10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2014

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 1-11527

HOSPITALITY PROPERTIES TRUST

(Exact Name of Registrant as Specified in Its Charter)

Maryland	04-3262075
(State or Other Jurisdiction of Incorporation or Organization)	(IRS Employer Identification No.)

Two Newton Place, 255 Washington Street, Suite 300, Newton, Massachusetts 02458

(Address of Principal Executive Offices)        (Zip Code)

617-964-8389

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant:  (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b—2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

Number of registrant’s common shares of beneficial interest, $.01 par value per share, outstanding as of August 10, 2014: 149,796,927

HOSPITALITY PROPERTIES TRUST

FORM 10-Q

June 30, 2014

INDEX

		Page
PART I	Financial Information (unaudited)
	Item 1. Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets — June 30, 2014 and December 31, 2013	1
	Condensed Consolidated Statements of Income and Comprehensive Income — Three and Six Months Ended June 30, 2014 and 2013	2
	Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30, 2014 and 2013	3
	Notes to Condensed Consolidated Financial Statements	4
	Item 2.
	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
	Item 3.
	Quantitative and Qualitative Disclosures About Market Risk	41
	Item 4.
	Controls and Procedures	43
	Warning Concerning Forward Looking Statements	44
	Statement Concerning Limited Liability	48
PART II	Other Information
	Item 2.
	Unregistered Sales of Equity Securities and Use of Proceeds	48
	Item 6.
	Exhibits	49
	Signatures	51

References in this Form 10-Q to “HPT”, “we”, “us” or “our” include Hospitality Properties Trust and its consolidated subsidiaries unless otherwise expressly stated or the context indicates otherwise.

Part I     Financial Information

Item 1.  Financial Statements

HOSPITALITY PROPERTIES TRUST

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(amounts in thousands, except share data)

	June 30,			December 31,
	2014			2013
ASSETS
Real estate properties, at cost:
Land	$	1,485,077		$	1,470,513
Buildings, improvements and equipment	6,073,936			5,946,852
	7,559,013			7,417,365
Accumulated depreciation	(1,865,135		)	(1,757,151		)
	5,693,878			5,660,214
Cash and cash equivalents	15,520			22,500
Restricted cash (FF&E reserve escrow)	29,239			30,873
Due from related persons	39,251			38,064
Other assets, net	211,037			215,893
	$	5,988,925		$	5,967,544
LIABILITIES AND SHAREHOLDERS’ EQUITY
Unsecured revolving credit facility	$	40,000		$	—
Unsecured term loan	400,000			400,000
Senior notes, net of discounts	2,345,527			2,295,527
Convertible senior notes	8,478			8,478
Security deposits	32,979			27,876
Accounts payable and other liabilities	112,836			130,448
Due to related persons	19,155			13,194
Dividends payable	5,166			5,166
Total liabilities	2,964,141			2,880,689
Commitments and contingencies
Shareholders’ equity:
Preferred shares of beneficial interest, no par value, 100,000,000 shares authorized:
Series D preferred shares; 7 1/8% cumulative redeemable; 11,600,000 shares issued and outstanding, aggregate liquidation preference of $290,000	280,107			280,107
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 149,775,483 and 149,606,024 shares issued and outstanding, respectively	1,498			1,496
Additional paid in capital	4,114,477			4,109,600
Cumulative net income	2,609,519			2,518,054
Cumulative other comprehensive income	13,053			15,952
Cumulative preferred distributions	(290,317		)	(279,985		)
Cumulative common distributions	(3,703,553		)	(3,558,369		)
Total shareholders’ equity	3,024,784			3,086,855
	$	5,988,925		$	5,967,544

The accompanying notes are an integral part of these condensed consolidated financial statements.

1

HOSPITALITY PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2014			2013			2014			2013
Revenues:
Hotel operating revenues	$	387,248		$	349,877		$	717,184		$	641,528
Rental income	63,736			61,856			127,122			124,068
FF&E reserve income	916			589			1,844			1,192
Total revenue	451,900			412,322			846,150			766,788
Expenses:
Hotel operating expenses	270,778			248,543			501,395			455,192
Depreciation and amortization	78,763			73,598			157,050			145,878
General and administrative	13,166			11,918			24,631			24,062
Acquisition related costs	162			1,814			223			2,090
Loss on asset impairment	—			2,171			—			2,171
Total expenses	362,869			338,044			683,299			629,393
Operating income	89,031			74,278			162,851			137,395
Interest income	25			60			50			79
Interest expense (including amortization of deferred financing costs and debt discounts of $1,354, $1,524, $3,184 and $3,036, respectively)	(34,941		)	(35,014		)	(70,309		)	(70,202		)
Loss on early extinguishment of debt	—			—			(214		)	—
Income before income taxes and equity in earnings of an investee	54,115			39,324			92,378			67,272
Income tax benefit (expense)	(455		)	5,950			(1,071		)	5,432
Equity in earnings of an investee	125			79			28			155
Income before gain on sale of real estate	53,785			45,353			91,335			72,859
Gain on sale of real estate	130			—			130			—
Net income	53,915			45,353			91,465			72,859
Preferred distributions	(5,166		)	(8,097		)	(10,332		)	(16,194		)
Net income available for common shareholders	$	48,749		$	37,256		$	81,133		$	56,665
Net income	$	53,915		$	45,353		$	91,465		$	72,859
Other comprehensive income (loss):
Unrealized gain (loss) on TravelCenters of America common shares	2,497			3,429			(2,941		)	15,849
Equity interest in investee’s unrealized gains (losses)	23			(73		)	42			(81		)
Other comprehensive income (loss)	2,520			3,356			(2,899		)	15,768
Comprehensive income	$	56,435		$	48,709		$	88,566		$	88,627
Weighted average common shares outstanding	149,753			139,743			149,695			132,624
Basic and diluted net income available for common shareholders per common share	$	0.33		$	0.27		$	0.54		$	0.43

The accompanying notes are an integral part of these condensed consolidated financial statements.

2

HOSPITALITY PROPERTIES TRUST

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

	For the Six Months Ended June 30,
	2014			2013
Cash flows from operating activities:
Net income	$	91,465		$	72,859
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	157,050			145,878
Amortization of deferred financing costs and debt discounts as interest	3,184			3,036
Straight line rental income	(75		)	(98		)
Security deposits replenished	5,123			—
FF&E reserve income and deposits	(26,852		)	(14,311		)
Loss on extinguishment of debt	214			—
Loss on asset impairment	—			2,171
Equity in earnings of an investee	(28		)	(155		)
Gain on sale of real estate	(130		)	—
Deferred income taxes	—			(7,068		)
Other non-cash (income) expense, net	1,884			(1,764		)
Changes in assets and liabilities:
Increase in due from related persons	(342		)	(8,673		)
Increase in other assets	(4,221		)	(11,063		)
Decrease in accounts payable and other liabilities	(9,355		)	(2,613		)
Decrease in due to related persons	(815		)	(6,295		)
Cash provided by operating activities	217,102			171,904
Cash flows from investing activities:
Real estate acquisitions and deposits	(60,000		)	(168,409		)
Real estate improvements	(96,081		)	(113,712		)
FF&E reserve fundings	(2,511		)	(29,720		)
Net proceeds from sale of real estate	4,288			—
Eminent domain proceeds	6,178			—
Investment in Affiliates Insurance Company	(825		)	—
Cash used in investing activities	(148,951		)	(311,841		)
Cash flows from financing activities:
Proceeds from issuance of common shares, net	—			393,474
Proceeds from issuance of senior notes, net of discount	346,616			299,661
Repayment of senior notes	(300,000		)	—
Borrowings under revolving credit facility	420,000			245,000
Repayments of revolving credit facility	(380,000		)	(475,000		)
Deferred financing costs	(6,231		)	(2,529		)
Distributions to preferred shareholders	(10,332		)	(16,194		)
Distributions to common shareholders	(145,184		)	(123,787		)
Cash (used in) provided by financing activities	(75,131		)	320,625
Increase (decrease) in cash and cash equivalents	(6,980		)	180,688
Cash and cash equivalents at beginning of period	22,500			20,049
Cash and cash equivalents at end of period	$	15,520		$	200,737
Supplemental cash flow information:
Cash paid for interest	$	71,365		$	66,407
Cash paid for income taxes	3,754			1,944
Non-cash investing activities:
Hotel managers’ deposits in FF&E reserve	$	23,608		$	13,718
Hotel managers’ purchases with FF&E reserve	(27,753		)	(49,382		)

The accompanying notes are an integral part of these condensed consolidated financial statements.

3

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Note 1.  Basis of Presentation

The accompanying condensed consolidated financial statements of Hospitality Properties Trust and its subsidiaries, or HPT, we, our or us, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2013, or our 2013 Annual Report.  In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included in these condensed consolidated financial statements.  These condensed consolidated financial statements include the accounts of HPT and its subsidiaries, all of which are 100% owned directly or indirectly by HPT.  All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods and those of our managers and tenants are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates.  Significant estimates in our condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets.

We have determined that each of our taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards CodificationTM.   We have concluded that we must consolidate each of our TRSs because we are the entity with the power to direct the activities that most significantly impact the VIEs’ economic performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE, and are, therefore, the primary beneficiary of each VIE.  The assets of our TRSs were $31,463 as of June 30, 2014 and consist primarily of amounts due from, and working capital advances to, certain of their hotel managers.  These assets can be used to settle obligations of both us and our TRSs.  The liabilities of our TRSs were $56,092 as of June 30, 2014 and consist primarily of security deposits they hold from and amounts payable to certain of their hotel managers.  Creditors have recourse to both us and our TRSs for these liabilities.

Note 2.  New Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.  This update amends the criteria for reporting discontinued operations to, among other things, change the criteria for disposals to qualify as discontinued operations. The update is effective for interim and annual reporting periods beginning after December 15, 2014 with early adoption permitted.  The implementation of this update is not expected to cause any significant changes to our condensed consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. This update is effective for interim and annual reporting periods beginning after December 15, 2016.  We are currently in the process of evaluating the impact, if any, the adoption of this update will have on our condensed consolidated financial statements.

4

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Note 3.  Revenue Recognition

We report hotel operating revenues for managed hotels in our condensed consolidated statements of income and comprehensive income. We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when services are provided. Our share of the net operating results of our managed hotels in excess of the minimum returns due to us and certain other amounts as provided under the management agreements, or additional returns, are generally determined annually. We recognize additional returns due to us under our management agreements at year end when all contingencies are met and the income is earned. We had no deferred additional returns for the three and six months ended June 30, 2014 and 2013.

We recognize rental income from operating leases on a straight line basis over the term of the lease agreements except for one lease in which there is uncertainty regarding the collection of scheduled future rent increases.  Rental income includes $33 and $75 for the three and six months ended June 30, 2014, respectively, of adjustments necessary to record rent on the straight line basis and $36 and $98 for the three and six months ended June 30, 2013, respectively, of adjustments necessary to record rent on the straight line basis.  Other assets, net, include $5,531 and $5,456 of straight line rent receivables at June 30, 2014 and December 31, 2013, respectively.

We determine percentage rent due to us under our leases annually and recognize it at year end when all contingencies have been met and the rent is earned. We had deferred percentage rent of $698 and $1,572 for the three and six months ended June 30, 2014 and $672 and $1,282 for the three and six months ended June 30, 2013, respectively.

We own all the capital expenditure reserves, or FF&E reserves, for our hotels. We do not report the amounts which are escrowed as FF&E reserves for our managed hotels as FF&E reserve income. We report deposits by our third party hotel tenants into the escrow accounts as FF&E reserve income.

Note 4.  Per Common Share Amounts

We compute per common share amounts using the weighted average number of our common shares outstanding during the period. We had no dilutive common share equivalents during the periods presented.

Note 5.  Shareholders’ Equity

Common Share Issuances

During the six months ended June 30, 2014 and the period July 1, 2014 to August 10, 2014, we issued 54,423 and 21,444, respectively, of our common shares to Reit Management & Research LLC, or RMR, as part of the business management fees payable by us under our business management agreement.  In March 2014, we also issued 102,536 of our common shares to RMR for the incentive fee for 2013 pursuant to the business management agreement.  See Note 10 for further information regarding this agreement.

On June 10, 2014, we granted 2,500 of our common shares valued at $29.28 per share, the closing price of our common shares on the New York Stock Exchange, or NYSE, on that day, to each of our five Trustees as part of their annual compensation.

Distributions

On each of January 15, 2014, April 15, 2014 and July 15, 2014, we paid a $0.4453 per share distribution, or $5,166, to our Series D preferred shareholders.

On February 20, 2014, we paid a $0.48 per share distribution, or $71,811, to our common shareholders.  On May 21, 2014, we paid a $0.49 per share distribution, or $73,373, to our common shareholders.  On July 10, 2014, we declared a $0.49 per share distribution, or $73,395, to our common shareholders of record on July 25, 2014.  We expect to pay this amount on or about August 22, 2014.

5

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Other Comprehensive Income (Loss)

Other comprehensive income (loss) represents the unrealized gain (loss) on the TravelCenters of America LLC, or TA, shares we own and our share of the comprehensive income (loss) of Affiliates Insurance Company, or AIC.  See Note 10 for further information regarding these investments.

Note 6.  Indebtedness

Our principal debt obligations at June 30, 2014 were: (1) our outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) our $400,000 unsecured term loan; (3) an aggregate outstanding principal amount of $2,355,000 of public issuances of unsecured senior notes; and (4) an aggregate outstanding principal amount of $8,478 of public issuances of convertible senior notes.

On January 8, 2014, we amended the agreements governing our unsecured revolving credit facility and unsecured term loan with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of other lenders.

As a result of the amendment, the stated maturity date of our $750,000 revolving credit facility was extended from September 7, 2015 to July 15, 2018. Subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date by an additional one year to July 15, 2019. The amended credit agreement provides that we can borrow, repay and reborrow funds available under the revolving credit facility until maturity, and no principal repayment is due until maturity. The $750,000 maximum amount of our revolving credit facility and the $400,000 amount of the term loan remained unchanged by the amendment. The amended credit agreement includes a feature under which maximum borrowings under the revolving credit facility and term loan may be increased up to $2,300,000 on a combined basis in certain circumstances.

Under the amendment, the interest rate paid on borrowings under the revolving credit facility was reduced from LIBOR plus a premium of 130 basis points to LIBOR plus a premium of 110 basis points, and the facility fee was reduced from 30 basis points to 20 basis points per annum on the total amount of lending commitments. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of both June 30, 2014 and August 10, 2014, we had $40,000 outstanding and $710,000 available under our revolving credit facility.  As of June 30, 2014, the interest rate for the amount outstanding under our revolving credit facility was 1.26%.  The weighted average interest rate for borrowings under our revolving credit facility was 1.25% for both the three and six months ended June 30, 2014 and 1.50% and $1.51% for the three and six months ended June 30, 2013, respectively.

As a result of the amendment, the stated maturity date of our $400,000 unsecured term loan was extended from March 13, 2017 to April 15, 2019. Our term loan is prepayable without penalty at any time. Under the amendment, the interest rate paid on borrowings under the term loan agreement was reduced from LIBOR plus a premium of 145 basis points to LIBOR plus a premium of 120 basis points. The interest rate premium is subject to adjustment based on changes to our credit ratings. As of June 30, 2014, the interest rate for the amount outstanding under our term loan was 1.35%. The weighted average interest rate for borrowings under our term loan was 1.35% and 1.36% for the three and six months ended June 30, 2014 and 1.66% for both the three and six months ended June 30, 2013, respectively.

As a result of the amendments to our revolving credit facility and term loan, we recorded a loss on early extinguishment of debt of $214 during the six months ended June 30, 2014.

Our borrowings under the amended credit facilities continue to be unsecured. Prior to the effectiveness of the amendment, certain of our subsidiaries had guaranteed our obligations under the revolving credit facility and term loan. As a result of the amendment, none of those subsidiary guarantees remain in effect. The amended credit agreement provides that, with certain exceptions, a subsidiary of ours is required to guaranty our obligations under the revolving credit facility and term loan only if that subsidiary has separately incurred debt (other than nonrecourse debt), within the meaning specified in the amended credit agreement, or provided a guarantee of debt incurred by us or any of our other subsidiaries.

6

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Our revolving credit facility and term loan agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes RMR ceasing to act as our business manager. Our revolving credit facility and term loan agreement contains a number of covenants that restrict our ability to incur debt in excess of calculated amounts, restrict our ability to make distributions under certain circumstances and generally require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of the agreement governing our revolving credit facility and term loan at June 30, 2014.

On February 15, 2014, we redeemed at par all of our outstanding 7.875% senior notes due 2014 for $300,000 plus accrued and unpaid interest (an aggregate of $311,813).

On March 12, 2014, we issued $350,000 of 4.65% unsecured senior notes due 2024 in a public offering for net proceeds of $345,949 after underwriting discounts and other offering expenses.

On July 15, 2014, we announced we will redeem at par plus accrued interest all $280,000 of our 51/8% Senior Notes due 2015 on August 15, 2014.

Note 7.  Real Estate Properties

At June 30, 2014, we owned 291 hotels and owned or leased 185 travel centers which are operated under 11 operating agreements.

During the six months ended June 30, 2014, we funded $98,592 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 $7,355.  See Notes 10 and 11 for further information about our fundings of improvements to certain of our properties.

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.  In January 2014, we received $6,178 of proceeds from the VDOT in connection with the taking.  See Note 10 for more information regarding this transaction.

On April 29, 2014, we sold our Sonesta ES Suites branded hotel in Myrtle Beach, SC for net proceeds of $4,288.  As a result of this sale, we recorded a $130 gain on sale of real estate in the three months ended June 30, 2014.  See Note 10 for further information regarding this transaction.

On May 30, 2014, we acquired a 240 room full service hotel located in Ft. Lauderdale, FL for $65,000, excluding related acquisition costs of $191.  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	$	14,592
Building	40,525
Furniture, fixtures and equipment	9,883
	$	65,000

We converted this hotel to a Sonesta branded hotel and added it to our Sonesta agreement.  See Notes 10 and 11 for more information regarding this transaction and our Sonesta agreement.

On July 14, 2014, we agreed to acquire a land parcel adjacent to one of our other travel centers for $450, excluding closing costs.  We currently expect to acquire this property in the third quarter of 2014 using cash on hand.  This pending acquisition is subject to completion of diligence and other customary closing conditions; accordingly, we can

7

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

provide no assurance that we will acquire this property, that the terms of the acquisition will not change or that the closing will not be delayed.  See Note 10 for more information regarding this transaction.

Note 8. Income Taxes

We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, and, accordingly are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements.  We are subject to income tax in Canada, Puerto Rico and certain states despite our REIT status.  Also, we lease our managed hotels to our wholly owned TRSs that, unlike most of our other subsidiaries, file separate consolidated federal corporate income tax returns and are subject to federal, state and foreign income taxes.  Our consolidated income tax provision included in our condensed consolidated statements of income and comprehensive income includes the income tax provision related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our REIT status.

During the three and six months ended June 30, 2014, we recognized income tax expense of $455 and $1,071, respectively, which includes ($22) and ($22), respectively, of federal taxes, $40 and $71, respectively, of foreign taxes and $437 and $1,022, respectively, of certain state taxes that are payable without regard to our REIT status and TRS tax loss carry forwards.

During the three and six months ended June 30, 2013, we recognized a current income tax expense of $907 and $1,637, respectively, which includes $547 and $897, respectively, of federal taxes, $31 and $62, respectively, of foreign taxes and $329 and $678, respectively, of certain state taxes that are payable without regard to our REIT status and TRS tax loss carry forwards. In addition, during the three and six months ended June 30, 2013, we recognized a deferred tax benefit of $6,857 and $7,069, respectively, related primarily to the restructuring of certain of our TRSs.

8

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Note 9.  Segment Information

	For the Three Months Ended June 30, 2014
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	387,248	$	—	$	—		$	387,248
Rental income	8,341		55,395		—			63,736
FF&E reserve income	916		—		—			916
Total revenues	396,505		55,395		—			451,900
Hotel operating expenses	270,778		—		—			270,778
Depreciation and amortization	53,362		25,401		—			78,763
General and administrative	—		—		13,166			13,166
Acquisition related costs	162		—		—			162
Total expenses	324,302		25,401		13,166			362,869
Operating income (loss)	72,203		29,994		(13,166		)	89,031
Interest income	—		—		25			25
Interest expense	—		—		(34,941		)	(34,941		)
Income (loss) before income taxes and equity in earnings of an investee	72,203		29,994		(48,082		)	54,115
Income tax expense	—		—		(455		)	(455		)
Equity in earnings of an investee	—		—		125			125
Income before gain on sale of real estate	72,203		29,994		(48,412		)	53,785
Gain on sale of real estate	130		—		—			130
Net income (loss)	$	72,333	$	29,994	$	(48,412	)	$	53,915

	For the Six Months Ended June 30, 2014
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	717,184	$	—	$	—		$	717,184
Rental income	16,444		110,678		—			127,122
FF&E reserve income	1,844		—		—			1,844
Total revenues	735,472		110,678		—			846,150
Hotel operating expenses	501,395		—		—			501,395
Depreciation and amortization	106,378		50,672		—			157,050
General and administrative	—		—		24,631			24,631
Acquisition related costs	223		—		—			223
Total expenses	607,996		50,672		24,631			683,299
Operating income (loss)	127,476		60,006		(24,631		)	162,851
Interest income	—		—		50			50
Interest expense	—		—		(70,309		)	(70,309		)
Loss on early extinguishment of debt	—		—		(214		)	(214		)
Income (loss) before income taxes and equity in earnings of an investee	127,476		60,006		(95,104		)	92,378
Income tax expense	—		—		(1,071		)	(1,071		)
Equity in earnings of an investee	—		—		28			28
Income before gain on sale of real estate	127,476		60,006		(96,147		)	91,335
Gain on sale of real estate	130		—		—			130
Net income (loss)	$	127,606	$	60,006	$	(96,147	)	$	91,465

	As of June 30, 2014
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,758,872	$	2,187,657	$	42,396	$	5,988,925

9

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

	For the Three Months Ended June 30, 2013
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	349,877	$	—	$	—		$	349,877
Rental income	7,908		53,948		—			61,856
FF&E reserve income	589		—		—			589
Total revenues	358,374		53,948		—			412,322
Hotel operating expenses	248,543		—		—			248,543
Depreciation and amortization	49,550		24,048		—			73,598
General and administrative	—		—		11,918			11,918
Acquisition related costs	1,814		—		—			1,814
Loss on asset impairment	2,171		—		—			2,171
Total expenses	302,078		24,048		11,918			338,044
Operating income (loss)	56,296		29,900		(11,918		)	74,278
Interest income	—		—		60			60
Interest expense	—		—		(35,014		)	(35,014		)
Income (loss) before income taxes and equity in earnings of an investee	56,296		29,900		(46,872		)	39,324
Income tax benefit	—		—		5,950			5,950
Equity in earnings of an investee	—		—		79			79
Net income (loss)	$	56,296	$	29,900	$	(40,843	)	$	45,353

	For the Six Months Ended June 30, 2013
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	641,528	$	—	$	—		$	641,528
Rental income	16,630		107,438		—			124,068
FF&E reserve income	1,192		—		—			1,192
Total revenues	659,350		107,438		—			766,788
Hotel operating expenses	455,192		—		—			455,192
Depreciation and amortization	98,227		47,651		—			145,878
General and administrative	—		—		24,062			24,062
Acquisition related costs	2,090		—		—			2,090
Loss on asset impairment	2,171		—		—			2,171
Total expenses	557,680		47,651		24,062			629,393
Operating income (loss)	101,670		59,787		(24,062		)	137,395
Interest income	—		—		79			79
Interest expense	—		—		(70,202		)	(70,202		)
Income (loss) before income taxes and equity in earnings of an investee	101,670		59,787		(94,185		)	67,272
Income tax benefit	—		—		5,432			5,432
Equity in earnings of an investee	—		—		155			155
Net income (loss)	$	101,670	$	59,787	$	(88,598	)	$	72,859

	As of December 31, 2013
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,701,850	$	2,223,337	$	42,357	$	5,967,544

10

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Note 10. Related Person Transactions

TA

TA is our former 100% owned subsidiary and our largest tenant, and we are TA’s largest shareholder.  TA was created as a separate public company in 2007 as a result of its spin-off from us.  As of June 30, 2014, we owned 3,420,000 common shares, representing approximately 9.1% of TA’s outstanding common shares.  TA is the lessee of 35% of our real estate properties, at cost, as of June 30, 2014.  Mr. Barry Portnoy, one of our Managing Trustees, is a managing director of TA.  Mr. Thomas O’Brien, an officer of RMR and a former officer of ours prior to the TA spin-off, is President and Chief Executive Officer and the other managing director of TA.  Mr. Arthur Koumantzelis, who was one of our Independent Trustees prior to the TA spin-off, serves as an independent director of TA.  RMR provides management services to both us and TA.

Financial information about TA may be found on the Securities and Exchange Commission’s, or the SEC, 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. TA has not yet filed its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014.  TA filed its Annual Report on Form 10-K for the year ended December 31, 2013, on June 6, 2014.  TA publicly disclosed that it had been delayed in filing that Annual Report due to unanticipated delays encountered in connection with TA’s accounting for income taxes as well as general delays encountered in connection with the completion of the TA’s accounting processes and procedures.  TA has also publicly disclosed that, as a result of the delay in completing its 2013 Annual Report, it has been delayed in filing its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014.  There is no assurance as to when TA’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 will be completed and filed with the SEC.

