Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K ☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2019 OR ☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 1-11527 SERVICE PROPERTIES TRUST (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Incorporation or Organization) Maryland 0 ...

Service Properties Trust (NASDAQ:SVC) Q4 2019 Earnings Conference Call February 28, 2020 10:00 AM ET Company Participants Kristin Brown – Director-Investor Relations John Murray – President Todd Hargreaves – Vice President Brian Donley – Chief Financial Officer Conference Call Participants Bryan Maher – B. Riley FBR Dori Kesten – Wells Fargo Operator Good day, and welcome to Service Properties Fourth Quarter 2019 Financial Results. [Operator Instructions] Please note the event is being recorded. Now I’d lik ...

[PART I Financial Information](index=3&type=section&id=PART%20I%20Financial%20Information) [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) The company's balance sheet expanded significantly due to real estate acquisitions financed by debt, while net income declined year-over-year [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sep 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | **Total real estate properties, net** | $8,213,852 | $6,549,589 | | Assets held for sale | $604,989 | $144,008 | | **Total assets** | **$9,515,503** | **$7,177,079** | | Unsecured revolving credit facility | $790,000 | $177,000 | | Senior unsecured notes, net | $5,284,933 | $3,598,295 | | **Total liabilities** | **$6,906,517** | **$4,579,648** | | **Total shareholders' equity** | **$2,608,986** | **$2,597,431** | - The significant increase in **total assets and liabilities** is primarily due to the acquisition of real estate properties, financed through increased borrowings[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Statement of Comprehensive Income Highlights (in thousands, except per share data) | Metric | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Total revenues | $1,735,242 | $1,743,737 | | Total expenses | $1,419,057 | $1,394,645 | | Gain on sale of real estate | $159,535 | $0 | | Unrealized (losses) gains on equity securities, net | ($43,761) | $89,348 | | **Net income** | **$274,643** | **$294,594** | | **Net income per common share (diluted)** | **$1.67** | **$1.79** | - **Net income decreased to $274.6 million** for the nine-month period, driven by unrealized losses on equity securities that offset a large gain on real estate sales[12](index=12&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Cash Flow Activity | Nine Months Ended Sep 30, 2019 | Nine Months Ended Sep 30, 2018 | | :--- | :--- | :--- | | Net cash provided by operating activities | $432,530 | $403,404 | | Net cash used in investing activities | ($2,457,485) | ($277,857) | | Net cash provided by (used in) financing activities | $2,019,461 | ($137,550) | - A **$2.46 billion cash outflow from investing activities** for property acquisitions was funded by a **$2.02 billion cash inflow from financing activities**, mainly new debt[18](index=18&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company adopted a new lease standard, recording **right-of-use assets and lease liabilities of $77.0 million**[24](index=24&type=chunk)[26](index=26&type=chunk) - Significant acquisitions included the **$2.48 billion SMTA Transaction** for 767 net lease properties and two hotels for approximately $174 million[55](index=55&type=chunk)[56](index=56&type=chunk)[57](index=57&type=chunk) - The company **sold 20 travel centers for $308.2 million**, resulting in a **gain of $159.5 million**[59](index=59&type=chunk) - The company **issued $1.7 billion in senior unsecured notes** to fund the SMTA Transaction, incurring an $8.5 million loss on early debt extinguishment[49](index=49&type=chunk)[50](index=50&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the impact of the transformative SMTA acquisition, financed by new debt, on financial results and portfolio performance [Overview and Portfolio Performance](index=32&type=section&id=Overview%20and%20Portfolio%20Performance) - The company completed a **$2.48 billion acquisition** of a 767-property net lease portfolio, significantly expanding its retail holdings[147](index=147&type=chunk) - As of September 30, 2019, the company owned **328 hotels and 946 service-oriented retail properties**[146](index=146&type=chunk)[155](index=155&type=chunk) Hotel Performance vs. Prior Year | Period | Metric | 2019 | 2018 | Change | | :--- | :--- | :--- | :--- | :--- | | **Q3 (322 Comparable Hotels)** | RevPAR | $98.78 | - | -0.3% | | | ADR | $126.80 | - | -1.6% | | | Occupancy | 77.9% | - | +1.0 p.p. | | **Nine Months (320 Comparable Hotels)** | RevPAR | $94.52 | - | -1.9% | | | ADR | $127.39 | - | -0.7% | | | Occupancy | 74.2% | - | -0.9 p.p. | [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q3 2019 vs Q3 2018 Financial Comparison (in thousands) | Metric | Q3 2019 | Q3 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $599,772 | $603,153 | (0.6%) | | Hotel Operating Revenues | $525,290 | $520,618 | 0.9% | | Rental Income | $73,619 | $81,322 | (9.5%) | | Net Income | $40,074 | $117,099 | (65.8%) | | Net Income per Share | $0.24 | $0.71 | (66.2%) | - The **sharp decrease in Q3 2019 net income** was primarily due to unrealized losses on equity securities and a loss on early debt extinguishment[157](index=157&type=chunk) Nine Months 2019 vs 2018 Financial Comparison (in thousands) | Metric | Nine Months 2019 | Nine Months 2018 | Change (%) | | :--- | :--- | :--- | :--- | | Total Revenues | $1,735,242 | $1,743,737 | (0.5%) | | Gain on sale of real estate | $159,535 | $0 | N/A | | Net Income | $274,643 | $294,594 | (6.8%) | | Net Income per Share | $1.67 | $1.79 | (6.7%) | - For the first nine months, **net income decreased despite a $159.5 million gain on real estate sales**, due to unrealized losses and higher interest expense[175](index=175&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) - Principal funding sources are property returns and credit facility borrowings, which management believes are sufficient for the next year[201](index=201&type=chunk) - The company plans to **sell approximately $300,000 of hotels** to reduce leverage and is exiting its relationship with Wyndham[197](index=197&type=chunk)[219](index=219&type=chunk) - The company **funded $123.2 million for capital improvements** to its hotels during the first nine months of 2019[206](index=206&type=chunk) - As of November 7, 2019, the company had **$700 million outstanding** and **$300 million available** under its $1 billion revolving credit facility[46](index=46&type=chunk) [Non-GAAP Financial Measures](index=58&type=section&id=Non-GAAP%20Financial%20Measures) FFO and Normalized FFO Reconciliation (in thousands, except per share) | Metric | Q3 2019 | Q3 2018 | Nine Months 2019 | Nine Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $40,074 | $117,099 | $274,643 | $294,594 | | FFO | $147,184 | $174,653 | $460,590 | $505,554 | | **Normalized FFO** | **$155,635** | **$174,653** | **$469,041** | **$505,714** | | FFO per share | $0.90 | $1.06 | $2.80 | $3.08 | | **Normalized FFO per share** | **$0.95** | **$1.06** | **$2.85** | **$3.08** | - **Normalized FFO for Q3 2019 was $155.6 million**, or $0.95 per share, down from $174.7 million, or $1.06 per share, in the prior year[282](index=282&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=60&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate volatility affecting its $1.19 billion in floating-rate debt - As of September 30, 2019, the company had **$5.35 billion in fixed-rate senior notes**, whose fair value is sensitive to interest rate changes[287](index=287&type=chunk) - The company had **$1.19 billion in floating-rate debt**; a **1% increase in interest rates would increase annual interest expense by approximately $11.9 million**[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk) - The company acknowledges the **expected phase-out of LIBOR** and anticipates amending its credit agreements to use an alternative benchmark rate[294](index=294&type=chunk) [Item 4. Controls and Procedures](index=62&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - The CEO and CFO concluded that the company's **disclosure controls and procedures were effective** as of the end of the period[296](index=296&type=chunk) - There were **no changes in internal control over financial reporting** during the quarter that have materially affected, or are likely to affect, internal controls[297](index=297&type=chunk) [PART II Other Information](index=67&type=section&id=PART%20II%20Other%20Information) [Item 1A. Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) The company faces new risks from the SMTA acquisition, including integration challenges, increased debt, and potential dividend unsustainability - The **SMTA Transaction has introduced new risks**, including integration difficulties and the possibility it may not be accretive to Normalized FFO per share[313](index=313&type=chunk)[314](index=314&type=chunk) - The company **incurred significant additional indebtedness** to fund the acquisition, increasing financial vulnerability and leading to negative rating agency actions[317](index=317&type=chunk)[318](index=318&type=chunk) - There is a risk the company **may not achieve its plan to sell approximately $800 million of assets** to reduce debt levels[317](index=317&type=chunk) - The company cautions it **may not be able to continue paying distributions at its current rate** due to increased debt and other business risks[320](index=320&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 29,334 common shares to satisfy tax withholding obligations related to vested employee share awards Issuer Purchases of Equity Securities (Q3 2019) | Month | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2019 | 5,041 | $25.20 | | September 2019 | 24,293 | $25.64 | | **Total** | **29,334** | **$25.56** | [Item 6. Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists key legal documents filed with the report, including debt indentures and amended lease agreements - Key exhibits filed include **supplemental indentures for the new notes issued in September 2019**[324](index=324&type=chunk) - The filing includes multiple **amended and restated lease and guaranty agreements with TravelCenters of America Inc**[324](index=324&type=chunk) - An **amendment to the management agreement with InterContinental Hotels Group** and an updated pooling agreement with Sonesta were also filed[324](index=324&type=chunk)

Service Properties Trust (NASDAQ:SVC) Q3 2019 Earnings Conference Call November 8, 2019 10:00 AM ET Company Participants Kristin Brown - Investor Relations John Murray - President & Chief Executive Officer Brian Donley - Chief Financial Officer Todd Hargreaves - Vice President Conference Call Participants Bryan Maher - B. Riley, FBR Operator Good day and welcome to the Service Properties Trust Third Quarter 2019 Financial Results Conference Call and Webcast. All participants will be in listen-only mode. [Op ...

