Good day, and welcome to the Hospitality Properties Trust's First Quarter 2015 Financial Results Conference Call. This call is being recorded. I would like to turn the call over to the Director of Investor Relations, Katherine Strohacker, for opening remarks and introductions. Please go ahead, ma'am.

Thanks, Brad, and good afternoon, everyone. On today's call, John Murray, President; and Mark Kleifges, Chief Financial Officer, will make a short presentation, which will be followed by a question-and-answer session. Just a reminder. Recording, retransmission and transcription of today's conference call is strictly prohibited without the prior written consent of HPT. Before we begin today's call, I just 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 7, 2015. 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 on 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 to be filed today with the SEC and in our supplemental operating and financial data found, once again, on the website at www.hptreit.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. And with that, I'll turn the call over to John.

Thank you, Katie. Good afternoon, and welcome to our first quarter 2015 earnings call. Today, I'm going to provide a summary of our quarterly performance, including investment activity and our outlook for the balance of 2015, then I'll turn the call over to Mark for a more detailed look at the quarter's results. This morning, HPT reported first quarter normalized FFO of $0.83 per share that reflects the steady execution of our strategy to own a geographically diverse portfolio of well-maintained hotels and travel centers operated under long-term management and lease agreements. Once again, we benefited from our extensive hotel renovation program that began in 2010. Starting with performance of the TravelCenter investments. First quarter results were very good at HPT's TravelCenters, with strong per-gallon fuel margins and steady fuel volumes sold resulting in fuel gross margins increasing by $15.5 million or nearly 20%. Nonfuel margins increased 6% and operating expenses increased only 1%. As a result, first quarter property-level EBITDA increased by $24.3 million or 28.7% compared to the first quarter of 2014 as the effect of reduced fuel prices and operating initiatives allowed TA's record 2014 performance levels to continue into 2015. Turning to HPT's hotel investments. Our renovation program is nearly complete. Since the beginning of 2010, we have spent approximately $886 million on significant guest room and public space improvements at 267 hotels, and this has contributed to 9 consecutive quarters of above-industry average RevPAR growth for the company. First quarter RevPAR growth was 10.1% across HPT's 290 comparable hotels. This performance, which was 82% rate-driven, reflects strong growth at the 26 hotels that completed renovations during 2014, with RevPAR gains of 24.1%, and the 59 hotels that completed renovations during 2013, with RevPAR gains of 12.4%. Hotels renovated in each of 2010, 2011 and 2012…

Thanks, John. Operating results at our comparable hotels were strong this quarter, with RevPAR up 10.1%, a 370 basis point increase in GOP margin percentage and 28.1% growth in cash flow available to pay HPT's minimum returns and rents. RevPAR at our 273 comparable hotels not under renovation this quarter was up 11.1% versus the prior year quarter on a 1.8 percentage point increase in occupancy and ADR growth of 8.4%. This quarter's results benefited from the RevPAR outperformance of the 7 hotels that were under renovation during the 2014 first quarter, with RevPAR up 21.5% at these hotels on occupancy and ADR gains of 5.9 points and 11.5%, respectively, in the current quarter. RevPAR at the 17 hotels under renovation during this quarter was down 5.6% on lower occupancy. Our portfolios with the highest RevPAR growth this quarter were our Wyndham, Carlson and Sonesta portfolios, with increases of 21%, 16.2% and 14.2%, respectively, versus the prior year quarter. RevPAR was up 20.3% at the 15 Sonesta hotels not undergoing renovations during the quarter. GOP margin percentage for our comparable hotels increased 370 basis points from the 2014 quarter to 38.9%. Our Carlson and Sonesta portfolios had the strongest margin growth in the quarter with gross operating profit margin percentage up 650 basis points for both portfolios versus the 2014 quarter. Our Wyndham portfolio also had a strong quarter with GOP margin percentage up 610 basis points. The combination of strong RevPAR growth and GOP margin expansion resulted in a $23.4 million or 28.1% increase from the 2014 quarter in cash flow available to pay our minimum returns and rents. As a result, cash flow coverage of our minimum rents and returns improved for all 9 of our hotel agreements versus the prior year quarter and the portfolio-wide coverage increased…

[Operator Instructions] And it looks like our first question comes from the line of Jeff Donnelly with Wells Fargo.

Just a question actually. I was curious how you guys are thinking or do you think about share repurchases. And I bring it up just because in the past year, I think you guys have had very good lift in your hotel operating performance even away from the hotels that have completed renovation, and also TA has had a very strong past year, but the stock is basically flat versus a year ago. And I guess I'm curious, does the board contemplate a share repurchase instead of purchasing assets? I'm just wondering how you guys are thinking about that capital allocation question.

We are not currently considering a share buyback program. We do consider that periodically in our board meetings as a possible use of our capital. We -- there are a lot of different factors that go into share buybacks. We haven't historically pursued that avenue and I don't really see it happening in the near term. I think we feel like there are acquisition opportunities that could be more positive than the impact of share repurchases. The rating agencies aren't fans of share repurchases and we're -- cycle's kind of long in the tooth. This isn't necessarily the best time to be reducing your equity base.