TA has two leases with us, the TA No. 1 lease and the TA No. 2 lease, pursuant to which TA leases 185 travel centers from us.  The TA No. 1 lease is for 145 travel centers that TA operates under the “TravelCenters of America” or “TA” brand names.  The TA No. 2 lease is for 40 travel centers that TA operates under the “Petro” brand name.  The TA No. 1 lease expires on December 31, 2022.  The TA No. 2 lease expires on June 30, 2024, and may be extended by TA for up to two additional periods of 15 years each.

Both of these leases require TA to: (1) make payments to us of minimum rents; (2) pay us percentage rent equal to 3% of non-fuel revenues and 0.3% of fuel revenues above applicable base year revenues subject to certain limitations; (3) pay us at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on our leased sites; and (4) maintain the leased travel centers, including structural and non-structural components.  In addition to minimum and percentage rent, TA is obligated to pay us ground rent of approximately $5,253 per year under the TA No. 1 lease.  Previously deferred rent due from TA of $107,085 and $42,915 is due in December 2022 and June 2024, respectively; however, we have not recognized any of the deferred rent as rental income or as rents receivable due to uncertainties regarding future collection.

We recognized rental income of $55,395 and $53,948 for the three months ended June 30, 2014 and 2013, respectively, and $110,678 and $107,438 for the six months ended June 30, 2014 and 2013, respectively, under our leases with TA.  Rental income for the three and six months ended June 30, 2014 and 2013 includes $408 and $845 and $432 and $899, respectively, of adjustments necessary to record the scheduled rent increase on our TA No. 1 lease and the estimated future payment to us by TA for the cost of removing underground storage tanks on a straight line basis.  As of June 30, 2014 and December 31, 2013, we had accruals for unpaid amounts of $39,251 and $37,034, respectively, owed to us by TA (excluding any deferred rents), which amounts are included in due from related persons on our condensed consolidated balance sheets.  We had deferred percentage rent under our TA No. 1 lease of $698 and $672 for the three months ended June 30, 2014 and 2013, respectively, and $1,572 and $1,282 for the six months ended June 30, 2014 and 2013, respectively.  We have waived an estimated $612 of percentage rent under our TA No. 2 lease as of June 30, 2014 because we previously agreed to waive the first $2,500 of percentage rents under the TA No. 2 lease.  The waived percentage rent is not included in the deferred percentage rent amounts we have disclosed in Note 3. We determine percentage rent due under our TA leases annually and recognize it at year end when all contingencies are met.

Under the TA No. 1 and No. 2 leases, TA may request that we fund approved amounts for renovations, improvements and equipment at leased travel centers in return for increases in TA’s minimum annual rent.  We are not required to fund these improvements and TA is not required to sell them to us.  For the six months ended June 30, 2014, we funded

11

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

$21,923 for capital improvements purchased under this lease provision; and, as a result, TA’s minimum annual rent payable to us increased by approximately $1,863.

On August 13, 2013, a travel center located in Roanoke, VA that we leased to TA under the TA No. 1 lease was taken by eminent domain proceedings brought by the VDOT in connection with certain highway construction.  Our TA No. 1 lease provides that the annual rent payable by TA to us is reduced by 8.5% of the amount of the proceeds we receive from the taking or, at our option, the fair market value rent of the property on the commencement date of the TA No. 1 lease.  In January 2014, we received proceeds from the VDOT of $6,178, which is a substantial portion of the VDOT’s estimate of the value of the property, and as a result the annual rent payable by TA to us under the TA No. 1 lease was reduced by $525 effective January 6, 2014.  We and TA intend to challenge the VDOT’s estimate of the property’s value.  We entered a lease agreement with the VDOT to lease this property through November 15, 2014 for $40 per month, and under the terms of the TA No. 1 lease TA will be responsible to pay this ground lease rent.  We entered into a sublease for this property with TA for TA to continue operating the property as a travel center through November 15, 2014.

On July 14, 2014, we agreed to purchase and lease to TA under the TA No. 1 lease land adjacent to a travel center that we own in Florence, KY.  We and TA expect to amend the TA No. 1 lease upon the closing of the transaction to add this property to the lease and to increase the annual rent payable by TA to us by 8.5% of our total investment in that purchased property.  See Note 7 for further information regarding this transaction.

RMR

We have no employees.  Personnel and various services we require to operate our business are provided to us by RMR.  We have two agreements with RMR to provide management and administrative services to us: (i) a business management agreement, which relates to our business generally, and (ii) a property management agreement, which relates to the property level operations of the office building component of only one property in Baltimore, MD, which also includes a Royal Sonesta hotel.

One of our Managing Trustees, Mr. Barry Portnoy, is Chairman, majority owner and an employee of RMR.  Our other Managing Trustee, Mr. Adam Portnoy, is the son of Mr. Barry Portnoy, and an owner, President, Chief Executive Officer and a director of RMR.  Each of our executive officers is also an officer of RMR, including Mr. Ethan Bornstein, who is the son-in-law of Mr. Barry Portnoy and the brother-in-law of Mr. Adam Portnoy.  Certain of TA’s and Sonesta’s executive officers are officers of RMR.  Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR provides management services.  Mr. Barry Portnoy serves as a managing director or managing trustee of a majority of the companies that RMR or its affiliates provide management services to and Mr. Adam Portnoy serves as a managing trustee of a majority of those companies.  In addition, officers of RMR serve as officers of those companies.

We incurred aggregate business management, property management and incentive fees of $10,925 and $10,050 for the three months ended June 30, 2014 and 2013, respectively, and $20,585 and $19,967 for the six months ended June 30, 2014 and 2013, respectively.  The fees for the three and six months ended June 30, 2014, include $1,445 and $2,296, respectively, of estimated 2014 incentive fees payable in common shares in 2015 based on our common share total return. These amounts are included in general and administrative expenses in our condensed consolidated financial statements.  In accordance with the terms of our business management agreement, we issued 65,018 of our common shares to RMR for the six months ended June 30, 2014 as payment for a portion of the base business management fee we recognized for such period.  In March 2014, we also issued 102,536 of our common shares to RMR for the incentive fee for 2013 pursuant to the business management agreement.

On May 9, 2014, we and RMR entered into amendments to our business management agreement and property management agreement.  As amended, RMR may terminate the agreements upon 120 days’ written notice.  Prior to the amendments, RMR could terminate the agreements upon 60 days’ written notice and could also terminate the property management agreement upon five business days’ notice if we underwent a change of control.  The amendments also provide for certain termination payments by us to RMR in the event that we terminate the agreements other than for

12

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

cause, including certain proportional adjustments to the termination fees if we merge with another REIT to which RMR is providing management services or if we spin-off a subsidiary of ours to which we contributed properties and to which RMR is providing management services both at the time of the spin-off and on the date of the expiration or termination of the agreement.  Also, as amended, RMR agrees to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR.

Directors’ and Officers’ Liability Insurance

In June 2014, we, RMR and four other companies to which RMR provides management services extended our and their combined directors’ and officers’ liability insurance policy, and we extended our separate directors’ and officers’ liability insurance policy, in each case for an interim period.  We paid an aggregate premium of approximately $50 for these extensions.  Further information about those policies is contained in note 8 to our audited financial statements contained in our Annual Report.

Sonesta

The stockholders of Sonesta are Mr. Barry Portnoy and Mr. Adam Portnoy, who are our Managing Trustees, and they also serve as directors of Sonesta. Sonesta’s Chairman and Chief Executive Officer is an officer of RMR and formerly was our Director of Internal Audit, and other officers and employees of Sonesta are current or former officers or employees of RMR.  In addition, RMR also provides certain services to Sonesta.

In 2012, pursuant to a series of transactions, we purchased the entities that owned the Royal Sonesta Hotel Boston in Cambridge, MA, or the Cambridge Hotel, and leased the Royal Sonesta Hotel New Orleans in New Orleans, LA, or the New Orleans Hotel, for approximately $150,500.  In connection with these transactions, we entered into hotel management agreements with Sonesta International Hotels Corporation, or Sonesta, that provide for Sonesta to manage for us each of the Cambridge Hotel and the New Orleans Hotel.  Since that time, we have rebranded additional hotels we own to Sonesta brands and management, and, as of June 30, 2014, Sonesta was managing 22 of our hotels pursuant to long term management agreements.  We currently lease all hotels that we own and which are managed by Sonesta to one of our TRSs.

On June 28, 2013, we acquired the fee interest in the New Orleans Hotel from the third party owner from which we previously leased that hotel and, as a result, the lease with the third party terminated.  Simultaneous with this acquisition, we and Sonesta amended and restated the prior management agreement we had with Sonesta for this hotel.  The terms of the amended and restated management agreement are substantially the same as those contained in our other management agreements with Sonesta relating to full service hotels.

In April 2012, we entered into a pooling agreement with Sonesta that combined our management agreements with Sonesta for hotels that we owned for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and the calculation of minimum returns due to us.  We previously referred to this agreement and combination of hotels and management agreements as our Sonesta No. 1 agreement.  The management agreements for all of our hotels then managed by Sonesta, excluding, until June 28, 2013, the New Orleans Hotel, were included in the Sonesta No. 1 agreement.  The amended and restated management agreement we entered with Sonesta for the New Orleans Hotel upon our acquiring the fee interest in that hotel was added to our pooling agreement with Sonesta.  We now refer to the pooling agreement and combination of our Sonesta branded hotels and management agreements as our Sonesta agreement.  See Note 11 for further information about our management agreements with Sonesta.

Pursuant to our management agreements with Sonesta, we incurred management, system, reservation fees and reimbursement of certain guest loyalty, marketing program and third party reservation transmission expenses payable to Sonesta of $4,717 and $3,007 for the three months ended June 30, 2014 and 2013, respectively, and $8,330 and $5,080 for the six months ended June 30, 2014 and 2013, respectively.  These amounts are included in hotel operating expenses in our condensed consolidated financial statements.  In addition, we also incurred procurement and construction supervision fees payable to Sonesta in connection with capital expenditures at our hotels managed by Sonesta of $1,200

13

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

and $1,150 for the three months ended June 30, 2014 and 2013, respectively, and $1,747 and $1,634 for the six months ended June 30, 2014 and 2013, respectively.  These amounts have been capitalized in our condensed consolidated financial statements.  Under our hotel management agreements with Sonesta, routine property maintenance, which is expensed, is an operating expense of the hotels and improvements and periodic renovations, which are capitalized, are funded by us, except in the case of the New Orleans Hotel for capital expenditures incurred prior to June 28, 2013, which were borne in large part by the former lessor.   As of June 30, 2014 and December 31, 2013, we had accruals for unpaid amounts of $398 and $893, respectively, owed to us by Sonesta, which amounts are included in due from related persons in our condensed consolidated balance sheets.  As of June 30, 2014 and December 31, 2013 we had accrued amounts due to Sonesta for capital expenditure reimbursements of $13,678 and $6,625, respectively, which amounts are included in due to related persons in our condensed consolidated balance sheets.

On April 29, 2014, we sold our Sonesta ES Suites in Myrtle Beach, SC.  In connection with this sale, the hotel management agreement with Sonesta for this property was terminated and removed from our Sonesta agreement.  See Note 7 for further information regarding this transaction.

On May 30, 2014, we acquired a hotel in Ft. Lauderdale, FL and this hotel has been rebranded as a Sonesta hotel.  Sonesta is managing this hotel pursuant to a hotel management agreement on terms consistent with our other hotel management agreements with Sonesta and that hotel management agreement has been added to our Sonesta agreement.  See Note 7 for further information regarding this transaction.

AIC

We, RMR, TA and four other companies to which RMR provides management services currently own Affiliates Insurance Company, or AIC, an Indiana insurance company.  All of our Trustees and most of the trustees and directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC.

On March 25, 2014, as a result of the removal, without cause, of all of the trustees of Equity Commonwealth (formerly known as CommonWealth REIT), or EQC, this shareholder of AIC underwent a change in control, as defined in the shareholders agreement among us, the other shareholders of AIC and AIC.  As a result of that change in control and in accordance with the terms of the shareholders agreement, on May 9, 2014, we and those other shareholders purchased pro rata the AIC shares EQC owned.  Pursuant to that purchase, we purchased 2,857 AIC shares from EQC for $825.  Following these purchases, we and the other remaining six shareholders each own approximately 14.3% of AIC.

In June 2014, we and the other shareholders of AIC renewed our participation in an insurance program arranged by AIC.  In connection with that renewal, we purchased a one-year property insurance policy providing $500,000 of coverage, with respect to which AIC is a reinsurer of certain coverage amounts.  The total premium due to AIC, including taxes and fees, is approximately $11,851 in connection with that policy, which amount may be adjusted from time to time as we acquire or dispose of properties that are covered in the policy. 

As of June 30, 2014, we had invested $6,034 in 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 as all of our Trustees are also directors of AIC.  Our investment in AIC had a carrying value of $6,807 and $5,913 as of June 30, 2014 and December 31, 2013, respectively, which amounts are included in other assets on our condensed consolidated balance sheet.  We recognized income of $125 and $79 for the three months ended June 30, 2014 and 2013, respectively, and $28 and $155 for the six months ended June 30, 2014 and 2013, respectively, related to our investment in AIC.

Note 11. Hotel Management Agreements and Leases and Renovation Funding

As of June 30, 2014, 288 of our hotels are leased to our TRSs and managed by independent hotel operating companies and three are leased to third parties.

Marriott No. 1 agreement.  Our management agreement with Marriott International Inc., or Marriott, for 53 hotels provides that as of June 30, 2014 we are paid a fixed annual minimum return of $67,711, to the extent that gross

14

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

revenues of the hotels, after payment of hotel operating expenses, are sufficient to do so.  We do not have any security deposits or guarantees for the 53 hotels included in our Marriott No. 1 agreement.  Accordingly, the returns we receive from these hotels managed by Marriott are limited to available hotel cash flows after payment of operating expenses. We realized returns of $18,771 and $33,807 during the three and six months ended June 30, 2014, respectively, under this agreement.  The realized returns for the three months ended June 30, 2014 includes the recovery of $1,857 of minimum return shortfalls from the first quarter of 2014.  Marriott’s management and incentive fees are only earned after we receive our minimum returns.

We currently expect to fund $4,400 of capital improvements during 2014 at certain of the hotels included in our Marriott No. 1 agreement. We funded $1,761 of this amount during the six months ended June 30, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 10% of the amounts funded.

Marriott No. 234 agreement. During the three and six months ended June 30, 2014, the payments we received under our Marriott No. 234 agreement, which requires annual minimum returns to us of $105,860 as of June 30, 2014, were $2,634 and $5,269 less than the minimum amounts contractually required, respectively. We realized returns of $26,330 and $50,136 during the three and six months ended June 30, 2014, respectively, under this agreement.  Pursuant to our Marriott No. 234 agreement, Marriott provided us with a limited guarantee for shortfalls up to 90% of our minimum returns through 2019. During the three months ended June 30, 2014, $2,548 of payments made to us under Marriott’s guaranty during the first quarter of 2014 were repaid from the net operating results these hotels generated during the period in excess of the guaranty threshold.  The available balance of this guaranty was $30,672 as of June 30, 2014. Also, during the period from June 30, 2014 to August 10, 2014, the payments we received for these hotels were $1,751 less than the contractual minimum returns due to us.

We currently expect to fund $7,350 of capital improvements during 2014 to complete renovations at certain of the hotels included in our Marriott No. 234 agreement. We funded $750 of this amount during the six months ended June 30, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 9% of the amounts funded.

Marriott No. 5 agreement. We lease one hotel in Kauai, Hawaii to Marriott.  This lease is guaranteed by Marriott and we received $2,501 and $5,002 of rent for this hotel during the three and six months ended June 30, 2014, respectively.  As of August 10, 2014, all rents due from Marriott for this hotel are current.  The guarantee provided by Marriott with respect to the one hotel leased by Marriott is unlimited.

InterContinental agreement. During the three and six months ended June 30, 2014, we realized returns and rents of $34,875 and $69,749, respectively, under our management agreement with InterContinental Hotels Group, plc, or InterContinental, covering 91 hotels and requiring annual minimum returns to us of $139,498 as of June 30, 2014. During the six months ended June 30, 2014, we have been paid all of our minimum returns due for the period.  During the three months ended June 30, 2014, we replenished the available security deposit by $3,286 for the payments we received during the period in excess of the minimum returns due to us for the period.   Also, during the period from June 30, 2014 to August 10, 2014, we received $1,649 more than the minimum amounts contractually required under our InterContinental agreement.

Under this agreement, InterContinental is required to maintain a minimum security deposit of $30,000 in 2014 and $37,000 thereafter. We were advised by InterContinental that it expects interim period shortfalls during 2014 and 2015 in the required minimum security deposit balance under the agreement. As a result, on January 6, 2014, we entered into a letter agreement with InterContinental under which the minimum security deposit balance required to be maintained during 2014 and 2015 will be reduced by two dollars for every dollar of additional security deposit InterContinental provides to us. Beginning January 1, 2016, any resulting reductions to the minimum security deposit amount will cease to be in effect and the minimum deposit balance required under the InterContinental agreement will revert to $37,000. Since January 1, 2014, InterContinental has provided $4,283 of additional security deposits, which reduced the minimum security deposit amount required to $21,434.  The remaining balance of the security deposit was $34,535 as of August 10, 2014.

15

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

We currently expect to fund $22,990 of capital improvements in 2014 to complete renovations at certain of the hotels included in our InterContinental agreement. We did not make any of these renovation fundings during the six months ended June 30, 2014.  As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded.

Sonesta agreement. Our management agreement with Sonesta provides that we are paid a fixed minimum return equal to 8% of our invested capital, as defined in the management agreement ($67,369 as of June 30, 2014), to the extent that gross revenues of the hotels, after payment of hotel operating expenses and certain base management fees to Sonesta, are sufficient to do so.  We do not have any security deposits or guarantees for our hotels managed by Sonesta.  Accordingly, the returns we receive from hotels managed by Sonesta are limited to available hotel cash flows after payment of operating expenses. Sonesta’s incentive management fees, but not its other fees, are only earned after we receive our minimum returns, and we may cancel these management agreements if approximately 75% of our minimum returns are not paid for certain periods. We realized returns of $11,205 and $13,300 during the three and six months ended June 30, 2014, respectively, under this agreement.

In addition to recurring capital expenditures, we currently expect to fund approximately $108,200 in 2014 and $22,800 in 2015 for renovations and other improvements at certain of the hotels included in our Sonesta agreement. We funded $53,117 of these amounts during the six months ended June 30, 2014. The annual minimum returns due to us under the Sonesta agreement increase by 8% of the amounts funded in excess of threshold amounts, as defined therein. See Note 10 for further information regarding our relationship with Sonesta.

Wyndham agreement. During the three and six months ended June 30, 2014, we realized returns and rents of $6,704 and $13,239, respectively, from our hotels managed or leased by Wyndham. The guarantee provided by Wyndham with respect to 22 hotels managed by Wyndham is limited to $35,656 ($8,833 remaining at June 30, 2014), subject to an annual payment limit of $17,828 and expires on July 28, 2020.  This guaranty was replenished by $309 during the three months ended June 30, 2014 from the net operating results these hotels generated during the period in excess of our minimum returns.  During the six months ended June 30, 2014, Wyndham has made $5,331 of guaranty payments to us.  The guarantee provided by Wyndham with respect to the lease with Wyndham Vacation Resorts, Inc., or Wyndham Vacation, for part of one hotel is unlimited.

We currently expect to fund approximately $27,500 of capital improvements in 2014 and $10,075 in 2015 to complete renovations at certain of the hotels included in our Wyndham Hotel Group, or Wyndham, agreement. We funded $20,936 of these amounts during the six months ended June 30, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded.

Other management agreement and lease matters.  As of August 10, 2014, all payments due to us from our managers and tenants under our other operating agreements were current.  Minimum return and minimum rent payments due to us under some of these other hotel management agreements and leases are supported by guarantees.  The guarantee provided by Hyatt Hotels Corporation, or Hyatt, with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($14,062 remaining at June 30, 2014). The guarantee provided by Carlson Hotels Worldwide, or Carlson, with respect to the 11 hotels managed by Carlson is limited to $40,000 ($20,534 remaining at June 30, 2014).

Guarantees and security deposits generally.  Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $4,449 and $5,424 less than the minimum returns due to us for the three months ended June 30, 2014 and 2013, respectively and $25,291 and $29,836 less than the minimum returns due to us for the six months ended June 30, 2014 and 2013, 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 condensed consolidated statements of income and comprehensive income as a reduction of hotel operating expenses. The reduction to hotel operating expenses was $1,267 in the three months ended June 30, 2013 and $5,331 and $8,772 in the six months ended June 30, 2014 and 2013, respectively. There was no reduction to hotel operating expenses in the three months ended June 30, 2014.  We had shortfalls in the minimum returns at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our operating agreements of $4,449 and $4,157 during the three months ended June 30, 2014 and 2013, respectively, and $19,960 and $21,064 during the six months ended June

16

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

30, 2014 and 2013, respectively, which represents the unguaranteed portion of our minimum returns from Marriott and Sonesta.  When we reduce the amounts of the security deposits we hold for any of our operating agreements for payment deficiencies, we record income equal to the amounts by which the deposit is reduced up to the minimum return or minimum rent due to us. However, reducing the security deposits does not result in additional cash flow to us of the deficiency amounts, but reducing amounts of security deposits may reduce the refunds due to the respective lessees or managers who have provided us with these deposits upon expiration of the respective lease or management agreement.  The security deposits are non-interest bearing and are not held in escrow.  Certain of our guarantees and our security deposits under the InterContinental and Marriott No. 234 agreements may be replenished by future cash flows from the applicable hotel operations pursuant to the terms of the respective agreements.

17

HOSPITALITY PROPERTIES TRUST

Notes to Condensed Consolidated Financial Statements

(dollars in thousands, except per share data)

Note 12.  Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at June 30, 2014, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

			Fair Value at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Investment securities (1)	$	30,370	$	30,370	$	—	$	—

(1)Our investment securities, consisting of our 3,420,000 shares of TA, which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs).  Our historical cost basis for these securities is $17,407.  The unrealized gain for these securities as of June 30, 2014 is included in cumulative other comprehensive income in our condensed consolidated balance sheets.

In addition to the investment securities included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, unsecured term loan, senior notes and security deposits. At June 30, 2014 and December 31, 2013, the fair values of these additional financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows:

	June 30, 2014					December 31, 2013
	Carrying			Fair		Carrying			Fair
	Amount			Value		Amount			Value
Senior Notes, due 2014 at 7.875%	$	—		$	—	$	300,000		$	304,035
Senior Notes, due 2015 at 5.125%	280,000			281,323		280,000			283,150
Senior Notes, due 2016 at 6.3%	275,000			294,040		275,000			297,443
Senior Notes, due 2017 at 5.625%	300,000			328,899		300,000			327,681
Senior Notes, due 2018 at 6.7%	350,000			393,652		350,000			399,560
Senior Notes, due 2022 at 5%	500,000			529,893		500,000			524,810
Senior Notes, due 2023 at 4.5%	300,000			306,272		300,000			289,950
Senior Notes, due 2024 at 4.65%	350,000			359,394		—			—
Convertible Senior Notes, due 2027 at 3.8%	8,478			8,963		8,478			8,983
Unamortized discounts	(9,473		)	—		(9,473		)	—
Total financial liabilities	$	2,354,005		$	2,502,436	$	2,304,005		$	2,435,612

At June 30, 2014, we estimated the fair values of our unsecured senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 1 inputs).  We estimated the fair value of our convertible unsecured senior notes using discounted cash flow analyses and currently prevailing market interest rates (Level 3 inputs) because no market quotes for these notes were available at June 30, 2014 and December 31, 2013.

18

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q and with our 2013 Annual Report.  We are a REIT organized under Maryland law.

Overview (dollar amounts in thousands, except per share amounts)

Hotel operations. During the six months ended June 30, 2014, the U.S. hotel industry generally realized improvements in average daily rate, or ADR, occupancy and revenue per available room, or RevPAR, when compared to the same period in 2013.  We believe certain of our hotels have benefited from recent renovations and, as a result, have produced year over year gains in RevPAR in excess of the hotel industry generally.  However, certain of our hotels were negatively impacted by the disruption and displacement caused by our renovation activities at those hotels during 2014. We expect the majority of our hotel renovation activities to be completed by the end of 2014.

For the three months ended June 30, 2014 compared to the same period in 2013 for our 288 hotels that we owned continuously since April 1, 2013, or our comparable hotels: ADR increased 6.2% to $113.50; occupancy increased 1.7 percentage points to 78.6%; and RevPAR increased 8.5% to $89.21.

During the three months ended June 30, 2014, we had 21 comparable hotels under renovation for all or part of the quarter.  For the three months ended June 30, 2014 compared to the same period in 2013 for our 21 hotels under renovation: ADR increased 11.4% to $136.13; occupancy decreased 21.4 percentage points to 58.3%; and RevPAR decreased 18.5% to $79.36.