SVC Nasdaq Listed Service Properties Trust Third Quarter 2019 Supplemental Operating and Financial Data Sonesta Suites Scottsdale Gainey Ranch Scottsdale, AZ Operator: Sonesta International Hotels Corporation Guest Rooms: 164 All amounts in this report are unaudited. TABLE OF CONTENTS TABLE OF CONTENTS PAGE CORPORATE INFORMATION 3 Company Profile 4,5 Investor Information 6 Research Coverage 7 FINANCIALS Key Financial Data 9 Condensed Consolidated Balance Sheets 10 Condensed Consolidated Statements of Income ...

Hospitality Properties Trust (HPT) Q2 2019 Earnings Conference Call August 9, 2019 10:00 AM ET Company Participants Katie Strohacker - Senior Director of Investor Relations John Murray - President and Chief Executive Officer Brian Donley - Chief Financial Officer Todd Hargreaves - Vice President Conference Call Participants Bryan Maher - B. Riley FBR Michael Bellisario - Baird Dori Kesten - Wells Fargo Operator Good day, and welcome to Hospitality Properties Trust Second Quarter 2019 Financial Results Confe ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 OR ☐TRANSITION 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) (State or Other Jurisdiction of Incorporation or Organization) Marylan ...

Financial Data and Key Metrics Changes - The company reported first quarter normalized FFO of $0.88 per share, a decrease of 6.4% compared to $0.94 in the first quarter of 2018, primarily due to the sale of 20 travel centers and lease amendments with TravelCenters of America [9][41] - Normalized FFO was $144.6 million in Q1 2019 compared to $154.9 million in Q1 2018, reflecting a decrease of $0.06 per share [41] - Adjusted EBITDAre was $195.9 million in Q1 2019, a 3.5% decrease from the previous year [42] Business Line Data and Key Metrics Changes - Comparable RevPAR for HPT's hotels decreased by 3.2% in Q1 2019, driven by a 2.9 percentage point decline in occupancy, partially offset by a 1% increase in rate [11][29] - The comparable Radisson and Wyndham portfolios had the weakest RevPAR performance with declines of 12.6% and 9.9% respectively [30] - RevPAR for hotels not impacted by renovation increased by 1.6%, while RevPAR for 16 hotels that completed renovations in Q1 2018 increased by 9.2% [14] Market Data and Key Metrics Changes - The company experienced negative weather-related impacts, including the loss of FEMA and hurricane recovery demand from 2018 and disruptions from winter storms in 2019 [13] - Comparable IHG portfolio RevPAR was down 4.9%, primarily due to a decrease in rate and occupancy [20] - Non-fuel travel center revenue increased by 3.1% versus the prior year, driven by growth in store and repair shop revenue [39] Company Strategy and Development Direction - The company plans to continue renovations, with only 15 hotels under renovation in Q2 2019 compared to 22 last year, expecting positive lift from 49 hotels that completed renovations in 2018 [26] - The management is cautious about the acquisition market, focusing on maintaining leverage levels and being mindful of renovation costs [64] - The company aims for RevPAR growth between 2% and 3% for 2019, despite current headwinds [27] Management Comments on Operating Environment and Future Outlook - Management noted that the first quarter is traditionally the weakest, and renovation activities contributed to the decline in performance [36] - There are concerns about margin pressures from wages and benefits, as well as increased operating costs [63] - The company remains optimistic about meeting projections due to active asset management and strong brand presence [27] Other Important Information - The company sold 20 travel centers for $308.2 million and recorded a gain of $159.5 million in Q1 2019 [44] - The company funded $44.7 million of hotel improvements in Q1 2019 and expects to fund approximately $204 million for the rest of the year [43] - The company has $72 million in cash, including $48.2 million escrowed for future improvements [44] Q&A Session Summary Question: Why was there no security deposit added for the Milwaukee acquisition? - The company negotiated for IHG to share 50% of the renovation costs, opting for co-investment instead of a security deposit [51] Question: What is the estimated cap rate of return expectation for the Milwaukee property? - The going-in cap rate was in the mid-7s, with an expected 8% return on investment from IHG [52] Question: What is the status of discussions with Wyndham regarding restructuring? - Discussions are ongoing, with both sides considering the possibility of disposing of weaker-performing properties and potentially adding new ones [55] Question: How does the company view its acquisition appetite for 2019? - The company is cautious about acquisitions due to the late cycle and economic uncertainty but expects to invest a couple of hundred million dollars in hotels [64] Question: Who are the more aggressive buyers in the marketplace? - The company has seen institutional investors, private equity, family offices, and high net worth individuals being more aggressive in the acquisition market [65]

