Good day, and welcome to the Hospitality Properties Trust 1 Quarter 2014 Financial Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to our Director of Investor Relations, Kathryn Strohacker. Please go ahead, ma'am.

Thank you. Good afternoon, 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. The reporting, retransmission and transcription of today's conference call is prohibited without the prior written consent of HPT. 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 other securities laws. These forward-looking statements are based on HPT's present beliefs and expectations as of today, May 6, 2014. 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 through filings with the Securities and Exchange Commission, or SEC. In addition, this call may contain non-GAAP financial measures, including normalized funds from operations, or normalized FFO. A reconciliation of normalized FFO and adjusted EBITDA to net income, as well as components to calculate AFFO are available in our supplemental package found in the Investor Relations section of the company's website. Actual results may differ materially from those projected in these forward-looking statements. Additional information concerning factors that could cause those differences is contained in our Form 10-Q filed today with the SEC and in our 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. Before I turn the call over to John, you should be aware that TravelCenters of America has not completed its year end 2013 or first quarter 2014 reporting. And accordingly, the company's remarks today with respect to TA's operating results will be limited and we won't be able to respond to questions related to TA's first quarter 2014 performance. And with that, I'll turn the call over to John Murray.

Thank you, Katie. Good afternoon, welcome to our first quarter 2014 earnings call. Today, HPT reported first quarter normalized FFO of $0.75 per share. As Katie noted, we are not yet able to update you on TA's performance for the full year 2013, nor first quarter 2014, because they have not yet reported their results. TA is working to complete its filings as soon as possible and we will then be able to update our disclosures on their performance. TA remains current on its rent payments to HPT. Turning to HPT's hotel investments, first quarter RevPAR was up 10.1% across HPT's 289 comparable hotels. Ongoing hotel renovations continue to impact our results. Excluding non-comparable hotels and the 18 hotels under renovation during the quarter, RevPAR was up 11.6% this quarter. The strong top line performance, which was comprised of both occupancy and rate gains, reflects strong results at the 61 hotels that completed renovations during 2013, with RevPAR gains of 29%. This helped to offset performance at our 18 renovation hotels this quarter, which experienced RevPAR declines of 4.2%, all from lost occupancy. 12 of the 18 comparable hotels under renovation this quarter were Wyndham and Sonesta hotels. This was an especially tough winter from Philadelphia to Toronto and our mid-Atlantic, New England and Canadian regions each showed RevPAR declines. In addition to the harsh winter, our mid-Atlantic region was negatively impacted by difficult Superstorm Sandy comparisons, which caused RevPAR at our New Jersey hotels to decline 8.2% in the first quarter of 2014. On the positive side, we continued to see strong RevPAR performance in the East North Central, Pacific and South Atlantic regions, up 19.2%, 14.7% and 13.3%, respectively. While the hotels renovated during 2013 had the most significant positive impact on first quarter 2014 performance as they…

Thanks, John. Operating results at our 289 comparable hotels were strong this quarter, with RevPAR up 10.1% and a 230-basis-point increase in GOP margin percentage. Hotel renovations continued to have both a positive and negative impact on hotel operations this quarter. RevPAR, at our 271 comparable hotels not under renovation this quarter was up 11.6%, versus the prior year quarter, on a 5.5 percentage point increase in occupancy and ADR growth of 3%. This quarter's results benefited from the RevPAR outperformance of the 39 hotels that were under renovation during the 2013 first quarter, with RevPAR up 32.4% at these hotels on occupancy and ADR gains of 14.1 points and 5.3%, respectively, in the current quarter. This strong performance was partially offset by the weak results at the 18 hotels under renovation this quarter, with RevPAR down 4.2% at these hotels on lower occupancy. Our portfolios with the highest RevPAR growth this quarter were our Wyndham and IHG portfolios, with increases of 18.3% and 17%, respectively, versus the prior year quarter. Growth in hotel profitability was also strong this quarter, with gross operating profit for our 289 comparable hotels up $18.9 million, or approximately 17.6% from the 2013 quarter, and GOP margin percentage up 230 basis points to 35.6%. Our IHG portfolio continued its outstanding performance this quarter, with gross operating profit up over 28% and GOP margin percentage up 380 basis points, versus the 2013 quarter. Turning to 2014 first quarter coverage. Hotel cash flow available to pay our minimum returns and rents this quarter increased $8.9 million, or approximately 12% from the 2013 quarter. As a result of this growth, coverage for the quarter under 7 of our 9 agreements improved, versus the prior year quarter, and portfolio-wide coverage for our hotels increased to 0.74x from 0.7x in…

[Operator Instructions] We'll go to the line of Jeff Donnelly with Wells Fargo.

Mark, I might have missed it, you mentioned some of the figures for, I guess, the support of the strong RevPAR in Q1. What was the RevPAR for the segment of hotels that were not under renovation, I guess, in either 2014 or 2013? I was just trying to kind of carve those out.

Yes. Let me see if I have that handy. We've sliced the portfolio about 90 ways. I hope I have that with me. John, do you have that?