For the three months ended June 30, 2014 compared to the same period in 2013 for our 267 comparable hotels not under renovation: ADR increased 6.2% to $112.12; occupancy increased 3.6 percentage points to 80.2%; and RevPAR increased 11.2% to $89.92.

For the six months ended June 30, 2014 compared to the same period in 2013 for our 288 comparable hotels: ADR increased 4.8% to $111.94; occupancy increased 3.0 percentage points to 74.7%; and RevPAR increased 9.2% to $83.62.

During the six months ended June 30, 2014, we had 29 comparable hotels under renovation for all or part of the quarter.  For the six months ended June 30, 2014 compared to the same period in 2013 for our 29 hotels under renovation: ADR increased 7.1% to $116.11; occupancy decreased 9.3 percentage points to 61.3%; and RevPAR decreased 7.0% to $71.18.

For the six months ended June 30, 2014 compared to the same period in 2013 for our 259 comparable hotels not under renovation: ADR increased 4.6% to $111.46; occupancy increased 4.8 percentage points to 76.6%; and RevPAR increased 11.6% to $85.38.

Our hotel tenants and managers.  Many of our hotel operating agreements contain security features, such as guarantees and security deposits, which are intended to protect minimum returns and rents due to us in accordance with our operating agreements regardless of hotel performance. However, the effectiveness of various security features to provide us uninterrupted receipt of minimum returns and rents is not assured, particularly if the profitability of our hotels takes an extended period to recover from the severe declines experienced during the recent recession, if economic conditions generally decline, or if our hotel renovation activities described above do not result in improved operating results at our hotels. Also, certain of the guarantees that we hold are limited in amount and duration and do not provide for payment of the entire amount of the applicable minimum returns. If our tenants, managers or guarantors do not earn or pay the minimum returns and rents due to us, our cash flows will decline and we may be unable to pay distributions to our shareholders, repay our debt or fund our debt service obligations.

Marriott No. 1 agreement.  Additional details of this agreement are set forth in Note 11 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

19

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our management agreement with Marriott for 53 hotels provides that we are paid a fixed annual minimum return of $67,711 as of June 30, 2014, to the extent that gross revenues of the hotels, after payment of hotel operating expenses, are sufficient to do so.  We do not have any security deposits or guarantees for the 53 hotels included in our Marriott No. 1 agreement.  Accordingly, the returns we receive from these hotels managed by Marriott are limited to available hotel cash flows after payment of operating expenses. We realized returns of $18,771 and $33,807 during the three and six months ended June 30, 2014, respectively, under this agreement.  The realized returns for the three months ended June 30, 2014 includes the recovery of $1,857 of minimum return shortfalls from the first quarter of 2014.  Marriott’s management and incentive fees are only earned after we receive our minimum returns.

Marriott No. 234 agreement.  Additional details of this agreement are set forth in Note 11 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

During the three and six months ended June 30, 2014, the payments we received under our Marriott No. 234 agreement, which requires annual minimum returns to us of $105,860 as of June 30, 2014, were $2,634 and $5,269 less than the minimum amounts contractually required, respectively. We realized returns of $26,330 and $50,136 during the three and six months ended June 30, 2014, respectively, under this agreement.  Pursuant to our Marriott No. 234 agreement, Marriott provided us with a limited guarantee for shortfalls up to 90% of our minimum returns through 2019. During the three months ended June 30, 2014, $2,548 of payments made to us under Marriott’s guaranty during the first quarter of 2014 were repaid from the net operating results these hotels generated during the period in excess of the guaranty threshold.  The available balance of this guaranty was $30,672 as of June 30, 2014. Also, during the period from June 30, 2014 to August 10, 2014, the payments we received for these hotels were $1,751 less than the contractual minimum returns due to us.

InterContinental agreement.  Additional details of this agreement are set forth in Note 11 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

During the three and six months ended June 30, 2014, we realized returns and rents of $34,875 and $69,749, respectively, under our management agreement with InterContinental, covering 91 hotels and requiring annual minimum returns to us of $139,498 as of June 30, 2014.  During the six months ended June 30, 2014, we have been paid all of our minimum returns due for the period.  During the three months ended June 30, 2014, we replenished the available security deposit by $3,286 for the payments we received during the period in excess of the minimum returns due to us for the period.   Also, during the period from June 30, 2014 to August 10, 2014, we received $1,649 more than the minimum amounts contractually required under our InterContinental agreement.

Under this agreement, InterContinental is required to maintain a minimum security deposit of $30,000 in 2014 and $37,000 thereafter. We were advised by InterContinental that it expects interim period shortfalls during 2014 and 2015 in the required minimum security deposit balance under the agreement. As a result, on January 6, 2014, we entered into a letter agreement with InterContinental under which the minimum security deposit balance required to be maintained during 2014 and 2015 will be reduced by two dollars for every dollar of additional security deposit InterContinental provides to us. Beginning January 1, 2016, any resulting reductions to the minimum security deposit amount will cease to be in effect and the minimum deposit balance required under the InterContinental agreement will revert to $37,000. Since January 1, 2014, InterContinental has provided $4,283 of additional security deposits, which reduced the minimum security deposit amount required to $21,434.  The remaining balance of the security deposit was $34,535 as of August 10, 2014.

Sonesta agreement. Additional details of this agreement are set forth in Note 11 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

20

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our management agreement with Sonesta provides that we are paid a fixed minimum return equal to 8% of our invested capital, as defined in the management agreement ($67,369 as of June 30, 2014), to the extent that gross revenues of the hotels, after payment of hotel operating expenses and base management fees to Sonesta, are sufficient to do so.  We do not have any security deposits or guarantees for our hotels managed by Sonesta.  Accordingly, the returns we receive from hotels managed by Sonesta are limited to available hotel cash flows after payment of operating expenses. Sonesta’s incentive management fees, but not its other fees, are only earned after we receive our minimum returns, and we may cancel these management agreements if approximately 75% of our minimum returns are not paid for certain periods. We realized returns of $11,205 and $13,300 during the three and six months ended June 30, 2014, respectively, under this agreement.

Wyndham agreement. Additional details of this agreement are set forth in Note 11 to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

During the three and six months ended June 30, 2014, we realized returns and rents of $6,704 and $13,239, respectively, from our hotels managed or leased by Wyndham.   The guarantee provided by Wyndham with respect to 22 hotels managed by Wyndham is limited to $35,656 ($8,833 remaining at June 30, 2014), subject to an annual payment limit of $17,828 and expires on July 28, 2020.  This guaranty was replenished by $309 during the three months ended June 30, 2014 from the net operating results these hotels generated during the period in excess of our minimum returns.  During the six months ended June 30, 2014, Wyndham has made $5,331 of guaranty payments to us.  The guarantee provided by Wyndham with respect to the lease with Wyndham Vacation Resorts, Inc., or Wyndham Vacation, for part of one hotel is unlimited.

Other management agreement and lease matters. As of August 10, 2014, all payments due to us from our managers and tenants under our other operating and lease agreements were current.  Additional details of our guarantees from Hyatt and Carlson and our other agreements with Marriott, Morgans and TA are set forth in Notes 10 and 11 to our condensed consolidated financial statements in Part I, Item I of this Quarterly Report on Form 10-Q, which disclosure is incorporated herein by reference.

Management Agreements and Leases

At June 30, 2014, we owned 291 hotels operated under nine operating agreements; 288 of these hotels are leased by us to our wholly owned TRSs and managed by hotel operating companies and three are leased to hotel operating companies.  At June 30, 2014, our 184 owned travel centers and one travel center we lease through November 15, 2014 are leased to TA under two agreements. Our condensed consolidated statements of income and comprehensive income include operating revenues and expenses of our managed hotels and rental income from our third party leased hotels and travel centers.  Additional information regarding the terms of our management agreements and leases is included in the table and notes thereto on pages 33 through 36.

21

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Results of Operations (amounts in thousands, except per share amounts)

Three Months Ended June 30, 2014 Compared to the Three Months Ended June 30, 2013

	For the Three Months Ended June 30,
							Increase			% Increase
	2014			2013			(Decrease)			(Decrease)
Revenues:
Hotel operating revenues	$	387,248		$	349,877		$	37,371		10.7%
Rental income:
Minimum rents - hotels	8,341			7,908			433			5.5%
Minimum rents - travel centers	55,395			53,948			1,447			2.7%
Total rental income	63,736			61,856			1,880			3.0%
FF&E reserve income	916			589			327			55.5%
Expenses:
Hotel operating expenses	270,778			248,543			22,235			8.9%
Depreciation and amortization - hotels	53,362			49,550			3,812			7.7%
Depreciation and amortization - travel centers	25,401			24,048			1,353			5.6%
Total depreciation and amortization	78,763			73,598			5,165			7.0%
General and administrative	13,166			11,918			1,248			10.5%
Acquisition related costs	162			1,814			(1,652		)	(91.1)%
Loss on asset impairment	—			2,171			(2,171		)	n/a
Operating income	89,031			74,278			14,753			19.9%
Interest income	25			60			(35		)	(58.3)%
Interest expense	(34,941		)	(35,014		)	73			0.2%
Income before income taxes and equity earnings of an investee	54,115			39,324			14,791			37.6%
Income tax benefit (expense)	(455		)	5,950			(6,405		)	107.6%
Equity in earnings of an investee	125			79			46			58.2%
Income before gain on sale of real estate	53,785			45,353			8,432			(18.6)%
Gain on sale of real estate	130			—			130			—
Net income	53,915			45,353			8,562			18.9%
Preferred distributions	(5,166		)	(8,097		)	2,931			(36.2)%
Net income available for common shareholders	48,749			37,256			11,493			30.8%
Weighted average shares outstanding	149,753			139,743			10,010			7.2%
Net income available for common shareholders per common share	$	0.33		$	0.27		$	0.06		22.2%

References to changes in the income and expense categories below relate to the comparison of results for the three month period ended June 30, 2014, compared to the three month period ended June 30, 2013.

The increase in hotel operating revenues is a result of increased revenues at certain of our managed hotels due to increases in ADR and higher occupancies ($37,212) and the effects of our hotel acquisitions since April 1, 2013 ($6,630).  These increases were partially offset by decreased revenues at certain of our managed hotels undergoing

22

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

renovations during the 2014 period due to lower occupancies ($6,471).  Additional operating statistics of our hotels are included in the table on page 37.

The increase in rental income - hotels is a result of contractual rent increases under certain of our hotel leases ($220) and increases in the minimum rents due to us as we funded improvements at certain of our leased hotels since April 1, 2013 ($213). Rental income for the 2014 and 2013 periods includes $131 and $120, respectively, of adjustments to record rent on a straight line basis.

The increase in rental income - travel centers is primarily a result of increases in the minimum rents due to us from TA for improvements we purchased at certain of our travel centers since April 1, 2013. Rental income for our travel centers for the 2014 and 2013 periods includes ($98) and ($83), respectively, of adjustments to record rent on a straight line basis.

FF&E reserve income represents amounts paid by certain of our hotel tenants into restricted accounts owned by us, the purpose of which is to accumulate funds for future capital expenditures. The terms of our hotel leases require these amounts to be calculated as a percentage of total sales at our hotels. The increase in FF&E reserve income is the result of increased sales at certain of our leased hotels and increased FF&E contribution percentages by certain of our tenants.  We do not report the amounts, if any, which are escrowed as FF&E reserves for our managed hotels as FF&E reserve income.

The increase in hotel operating expenses was primarily caused by increased expenses at certain of our managed hotels resulting primarily from higher occupancies ($22,491), the effect of our acquisitions since April 1, 2013 ($6,630) and the reduction in the amount of minimum return shortfalls funded by our managers ($415), partially offset by operating expense decreases at certain properties undergoing renovations during the 2014 period due to lower occupancies ($6,471).  Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $4,449 and $5,424 less than the minimum returns due to us in the three months ended June 30, 2014 and 2013, respectively.  When the managers of these hotels fund the shortfalls under the terms of our operating agreements or their guarantees, we reflect such fundings (including security deposit applications) in our condensed consolidated statements of income and comprehensive income as a reduction of hotel operating expenses. The reduction to operating expenses was $1,267 in the three months ended June 30, 2013.  There was no reduction to hotel operating expenses in the three months ended June 30, 2014.  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 $4,449 and $4,157 during the three months ended June 30, 2014 and 2013, respectively, which represents the unguaranteed portion of our minimum returns from Marriott and Sonesta.

The increase in depreciation and amortization - hotels is primarily due to the depreciation and amortization of assets acquired with funds from our FF&E reserves or directly funded by us since April 1, 2013 ($5,713) and the effect of our hotel acquisitions since April 1, 2013 ($1,274), partially offset by certain of our depreciable assets becoming fully depreciated since April 1, 2013 ($3,175).

The increase in depreciation and amortization - travel centers is due to the depreciation and amortization of improvements made to our travel centers since April 1, 2013.

The increase in general and administrative costs is primarily due to an increases in estimated business management incentive fees ($878), stock compensation expense ($448) and professional service costs ($187) during the 2014 period, partially offset by lower state franchise taxes ($265).

Acquisition related costs represent legal and other costs incurred in connection with our hotel acquisition activities.

We recorded a $2,171 loss on asset impairment in the 2013 period in connection with our plan to sell one hotel.

The increase in operating income is primarily due to the revenue and expense changes discussed above during the 2014 period compared to the 2013 period.

23

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The decrease in interest income is due to lower average cash balances during the 2014 period.

Interest expense is essentially unchanged with the impact of higher average outstanding borrowings being offset by a lower weighted average interest rate in the 2014 period.

We recognized higher state income taxes during the 2014 period primarily due to increased taxable income in certain jurisdictions, partially offset by decreased federal taxes related to our TRSs in the 2014 period.  We recorded a $6,868 tax benefit in the 2013 period in connection with the restructuring of certain of our TRSs.

Equity in earnings of an investee represents our proportionate share of earnings of AIC.

We recorded a $130 gain on sale of real estate in the 2014 period in connection with the sale of our Sonesta ES Suites hotel in Myrtle Beach, SC in April 2014.

The decrease in preferred distributions is the result of our redemption of our Series C cumulative redeemable preferred shares in July 2013.

The increases in net income, net income available for common shareholders and net income available for common shareholders per common share in the three months ended June 30, 2014, compared to the prior year period, are primarily a result of the changes discussed above.  The percentage increase in net income available for common shareholders per share is lower primarily as a result of our issuance of common shares pursuant to a public offering in November 2013.

24

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Six Months Ended June 30, 2014 Compared to the Six Months Ended June 30, 2013

	For the Six Months Ended June 30,
							Increase			% Increase
	2014			2013			(Decrease)			(Decrease)
Revenues:
Hotel operating revenues	$	717,184		$	641,528		$	75,656		11.8%
Rental income:
Minimum rents - hotels	16,444			16,630			(186		)	(1.1)%
Minimum rents - travel centers	110,678			107,438			3,240			3.0%
Total rental income	127,122			124,068			3,054			2.5%
FF&E reserve income	1,844			1,192			652			54.7%
Expenses:
Hotel operating expenses	501,395			455,192			46,203			10.2%
Depreciation and amortization - hotels	106,378			98,227			8,151			8.3%
Depreciation and amortization - travel centers	50,672			47,651			3,021			6.3%
Total depreciation and amortization	157,050			145,878			11,172			7.7%
General and administrative	24,631			24,062			569			2.4%
Acquisition related costs	223			2,090			(1,867		)	(89.3)%
Loss on asset impairment	—			2,171			(2,171		)	(100.0)%
Operating income	162,851			137,395			25,456			18.5%
Interest income	50			79			(29		)	(36.7)%
Interest expense	(70,309		)	(70,202		)	107			0.2%
Loss on extinguishment of debt	(214		)	—			(214		)	—
Income before income taxes and equity earnings of an investee	92,378			67,272			25,106			37.3%
Income tax benefit (expense)	(1,071		)	5,432			6,503			(119.7)%
Equity in earnings of an investee	28			155			(127		)	(81.9)%
Income before gain on sale of real estate	91,335			72,859			18,476			25.4%
Gain on sale of real estate	130			—			130			—
Net income	91,465			72,859			18,606			25.5%
Preferred distributions	(10,332		)	(16,194		)	5,862			(36.2)%
Net income available for common shareholders	81,133			56,665			24,468			43.2%
Weighted average shares outstanding	149,695			132,624			17,071			12.9%
Net income available for common shareholders per common share	$	0.54		$	0.43		$	0.11		25.6%

References to changes in the income and expense categories below relate to the comparison of results for the six month period ended June 30, 2014, compared to the six month period ended June 30, 2013.

The increase in hotel operating revenues is a result of increased revenues at certain of our managed hotels due to increases in ADR and higher occupancies ($68,354) and the effects of our hotel acquisitions since January 1, 2013 ($13,536).  These increases were partially offset by decreased revenues at certain of our managed hotels undergoing

25

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

renovations during the 2014 period due to lower occupancies ($6,234).  Additional operating statistics of our hotels are included in the table on page 37.

The decrease in rental income - hotels is a result of the conversion of 53 hotels from leased to managed in January 2013 ($676) partially offset by contractual rent increases under certain of our hotel leases and increases in the minimum rents due to us as we funded improvements at certain of our leased hotels since January 1, 2013 ($490). Rental income for the 2014 and 2013 periods includes $261 and $254 of adjustments to record rent on a straight line basis, respectively.

The increase in rental income - travel centers is primarily a result of increases in the minimum rents due to us from TA for improvements we purchased at certain of our travel centers since January 1, 2013. Rental income for our travel centers for the 2014 and 2013 periods includes ($186) and ($156) of adjustments to record rent on a straight line basis, respectively.

The increase in FF&E reserve income is the result of increased sales at certain of our leased hotels and increased FF&E contribution percentages by certain of our tenants.

The increase in hotel operating expenses was primarily caused by increased expenses at certain of our managed hotels resulting primarily from higher occupancies ($30,799), the effect of our acquisitions since January 1, 2013 ($13,536), the reduction in the amount of minimum return shortfalls funded by our managers ($3,617) and operating expense increases at certain properties undergoing or completing renovations during the 2014 period due to higher occupancies ($5,485).  Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $25,291 and $29,836 less than the minimum returns due to us in the six months ended June 30, 2014 and 2013, respectively.  When the managers of these hotels fund the shortfalls under the terms of our operating agreements or their guarantees, we reflect such fundings (including security deposit applications) in our condensed consolidated statements of income and comprehensive income as a reduction of hotel operating expenses. The reduction to operating expenses was $5,331 and $8,772 in the six months ended June 30, 2014 and 2013, 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 $19,960 and $21,064 during the six months ended June 30, 2014 and 2013, respectively, which represents the unguaranteed portion of our minimum returns from Marriott and Sonesta.

The increase in depreciation and amortization - hotels is primarily due to the depreciation and amortization of assets acquired with funds from our FF&E reserves or directly funded by us since January 1, 2013 ($12,218) and the effect of our hotel acquisitions since January 1, 2013 ($2,333), partially offset by certain of our depreciable assets becoming fully depreciated since January 1, 2013 ($6,400).

The increase in depreciation and amortization - travel centers is due to the depreciation and amortization of improvements made to our travel centers since January 1, 2013.

The increase in general and administrative costs is primarily due to an increase in estimated business management incentive fees in the 2014 period ($1,102), partially offset by lower business management fees ($442) resulting from the December 2013 amendment to our business management agreement.

Acquisition related costs represent legal and other costs incurred in connection with our hotel acquisition activities.

We recorded a $2,171 loss on asset impairment in the 2013 period in connection with our plan to sell one hotel.

The increase in operating income is primarily due to the revenue and expense changes discussed above during the 2014 period compared to the 2013 period.

The decrease in interest income is due to lower average cash balances during the 2014 period.

Interest expense is essentially unchanged with the impact of higher average outstanding borrowings being offset by a lower weighted average interest rate in the 2014 period.

26

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We recorded a $214 loss on early extinguishment of debt in the 2014 period in connection with amending the terms of our revolving credit facility and term loan.

We recognized higher state income taxes during the 2014 period primarily due to increased taxable income in certain jurisdictions, partially offset by decreased federal taxes related to our TRSs in the 2014 period.  We recorded a $6,868 tax benefit in the 2013 period in connection with the restructuring of certain of our TRSs.

Equity in earnings of an investee represents our proportionate share of earnings of AIC.

We recorded a $130 gain on sale of real estate in the 2014 period in connection with the sale of our Sonesta ES Suites hotel in Myrtle Beach, SC in April 2014.

The decrease in preferred distributions is the result of our redemption of our Series C cumulative redeemable preferred shares in July 2013.

The increases in net income, net income available for common shareholders and net income available for common shareholders per common share in the six months ended June 30, 2014, compared to the prior year period, are primarily a result of the changes discussed above.  The percentage increase in net income available for common shareholders per share is lower primarily as a result of our issuance of common shares pursuant to public offerings in March 2013 and November 2013.

Liquidity and Capital Resources (dollar amounts in thousands, except per share amounts)

Our Managers and Tenants

As of June 30, 2014, 289 of our hotels are included in one of seven portfolio agreements and two hotels are not included in a portfolio and are leased to hotel operating companies. Our 184 owned travel centers and one travel center we lease through November 15, 2014 are leased under two portfolio agreements. All costs of operating and maintaining our properties are paid by the hotel managers as agents for us or by our tenants for their own account. Our hotel managers and tenants derive their funding for property operating expenses and for returns and rents due to us generally from property operating revenues and, to the extent that these parties themselves fund our minimum returns and minimum rents, from their separate resources. Our hotel managers and tenants are Marriott, InterContinental, Sonesta, Wyndham, Hyatt, Carlson and Morgans Hotel Group, or Morgans. Our travel centers are leased to TA.

We define coverage for each of our hotel management agreements or leases as total property level revenues minus FF&E reserve escrows, if any, and all property level expenses which are not subordinated to the minimum returns and minimum rents due to us divided by the minimum returns or minimum rent payments due to us. More detail regarding coverage, guarantees and other features of our hotel operating agreements is presented in the tables and related notes on pages 33 through 36. For the twelve months ended June 30, 2014, six of our nine hotel operating agreements generated coverage of less than 1.0x (with a range among those six hotel operating agreements of 0.32x to 0.93x); our Marriott No. 1, InterContinental and Morgans agreements generated coverage of 1.09x, 1.05x and 1.03x for the twelve months ended June 30, 2014, respectively.

We define coverage for our travel center leases as property level revenues minus all property level expenses divided by the minimum rent payments due to us.  Coverage data for the twelve months ended June 30, 2014 is currently not available from our tenant TA. Because a large percentage of TA’s business is conducted at properties leased from us, property level rent coverage may not be an appropriate way to evaluate TA’s ability to pay rents due to us. We believe property level rent coverage is nonetheless one useful indicator of the performance and value of our properties as we believe it is what an operator interested to acquire these properties or the leaseholds might use to evaluate the contribution of these properties to their earnings before corporate level expenses.

27

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Three hundred nine (309) of our properties, representing 61% of our total historical investments at cost as of June 30, 2014, are operated under seven management arrangements or leases which are subject to full or limited guarantees. These guarantees may provide us with continued payments if the property level cash flows fail to equal or exceed guaranteed amounts due to us. Our minimum returns and minimum rents for 91 hotels, representing 18% of our total historical investments at cost as of June 30, 2014, are secured by a security deposit which we control. Some of our managers and tenants, or their affiliates, may also supplement cash flow from our properties in order to make payments to us and preserve their rights to continue operating our properties even if they are not required to do so by guarantees. Guarantee payments, security deposit applications or supplemental payments to us, if any, made under any of our management agreements or leases do not subject us to repayment obligations, but, under some of our agreements, the manager or tenant may recover these guarantee or supplemental payments and the security deposits may be replenished from the future cash flows from our properties after our future minimum returns and minimum rents are paid.

Cash flows from our hotels under certain of our agreements are less than the minimum amounts contractually required and we have been utilizing the applicable security features in our agreements to cover some of these shortfalls. However, several of the guarantees and all the security deposits we hold are for limited amounts and are for limited durations and may be exhausted or expire, especially if the profitability of our hotels does not fully recover from the recent recession in a reasonable time period or if our hotel renovation and rebranding activities do not result in improved operating results at these hotels. Accordingly, the effectiveness of our various security features to provide uninterrupted payments to us is not assured. If any of our hotel managers, tenants or guarantors default in their payment obligations to us, our cash flows will decline and we may become unable to continue to pay distributions to our shareholders or the amount of the distributions may decline.

Our Operating Liquidity and Capital Resources

Our principal source of funds for current expenses and distributions to shareholders are minimum returns from our managed hotels and minimum rents from our leased hotels and travel centers. We receive minimum returns and minimum rents from our managers and tenants monthly. We receive additional returns, percentage returns and rents and our share of the operating profits of our managed hotels after payment of management fees and other deductions, if any, either monthly or quarterly. This flow of funds has historically been sufficient for us to pay our operating expenses, interest expense on our debt and distributions to shareholders declared by our Board of Trustees. We believe that our operating cash flow will be sufficient to meet our operating expenses, interest expense and distribution payments declared by our Board of Trustees for the next twelve months and the foreseeable future thereafter. However, because of the impact of the modest growth of the U.S. economy on the hotel and travel center industries, our managers and tenants may become unable to pay minimum returns and minimum rents to us when due, in which case our cash flow and net income will decline and we may need to reduce the amount of, or even eliminate, our distributions to common shareholders.

