Good day every one and welcome to the Hospitality Properties Trust Second Quarter 2008 Earnings Results Conference Call. Today's call is being recorded. At this time for opening remarks and introduction, I would like to turn the call over to the Manager of Investor Relations, Mr. Tim Bonang. Please go ahead sir.

Thank you, and good morning everyone. Joining me on today's call are John Murray, President; and Mark Kleifges, Chief Financial Officer. John and Mark will make a short presentation which will be followed by a question-and-answer session. Before we begin today's call, I would like to read our Safe Harbor statement. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and Federal Securities Laws. These forward-looking statements are based on HPT's present beliefs and expectations as of today, August 12, 2008. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call other than few filings with the Securities and Exchange Commission or SEC regarding this reporting period. In addition, this call may contain non-GAAP numbers including funds from operations or FFO. The reconciliation of FFO and net income is available on our supplemental package found in the new Investor Relations section of our website. Actual results may differ materially from those projected in forward-looking statements. Additional information concerning factors that could cause those differences is contained in our Forms 10-K and 10-Q filed with the Securities and Exchange Commission and in our Q2 supplemental operating and financial data found on our website at www.hptreit.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. And with that, I would like to turn the call over to John Murray.

Thank you, Tim. Good morning and welcome to our second quarter 2008 earnings call. Yesterday, HPT reported FFO per share for the second quarter of $1.04. FFO includes $19.6 million or $0.21 per share, non-cash reserve for the straight line rent receivable relating to our lease with TA for 145 travel service. In addition, in the second quarter we made the decision to stop accruing straight line rent, $3.5 million or $0.04 per share under the TA lease. Both HPT's and TA's quarterly results were announced yesterday and accordingly, unlike previous quarterly calls, today we can discuss TA's results through second quarter 2008 and also the agreement which we announced to provide TA liquidity, flexibility to weather this economic downturn. Many of you may have listened to TA's second quarter 2008 conference call this morning. During previous earnings calls and conference presentations, we discussed what we described as the perfect storm of rapidly increasing diesel prices and decreasing levels of economic activity, and the combined negative impact that this had on the trucking industry and TA. To put this in perspective diesel prices increased a 138%, since our January 2007 TA acquisition through June 30, 2008. We've also told you that TA's management team has taken a number of steps to maintain or grow fuel margins and appropriately match staffing and other expenses with a lower level of business activity they are experiencing. They have implemented staff reductions, stopped discretionary capital spending, renegotiated contracts with suppliers, reduced restaurant hours of operation and take another initiatives to address the changed operating environment. On the expense side, much of the savings were implemented beginning in late March, so the impact was only noticeable in the second quarter. Yesterday, TA reported much improved financial performance in quarter two, versus what was experienced in…

Thanks, John. During the 2008 second quarter RevPAR for our hotel portfolio was up 2.1% led by our Hyatt, Carlson and Staybridge Suites portfolios with increases of 31%, 3.3% and 3.2% respectively. These increases were partially offset by a 5.2% decline at our Marriott Kauai hotel and a 2% decline for our residence in portfolio where our downtown Chicago hotel was under renovation during the quarter. Hotel gross margins were essentially flat for the quarter declining 10 basis points to 46%. We experienced a significant increase in gross profit margins at our Hyatt portfolio driven by a 14.4 point increase in average occupancy and a 5.1% rise in ADR. Consistent with hotel gross margins, cash flow available to pay our minimum returns and rents was also flat quarter-over-quarter. Once again our Hyatt portfolio turned in a strong performance with cash flow increasing approximately 129% to $6.4 million in the quarter. However, seven of our hotel portfolios experienced quarter-over-quarter declines in cash flow available to pay our returns and rents offsetting the Hyatt portfolio's performance. Rent and return coverage ratios remain strong for our hotel portfolios. On a trailing 12 month basis only two of our operating agreements have coverage below one times at June 30, 2008, our Marriott Kauai lease and our Hyatt management contract. As we've discussed last quarter the Kauai lease which is subject to a Marriott guarantee is not expected to show significant improvement until after its renovation is completed. The 12 month coverage number for the Hyatt portfolio includes operating results for periods when certain of the hotels experience significant disruption due to the Hyatt Place re-branding process. We expect coverage for the Hyatt portfolio to be greater than one times for the 2008 year. Our remaining nine hotel portfolios have coverage ratios of 1.61 to…