PART I Financial Information (unaudited) This section presents the unaudited financial statements and related disclosures for the company's first quarter [Item 1. Financial Statements (unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20%28unaudited%29) This section provides the unaudited condensed consolidated financial statements, including balance sheets, income, equity, and cash flow statements, with explanatory notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's financial position at specific dates, detailing assets, liabilities, and shareholders' equity Condensed Consolidated Balance Sheets (March 31, 2019 vs. December 31, 2018) | Category | March 31, 2019 (in thousands) | December 31, 2018 (in thousands) | | :-------------------------------- | :----------------------------- | :----------------------------- | | **ASSETS** | | | | Total real estate properties, net | $6,653,425 | $6,549,589 | | Cash and cash equivalents | $23,675 | $25,966 | | Restricted cash | $75,129 | $50,037 | | Due from related persons | $79,710 | $91,212 | | Other assets, net | $423,865 | $460,275 | | **Total assets** | **$7,255,804** | **$7,177,079** | | **LIABILITIES** | | | | Unsecured revolving credit facility | $141,000 | $177,000 | | Unsecured term loan, net | $397,442 | $397,292 | | Senior unsecured notes, net | $3,600,314 | $3,598,295 | | Security deposits | $116,448 | $132,816 | | Accounts payable and other liabilities | $250,925 | $211,332 | | Due to related persons | $13,109 | $62,913 | | **Total liabilities** | **$4,519,238** | **$4,579,648** | | **SHAREHOLDERS' EQUITY** | | | | Total shareholders' equity | $2,736,566 | $2,597,431 | | **Total liabilities and shareholders' equity** | **$7,255,804** | **$7,177,079** | - Total assets increased by **$78,725 thousand** from December 31, 2018, to March 31, 2019, primarily driven by an increase in net real estate properties[8](index=8&type=chunk) - Total liabilities decreased by **$60,410 thousand**, mainly due to a reduction in the unsecured revolving credit facility and amounts due to related persons[8](index=8&type=chunk) - Total shareholders' equity increased by **$139,135 thousand**, reflecting net income and additional paid-in capital[9](index=9&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details the company's financial performance over a period, including revenues, expenses, and net income Condensed Consolidated Statements of Comprehensive Income (Three Months Ended March 31, 2019 vs. 2018) | Metric | Three Months Ended March 31, 2019 (in thousands) | Three Months Ended March 31, 2018 (in thousands) | Change (YoY) | | :------------------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Hotel operating revenues | $455,385 | $445,276 | +$10,109 | | Rental income | $68,151 | $81,993 | -$13,842 | | Total revenues | $524,908 | $528,633 | -$3,725 | | Hotel operating expenses | $319,125 | $314,982 | +$4,143 | | Depreciation and amortization | $99,365 | $99,617 | -$252 | | General and administrative | $12,235 | $11,734 | +$501 | | Total expenses | $430,725 | $426,333 | +$4,392 | | Gain on sale of real estate | $159,535 | — | +$159,535 | | Interest expense | ($49,766) | ($47,540) | -$2,226 | | Net income | $225,787 | $80,206 | +$145,581 | | Comprehensive income | $225,853 | $80,113 | +$145,740 | | Net income per common share (basic and diluted) | $1.37 | $0.49 | +$0.88 | - Net income significantly increased by **181.5%** year-over-year, primarily driven by a **$159,535 thousand** gain on the sale of real estate in Q1 2019[11](index=11&type=chunk)[142](index=142&type=chunk) - Total revenues saw a slight decrease of **0.7%** due to lower rental income from travel centers, partially offset by increased hotel operating revenues[11](index=11&type=chunk)[128](index=128&type=chunk) [Condensed Consolidated Statements of Shareholders' Equity](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Shareholders%27%20Equity) This section outlines changes in the company's equity, reflecting net income, distributions, and other comprehensive income Condensed Consolidated Statements of Shareholders' Equity (Three Months Ended March 31, 2019 vs. 2018) | Category | Balance at Dec 31, 2018 (in thousands) | Net Income (in thousands) | Equity Interest in Investee's Unrealized Gains (in thousands) | Common Share Grants (in thousands) | Distributions (in thousands) | Balance at Mar 31, 2019 (in thousands) | | :----------------------------------- | :----------------------------------- | :------------------------ | :--------------------------------------------------- | :----------------------- | :----------------------- | :----------------------------------- | | Common Shares | $1,644 | — | — | — | — | $1,644 | | Additional Paid in Capital | $4,545,481 | — | — | $436 | — | $4,545,917 | | Cumulative Net Income Available for Common Shareholders | $3,231,895 | $225,787 | — | — | — | $3,457,682 | | Cumulative Common Distributions | ($5,181,323) | — | — | — | ($87,154) | ($5,268,477) | | Cumulative Other Comprehensive Loss | ($266) | — | $66 | — | — | ($200) | | **Total Shareholders' Equity** | **$2,597,431** | **$225,787** | **$66** | **$436** | **($87,154)** | **$2,736,566** | - Total shareholders' equity increased by **$139,135 thousand** from December 31, 2018, to March 31, 2019, primarily due to net income of **$225,787 thousand**, partially offset by common distributions of **$87,154 