Real Estate Properties

As of December 31, 2017, we owned 323 hotels and 199 travel centers.

Our real estate properties, at cost after impairments, consisted of land of $1,668,797, buildings and improvements of $7,110,761 and furniture, fixtures and equipment of $648,101, as of December 31, 2017; and land of $1,566,630, buildings and improvements of $6,542,384 and furniture, fixtures and equipment of $614,375, as of December 31, 2016.

During 2017, 2016 and 2015, we funded $162,482, $191,401 and $188,002, respectively, of improvements to certain of our properties which pursuant to the terms of our management agreements and leases with our managers and tenants resulted in increases in our contractual annual minimum returns and rents of $10,274, $14,740 and $14,691 in 2017, 2016 and 2015 respectively.

At December 31, 2017, 14 of our hotels were on land we leased partially or entirely from unrelated third parties. The average remaining term of the ground leases (including renewal options) is approximately 39 years (range of 21 to 70 years). Ground rent payable under nine of the ground leases is generally calculated as a percentage of hotel revenues. Twelve (12) of the 14 ground leases require annual minimum rents averaging $247 per year; future rents under two ground leases have been prepaid. Fifteen (15) of our travel centers are on land we leased partially or entirely from unrelated third parties. The remaining terms on the leases range from 1 to 33 years with rents averaging $479 per year. Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant did not perform obligations under a ground lease or did not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Any pledge, sale or transfer of our interests in a ground lease may require the consent of the applicable ground lessor and its lenders.

Acquisitions

During the year ended December 31, 2017, we acquired 20 hotels, one travel center, a land parcel adjacent to one of our hotels and land and certain improvements at a travel center we leased from a third party and subleased to TA. We accounted for these transactions as acquisitions of assets. Our allocation of the purchase price of each of these acquisitions based on the estimated fair value of the acquired assets and assumed liabilities is presented in the table below.



					Purchase Price Allocation
Acquisition Date	Location	Type	Purchase Price		Land		Land Improvements		Building and Improvements		Furniture, Fixtures and Equipment		Intangible Assets
2/1/2017	Chicago, IL ⁽¹⁾	Hotel	$	86,201	$	13,609	$	40	$	58,929	$	11,926	$	1,697
3/31/2017	Seattle, WA ⁽²⁾	Hotel	72,736		24,460		30		46,944		855		447
5/3/2017	Columbia, SC ⁽³⁾	Travel Center	27,604		4,040		7,172		16,392		—		—
6/2/2017	St. Louis, MO ⁽⁴⁾	Hotel	88,080		4,250		161		79,737		3,394		538
6/29/2017	Atlanta, GA ⁽⁵⁾	Hotel	88,748		16,612		483		68,864		2,789		—
8/1/2017	Columbus, OH ⁽⁶⁾	Hotel	49,188		6,100		49		40,678		2,361		—
8/23/2017	Charlotte, NC ⁽⁷⁾	Hotel	44,000		2,684		1,012		35,288		5,016		—
9/8/2017	Atlanta, GA ⁽⁸⁾	Land	940		940		—		—		—		—
9/26/2017	Various ⁽⁹⁾	Hotels	139,885		30,712		6,390		93,872		8,911		—
9/28/2017	Sayre, OK ⁽¹⁰⁾	Travel Center	8,672		1,031		—		7,641		—		—
			$	606,054	$	104,438	$	15,337	$	448,345	$	35,252	$	2,682

During the year ended December 31, 2016, we acquired four hotels, five travel centers and a land parcel adjacent to one of our travel centers.



Acquisition Date	Location	Type	Purchase Price ⁽¹¹⁾		Land		Land Improvements		Building and Improvements		Furniture, Fixtures and Equipment		Intangible Assets
2/1/2016	Various ^(12)(13)	Hotels	$	12,000	$	1,953	$	654	$	8,153	$	1,240	$	—
3/16/2016	Portland, OR ^(12)(14)	Hotel	114,000		5,657		3		100,535		7,805		—
3/31/2016	Hillsboro, TX ⁽³⁾	Travel Center	19,683		4,834		4,196		10,653		—		—
6/22/2016	Various ⁽³⁾	Travel Centers	23,876		3,170		9,280		11,426		—		—
6/30/2016	Wilmington, IL ⁽³⁾	Travel Center	22,297		6,523		3,364		12,410		—		—
9/14/2016	Holbrook, AZ ⁽¹⁵⁾	Land	325		325		—		—		—		—
9/30/2016	Caryville, TN ⁽³⁾	Travel Center	16,557		2,068		6,082		8,407		—		—
12/5/2016	Milpitas, CA ^(12)(16)	Hotel	46,000		$	13,089	$	823	$	29,748	$	2,340	—
			$	254,738	$	37,619	$	24,402	$	181,332	$	11,385	$	—

During the year ended December 31, 2015, we acquired 11 hotels, a land parcel adjacent to one of our hotels, 14 travel centers and certain assets at 11 travel centers we own and lease to TA, and land and certain improvements at a travel center we leased from a third party and subleased to TA.