Thank you. [Operator Instructions]. Our first question today is from Nap Overton, from Morgan Keegan. Napoleon Overton - Morgan Keegan & Company, Inc.: Good morning.

Hi, Nap.

Good morning. Napoleon Overton - Morgan Keegan & Company, Inc.: You answered my first question and the second one would be, would you just summarize for us all of the agreements you have in place to fund effectively fund TA as there will be rent deferral and then also the agreement to accelerate the cushion of the $125 million [ph], that you originally agreed to, are there other things in place there to hope fund TA?

No, the $125 million that relates to rent, to acquiring capital improvements made by TA at our travel center locations at the 145 leased travel center locations was in the original lease and we agreed to allow TA to request... originally it was agreed that we would fund $25 million a year over a five year period. We allowed TA to accelerate that help with liquidity since they had embarked on aggressive CapEx improvement plan at their sites. So, is 23 roughly, $23 million remaining available on that, under that agreement which TA would first need to purchase and demonstrate that they had... maybe capital improvements. And then the only other agreement separate from the lease is the deferral agreement that was announced yesterday which allows them to defer up to $5 million per month of rent for up to 30 months. It's a non-cumulative deferral mechanism, so each month they need to make a decision as to what they are going to defer if they decide not to defer the full amount, or not to defer at all, that amount doesn't carry forward the following month, they would just have the $5 million option. In the first 18 months there is no interest on the deferred amounts but after that, the full amounts defer if any will... would not have not been repaid by that point will be accrual interest to 12%. Napoleon Overton - Morgan Keegan & Company, Inc.: Okay. And then and thinking about this deferral agreement after I would... the deferrals are highly probable based on TA's comments on their conference call and the current third quarter of '08 and the fourth seasonally weaker, fourth and the first quarters would you confer that next year the second and third quarters are going to be interesting, determining the company's real ability to get back on its feet with these rent deferral agreements, and in terms of whether they continue to rent deferral options in the second, third quarters next year?

Well, you know we are not operating TA's business so I am not going to go as to far as to comment on what their second and third quarters next year is going to look like, but I can tell you that we... it was very important to us to see that this quarter the TA had right sized it's business and was able to operate and in a manner where they were generating positive fuel margins and fairly attractive margins on a sense per gallon basis, and that they were maintaining their expense levels at a point where they could not only pay... afford to pay rent at the property level but on an adjusted corporate level. But the concern was that although they have achieved that they have made great strides, the fourth quarter of this year and the first quarter of next are likely to be challenging because those are typically the two weakest quarters for trucking. And so, we expect to see improvement in the third quarter over the second quarter and we expect that probably over the prior year and we expect to see, we hope that a lot of the initiatives that they have under taken will make the fourth quarter and first quarter less negative than they were this past year. But, nonetheless we thought it was important that we make sure that TA have the liquidity to weather the fourth and first quarters which are typically more challenging. So, we looked at a lot of different scenarios, did a tremendous amount of analysis and modeling and projections for our independent trusties and we believe that no where we came out provides the necessary cushion. Napoleon Overton - Morgan Keegan & Company, Inc.: Okay. And then can you outline for us the reasoning, basic reasoning behind the stock issuance from TA to HPT?

