014 Senior Notes, due 2016 at 6.3%	Dec. 31, 2013 Senior Notes, due 2016 at 6.3%	Mar. 31, 2014 Senior Notes, due 2017 at 5.625%	Dec. 31, 2013 Senior Notes, due 2017 at 5.625%	Mar. 31, 2014 Senior Notes, due 2018 at 6.7%	Dec. 31, 2013 Senior Notes, due 2018 at 6.7%	Mar. 31, 2014 Senior Notes, due 2022 at 5%	Dec. 31, 2013 Senior Notes, due 2022 at 5%	Mar. 31, 2014 Senior Notes, due 2023 at 4.5%	Dec. 31, 2013 Senior Notes, due 2023 at 4.5%	Mar. 31, 2014 Senior Notes, due 2024 at 4.65%	Mar. 12, 2014 Senior Notes, due 2024 at 4.65%	Mar. 31, 2014 Convertible senior notes, due 2027 at 3.8%	Dec. 31, 2013 Convertible senior notes, due 2027 at 3.8%	Mar. 31, 2014 Carrying Amount	Dec. 31, 2013 Carrying Amount	Dec. 31, 2013 Carrying Amount Senior Notes, due 2014 at 7.875%	Mar. 31, 2014 Carrying Amount Senior Notes, due 2015 at 5.125%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2015 at 5.125%	Mar. 31, 2014 Carrying Amount Senior Notes, due 2016 at 6.3%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2016 at 6.3%	Mar. 31, 2014 Carrying Amount Senior Notes, due 2017 at 5.625%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2017 at 5.625%	Mar. 31, 2014 Carrying Amount Senior Notes, due 2018 at 6.7%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2018 at 6.7%	Mar. 31, 2014 Carrying Amount Senior Notes, due 2022 at 5%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2022 at 5%	Mar. 31, 2014 Carrying Amount Senior Notes, due 2023 at 4.5%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2023 at 4.5%	Mar. 31, 2014 Carrying Amount Senior Notes, due 2024 at 4.65%	Mar. 31, 2014 Carrying Amount Convertible senior notes, due 2027 at 3.8%	Dec. 31, 2013 Carrying Amount Convertible senior notes, due 2027 at 3.8%	Mar. 31, 2014 Fair Value	Dec. 31, 2013 Fair Value	Dec. 31, 2013 Fair Value Senior Notes, due 2014 at 7.875%	Mar. 31, 2014 Fair Value Senior Notes, due 2015 at 5.125%	Dec. 31, 2013 Fair Value Senior Notes, due 2015 at 5.125%	Mar. 31, 2014 Fair Value Senior Notes, due 2016 at 6.3%	Dec. 31, 2013 Fair Value Senior Notes, due 2016 at 6.3%	Mar. 31, 2014 Fair Value Senior Notes, due 2017 at 5.625%	Dec. 31, 2013 Fair Value Senior Notes, due 2017 at 5.625%	Mar. 31, 2014 Fair Value Senior Notes, due 2018 at 6.7%	Dec. 31, 2013 Fair Value Senior Notes, due 2018 at 6.7%	Mar. 31, 2014 Fair Value Senior Notes, due 2022 at 5%	Dec. 31, 2013 Fair Value Senior Notes, due 2022 at 5%	Mar. 31, 2014 Fair Value Senior Notes, due 2023 at 4.5%	Dec. 31, 2013 Fair Value Senior Notes, due 2023 at 4.5%	Mar. 31, 2014 Fair Value Senior Notes, due 2024 at 4.65%	Mar. 31, 2014 Fair Value Convertible senior notes, due 2027 at 3.8%	Dec. 31, 2013 Fair Value Convertible senior notes, due 2027 at 3.8%
Fair Value of Assets and Liabilities
Financial liabilities																					$ 300,000	$ 280,000	$ 280,000	$ 275,000	$ 275,000	$ 300,000	$ 300,000	$ 350,000	$ 350,000	$ 500,000	$ 500,000	$ 300,000	$ 300,000	$ 350,000	$ 8,478	$ 8,478			$ 304,035	$ 283,965	$ 283,150	$ 296,049	$ 297,443	$ 331,071	$ 327,681	$ 397,968	$ 399,560	$ 521,475	$ 524,810	$ 298,932	$ 289,950	$ 356,101	$ 8,860	$ 8,983
Unamortized discounts																			(9,849)	(11,120)
Financial liabilities																			$ 2,353,629	$ 2,302,358																	$ 2,494,421	$ 2,435,612
Interest rate stated percentage	7.875%	7.875%	5.125%	5.125%	6.30%	6.30%	5.625%	5.625%	6.70%	6.70%	5.00%	5.00%	4.50%	4.50%	4.65%	4.65%	3.80%	3.80%

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Real estate properties, at cost:
Land	$ 1,470,513	$ 1,470,513
Buildings, improvements and equipment	5,968,554	5,946,852
Total real estate properties, gross	7,439,067	7,417,365
Accumulated depreciation	(1,812,007)	(1,757,151)
Total real estate properties, net	5,627,060	5,660,214
Cash and cash equivalents	33,830	22,500
Restricted cash (FF&E reserve escrow)	26,863	30,873
Due from related persons	38,503	38,064
Other assets, net	209,931	215,893
Total assets	5,936,187	5,967,544
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured term loan	400,000	400,000
Senior notes, net of discounts	2,345,151	2,295,527
Convertible senior notes	8,478	8,478
Security deposits	29,718	27,876
Accounts payable and other liabilities	94,053	130,448
Due to related persons	8,145	13,194
Dividends payable	5,166	5,166
Total liabilities	2,890,711	2,880,689
Commitments and contingencies
Preferred shares of beneficial interest, no par value, 100,000,000 shares authorized:
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 149,730,332 and 149,606,024 shares issued and outstanding, respectively	1,497	1,496
Additional paid in capital	4,113,065	4,109,600
Cumulative net income	2,555,604	2,518,054
Cumulative other comprehensive income	10,534	15,952
Cumulative preferred distributions	(285,151)	(279,985)
Cumulative common distributions	(3,630,180)	(3,558,369)
Total shareholders' equity	3,045,476	3,086,855
Total liabilities and shareholders' equity	5,936,187	5,967,544
Series D
Preferred shares of beneficial interest, no par value, 100,000,000 shares authorized:
Preferred shares	$ 280,107	$ 280,107