thousand**[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section reports the cash generated and used by the company across operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, 2019 vs. 2018) | Cash Flow Activity | Three Months Ended March 31, 2019 (in thousands) | Three Months Ended March 31, 2018 (in thousands) | Change (YoY) | | :--------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :----------- | | Net cash provided by operating activities | $43,865 | $49,685 | -$5,820 | | Net cash provided by (used in) investing activities | $102,090 | ($59,709) | +$161,799 | | Net cash used in financing activities | ($123,154) | ($11,107) | -$112,047 | | Increase (decrease) in cash and cash equivalents and restricted cash | $22,801 | ($21,131) | +$43,932 | | Cash and cash equivalents and restricted cash at end of period | $98,804 | $76,365 | +$22,439 | - Cash flows from operating activities decreased by **$5,820 thousand**, primarily due to lower minimum rents from travel centers and higher interest payments, partially offset by decreased incentive business management fees[16](index=16&type=chunk)[151](index=151&type=chunk) - Investing activities shifted from a net use of **$59,709 thousand** in 2018 to a net provision of **$102,090 thousand** in 2019, largely due to proceeds from the sale of 20 travel centers (**$308,200 thousand**) and decreased capital improvement fundings, partially offset by increased real estate acquisitions[16](index=16&type=chunk)[151](index=151&type=chunk) - Cash used in financing activities increased significantly by **$112,047 thousand**, mainly due to the issuance of notes in 2018 not recurring in 2019, partially offset by lower net repayments under the revolving credit facility[16](index=16&type=chunk)[151](index=151&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and additional information supporting the condensed financial statements - The company adopted the new Lease Standard (ASU No. 2016-02) on January 1, 2019, recording **$77,010 thousand** in right-of-use assets and related lease liabilities as a lessee, with no material impact on comprehensive income or cash flows[23](index=23&type=chunk)[25](index=25&type=chunk) - Revenue recognition for managed hotels is based on goods and services provided, while rental income from operating leases (hotels and travel centers) is recognized on a straight-line basis over the lease term[29](index=29&type=chunk)[30](index=30&type=chunk) - The company acquired one hotel (Hotel Palomar in Washington, D.C.) for **$143,742 thousand** in February 2019 and sold 20 travel centers to TA for **$308,200 thousand** in January 2019, recording a gain of **$159,535 thousand**[47](index=47&type=chunk)[49](index=49&type=chunk) - As of March 31, 2019, the company owned **327 hotels** and **179 travel centers**, managed or leased under 13 operating agreements with various operators like Marriott, IHG, Sonesta, Wyndham, Hyatt, Radisson, and TA[50](index=50&type=chunk)[51](index=51&type=chunk) - The company has significant related party transactions with TA (largest tenant and shareholder), Sonesta (hotel manager, partly owned by a Managing Trustee), RMR LLC (business and property manager), RMR Inc. (parent of RMR LLC, company is a shareholder), and AIC (insurance company, jointly owned)[97](index=97&type=chunk)[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk)[102](index=102&type=chunk) - The company's investments in TA common shares and RMR Inc. class A common stock are reported at fair value, with unrealized gains of **$1,197 thousand** and **$19,780 thousand**, respectively, recorded for the three months ended March 31, 2019[116](index=116&type=chunk)[117](index=117&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial condition and operational results, covering revenues, expenses, liquidity, debt, and key operating statistics, including non-GAAP measures [Overview](index=23&type=section&id=Overview) This section provides a high-level summary of the company's property portfolio and key hotel operating performance metrics - As of March 31, 2019, the company owned **327 hotels** (325 managed by hotel operating companies via TRSs, 2 leased to third parties) and **179 travel centers** leased to TA[122](index=122&type=chunk) - Many operating agreements include security features like guarantees and security deposits to protect minimum returns/rents, but their effectiveness is not assured, especially during prolonged economic downturns[123](index=123&type=chunk) Hotel Operating Statistics (323 Comparable Hotels, Q1 2019 vs. Q1 2018) | Metric | Q1 2019 | Q1 2018 | Change (YoY) | | :------- | :------ | :------ | :----------- | | ADR ($) | $129.11 | N/A | +1.0% | | Occupancy (%) | 67.4% | N/A | -2.9 percentage points | | RevPAR ($) | $87.02 | N/A | -3.2% | - Comparable hotels experienced a decline in occupancy and RevPAR, attributed to renovation disruptions, increased competition from new hotel supply, and decreased business activity in certain markets[124](index=124&type=chunk) [Results of Operations](index=24&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, detailing changes in revenues, expenses, and net income Key Financial Results (Three Months Ended March 31, 2019 vs. 2018) | Metric | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | % Change (YoY) | | :------------------------------------------ | :------------------ | :------------------ | :----------- | :------------- | | Hotel operating revenues | $455,385 | $445,276 | $10,109 | 2.3% | | Rental income - hotels | $5,076 | $7,800 | ($2,724) | (34.9)% | | Rental income - travel centers | $63,075 | $74,193 | ($11,118) | (15.0)% | | Total revenues | $524,908 | $528,633 | ($3,725) | (0.7)% | | Hotel operating expenses | $319,125 | $314,982 | $4,143 | 1.3% | | Depreciation and amortization - hotels | $66,583 | $62,446 | $4,137 | 6.6% | | Depreciation and amortization - travel centers | $32,782 | $37,171 | ($4,389) | (11.8)% | | General and administrative | $12,235 | $11,734 | $501 | 4.3% | | Gain on sale of real estate | $159,535 | — | $159,535 | n/m | | Interest expense | ($49,766) | ($47,540) | ($2,226) | 4.7% | | Net income | $225,787 | $80,206 | $145,581 | 181.5% | | Net income per common share (basic and diluted) | $1.37 | $0.49 | $0.88 | 179.6% | - Net income increased significantly by **181.5%** year-over-year, primarily due to a **$159,535 thousand** gain on the sale of 20 travel centers in Q1 2019[128](index=128&type=chunk)[138](index=138&type=chunk)[142](index=142&type=chunk) - Total revenues decreased slightly by **0.7%**, as a **2.3%** increase in hotel operating revenues was offset by a **16.9%** decrease in total rental income, mainly from travel centers due to dispositions and lease amendments[128](index=128&type=chunk)[129](index=129&type=chunk)[131](index=131&type=chunk) - Hotel operating expenses increased by **1.3%**, influenced by hotel acquisitions and conversions, but partially offset by a significant increase in guaranty and security deposit utilization (**$11,614 thousand**) to cover shortfalls[128](index=128&type=chunk)[135](index=135&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to meet financial obligations and fund operations, including cash flow and debt - The company's primary liquidity sources are minimum returns/rents from managed/leased properties and borrowings under its revolving credit facility, which are expected to be sufficient for operating expenses, debt service, and distributions[149](index=149&type=chunk) Cash Flow Changes (Three Months Ended March 31, 2019 vs. 2018) | Cash Flow Activity | 2019 (in thousands) | 2018 (in thousands) | Change (YoY) | | :--------------------------------- | :------------------ | :------------------ | :----------- | | Operating activities | $43,865 | $49,685 | ($5,820) | | Investing activities | $102,090 | ($59,709) | $161,799 | | Financing activities | ($123,154) | ($11,107) | ($112,047) | - The shift in investing cash flows to a net positive was primarily due to **$308,200 thousand** from the sale of 20 travel centers, partially offset by increased real estate acquisitions (**$148,011 thousand**) and hotel improvements[16](index=16&type=chunk)[151](index=151&type=chunk)[157](index=157&type=chunk)[159](index=159&type=chunk) - The company funded **$44,693 thousand** for capital improvements to hotels in Q1 2019, which generally increases contractual annual minimum returns, and expects to fund an additional **$204.2 million** in the remaining nine months of 2019 and **$47.5 million** in 2020[154](index=154&type=chunk)[155](index=155&type=chunk)[223](index=223&type=chunk) - As of March 31, 2019, the company had **$141,000 thousand** outstanding and **$859,000 thousand** available under its **$1,000,000 thousand** revolving credit facility, with a maturity date of July 15, 2022[161](index=161&type=chunk) [Off Balance Sheet Arrangements](index=30&type=section&id=Off%20Balance%20Sheet%20Arrangements) This section confirms the absence of material off-balance sheet arrangements impacting financial position - As of March 31, 2019, the company had no off-balance sheet arrangements that are reasonably likely to have a material effect on its financial condition, results of operations, or liquidity[168](index=168&type=chunk) [Debt Covenants](index=31&type=section&id=Debt%20Covenants) This section outlines financial restrictions and requirements imposed by debt agreements and compliance status - The company's debt obligations, including its revolving credit facility, term loan, and senior notes, are subject to covenants that restrict debt incurrence and distributions, and require maintaining specific financial ratios[169](index=169&type=chunk) - As of March 31, 2019, the company believes it was in compliance with all debt covenants[169](index=169&type=chunk) - Debt agreements contain cross-default provisions for other indebtedness exceeding certain thresholds (**$20,000 thousand** or **$50,000 thousand** for public debt, **$25,000 thousand** recourse or **$75,000 thousand** non-recourse for credit agreement)[171](index=171&type=chunk) [Management Agreements, Leases and Operating Statistics](index=32&type=section&id=Management%20Agreements%2C%20Leases%20and%20Operating%20Statistics) This section details the operational structure of properties, including management, lease agreements, and key performance metrics - As of March 31, 2019, the company's **327 hotels** and **179 travel centers** were operated under various management and lease agreements with