There are I guess several factors. One is that in that first 18 months period there is no interest on the deferred amount, so its in effect the compensation for that is also a clawback provision in there that if they don't make use of the full deferral they can get back part of the shares. And so, I think that coupled with the 12% interest in the latter periods provides an incentive for them to pay us back. The only deferral what they need to defer and to pay back with a deferred as quickly as possible and so those are the two main concepts. Napoleon Overton - Morgan Keegan & Company, Inc.: Okay. And then my last question is this I'm certainly appreciating Mark comments on the dividend and would... if you just remind us what the company is going to stated dividend policy isn't perhaps share some color on what sort of circumstances could cause you to or that you believe would cause the Board to reconsider the dividend by my calculations quickly the payout ratio increases from about mid-70s percent range on 2009 to the mid upper 80s range how that payout ratio have to go before you seriously reconsider adjusting the dividend?

I can tell you that we are not seriously considering adjusting the dividend. We don't have a formal stated dividend policy. Historically, we tried to raise the dividend at least annually. In the current capital market environment I am not sure that there is any value to be necessarily had by raising the dividend. We are certainly not planning on reducing the dividend, I think the math you have done in terms of the payout ratios is probably, reasonably accurate. We've run at CAT payout ratios in the upper 80s many times in the past I think after 9/11 in it sort of 2001 - 2002 periods we were up in the 90s. And we've never cut our dividend and we are not at presently anticipating considering that.

Yes, Nap this is Mark. I guess I just add that I think this... the way our hotel operating agreements are structured and the stability of our cash flows under those agreements, probably allows us to be to operate little more comfortably at a higher payout ratios than maybe some of the other REITs would be. Napoleon Overton - Morgan Keegan & Company, Inc.: Okay. Thank you, very much.

Yes.

Our next question today will come from Michael Salinsky from RBC Capital Markets.

The deferrals were there any deferred announced in July just to be clear?

No there were no deferrals in July. But we--

Okay.

That I think has more to do with the timing of when we got the, independent trusties and independent directors, we were able to reach agreement but that the agreement is effective July 1 but since they are early paid as the July rent in August they have the option, one-time option to differ $10 million. So, effectively we will find out at the end of August if they want to defer both July and August, $5 million for each of those months.

Okay. Given that you have mentioned that TA has dealing that due to the strongest two quarters for TA the second quarter and third quarter and that they are covering a rent, would you expect to see a deferral then in August?

I think the idea here is to create a cash flow cushion and since its not accumulative type of deferral. I expect that the real concern was about what are the future holds for the fourth quarter and the first quarter, we don't know exactly where the economy is going, we don't know exactly where fuel prices are going. And so my expectation is that TA will start deferring up through effective they will start effective immediately and until they get into the fourth quarter and first quarter and see what the real, what the reality of the world is at that time. So I think that if they wait until they really have a liquidity crises to draw on the deferrals it will be too late. So I think they'll build up a cushion between now and November and December so that if there is... if things remain bad or get worse that they do have the cushion if they need it.

And just from an accounting standpoint the way the deferral is structuring a lease you booked the full amount of revenues that are due to you and then create a reserve or how does that work? Will you just recognize the amount of cash it's collected?

Yes, we'll essentially, might be on a cash basis going forward for that deferral piece unless circumstances change and our assessment is that there is high probability that we'll collect those amounts. So it will be at each quarter we'll annualize it but right now I would say at least for the third and fourth quarters we don't recognize that revenue to the extent it was paid to us.

Now switching gears looking at the lodging portfolio do you expect you mentioned you expect softness here in the second half of the year yet this past quarter you were able to maintain margins despite the lower drop in RevPAR. What levels do you think RevPAR can fall to before you start to see margin erosion within your portfolio right now?

Well we had 2% RevPAR, 2.1% RevPAR growth this quarter and margins slipped overall about 10 basis points, obviously that was helped quite a good by Hyatt Place with very strong performance. It was hampered somewhat by major renovation at our down town Chicago Residents Inn. But I think if we have RevPAR growth that's less than 2%, our managers will be high pressed to keep margins steady. That said there I don't think that any of them are going to have any difficulty paying the returns or rents that they are obligated to pay us. In most cases there, the guaranteed or the security deposits or rather we are not expecting any draconian situations on the hotel front just some weakness to the cycle.

