Good day, everyone and welcome to the Hospitality Properties Trust Third Quarter 2017 Financial Results Conference Call. All participants will be in listen-only mode. [Operator Instructions] And please note that today’s event is being recorded. I would now like to turn the conference over to Katie Strohacker, Senior Director of Investor Relations. Please go ahead.

Thank you. Good morning, 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 with analysts. Please note that the recording, retransmission and transcription of today’s conference call is prohibited without the prior written consent of HPT. I would like to point out that 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, November 8, 2017. 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 to be filed later today with the SEC and once again 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. And with that, I will turn the call over to you John.

Thank you, Katie. Good morning and welcome to our third quarter 2017 earnings call. Earlier this morning, we reported third quarter normalized FFO of $175.5 million, an increase of 8.2% compared to the third quarter of 2016. On a per share basis, normalized FFO of $1.07 per share represents a 3.9% increase compared to the 2016 quarter. Starting with performance at HPT’s travel centers, fuel margin decreased by $7.4 million or 8.4% in the third quarter, reflecting reduced fuel volumes sold and lower cents per gallon diesel fuel gross margins compared to 2016. Non-fuel gross margin increased $1.1 million or 0.5% and site-level operating expenses decreased by $7.4 million or 3.8%. Mark will explain these changes in a moment. Property level rent coverage for the quarter was a strong 1.72 times despite HPT’s rent increasing 4.2% compared to 2016 due to our increased investments. Turning to performance at HPT’s hotels, third quarter 2017 comparable RevPAR declined by 0.4% versus the 2016 quarter and comparable GOP margins declined by 72 basis points versus the 2016 quarter to 42.7% reflecting lower revenues and increased wages, benefits, and travel agent commissions. Aggregate coverage of our annual minimum returns and rents at all our hotels was 1.19 times this quarter, down from 1.27 times in 2016. There were many factors that impacted third quarter results, including room supply growth, market weakness due to convention center renovations in San Francisco and Miami, reduced occupancy of renovation in hotels, holiday shifts, non-recurring political conventions, hurricanes and Western wildfires. While our hotels are geographically diversified, many are in or near top 25 markets and sometimes concentrations temporarily work against us. Specifically, this quarter, we had 30 hotels representing 7.5% of our minimum returns in the quarter’s top performing markets of Houston, Orlando, Tampa, Nashville and Detroit. About…

Thanks, John. Starting with the performance of our travel center investments, lower site-level operating expenses and a modest increase in non-fuel gross margin offset a decline in fuel gross margin resulting in a slight improvement in operating results from the 2016 quarter. For the quarter, fuel gross margin for our travel centers decreased $7.4 million or 8.4% versus the prior year quarter, as a result of the 2.7% decrease in fuel sales volume and a 5.9% decrease in cents per gallon margin. The fuel volume decrease in the third quarter resulted primarily from continued dropped fuel efficiency gains. The decline versus the prior year in per gallon fuel margin was due primarily to the absence of the federal biodiesel fuel tax credit program in 2017 and increasing fuel cost trends in the quarter. Fuel gross margin per gallon for HPT sites was still a strong $0.183 in the 2017 third quarter. Non-fuel revenues increased 0.7% versus the prior year due primarily to growth in store and shop sales partially offset by a decline in restaurant revenues, which were negatively impacted by brand conversions of several full service restaurants. Our travel centers grew non-fuel gross margin 0.5% versus the prior year to $231.7 million, which accounted for approximately 74% of the total gross margin dollars of our travel centers in the quarter. Site level operating expenses declined 3.8% versus the prior year due in part to the reversal of $4.2 million of increased transaction fees that TA incurred in the first and second quarters of 2017 and that were the subject of litigation between TA and a fuel card provider. TA reversed these previously expensed fees in the third quarter due to a favorable September court ruling. Excluding this reversal, site level operating expenses still declined by approximately 1.6% versus the…

Thank you. We’ll now begin the question-and-answer session. [Operator Instructions] And the first question today will be from Michael Bellisario with Baird. Please go ahead.

Good morning, everyone.

Good morning.

Just kind of big picture question mostly focused on the hotel side kind of can you give us your thought process and how you’re thinking about getting comfortable with underwriting new deals looking at new investments deploying more capital today when in your current portfolio you’re seeing flattish RevPAR growth and flat to deteriorating margins?