Changes in our cash flows in the six months ended June 30, 2014 compared to the same period in 2013 were as follows: (1) cash flow provided by operating activities increased from $171,904 in 2013 to $217,102 in 2014; (2) cash used in investing activities decreased from $311,841 in 2013 to $148,951 in 2014; and (3) cash flows from financing activities changed from $320,625 of cash provided by investing activities in 2013 to $75,131 of cash used in investing activities in 2014.

The increase in cash provided by operating activities for the six months ended June 30, 2014 as compared to the prior year period is due primarily to an increase in the minimum returns and rents paid to us during 2014 due to our funding of improvements to our hotels and travel centers and our hotel acquisitions since January 1, 2013, an increase in security deposit replenishments resulting from the improved operating performance at certain hotels and favorable changes in working capital. The decrease in cash used in investing activities for the six months ended June 30, 2014 as compared to the prior year period is primarily due to a decline in hotel acquisitions and hotel renovation activities in 2014 compared to 2013. The decrease in cash provided by financing activities for the six months ended June 30, 2014 as compared to the prior year is primarily due to lower proceeds from the issuance of common shares, increased debt repayments in the 2014 period compared to 2013 and increased distributions to common shareholders in 2014.

28

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

We maintain our status as a REIT under the Internal Revenue Code by meeting certain requirements. As a REIT, we do not expect to pay federal income taxes on the majority of our income; however, the income realized by our TRSs in excess of the rent they pay to us is subject to U.S. federal income tax at corporate tax rates. In addition, the income we receive from our hotels in Canada and Puerto Rico is subject to taxes in those jurisdictions and we are subject to taxes in certain states where we have properties, despite our REIT status.

Our Investment and Financing Liquidity and Capital Resources

Various percentages of total sales at some of our hotels are escrowed as FF&E reserves to fund future capital improvements. During the six months ended June 30, 2014, our hotel managers and hotel tenants deposited $23,608 to these accounts and $27,753 was spent from the FF&E reserve escrow accounts to renovate and refurbish our hotels.  As of June 30, 2014, there was $29,239 on deposit in these escrow accounts, which was held directly by us and is reflected on our condensed consolidated balance sheets as restricted cash.

Our hotel operating agreements generally provide that, if necessary, we may provide our managers and tenants with funding for capital improvements to our hotels in excess of amounts otherwise available in escrowed FF&E reserves or when no FF&E reserves are available. To the extent we make such additional fundings, our annual minimum returns or minimum rents generally increase by a percentage of the amount we fund. During the six months ended June 30, 2014, we funded $76,564 for capital improvements in excess of FF&E reserve fundings available from hotel operations to our hotels as follows:

·During the six months ended June 30, 2014, we funded $1,761 for improvements to hotels included in our Marriott No. 1 agreement using cash on hand and borrowings under our revolving credit facility. We currently expect to fund approximately $2,600 for capital improvements under this agreement during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. As we fund these improvements, the minimum return payable to us increases.

·Pursuant to the June 2011 and May 2012 agreements we entered with Marriott for management of 68 hotels (our Marriott No. 234 agreement), we expect to provide an aggregate of $129,300 of funding for renovations of certain of these hotels and for other improvements. As of June 30, 2014, $122,700 has been funded. We funded $750 during the six months ended June 30, 2014. We currently expect to fund the remaining $6,600 during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. As we fund these improvements, the minimum return payable to us increases.

·Pursuant to the July 2011 agreement we entered with InterContinental for management of 91 hotels, we expect to provide an aggregate of $290,000 of funding for renovations of certain of these hotels and other improvements. As of June 30, 2014, $267,010 has been funded. We made no fundings during the six months ended June 30, 2014. We currently expect to fund the remaining $22,990 during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. As we fund these improvements, the minimum return payable to us increases.

·Our Sonesta management agreements do not require FF&E escrow deposits. Under our Sonesta agreement, we are required to fund capital expenditures made at our hotels. In addition to recurring capital expenditures, we currently expect to provide an aggregate of $247,000 of funding for rebranding, renovations and other improvements to the 22 hotels included in our Sonesta agreement through 2015. As of June 30, 2014, $169,000 has been funded. We funded $53,117 during the six months ended June 30, 2014 using existing cash balances and borrowings under our revolving credit facility. We currently expect to fund approximately $55,000 during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. We currently expect to fund the remainder of this commitment in 2015. As we fund these improvements, the minimum returns payable to us increase to the extent amounts funded exceed threshold amounts, as defined in our Sonesta agreement.

29

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

·Pursuant to our agreement with Wyndham for the management of 22 hotels, we expect to provide an aggregate of $103,000 for refurbishment and rebranding of these hotels. As of June 30, 2014, $86,350 has been funded. We funded $20,936 during the six months ended June 30, 2014 using existing cash balances and borrowings under our revolving credit facility. We currently expect to fund approximately $6,500 during the remainder of 2014 using existing cash balances or borrowings under our revolving credit facility. We currently expect to fund the remainder of this commitment in 2015. As we fund these improvements, the minimum return payable to us increases.

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 of our leases with TA, TA may request that we purchase qualifying capital improvements to the leased facilities in return for minimum rent increases. However, TA is not obligated to request and we are not obligated to purchase any such improvements. We funded $21,923 for purchases of capital improvements under these lease provisions during the six months ended June 30, 2014, resulting in TA’s minimum rent payable to us increasing by $1,863 pursuant to the leases.

On each of January 15, 2014, April 15, 2014 and July 15, 2014, we paid a $0.4453 per share distribution, or $5,166, to our Series D preferred shareholders.  We funded these distributions using cash on hand.

On February 20, 2014, we paid a $0.48 per share distribution, or $71,811, to our common shareholders.  On May 21, 2014, we paid a $0.49 per share distribution, or $73,373, to our common shareholders.  We funded these distributions using cash on hand and borrowings under our revolving credit facility.  On July 10, 2014, we declared a $0.49 per share distribution, or $73,395, to our common shareholders of record on July 25, 2014.  We expect to pay this amount on or about August 22, 2014 using cash on hand and borrowings under our revolving credit facility.

On February 15, 2014, we redeemed at par all of our outstanding 7.875% senior notes due 2014 for $300,000 plus accrued and unpaid interest (an aggregate of $311,813). We funded this redemption with cash on hand and borrowings under our revolving credit facility.

On March 12, 2014, we issued $350,000 of 4.65% unsecured senior notes due 2024 in a public offering.  Net proceeds from this offering of $345,949 after underwriting discounts and other offering expenses were used to repay amounts outstanding under our revolving credit facility including amounts drawn to fund the redemption of our 7.875% Senior Notes due 2014 described above.

On April 29, 2014, we sold our Sonesta ES Suites branded hotel in Myrtle Beach, SC for net proceeds of $4,288.  Net proceeds from the sale were used for general business purposes.

On May 30, 2014, we acquired a 240 room full service hotel located in Ft. Lauderdale, FL for $65,000, excluding closing costs, using cash on hand and borrowings under our revolving credit facility.

On July 14, 2014, we agreed to acquire a land parcel adjacent to one of our travel centers for $450, excluding closing costs.  We currently expect to acquire this property in the third quarter of 2014 using cash on hand.  This pending acquisition is subject to completion of diligence and other customary closing conditions; accordingly, we can provide no assurance that we will acquire this property, that the terms of the acquisition will not change or that the closing will not be delayed.

On July 15, 2014, we announced we will redeem at par plus accrued interest all $280,000 of our 51/8% Senior Notes due 2015 on August 15, 2014. We expect to fund this redemption using cash on hand and borrowings under our revolving credit facility.

In order to fund capital improvements to our properties and acquisitions and to meet cash needs that may result from timing differences between our receipt of returns and rents and our desire or need to pay operating expenses, debt service and distributions, as of June 30, 2014 we maintained a $750,000 revolving credit facility.

30

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

On January 8, 2014, we amended the agreements governing our unsecured revolving credit facility and unsecured term loan with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of other lenders. As a result of the amendment, the stated maturity date of the revolving credit facility was extended from September 7, 2015 to July 15, 2018 and the stated maturity date of the term loan was extended from March 13, 2017 to April 15, 2019. Subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date of the revolving credit facility by an additional one year to July 15, 2019. The amended credit agreement provides that we can borrow, repay and reborrow funds available under the revolving credit facility until maturity, and no principal repayment is due until maturity. Our term loan is prepayable without penalty at any time. The $750,000 maximum amount of our revolving credit facility and the $400,000 amount of the term loan remained unchanged by the January 8, 2014 amendment. The amended credit agreement includes a feature under which maximum borrowings under the revolving credit facility and term loan may be increased up to $2,300,000 on a combined basis in certain circumstances.

As a result of the amendment, the interest rate paid on borrowings under the revolving credit facility was reduced from LIBOR plus a premium of 130 basis points to LIBOR plus a premium of 110 basis points, and the facility fee was reduced from 30 basis points to 20 basis points per annum on the total amount of lending commitments under the revolving credit facility. Also as a result of the amendment, the interest rate paid on borrowings under the term loan was reduced from LIBOR plus a premium of 145 basis points to LIBOR plus a premium of 120 basis points. Both the interest rate premiums and the facility fee are subject to adjustment based upon changes to our credit ratings. As of both June 30, 2014 and August 10, 2014, we had $40,000 outstanding and $710,000 available under our revolving credit facility. As of June 30, 2014, the interest rate for the amount outstanding under our revolving credit facility was 1.26%.

As of both June 30, 2014 and May 5, 2014, we had $400,000 outstanding under our term loan. As of June 30, 2014, the interest rate for the amount outstanding under our term loan was 1.35%.

Our borrowings under the revolving credit facility and term loan continue to be unsecured. Prior to the effectiveness of the amendment, certain of our subsidiaries had guaranteed our obligations under the revolving credit facility and term loan. As a result of the amendment, none of those subsidiary guarantees remain in effect. The amended credit agreement provides that, with certain exceptions, a subsidiary of ours is required to guaranty our obligations under the revolving credit facility and term loan only if that subsidiary has separately incurred debt (other than nonrecourse debt), within the meaning specified in the amended credit agreement, or provided a guarantee of debt incurred by us or any of our other subsidiaries.

Our term debt maturities (other than our revolving credit facility and term loan) as of June 30, 2014 were as follows: $280,000 in 2015, $275,000 in 2016, $300,000 in 2017, $350,000 in 2018, $500,000 in 2022, $300,000 in 2023, $350,000 in 2024 and $8,478 in 2027. Our $8,478 of 3.8% convertible senior notes due 2027 are convertible into our common shares, if certain conditions are met (including certain changes in control), into cash equal to the principal amount of the notes and, to the extent the market price of our common shares exceeds the exchange price of $50.50 per share, subject to adjustment, either cash or our common shares at our option with a value based on such excess amount. Holders of our convertible senior notes may require us to repurchase all or a portion of the notes on March 15, 2017 and March 15, 2022, or upon the occurrence of certain change in control events. None of our other debt obligations require principal or sinking fund payments prior to their maturity dates.

We expect to use existing cash balances, the cash flow from our operations, borrowings under our revolving credit facility, net proceeds from any property sales and net proceeds of offerings of equity or debt securities to fund future debt maturities, property acquisitions and improvements and other general business purposes. Although we have not historically done so, we may also assume mortgage debt on properties we may acquire or obtain mortgage financing on our existing properties.

When significant amounts are outstanding for an extended period of time under our revolving credit facility and as the maturity dates of our revolving credit facility and term debts approach, we currently expect to explore alternatives for the repayment of amounts due or renewal or extension of the maturity dates. Such alternatives in the short term and long term may include incurring additional debt and issuing new equity securities. We have an effective shelf registration

31

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

statement that allows us to issue public securities on an expedited basis, but it does not assure that there will be buyers for such securities.

While we believe we will have access to various types of financings, including debt or equity, to fund our future acquisitions and to pay our debts and other obligations, there can be no assurance that we will be able to complete any debt or equity offerings or that our cost of any future public or private financings will be reasonable.

Off Balance Sheet Arrangements

As of June 30, 2014, we had no off balance sheet arrangements that have had or that we expect would be reasonably likely to have a future material effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Debt Covenants

Our debt obligations at June 30, 2014, consist of outstanding borrowings under our $750,000 unsecured revolving credit facility, our $400,000 unsecured term loan and $2,363,478 of publicly issued unsecured term debt and convertible notes. Our publicly issued unsecured term debt and convertible notes are governed by an indenture. This indenture and related supplements and our revolving credit facility and term loan agreement contain a number of financial ratio covenants which generally restrict our ability to incur debts, including debts secured by mortgages on our properties, in excess of calculated amounts, require us to maintain a minimum net worth, restrict our ability to make distributions under certain circumstances and require us to maintain various financial ratios. Our revolving credit facility and term loan agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes RMR ceasing to act as our business manager.  As of June 30, 2014, we believe we were in compliance with all of the covenants under our indenture and its supplements and our revolving credit facility and term loan agreement.

Neither our indenture and its supplements nor our revolving credit facility and term loan agreement contain provisions for acceleration which could be triggered by our debt ratings. However, under our revolving credit facility and term loan agreement, our highest senior unsecured debt rating is used to determine the fees and interest rates we pay.  Accordingly, if that debt rating is downgraded by certain credit rating agencies, our interest expense and related costs under our revolving credit facility and term loan would increase.

Our public debt indenture and its supplements contain cross default provisions to any other debts of $20,000 or more. Similarly, our revolving credit facility and term loan agreement has cross default provisions to other indebtedness that is recourse of $25,000 or more and indebtedness that is non-recourse of $75,000 or more.

Management Agreements, Leases and Operating Statistics (dollar amounts in thousands)

As of June 30, 2014, 289 of our hotels are included in one of seven portfolio agreements and two hotels are not included in a portfolio and are leased to hotel operating companies. Our 184 owned travel centers and one travel center we lease through November 15, 2014 are leased under two portfolio agreements. Our hotels are managed by or leased to separate affiliates of InterContinental, Marriott, Hyatt, Carlson, Sonesta, Wyndham and Morgans under nine agreements. Our 185 travel centers are leased to and operated by TA under two agreements.

The table and related notes on pages 33 to 36 summarize significant terms of our leases and management agreements as of June 30, 2014. The tables on pages 33 and 37 also include statistics reported to us or derived from information reported to us by our managers and tenants. These statistics include coverage of our minimum returns or minimum rents and occupancy, ADR and RevPAR for our hotel properties. We consider these statistics and the management agreement or lease security features also presented in the tables on the following pages, to be important measures of our managers’ and tenants’ success in operating our properties and their ability to continue to pay us.  However, none of this third party reported information is a direct measure of our financial performance and we have not independently verified this data.

32

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

							Rent / Return Coverage (3)
		Number of			Annual		Three Months Ended		Twelve Months Ended
Operating Agreement	Number of	Rooms /			Minimum		June 30,		June 30,
Reference Name	Properties	Suites	Investment (1)		Return/Rent(2)		2014	2013	2014	2013
Marriott (No. 1) (4)	53	7,610	$	682,052	$	67,711	1.41x	1.31x	1.09x	1.02x
Marriott (No. 234) (5)	68	9,120	996,189		105,860		1.09x	1.03x	0.92x	0.91x
Marriott (No. 5) (6)	1	356	90,078		10,004		0.36x	0.47x	0.32x	0.40x
Subtotal / Average Marriott	122	17,086	1,768,319		183,575		1.17x	1.10x	0.95x	0.92x
InterContinental (7)	91	13,516	1,417,146		139,498		1.17x	1.14x	1.05x	0.90x
Sonesta (8)	22	4,733	879,575		67,369		0.73x	0.68x	0.41x	0.29x
Wyndham (9)	22	3,590	369,879		26,974		0.98x	0.92x	0.46x	0.36x
Hyatt (10)	22	2,724	301,942		22,037		1.18x	1.04x	0.90x	0.86x
Carlson (11)	11	2,090	209,895		12,920		1.14x	0.99x	0.93x	0.79x
Morgans (12)	1	372	120,000		5,956		1.08x	0.95x	1.03x	0.80x
Subtotal / Average Hotels	291	44,111	5,066,756		458,329		1.09x	1.04x	0.88x	0.80x
TA (No. 1) (13)	145	—	2,015,191		162,007		(15)	1.79x	(15)	1.61x
TA (No. 2) (14)	40	—	780,772		61,157		(15)	1.73x	(15)	1.59x
Subtotal / Average TA	185	—	2,795,963		223,164		(15)	1.77x	(15)	1.60x
Total / Average	476	44,111	$	7,862,719	$	681,493		1.28x		1.06x

(1)Represents the 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)Each of our management agreements or leases provides for payment to us of an annual minimum return or minimum rent, respectively. Certain of these minimum payment amounts are secured by full or limited guarantees or security deposits as more fully described below. In addition, certain of our hotel management agreements provide for payment to us of additional amounts to the extent of available cash flow as defined in the management agreement. Payment of these additional amounts are not guaranteed or secured by deposits.

(3)We define coverage as combined total property level revenues minus the required FF&E reserve escrows, if any, and all property level expenses which are not subordinated to minimum returns and minimum rent payments to us (which data is provided to us by our managers or tenants), divided by the minimum return or minimum rent payments due to us. Coverage amounts for our Sonesta, Wyndham and Morgans agreements include data for periods prior to our ownership or leasing of certain hotels. Coverage amounts for our Sonesta and Wyndham agreements include data for periods certain rebranded hotels were not operated by the current manager.

(4)We lease 53 Courtyard by Marriott® branded hotels in 24 states to one of our TRSs.  The hotels are managed by a subsidiary of Marriott under a combination management agreement which expires in 2024; Marriott has two renewal options for 12 years each for all, but not less than all, of the hotels.

We have no security deposit or guaranty from Marriott for these 53 hotels.  Accordingly, payment by Marriott of the minimum return due to us under this management agreement is limited to available hotel cash flow after payment of operating expenses.  In addition to our minimum return, this agreement provides for payment to us of 50% of available cash flow after payment of hotel operating expenses, funding of the required FF&E reserve, payment of our minimum return and payment of certain management fees.

(5)We lease 68 of our Marriott branded hotels (1 full service Marriott®, 35 Residence Inn by Marriott®, 18 Courtyard by Marriott®, 12 TownePlace Suites by Marriott® and two SpringHill Suites by Marriott® hotels) in 22 states to one of our TRSs.  The hotels are managed by subsidiaries of Marriott under a combination management agreement which expires in 2025; Marriott has two renewal options for 10 years each for all, but not less than all, of the hotels.

We originally held a security deposit of $64,700 under this agreement.  As of June 30, 2014, we have fully exhausted this security deposit covering shortfalls in the payments of our minimum return.  This security deposit may be replenished from future cash flows from these hotels in excess of our minimum return and certain management fees.  Marriott has also provided us with a $40,000 limited guaranty for payment shortfalls up to 90% of our minimum return, which expires in 2019.  As of June 30, 2014, the available Marriott guaranty was $30,672.

33

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to our minimum return, this agreement provides for payment to us of 62.5% of excess cash flow after payment of hotel operating expenses, funding of the required FF&E reserve, payment of our minimum return, payment of certain management fees and replenishment of the security deposit. This additional return amount is not guaranteed or secured by the security deposit.

(6)We lease one Marriott® branded hotel in Kauai, HI to a subsidiary of Marriott under a lease that expires in 2019; Marriott has four renewal options for 15 years each. This lease is guaranteed by Marriott and provides for increases in the annual minimum rent payable to us based on changes in the consumer price index.

(7)We lease 90 InterContinental branded hotels (19 Staybridge Suites®, 61 Candlewood Suites®, two InterContinental®, six Crowne Plaza® and two Holiday Inn® hotels) in 27 states in the U.S. and Ontario, Canada to one of our TRSs.  These 90 hotels are managed by subsidiaries of InterContinental under a combination management agreement.  We lease one additional InterContinental® branded hotel in Puerto Rico to a subsidiary of InterContinental. The annual minimum return amount presented in the table on page 33 includes $7,601 of minimum rent related to the leased Puerto Rico property.  The management agreement and the lease expire in 2036; InterContinental has two renewal options for 15 years each for all, but not less than all, of the hotels.

We originally held a security deposit of $73,872 under this agreement.  As of June 30, 2014, we have applied $40,986 of the security deposit to cover shortfalls in the payments of our minimum return and rent.  As of June 30, 2014, the balance of this security deposit was $32,886.  This security deposit may be replenished and increased up to $100,000 from future cash flows from these hotels in excess of our minimum return and rent and certain management fees.

Under this agreement, InterContinental is required to maintain a minimum security deposit of $30,000 in 2014 and $37,000 thereafter.  We were advised by InterContinental that it expects interim period shortfalls during 2014 and 2015 in the required minimum security deposit balance under the agreement.  As a result, on January 6, 2014, we entered into a letter agreement with InterContinental under which the minimum security deposit balance required to be maintained during 2014 and 2015 will be reduced by two dollars for every dollar of additional security deposit InterContinental provides to us.  Beginning January 1, 2016, any resulting reductions to the minimum security deposit amount will cease to be in effect and the minimum deposit balance required under the InterContinental agreement will revert to $37,000.  Since January 1, 2014, InterContinental has provided $4,283 of additional security deposit, which reduced the minimum security deposit amount to $21,434.

In addition to our minimum return, this management agreement provides for an annual additional return payment to us of $12,067 to the extent of available cash flow after payment of hotel operating expenses, funding of the required FF&E reserve, if any, payment of our minimum return, payment of certain management fees and replenishment and expansion of the security deposit.  In addition, the agreement provides for payment to us of 50% of the available cash flow after payment to us of the annual additional return amount.  These additional return amounts are not guaranteed or secured by the security deposit.

(8)We lease 22 of our Sonesta branded hotels (four Royal Sonesta®, four Sonesta® and 14 Sonesta ES Suites® hotels) in 13 states to one of our TRSs.  The hotels are managed by Sonesta under a combination management agreement which expires in 2037; Sonesta has two renewal options for 15 years each for all, but not less than all, of the hotels.

We have no security deposit or guaranty from Sonesta.  Accordingly, payment by Sonesta of the minimum return due to us under this management agreement is limited to available hotel cash flow after the payment of operating expenses, including certain management fees, and we are financially responsible for operating cash flow deficits, if any.

In addition to our minimum return, this management agreement provides for payment to us of 80% of available cash flow after payment of hotel operating expenses, management fees to Sonesta, our minimum return and reimbursement of operating loss or working capital advances, if any.

(9)We lease our 22 Wyndham branded hotels (six Wyndham Hotels and Resorts® and 16 Hawthorn Suites® hotels) in 14 states to one of our TRSs.  The hotels are managed by a subsidiary of Wyndham under a combination management agreement which expires in 2038; Wyndham has two renewal options for 15 years each for all, but not less than all, of the hotels.  We also lease 48 vacation units in one of the hotels to Wyndham Vacation under a lease that expires in 2037; Wyndham Vacation has two renewal options for 15 years each for all, but not less than all, of the vacation units.  The lease is guaranteed by Wyndham and provides for rent increases of 3% per annum. The annual minimum return amount presented in the table on page 33 includes $1,288 of minimum rent related to the Wyndham Vacation lease.

We had a guaranty of $35,656 under this agreement for payment shortfalls of minimum return, subject to an annual payment limit of $17,828.  As of June 30, 2014, the available Wyndham guaranty was $8,833.  This guaranty expires in 2020.

34

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

In addition to our minimum return, this management agreement provides for payment to us of 50% of available cash flow after payment of hotel operating expenses, payment of our minimum return, funding of the FF&E reserve, if any, payment of certain management fees and reimbursement of any Wyndham guaranty advances.  This additional return amount is not guaranteed.  Amounts reimbursed to Wyndham for guaranty advances replenish the amount of the Wyndham guaranty available to us.

(10)We lease our 22 Hyatt Place® branded hotels in 14 states to one of our TRSs.  The hotels are managed by a subsidiary of Hyatt under a combination management agreement that expires in 2030; Hyatt has two renewal options for 15 years each for all, but not less than all, of the hotels.

We originally had a guaranty of $50,000 under this agreement for payment shortfalls of our minimum return.  As of June 30, 2014, the available Hyatt guaranty was $14,062.  The guaranty is limited in amount but does not expire in time and may be replenished from future cash flows from the hotels in excess of our minimum return.

In addition to our minimum return, this management agreement provides for payment to us of 50% of available cash flow after payment of operating expenses, funding the required FF&E reserve, payment of our minimum return and reimbursement to Hyatt of working capital and guaranty advances, if any.  This additional return is not guaranteed.

(11)We lease our 11 Carlson branded hotels (five Radisson® Hotels & Resorts, one Park Plaza® Hotels & Resorts and five Country Inns & Suites® hotels) in seven states to one of our TRSs.  The hotels are managed by a subsidiary of Carlson under a combination management agreement that expires in 2030; Carlson has two renewal options for 15 years each for all, but not less than all, of the hotels.

We originally had a limited guaranty of $40,000 under this agreement for payment shortfalls of our minimum return.  As of June 30, 2014, the available Carlson guaranty was $20,534.  The guaranty is limited in amount but does not expire in time and may be replenished from future cash flows from the hotels in excess of our minimum return.

In addition to our minimum return, this management agreement provides for payment to us of 50% of available cash flow after payment of operating expenses, funding the required FF&E reserve, payment of our minimum return and reimbursement to Carlson of working capital and guaranty advances, if any.  This additional return is not guaranteed.