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Cash flows from operating activities:
Net income	$ 37,550	$ 27,506
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	78,287	72,280
Amortization of deferred financing costs and debt discounts as interest	1,831	1,512
Straight line rental income	(42)	(62)
Security deposits replenished (applied to payment shortfalls)	1,837	(5,917)
FF&E reserve income and deposits	(12,556)	(6,845)
Loss on extinguishment of debt	214
Equity in (earnings) losses of an investee	97	(76)
Deferred income taxes		(212)
Other non-cash (income) expense, net	252	(1,100)
Changes in assets and liabilities:
(Increase) decrease in due from related persons	(2)	260
Increase in other assets	(1,382)	(12,063)
Decrease in accounts payable and other liabilities	(25,183)	(23,734)
Decrease in due to related persons	(1,833)	(3,346)
Cash provided by operating activities	79,070	48,203
Cash flows from investing activities:
Real estate acquisitions and deposits	5,000	(3,000)
Real estate improvements	(41,607)	(49,364)
FF&E reserve fundings	(769)	(15,111)
Eminent domain proceeds	6,178
Cash used in investing activities	(31,198)	(67,475)
Cash flows from financing activities:
Proceeds from issuance of common shares, net		393,473
Proceeds from issuance of senior notes, net of discount	346,616
Repayment of senior notes	(300,000)
Borrowings under revolving credit facility	370,000	95,000
Repayments of revolving credit facility	(370,000)	(405,000)
Deferred financing costs	(6,181)
Distributions to preferred shareholders	(5,166)	(8,097)
Distributions to common shareholders	(71,811)	(58,110)
Cash (used in) provided by financing activities	(36,542)	17,266
Increase (decrease) in cash and cash equivalents	11,330	(2,006)
Cash and cash equivalents at beginning of period	22,500	20,049
Cash and cash equivalents at end of period	33,830	18,043
Supplemental cash flow information:
Cash paid for interest	54,116	55,064
Cash paid for income taxes	1,737	132
Non-cash investing activities:
Hotel managers' deposits in FF&E reserve	9,745	5,891
Hotel managers' purchases with FF&E reserve	$ (14,524)	$ (23,816)

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Revenue Recognition (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014 item	Mar. 31, 2013	Dec. 31, 2013
Revenue Recognition
Deferred additional returns	$ 0	$ 0
Number of operating leases for which rental income is not recognized on straight line basis over the term of the lease agreements	1
Adjustments necessary to record rent on straight line basis	42	62
Straight line rent receivables	5,492		5,450
Deferred percentage rent	$ 874	$ 610

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Shareholders' Equity (Details) (USD $)	0 Months Ended		0 Months Ended		1 Months Ended	3 Months Ended	1 Months Ended
	Jan. 15, 2014 Series D	Mar. 03, 2014 Series D	Feb. 20, 2014 Common Shares	Apr. 08, 2014 Subsequent event Common Shares	Mar. 31, 2014 RMR	Mar. 31, 2014 RMR	Mar. 31, 2014 RMR Common Shares	May 05, 2014 RMR Subsequent event
Common Share Issuances
Common shares issued						21,772		11,155
Common shares issued for services rendered by RMR					102,536	32,927	102,536
Distribution to preferred shareholders (in dollars per share)	$ 0.4453
Distribution declared per share (in dollars per share)		$ 0.4453
Distribution to common shareholders (in dollars per share)			$ 0.48
Cash distributions paid or payable (in dollars per share)				$ 0.49

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Basis of Presentation

3 Months Ended

Mar. 31, 2014

Basis of Presentation

Basis of Presentation

Note 1.  Basis of Presentation

The accompanying condensed consolidated financial statements of Hospitality Properties Trust and its subsidiaries, or HPT, we, our or us, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2013, or our 2013 Annual Report.  In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included in these condensed consolidated financial statements.  These condensed consolidated financial statements include the accounts of HPT and its subsidiaries, all of which are 100% owned directly or indirectly by HPT.  All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods and those of our managers and tenants are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates.  Significant estimates in our condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets.

We have determined that each of our taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards CodificationTM.   We have concluded that we must consolidate each of our TRSs because we are the entity with the power to direct the activities that most significantly impact the VIEs’ performance and we have the obligation to absorb the majority of the potential variability in gains and losses of each VIE, with the primary focus on losses, and are, therefore, the primary beneficiary of each VIE.  The assets of our TRSs were $28,341 as of March 31, 2014 and consist primarily of amounts due from certain of their hotel managers and working capital advances to certain of their hotel managers.  These assets can be used to settle obligations of both us and our TRSs.  The liabilities of our TRSs were $41,702 as of March 31, 2014 and consist primarily of security deposits they hold and amounts payable to certain of their hotel managers.  Creditors have recourse to both us and our TRSs for these liabilities.

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2014	Dec. 31, 2013
Common shares, par value (in dollars per share)	$ 0.01	$ 0.01
Common shares, shares authorized	200,000,000	200,000,000
Common shares, shares issued	149,730,332	149,606,024
Common shares, shares outstanding	149,730,332	149,606,024
Series D
Preferred shares, par value (in dollars per share)
Preferred shares, shares authorized	100,000,000	100,000,000
Preferred shares, dividend yield (as a percent)	7.125%	7.125%
Preferred shares, shares issued	11,600,000	11,600,000
Preferred shares, shares outstanding	11,600,000	11,600,000
Preferred shares, aggregate liquidation preference (in dollars)	$ 290,000	$ 290,000

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Hotel Management Agreements and Leases and Renovation Funding

3 Months Ended

Mar. 31, 2014

Hotel Management Agreements and Leases and Renovation Funding

Hotel Management Agreements and Leases and Renovation Funding

Note 11. Hotel Management Agreements and Leases and Renovation Funding

As of March 31, 2014, 288 of our hotels are leased to our TRSs and managed by independent hotel operating companies and three are leased to third parties.

Marriott No. 1 agreement.  Our management agreement with Marriott International Inc., or Marriott, for 53 hotels provides that we are paid a fixed annual minimum return of $67,612, to the extent that gross revenues of the hotels, after payment of hotel operating expenses, are sufficient to do so.  We do not have any security deposits or guarantees for the 53 hotels included in our Marriott No. 1 agreement.  Accordingly, the returns we receive from these hotels managed by Marriott are limited to available hotel cash flows after payment of operating expenses. We realized returns of $15,036 during the three months ended March 31, 2014 under this agreement.  Marriott’s management and incentive fees are only earned after we receive our minimum returns.

We currently expect to fund $4,400 of capital improvements during 2014 at certain of the hotels included in our Marriott No. 1 agreement. We funded $769 of this amount during the three months ended March 31, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 10% of the amounts funded.

