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Significant Tenant

6 Months Ended

Jun. 30, 2011

Note 10. Significant Tenant

TA is the lessee of 39% of our real estate investments, at cost, as of June 30, 2011. The following table presents summary financial information for TA for its quarter and six months ended June 30, 2011, as reported in its Quarterly Report on Form 10-Q, or TA’s Quarterly Report:

	For the Three Months Ended June 30,
	2011		2010
Operations
Total revenues	$	2,094,957	$	1,504,491
Total cost of goods sold	1,818,581		1,251,431
Net income	21,667		1,173

	For the Six Months Ended June 30,
	2011			2010
Total revenues	$	3,877,071		$	2,888,110
Total cost of goods sold	3,371,212			2,430,071
Net income (loss)	4,928			(40,043		)

Cash Flows
Net cash provided by (used in) operating activities	(6,932		)	30,725
Net cash used in investing activities	(33,789		)	(14,905		)
Net cash provided by (used in) financing activities	52,112			(1,392		)
Net increase in cash	11,415			14,410
Cash and cash equivalents at the beginning of the period	125,396			155,632
Cash and cash equivalents at the end of the period	136,811			170,042

	As of June 30,
	2011		2010
Financial Position
Current assets	$	515,147	$	441,888
Noncurrent assets	506,581		470,189
Current liabilities	310,299		258,648
Noncurrent liabilities	400,655		378,120
Total shareholders’ equity	310,774		275,309

The summary financial information of TA is presented to comply with applicable accounting regulations of the Securities and Exchange Commission, or the SEC. References in these financial statements to TA’s Quarterly Report are included as textual references only, and the information in TA’s Quarterly Report is not incorporated by reference into these financial statements.

Our 185 travel centers are leased to and operated by separate subsidiaries of TA under two agreements. Our lease for 145 travel centers expires in 2022. Our lease for 40 travel centers expires in 2024 and has two 15 year renewal options. Both of these leases require TA to: (1) make payments to us of minimum rents; (2) pay us 3% of non-fuel revenue and 0.3% of fuel revenues over threshold amounts to be established in 2011 and 2012, respectively; and (3) maintain the leased travel centers, including structural and non-structural components. As of December 31, 2010, TA had deferred $150,000 of rent due to us, the maximum amount permitted under its rent deferral agreement with us dated August 11, 2008. On January 31, 2011, we entered into an amendment agreement with TA which modified the terms of our two leases with TA. The amended terms are as follows:

· Our lease for 145 travel centers (which we have historically referred to as TA No. 1) was modified effective January 1, 2011, so that the minimum rent is reduced from $165,122 per year to $135,139 per year. The rent will increase to $142,124 per year effective February 1, 2012, plus increases beginning in 2012 based upon percentages of increases in gross revenues which exceed a threshold amount. In addition to the minimum rent, TA remains obligated to pay us ground rent of approximately $5,026 per year.

· Our lease for 40 travel centers (which we have historically referred to as TA No. 2) was modified effective January 1, 2011, so that the minimum rent is reduced from $66,177 per year to $54,160 per year, plus increases starting in 2013 based upon percentages of increases in gross revenues that exceed a threshold amount with the first $2,500 of percentage rent waived.

· The $150,000 of previously deferred rent due from TA to us is further deferred, without interest, so that $107,085 will be due in December 2022 and $42,915 will be due in June 2024. These deferred rent amounts will become due and interest may accrue in certain circumstances set forth in the amendment agreement, including a change in control of TA.

We recognized rental income from our leases with TA of $50,254 and $47,421 for the three months ended June 30, 2011 and 2010, respectively. Rental income for the three months ended June 30, 2011 includes $1,195 of adjustments necessary to record rent on our TA No. 1 lease on a straight line basis. We recognized rental income from our leases with TA of $100,086 and $94,049 for the six months ended June 30, 2011 and 2010, respectively. Rental income for the six months ended June 30, 2011 includes $2,399 of adjustments necessary to record rent on our TA No. 1 lease on a straight line basis. We have not recognized any of the $150,000 of deferred rent as rental income or as rents receivable due to uncertainties regarding future collection of this amount.