(12)We lease the Clift Hotel, a full service hotel in San Francisco, CA, to a subsidiary of Morgans under a lease agreement that expires in 2103. The lease currently provides for annual rent to us of $5,956.  On October 14, 2014, the rent due to us will be increased based on changes in the consumer price index with a minimum increase of 20% of the current rent amount and a maximum increase of 40% as described in the lease.  On each fifth anniversary thereafter during the lease term, the rent due to us will be increased further based on changes in the consumer price index with minimum increases of 10% and maximum increases of 20%.  Although the contractual lease terms would qualify this lease as a direct financing lease under GAAP, we account for this lease as an operating lease due to uncertainty regarding the collection of future rent increases and we recognize rental income from this lease on a cash basis, in accordance with GAAP.

(13)We lease our 145 TravelCenters of America® branded travel centers in 39 states, including the Roanoke, VA travel center described above, to a subsidiary of TA under a lease that expires in 2022; TA has no renewal option.  In addition to the payment of our minimum rent, this lease agreement provides for payment to us of percentage rent based on increases in total revenues over base year levels (3% of non-fuel revenues and 0.3% of fuel revenues above 2011 revenues subject to certain limits).  The annual minimum rent amount presented in the table on page 33 for our TA No. 1 lease includes approximately $5,253 of ground rent paid by TA for properties we lease and sublease to TA.  This lease is guaranteed by TA.

On August 13, 2013, a travel center located in Roanoke, VA that we leased to TA under the TA No. 1 lease was taken by eminent domain proceedings brought by the VDOT in connection with certain highway construction. Our TA No. 1 lease provides that the annual rent payable by TA to us is reduced by 8.5% of the amount of the proceeds we receive from the taking or, at our option, the fair market value rent of the property on the commencement date of the TA No. 1 lease. In January 2014, we received proceeds from the VDOT of $6,178, which is a substantial portion of the VDOT’s estimate of the value of the property, and as a result the annual rent payable by TA to us under the TA No. 1 lease was reduced by $525 effective January 6, 2014. We and TA intend to challenge the VDOT’s estimate of the property’s value. We entered a lease agreement with the VDOT to lease this property through November 15, 2014 for $40 per month, and under the terms of the TA No. 1 lease TA will be responsible to pay this ground lease rent. We entered into a sublease for this property with TA for TA to continue operating the property as a travel center through November 15, 2014.

(14)We lease our 40 Petro Stopping Centers® branded travel centers in 25 states to a subsidiary of TA under a lease that expires in 2024; TA has two renewal options for 15 years each for all, but not less than all, of these travel centers.  In addition to the payment of our minimum rent, this lease agreement provides for payment to us of percentage rent based on increases in total revenues over base year

35

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

levels (3% of non-fuel revenues and 0.3% of fuel revenues above 2012 revenues subject to certain limits).  We have agreed to waive payment of the first $2,500 of percentage rent that may become due under the TA No. 2 lease. We have waived an estimated $612 of percentage rent as of June 30, 2014.  This lease is guaranteed by TA.

(15)Data for the periods subsequent to December 31, 2013 is currently not available from our tenant, TA.

36

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following tables summarize the operating statistics, including ADR, occupancy and RevPAR reported to us by our hotel managers or tenants by management agreement or lease for the periods indicated. All operating data presented are based upon the operating results provided by our managers and tenants for the indicated periods. We have not independently verified our managers’ or tenants’ operating data.

		No. of	Three Months Ended							Six Months Ended
	No. of	Rooms /	June 30, (1)							June 30, (1)
	Hotels	Suites	2014			2013			Change	2014			2013			Change
ADR
Marriott (No. 1)	53	7,610	$	121.15		$	117.54		3.1%	$	120.30		$	117.46		2.4%
Marriott (No. 234)	68	9,120	117.86			112.27			5.0%	116.51			111.97			4.1%
Marriott (No. 5)	1	356	218.07			214.94			1.5%	221.41			217.47			1.8%
Subtotal / Average Marriott	122	17,086	121.65			116.90			4.1%	120.68			116.96			3.2%
InterContinental	91	13,516	99.96			94.29			6.0%	100.64			95.70			5.2%
Sonesta	22	4,733	151.95			133.27			14.0%	144.62			131.98			9.6%
Wyndham	22	3,590	91.76			80.88			13.5%	86.40			77.12			12.0%
Hyatt	22	2,724	102.42			96.02			6.7%	100.68			95.73			5.2%
Carlson	11	2,090	97.61			92.50			5.5%	97.58			93.19			4.7%
Morgans	1	372	250.67			234.52			6.9%	250.73			235.02			6.7%
All hotels Total / Average	291	44,111	$	113.73		$	107.27		6.0%	$	112.36		$	107.34		4.7%
OCCUPANCY
Marriott (No. 1)	53	7,610	75.2		%	72.3		%	2.9 pts	69.1		%	66.8		%	2.3 pts
Marriott (No. 234)	68	9,120	78.0		%	75.3		%	2.7 pts	74.5		%	71.0		%	3.5 pts
Marriott (No. 5)	1	356	87.1		%	81.1		%	6.0 pts	84.8		%	83.6		%	1.2 pts
Subtotal / Average Marriott	122	17,086	77.0		%	74.1		%	2.9 pts	72.3		%	69.4		%	2.9 pts
InterContinental	91	13,516	85.9		%	81.8		%	4.1 pts	82.9		%	76.5		%	6.4 pts
Sonesta	22	4,733	63.7		%	75.4		%	-11.7 pts	60.7		%	68.4		%	-7.7 pts
Wyndham	22	3,590	73.1		%	69.6		%	3.5 pts	67.4		%	63.5		%	3.9 pts
Hyatt	22	2,724	82.1		%	79.5		%	2.6 pts	79.3		%	76.5		%	2.8 pts
Carlson	11	2,090	74.5		%	72.6		%	1.9 pts	72.2		%	69.1		%	3.1 pts
Morgans	1	372	95.1		%	91.4		%	3.7 pts	89.2		%	85.6		%	3.6 pts
All hotels Total / Average	291	44,111	78.3		%	76.6		%	1.7 pts	74.5		%	71.6		%	2.9 pts
RevPAR
Marriott (No. 1)	53	7,610	$	91.10		$	84.98		7.2%	$	83.13		$	78.46		6.0%
Marriott (No. 234)	68	9,120	91.93			84.54			8.7%	86.80			79.50			9.2%
Marriott (No. 5)	1	356	189.94			174.32			9.0%	187.76			181.80			3.3%
Subtotal / Average Marriott	122	17,086	93.67			86.62			8.1%	87.25			81.17			7.5%
InterContinental	91	13,516	85.87			77.13			11.3%	83.43			73.21			14.0%
Sonesta	22	4,733	96.79			100.49			-3.7%	87.78			90.27			-2.8%
Wyndham	22	3,590	67.08			56.29			19.2%	58.23			48.97			18.9%
Hyatt	22	2,724	84.09			76.34			10.2%	79.84			73.23			9.0%
Carlson	11	2,090	72.72			67.16			8.3%	70.45			64.39			9.4%
Morgans	1	372	238.39			214.35			11.2%	223.65			201.18			11.2%
All hotels Total / Average	291	44,111	$	89.05		$	82.17		8.4%	$	83.71		$	76.86		8.9%

(1)Operating data for our Sonesta and Wyndham agreements include data for periods prior to our ownership of certain hotels.

37

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Seasonality

Our hotels and travel centers have historically experienced seasonal differences typical of their industries with higher revenues in the second and third quarters of calendar years compared with the first and fourth quarters. This seasonality is not expected to cause material fluctuations in our income or cash flow because most of our management agreements and leases require our managers and tenants to make the substantial portion of our return payments and rents to us in equal amounts throughout a year. Seasonality may affect our hotel operating revenues and our net cash flows from our Sonesta managed hotels and our hotels included in our Marriott No. 1 agreement, but we do not expect seasonal variations to have a material impact upon our financial results of operations or upon our managers’ or tenants’ ability to meet their contractual obligations to us.

Related Person Transactions

We have relationships and historical and continuing transactions with our Trustees, our executive officers, RMR, TA, Sonesta, AIC and other companies to which RMR provides management services and others affiliated with them.  For example, we have no employees and personnel and various services we require to operate our business are provided to us by RMR pursuant to management agreements; and RMR is owned by our Managing Trustees.  Also, as a further example, we have relationships with other companies to which RMR provides management services and which have trustees, directors and officers who are also trustees, directors or officers of us or RMR or with entities affiliated with RMR, including: TA is our former subsidiary and our largest tenant and we are TA’s largest shareholder; Sonesta manages several of our hotels for our TRSs; we previously sold two hotels to affiliates of RMR; and we, RMR, TA and four other companies to which RMR provides management services each currently own approximately 14.3% of AIC, an Indiana insurance company, and we and the other shareholders of AIC have property insurance in place providing $500,000 of coverage pursuant to an insurance program arranged by AIC and with respect to which AIC is a reinsurer of certain coverage amounts.  For further information about these and other such relationships and related person transactions, please see Note 10 to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q, which is incorporated herein by reference.  In addition, for more information about these transactions and relationships, please see elsewhere in this Quarterly Report on Form 10-Q, including “Warning Concerning Forward Looking Statements” in Part I, and our 2013 Annual Report, our Proxy Statement for our 2014 Annual Meeting of Shareholders, or our Proxy Statement, our Current Reports on Form 8-K dated May 12, 2014 and June 3, 2014, and our other filings with the SEC, including Note 8 to our consolidated financial statements included in our 2013 Annual Report, the sections captioned “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Related Person Transactions” and “Warning Concerning Forward Looking Statements” of our 2013 Annual Report and the section captioned “Related Person Transactions” and the information regarding our Trustees and executive officers in our Proxy Statement.  In addition, please see the section captioned “Risk Factors” of our 2013 Annual Report for a description of risks that may arise as a result of these and other related person transactions and relationships.  Our filings with the SEC, including our 2013 Annual Report and our Proxy Statement, are available at the SEC’s website at www.sec.gov.  Copies of certain of our agreements with these related parties, including our business management agreement and property management agreement with RMR, various agreements we have entered with TA and Sonesta, our purchase and sale agreements with affiliates of RMR and our shareholders agreement with AIC and its shareholders, are publicly available as exhibits to our public filings with the SEC and accessible at the SEC’s website.

We believe that our agreements with RMR, TA, Sonesta and AIC are on commercially reasonable terms.  We also believe that our relationships with RMR, TA, Sonesta and AIC and their affiliated and related persons and entities benefit us, and, in fact, provide us with competitive advantages in operating and growing our business.

Non-GAAP Measures

Funds From Operations and Normalized Funds From Operations

We calculate FFO and Normalized FFO as shown below.  FFO is calculated on the basis defined by The National Association of Real Estate Investment Trusts, or NAREIT, which is net income, calculated in accordance with GAAP,

38

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

excluding any gain or loss on sale of properties, loss on impairment of real estate assets, plus real estate depreciation and amortization, as well as certain other adjustments currently not applicable to us.  Our calculation of Normalized FFO differs from NAREIT’s definition of FFO because we include estimated percentage rent in the period to which we estimate that it relates rather than when it is recognized as income in accordance with GAAP and exclude acquisition related costs, loss on early extinguishment of debt, estimated business management incentive fees and the deferred income tax benefit described below.  We consider FFO and Normalized FFO to be appropriate measures of operating performance for a REIT, along with net income, net income available for common shareholders, operating income and cash flow from operating activities.  We believe that FFO and Normalized FFO provide useful information to investors because by excluding the effects of certain historical amounts, such as depreciation expense, FFO and Normalized FFO may facilitate a comparison of our operating performance between periods and with other REITs.  FFO and Normalized FFO are among the factors considered by our Board of Trustees when determining the amount of distributions to shareholders.  Other factors include, but are not limited to, requirements to maintain our status as a REIT, limitations in our revolving credit facility and term loan agreement and public debt covenants, the availability of debt and equity capital, our expectation of our future capital requirements and operating performance, and our expected needs and availability of cash to pay our obligations. FFO and Normalized FFO do not represent cash generated by operating activities in accordance with GAAP and should not be considered as alternatives to net income, operating income, net income available for common shareholders or cash flow from operating activities, determined in accordance with GAAP, or as indicators of our financial performance or liquidity, nor are these measures necessarily indicative of sufficient cash flow to fund all of our needs.  These measures should be considered in conjunction with net income, operating income, net income available for common shareholders and cash flow from operating activities as presented in our condensed consolidated statements of income and comprehensive income and condensed consolidated statements of cash flows.  Other REITs and real estate companies may calculate FFO and Normalized FFO differently than we do.

Our calculations of FFO and Normalized FFO for the three and six months ended June 30, 2014 and 2013 and reconciliations of FFO and Normalized FFO to net income available for common shareholders, the most directly comparable financial measure under GAAP reported in our consolidated financial statements, appear in the following table.

39

HOSPITALITY PROPERTIES TRUST

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2014			2013			2014			2013
Net income available for common shareholders	$	48,749		$	37,256		$	81,133		$	56,665
Depreciation and amortization expense	78,763			73,598			157,050			145,878
Loss on asset impairment (1)	—			2,171			—			2,171
Gain on sale of real estate (2)	(130		)	—			(130		)	—
FFO	127,382			113,025			238,053			204,714
Acquisition related costs (3)	162			1,814			223			2,090
Estimated business management incentive fees (4)	1,445			567			2,296			1,194
Loss on early extinguishment of debt (5)	—			—			214			—
Deferred percentage rent (6)	698			672			1,572			1,282
Deferred income tax benefit (7)	—			(6,868		)	—			(6,868		)
Normalized FFO	$	129,687		$	109,210		$	242,358		$	202,412
Weighted average shares outstanding	149,753			139,743			149,695			132,624
FFO available for common shareholders per share	$	0.85		$	0.81		$	1.59		$	1.54
Normalized FFO available for common shareholders per share	$	0.87		$	0.78		$	1.62		$	1.53
Distributions declared per share	$	0.49		$	0.47		$	0.97		$	0.94

(1)We recorded a $2,171, or $0.02 per share, loss on asset impairment in the second quarter of 2013 in connection with our plan to sell a hotel.

(2)We recorded a $130 gain on sale of real estate in the second quarter of 2014 in connection with the sale of one hotel.

(3)Represents costs associated with our hotel acquisition activities.

(4)Amounts represent estimated incentive fees under our business management agreement payable in common shares after the end of each calendar year calculated: (i) prior to 2014 based upon increases in annual cash available for distribution per share, as defined and (ii) beginning in 2014 based on common share total return.  In calculating net income in accordance with GAAP, we recognize estimated business management incentive fee expense each quarter.  Although we recognize this expense each quarter for purposes of calculating net income, we do not include these amounts in the calculation of Normalized FFO until the fourth quarter, which is when the actual expense amount for the year is determined. Adjustments were made to prior period amounts to conform to the current period Normalized FFO calculation.

(5)We recorded a $214 loss on early extinguishment of debt in the first quarter of 2014 in connection with amending the terms of our unsecured revolving credit facility and unsecured term loan.

(6)In calculating net income in accordance with GAAP, we recognize percentage rental income received for the first, second and third quarters in the fourth quarter, which is when all contingencies have been met and the income is earned. Although we defer recognition of this revenue until the fourth quarter for purposes of calculating net income, we include these estimated amounts in the calculation of Normalized FFO for each quarter of the year. The fourth quarter Normalized FFO calculation excludes the amounts recognized during the first three quarters.

(7)We recorded a $6,868, or $.05 per share, income tax benefit in the second quarter of 2013 in connection with the restructuring of certain of our TRSs.

40

HOSPITALITY PROPERTIES TRUST

Item 3.  Quantitative and Qualitative Disclosures About Market Risk (dollar amounts in thousands)

We are exposed to risks associated with market changes in interest rates. We manage our exposure to this market risk by monitoring available financing alternatives. Our strategy to manage exposure to changes in interest rates has not materially changed since December 31, 2013. Other than as described below, we do not currently foresee any significant changes in our exposure to fluctuations in interest rates or in how we manage this exposure in the near future.

As of June 30, 2014, our outstanding publicly tradable debt consisted of seven issues of fixed rate, senior unsecured notes and one issue of fixed rate, convertible senior notes:

Principal Balance		Annual Interest Rate	Annual Interest Expense		Maturity		Interest Payments Due
$	280,000	5.125%	14,350		2015	(1)	Semi-Annually
275,000		6.300%	17,325		2016		Semi-Annually
300,000		5.625%	16,875		2017		Semi-Annually
350,000		6.700%	23,450		2018		Semi-Annually
500,000		5.000%	25,000		2022		Semi-Annually
300,000		4.500%	13,500		2023		Semi-Annually
350,000		4.650%	16,275		2024		Semi-Annually
8,478		3.800%	322		2027	(2)	Semi-Annually
$	2,363,478		$	127,097

(1)On July 15, 2014, we announced that we will redeem all of these notes at par plus accrued interest on August 15, 2014.

(2)The convertible senior notes are convertible, if certain conditions are met (including certain changes in control), into cash equal to the principal amount of the notes and, to the extent the market price of our common shares exceeds the initial exchange price of $50.50 per share, subject to adjustment, either cash or our common shares at our option with a value based on such excess amount. Holders of our convertible senior notes may require us to repurchase all or a portion of the notes on March 15, 2017 and March 15, 2022, or upon the occurrence of certain change in control events.

Except as described in notes 1 and 2 to the table above, no principal repayments are due under these notes until maturity. Because these notes bear interest at fixed rates, changes in market interest rates during the term of these debts will not affect our interest obligations. If these notes were refinanced at interest rates which are 100 basis points higher than the rates shown above, our per annum interest cost would increase by approximately $23,635. Changes in market interest rates would affect the fair value of our fixed rate debt obligations; increases in market interest rates decrease the fair value of our fixed rate debt while decreases in market interest rates increase the fair value of our fixed rate debt. Based on the balances outstanding at June 30, 2014, and discounted cash flow analyses through the respective maturity dates, and assuming no other changes in factors that may affect the fair value of our fixed rate debt obligations, a hypothetical immediate 100 basis point increase in interest rates would change the fair value of those debt obligations by approximately $107,635. Changes in the trading price of our common shares may also affect the fair value of our convertible senior notes.

Each of these fixed rate unsecured debt arrangements allows us to make repayments earlier than the stated maturity date. We are generally allowed to make prepayments only at a premium equal to a make whole amount, as defined, which is generally designed to preserve a stated yield to the note holder. Also, we have in the past repurchased and retired some of our outstanding debts and we may do so again in the future. These prepayment rights and our ability to

41

HOSPITALITY PROPERTIES TRUST

repurchase and retire outstanding debt may afford us opportunities to mitigate the risks of refinancing our debts at their maturities at higher rates by refinancing prior to maturity.

At June 30, 2014, our floating rate debt consisted of $40,000 outstanding under our $750,000 unsecured revolving credit facility and our $400,000 unsecured term loan.  In January 2014, we amended the agreements governing our unsecured revolving credit facility and unsecured term loan. Under the amendment, the maturity date of our revolving credit facility was extended from September 7, 2015 to July 15, 2018, and subject to our meeting certain conditions, including our payment of an extension fee, we have the option to extend the stated maturity by one year to July 15, 2019. Also under the amendment, we extended the maturity date of our unsecured term loan from March 13, 2017 to April 15, 2019. No principal repayments are required under our revolving credit facility or term loan prior to maturity, and prepayments may be made, and redrawn subject to conditions at any time without penalty. Borrowings under our revolving credit facility and term loan are in U.S. dollars and bear interest at LIBOR plus a premium that is subject to adjustment based upon changes to our credit ratings. Accordingly, we are vulnerable to changes in U.S. dollar based short term interest rates, specifically LIBOR.  In addition, upon renewal or refinancing of our revolving credit facility or our term loan, we are vulnerable to increases in interest rate premiums due to market conditions or our perceived credit risk. Generally, a change in interest rates would not affect the value of this floating rate debt but would affect our operating results.

The following table presents the impact a 100 basis points increase in interest rates would have on our annual floating rate interest expense as of June 30, 2014:

	Impact of Increase in Interest Rates
	Interest Rate	Outstanding		Total Interest		Annual Per Common
	Per Year (1)	Debt		Expense Per Year		Share Impact(2)
At June 30, 2014	1.34%	$	440,000	$	5,896	$	0.04
100 basis point increase	2.34%	$	440,000	$	10,296	$	0.07

(1)     Weighted average based on the outstanding borrowings as of June 30, 2014.

(2)     Based on weighted average shares outstanding for the six months ended June 30, 2014.

The following table presents the impact that a 100 basis point increase in interest rates would have on our annual floating rate interest expense at June 30, 2014 if we were fully drawn on our revolving credit facility and term loan remained outstanding:

	Impact of Increase in Interest Rates
	Interest Rate	Outstanding		Total Interest		Annual Per Common
	Per Year (1)	Debt		Expense Per Year		Share Impact(2)
At June 30, 2014	1.29%	$	1,150,000	$	14,835	$	0.10
100 basis point increase	2.29%	$	1,150,000	$	26,335	$	0.18

(1)     Weighted average based on the outstanding borrowings as of June 30, 2014.

(2)     Based on weighted average shares outstanding for the six months ended June 30, 2014.

The foregoing tables show the impact of an immediate change in floating interest rates. If interest rates were to change gradually over time, the impact would be spread over time. Our exposure to fluctuations in floating interest rates will increase or decrease in the future with increases or decreases in the outstanding amount under our revolving credit facility or other floating rate debt, if any. Although we have no present plans to do so, we may in the future enter into hedge arrangements from time to time to mitigate our exposure to changes in interest rates.

42

HOSPITALITY PROPERTIES TRUST

Item 4.  Controls and Procedures

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, President and Chief Operating Officer and Treasurer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures pursuant to the Securities Exchange Act of 1934, as amended, Rules 13a-15 and 15d-15. Based upon that evaluation, our Managing Trustees, President and Chief Operating Officer and Treasurer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

43

HOSPITALITY PROPERTIES TRUST

WARNING CONCERNING FORWARD LOOKING STATEMENTS

THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS STATEMENTS THAT CONSTITUTE FORWARD LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND OTHER SECURITIES LAWS. ALSO, WHENEVER WE USE WORDS SUCH AS “BELIEVE”, “EXPECT”, “ANTICIPATE”, “INTEND”, “PLAN”, “ESTIMATE” OR SIMILAR EXPRESSIONS, WE ARE MAKING FORWARD LOOKING STATEMENTS. THESE FORWARD LOOKING STATEMENTS ARE BASED UPON OUR PRESENT INTENT, BELIEFS OR EXPECTATIONS, BUT FORWARD LOOKING STATEMENTS ARE NOT GUARANTEED TO OCCUR AND MAY NOT OCCUR. FORWARD LOOKING STATEMENTS IN THIS REPORT RELATE TO VARIOUS ASPECTS OF OUR BUSINESS, INCLUDING:

·OUR HOTEL MANAGERS’ OR TENANTS’ ABILITIES TO PAY THE CONTRACTUAL AMOUNTS OF RETURNS OR RENTS DUE TO US,

·OUR ABILITY TO PAY DISTRIBUTIONS TO OUR SHAREHOLDERS AND THE AMOUNT OF SUCH DISTRIBUTIONS,

·THE ABILITY OF TA TO PAY CURRENT AND DEFERRED RENT AMOUNTS DUE TO US,

·OUR INTENT TO REFURBISH OR MAKE IMPROVEMENTS TO CERTAIN OF OUR PROPERTIES AND THE SUCCESS OF OUR HOTEL RENOVATION PROGRAM,

·OUR ABILITY TO RETAIN QUALIFIED MANAGERS AND TENANTS FOR OUR HOTELS AND TRAVEL CENTERS ON SATISFACTORY TERMS,

·OUR ABILITY TO RAISE EQUITY OR DEBT CAPITAL,

·THE FUTURE AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY,

·OUR ABILITY TO PAY INTEREST ON AND PRINCIPAL OF OUR DEBT,

·OUR POLICIES AND PLANS REGARDING INVESTMENTS AND FINANCINGS,

·OUR TAX STATUS AS A REIT,

·OUR ABILITY TO MAKE ACQUISITIONS OF PROPERTIES AND OTHER INVESTMENTS,

·OUR EXPECTATION THAT WE WILL BENEFIT FINANCIALLY BY PARTICIPATING IN AIC WITH RMR AND COMPANIES TO WHICH RMR PROVIDES MANAGEMENT SERVICES, AND

·OTHER MATTERS.