Yes, I think, yes. I think John's right on there. We want to continue to have a focus on growing the size of our portfolio. We think there's a lot of opportunities out there. But at the same time, we want to maintain our strong balance sheet and investment-grade ratings and those 2 just don't go together, stock buybacks and growing and maintaining the balance sheet strength.

Does that mean that to the extent then if you continue to acquire, we should sort of think that you'll either be leverage-neutral or even sort of use acquisitions to delever further?

I wouldn't say delever further. I think, we're -- at quarter-end, our debt-to-total book capitalization was about 49.5%, so we're at the high end of the 45% to 50% leverage we like to run the company at. Having said that, we're comfortable running it with that level of leverage. And if you kind of look at, we have one acquisition under contract and about $112 million or so of capital that we plan to invest in improvements to our hotels and TravelCenters during the rest of the year and we can really cover those cash needs through free cash flow. So I think absent any additional acquisitions this year, we're going to kind of be leverage-neutral at the end of the year, so I don't really see it this time any need for the company to access the capital markets. Now if we're successful with additional acquisitions later this year, as I said, we want to maintain that 45% to 50% leverage. So the likelihood is we would have to access the capital markets at some point.

And just one last question. I'm just curious, how do you think about the opportunity for large portfolio acquisitions? In prior years, there used to be sort of these big sort of deals usually done in conjunction with brands. And if you look, there could be some options out there. There's a few obvious single-owner-operator brands, some of the bigger global brands are officially or unofficially exploring strategic alternatives. I'm just wondering if you think some of that could give rise to consolidation and the situation where HPT could play a role? Or do you think there's odds of a transaction like that down the road that are, I should say, are there higher odds of a transaction like that down the road, do you think, or that's not likely?

That was a big question. We have always liked to do portfolio transactions in the select-service space. Many of the portfolios that we've seen over the last couple of years have been what I'd refer to as groups of hotels as opposed to portfolios the way we consider them. They haven't been on a single cross-collateralized single contract. They've been many hotels in one transaction, but they're all individual contracts. And so that's why we haven't been an active portfolio acquirer over the past couple of years. But we have -- the portfolio transactions we have done have been largely done because they made strategic sense for both us and the seller and oftentimes it was a brand. So I think if there is consolidation of one type or another or brands -- brand management companies that are seeking to go more asset-light than they currently are, those would be opportunities for HPT to be a business partner with those -- in those opportunities, but -- and I expect we will see some of that. Typically, there has been more consolidation in the lodging space as we get later and later into the cycle and we've been into the cycle for a number of years, so we'll see how it plays out. But we're not looking at anything like that currently. So...

And we do have a question from the line of Wes Golladay from RBC Capital Markets.

Looking at Sonesta, it had a good quarter on the GOP margins going up 650 basis points. Just trying to get a sense of how much runway you have for that portfolio, where are your expectations for GOP margins this year and the potential, say, over the next 2 years for that portfolio?

Well, we don't give property-specific data like that traditionally, but the Sonesta portfolio has been undergoing a lot of renovations. As we mentioned, there were 7 hotels under renovation this quarter. We just, in the first quarter, we had a few carryover punch list-type items at several hotels. We just started the major component of the renovation in New Orleans. In the first quarter, we did the Desire restaurant, which may be the one of the most famous corner [ph] restaurants in that city. But the room renovation just started on Monday and will take the better part of the year through October or so. So there'll be disruption to that business in various ways this year. So we expect that the properties that have completed their renovations are going to continue what's been a fairly strong ramp-up and we expect that the New Orleans property will be able to continue to push rate and continue to maintain a very high occupancy, which it has historically once it comes back out of the renovation. We're lucky to be able to get that renovation done during the slower time of the year for them. And so we expect the performance is going to continue to improve over the next couple of years pretty nicely.

Okay, it seems like that's a portfolio that could meaningfully move the numbers for you guys going forward. So I'm just trying to gauge the amount of disruption, which you'll probably get back and then some going forward. Any idea of the magnitude of the disruption the last year or so?

I'm not sure that I have a great answer for that question. I don't think you're going to see a lot of disruption in terms of bottom line contribution from the New Orleans renovation because they get -- the majority of their bottom line contribution comes from the period from January 1 through Jazz Fest, which is now behind them and then in October, November, December time frame. So I don't think their renovation is going to negatively impact performance. So we expect to see them continue to move towards the owner's priority coverage amount steadily. We don't -- I don't think they're going to get there this year probably, but they'll get pretty close.

But we have several, Wes -- we have several quarters, I think, of additional margin expansion ahead of us with that portfolio if things go as planned.

Okay, so maybe a fair assumption to kind of get the growth profile correct for the modeling would be maybe getting closer to the one by next year for the full year, would that be a good assumption, you think?

One for '16, you're saying?

Yes, yes.

Yes. We're not going to get there this year. No.

Okay, as long as we can kind of pencil it in with next year. That makes sense, guys.

[Operator Instructions]

So I think we'll turn the call back over to John for some closing remarks. Thanks, Brad.

Thank you very much for joining us on the call today, and we look forward to seeing you at the NYU and NAREIT Conferences coming up in a couple weeks. Thank you.