Welcome to the Hospitality Property Trust First Quarter Financial Results Conference Call. [Operator Instructions]. I would now like to turn the conference over to Katie Strohacker, Senior Director of Investor Relations. Please go ahead, ma'am.

Good morning. 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. Please note the recording, retransmission and transcription of today's conference call is prohibited without the prior written consent of HPT. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities law. These forward-looking statements are based on HPT's present beliefs and expectations as of today May 10, 2016. The Company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's call other than through filings with the Securities and Exchange Commission or SEC. In addition, the call may contain non-GAAP financial measures including the 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 filed 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 later today with the SEC and in our supplemental operating and financial data found, once again, on our 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 morning and welcome to our first quarter 2016 earnings call. It was another solid operating quarter for HPT. This morning I'm going to provide a summary of our performance, discuss our investment activity and our outlook for the balance of 2016 and then Mark will provide a more detailed look at this quarter's financial results. Earlier today, HPT reported first quarter normalized FFO of $0.93 per share, a12% increase compared to the $0.83 reported in the first quarter of 2015 due primarily to the impact of HPT's Travel Center and hotel acquisitions and improved hotel operating results. We believe this reflects the continued execution of our strategy to own a diverse portfolio of well-maintained Travel Centers and hotels predominantly Select Service and Extended Stay hotels in near-urban locations operated under long term lease and management agreements. Our geographically diverse, recently renovated, primarily upscale hotel portfolio and our continued asset management focus on revenue and flow-through improvement were the principal factors behind our hotel portfolio's performance during the quarter. First quarter results for HPT's Travel Centers reflected flat fuel volumes sold and per gallon fuel margins that declined as expected versus the comparable 2015 period which had unusually favorable purchasing and pricing environment. The decline in fuel gross margin more than offset increases in non-fuel sales and margin growth. Property-level rent coverage for the last 12 months through March 31, was 1.6 times. Turning to our hotels, the first quarter continued our positive RevPAR and margin growth momentum with RevPAR growth of 4.4% across HPT's 291 comparable hotels, well above industry growth levels again this quarter. This could RevPAR growth which was 91% rate driven continued to be broad-based. For example our 224 hotels that were renovated from 2010 through 2013 improved RevPAR by 3.7%. This quarter's…

Thanks, John. Starting with the performance of our Travel Center investments, property-level operating results for the 2016 first quarter declined versus very tough prior year comps, but remained strong. As you may recall, in the 2015 first quarter, our TravelCenters realized very high per gallon fuel margins as a result of the favorable fuel-purchasing environment. These conditions did not occur in 2016 and, as a result, our TravelCenters experienced a 25% decline versus the prior year quarter in fuel gross margin. Our TravelCenters did continue to grow non-fuel revenue and non-fuel gross margin which increased 2.9% and 6.4% respectively versus the prior year. As a result of these changes, first quarter property level EBITDAR of our Travel Centers declined by $24.8 million or 21.7% compared to the first quarter of 2015. Coverage of HPT's annual minimum rents, however, remained strong at 1.4 times for the seasonably weaker first quarter and 1.6 times for the 12 months ended March 31. Operating results at our comparable hotels were sound again this quarter with RevPAR up 4.4%, an 80 basis point increase in GOP margin percentage and growth in cash flow available to pay HPT's minimum returns and rents of 6.8%. The 4.4% increase in RevPAR this quarter was driven by ADR growth of 4% and a 3 basis-point increase in occupancy. This quarter's RevPAR growth benefited from the outperformance of the eight comparable hotels that were under renovation during the 2015 first quarter with RevPAR up 14.8% at these hotels; but was also impacted by the 22.2% decline in RevPAR at the two comparable hotels under renovation during this quarter. The portfolios with the highest RevPAR growth this quarter were our Marriott number 234, Hyatt and Marriott number 1 portfolios with increases of 5.2%, 4.7% and 4.1%, respectively versus the prior-year quarter.…

[Operator Instructions]. And the first question comes from Wes Golladay with RBC Capital Markets.

With looking at the Wyndham contract, you mentioned you think you can refill the $4 million guarantee. What type of scenario are you baking into the second half of the year for this to occur?

Their projections for this year projected that they would have greater than one times coverage; the first and fourth quarters are typically the weakest the way the cash flow waterfall works. There's a shortfall in the early part of the year. The guarantee is drawn upon to replenish the shortfalls and, as you move through the year, it's sort of a rolling putback month to month on the waterfall and so we expect that the second and third quarters, in particular, will be much stronger and that the guarantee will be in the same place at the end of the year that it was at the beginning.