OUR ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE CONTAINED IN OR IMPLIED BY OUR FORWARD LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS. FACTORS THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FORWARD LOOKING STATEMENTS AND UPON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, FFO, NORMALIZED FFO, CASH FLOWS, LIQUIDITY AND PROSPECTS INCLUDE, BUT ARE NOT LIMITED TO:

·THE IMPACT OF CHANGES IN THE ECONOMY AND THE CAPITAL MARKETS ON US AND OUR MANAGERS AND TENANTS,

·LIMITATIONS IMPOSED ON OUR BUSINESS AND OUR ABILITY TO SATISFY COMPLEX RULES IN ORDER FOR US TO QUALIFY AS A REIT FOR U.S. FEDERAL INCOME TAX PURPOSES,

·COMPLIANCE WITH, AND CHANGES TO, FEDERAL, STATE AND LOCAL LAWS AND REGULATIONS AFFECTING THE REAL ESTATE, HOTEL, TRANSPORTATION AND TRAVEL CENTER INDUSTRIES, ACCOUNTING RULES, TAX LAWS AND SIMILAR MATTERS,

·COMPETITION WITHIN THE REAL ESTATE INDUSTRY, PARTICULARLY IN THOSE MARKETS IN WHICH OUR PROPERTIES ARE LOCATED,

44

HOSPITALITY PROPERTIES TRUST

·ACTS OF TERRORISM, OUTBREAKS OF SO CALLED PANDEMICS OR OTHER MANMADE OR NATURAL DISASTERS BEYOND OUR CONTROL, AND

·ACTUAL AND POTENTIAL CONFLICTS OF INTEREST WITH OUR MANAGING TRUSTEES, TA, SONESTA, RMR, AIC AND THEIR RELATED PERSONS AND ENTITIES.

FOR EXAMPLE:

·OUR ABILITY TO MAKE FUTURE DISTRIBUTIONS DEPENDS UPON A NUMBER OF FACTORS, INCLUDING OUR FUTURE EARNINGS. WE MAY BE UNABLE TO MAINTAIN OUR CURRENT RATE OF DISTRIBUTIONS ON OUR COMMON AND PREFERRED SHARES AND FUTURE DISTRIBUTIONS MAY BE SUSPENDED,

·THE SECURITY DEPOSITS WHICH WE HOLD ARE NOT IN SEGREGATED CASH ACCOUNTS OR OTHERWISE SEPARATE FROM OUR OTHER ASSETS AND LIABILITIES. ACCORDINGLY, WHEN WE RECORD INCOME BY REDUCING OUR SECURITY DEPOSIT LIABILITIES, WE DO NOT RECEIVE ANY ADDITIONAL CASH PAYMENT. BECAUSE WE DO NOT RECEIVE ANY ADDITIONAL CASH PAYMENT AND BECAUSE THE AMOUNT OF THE SECURITY DEPOSITS AVAILABLE FOR FUTURE USE IS REDUCED AS WE APPLY SECURITY DEPOSITS TO COVER PAYMENT SHORTFALLS, THE FAILURE OF OUR TENANTS OR MANAGERS TO PAY MINIMUM RETURNS OR RENTS DUE TO US MAY REDUCE OUR CASH FLOWS AND OUR ABILITY TO PAY DISTRIBUTIONS TO SHAREHOLDERS,

·WE EXPECT THAT, WHILE THE SECURITY DEPOSIT FOR OUR MARRIOTT NO. 234 AGREEMENT IS EXHAUSTED, MARRIOTT WILL PAY US UP TO 90% OF OUR MINIMUM RETURNS UNDER A LIMITED GUARANTY. THIS STATEMENT MAY IMPLY THAT MARRIOTT WILL FULFILL ITS OBLIGATION UNDER THIS GUARANTY OR THAT FUTURE SHORTFALLS WILL NOT EXHAUST THE GUARANTY. HOWEVER, THIS GUARANTY EXPIRES ON DECEMBER 31, 2019, AND WE CAN PROVIDE NO ASSURANCE WITH REGARD TO MARRIOTT’S FUTURE ACTIONS OR THE FUTURE PERFORMANCE OF OUR HOTELS TO WHICH THE MARRIOTT LIMITED GUARANTY APPLIES,

·WE EXPECT THAT INTERCONTINENTAL WILL CONTINUE TO PAY US THE MINIMUM RETURNS INCLUDED IN OUR MANAGEMENT AGREEMENT WITH INTERCONTINENTAL AND THAT WE WILL UTILIZE THE SECURITY DEPOSIT WE HOLD FOR ANY PAYMENT SHORTFALLS. HOWEVER, THE SECURITY DEPOSIT WE HOLD FOR INTERCONTINENTAL’S OBLIGATIONS TO US IS FOR A LIMITED AMOUNT AND WE CAN PROVIDE NO ASSURANCE THAT THE SECURITY DEPOSIT WILL BE ADEQUATE TO COVER FUTURE PAYMENT SHORTFALLS FROM OUR INTERCONTINENTAL HOTELS,

·WYNDHAM HAS AGREED TO PARTIALLY GUARANTEE ANNUAL MINIMUM RETURNS PAYABLE TO US BY WYNDHAM. WYNDHAM’S GUARANTEE IS LIMITED BY TIME TO ANNUAL MINIMUM RETURN PAYMENTS DUE THROUGH 2020, AND AS OF JUNE 30, 2014, IT IS LIMITED TO NET PAYMENTS FROM WYNDHAM OF $35.7 MILLION (OF WHICH $8.8 MILLION REMAINED AVAILABLE TO PAY US) AND IS SUBJECT TO AN ANNUAL PAYMENT LIMIT OF $17.8 MILLION. ACCORDINGLY, THERE IS NO ASSURANCE THAT WE WILL RECEIVE THE ANNUAL MINIMUM RETURNS DURING THE TERM OF OUR WYNDHAM AGREEMENT,

·THE ANNUAL RENT DUE TO US UNDER A LEASE WITH A SUBSIDIARY OF MORGANS IS $6.0 MILLION, SUBJECT TO FUTURE INCREASES. WE CAN PROVIDE NO ASSURANCE THAT MORGANS WILL FULFILL ITS OBLIGATIONS UNDER THIS LEASE OR WITH REGARD TO THE FUTURE PERFORMANCE OF THE HOTEL WE LEASE TO MORGANS,

·WE HAVE RECENTLY RENOVATED CERTAIN HOTELS AND ARE CURRENTLY RENOVATING ADDITIONAL HOTELS. THE COST OF CAPITAL PROJECTS ASSOCIATED WITH SUCH RENOVATIONS MAY BE GREATER THAN WE NOW ANTICIPATE. WHILE THE CAPITAL PROJECTS WILL CAUSE OUR CONTRACTUAL MINIMUM RETURNS TO INCREASE, THE HOTELS’ OPERATING RESULTS MAY NOT INCREASE OR MAY NOT INCREASE TO THE

45

HOSPITALITY PROPERTIES TRUST

EXTENT THAT THE MINIMUM RETURNS INCREASE. ACCORDINGLY, COVERAGE OF OUR MINIMUM RETURNS AT THESE HOTELS MAY REMAIN DEPRESSED FOR AN EXTENDED PERIOD,

·WE HAVE NO GUARANTEE OR SECURITY DEPOSIT FOR THE MINIMUM RETURNS DUE TO US FROM SONESTA OR UNDER OUR MARRIOTT NO. 1 AGREEMENT. ACCORDINGLY, THE FUTURE RETURNS WE RECEIVE FROM HOTELS MANAGED BY SONESTA OR MANAGED BY MARRIOTT UNDER OUR MARRIOTT NO. 1 AGREEMENT ARE ENTIRELY DEPENDENT UPON THE AVAILABLE HOTEL CASH FLOW AFTER PAYMENT OF OPERATING EXPENSES OF THOSE HOTELS,

·OTHER SECURITY DEPOSITS AND GUARANTEES REFERENCED HEREIN ARE ALSO LIMITED IN DURATION AND AMOUNT AND GUARANTEES ARE SUBJECT TO THE GUARANTORS’ ABILITY AND WILLINGNESS TO PAY,

·HOTEL ROOM DEMAND AND TRUCKING ACTIVITY ARE OFTEN REFLECTIONS OF THE GENERAL ECONOMIC ACTIVITY IN THE COUNTRY. IF ECONOMIC ACTIVITY IN THE COUNTRY DECLINES, HOTEL ROOM DEMAND AND TRUCKING ACTIVITY MAY DECLINE AND THE OPERATING RESULTS OF OUR HOTELS AND TRAVEL CENTERS MAY DECLINE, THE FINANCIAL RESULTS OF OUR HOTEL MANAGERS AND OUR TENANTS, INCLUDING TA, MAY SUFFER AND THESE MANAGERS AND TENANTS MAY BE UNABLE TO PAY OUR RETURNS OR RENTS. ALSO, CONTINUED DEPRESSED OPERATING RESULTS FROM OUR PROPERTIES FOR EXTENDED PERIODS MAY RESULT IN THE OPERATORS OF SOME OR ALL OF OUR HOTELS AND TRAVEL CENTERS BECOMING UNABLE OR UNWILLING TO MEET THEIR OBLIGATIONS OR THEIR GUARANTEES AND SECURITY DEPOSITS MAY BE EXHAUSTED,

·SINCE ITS FORMATION, TA HAS NOT PRODUCED CONSISTENT OPERATING PROFITS. IF THE CURRENT LEVEL OF COMMERCIAL ACTIVITY IN THE COUNTRY DECLINES, IF THE PRICE OF DIESEL FUEL INCREASES SIGNIFICANTLY, IF FUEL CONSERVATION MEASURES ARE INCREASED, IF FREIGHT BUSINESS IS DIRECTED AWAY FROM TRUCKING, IF TA IS UNABLE TO EFFECTIVELY COMPETE OR OPERATE ITS BUSINESS OR FOR VARIOUS OTHER REASONS, TA MAY BECOME UNABLE TO PAY CURRENT AND DEFERRED RENTS DUE TO US,

·OUR ABILITY TO GROW OUR BUSINESS AND INCREASE OUR DISTRIBUTIONS DEPENDS IN LARGE PART UPON OUR ABILITY TO BUY PROPERTIES THAT GENERATE RETURNS OR LEASE THEM FOR RENTS WHICH EXCEED OUR OPERATING AND CAPITAL COSTS. WE MAY BE UNABLE TO IDENTIFY PROPERTIES THAT WE WANT TO ACQUIRE OR TO NEGOTIATE ACCEPTABLE PURCHASE PRICES, ACQUISITION FINANCING, MANAGEMENT CONTRACTS OR LEASE TERMS FOR NEW PROPERTIES,

·CONTINGENCIES IN OUR ACQUISITION AND SALE AGREEMENTS MAY NOT BE SATISFIED AND OUR PENDING PROPERTY SALES OR PENDING ACQUISITIONS AND ANY RELATED MANAGEMENT AGREEMENTS MAY NOT OCCUR, MAY BE DELAYED OR THE TERMS OF SUCH TRANSACTIONS MAY CHANGE,

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE AND TA INTEND TO CHALLENGE THE AMOUNT OF COMPENSATION PAID TO US BY THE VDOT WITH REGARD TO A TRAVEL CENTER WE PREVIOUSLY OWNED AND WHICH THE VDOT TOOK BY EMINENT DOMAIN PROCEEDING. THERE CAN BE NO ASSURANCE CONCERNING THE AMOUNT OF COMPENSATION PAYABLE TO US OR TA AS A RESULT OF THE TAKING OR WHAT THE FINAL REDUCTION OF RENT PAYABLE TO US BY TA WILL BE AS A RESULT OF THIS TAKING,

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE EXPECT TO FUND AN ADDITIONAL $6.6 MILLION TO RENOVATE HOTELS UNDER OUR MARRIOTT NO. 234 AGREEMENT, FUND AN ADDITIONAL $23.0 MILLION TO RENOVATE HOTELS

46

HOSPITALITY PROPERTIES TRUST

INCLUDED IN OUR INTERCONTINENTAL AGREEMENT, FUND UP TO AN ADDITIONAL $16.7 MILLION TO RENOVATE 22 HOTELS INCLUDED IN OUR WYNDHAM AGREEMENT, AND FUND UP TO AN ADDITIONAL $78.0 MILLION TO RENOVATE 22 HOTELS INCLUDED IN OUR SONESTA AGREEMENT. RENOVATION COSTS ARE DIFFICULT TO PROJECT AND WE CAN PROVIDE NO ASSURANCE THAT THESE AMOUNTS WILL BE SUFFICIENT TO COMPLETE THE DESIRED RENOVATIONS OR REFURBISHMENT COSTS, OR WHAT THE FINAL AMOUNTS FUNDED WILL BE,

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT, AT JUNE 30, 2014, WE HAD $15.5 MILLION OF CASH AND CASH EQUIVALENTS, THAT THERE WAS $710.0 MILLION AVAILABLE UNDER OUR $750.0 MILLION UNSECURED REVOLVING CREDIT FACILITY AND THAT WE HAD SECURITY DEPOSITS AND GUARANTEES COVERING SOME OF OUR MINIMUM RETURNS AND RENTS. THESE STATEMENTS MAY IMPLY THAT WE HAVE ABUNDANT WORKING CAPITAL AND LIQUIDITY. HOWEVER, OUR MANAGERS AND TENANTS MAY NOT BE ABLE TO FUND MINIMUM RETURNS AND RENTS DUE TO US FROM THE OPERATIONS OF OUR PROPERTIES OR FROM OTHER RESOURCES; IN THE PAST AND CURRENTLY CERTAIN OF OUR TENANTS AND HOTEL MANAGERS HAVE IN FACT NOT BEEN ABLE TO PAY THE MINIMUM AMOUNTS DUE TO US FROM THEIR OPERATIONS OF OUR LEASED OR MANAGED PROPERTIES. ALSO, THE SECURITY DEPOSITS AND GUARANTEES WE HAVE TO COVER ANY SUCH SHORTFALLS ARE LIMITED IN AMOUNT AND DURATION, AND ANY SECURITY DEPOSITS WE APPLY FOR SUCH SHORTFALLS DO NOT RESULT IN ADDITIONAL CASH FLOW TO US AS WE ALREADY HOLD THOSE FUNDS. FURTHER, OUR PROPERTIES REQUIRE, AND WE HAVE AGREED TO PROVIDE, SIGNIFICANT FUNDING FOR CAPITAL IMPROVEMENTS, RENOVATIONS AND OTHER MATTERS. ACCORDINGLY, WE MAY NOT HAVE SUFFICIENT WORKING CAPITAL OR LIQUIDITY,

·WE MAY BE UNABLE TO REPAY OUR DEBT OBLIGATIONS WHEN THEY BECOME DUE,

·CONTINUED AVAILABILITY OF BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY IS SUBJECT TO OUR SATISFYING CERTAIN FINANCIAL COVENANTS AND MEETING OTHER CUSTOMARY CREDIT FACILITY CONDITIONS,

·ACTUAL COSTS UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN WILL BE HIGHER THAN LIBOR PLUS A PREMIUM BECAUSE OF OTHER FEES AND EXPENSES ASSOCIATED WITH THIS AGREEMENT,

·INCREASING THE MAXIMUM BORROWINGS UNDER OUR REVOLVING CREDIT FACILITY AND TERM LOAN AGREEMENT IS SUBJECT TO OUR OBTAINING ADDITIONAL COMMITMENTS FROM LENDERS, WHICH MAY NOT OCCUR,

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE MAY EXTEND THE MATURITY DATE OF OUR REVOLVING CREDIT FACILITY SUBJECT TO MEETING CERTAIN CONDITIONS AND PAYMENT OF A FEE.  WE CAN PROVIDE NO ASSURANCE THAT THE APPLICABLE CONDITIONS WILL BE MET,

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE WILL REDEEM ALL OF OUR OUTSTANDING 51/8% SENIOR NOTES DUE 2015.  IF PRESENTLY UNFORESEEN CIRCUMSTANCES OCCUR, THE EXPECTED REDEMPTION OF THE 51/8% SENIOR NOTES DUE 2015 MAY BE DELAYED OR NOT COMPLETED, AND

·THIS QUARTERLY REPORT ON FORM 10-Q STATES THAT WE BELIEVE THAT OUR CONTINUING RELATIONSHIPS WITH RMR, TA, SONESTA, AIC, AND THEIR AFFILIATED AND RELATED PERSONS AND ENTITIES MAY BENEFIT US AND PROVIDE US WITH COMPETITIVE ADVANTAGES IN OPERATING AND GROWING OUR BUSINESS. IN FACT, THE ADVANTAGES WE BELIEVE WE MAY REALIZE FROM THESE RELATIONSHIPS MAY NOT MATERIALIZE.

THESE RESULTS COULD OCCUR DUE TO MANY DIFFERENT CIRCUMSTANCES, SOME OF WHICH ARE BEYOND OUR CONTROL, SUCH AS NATURAL DISASTERS, CHANGES IN OUR TENANTS’

47

HOSPITALITY PROPERTIES TRUST

REVENUES OR EXPENSES, CHANGES IN OUR MANAGERS’ OR TENANTS’ FINANCIAL CONDITIONS OR THE MARKET DEMAND FOR HOTEL ROOMS OR FUEL, OR CHANGES IN CAPITAL MARKETS OR THE ECONOMY GENERALLY.

THE INFORMATION CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q OR IN OUR FILINGS WITH THE SEC INCLUDING UNDER THE CAPTION “RISK FACTORS”, OR INCORPORATED HEREIN OR THEREIN, IDENTIFIES OTHER IMPORTANT FACTORS THAT COULD CAUSE DIFFERENCES FROM OUR FORWARD LOOKING STATEMENTS. OUR FILINGS WITH THE SEC ARE AVAILABLE ON THE SEC’S WEBSITE AT WWW.SEC.GOV.

YOU SHOULD NOT PLACE UNDUE RELIANCE UPON OUR FORWARD LOOKING STATEMENTS.

EXCEPT AS REQUIRED BY LAW, WE DO NOT INTEND TO UPDATE OR CHANGE ANY FORWARD LOOKING STATEMENTS AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.

STATEMENT CONCERNING LIMITED LIABILITY

THE AMENDED AND RESTATED DECLARATION OF TRUST ESTABLISHING HOSPITALITY PROPERTIES TRUST, DATED AUGUST 21, 1995, AS AMENDED AND SUPPLEMENTED, AS FILED WITH THE STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND, PROVIDES THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF HOSPITALITY PROPERTIES TRUST SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, HOSPITALITY PROPERTIES TRUST. ALL PERSONS DEALING WITH HOSPITALITY PROPERTIES TRUST IN ANY WAY SHALL LOOK ONLY TO THE ASSETS OF HOSPITALITY PROPERTIES TRUST FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

Part II Other Information

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On April 7, May 7 and June 6, 2014, we issued 11,155, 10,566 and 10,930 of our common shares, respectively, to RMR as payment of a portion of the management fee due to RMR pursuant to our business management agreement with RMR.  We issued these shares pursuant to an exemption from registration contained in Section 4(a)(2) of the Securities Act of 1933, as amended.

48

HOSPITALITY PROPERTIES TRUST

Item 6.  Exhibits

Exhibit Number	Description
3.1	Composite Copy of Amended and Restated Declaration of Trust dated as of August 21, 1995, as amended to date. (Filed herewith.)
3.2	Composite Copy of Amended and Restated Declaration of Trust dated as of August 21, 1995, as amended to date (marked copy). (Filed herewith.)
3.3	Articles Supplementary dated as of June 2, 1997. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File Number 001-11527.)
3.4	Articles Supplementary dated as of March 5, 2007. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 2, 2007, File Number 001-11527.)
3.5	Articles Supplementary dated as of January 13, 2012. (Incorporated by reference to the Company’s Current Report on Form 8-K dated January 13, 2012.)
3.6	Articles Supplementary dated as of June 10, 2014. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 10, 2014.)
3.7	Amended and Restated Bylaws of the Company adopted April 9, 2014. (Incorporated by reference to the Company’s Current Report on Form 8-K dated April 9, 2014.)
4.1	Form of Common Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013.)
4.2	Form of 7.125% Series D Cumulative Redeemable Preferred Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.)
4.3	Indenture, dated as of February 25, 1998, between the Company and State Street Bank and Trust Company. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 1997, File Number 001-11527.)
4.4	Supplemental Indenture No. 8, dated as of February 15, 2005, between the Company and U.S. Bank National Association, relating to the Company’s 51/8% Senior Notes due 2015, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated February 10, 2005, File Number 001-11527.)
4.5	Supplemental Indenture No. 9, dated as of June 15, 2006, between the Company and U.S. Bank National Association, relating to the Company’s 6.30% Senior Notes due 2016, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2006, File Number 001-11527.)
4.6	Supplemental Indenture No. 10, dated as of March 7, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 3.80% Convertible Senior Notes due 2027, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 2, 2007, File Number 001-11527.)
4.7	Supplemental Indenture No. 11, dated as of March 12, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 5.625% Senior Notes due 2017, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K dated March 7, 2007, File Number 001-11527.)
4.8	Supplemental Indenture No. 12, dated as of September 28, 2007, between the Company and U.S. Bank National Association, relating to the Company’s 6.70% Senior Notes due 2018, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007, File Number 001-11527.)
4.9	Supplemental Indenture No. 13, dated as of August 12, 2009, between the Company and U.S. Bank National Association, relating to the Company’s 7.875% Senior Notes due 2014, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.)
4.10	Supplemental Indenture No. 14, dated as of August 16, 2012, between the Company and U.S. Bank National Association, relating to the Company’s 5.000% Senior Notes due 2022, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.)
4.11	Supplemental Indenture No. 15, dated as of June 6, 2013, between the Company and U.S. Bank National Association, relating to the Company’s 4.500% Senior Notes due 2023, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended

49

HOSPITALITY PROPERTIES TRUST

	September 30, 2013.)
4.12	Supplemental Indenture No. 16, dated as of March 12, 2014, between the Company and U.S. Bank National Association, relating to the Company’s 4.650% Senior Notes due 2024, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2014.)
10.1	First Amendment to Amended and Restated Business Management Agreement, dated as of May 9, 2014, between the Company and Reit Management & Research LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 9, 2014.)
10.2	Third Amendment to Amended and Restated Property Management Agreement, dated as of May 9, 2014, between the Company and Reit Management & Research LLC. (Incorporated by reference to the Company’s Current Report on Form 8-K dated May 9, 2014.)
10.3	Representative Form of Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc. (limited service). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q/A, Amendment No. 2, for the quarter ended June 30, 2012.) (Schedule of applicable agreements filed herewith.)
10.4	Pooling Agreement, dated April 23, 2012, as updated through May 30, 2014, between Sonesta International Hotels Corporation and Cambridge TRS, Inc. (Filed herewith.)
10.5	Summary of Trustee Compensation. (Incorporated by reference to the Company’s Current Report on Form 8-K dated June 10, 2014.)
12.1	Computation of Ratio of Earnings to Fixed Charges. (Filed herewith.)
12.2	Computation of Ratio of Earnings to Fixed Charges and Preferred Distributions. (Filed herewith.)
31.1	Rule 13a-14(a) Certification. (Filed herewith.)
31.2	Rule 13a-14(a) Certification. (Filed herewith.)
31.3	Rule 13a-14(a) Certification. (Filed herewith.)
31.4	Rule 13a-14(a) Certification. (Filed herewith.)
32.1	Section 1350 Certification. (Furnished herewith.)
101.1	The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 formatted in XBRL (eXtensible Business Reporting Language): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Income and Comprehensive Income, (iii) the Condensed Consolidated Statements of Cash Flows and (iv) related notes to these financial statements, tagged as blocks of text and in detail. (Filed herewith.)

