Related Person Transactions

6 Months Ended

Jun. 30, 2011

Related Person Transactions

Related Person Transactions

Note 11. Related Person Transactions

We have no employees.  Services that might be provided to us by employees are provided to us by Reit Management & Research LLC, or RMR.  RMR provides both business and property management services to us under a business management agreement and a property management agreement, each as amended in January 2010.  In connection with these agreements with RMR, we recognized expenses of $8,589 and $16,874, and $8,258 and $16,408 for the three and six months ended June 30, 2011 and 2010, respectively.  These amounts are included in general and administrative expenses in our condensed consolidated statements of income.  Our Managing Trustees are the owners of RMR.

We, TA, RMR and other companies to which RMR provides management services each currently owns approximately 14.29% of AIC.  All of our Trustees and all of the trustees and directors of the other shareholders of AIC currently serve on the board of directors of AIC.  RMR, in addition to being a shareholder, provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC.  Although we own less than 20% of AIC, we use the equity method to account for this investment because we believe that we have significant influence over AIC because each of our Trustees is a director of AIC.  As of June 30, 2011, we have invested $5,209 in AIC.  We may invest additional amounts in AIC in the future if the expansion of this insurance business requires additional capital, but we are not obligated to do so.  This investment is carried on our condensed consolidated balance sheets in other assets and had a carrying value of $5,202 and $5,077 as of June 30, 2011 and December 31, 2010, respectively.  During the three and six months ended June 30, 2011, we recognized earnings of $46 and $83, respectively, related to this investment. During the three and six months ended June 30, 2010, we recognized a loss of $24 and $52, respectively, related to this investment.  In 2010, AIC designed a combination property insurance program for us and other AIC shareholders in which AIC participated as a reinsurer.  Our total premiums under this program for the policy years expiring May 31, 2012 and 2011 were $5,773 and $4,816, respectively. We are currently investigating the possibilities to expand our insurance relationships with AIC to include property insurance for additional properties we own and other types of insurance.  By participating in this insurance business with RMR and the other companies to which RMR provides management services, we expect that we may benefit financially by possibly reducing our insurance expenses or by realizing our pro-rata share of any profits of this insurance business.

Our travel center leases with TA do not require FF&E escrow deposits.  However, TA is required to maintain the leased travel centers, including structural and non-structural components.  Under both our leases with TA, TA may request that we fund additional amounts for capital improvements to the leased facilities in return for minimum rent increases.  We funded $35,863 for capital improvements to TA under this lease provision during the three months ended June 30, 2011 and currently expect to fund additional amounts for capital improvements to our properties during the remainder of 2011, using funds from our existing cash balances or borrowings under our revolving credit facility.

TA was formerly our 100% owned subsidiary and it became a public company in a spin off transaction in 2007.  In May 2011, we acquired an additional 1,000,000 TA common shares for $5,690 as part of a public offering by TA.  As of June 30, 2011, we owned 2,540,000 common shares of TA (approximately 9.1% of its total shares outstanding).  RMR provides certain management services to both us and TA.  One of our Managing Trustees is a Managing Director of TA and our other Trustees also serve as trustees or directors of other companies managed by RMR.

For more information about the relationships among us, our Trustees and executive officers, RMR, TA, AIC and other companies to which RMR provides management services, and about the risks which may arise from these relationships, please refer to our 2010 Annual Report and our other filings with the SEC, including, the sections captioned “Business”, “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Related Person Transactions” in our 2010 Annual Report, our Quarterly Report on Form 10-Q for the three months ended March 31, 2011 and the information regarding our Trustees and the executive officers and the section captioned “Related Person Transactions and the Company Review of Such Transactions” in our Proxy Statement dated February 22, 2011 relating to our 2011 Annual Meeting of Shareholders.  Our filings with the SEC, including our 2010 Annual Report, our quarterly reports and our Proxy Statement, are available at the SEC’s website: www.sec.gov.