Marriott, IHG, Sonesta, Wyndham, Hyatt, Radisson, and TA[173](index=173&type=chunk) - For the twelve months ended March 31, 2019, three of eight hotel operating agreements (**21%** of total annual minimum returns/rents) had coverage ratios below **1.0x** (ranging from **0.61x** to **0.97x**)[144](index=144&type=chunk) - The **179 travel centers** leased to TA generated a combined coverage of **1.83x** for the twelve months ended March 31, 2019[145](index=145&type=chunk) Hotel Operating Statistics (Three Months Ended March 31, 2019 vs. 2018) | Metric | 2019 | 2018 | Change | | :-------------------- | :----- | :----- | :------- | | All Hotels Total / Average ADR ($) | $130.03 | $128.90 | 0.9% | | All Hotels Total / Average Occupancy (%) | 67.5% | 70.3% | -2.8 pts | | All Hotels Total / Average RevPAR ($) | $87.77 | $90.62 | -3.1% | - Wyndham's guarantee for its managed hotels was depleted as of March 31, 2019, requiring Wyndham to pay the greater of available cash flows or **85%** of minimum returns to avoid default[147](index=147&type=chunk)[184](index=184&type=chunk) - Marriott notified the company that it will not renew the lease for the Kauai Marriott, expiring December 31, 2019, leading to ongoing negotiations for alternatives[148](index=148&type=chunk)[187](index=187&type=chunk) [Related Person Transactions](index=37&type=section&id=Related%20Person%20Transactions) This section describes the company's significant business relationships and transactions with its related parties - The company has extensive relationships with RMR LLC (business and property manager), RMR Inc. (parent of RMR LLC), TA (largest tenant and shareholder), Sonesta (hotel manager, partly owned by a Managing Trustee), and AIC (insurance company, jointly owned)[197](index=197&type=chunk)[199](index=199&type=chunk) - These relationships involve shared management, ownership interests, and operational agreements, which are detailed in the notes to financial statements and other SEC filings[197](index=197&type=chunk)[199](index=199&type=chunk) [Non-GAAP Measures (FFO and Normalized FFO)](index=39&type=section&id=Non-GAAP%20Measures%20%28FFO%20and%20Normalized%20FFO%29) This section presents and reconciles non-GAAP financial measures, FFO and Normalized FFO, for operating performance insights - The company presents Funds From Operations (FFO) and Normalized FFO as non-GAAP measures to supplement GAAP net income, believing they provide useful information for comparing operating performance among REITs[200](index=200&type=chunk)[201](index=201&type=chunk) FFO and Normalized FFO (Three Months Ended March 31, 2019 vs. 2018) | Metric | 2019 (in thousands) | 2018 (in thousands) | | :------------------------------------------ | :------------------ | :------------------ | | Net income | $225,787 | $80,206 | | Add (Less): Depreciation and amortization expense | $99,365 | $99,617 | | Gain on sale of real estate | ($159,535) | — | | Unrealized gains and losses on equity securities, net | ($20,977) | ($24,955) | | **FFO and Normalized FFO** | **$144,640** | **$154,868** | | Basic and diluted FFO and Normalized FFO per common share | $0.88 | $0.94 | - FFO and Normalized FFO decreased by **$10,228 thousand** (**6.6%**) year-over-year, primarily due to the exclusion of the gain on sale of real estate and unrealized gains on equity securities, which significantly boosted net income[204](index=204&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's market risk exposures, mainly interest rate fluctuations, and its management strategies, including the impact on fixed and floating-rate debt and LIBOR phase-out [Fixed Rate Debt](index=40&type=section&id=Fixed%20Rate%20Debt) This section analyzes fixed-rate debt, outstanding amounts, interest expenses, and sensitivity to market interest rates - As of March 31, 2019, the company had **$3,650,000 thousand** in fixed-rate senior notes across nine issues, with annual interest expenses totaling **$168,000 thousand**[206](index=206&type=chunk) - A hypothetical one percentage point increase in interest rates would increase annual interest costs by approximately **$36,500 thousand** if these notes were refinanced[206](index=206&type=chunk) - Changes in market interest rates affect the fair value of fixed-rate debt; a one percentage point change would alter fair value by approximately **$173,546 thousand**[207](index=207&type=chunk) [Floating Rate Debt](index=41&type=section&id=Floating%20Rate%20Debt) This section examines floating-rate debt, its exposure to interest rate fluctuations, and impact on interest expenses - As of March 31, 2019, floating-rate debt included **$141,000 thousand** outstanding under a **$1,000,000 thousand** revolving credit facility and a **$400,000 thousand** term loan, totaling **$541,000 thousand**[209](index=209&type=chunk)[210](index=210&type=chunk) - Interest on floating-rate debt is based on LIBOR plus a premium, making the company vulnerable to changes in U.S. dollar-based short-term interest rates[209](index=209&type=chunk) Impact of 1% Interest Rate Increase on Floating Rate Debt (March 31, 2019) | Scenario | Outstanding Debt (in thousands) | Annual Interest Expense (in thousands) | Annual Per Share Impact ($/share) | | :------------------------------------------------ | :------------------------------ | :----------------------------------- | :-------------------------------- | | Current (as of March 31, 2019) | $541,000 | $19,151 | $0.12 | | One percentage point increase | $541,000 | $24,561 | $0.15 | | Fully drawn on revolving credit facility (total $1,400,000) | $1,400,000 | $48,440 | $0.29 | | Fully drawn + one percentage point increase | $1,400,000 | $62,440 | $0.38 | [LIBOR Phase Out](index=42&type=section&id=LIBOR%20Phase%20Out) This section addresses the anticipated discontinuation of LIBOR and its potential implications for debt agreements - LIBOR is expected to be phased out in 2021, which may require revisions to the interest rate determination under the company's credit facility and term loan[214](index=214&type=chunk) - The company expects the new interest rate standard to approximate existing LIBOR calculations but cannot be certain of the exact impact or the replacement standard[214](index=214&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of disclosure controls, absence of material changes to internal controls, and provides warnings about forward-looking statements and limited liability [Disclosure Controls and Internal Control Over Financial Reporting](index=43&type=section&id=Disclosure%20Controls%20and%20Internal%20Control%20Over%20Financial%20Reporting) This section assesses the effectiveness of the company's controls for financial reporting and disclosure - Management, under the supervision of the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of March 31, 2019[216](index=216&type=chunk) - There have been no material changes to the company's internal control over financial reporting during the quarter ended March 31, 2019[217](index=217&type=chunk) [Warning Concerning Forward-Looking Statements](index=43&type=section&id=Warning%20Concerning%20Forward-Looking%20Statements) This section cautions readers about forward-looking statements and outlines risks that could cause actual results to differ - The report contains forward-looking statements regarding business aspects such as managers'/tenants' payment abilities, acquisitions, distributions, debt/equity capital, property improvements, and related party benefits[219](index=219&type=chunk)[220](index=220&type=chunk) - Actual results may differ materially due to known and unknown risks, including economic conditions, competition, compliance with laws, REIT qualification, acts of terrorism, and conflicts of interest with related parties[220](index=220&type=chunk)[223](index=223&type=chunk) - Specific risks highlighted include potential inability of managers/tenants to pay, limitations of security deposits/guarantees, costs and disruptions from hotel renovations, and the impact of declining economic activity on hotel and travel center performance[223](index=223&type=chunk)[224](index=224&type=chunk)[225](index=225&type=chunk) [Statement Concerning Limited Liability](index=46&type=section&id=Statement%20Concerning%20Limited%20Liability) This section clarifies that trustees, officers, shareholders, employees, and agents are not personally liable for company obligations - The company's Declaration of Trust stipulates that no trustee, officer, shareholder, employee, or agent shall be held personally liable for any obligation or claim against Hospitality Properties Trust; all persons dealing with the Trust must look solely to its assets[231](index=231&type=chunk) PART II Other Information This section provides additional disclosures not covered in the financial information, including risk factors and exhibits [Item 1A. Risk Factors](index=47&type=section&id=Item%201A.%20Risk%20Factors) This section confirms no material changes to the risk factors previously disclosed in the company's 2018 Annual Report - No material changes to risk factors have occurred since the 2018 Annual Report[233](index=233&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, indentures, and certifications - The exhibits include the Amended and Restated Declaration of Trust, Amended and Restated Bylaws, various Supplemental Indentures for Senior Notes, and Rule 13a-14(a) and Section 1350 Certifications[234](index=234&type=chunk) - XBRL formatted financial statements (Balance Sheets, Comprehensive Income, Shareholders' Equity, Cash Flows, and related notes) are also filed as Exhibit 101.1[236](index=236&type=chunk) [Signatures](index=50&type=section&id=Signatures) This section contains the required signatures of the company's President, CEO, CFO, and Treasurer, certifying the report's filing - The report is signed by John G. Murray, President and Chief Executive Officer, and Brian E. Donley, Chief Financial Officer and Treasurer, on May 10, 2019[239](index=239&type=chunk)

Hospitality Properties Trust First Quarter 2019 Supplemental Operating and Financial Data | --- | --- | --- | --- | |---------------------------------------------------------------------------------------------------------------------------|-------|-------|-------| | | | | | | | | | | | | | | | | | | | | | Sonesta Suites Scottsdale Gainey Ranch Scottsdale, AZ Operator: Sonesta International Hotels Corporation Guest Rooms: 164 | | | | All amounts in this report are unaudited. TABLE OF CONTENTS | --- | --- | ...