50

HOSPITALITY PROPERTIES TRUST

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

HOSPITALITY PROPERTIES TRUST

/s/ John G. Murray

John G. Murray

President and Chief Operating Officer

Dated: August 11, 2014

/s/ Mark L. Kleifges

Mark L. Kleifges

Treasurer and Chief Financial Officer

(principal financial and accounting officer)

Dated: August 11, 2014

51

EX-3.1

Exhibit 3.1

HOSPITALITY PROPERTIES TRUST

AMENDED AND RESTATED

DECLARATION OF TRUST

Dated May 12, 1995

As Amended and Restated on August 21, 1995

and Amended on June 2, 1997

and Amended on May 24, 2006
and Amended on March 5, 2007
and Amended on May 15, 2007

and Amended on April 15, 2010
and Amended on January 18, 2012

and Amended on June 10, 2014

Table of Contents

		Page
ARTICLE I	THE TRUST; DEFINITIONS	4
1.1.	Name	4
1.2.	Place of Business	4
1.3.	Nature of Trust	5
1.4.	Definitions	5
ARTICLE II	TRUSTEES	6
2.1.	Number, Term of Office and Qualification of Trustees	6
2.2.	Compensation and Other Remuneration	7
2.3.	Resignation, Removal and Death of Trustees	7
2.4.	Vacancies	8
2.5.	Successor and Additional Trustees	8
2.6.	Actions by Trustees	8
2.7.	Committees	8
ARTICLE III	TRUSTEES’ POWERS	8
3.1.	Power and Authority of Trustees	8
3.2.	Specific Powers and Authority	8
3.3.	Bylaws	11
ARTICLE IV	INVESTMENT POLICY AND POLICIES WITH RESPECT TO CERTAIN DISTRIBUTIONS TO SHAREHOLDERS	11
4.1.	Statement of Policy	11
4.2.	Prohibited Investments and Activities	11
4.3.	Change in Investment Policies	12
ARTICLE V	THE SHARES AND SHAREHOLDERS	12
5.1.	Description of Shares	12
5.2.	Certificates, Ownership of Shares shall be evidenced by certificates	12
5.3.	Fractional Shares	13
5.4.	Legal Ownership of Trust Estate	13
5.5.	Shares Deemed Personal Property	13
5.6.	Share Record; Issuance and Transferability of Shares	13
5.7.	Dividends or Distributions to Shareholders	13
5.8.	Transfer Agent, Dividend Disbursing Agent and Registrar	14
5.9.	Shareholders’ Meetings	14
5.10.	Proxies	14
5.11.	[Reserved]	14
5.12.	Fixing Record Date	14
5.13.	Notice to Shareholders	14
5.14.	Shareholders’ Disclosure; Restrictions on Share Transfer; Limitation on Holdings	15
5.15.	Special Voting Provisions relating to Certain Business Combinations and Control Shares	16
ARTICLE VI	LIABILITY OF TRUSTEES, SHAREHOLDERS, OFFICERS, EMPLOYEES AND AGENTS, AND OTHER MATTERS	17

		Page
6.1.	Limitation of Liability of Shareholders, Trustees, Officers, Employees and Agents for Obligations of the Trust	17
6.2.	Express Exculpatory Clauses and Instruments	17
6.3.	Limitation of Liability of Trustees, Officers, Employees and Agents to the Trust and to Shareholders for Acts and Omissions	17
6.4.	Indemnification and Reimbursement of Trustees, Officers, Employees, Agents and Certain Other Persons	17
6.5.	Indemnification and Reimbursement of Shareholders	17
6.6.	Right of Trustees, Officers, Employees and Agents to Own Shares or Other Property and to Engage in Other Business	18
6.7.	Transactions Between Trustees, Officers, Employees or Agents and the Trust	18
6.8.	Persons Dealing with Trustees, Officers, Employees or Agents	18
6.9.	Reliance	18
ARTICLE VII	DURATION, AMENDMENT AND TERMINATION OF TRUST	19
7.1.	Duration of Trust	19
7.2.	Termination of Trust	19
7.3.	Amendment Procedure	19
7.4.	Amendments Effective	19
7.5.	Transfer to Successor	19
ARTICLE VIII	MISCELLANEOUS	20
8.1.	Applicable Law	20
8.2.	Index and Headings for Reference Only	20
8.3.	Successors in Interest	20
8.4.	Inspection of Records	20
8.5.	Counterparts	20
8.6.	Provisions of the Trust in Conflict with Law or Regulations; Severability	20
8.7.	Certifications	20
8.8.	Indemnification of the Trust	21

AMENDED AND RESTATED

DECLARATION OF TRUST

OF

HOSPITALITY PROPERTIES TRUST

Dated May 12, 1995

As Amended and Restated on August 21, 1995

and Amended on June 2, 1997

and Amended on May 24, 2006
and Amended on March 5, 2007
and Amended on May 15, 2007
and Amended on April 15, 2010

and Amended on January 18, 2012

and Amended on June 10, 2014

The Declaration of Hospitality Properties Trust, as filed with the Maryland Department of Assessments and Taxation on May 12, 1995 is hereby amended and restated as follows:

DECLARATION OF TRUST made as of the date set forth above by the undersigned Trustees.

WITNESSETH:

WHEREAS, the Trustees desire to create a trust for the principal purpose of investing in real property and interests therein; and

WHEREAS, the Trustees desire that such trust qualify as a “qualified REIT subsidiary” as long as it shall remain wholly owned by Health and Retirement Properties Trust (“HRP”) and, thereafter, as a “real estate investment trust” under the REIT Provisions of the Internal Revenue Code, and as a “real estate investment trust” under Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland; and

WHEREAS, in furtherance of such purpose the Trustees intend to acquire certain real property and interests therein and to hold, manage and dispose of all such property as Trustees in the manner hereinafter stated; and

WHEREAS, it is proposed that the beneficial interest in the Trust be divided into transferable Shares of Beneficial Interest, evidenced by certificates therefor, as hereinafter provided;

NOW, THEREFORE, it is hereby agreed and declared that the Trustees will hold any and all property of every type and description which they are acquiring or may hereafter acquire as Trustees, together with the proceeds thereof, in trust, to manage and dispose of the same for the benefit of the holders from time to time of the Shares of Beneficial Interest being issued and to be issued hereunder in the manner and subject to the stipulations contained herein.

ARTICLE I

THE TRUST; DEFINITIONS

1.1.Name. The name of the Trust created by this Declaration of Trust shall be “Hospitality Properties Trust” and so far as may be practicable the Trustees shall conduct the Trust’s activities, execute all documents and sue or be sued under that name, which name (and the word “Trust” wherever used in this Declaration of Trust, except where the context otherwise requires) shall refer to the Trustees collectively but not individually or personally nor to the officers, agents, employees or Shareholders of the Trust or of such Trustees. Under circumstances under which the Trustees determine that the use of such name is not practicable or under circumstances in which the Trustees are contractually bound to change that name, they may use such other designation or they may adopt another name under which the Trust may hold property or conduct its activities.

1.2.Places of Business. The Trust shall maintain an office in Maryland at The Prentice-Hall Corporation System, Maryland, 11 East Chase Street, Baltimore City, Maryland, 21202 or such other place in Maryland as the Trustees may determine from time to time. The Resident Agent of the Trust at such office shall be The Prentice-Hall Corporation System, Maryland. The Trust

4

may change such Resident Agent from time to time as the Trustees shall determine. The Trust may have such other offices or places of business within or without the State of Maryland as the Trustees may from time to time determine.

1.3.Nature of Trust. The Trust shall be a real estate investment trust within the meaning of Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland. It is also intended that the Trust shall carry on a business as a “qualified REIT subsidiary” as described in the REIT Provisions of the Internal Revenue Code for so long as it is wholly owned by HRP and thereafter shall qualify and carry on business as a “real estate investment trust” as described therein. The Trust is not intended to be, shall not be deemed to be, and shall not be treated as a general partnership, limited partnership, joint venture, corporation or joint stock company (but nothing herein shall preclude the Trust from being treated for tax purposes as an association under the Internal Revenue Code); nor shall the Trustees or Shareholders or any of them for any purpose be, nor be deemed to be, nor be treated in any way whatsoever as, liable or responsible hereunder as partners or joint venturers. The relationship of the Shareholders to the Trustees shall be solely that of beneficiaries of the Trust in accordance with the rights conferred upon them by this Declaration.

1.4.Definitions. The terms defined in this Section 1.4, wherever used in this Declaration, shall, unless the context otherwise requires, have the respective meanings hereinafter specified. Whenever the singular number is used in this Declaration and when permitted by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and vice versa. Where applicable, calculations to be made pursuant to any such definition shall be made in accordance with generally accepted accounting principles as in effect from time to time except as otherwise provided in such definition.

(a)Advisor. “Advisor” shall mean HRPT Advisors, Inc., a Delaware corporation, or such other Person as the Trustees shall from time to time engage to supervise the operation of the Trust and to provide the Trust with a program of investments.

(b)Affiliate. “Affiliate” shall mean, as to any Person, (i) any other Person who, at the time of determination, is directly or indirectly controlling, controlled by or under common control with such Person, (ii) any other Person who, at such time, owns beneficially, directly or indirectly, five percent (5%) or more of the outstanding capital stock, shares or equity interests of such Person, or (iii) any Person who is at the time of determination an officer, director, employee, general partner or trustee of any such Person or of any Person who, at such time, is controlling, controlled by or under common control with such Person (excluding any trustee who is not otherwise an Affiliate of such Person).

(c)Annual Meeting of Shareholders. “Annual Meeting of Shareholders” shall mean the meeting described in the first sentence of Section 5.9.

(d)Annual Report. “Annual Report” shall have the meaning set forth in Section 5.11(a).

(e)Book Value. “Book Value” of an asset or assets shall mean the value of such asset or assets of the Trust on the books of the Trust, without deduction for depreciation or other asset valuation reserves and without deduction for mortgages or other security interests to which such asset or assets are subject, except that no asset shall be valued at more than its fair market value as determined by or under procedures adopted by the Trustees, and the underlying assets of a partnership, joint venture or other form of indirect ownership, to the extent of the Trust’s interest therein, shall be valued as if owned directly by the Trust.

(f)Bylaws. “Bylaws” shall have the meaning set forth in Section 3.3.

(g)Declaration. “Declaration” or “this Declaration” shall mean this Declaration of Trust, as amended, restated or modified from time to time. The use in this Declaration of “herein” and “hereunder” shall be deemed to refer to this Declaration and shall not be limited to the particular text, article or section in which such words appear.

(h)Independent Trustee. “Independent Trustee” shall mean a Trustee who is not then an officer of the Trust or an Affiliate of the Advisor.

(i)Internal Revenue Code. “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as now enacted or hereafter amended, or successor statutes and applicable rules and regulations thereunder.

(j)Invested Assets. “Invested Assets” shall mean the Book Value of all the Real Estate Investments of the Trust.

(k)Mortgage Loans. “Mortgage Loans” shall mean notes, debentures, bonds and other evidences of indebtedness or obligations, whether negotiable or non-negotiable, which are secured or collateralized by Mortgages.

5

(l)Mortgages. “Mortgages” shall mean mortgages, deeds of trust or other security interests in Real Property.

(m)Person. “Person” shall mean and include individuals, corporations, limited partnerships, general partnerships, joint stock companies or associations, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts and other entities and governments and agencies and political subdivisions thereof.

(n)Real Estate Investment. “Real Estate Investment” shall mean any direct or indirect investment in any interest in Real Property or in any Mortgage Loan, or in any Person whose principal purpose is to make any such investment.

(o)Real Property. “Real Property” shall mean and include land, leasehold interests (including but not limited to interests of a lessor or lessee therein), rights and interests in land, and in any buildings, structures, improvements, furnishings and fixtures located on or used in connection with land or interests therein, but does not include investments in Mortgages, Mortgage Loans or interests therein.

(p)REIT. “REIT” shall mean a real estate investment trust as defined in the REIT Provisions of the Internal Revenue Code.

(q)REIT Provisions of the Internal Revenue Code. “REIT Provisions of the Internal Revenue Code” shall mean Parts II and III of Subchapter M of Chapter 1 of Subtitle A of the Internal Revenue Code or any successor provision.

(r)Securities. “Securities” shall mean any stock, shares, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire any of the foregoing.

(s)Shareholders. “Shareholders” shall mean as of any particular time all holders of record of outstanding Shares at such time.

(t)Shares. “Shares” or, as the context may require, “shares” shall mean the shares of beneficial interest of the Trust as described in Section 5.1 hereof.

(u)Trust. “Trust” shall mean the Trust created by this Declaration.

(v)Trustees. “Trustees” shall mean, as of any particular time, the original signatories hereto as long as they hold office hereunder and additional and successor Trustees, and shall not include the officers, employees or agents of the Trust or the Shareholders. Nothing herein shall be deemed to preclude the Trustees from also serving as officers, employees or agents of the Trust or owning Shares.

(w)Trust Estate. “Trust Estate” shall mean as of any particular time any and all property, real, personal or otherwise, tangible or intangible, which is transferred, conveyed or paid to or purchased by the Trust or Trustees and all rents, income, profits and gains therefrom and which at such time is owned or held by or for the Trust or the Trustees.

ARTICLE II

TRUSTEES

2.1.Number, Term of Office and Qualifications of Trustees.

(a)The number of Trustees initially need not be more than one (1).

(i)The exact number of Trustees shall be five (5) until changed by a two-thirds (2/3) vote of the Trustees or by an amendment of this Declaration duly adopted by holders of two-thirds (2/3) of the outstanding Shares entitled to vote. Any vacancies in the Board of Trustees created thereby shall be filled by a majority of the Trustees then in office. The terms of the Trustees shall be determined as follows: (i) at the annual meeting of shareholders of the Trust that is held in calendar year 2014 (the “2014 Annual Meeting”), the Trustees whose terms expire at the 2014 Annual Meeting (or such Trustees’ successors) shall be elected to hold office for a three-year term expiring at the annual meeting of

6

shareholders of the Trust that is held in calendar year 2017 (the “2017 Annual Meeting”); (ii) at the annual meeting of shareholders of the Trust that is held in calendar year 2015 (the “2015 Annual Meeting”), the Trustees whose terms expire at the 2015 Annual Meeting (or such Trustees’ successors) shall be elected to hold office for a one-year term expiring at the annual meeting of shareholders of the Trust that is held in calendar year 2016 (the “2016 Annual Meeting”); (iii) at the 2016 Annual Meeting, the Trustees whose terms expire at the 2016 Annual Meeting (or such Trustees’ successors) shall be elected to hold office for a one-year term expiring at the 2017 Annual Meeting; and (iv) at the 2017 Annual Meeting, and at each annual meeting of shareholders of the Trust thereafter, all Trustees shall be elected to hold office for a one-year term expiring at the next annual meeting of shareholders following his or her election.  For the avoidance of doubt, each Trustee elected or appointed to the Board of Trustees to serve a term that commenced before the 2015 Annual Meeting (an “Existing Trustee”), and each Trustee elected or appointed to the Board of Trustees to fill a vacancy resulting from the death, incapacity, resignation or removal of an Existing Trustee, shall serve for the full term to which the Existing Trustee was elected or appointed.

(ii)A majority of the Trustees holding office subject to the foregoing provisions of this paragraph (ii) shall at all times be Independent Trustees; provided, however, that upon a failure to comply with this requirement as a result of the creation of a vacancy which must be filled by an Independent Trustee, whether as a result of enlargement of the Board of Trustees or the resignation, removal or death of a Trustee who is an Independent Trustee, such requirement shall not be applicable for a period of ninety (90) days.

(b)The names and business addresses of the initial Trustees, who shall serve as Trustees until the first annual meeting of Shareholders (unless their terms shall be otherwise classified pursuant to Section 2.1(a)(ii)) and until their successors shall have been elected and qualified are as follows:

Name:	Barry M. Portnoy
Address:	Sullivan & Worcester One Post Office Square Boston, MA 02109
Name:	Gerard M. Martin
Address:	M & P Partners Limited Partnership 400 Centre Street Newton, MA 02158

The initial Trustees shall be the signatories hereto. No reduction in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his term. Subject to the provisions of Section 2.3, each Trustee shall hold office until the election and qualification of his successor. There shall be no cumulative voting in the election of Trustees. A Trustee shall be an individual at least twenty-one (21) years of age who is not under legal disability. Unless otherwise required by law, no Trustee shall be required to give bond, surety or security in any jurisdiction for the performance of any duties or obligations hereunder. The Trustees in their capacity as Trustees shall not be required to be Shareholders or to devote their entire time to the business and affairs of the Trust.

2.2.Compensation and Other Remuneration. The Trustees shall be entitled to receive such reasonable compensation for their services as Trustees as the Trustees may determine from time to time. The Trustees and Trust officers shall be entitled to receive remuneration for services rendered to the Trust in any other capacity. Subject to Sections 6.6 and 6.7, such services may include, without limitation, services as an officer of the Trust, legal, accounting or other professional services, or services as a broker, transfer agent or underwriter, whether performed by a Trustee or any Person affiliated with a Trustee.

2.3.Resignation, Removal and Death of Trustees. A Trustee may resign at any time by giving written notice to the remaining Trustees at the principal office of the Trust. Such resignation shall take effect on the date specified in such notice, without need for prior accounting. A Trustee may be removed at any time with or without cause by the affirmative vote either of all the remaining Trustees or of the holders of Shares representing two-thirds of the total votes authorized to be cast by Shares then outstanding and entitled to vote thereon, voting as a single class. A Trustee judged incompetent or for whom a guardian or conservator has been appointed shall be deemed to have resigned as of the date of such adjudication or appointment. Upon the resignation or removal of any Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver such documents as the remaining Trustees shall require for the conveyance of any Trust property held in his name, shall account to the remaining Trustees as they require for all property which he holds as Trustee and shall thereupon be discharged as Trustee. Upon the incapacity or death of any Trustee, his legal representative shall perform the acts set forth in the preceding sentence and the discharge mentioned therein shall run to such legal representative and to the incapacitated Trustee or the estate of the deceased Trustee, as the case may be.

7

2.4.Vacancies. If any or all the Trustees cease to be Trustees hereunder, whether by reason of resignation, removal, incapacity, death or otherwise, such event shall not terminate the Trust or affect its continuity. Until vacancies are filled, the remaining Trustee or Trustees (even though fewer than three (3)) may exercise the powers of the Trustees hereunder. Vacancies (including vacancies created by increases in number) may be filled by the remaining Trustee or by a majority of the remaining Trustees. If at any time there shall be no Trustees in office, successor Trustees shall be elected by the Shareholders as provided in Section 5.9. Any Trustee elected to fill a vacancy created by the resignation, removal or death of a former Trustee shall hold office for the unexpired term of such former Trustee.

2.5.Successor and Additional Trustees. The right, title and interest of the Trustees in and to the Trust Estate shall also vest in successor and additional Trustees upon their qualification, and they shall thereupon have all the rights and obligations of Trustees hereunder. Such right, title and interest shall vest in the Trustees whether or not conveyancing documents have been executed and delivered pursuant to Section 2.3 or otherwise. Appropriate written evidence of the election and qualification of successor and additional Trustees shall be filed with the records of the Trust and in such other offices or places as the Trustees may deem necessary, appropriate or desirable.

2.6.Actions by Trustees. The Trustees may act with or without a meeting. A quorum for all meetings of the Trustees shall be a majority of the Trustees; provided, however, that, whenever pursuant to Section 6.7 or otherwise the vote of a majority of a particular group of Trustees is required at a meeting, a quorum for such meeting shall be a majority of the Trustees which shall include a majority of such group. Unless specifically provided otherwise in this Declaration, any action of the Trustees may be taken at a meeting by vote of a majority of the Trustees present (a quorum being present) or without a meeting by written consents of a majority of the Trustees, which consents shall be filed with the records of meetings of the Trustees. Any action or actions permitted to be taken by the Trustees in connection with the business of the Trust may be taken pursuant to authority granted by a meeting of the Trustees conducted by a telephone conference call, and the transaction of Trust business represented thereby shall be of the same authority and validity as if transacted at a meeting of the Trustees held in person or by written consent. The minutes of any Trustees’ meeting held by telephone shall be prepared in the same manner as a meeting of the Trustees held in person. The acquisition or disposition of any investment (other than investments in short-term investment Securities described in Section 4.1) shall require the approval of a majority of Trustees, except as otherwise provided in Section 6.7. Any agreement, deed, mortgage, lease or other instrument or writing executed by one or more of the Trustees or by any authorized Person shall be valid and binding upon the Trustees and upon the Trust when authorized or ratified by action of the Trustees or as provided in the Bylaws.

With respect to the actions of the Trustees, Trustees who have, or are Affiliates of Persons who have, any direct or indirect interest in or connection with any matter being acted upon may be counted for all quorum purposes under this Section 2.6 and, subject to the provisions of Section 6.7, may vote on the matter as to which they or their Affiliates have such interest or connection.

2.7.Committees. The Trustees may appoint an audit committee and such other standing committees as the Trustees determine. Each standing committee shall consist of two (2) or more members; provided, however, that the Trustees may appoint a standing committee consisting of at least one Trustee and two non-Trustees. Each committee shall have such powers, duties and obligations as the Trustees may deem necessary or appropriate. The standing committees shall report their activities periodically to the Trustees.

ARTICLE III

TRUSTEES’ POWERS

3.1.Power and Authority of Trustees. The Trustees, subject only to the specific limitations contained in this Declaration, shall have, without further or other authorization, and free from any power or control on the part of the Shareholders, full, absolute and exclusive power, control and authority over the Trust Estate and over the business and affairs of the Trust to the same extent as if the Trustees were the sole owners thereof in their own right, and may do all such acts and things as in their sole judgment and discretion are necessary for or incidental to or desirable for carrying out or conducting the business of the Trust. Any construction of this Declaration or any determination made in good faith by the Trustees as to the purposes of the Trust or the existence of any power or authority hereunder shall be conclusive. In construing the provisions of this Declaration, the presumption shall be in favor of the grant of powers and authority to the Trustees. The enumeration of any specific power or authority herein shall not be construed as limiting the aforesaid powers or the general powers or authority or any other specified power or authority conferred herein upon the Trustees.

3.2.Specific Powers and Authority. Subject only to the express limitations contained in this Declaration and in addition to any powers and authority conferred by this Declaration or which the Trustees may have by virtue of any present or future statute or rule or law, the Trustees without any action or consent by the Shareholders shall have and may exercise at any time and from

8

time to time the following powers and authorities which may or may not be exercised by them in their sole judgment and discretion and in such manner and upon such terms and conditions as they may from time to time deem proper:

(a)to retain, invest and reinvest the capital or other funds of the Trust in, and to acquire, purchase, or own, real or personal property of any kind, whether tangible or intangible, wherever located in the world, and make commitments for such investments, all without regard to whether any such property is authorized by law for the investment of trust funds or produces or may produce income; to possess and exercise all the rights, powers and privileges appertaining to the ownership of the Trust Estate; and to increase the capital of the Trust at any time by the issuance of any additional authorized Shares or other Securities of the Trust for such consideration as they deem advisable;

(b)without limitation of the powers set forth in subsection (a) above, to invest in, purchase or otherwise acquire for such consideration as they deem proper, in cash or other property or through the issuance of shares or through the issuance of notes, debentures, bonds or other obligations of the Trust, and to hold for investment, the entire or any participating interests in any Mortgage Loans or interest in Real Property, including ownership of, or participations in the ownership of, or rights to acquire, equity interests in Real Property or in Persons owning, developing, improving, operating or managing Real Property, which interests may be acquired independently of or in connection with other investment activities of the Trust and, in the latter case, may include rights to receive additional payments based on gross income or rental or other income from the Real Property or improvements thereon; and to invest in loans secured by the pledge or transfer of Mortgage Loans;

(c)to sell, rent, lease, hire, exchange, release, partition, assign, mortgage, pledge, hypothecate, grant security interests in, encumber, negotiate, convey, transfer or otherwise dispose of any and all the Trust Estate by deeds (including deeds in lieu of foreclosure), trust deeds, assignments, bills of sale, transfers, leases, mortgages, financing statements, security agreements and other instruments for any of such purposes executed and delivered for and on behalf of the Trust or the Trustees by one or more of the Trustees or by a duly authorized officer, employee, agent or nominee of the Trust;

(d)to issue Shares, bonds, debentures, notes or other evidences of indebtedness, which may be secured or unsecured and may be subordinated to any indebtedness of the Trust, to such Persons for such cash, property or other consideration (including Securities issued or created by, or interests in, any Person) at such time or times and on such terms as the Trustees may deem advisable and to list any of the foregoing Securities issued by the Trust on any securities exchange and to purchase or otherwise acquire, hold, cancel, reissue, sell and transfer any of such Securities, and to cause the instruments evidencing such Securities to bear an actual or facsimile imprint of the seal of the Trust (if the Trustees shall have adopted such a seal) and to be signed by manual or facsimile signature or signatures (and to issue such Securities, whether or not any Person whose manual or facsimile signature shall be imprinted thereon shall have ceased to occupy the office with respect to which such signature was authorized), provided that, where only facsimile signatures for the Trust are used, the instrument shall be countersigned manually by a transfer agent, registrar or other authentication agent; and to issue any of such Securities of different types in combinations or units with such restrictions on the separate transferability thereof as the Trustees shall determine;

(e)to enter into leases of real and personal property as lessor or lessee and to enter into contracts, obligations and other agreements for a term, and to invest in obligations having a term, extending beyond the term of office of the Trustees and beyond the possible termination of the Trust, or having a lesser term;

(f)to borrow money and give negotiable or non negotiable instruments therefor; or guarantee, indemnify or act as surety with respect to payment or performance of obligations of third parties; to enter into other obligations on behalf of the Trust; and to assign, convey, transfer, mortgage, subordinate, pledge, grant security interest in, encumber or hypothecate the Trust Estate to secure any indebtedness of the Trust or any other of the foregoing obligations of the Trust;

(g)to lend money, whether secured or unsecured;

(h)to create reserve funds for any purpose;

(i)to incur and pay out of the Trust Estate any charges or expenses, and to disburse any funds of the Trust, which charges, expenses or disbursements are, in the opinion of the Trustees, necessary or incidental to or desirable for the carrying out of any of the purposes of the Trust or conducting the business of the Trust, including without limitation taxes and other governmental levies, charges and assessments, of whatever kind or nature, imposed upon or against the Trustees in connection with the Trust or the Trust Estate or upon or against the Trust Estate or any part hereof, and for any of the purposes herein;

(j)to deposit funds of the Trust in banks, trust companies, savings and loan associations and other depositories, whether or not such deposits will draw interest, the same to be subject to withdrawal on such terms and in such manner

9

and by such Person or Persons (including any one or more Trustees or officers, employees or agents, of the Trust) as the Trustees may determine;

(k)to possess and exercise all the rights, powers and privileges pertaining to the ownership of all or any Mortgages or Securities issued or created by, or interests in, any Person, forming part of the Trust Estate, to the same extent that an individual might do so, and, without limiting the generality of the foregoing, to vote or give any consent, request or notice, or waive any notice, either in person or by proxy or power of attorney, with or without power of substitution, to one or more Persons, which proxies and powers of attorney may be for meetings or action generally or for any particular meeting or action, and may include the exercise of discretionary powers;

(l)to cause to be organized or assist in organizing any Person under the laws of any jurisdiction to acquire the Trust Estate or any part or parts thereof or to carry on any business in which the Trust shall directly or indirectly have any interest, and to sell, rent, lease, hire, convey, negotiate, assign, exchange or transfer the Trust Estate or any part or parts thereof to or with any such Person or any existing Person in exchange for the Securities thereof or otherwise, and to merge or consolidate the Trust with or into any Person or merge or consolidate any Person into the Trust, and to lend money to, subscribe for the Securities of, and enter into any contracts with, any Person in which the Trust holds or is about to acquire Securities or any other interest;

