Note 7. Real Estate Properties

At September 30, 2013, we owned 475 properties consisting of 291 hotels and 184 travel centers that were operated under 11 management or lease agreements.

During the nine months ended September 30, 2013, we funded $238,771 of improvements to certain of our properties that pursuant to the terms of our management and lease agreements with our hotel managers and tenants resulted in increases in our contractual annual minimum returns and rents of $19,135. See Notes 10 and 11 for further information about our fundings of improvements to certain of our properties.

On May 17, 2013, we acquired a 426 room full service hotel located in Duluth, GA for $29,700, excluding related acquisition costs of $253. We accounted for this transaction as a business combination. The following table summarizes our allocation of the acquisition cost to the estimated fair value of the assets we acquired.

Land	$	2,000
Building	24,300
Furniture, fixtures and equipment	3,400
	$	29,700

On June 28, 2013, we acquired the fee interest in the Royal Sonesta Hotel New Orleans in New Orleans, LA, or the New Orleans Hotel, for $120,500, excluding related acquisition costs, from the third party owner from which we previously leased this hotel. We accounted for this transaction as an acquisition of assets. In connection with this acquisition, we incurred acquisition costs of $309 which we capitalized and we reclassified $18,958 of intangible assets related to our previous leasehold interest in the hotel to land and building. The following table summarizes our allocation of the acquisition cost based on the estimated relative fair value of the assets we acquired.

Land	$	12,564
Building	108,245
	$	120,809

Simultaneously with this acquisition, the lease with the third party terminated and we entered into an amended and restated management agreement with Sonesta International Hotels Corporation, or Sonesta. See Notes 10 and 11 for further information about this agreement.

On July 1, 2013, we acquired the fee interest in a travel center in Montgomery, NY we previously leased from a third party and subleased to TA. We also acquired land parcels adjacent to three of our other travel centers and leased these to TA. The aggregate consideration for these transactions was $6,325. See Note 10 for further information about these transactions.

On August 1, 2013, we acquired a 219 room full service hotel located in Florham Park, NJ for $52,750, excluding related acquisition costs of $859. We accounted for this transaction as a business combination. The following table summarizes our preliminary allocation of the acquisition cost to the estimated fair value of the assets we acquired.

Land	$	5,098
Building	43,404
Furniture, fixtures and equipment	3,540
Intangible assets	708
	$	52,750

We have included the results of our 2013 hotel acquisitions in our condensed consolidated financial statements from the date of acquisition. The pro forma impact of including the results of operations of these hotels from the beginning of the period is not material to our condensed consolidated financial statements.

One of the travel centers we leased to TA under our TA No.1 lease, located in Roanoke, VA, was taken in August 2013 by eminent domain proceedings brought by the Virginia Department of Transportation, or the VDOT, in connection with certain highway construction. The TA No. 1 Lease provides that it terminates with respect to a property upon a taking of the property as the result of any eminent domain proceeding. Under the terms of the TA No. 1 lease, the annual rent payable to us is reduced by either (i) 8.5% of the amount of the proceeds we receive from that taking or, at our option, (ii) the annual fair market value rent of the property. There are ongoing negotiations among the VDOT, TA, and us regarding the amount of compensation to be paid for the taking and regarding a possible short term lease of the property to us for sublease to TA. We expect that TA will continue to operate this travel center pursuant to a sublease until October 2014. The VDOT's estimate of fair market value for the taking is $6,280. We recorded a $5,837, or $0.04, per share loss on asset impairment during the three months ended September 30, 2013 to reduce the carrying value of this property to the $6,280 compensation amount proposed by the VDOT. We and TA have engaged an appraiser to review the VDOT's estimate. Given the preliminary stages of these negotiations, there can be no assurance concerning what additional compensation, if any, would be payable to us or HPT as a result of the taking or what leasing arrangements, if any, will be entered into and the date at which we will cease to operate this travel center.

In September 2013, we entered an agreement to acquire a 223 room full service hotel located in Orlando, FL for a purchase price of $21,000, excluding closing costs. We plan to convert this hotel to a Sonesta branded hotel and add it to our Sonesta agreement (see Notes 11 and 12 for more information regarding the Sonesta agreement). We currently expect to acquire this hotel during the first quarter of 2014; however, this acquisition is subject to customary closing conditions and we can provide no assurance that we will acquire this property in that time or at all or that the terms of the acquisition will not change.

At September 30, 2013, one of our hotels was held for sale. See Note 12 for further information relating to our hotel held for sale.