Marriott No. 234 agreement. During the three months ended March 31, 2014, the payments we received under our Marriott No. 234 agreement, which requires annual minimum returns to us of $105,793, were $2,635 less than the minimum amounts contractually required. Pursuant to our Marriott No. 234 agreement, Marriott provided us with a limited guarantee for shortfalls up to 90% of our minimum returns through 2019. During the three months ended March 31, 2014, Marriott made $2,548 of guaranty payments to us.  We realized returns of $23,806 during the three months ended March 31, 2014 under this agreement.  The available balance of this guaranty was $28,124 as of March 31, 2014. Also, during the period from March 31, 2014 to May 5, 2014, the payments we received for these hotels were $1,756 less than the contractual minimum returns due to us.

We currently expect to fund $7,050 of capital improvements during 2014 to complete renovations at certain of the hotels included in our Marriott No. 234 agreement. We did not make any of these renovation fundings during the three months ended March 31, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 9% of the amounts funded.

InterContinental agreement. During the three months ended March 31, 2014, the payments we received under our agreement with InterContinental Hotels Group, plc, or InterContinental, covering 91 hotels and requiring annual minimum returns to us of $139,498, were $2,446 less than the minimum amounts contractually required.  We applied the available security deposit to cover these shortfalls.

Under this agreement, InterContinental is required to maintain a minimum security deposit of $30,000 in 2014 and $37,000 thereafter. We were advised by InterContinental that it expects interim period shortfalls during 2014 and 2015 in the required minimum security deposit balance under the agreement. As a result, on January 6, 2014, we entered into a letter agreement with InterContinental under which the minimum security deposit balance required to be maintained during 2014 and 2015 will be reduced by two dollars for every dollar of additional security deposit InterContinental provides to us. Beginning January 1, 2016, any resulting reductions to the minimum security deposit amount will cease to be in effect and the minimum deposit balance required under the InterContinental agreement will revert to $37,000. Since January 1, 2014, InterContinental has provided $4,283 of additional security deposits, which reduced the minimum security deposit amount required to $21,434.  Also, during the period from March 31, 2014 to May 5, 2014, the minimum return payments we received under our InterContinental agreement were $2,446 more than the minimum amounts due to us.  We replenished the available security deposit by the additional amounts received.  The remaining balance of the security deposit was $32,046 as of May 5, 2014.

When we reduce the amounts of the security deposits we hold for this agreement or any other operating agreements for payment deficiencies, we record income equal to the amounts by which the deposit is reduced up to the minimum return or minimum rent due to us. However, reducing the security deposits does not result in additional cash flow to us of the deficiency amounts, but reducing amounts of security deposits may reduce the refunds due to the respective lessees or managers who have provided us with these deposits upon expiration of the respective lease or management agreement.  The security deposits are non-interest bearing and are not held in escrow. Under all of our hotel contracts that include a security deposit, any amounts of the security deposits which are applied to payment deficits may be replenished from future cash flows from the applicable hotel operations pursuant to the terms of the respective contracts.

We currently expect to fund $22,990 of capital improvements in 2014 to complete renovations at certain of the hotels included in our InterContinental agreement. We did not make any of these renovation fundings during the three months ended March 31, 2014.  As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded.

Sonesta agreement. Our management agreement with Sonesta provides that we are paid a fixed minimum return equal to 8% of our invested capital, as defined in the management agreement ($60,104 as of March 31, 2014), to the extent that gross revenues of the hotels, after payment of hotel operating expenses and base management fees to Sonesta, are sufficient to do so.  We do not have any security deposits or guarantees for our hotels managed by Sonesta.  Accordingly, the returns we receive from hotels managed by Sonesta are limited to available hotel cash flows after payment of operating expenses. Sonesta’s incentive management fees, but not its other fees, are only earned after we receive our minimum returns, and we may cancel these management agreements if approximately 75% of our minimum returns are not paid for certain periods. We realized returns of $2,096 during the three months ended March 31, 2014 under this agreement.

In addition to recurring capital expenditures, we currently expect to fund approximately $108,200 in 2014 and $22,800 in 2015 for renovations and other improvements at certain of the hotels included in our Sonesta agreement. We funded $20,179 of these amounts during the three months ended March 31, 2014. The annual minimum returns due to us under the Sonesta agreement increase by 8% of the amounts funded in excess of threshold amounts, as defined therein. See Note 10 for further information regarding our relationship with Sonesta.

Wyndham agreement. We currently expect to fund approximately $27,500 of capital improvements in 2014 and $10,075 in 2015 to complete renovations at certain of the hotels included in our Wyndham Hotel Group, or Wyndham, agreement. We funded $15,286 of these amounts during the three months ended March 31, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded.

Other management agreement and lease matters.  As of May 5, 2014, all payments due to us from our managers and tenants under our other operating agreements were current.  Minimum return and minimum rent payments due to us under some of these other hotel management agreements and leases are supported by guarantees.  The guarantee provided by Wyndham with respect to 22 hotels managed by Wyndham is limited to $35,656 ($8,524 remaining at March 31, 2014), subject to an annual payment limit of $17,828 and expires on July 28, 2020.  The guarantee provided by Hyatt Hotels Corporation, or Hyatt, with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($13,066 remaining at March 31, 2014). The guarantee provided by Carlson Hotels Worldwide, or Carlson, with respect to the 11 hotels managed by Carlson is limited to $40,000 ($20,078 remaining at March 31, 2014).  The guarantee provided by Wyndham with respect to the lease with Wyndham Vacation Resorts, Inc., or Wyndham Vacation, for part of one hotel is unlimited. The guarantee provided by Marriott with respect to the one hotel leased by Marriott (Marriott No. 5 agreement) is unlimited.