Okay. That's helpful. But, finally several of your competitors have mentioned the cap rates have backed up significantly can you talk about what you are seeing with regard to cap rates and is it correlated to that when you expect to re-enter the acquisition arena for hotel opportunities?

We continue to look at a number of transaction possibilities, but most sellers who don't have to sell are not really even bothering to test the water because most buyers are expecting that there is going to be some continued weakness going into the balance of this year and maybe going into 2009. So, the expectation is that cap rates are going to continue to come up and so there is really no point in the first guy out there to buy, its because of you can probably buy at a better of price. So I think that it's hard to point any evidence, because there have been so few transactions. So we are watching closely if a very attractive transaction comes long we have availability on our revolvers and we can take advantage of an opportunity. But it doesn't seem to be any reason to have to rush into a transaction.

If there are anything in the past three months?

We have issued Letters of Intent in the last three months. But we don't have anything that's why they are being announced or, I'm not presently anticipating based on our current pipeline, I'm not anticipating any transactions, over the... in this next quarter.

Okay, thank you.

Our next question will come from Michelle Ko from UBS.

Hi, I was just wondering about the reserve for the straight line rent, does that return into fourth quarter we should probably expect a $0.20 decline in FFO and what are your expectations for next year?

Michelle, this is Mark. I think we really need to wait and see how TA's third and fourth quarters turn out and as I said this is something recording the straight-line rent then recording the deferred amounts as revenue is something we'll need to continuously evaluate. So I think that's just a little too far off right now as to project.

Okay. And then also in terms of the issuance of the common stock of TA was there some sort of restriction whereby you cannot receive preferred instead or why the decision to receive common stock versus preferred?

I think we knew that... this all came together in sort of the month of July and TA had the ability to issue common shares. They didn't have preferred shares outstanding and this was something that we could most quickly I think.

I think the other day, Michelle, preferred would create another cash outflow for TA in terms of having to pay some type of dividend and the common stock this is really a non-cash way of compensating HPT through this period where there's no interest on the deferred amount.

Okay. And can you also give us a break down of the additional rent returns with the second quarter?

Yes, I will give you the larger components Candlewood was $3.6 million, InterContinental number $3 million agreement was. $2.3 million and the Marriott management contract was $1.1 million.

Great, thank you.

Yes.

[Operator Instructions]. Our next question today comes from Michael O'Royne [ph] from Sun capital Advisers.

Hi, guys, two quick questions one was there any dialogue with the rating agencies regarding the rents deferral with TA and there was any thing sort of information on that? And then secondly just want to get a better handle for the write-down on intangible assets you say it's rising from HPT, TA transaction but is that something that sort of is on in other assets on the balance sheet or what is that, fall I guess on the balance sheet?

This is Mark, I will take those with respect to the rating agencies we did provide both Moody's and S&P with an update on where we thought this deferral transaction was heading as well as an update on TA's operating performance and we did that last week. And at this stage we don't have any feedback from them on the transaction. We would be hopeful that neither agency would take any action, but that's really all the color I can add on that at this time. In terms of the intangible assets, they are in other assets. When we acquire TA we acquire the entire operating business and as part of the purchase accounting for their transaction we recorded there are allocated purchase price of about $142 million to the various trademarks and trade names associated with the TA business and when we spun off the operating business to our shareholders, we retained ownership of those trademarks and trade names under GAAP. Anytime there is an indication of possible impairment, you need to evaluate those intangibles and write them down through their fair market value, which is what we did by writing them down about $53 million during the second quarter.

Okay. So the maximum write-down would be kind of what those were $142 million?

Correct.

Okay, thanks.

Moving on we have a question from Mark Roberts [ph] from Roberts and Company.

Thank you. Good morning. Most of my questions have been answered, but let me ask two market share questions if I could. In the current economic downturn, are you seeing in your numbers any market share shifts away from smaller brand names to larger brand names or vice versa for example, Candlewood moving to Marriott brands or vice versa?