Acquisition Date	Location	Type	Purchase Price ⁽¹¹⁾		Land		Land Improvements		Building and Improvements		Furniture, Fixtures and Equipment		Intangible Assets
3/16/2015	Rosemont, IL ^(12)(17)	Hotel	$	35,500	$	2,375	$	219	$	31,182	$	1,463	$	261
4/28/2015	Ft. Lauderdale, FL ⁽¹⁸⁾	Land	750		165		—		585		—		—
5/15/2015	Denver, CO ^(12)(19)	Hotel	77,250		8,193		181		61,005		7,871		—
6/1/2015	Various ⁽³⁾	Travel Centers	227,877		26,286		67,161		134,388		42		—
7/23/2015	Various ^(12)(20)	Hotels	85,000		13,165		—		64,338		7,497		—
9/23/2015	Various ⁽³⁾	Travel Centers	51,506		9,165		21,266		21,075		—		—
10/30/2015	Waterloo, NY ⁽²¹⁾	Land	15,000		1,500		4,500		9,000		—		—
			$	492,883	$	60,849	$	93,327	$	321,573	$	16,873	$	261


(1)	On February 1, 2017, we acquired the 483 room Hotel Allegro in Chicago, IL for a purchase price of $86,201, including capitalized acquisition costs of $707. We added this Kimpton^® branded hotel to our management agreement with InterContinental.


(2)	On March 31, 2017, we acquired the 121 room Hotel Alexis in Seattle, WA for a purchase price of $72,736, including capitalized acquisition costs of $1,111. We added this Kimpton^® branded hotel to our management agreement with InterContinental.

(3)

We and TA were parties to a transaction agreement that we entered into on June 1, 2015, and which we and TA subsequently amended. Pursuant to that agreement, among other things, we agreed to acquire from, and lease back to, TA 14 travel centers then owned by TA and certain assets then owned by TA at 11 properties we own and lease to TA for an aggregate purchase price of $279,383, excluding acquisition related costs. As of December 31, 2015, we had completed these acquisitions. Simultaneously with these acquisitions, we leased these travel centers and assets back to TA under leases that we and TA entered into pursuant to the transaction agreement, which replaced our previously existing leases with TA.

Also pursuant to the transaction agreement, we agreed to acquire from, and lease back to, TA four travel centers owned by TA that were under development for purchase prices equal to TA’s development costs and two additional travel centers TA then owned. On March 31, 2016, we acquired one of these properties from TA for $19,683. On June 22, 2016, we acquired the two travel centers TA then owned from TA for an aggregate purchase price of $23,876. On June 30, 2016, we acquired from TA another of the properties for $22,297. On September 30, 2016, we acquired from TA another of the properties for $16,557. On May 3, 2017, we acquired from TA the remaining property for $27,604. Simultaneously with these acquisitions, we leased these travel centers back to TA under our TA leases. We accounted for all of our TA transactions under the transaction agreement as asset acquisitions.


(4)	On June 2, 2017, we acquired the 389 room Chase Park Plaza Hotel in St. Louis, MO for a purchase price of $88,080, including capitalized acquisition costs of $466. We converted this hotel to the Royal Sonesta^® hotel brand and entered into a management agreement for this hotel with Sonesta.


(5)	On June 29, 2017, we acquired the 495 room Crowne Plaza Ravinia hotel located in Atlanta, GA for a purchase price of $88,748, including capitalized acquisition costs of $144. We added this Crowne Plaza^® branded hotel to our management agreement with InterContinental.


(6)	On August 1, 2017, we acquired the 419 room Crowne Plaza & Lofts hotel in Columbus, OH for a purchase price of $49,188, including capitalized acquisition costs of $198. We added this Crowne Plaza^® branded hotel to our management agreement with InterContinental.


(7)	On August 23, 2017, we acquired the 300 room Crowne Plaza hotel in Charlotte, NC for a purchase price of $44,000, including capitalized acquisition costs of $143. We added this Crowne Plaza^® branded hotel to our management agreement with InterContinental.


(8)	On September 8, 2017, we acquired a land parcel adjacent to our Crowne Plaza hotel located in Atlanta, GA for a purchase price of $940, including capitalized acquisition costs of $40.


(9)	On September 26, 2017, we acquired 14 extended stay hotels with 1,653 suites located in 12 states for a purchase price of $139,885, including capitalized acquisition costs of $1,885. In connection with this acquisition, we converted these hotels to the Sonesta ES Suites^® brand and entered into management agreements for these hotels with Sonesta.