Guarantees and security deposits generally.  Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $28,095 and $33,007 less than the minimum returns due to us for the three months ended March 31, 2014 and 2013, respectively. When managers of these hotels are required to fund the shortfalls under the terms of our operating agreements or their guarantees, we reflect such fundings (including security deposit applications) in our condensed consolidated statements of income and comprehensive income as a reduction of hotel operating expenses. The reduction to hotel operating expenses was $10,876 and $14,908 in the three months ended March 31, 2014 and 2013, respectively. We had shortfalls in the minimum returns at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our operating agreements of $17,219 and $18,099 during the three months ended March 31, 2014 and 2013, respectively, which represents the unguaranteed portion of our minimum returns from Marriott and Sonesta.  Certain of our guarantees and our security deposits under the InterContinental and Marriott No. 234 agreements may be replenished by future cash flows from the hotels in excess of our minimum returns.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2014	May 05, 2014
Document and Entity Information
Entity Registrant Name	HOSPITALITY PROPERTIES TRUST
Entity Central Index Key	0000945394
Document Type	10-Q
Document Period End Date	Mar. 31, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		149,741,487
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q1

XML

Fair Value of Assets and Liabilities

3 Months Ended

Mar. 31, 2014

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

Note 12.  Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at March 31, 2014, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

			Fair Value at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Investment securities (1)	$	27,873	$	27,873	$	—	$	—
Property held for sale (2)	$	4,074	$	—	$	—	$	4,074

(1) Our investment securities, consisting of our 3,420,000 shares of TA, which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs).  Our historical cost basis for these securities is $17,407.  The unrealized gain for these securities as of March 31, 2014 is included in cumulative other comprehensive income in our condensed consolidated balance sheets.

(2) Our property held for sale consists of one Sonesta ES Suites hotel in Myrtle Beach, SC we sold on April 29, 2014. We estimated the fair value less costs to sell this hotel using standard industry valuation techniques and estimates of value developed by hotel brokerage firms (Level 3 inputs).

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, unsecured term loan, senior notes and security deposits. At March 31, 2014 and December 31, 2013, the fair values of these additional financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows:

	March 31, 2014					December 31, 2013
	Carrying			Fair		Carrying			Fair
	Amount			Value		Amount			Value
Senior Notes, due 2014 at 7.875%	$	—		$	—	$	300,000		$	304,035
Senior Notes, due 2015 at 5.125%	280,000			283,965		280,000			283,150
Senior Notes, due 2016 at 6.3%	275,000			296,049		275,000			297,443
Senior Notes, due 2017 at 5.625%	300,000			331,071		300,000			327,681
Senior Notes, due 2018 at 6.7%	350,000			397,968		350,000			399,560
Senior Notes, due 2022 at 5%	500,000			521,475		500,000			524,810
Senior Notes, due 2023 at 4.5%	300,000			298,932		300,000			289,950
Senior Notes, due 2024 at 4.65%	350,000			356,101		—			—
Convertible Senior Notes, due 2027 at 3.8%	8,478			8,860		8,478			8,983
Unamortized discounts	(9,849		)	—		(11,120		)	—
Total financial liabilities	$	2,353,629		$	2,494,421	$	2,302,358		$	2,435,612

At March 31, 2014, we estimated the fair values of our unsecured senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 1 inputs).  We estimated the fair value of our convertible unsecured senior notes using discounted cash flow analyses and currently prevailing market interest rates (Level 3 inputs) because no market quotes were available at March 31, 2014 and December 31, 2013.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
Revenues:
Hotel operating revenues	$ 329,936	$ 291,651
Rental income	63,386	62,212
FF&E reserve income	928	603
Total revenue	394,250	354,466
Expenses:
Hotel operating expenses	230,617	206,649
Depreciation and amortization	78,287	72,280
General and administrative	11,465	12,144
Acquisition related costs	61	276
Total expenses	320,430	291,349
Operating income	73,820	63,117
Interest income	25	19
Interest expense (including amortization of deferred financing costs and debt discounts of $1,831 and $1,512, respectively)	(35,368)	(35,188)
Loss on extinguishment of debt	(214)
Income before income taxes and equity in earnings (losses) of an investee	38,263	27,948
Income tax expense	(616)	(518)
Equity in earnings (losses) of an investee	(97)	76
Net income	37,550	27,506
Preferred distributions	(5,166)	(8,097)
Net income available for common shareholders	32,384	19,409
Net income	37,550	27,506
Other comprehensive income (loss):
Unrealized gain (loss) on TravelCenters of America common shares	(5,438)	12,420
Equity interest in investee's unrealized gains (losses)	19	(8)
Other comprehensive income (loss)	(5,419)	12,412
Comprehensive income	$ 32,131	$ 39,918
Weighted average common shares outstanding (in shares)	149,636	125,426
Basic and diluted earnings per common shares:
Net income available for common shareholders (in dollars per share)	$ 0.22	$ 0.15

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Indebtedness

3 Months Ended

Mar. 31, 2014

Indebtedness

Indebtedness

Note 6.  Indebtedness

Our principal debt obligations at March 31, 2014 were: (1) our $400,000 unsecured term loan; (2) an aggregate principal amount of $2,355,000 of public issuances of unsecured senior notes; and (3) our public issuance of $8,478 outstanding principal amount of convertible senior notes due 2027.  As of both March 31, 2014 and May 5, 2014, we had no amounts outstanding and $750,000 available under our revolving credit facility.

On January 8, 2014, we amended the agreements governing our unsecured revolving credit facility and unsecured term loan with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of other lenders.

As a result of the amendment, the stated maturity date of our $750,000 revolving credit facility was extended from September 7, 2015 to July 15, 2018. Subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date by an additional one year to July 15, 2019. The amended credit agreement provides that we can borrow, repay and reborrow funds available under the revolving credit facility until maturity, and no principal repayment is due until maturity. The $750,000 maximum amount of our revolving credit facility and the $400,000 amount of the term loan remained unchanged by the amendment. The amended credit agreement includes a feature under which maximum borrowings under the revolving credit facility and term loan may be increased to up to $2,300,000 on a combined basis in certain circumstances. Under the amendment, the interest rate paid on borrowings under the revolving credit facility was reduced from LIBOR plus a premium of 130 basis points to LIBOR plus a premium of 110 basis points, and the facility fee was reduced from 30 basis points to 20 basis points per annum on the total amount of lending commitments. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. The weighted average interest rate for borrowings under our revolving credit facility was 1.25% and 1.51% for the three months ended March 31, 2014 and 2013, respectively.

As a result of the amendment, the stated maturity date of our $400,000 unsecured term loan was extended from March 13, 2017 to April 15, 2019. Our term loan is prepayable without penalty at any time. Under the amendment, the interest rate paid on borrowings under the term loan agreement was reduced from LIBOR plus a premium of 145 basis points to LIBOR plus a premium of 120 basis points. The interest rate premium is subject to adjustment based on changes to our credit ratings. As of March 31, 2014, the interest rate for the amount outstanding under our term loan was 1.35%. The weighted average interest rate for the amount outstanding under our term loan was 1.38% and 1.66% for the three months ended March 31, 2014 and 2013, respectively.

As a result of the amendments to our revolving credit facility and term loan, we recorded a loss on early extinguishment of debt of $214 during the three months ended March 31, 2014.