Sure. I guess that addressed a lot of comments. First, we don’t expect to see those that weak RevPAR and declining margins to continue. So, we do believe that the trend will start changing in the fourth quarter and we are expecting that negative RevPAR will become a thing of the past after we get through this quarter. So, we are looking at the portfolio right now and we are seeing a lot of headwinds from supply growth, not just supply that remains to come on in 2018 or 2019, but there is the markets, many markets still absorbing hotels that were built this year or last year and so that makes underwriting more complicated and so we are being a little more conservative about how we invest and we are being careful about who we invest with. And so we think that the prices that we are investing at on a per fee basis and in terms of the going in yields are conservative. We think they are going to be attractive after we completed our renovations and we’re only looking at a couple of potential acquisitions, currently and not sure that they are even necessary go forward, but we are dialing back our acquisition pipeline, we’re seeing a lot of activity in potential transactions, but we have a lot of renovations as Mark said that we’re going to be working on during the course of next year related to the pretty healthy level of acquisitions we made this year. So I think that we’re going to take a little bit more of a latency on where the – where the hotel industry is going.

Got it. That’s helpful and you kind of answer my follow-up there on the pipeline. And then just one other question maybe for mark on the balance sheet is there – is there really anything left for you guys to do maybe proactively before that April ‘19 maturity you mentioned?

Not really, we redeemed a cost preferred back in February this year. As soon as we kicked redeem at part the 6.7% notes due next year we took care of that. So that April ’19 maturity is actually our bank term debt loan and I wouldn’t be surprised if we address that maturity early next year.

That’s helpful. Thank you.

[Operator Instructions] And the next question will be Bryan Maher with B. Riley FBR. Please go ahead.

Hi, guys. So just to be clear there was no real damage to any of your property to speak of?

That’s more or less correct, Bryan. We had – we have about 45 rooms out of service at a courtyard at Houston Hobby Airport. We had a couple of hotels in Hilton Head and Fort Lauderdale, two Sonestas that were closed for a couple of days for one of our gains, but the damage there was not in excess of the deductible on the insurance. There was a significant amount of damage to the Intercontinental in San Juan but that’s a leased hotel and despite the damage, there was a fair amount of business from relief workers following the following hurricane Maria because of the our hotels one of the few places on the island that had a generator had power and had running water despite the storm so here in the news so even though they had damaged their results were pretty good. All in all, we have dodged the storms very well.

Okay. And then one of your competitors albeit a really small one is having some success early on the RevPAR front by going after kind of newer select service hotels upscale ones in kind of the MSAs 20 through 60. Is that anything that you spend some time on I know it’s hard to move the needle for you guys now at onesie, twosie select service, but what are your thoughts on that strategy as a way to incrementally grow in an otherwise kind of tough market?

For us especially on select service assets, we really have a strong preference for portfolio growth. And as you said with the well over 300 hotels now in over 45,000 hotel rooms, it’s hard to move the needle with a couple of small acquisitions. We like select service assets that have 125 to 175 hotel rooms. A lot of the – when you get into the smaller market, we start to see a lot more of what I would consider more sort of small franchisee sized hotels that tend to be more in the 75 to 100 room properties and we think that you want to be a little bit bigger. So, we see portfolios in there in those markets. We don’t object to being in some of the – some of the markets you referenced, but we don’t – we haven’t specifically targeted them and I don’t them we are going to in the near-term.

And then just lastly on the TA front, I know that you guys really haven’t done a lot since that you announced the acquisitions back in mid ‘15 and subsequently closed on those properties, but in light of where TA stock has been trading, have you given any further consideration to maybe taking down 5 or 10 of their travel centers? And have you reconsidered at all their C-store portfolio if and when it gets to a stabilized level that is attractive taking down 50 or 100 or 150 of those?

No, I think we have said on the last couple of calls in response to questions like that, but we are not currently evaluating any additional travel center requisitions. I think that they are, I am not sure what the exact – the best word to use here is that they are content with the portfolio that they currently own and this benefits to them for their own, borrowing capacity and things like to own some properties. And we are not – we don’t think C-stores is the right type of investment for HPT. I don’t anticipate getting into the C-store business.

Okay. Thanks, John.

[Operator Instructions] And there looked to be no further questions, so this will conclude the question-and-answer session I would like to turn the conference back over to John Murray for any closing remarks.

Thank you very much for joining us today and we look forward to hopefully seeing many of you with NAREIT next week in Dallas. Thank you.

And the conference has now concluded. Thank you all for attending today’s presentation. You may now disconnect your lines.