Yes, Wes, if you look back at quarterly performance, the second quarter of last year, coverage for that portfolio was 1.3 times. And in the third quarter, it was almost 1.1 times. And we're expecting similar operating results this quarter which will help build back that guarantee in those two quarters.

Okay and looking at the mechanics of that, say we're still below one times coverage for the second quarter. It'll probably have a little bit of an earnings impact but if you get caught up for the year in the revenue third quarter, would you get it all back in what you have for the shortfall in the second quarter? Is that how the mechanics work?

It's a calendar year waterfall, so the first that'll happen is the guarantee will get replenished. Once the guarantee has been replenished, the next line item in the waterfall would be to fund the FF in the reserve.

And then looking at the Sonesta portfolio, there's a lot of moving parts in that. You have obviously the renovations, but you also had seven properties under renovation last year, so you probably had a little bit of an easy comp there. How much of it is just the rebranding of the hotels you bought last year that's impacting the results? And then when do you see the portfolio being stabilized for a good run rate?

There has been a lot of growth in the portfolio in terms of adding hotels. So a lot of the RevPAR growth that you see is properties continuing to restabilize after the acquisitions and improve occupancy. But the core Extended Stay properties, that were the first ones rebranded to Sonesta ES Suites Hotel, should be generating stabilized results by midyear this year. And we'll continue to report the recently acquired hotels that are under renovation separately from the others, so you'll be able to see that, I think

I think if you kind of bifurcate the portfolio into the comparable hotels versus the 11 properties that were acquired, 9 in July last year and 2 in the first quarter of this year; it's two different stories. The comp hotels, as I said, cash flow available to pay our rents and returns was up about 22% for those hotels and would have been even stronger if not for the negative impact that the Houston and New Orleans hotels had on the portfolio this quarter. Those are 2 of the 3 largest hotels from a cash-flow contribution standpoint in that portfolio. And both have been hit hard by the energy sector downturn. If you strip those two properties out of the comp hotels, cash flows for the remaining hotels was up over 180%. So there is a lot of noise in that portfolio; but, if you peel it back, the underlying format of the renovated hotels is pretty strong.

[Operator Instructions]. The next question comes from Bryan Maher with FBR & Company.

On the acquisition front, can you drill down a little bit deeper on what you're seeing out there? I know you made mention that you thought pricing would come in a bit given where supply is picking up to, but how much you think it could come in and over what period of time and are you seeing a pickup in the number of select-service assets being marketed?

I'm not sure over what period of time. I think that most of the lodging REITs have, on their earning calls, have indicated that they are more likely to be sellers than buyers. I think the secured debt markets have become a little bit more challenging. Still by historical standards, debt is still cheap, but it's becoming maybe a little bit harder to obtain. And so I think that will cause some of the private equity shops to expect higher yields. I think maybe it takes the balance of this year to see a moderating trend, but I do think the prices will moderate this year. In terms of select service hotels, we see a lot of one-offs, but the pace of one-off opportunities maybe has slowed just a slight bit. And we're seeing less portfolios of select service hotels in the market as well, a lot of full-service hotels.

You are seeing a lot of full-service hotels?

Yes.

Okay. And on the Travel Center front, we know you made a big purchase last year in the summer. Is there still an appetite at HPT for more of those; and, if so, are you just simply waiting for the existing ones, that TA already owns to stabilize before moving forward? Or do you think you have as much as you want for now?

First of all, obviously, I think you know, Brian, that we're committed to acquire several development locations from TA, a couple more this year and one next. Fundamentally, we think that the Travel Center business is a very good one. We have on a rolling 12-month basis, we have 1.6 times coverage there, so we think that it's a secure portfolio. We believe in the fundamentals there; it's really an infrastructure business in a lot of ways. So we don't have any bias against investing in TravelCenters. But we're more focused on hotels and acquisitions; that is our primary focus. And for the balance of 2016, aside from a couple of newly developed sites, if you see acquisition activity from HPT, it's most likely going to be hotels.

Lastly, outside of hotels and Travel Centers, are there any other kind of verticals that you've been exploring or that you think you might explore in the future? Or is it just going to stay hotels and Travel Centers for the time being?

We're not looking at any other property types. We're really focused on hotel acquisitions and improving our portfolio

[Operator Instructions]. All right, as there is nothing else at the present time, I would like to turn return the call to John Murray for any closing comments.

Thank you for joining us this morning. We look forward to hopefully seeing some of you at the NYU hotel conference in Erie. Thanks again.

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.