Our borrowings under the amended credit facilities continue to be unsecured. Prior to the effectiveness of the amendment, certain of our subsidiaries had guaranteed our obligations under the revolving credit facility and term loan. As a result of the amendment, none of those subsidiary guarantees remain in effect. The amended credit agreement provides that, with certain exceptions, a subsidiary of ours is required to guaranty our obligations under the revolving credit facility and term loan only if that subsidiary has separately incurred debt (other than nonrecourse debt), within the meaning specified in the amended credit agreement, or provided a guarantee of debt incurred by us or any of our other subsidiaries.

Our revolving credit facility and term loan agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes RMR ceasing to act as our business manager. Our revolving credit facility and term loan agreement contains a number of covenants that restrict our ability to incur debt in excess of calculated amounts, restrict our ability 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 the agreement governing our revolving credit facility and term loan at March 31, 2014.

On February 15, 2014, we redeemed at par all of our outstanding 7.875% senior notes due 2014 for $300,000 plus accrued and unpaid interest (an aggregate of $311,813).

On March 12, 2014, we issued $350,000 of 4.65% unsecured senior notes due 2024 in a public offering for net proceeds of $345,999 after underwriting discounts and other offering expenses.

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Shareholders' Equity

3 Months Ended

Mar. 31, 2014

Shareholders' Equity

Shareholders' Equity

Note 5.  Shareholders’ Equity

Common Share Issuances

During the three months ended March 31, 2014 and the period April 1, 2014 to May 5, 2014, we issued 21,772 and 11,155, respectively, of our common shares to Reit Management & Research LLC, or RMR, as part of its compensation under our business management agreement.  In March 2014, we also issued 102,536 of our common shares to RMR for the incentive fee for 2013 pursuant to the business management agreement.  See Note 10 for further information regarding this agreement.

Distributions

On January 15, 2014, we paid a $0.4453 per share distribution to our Series D preferred shareholders.  On March 3, 2014, we declared a $0.4453 per share distribution to our Series D preferred shareholders of record on March 31, 2014. We paid this amount on April 15, 2014.

On February 20, 2014, we paid a $0.48 per share distribution to our common shareholders.  On April 8, 2014, we declared a $0.49 per share distribution to our common shareholders of record on April 25, 2014. We expect to pay this amount on or about May 21, 2014.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) represents the unrealized gain (loss) on the TravelCenters of America LLC, or TA, shares we own and our share of the comprehensive income (loss) of Affiliates Insurance Company, or AIC.  See Note 10 for further information regarding these investments.

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Per Common Share Amounts (Details)	3 Months Ended
	Mar. 31, 2014
Per Common Share Amounts
Dilutive common shares	0

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Segment Information (Tables)

3 Months Ended

Mar. 31, 2014

Segment Information

Schedule of segment information

	For the Three Months Ended March 31, 2014
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	329,936	$	—	$	—		$	329,936
Rental income	8,103		55,283		—			63,386
FF&E reserve income	928		—		—			928
Total revenues	338,967		55,283		—			394,250
Hotel operating expenses	230,617		—		—			230,617
Depreciation and amortization	53,016		25,271		—			78,287
General and administrative	—		—		11,465			11,465
Acquisition related costs	61		—		—			61
Total expenses	283,694		25,271		11,465			320,430
Operating income (loss)	55,273		30,012		(11,465		)	73,820
Interest income	—		—		25			25
Interest expense	—		—		(35,368		)	(35,368		)
Loss on early extinguishment of debt	—		—		(214		)	(214		)
Income (loss) before income taxes and equity in losses of an investee	55,273		30,012		(47,022		)	38,263
Income tax expense	—		—		(616		)	(616		)
Equity in losses of an investee	—		—		(97		)	(97		)
Net income (loss)	$	55,273	$	30,012	$	(47,735	)	$	37,550

	As of March 31, 2014
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,681,451	$	2,193,969	$	60,767	$	5,936,187

	For the Three Months Ended March 31, 2013
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	291,651	$	—	$	—		$	291,651
Rental income	8,688		53,524		—			62,212
FF&E reserve income	603		—		—			603
Total revenues	300,942		53,524		—			354,466
Hotel operating expenses	206,649		—		—			206,649
Depreciation and amortization	48,677		23,603		—			72,280
General and administrative	—		—		12,144			12,144
Acquisition related costs	276		—		—			276
Total expenses	255,602		23,603		12,144			291,349
Operating income (loss)	45,340		29,921		(12,144		)	63,117
Interest income	—		—		19			19
Interest expense	—		—		(35,188		)	(35,188		)
Gain on sale of real estate	—		—		—			—
Income (loss) before income taxes and equity in earnings of an investee	45,340		29,921		(47,313		)	27,948
Income tax expense	—		—		(518		)	(518		)
Equity in earnings of an investee	—		—		76			76
Net income (loss)	$	45,340	$	29,921	$	(47,755	)	$	27,506

	As of December 31, 2013
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,701,850	$	2,223,337	$	42,357	$	5,967,544

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Segment Information

3 Months Ended

Mar. 31, 2014

Segment Information

Segment Information

Note 9.  Segment Information

	For the Three Months Ended March 31, 2014
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	329,936	$	—	$	—		$	329,936
Rental income	8,103		55,283		—			63,386
FF&E reserve income	928		—		—			928
Total revenues	338,967		55,283		—			394,250
Hotel operating expenses	230,617		—		—			230,617
Depreciation and amortization	53,016		25,271		—			78,287
General and administrative	—		—		11,465			11,465
Acquisition related costs	61		—		—			61
Total expenses	283,694		25,271		11,465			320,430
Operating income (loss)	55,273		30,012		(11,465		)	73,820
Interest income	—		—		25			25
Interest expense	—		—		(35,368		)	(35,368		)
Loss on early extinguishment of debt	—		—		(214		)	(214		)
Income (loss) before income taxes and equity in losses of an investee	55,273		30,012		(47,022		)	38,263
Income tax expense	—		—		(616		)	(616		)
Equity in losses of an investee	—		—		(97		)	(97		)
Net income (loss)	$	55,273	$	30,012	$	(47,735	)	$	37,550

	As of March 31, 2014
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,681,451	$	2,193,969	$	60,767	$	5,936,187