I can tell you that we're seeing market share improvement at our hotels, which cover Hyatt, Marriott, IHG, and Carlsen brands. We can see when our occupancy index in the local market picks up, when our rate improves, and our RevPAR index picks up, we're not told where it came from. So we can't tell, intuitively you would think that the most well respected brands that have the strongest work, most well capitalized management companies that have the best marketing programs and the best frequent guest programs, the ones that perform the best in those difficult times. And as Mark mentioned for instance, the Candlewood portfolio is one of the portfolios that contributed nicely to a percentage returns this quarter. So we think that brand is doing reasonably well. So it maybe, it may be a be combination of some travelers trading down from larger full service hotels to upscale flex service hotels. It could be that our hotels, because they are strong brands are attracting guests from weaker brands or we can't drill down to that level.

Okay let me ask a similar question on TA. Lot of times when fuel prices rise, the trucking companies will try to consolidate their purchasing with volume based discounting at the larger truck stops. Are you seeing moves of some of the smaller trucking companies who really allowed the drivers to purchase the lowest price, two more consolidated purchasing agreements or actually are you seeing maybe vice versa where companies that had volume discounting with TA are allowing the drivers to search for cheaper fuel price?

That's a tough one. I think that travel centers the TA branded travel centers that we have probably have a mix that's heavier in terms of fleet business maybe 70% to 75% of their trucking business comes from fleet operators into this where as the Petro locations, the 45 Petro locations maybe is more of the 50-50 mix between independent truckers and fleet drivers. And there are arrangements that TA has with certain fleets where the pricing has some of the diesel fuel has something to do with the volume of diesel that they acquire. But there are no agreements that require a trucker whether it's a fleet trucker and an independent driver to only use TA sites, only use Petro sites. So its kind a very difficult time for truckers its been a very difficult time for TA and I think as between the two of them they are all trying to stay within the agreement that they have and I don't think as far as I know I don't believe they are being each other up they are all trying to survive though.

But you are not seeing any market share shifts for example, fleets not renewing agreements with the various brands?

I don't really have the data to answer that question you might try it asking the guys at TA that.

Okay, thank you.

We will take our next question from Juzanne [ph] from Ford Research Management [ph].

Hi, good morning.

Good morning.

Just a quick question on your Marriott number one number two contract that you lease to host?

Yes.

Yes, host sub-lease to other independent companies. I just curious in case the third party that sub-lease kind of can outperform the minimum rents, is the host still on the foot?

Yes, they are.

Okay. That's all I have. Thanks, very much.

Yes.

And we will take a follow-up question from Nap Overton from Morgan, Keegan. Napoleon Overton - Morgan Keegan & Company, Inc.: Yes, Mark you indicated that you thought the, that there are some [indiscernible] additional returns second half of the year?

Sorry, Nap you faded out of me I couldn't hear you. Napoleon Overton - Morgan Keegan & Company, Inc.: Can you here me now?

Yes. Napoleon Overton - Morgan Keegan & Company, Inc.: Okay. You indicated the, you thought the comparisons would be more difficult for percentage rents and additional returns in the second half would you care to quantify that at all?

No I think I was just... we don't give guidance and since that's really the only variable piece of our income stream. I'm not getting get very specific but I did want to... if you look at Q2 over Q2, additional returns were up above 14% and percentage rent was call it down 4%. I just wanted to make a point that 14% quarter-over-quarter growth in additional returns is probably going to be tough to do with the lower RevPar expectations. Napoleon Overton - Morgan Keegan & Company, Inc.: Okay, thanks.

Yes.

And that's all the time we have for questions today. Mr. Murray I will the turn the conference back to you for any additional or closing remarks.

Thank you. I would like to thank you all for joining us on our conference call today. And hope you have good day. Thanks.

That does conclude our conference call today. And we thank you all for your participation.