That might be the 91st way.

It's all right. I can follow-up with you afterwards on it.

Yes. We have that. We can talk later.

And maybe you could just talk in some broad strokes about how the renovations from -- that were completed in 2013 are faring versus your, I guess, internal budgets? Are things sort of on track or where are they varying?

I'd say that we're more or less on track, which is why the forecasts that were done, the budgets that were done for 2014, compared to the reforecasts that were done at the end of the quarter, are not materially different. I think we're tracking where we were expecting to. There's pluses and minuses built into those numbers, things that weren't expected. We didn't expect as harsh a winter. We had a fair amount of expenses as a result of utility increases and snow removal costs that probably detracted about 90 basis points from our margins. But we also got stronger RevPAR performance from the hotels renovated in 2012 than I think we were expecting. So all in all, I think we're about where we expected we would be.

And just to switch topics, I don't know if you'd seen this, but Susser Holdings had recently been, I guess, acquired its -- gas stations were going to be acquired by an entity that I think is going to place them into an MLP-type structure. Do you guys ever give any consideration to monetizing the gas stations maybe while they're performing well: Because I think some investors out there think that it's been sort of a source of pressure on your multiple over the years. That, I don't know, do you look at that transaction, I think it was like 10x to 11x EBITDA, and think that's appealing to you guys?

I guess the short answer is we have not looked at that. TA is -- our strongest rent coverage is in TA and, frankly they've, all through the third quarter, which we can talk about, their revenue management has been at least as good as any of the hotel managers we have. Their cents per gallon increases have been pretty impressive since the recession. So I know that there are some investors who have trouble with both the TravelCenters and the hotels in the REIT. But we're not currently looking at separating them.

And we'll move along to the line of Ryan Meliker with MLV Company. Ryan Meliker - MLV & Co LLC, Research Division: A couple things. First of all, with regards to TA, do you guys have any concern about their ability to fund rents, either going forward or currently, given the fact that it sounds like they've got some accounting issues that have precluded them from filing their K. I'm just wondering if there's going to be implications with regards to their lending covenants? Obviously, they're -- it's not going to be easy for them to raise equity if they need to over the next 12 months. Like how do you balance the fact that they are your best coverage coupled with 35% of your EBITDA with the fact that now they've got some material challenges with regards to their funding?

Yes. Well, first off, we don't have any concerns with TA's ability to pay the rent. The principal issues that they're dealing with and, obviously, we have to limit our comments to what they've disclosed publicly. But they have some very, very complex income tax accounting that they're working through. TA is in a net operating loss position as a company and they've historically put a valuation reserve up against that NOL, that because of their improved operating performance over the last couple years, they're required to reverse that valuation reserve under GAAP. And in working through that, there's some very, very complex tax regulations that may limit how much NOL they get to record and over what periods they can utilize that NOL. So that's the primary thing they're working through, Ryan. It's nothing to -- the delay in financial statements isn't due to some other more troubling issue. And the core business remains solid and we have absolutely no concerns with respect to rent. In terms of their liquidity, they did disclose that they've received waivers, I believe it's for the 10-K through the end of May from other banks. And with respect to the first quarter, I believe it's through the end of June, but you can double check those with the filing, I think, they made last week. Ryan Meliker - MLV & Co LLC, Research Division: Okay. And then, I guess, would there be concerns on your part if they went through those deadlines and still hadn't filed the required SEC filings?

Well, I think given the nature of the accounting issues, I would think even if they met -- if they were unable to meet those deadlines, I would think that the banks would provide additional waivers. Obviously, I can't -- I haven't had any discussions with the banks, I can't confirm that. But given the nature of the issue, the fact that it's non-cash, it's a future benefit to TA, the NOLs, I just don't know. I don't think that would cause me a whole lot of concerns. I'm also optimistic they're going to be able to meet those deadlines. Ryan Meliker - MLV & Co LLC, Research Division: Okay. That's helpful. Then with regards to Orlando and Fort Lauderdale, can you just give us a little more color on why you walked away from Orlando? What it is you found you didn't like? And then with Fort Lauderdale, a 6%, 7% cap rate seems relatively low given your capital structure and cost of equity. What made you get comfortable with that? How high do you really think that could be on a more stabilized basis once you get Sonesta in there?

On the Orlando property, there was the seller on the couple hotels that were adjacent to one another and there are some systems that were shared by the 2 buildings. And the cost to separate them was prohibitive and time-consuming, and we just couldn't wait any longer. So we decided to pass. The hotel in Fort Lauderdale, I agree that's a lower cap rate than we've seen on some other acquisitions that we've done. It's an unusual property in that it, first of all, was recently, effectively in 2010, gutted and rebuilt. So all the systems are new, the design is fresh and attractive. So we don't expect to need to put any capital into that property for a long time. It's also right on the ocean, it's right across the street from the beach. The Fort Lauderdale market is improving significantly. The airport in Fort Lauderdale is being expanded. They're adding a runway partially to accommodate flights that are being -- that are going to over time be diverted from Miami into Fort Lauderdale because Miami, frankly, is too busy with international flights. So the Fort Lauderdale market is perhaps not as strong as Miami's, but it's a 4-season market and there's a lot of businesses and demand generated there, and so we expect that we'll be north of an 8% cash return out of that property possibly in '15, but assuredly in '16, I think. Ryan Meliker - MLV & Co LLC, Research Division: And was that an unlevered or a levered cash return?