	For the Three Months Ended March 31, 2013
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	291,651	$	—	$	—		$	291,651
Rental income	8,688		53,524		—			62,212
FF&E reserve income	603		—		—			603
Total revenues	300,942		53,524		—			354,466
Hotel operating expenses	206,649		—		—			206,649
Depreciation and amortization	48,677		23,603		—			72,280
General and administrative	—		—		12,144			12,144
Acquisition related costs	276		—		—			276
Total expenses	255,602		23,603		12,144			291,349
Operating income (loss)	45,340		29,921		(12,144		)	63,117
Interest income	—		—		19			19
Interest expense	—		—		(35,188		)	(35,188		)
Gain on sale of real estate	—		—		—			—
Income (loss) before income taxes and equity in earnings of an investee	45,340		29,921		(47,313		)	27,948
Income tax expense	—		—		(518		)	(518		)
Equity in earnings of an investee	—		—		76			76
Net income (loss)	$	45,340	$	29,921	$	(47,755	)	$	27,506

	As of December 31, 2013
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,701,850	$	2,223,337	$	42,357	$	5,967,544

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Real Estate Properties

3 Months Ended

Mar. 31, 2014

Real Estate Properties

Real Estate Properties

Note 7.  Real Estate Properties

At March 31, 2014, we owned 291 hotels and owned or leased 185 travel centers which are operated under 11 operating agreements.

During the three months ended March 31, 2014, we funded $42,376 of improvements to certain of our properties that pursuant to the terms of our management and lease agreements with our hotel managers and tenants resulted in increases in our contractual annual minimum returns and rents of $3,068.  See Notes 10 and 11 for further information about our fundings of improvements to certain of our properties.

One of the travel centers we leased to TA under our TA No. 1 lease, located in Roanoke, VA, was taken in August 2013 by eminent domain proceedings brought by the Virginia Department of Transportation, or the VDOT, in connection with certain highway construction.  In January 2014, we received $6,178 of proceeds from the VDOT in connection with the taking.  See Note 10 for more information regarding this transaction.

On February 27, 2014, we terminated a previously disclosed agreement to acquire a hotel located in Orlando, FL which had a contract purchase price of $21,000.  We terminated this agreement based upon our diligence findings.

On March 31, 2014, we entered an agreement to acquire a 240 room full service hotel located in Ft. Lauderdale, FL for a contract purchase price of $65,000, excluding closing costs. We currently expect to acquire this hotel during the second quarter of 2014.  We plan to convert this hotel to a Sonesta branded hotel and add it to our Sonesta agreement (see Notes 10 and 11 for more information regarding this transaction and the Sonesta agreement).

On April 29, 2014, we sold our Sonesta ES Suites branded hotel in Myrtle Beach, SC for $4,500, excluding closing costs.  See Notes 10 and 12 for further information regarding this transaction.

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Income Taxes

3 Months Ended

Mar. 31, 2014

Income Taxes

Income Taxes

Note 8. Income Taxes

We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, and, accordingly are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements.  We are subject to income tax in Canada, Puerto Rico and certain states despite our REIT status.  Also, we lease our managed hotels to our wholly owned TRSs that, unlike most of our other subsidiaries, file separate consolidated federal corporate income tax returns and are subject to federal, state and foreign income taxes.  Our consolidated income tax provision included in our condensed consolidated statements of income and comprehensive income includes the income tax provision related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our REIT status.

During the three months ended March 31, 2014, we recognized income tax expense of $616, which includes $31 of foreign taxes and $585 of certain state taxes that are payable without regard to our REIT status and TRS tax loss carry forwards.

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Related Person Transactions

3 Months Ended

Mar. 31, 2014

Related Person Transactions

Related Person Transactions

Note 10. Related Person Transactions

TA

TA is our former 100% owned subsidiary and our largest tenant, and we are TA’s largest shareholder. TA was created as a separate public company in 2007 as a result of its spin-off from us. As of March 31, 2014, we owned 3,420,000 common shares, representing approximately 9.1% of TA’s outstanding common shares. TA is the lessee of 36% of our real estate properties, at cost, as of March 31, 2014.  Mr. Barry Portnoy, one of our Managing Trustees, is a managing director of TA. Mr. Thomas O’Brien, an officer of RMR and a former officer of ours prior to the TA spin-off, is President and Chief Executive Officer and the other managing director of TA. Mr. Arthur Koumantzelis, who was one of our Independent Trustees prior to the TA spin-off, serves as an independent director of TA. RMR provides management services to both us and TA.

Financial information about TA may be found on the Securities and Exchange Commission’s, or the SEC, website by entering TA’s name at http://www.sec.gov/edgar/searchedgar/companysearch.html. Reference to TA’s financial information on this external website is presented to comply with applicable accounting regulations of the SEC.  Except for such financial information contained therein as is required to be included herein under such regulations, TA’s public filings and other information located in external websites are not incorporated by reference into these financial statements.  TA has not yet filed its Annual Report on Form 10-K for the year ended December 31, 2013.  TA has publicly disclosed that the delay is due to unanticipated delays encountered in connection with TA’s accounting for income taxes as well as general delays encountered in connection with the completion of the TA’s accounting processes and procedures.  There is no assurance as to when TA’s Annual Report on Form 10-K for the year ended December 31, 2013 will be completed and filed with the SEC.

TA has two leases with us, the TA No. 1 lease and the TA No. 2 lease, pursuant to which TA leases 185 travel centers from us. The TA No. 1 lease is for 145 travel centers that TA operates under the “TravelCenters of America” or “TA” brand names. The TA No. 2 lease is for 40 travel centers that TA operates under the “Petro” brand name. The TA No. 1 lease expires on December 31, 2022.  The TA No. 2 lease expires on June 30, 2024, and may be extended by TA for up to two additional periods of 15 years each.

Both of these leases require TA to: (1) make payments to us of minimum rents; (2) pay us percentage rent equal to 3% of non-fuel revenues and 0.3% of fuel revenues above applicable base year revenues subject to certain limitations; (3) pay us at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on our leased sites; and (4) maintain the leased travel centers, including structural and non-structural components. In addition to minimum and percentage rent, TA is obligated to pay us ground rent of approximately $5,233 per year under the TA No. 1 lease. Previously deferred rent due from TA of $107,085 and $42,915 is due in December 2022 and June 2024, respectively; however, we have not recognized any of the deferred rent as rental income or as rents receivable due to uncertainties regarding future collection.