(10)

On September 28, 2017, we acquired land and certain improvements at a travel center located in Sayre, OK that we previously leased from a third party and subleased to TA for a purchase price of $8,672, including capitalized acquisition costs of $72. Effective as of that date, rent due to that third party and TA’s sublease rental obligations to pay the third party rent ceased, and we amended our lease with TA to document a direct lease to TA of that land and those improvements and to increase the annual minimum rent payable by TA to us by $731, which was 8.5% of our purchase price.


(11)	Excludes acquisition related costs.


(12)	We accounted for these transactions as business combinations under previous GAAP guidance. The pro forma impact of including the results of operations of these acquisitions from the beginning of the year is not material to our consolidated financial statements.


(13)	On February 1, 2016, we acquired two extended stay hotels with 262 suites located in Cleveland and Westlake, OH for an aggregate purchase price of $12,000. We converted these hotels to the Sonesta ES Suites^® brand and entered into management agreements for these hotels with Sonesta.


(14)	On March 16, 2016, we acquired the Kimpton Hotel Monaco, a full service hotel with 221 rooms located in Portland, OR for a purchase price of $114,000. We added this hotel to our management agreement with InterContinental.


(15)	On September 14, 2016, we acquired land adjacent to a travel center that we own in Holbrook, AZ for $325. We and TA added this property to our TA No. 4 lease and annual rent payable by TA to us increased by $28 as a result. We capitalized acquisition related costs of $7 related to this transaction.


(16)	On December 5, 2016, we acquired a full service hotel with 236 rooms located in Milpitas, CA for a purchase price of $46,000. We converted this hotel to the Sonesta^® brand and entered a management agreement for this hotel with Sonesta.


(17)	On March 16, 2015, we acquired a 300 room hotel located in Rosemont, IL for a purchase price of $35,500. We added this Holiday Inn and Suites^® branded hotel to our management agreement with InterContinental.


(18)	On April 28, 2015, we acquired land and improvements adjacent to a Sonesta hotel that we own in Fort Lauderdale, FL for a purchase price of $750, including capitalized acquisition costs of $41. This land and these improvements are included with the Fort Lauderdale hotel under our Sonesta agreement.


(19)	On May 15, 2015, we acquired a 364 room full service hotel located in Denver, CO for a purchase price of $77,250. We added this Crowne Plaza^® branded hotel to our management agreement with InterContinental.


(20)	On July 23, 2015, we acquired a portfolio of nine extended stay hotels with 1,095 suites located in eight states for an aggregate purchase price of $85,000. We converted these hotels to Sonesta ES Suites^® branded hotels and entered into management agreements for these hotels with Sonesta.

(21)

On October 30, 2015, we acquired land and certain improvements at a travel center located in Waterloo, NY that we previously leased from a third party and subleased to TA for a purchase price of $15,000. Effective as of that date, rent due to that third party and TA’s sublease rental obligations to pay the third party rent ceased, and we amended our lease with TA to document a direct lease to TA of that land and those improvements and to increase the annual minimum rent payable by TA to us by $1,275, which was 8.5% of our purchase price.

See Note 6 for further information regarding our InterContinental agreement. See Notes 6 and 10 for further information regarding our relationship, agreements and transactions with Sonesta and TA.

Dispositions

During the year ended December 31, 2017, we sold three of our Carlson branded hotels. On August 1, 2017, we sold our 159 room Radisson hotel located in Chandler, AZ for net proceeds of $9,085. On August 31, 2017, we sold our 143 room Country Inn & Suites hotel located in Naperville, IL for net proceeds of $6,313. On September 22, 2017, we sold our 209 room Park Plaza hotel located in Bloomington, MN for net proceeds of $8,030. As a result of these sales, we recorded a $9,348 gain on sale of real estate in the year ended December 31, 2017. See Note 6 for further information regarding our Carlson agreement.

On June 9, 2015, pursuant to our June 2015 transaction agreement with TA, we sold to TA five TA branded travel centers that we then owned and leased to TA for $45,042. As a result of this sale, we recorded an $11,015 gain on sale of real estate in the year ended December 31, 2015.

On August 13, 2013, a travel center located in Roanoke, VA that we leased to TA was taken by eminent domain proceedings brought by the Virginia Department of Transportation, or VDOT, in connection with certain highway construction. In January 2014, we received proceeds from VDOT of $6,178, which is a substantial portion of VDOT’s estimate of the value of the property and as a result, the annual minimum rent payable by TA to us under the then applicable lease was reduced by $525, effective January 6, 2014. In November 2014, this property was surrendered to VDOT. We challenged VDOT’s estimate of this property’s value and engaged in mediation. Following the mediation, VDOT agreed to pay, and we agreed to accept, the sum of $7,200 as full payment for VDOT's taking of the travel center. VDOT subsequently made payment to us of $1,030, representing the agreed settlement less amounts previously paid to us (exclusive of interest). After deducting from this payment our and TA's share of third party costs and expenses incurred in connection with the challenge of VDOT's initial valuation of the property, we and TA will allocate and apply any remaining amount as set forth in the lease.