Sorry? Ryan Meliker - MLV & Co LLC, Research Division: Was that an unlevered or a levered cash return?

Unlevered.

And we'll go to the line of Wes Golladay with RBC Capital Markets.

Looking at the Wyndham portfolio, you had pretty strong RevPAR at 18.3% RevPAR growth. The coverage is still a little light there. Is there onetime expenses flowing through that, the strong RevPAR is not flowing through to the bottom line? Can you comment on that?

There are a lot of different things that went on in that portfolio. There are a number of properties that were under renovation during part of the first quarter. There's an unusual weighting of properties in that Wyndham portfolio that are in the northern parts of the United States, including in Illinois and Michigan. And so -- they were some of the hotels that beared (sic) [bore] the brunt of the unusually harsh winter besides the renovation activity. I don't have the numbers exactly for the Wyndham portfolio, but I think we had -- across that portfolio, we had something like 16% increase in utilities because of the harsh winter, and we had about a 22% or 23% increase in cost for snow removal. And so that had a negative impact across the portfolio, but certainly had, I think, an outsized impact on Wyndham.

Okay. So going forward, Wyndham looks like it's going to be relatively one of your better performers on the RevPAR front and we should expect a little bit better bottom line performance going forward?

Yes. I think, Wes, you'll see a significant -- you should see a significant improvement starting in the second quarter from a coverage perspective.

Okay. And then looking at the Sonesta, I know you have some more renovations. When do you think that bottoms out? I mean, you'll be lapping against some renovations as well. So I mean, is that enough to get it going in the right direction or do we have to wait until probably 2015 to really accelerate that one?

I think it's more a 2015 story. I mean, we had 7 hotels under renovation in the first quarter and coverage was relatively flat quarter versus the prior year quarter. We're going to have 16 hotels under renovation for all the part of the second quarter, and 13 for all the part of the third quarter and then it winds down to just 2 in the fourth quarter. So I think Q2 and Q3, there's going to be a lot of renovation disruption. We are seeing positive results in growth and cash flow at the non-renovation hotels, so that's going to offset some of that renovation disruption. But I don't think it's unreasonable to assume kind of flattish coverage year-over-year for the Sonesta portfolio, and then see coverage start to improve in 2015.

Okay. And then looking at the IHG portfolio, it looks like at the beginning of the year, they added more to the deposit. Can you walk us through what's going on there and is it always like a soft guarantee of around $30 million for you? Or can you give some color on that?

On the security deposit?

Yes. It looks like they funded additional money -- gave you additional money, I think, on January 6.

Yes.

So it was a minimum deposit maintenance requirement in the -- that was in our agreements. And while IHG expected to easily hit those levels, maintenance levels, at year end in this year and next year because of seasonality, there was concern that possibly in the first quarter of this year and possibly in the fourth quarter, they might dip below those maintenance levels. So as an abundance of caution, they asked if we would give them some relief. And we said that we would do so if they put up additional deposit amounts, we would reduce the threshold on a 2 for 1 basis. As it turns out, this quarter, they had coverage so.

Yes. I mean, it appears that this is the seasonally soft quarter, so it looks like they're going to be okay this year.

Yes. Not an indication of a problem, it's everybody just being cautious.

[Operator Instructions] We'll go to the line of Bryan Maher with Craig-Hallum Capital Group.

Quick question. Maybe taking a different tack with TA, since I covered TA and I agree with the comments that you made earlier. As it relates to the now over 30 properties that they, over the past couple years, have acquired on their own balance sheet, renovated, repositioned and are ramping EBITDA nicely, would you consider, or do you think about at all, building upon your portfolio once they have new TravelCenters that have reached the stabilized EBITDA?

We have certain rights of first receivable when they acquire properties, and most of the properties that they've been acquiring needed to be -- were sort of turnaround stories, and that's why we didn't -- we haven't taken advantage of the rights that we had. But we are, as I mentioned earlier, we don't have any issues with our TA investments. And if TA were to come to us and ask us to acquire additional sites, I don't see any reason why we wouldn't consider that.

Okay, that's interesting to know. And then also, what would you be your appetite for other non-hotel investments, kind of excluding TA, excluding hotels? Do you look at other non-hotel investments, and what categories might those be in?

We are not looking at and I don't anticipate us looking at other non-lodging-related property types.

[Operator Instructions] We have no further questions in queue. I'll turn the conference back over to John Murray for closing remarks.

Thank you very much for joining us on our call today. We hope to see you at the upcoming NYU hotel conference and NAREIT in June. Thanks again.

Thank you. And ladies and gentlemen, that does conclude our conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.