We recognized rental income of $55,283 and $53,524 for the three months ended March 31, 2014 and 2013, respectively, under our leases with TA. Rental income for the three months ended March 31, 2014 and 2013 includes ($88) and ($73), respectively, of adjustments necessary to record the scheduled rent increase on our TA No. 1 lease and the estimated future payment to us by TA for the cost of removing underground storage tanks on a straight line basis. As of March 31, 2014 and December 31, 2013, we had accruals for unpaid amounts of $38,177 and $37,034, respectively, owed to us by TA (excluding any deferred rents), which amounts are included in due from related persons on our condensed consolidated balance sheets. We had deferred percentage rent under our TA No. 1 lease of $874 and $610 for the three months ended March 31, 2014 and 2013, respectively. We have waived an estimated $495 of percentage rent under our TA No. 2 lease as of March 31, 2014 because we previously agreed to waive the first $2,500 of percentage rents under the TA No. 2 lease. We determine percentage rent due under our TA leases annually and recognize it at year end when all contingencies are met.

Under the TA No. 1 and No. 2 leases, TA may request that we fund approved amounts for renovations, improvements and equipment at leased travel centers in return for increases in TA’s minimum annual rent. We are not required to fund these improvements and TA is not required to sell them to us. For the three months ended March 31, 2014, we funded $6,063 for capital improvements purchased from TA under this lease provision; and, as a result, TA’s minimum annual rent payable to us increased by approximately $515.

On August 13, 2013, a travel center located in Roanoke, VA that we leased to TA under the TA No. 1 lease was taken by eminent domain proceedings brought by the VDOT in connection with certain highway construction. Our TA No. 1 lease provides that the annual rent payable by TA to us is reduced by 8.5% of the amount of the proceeds we receive from the taking or, at our option, the fair market value rent of the property on the commencement date of the TA No. 1 lease. In January 2014, we received proceeds from the VDOT of $6,178, which is a portion of the VDOT’s estimate of the value of the property, and as a result the annual rent payable by TA to us under the TA No. 1 lease was reduced by $525 effective January 6, 2014. We and TA intend to challenge the VDOT’s estimate of the property’s value. We have entered a lease agreement with the VDOT to lease this property through August 2014 for $40 per month, and under the terms of the TA No. 1 lease TA will be responsible to pay this ground lease rent. We entered into a sublease for this property with TA, and TA plans to continue operating it as a travel center through August 2014.

RMR

We have no employees. Personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management and administrative services to us: (i) a business management agreement, which relates to our business generally, and (ii) a property management agreement, which relates to the property level operations of the office building component of only one property in Baltimore, MD, which also includes a Royal Sonesta hotel.

One of our Managing Trustees, Mr. Barry Portnoy, is Chairman, majority owner and an employee of RMR. Our other Managing Trustee, Mr. Adam Portnoy, is the son of Mr. Barry Portnoy, and an owner, President, Chief Executive Officer and a director of RMR. Each of our executive officers is also an officer of RMR, including Mr. Ethan Bornstein, who is the son-in-law of Mr. Barry Portnoy and the brother-in-law of Mr. Adam Portnoy. Certain of TA’s and Sonesta’s executive officers are officers of RMR. Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR provides management services. Mr. Barry Portnoy serves as a managing director or managing trustee of a majority of those companies and Mr. Adam Portnoy serves as a managing trustee of a majority of those companies. In addition, officers of RMR serve as officers of those companies.

We incurred aggregate business management, property management and incentive fees of $9,659 and $9,893 for the three months ended March 31, 2014 and 2013. The fees for the three months ended March 31, 2014, include $851 of estimated 2014 incentive fees payable in common shares in 2015 based on our common share total return. These amounts are included in general and administrative expenses in our condensed consolidated financial statements. In accordance with the terms of our business management agreement, as amended in December 2013, we issued 32,927 of our common shares to RMR for the three months ended March 31, 2014 as payment for a portion of the base business management fee we recognized for such period. In March 2014, we also issued 102,536 of our common shares to RMR for the incentive fee for 2013 pursuant to the business management agreement.

Sonesta

The stockholders of Sonesta are Mr. Barry Portnoy and Mr. Adam Portnoy, who are our Managing Trustees, and they also serve as directors of Sonesta. Sonesta’s Chairman and Chief Executive Officer is an officer of RMR and formerly was our Director of Internal Audit, and other officers and employees of Sonesta are former employees of RMR. In addition, RMR also provides certain services to Sonesta.

In 2012, pursuant to a series of transactions, we purchased the entities that owned the Royal Sonesta Hotel Boston in Cambridge, MA, or the Cambridge Hotel, and leased the Royal Sonesta Hotel New Orleans in New Orleans, LA, or the New Orleans Hotel, for approximately $150,500. In connection with these transactions, we entered into hotel management agreements with Sonesta International Hotels Corporation, or Sonesta, that provide for Sonesta to manage for us each of the Cambridge Hotel and the New Orleans Hotel. Since that time, we have rebranded additional hotels we own to Sonesta brands and management, and as of March 31, 2014, Sonesta was managing 22 of our hotels pursuant to long term management agreements. We currently lease all hotels that we own and which are managed by Sonesta to one of our TRSs.

On June 28, 2013, we acquired the fee interest in the New Orleans Hotel from the third party owner from which we previously leased that hotel and, as a result, the lease with the third party terminated. Simultaneous with this acquisition, we and Sonesta amended and restated the prior management agreement we had with Sonesta for this hotel. The terms of the amended and restated management agreement are substantially the same as those contained in our other management agreements with Sonesta relating to full service hotels.

In April 2012, we entered into a pooling agreement with Sonesta that combined our management agreements with Sonesta for hotels that we owned for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and the calculation of minimum returns due to us. We previously referred to this agreement and combination of hotels and management agreements as our Sonesta No. 1 agreement. The management agreements for all of our hotels then managed by Sonesta, excluding, until June 28, 2013, the New Orleans Hotel, were included in the Sonesta No. 1 agreement. The amended and restated management agreement we entered with Sonesta for the New Orleans Hotel upon our acquiring the fee interest in that hotel was added to our pooling agreement with Sonesta. We now refer to the pooling agreement and combination of our Sonesta branded hotels and management agreements as our Sonesta agreement. See Note 11 for further information about our management agreements with Sonesta.

Pursuant to our management agreements with Sonesta, we incurred management, system and reservation fees payable to Sonesta of $2,625 and $2,073 for the three months ended March 31, 2014 and 2013, respectively. These amounts are included in hotel operating expenses in our condensed consolidated financial statements. In addition, we also incurred procurement and construction supervision fees payable to Sonesta in connection with capital expenditures at our hotels managed by Sonesta of $547 and $484 for the three months ended March 31, 2014 and 2013, respectively. These amounts have been capitalized in our condensed consolidated financial statements. Under our hotel management agreements with Sonesta, routine property maintenance, which is expensed, is an operating expense of the hotels and improvements and periodic renovations, which are capitalized, are funded by us, except in the case of the New Orleans Hotel for capital expenditures incurred prior to June 28, 2013, which were borne in large part by the former lessor.  As of March 31, 2014 and December 31, 2013, we had accruals for unpaid amounts of $326 and $893, respectively, owed to us by Sonesta, which amounts are included in due from related persons in our condensed consolidated balance sheets.  As of March 31, 2014 and December 31, 2013 we had accrued amounts due to Sonesta for capital expenditure reimbursements of $4,121 and $6,625, respectively, which amounts are included in due to related persons in our condensed consolidated balance sheets.

