9. Concentration

Geographic Concentration

At December 31, 2013, our 476 properties were located in 44 states in the United States, Ontario, Canada and Puerto Rico. Between 5% and 13% of our properties, by investment, were located in each of California, Texas, Georgia and New Jersey. Our two hotels in Ontario, Canada and our hotel in Puerto Rico represent 1% and 2% of our hotels, by investment, respectively.

Credit Concentration

All of our managers and tenants are subsidiaries of other companies. The percentage of our minimum return payments and minimum rents, for each management or lease agreement is shown below, as of December 31, 2013.

Agreement Reference Name		Minimum Return/ Minimum Rent				Investment⁽¹⁾

Marriott (No. 1)	53	$	67,535	10	%	$	680,291	9	%
Marriott (No. 234)	68		105,793	16	%		995,439	13	%
Marriott (No. 5)	1		9,902	1	%		90,078	1	%


Subtotal Marriott	122		183,230	27	%		1,765,808	23	%
InterContinental	91		139,498	21	%		1,417,146	18	%
Sonesta	22		58,647	9	%		774,087	10	%
Wyndham⁽²⁾	22		25,531	4	%		348,944	4	%
Hyatt	22		22,037	3	%		301,942	4	%
Carlson	11		12,920	2	%		209,895	3	%
Morgans	1		5,956	1	%		120,000	2	%


Subtotal Hotels	291		447,819	67	%		4,937,822	64	%
TA (No. 1)⁽³⁾	145		160,922	24	%		1,997,738	26	%
TA (No. 2)	40		60,777	9	%		776,302	10	%


Subtotal TA	185		221,699	33	%		2,774,040	36	%


Total	476	$	669,518	100	%	$	7,711,862	100	%

(1): Represents historical cost of our properties plus capital improvements funded by us less impairment writedowns, if any, and excludes capital improvements made from FF&E reserves funded from hotel operations.
(2): The annual minimum return / minimum rent amount presented includes $1,288 of rent related to our lease with Wyndham Vacation Resorts, Inc. for 48 vacation units in one hotel.
(3): Includes a travel center previously owned by us and leased to TA that was taken by eminent domain proceedings in August 2013. We are currently leasing this travel center from the VDOT and subleasing it to TA through August 31, 2014. The annual minimum rent amount for our TA No. 1 lease includes approximately $5,165 of ground rent paid by TA for properties we leased and subleased to TA.

Minimum return and minimum rent payments due to us under some of these hotel management agreements and leases are supported by guarantees. The guarantee provided by Marriott with respect to the 68 hotels managed by Marriott under our Marriott No. 234 agreement is limited to $40,000 ($30,672 remaining at December 31, 2013) and expires on December 31, 2019. The guarantee provided by Wyndham with respect to the 22 hotels managed by Wyndham is limited to $35,656 ($14,163 remaining at December 31, 2013) and expires on December 31, 2019. The guarantee provided by Hyatt with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($13,974 remaining at December 31, 2013). The guarantee provided by Carlson with respect to the 11 hotels managed by Carlson is limited to $40,000 ($20,446 remaining at December 31, 2013). These guarantees may be replenished by future cash flows from the hotels in excess of our minimum returns. The guarantee provided by Wyndham for the lease with Wyndham Vacation Resorts, Inc., is unlimited. The guarantee provided by Marriott with respect to the one hotel leased by Marriott (Marriott No. 5 agreement) is unlimited.

Security deposits support minimum return and minimum rent payments that may be due to us under some of our management agreements and leases. As of December 31, 2013, we hold security deposits for our 91 hotels managed or leased by InterContinental ($27,763). The security deposit we held for our Marriott No. 234 agreement has been exhausted, but may be replenished in the future from available cash flow.

Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $65,623, $76,978 and $60,265 less than the minimum returns due to us for the years ended December 31, 2013, 2012, and 2011 respectively. When managers of these hotels are required to fund the shortfalls under the terms of our operating agreements or their guarantees, we reflect such fundings (including security deposit applications) in our Consolidated Statements of Income and Comprehensive Income as a reduction of hotel operating expenses. The reduction to hotel operating expenses was $19,311, $46,386 and $58,772 in the years ended December 31, 2013, 2012 and 2011, respectively. We had shortfalls at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our operating agreements of $46,312, $30,592 and $1,493 during the years ended December 31, 2013, 2012 and 2011, respectively, which represents the unguaranteed portion of our minimum returns from Marriott and Sonesta.

Significant Tenant

TA is our former subsidiary and is the lessee of 36% of our real estate properties, at cost, as of December 31, 2013.

Financial information about TA may be found on the SEC's website by entering TA's name at http://www.sec.gov/edgar/searchedgar/companysearch.html. Reference to TA's financial information on this external website is presented to comply with applicable accounting regulations of the SEC. Except for such financial information contained therein as is required to be included herein under such regulations, TA's public filings and other information located in external websites are not incorporated by reference into these financial statements. See Note 8 for further information relating to our leases with TA.