On March 31, 2014, we agreed to acquire a hotel in Ft. Lauderdale, FL for a purchase price of $65,000, excluding closing costs. Upon acquisition of this hotel, we intend to rebrand the hotel as a Sonesta hotel.  This acquisition is subject to completion of diligence and other closing conditions and we can provide no assurance that we will acquire this property or that terms of the acquisition will not change. We expect to enter into a hotel management agreement with Sonesta for this property on terms consistent with our other applicable hotel management agreements with Sonesta and to add that management agreement to our Sonesta agreement.

On April 29, 2014, we sold our Sonesta ES Suites in Myrtle Beach, SC. In connection with this sale, the hotel management agreement with Sonesta for this property was terminated and removed from our Sonesta agreement.

AIC

We, RMR, TA and five other companies to which RMR provides management services each currently own approximately 12.5% of Affiliates Insurance Company, or AIC, an Indiana insurance company. All of our Trustees and most of the trustees and directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC.

We and the other shareholders of AIC have purchased property insurance providing $500,000 of coverage pursuant to an insurance program arranged by AIC and with respect to which AIC is a reinsurer of certain coverage amounts. This program currently expires in June 2014, and we may determine to renew our participation in this program at that time. As of March 31, 2014, we have invested $5,209 in AIC since its formation in 2008. Although we own less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC as all of our Trustees are also directors of AIC. Our investment in AIC had a carrying value of $5,835 and $5,913 as of March 31, 2014 and December 31, 2013, respectively, which amounts are included in other assets on our condensed consolidated balance sheet. We recognized a loss of $97 and income of $76 related to our investment in AIC for the three months ended March 31, 2014 and 2013, respectively.

On March 25, 2014, as a result of the removal, without cause, of all of the trustees of CommonWealth REIT, or CWH, CWH underwent a change in control, as defined in the shareholders agreement among us, the other shareholders of AIC and AIC. As a result of that change in control and in accordance with the terms of the shareholders agreement, we provided notice of exercise of our right to purchase shares of AIC CWH then owned.  We expect that we and the other non-CWH shareholders will purchase pro rata all of the AIC shares CWH owns.  As such, we expect to purchase 2,857 of those shares for $825, and that following these purchases, we and the other remaining six shareholders will then each own approximately 14.3% of AIC.

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Basis of Presentation (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2014
Basis of Presentation
Ownership interest in subsidiaries (as a percent)	100.00%
Assets of TRSs	$ 28,341
Liabilities of TRSs	$ 41,702

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Real Estate Properties (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended			0 Months Ended			1 Months Ended
	Mar. 31, 2014 item	Mar. 31, 2014 Full service hotel in Ft. Lauderdale, FL item	Feb. 27, 2014 Full service hotel in Orlando, FL	Apr. 29, 2014 Sonesta ES Suites Subsequent event	Mar. 31, 2014 Hotels property	Mar. 31, 2014 Travel centers property	Jan. 31, 2014 Travel centers Travel center located in Roanoke, VA TA No. 1
Real estate properties
Number of properties owned					291	185
Number of operating agreements	11
Funded real estate improvements	$ 42,376
Increase (decrease) in annual minimum returns and rents	3,068						(525)
Proceeds received from the VDOT in connection with the eminent domain taking	6,178						6,178
Purchase price		65,000	21,000
Number of rooms		240
Gross proceeds from sale of hotel				$ 4,500

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014	Mar. 31, 2013
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Interest expense, amortization of deferred financing costs and debt discounts	$ 1,831	$ 1,512

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Per Common Share Amounts

3 Months Ended

Mar. 31, 2014

Per Common Share Amounts

Per Common Share Amounts

Note 4.  Per Common Share Amounts

We compute per common share amounts using the weighted average number of our common shares outstanding during the period. We had no dilutive common shares during the periods presented.

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Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Income Taxes
Income tax expense	$ 616
Foreign taxes included in current tax expense	31
Certain state taxes that are payable without regard to entity's REIT status and TRS tax loss carry forwards, included in current tax expense	$ 585

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Fair Value of Assets and Liabilities (Tables)

3 Months Ended

Mar. 31, 2014

Fair Value of Assets and Liabilities

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 March 31, 2014, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

			Fair Value at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Investment securities (1)	$	27,873	$	27,873	$	—	$	—
Property held for sale (2)	$	4,074	$	—	$	—	$	4,074

(1) Our investment securities, consisting of our 3,420,000 shares of TA, which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs).  Our historical cost basis for these securities is $17,407.  The unrealized gain for these securities as of March 31, 2014 is included in cumulative other comprehensive income in our condensed consolidated balance sheets.

(2) Our property held for sale consists of one Sonesta ES Suites hotel in Myrtle Beach, SC we sold on April 29, 2014. We estimated the fair value less costs to sell this hotel using standard industry valuation techniques and estimates of value developed by hotel brokerage firms (Level 3 inputs).

Schedule of fair value of additional financial instruments

	March 31, 2014					December 31, 2013
	Carrying			Fair		Carrying			Fair
	Amount			Value		Amount			Value
Senior Notes, due 2014 at 7.875%	$	—		$	—	$	300,000		$	304,035
Senior Notes, due 2015 at 5.125%	280,000			283,965		280,000			283,150
Senior Notes, due 2016 at 6.3%	275,000			296,049		275,000			297,443
Senior Notes, due 2017 at 5.625%	300,000			331,071		300,000			327,681
Senior Notes, due 2018 at 6.7%	350,000			397,968		350,000			399,560
Senior Notes, due 2022 at 5%	500,000			521,475		500,000			524,810
Senior Notes, due 2023 at 4.5%	300,000			298,932		300,000			289,950
Senior Notes, due 2024 at 4.65%	350,000			356,101		—			—
Convertible Senior Notes, due 2027 at 3.8%	8,478			8,860		8,478			8,983
Unamortized discounts	(9,849		)	—		(11,120		)	—
Total financial liabilities	$	2,353,629		$	2,494,421	$	2,302,358		$	2,435,612