(m)to enter into joint ventures, general or limited partnerships, participation or agency arrangements and any other lawful combinations or associations, and to act as a general or limited partner;

(n)to elect, appoint, engage or employ such officers for the Trust as the Trustees may determine, who may be removed or discharged at the discretion of the Trustees, such officers to have such powers and duties, and to serve such terms, as may be prescribed by the Trustees or by the Bylaws; to engage or employ any Persons (including, subject to the provisions of Sections 6.6 and 6.7, any Trustee or officer, agent or employee of the Trust and any Person in which any Trustee, officer or agent is directly or indirectly interested or with which he is directly or indirectly connected) as agents, representatives, employees, or independent contractors (including without limitation real estate advisors, investment advisors, transfer agents, registrars, underwriters, accountants, attorneys at law, real estate agents, managers, appraisers, brokers, architects, engineers, construction managers, general contractors or otherwise) in one or more capacities, and to pay compensation from the Trust for services in as many capacities as such Person may be so engaged or employed; and to delegate any of the powers and duties of the Trustees to any one or more Trustees, agents, representatives, officers, employees, independent contractors or other Persons;

(o)to determine or cause to be determined from time to time the value of all or any part of the Trust Estate and of any services, Securities, property or other consideration to be furnished to or acquired by the Trust, and from time to time to revalue or cause to be revalued all or any part of the Trust Estate in accordance with such appraisals or other information as are, in the Trustees’ sole judgment, necessary and/or satisfactory;

(p)to collect, sue for and receive all sums of money coming due to the Trust, and to engage in, intervene in, prosecute, join, defend, compromise, abandon or adjust, by arbitration or otherwise, any actions, suits, proceedings, disputes, claims, controversies, demands or other litigation relating to the Trust, the Trust Estate or the Trust’s affairs, to enter into agreements therefor, whether or not any suit is commenced or claim accrued or asserted and, in advance of any controversy, to enter into agreements regarding arbitration, adjudication or settlement thereof;

(q)to renew, modify, release, compromise, extend, consolidate or cancel, in whole or in part, any obligation to or of the Trust or participate in any reorganization of obligors to the Trust;

(r)to self-insure or to purchase and pay for out of the Trust Estate insurance contracts and policies, including contracts of indemnity, insuring the Trust Estate against any and all risks and insuring the Trust and/or all or any of the Trustees, the Shareholders, or the officers, employees or agents of the Trust or Persons who may directly or indirectly control the Trust against any and all claims and liabilities of every nature asserted by any Person arising by reason of any action alleged to have been taken or omitted by the Trust or by the Trustees, Shareholders, officers, employees agents or controlling Persons whether or not the Trust would have the power to indemnify such Person or Persons against any such claim or liability;

(s)to cause legal title to any of the Trust Estate to be held by and/or in the name of the Trustees, or, except as prohibited by law, by and/or in the name of the Trust or one or more of the Trustees or any other Person, on such terms, in such manner and with such powers in such Person as the Trustees may determine, and with or without disclosure that the Trust or Trustees are interested therein;

(t)to adopt a fiscal year for the Trust, and from time to time to change such fiscal year;

10

(u)to adopt and use a seal (but the use of a seal shall not be required for the execution of instruments or obligations of the Trust);

(v)to the extent permitted by law, to indemnify or enter into agreements with respect to indemnification with any Person with which the Trust has dealings, including without limitation any broker/dealer, investment bank, investment advisor or independent contractor, to such extent as the Trustees shall determine;

(w)to confess judgment against the Trust;

(x)to discontinue the operations of the Trust;

(y)to repurchase or redeem Shares and other Securities issued by the Trust;

(z)to declare and pay dividends or distributions, consisting of cash, property or Securities, to the holders of Shares of the Trust out of any funds legally available therefor; and

(aa)to do all other such acts and things as are incident to the foregoing, and to exercise all powers which are necessary or useful to carry on the business of the Trust and to carry out the provisions of this Declaration.

3.3.Bylaws. The Trustees may make or adopt and from time to time amend or repeal Bylaws (the “Bylaws”) not inconsistent with law or with this Declaration, containing provisions relating to the business of the Trust and the conduct of its affairs and in such Bylaws may define the duties of the officers, employees and agents of the Trust.

ARTICLE IV

INVESTMENT POLICY AND POLICIES

WITH RESPECT TO CERTAIN

DISTRIBUTIONS TO SHAREHOLDERS

4.1.Statement of Policy. It shall be the general objectives of the Trust (i) to provide current income for distribution to Shareholders through investments in income-producing hotels and hospitality-related facilities and other real estate investments and (ii) to provide Shareholders with the opportunity for additional returns from a percentage of gross revenues generated by the investment properties.

The Trust may make secured borrowings to make permitted additional Real Estate Investments and secured or unsecured borrowings for normal working capital needs, including the repair and maintenance of properties in which it has invested, tenant improvements and leasing commissions. The Trust may make such borrowings from third parties or from Affiliates of the Advisor. Interest and other financing charges or fees to be paid on loans from such Affiliates will not exceed the interest and other financing charges or fees which would be charged by third party financing institutions on comparable loans for the same purpose in the same geographic area.

To the extent that the Trust Estate has assets not otherwise invested in accordance with this Section 4.1, it shall be the policy of the Trustees to invest such assets in investments selected by the Trustees or the Advisor which are consistent with the Trust’s intention to qualify as a REIT under the Internal Revenue Code.

It shall be the policy of the Trustees to make investments and to conduct the business of the Trust in such manner as to qualify as a REIT and to comply with the requirements of the Internal Revenue Code with respect to the composition of investments and the derivation of the income of a real estate investment trust as defined in the REIT Provisions of the Internal Revenue Code; provided, however, that no Trustee, officer, employee or agent of the Trust shall be liable for any act or omission resulting in the loss of tax benefits under the Internal Revenue Code, except for that arising from his own wilful misfeasance, bad faith, gross negligence or reckless disregard of duty.

4.2.Prohibited Investments and Activities. The Trustees shall not:

(a)engage in any undertaking or activity that would disqualify the Trust as a real estate investment trust under the provisions of the Internal Revenue Code as long as a real estate investment trust is accorded substantially the same treatment or benefits under the United States tax laws from time to time in effect as under Sections 856-860 of the Internal Revenue Code at the date of adoption of this Declaration; and/or

11

(b)use or apply land for farming, agriculture, horticulture or similar purposes in violation of Section 8-302(b) of the Corporations and Associations Article of the Annotated Code of Maryland.

4.3.Change in Investment Policies. The investment policies set out in this Article IV may be changed by a vote of a majority of the Trustees.

ARTICLE V

THE SHARES AND SHAREHOLDERS

5.1.Description of Shares. The interest of the Shareholders shall be divided into 300,000,000 shares of beneficial interest which shall be known collectively as “Shares”, all of which shall be validly issued, fully paid and non-assessable by the Trust upon receipt of full consideration for which they have been issued or without additional consideration if issued by way of share dividend or share split. There shall be two classes of Shares: 200,000,000 shares of one such class shall be known as “Common Shares”, $.01 par value per share, and 100,000,000 shares of the other such class shall be known as “Preferred Shares”. Each holder of Shares shall as a result thereof be deemed to have agreed to and be bound by the terms of this Declaration. The Shares may be issued for such consideration as the Trustees shall deem advisable. The Trustees are hereby expressly authorized at any time, and from time to time, to provide for issuance of Shares upon such terms and conditions and pursuant to such arrangements as the Trustees may determine. The Trustees are hereby expressly authorized at any time, and from time to time, without Shareholder approval, to amend this Declaration to increase or decrease the aggregate number of Shares or the number of Shares of any class that the Trust has the authority to issue.

The Trustees are hereby expressly authorized at any time, and from time to time, without Shareholder approval, to set (or change if such class has previously been established) the par value, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms, or conditions of redemption, of the Preferred Shares, and such Preferred Shares may further be divided by the Trustees into classes or series.

Except as otherwise determined by the Trustees with respect to any class or series of Preferred Shares, the holders of Shares shall be entitled to the rights and powers hereinafter set forth in this Section 5.1: The holders of Shares shall be entitled to receive, when and as declared from time to time by the Trustees out of any funds legally available for the purpose, such dividends or distributions as may be declared from time to time by the Trustees. In the event of the termination of the Trust pursuant to Section 7.1 or otherwise, or upon the distribution of its assets, the assets of the Trust available for payment and distribution to Shareholders shall be distributed ratably among the holders of Shares at the time outstanding in accordance with Section 7.2. All Shares shall have equal non-cumulative voting rights at the rate of one vote per Share, and equal dividend, distribution, liquidation and other rights, and shall have no preference, conversion, exchange, sinking fund or redemption rights. Absent a contrary written agreement of the Trust authorized by the Trustees, and notwithstanding any other determination by the Trustees with respect to any class or series of Preferred Shares, no holder of Shares or Preferred Shares shall be entitled as a matter of right to subscribe for or purchase any part of any new or additional issue of Shares of any class whatsoever of the Trust, or of securities convertible into any shares of any class whatsoever of the Trust, whether now or hereafter authorized and whether issued for cash or other consideration or by way of dividend.

5.2.Certificates. At the election of the Trust, ownership of Shares may be evidenced by certificates in such form as the Trustees shall from time to time approve, specifying the number of Shares of the applicable class held by such Shareholder. Subject to Sections 5.6 and 5.14(c) hereof, such certificates shall be treated as negotiable and title thereto and to the Shares represented thereby shall be transferred by delivery thereof to the same extent in all respects as a stock certificate, and the Shares represented thereby, of a Maryland business corporation. Unless otherwise determined by the Trustees, such certificates shall be signed by the Chairman, if any, and the President and shall be countersigned by a transfer agent, and registered by a registrar if any, and such signatures may be facsimile signatures in accordance with Section 3.2(d) hereof. There shall be filed with each transfer agent a copy of the form of certificate so approved by the Trustees, certified by the Chairman, President, or Secretary, and such form shall continue to be used unless and until the Trustees approve some other form.

In furtherance of the provisions of Sections 5.1 and 5.14(c) hereof, each Certificate evidencing Shares shall contain a legend imprinted thereon to substantially the following effect or such other legend as the Trustees may from time to time adopt:

REFERENCE IS MADE TO THE DECLARATION OF TRUST OF THE TRUST FOR A STATEMENT OF ALL THE DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF EACH CLASS OR SERIES OF SHARES THAT THE TRUST IS AUTHORIZED TO ISSUE, THE VARIATIONS IN THE RELATIVE RIGHTS AND PREFERENCES OF ANY PREFERRED OR SPECIAL CLASS OF SHARES IN SERIES, TO THE EXTENT THEY HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF THE TRUSTEES TO FIX

12

AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES. ANY SUCH STATEMENT SHALL BE FURNISHED WITHOUT CHARGE ON REQUEST TO THE TRUST AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.

IF NECESSARY TO EFFECT COMPLIANCE BY THE TRUST WITH REQUIREMENTS OF THE INTERNAL REVENUE CODE RELATING TO REAL ESTATE INVESTMENT TRUSTS, THE PURPORTED TRANSFER OF THE SHARES EVIDENCED BY THIS CERTIFICATE MAY BE PROHIBITED AND OR INVALIDATED UPON THE TERMS AND CONDITIONS SET FORTH IN THE DECLARATION OF TRUST. THE TRUST WILL FURNISH A COPY OF SUCH TERMS AND CONDITIONS TO THE REGISTERED HOLDER OF THIS CERTIFICATE UPON REQUEST AND WITHOUT CHARGE.

5.3.Fractional Shares. In connection with any issuance of Shares, the Trustees may issue fractional Shares or may adopt provisions for the issuance of scrip including, without limitation, the time within which any such scrip must be surrendered for exchange into full Shares and the rights, if any, of holders of scrip upon the expiration of the time so fixed, the rights, if any, to receive proportional distributions, and the rights, if any, to redeem scrip for cash, or the Trustees may in their discretion, or if they see fit at the option of, each holder, provide in lieu of scrip for the adjustment of the fractions in cash. The provisions of Section 5.2 hereof relative to certificates for Shares shall apply so far as applicable to such scrip, except that such scrip may in the discretion of the Trustees be signed by a transfer agent alone.

5.4.Legal Ownership of Trust Estate. The legal ownership of the Trust Estate and the right to conduct the business of the Trust are vested exclusively in the Trustees (subject to Section 3.2(s)), and the Shareholders shall have no interest therein (other than beneficial interest in the Trust conferred by their Shares issued hereunder) and they shall have no right to compel any partition, division, dividend or distribution of the Trust or any of the Trust Estate.

5.5.Shares Deemed Personal Property. The Shares shall be personal property and shall confer upon the holders thereof only the interest and rights specifically set forth or provided for in this Declaration. The death, insolvency or incapacity of a Shareholder shall not dissolve or terminate the Trust or affect its continuity nor give his legal representative any rights whatsoever, whether against or in respect of other Shareholders, the Trustees or the Trust Estate or otherwise, except the sole right to demand and, subject to the provisions of this Declaration, the Bylaws and any requirements of law, to receive a new certificate for Shares registered in the name of such legal representative, in exchange for the certificate held by such Shareholder.

5.6.Share Record; Issuance and Transferability of Shares. Records shall be kept by or on behalf of and under the direction of the Trustees, which shall contain the names and addresses of the Shareholders, the number of Shares held by them respectively, and the numbers of the certificates representing the Shares, and in which there shall be recorded all transfers of Shares. The Trust, the Trustees and the officers, employees and agents of the Trust shall be entitled to deem the Persons in whose names certificates are registered on the records of the Trust to be the absolute owners of the Shares represented thereby for all purposes of the Trust; but nothing herein shall be deemed to preclude the Trustees or officers, employees or agents of the Trust from inquiring as to the actual ownership of Shares. Until a transfer is duly effected on the records of the Trust, the Trustees shall not be affected by any notice of such transfer, either actual or constructive.

Shares shall be transferable on the records of the Trust only by the record holder thereof or by his agent thereunto duly authorized in writing upon delivery to the Trustees or a transfer agent of the certificate or certificates therefor, properly endorsed or accompanied by duly executed instruments of transfer and accompanied by all necessary documentary stamps together with such evidence of the genuineness of each such endorsement, execution or authorization and of other matters as may reasonably be required by the Trustees or such transfer agent. Upon such delivery, the transfer shall be recorded in the records of the Trust and a new certificate for the Shares so transferred shall be issued to the transferee and in case of a transfer of only a part of the Shares represented by any certificate, a new certificate for the balance shall be issued to the transferor. Any Person becoming entitled to any Shares in consequence of the death of a Shareholder or otherwise by operation of law shall be recorded as the holder of such Shares and shall receive a new certificate therefor but only upon delivery to the Trustees or a transfer agent of instruments and other evidence required by the Trustees or the transfer agent to demonstrate such entitlement, the existing certificate for such Shares and such releases from applicable governmental authorities as may be required by the Trustees or transfer agent. In case of the loss, mutilation or destruction of any certificate for shares, the Trustees may issue or cause to be issued a replacement certificate on such terms and subject to such rules and regulations as the Trustees may from time to time prescribe. Nothing in this Declaration shall impose upon the Trustees or a transfer agent a duty, or limit their rights, to inquire into adverse claims.

5.7.Dividends or Distributions to Shareholders. Subject to Section 5.1, the Trustees may from time to time declare and pay to Shareholders such dividends or distributions in cash, property or assets of the Trust or Securities issued by the Trust, out of current or accumulated income, capital, capital gains, principal, interest, surplus, proceeds from the increase or financing or refinancing of Trust obligations, or from the sale of portions of the Trust Estate or from any other source as the Trustees in their

13

discretion shall determine. Shareholders shall have no right to any dividend or distribution unless and until declared by the Trustees. The Trustees shall furnish the Shareholders with a statement in writing advising as to the source of the funds so distributed not later than ninety (90) days after the close of the fiscal year in which the distribution was made.

5.8.Transfer Agent, Dividend Disbursing Agent and Registrar. The Trustees shall have power to employ one or more transfer agents, dividend disbursing agents and registrars (including the Advisor or its Affiliates) and to authorize them on behalf of the Trust to keep records to hold and to disburse any dividends or distributions and to have and perform, in respect of all original issues and transfers of Shares, dividends and distributions and reports and communications to Shareholders, the powers and duties usually had and performed by transfer agents, dividend disbursing agents and registrars of a Maryland business corporation.

5.9.Shareholders’ Meetings. There shall be an annual meeting of the Shareholders, at such time and place as shall be determined by or in the manner prescribed in the Bylaws, at which the Trustees shall be elected and any other proper business may be conducted. The Annual Meeting of Shareholders shall be held no fewer than 30 days after delivery to the Shareholders of the Annual Report and within six (6) months after the end of each fiscal year, commencing with the fiscal year ending December 31, 1995. Special meetings of Shareholders may only be called by a majority of the Trustees. If there shall be no Trustees, the officers of the Trust shall promptly call a special meeting of the Shareholders entitled to vote for the election of successor Trustees.

No business shall be transacted by the Shareholders at a special meeting other than business that is either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Trustees (or any duly authorized committee thereof) or (ii) otherwise properly brought before the Shareholders by or at the direction of the Trustees.

The holders of Shares entitled to vote at the meeting representing a majority of the total number of votes authorized to be cast by Shares then outstanding and entitled to vote on any question present in person or by proxy shall constitute a quorum at any such meeting for action on such question. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, without regard to class, whether or not a quorum is present, and, except as otherwise provided in the Bylaws, the meeting may be reconvened without further notice. At any reconvened session of the meeting at which there shall be a quorum, any business may be transacted at the meeting as originally noticed.

Except as otherwise clearly indicated in this Declaration or the Bylaws, whenever any action is to be taken by the Shareholders, it shall be authorized by the affirmative vote of the holders of Shares representing a majority of the total number of votes authorized to be cast by shares then outstanding and entitled to vote thereon. At all elections of Trustees, voting by Shareholders shall be conducted under the non-cumulative method and the election of Trustees shall be by the affirmative vote of the holders of Shares representing a majority of the total number of votes authorized to be cast by shares then outstanding and entitled to vote thereon; provided, however, the election of a Managing Trustee or an Independent Trustee in an uncontested election, which is an election in which the number of nominees for election equals (or is less than) the number to be elected at the meeting, shall be by the affirmative vote of Shares representing a majority of the total number of Share votes cast.

Whenever Shareholders are required or permitted to take any action by a vote at a meeting of Shareholders, at any time any of the outstanding Shares are held by a Person other than HRP, such action shall not be taken except by such a vote at such a meeting of Shareholders and the Shareholders shall have no power or right to take any action by executing written consents in lieu thereof.

5.10.Proxies. Whenever the vote or consent of a Shareholder entitled to vote is required or permitted under this Declaration, such vote or consent may be given either directly by such Shareholder or by a proxy in the form prescribed in, and subject to the provisions of, the Bylaws. The Trustees may solicit such proxies from the Shareholders or any of them entitled to vote in any matter requiring or permitting the Shareholders’ vote or consent.

5.11.[Reserved.]

5.12.Fixing Record Date. The Bylaws may provide for fixing or, in the absence of such provision, the Trustees may fix, in advance, a date as the record date for determining the Shareholders entitled to notice of or to vote at any meeting of Shareholders or to express consent to any proposal without a meeting or for the purpose of determining Shareholders entitled to receive payment of any dividend or distribution (whether before or after termination of the Trust) or any Annual Report or other communication from the Trustees, or for any other purpose.

5.13.Notice to Shareholders. Any notice of meeting or other notice, communication or report to any Shareholder shall be deemed duly delivered to such Shareholder when such notice, communication or report is deposited, with postage thereon prepaid, in the United States mail, addressed to such Shareholder at his address as it appears on the records of the Trust or is delivered in person to such Shareholder.

14

5.14.Shareholders’ Disclosure; Restrictions on Share Transfer; Limitation on Holdings. At such time as any Person other than HRP shall hold any Shares of Beneficial Interest and thereafter:

(a)Every Shareholder shall upon demand disclose to the Trustees in writing such information with respect to direct and indirect ownership of any Shares as the Trustees deem necessary or appropriate, in their discretion, to comply with the REIT Provisions of the Internal Revenue Code, or to comply with the requirements of any taxing authority or governmental agency.

(b)Whenever in good faith the Trustees deem it reasonably necessary to protect the status of the Trust as a REIT under the Internal Revenue Code, they may require a statement or affidavit from each Shareholder or proposed transferee of Shares setting forth the number of Shares already owned, directly or indirectly, by such Shareholder or proposed transferee and any related Person specified in the form prescribed by the Trustees for that purpose. If, in the opinion of the Trustees, which shall be binding upon any Shareholder and any proposed transferee of Shares, but subject to subsection (i) of this Section 5.14, any proposed transfer of Shares would jeopardize the status of the Trust as a REIT under the Internal Revenue Code, the Trustees shall have the right, but not the duty, to refuse to permit such transfer.

(c)As a condition to the transfer (including, without limitation, any sale, transfer, gift, assignment, devise or other disposition of Shares, whether voluntary or involuntary, whether beneficially or of record, and whether effected constructively, by operation of law or otherwise) and/or registration of transfer of any Shares (“Excess Shares”) which could in the opinion of the Trustees result in

(i)direct or indirect ownership (as hereafter defined) of Shares representing more than 9.8% in number, value or voting power of the total Shares outstanding becoming concentrated in the hands of one owner other than an Excepted Person (as such term is defined hereafter),

(ii)the outstanding Shares of the Trust being owned by fewer than one hundred (100) persons or

(iii)the Trust being “closely held” within the meaning of Section 856(h) of the Internal Revenue Code,

such potential owner (a “Proposed Transferee”) shall file with the Trust the statement or affidavit described in subsection (b) of this Section 5.14 no later than the fifteenth (15th) day prior to any proposed transfer, registration of transfer or transaction which, if consummated, would have any of the results set forth above; provided, however, that the Trustees may waive such requirement of prior notice upon determination that such waiver is in the best interests of the Trust. Subject to the subsection (i) of this Section 5.14, the Trustees shall have the power and right (i) to refuse to transfer or issue Excess Shares or share certificates to any Proposed Transferee whose acquisition of such Excess Shares would, in the opinion of the Trustees, result in the direct or indirect beneficial ownership of any Excess Shares by a Person other than an Excepted Person and (ii) to treat such Excess Shares as having been transferred not to the Proposed Transferee but rather to a trustee, who shall be designated by the Trustees but unaffiliated with either the Trust or the Proposed Transferee, for the benefit of one or more organizations described in Sections 170(b)(1)(a) and 170(c) of the Internal Revenue Code (each such organization being referred to herein as a “Charitable Beneficiary”) that have been designated by the Trustees. Any such trust shall be deemed to have been established by the Shareholder for the benefit of the Charitable Beneficiary on the day prior to the date of the purported transfer to the Proposed Transferee, which purported transfer shall be void ab initio and the Proposed Transferee shall be deemed never to have acquired any interest in or with respect to the Excess Shares purportedly transferred.

Any dividends paid or other distributions made with respect to any Excess Shares prior to the Trust discovering that such Excess Shares have been transferred into trust for the Charitable Beneficiary as set forth above shall be repaid and disgorged by the Proposed Transferee to the Trust and any dividend or other distribution declared but still unpaid or unmade shall be rescinded as void ab initio with respect to the Proposed Transferee. Any dividends or other distributions so repaid, disgorged or rescinded shall then be paid over to the trustee and held in trust for the Charitable Beneficiary. Any vote cast by the Proposed Transferee prior to the Trust discovering that such Excess Shares had been transferred to the trustee shall be rescinded as being void ab initio and the Proposed Transferee shall be deemed to have given an irrevocable proxy to the trustee to vote the Excess Shares held for the benefit of the Charitable Beneficiary.

All Excess Shares shall be deemed to be offered by the trustee for sale to the Trust or a Person or Persons designated by the Trust for a period of ninety (90) days following the receipt by the Trust of notice of the event that has caused the Excess Shares to be transferred into trust as set forth above at a price equal to the lesser of (i) the price that was paid for the Excess Shares by the

15

Proposed Transferee and (ii) the market price of the Excess Shares on the date that the Trust or its designee accepts the trustee’s offer to sell.

At the direction of the Trust, the trustee of any such trust shall sell any Excess Shares held by the trust to a Person whose ownership of such shares will not, in the judgment of the Trustees, jeopardize the Trust’s status as a REIT (a “Permitted Transferee”). If such a transfer is made, the interests of the Charitable Beneficiary with respect to the Excess Shares shall cease and the proceeds of the sale to the Permitted Transferee shall be payable to the Proposed Transferee and to the Charitable Beneficiary as follows: The Proposed Transferee shall be entitled to receive the lesser of (i) the price paid by the Proposed Transferee for the Excess Shares or, if the Proposed Transferee did not give value for the Excess Shares, the market price of the Excess Shares on the day of the event that resulted in the Excess Shares being transferred into trust as set forth above, and (ii) the price received by the trustee from the sale of the Excess Shares. Any proceeds from the sale of Excess Shares in excess of the amount payable to the Proposed Transferee as set forth above shall be payable to the Charitable Beneficiary.

The following Persons are “Excepted Persons”: (i) HRP, (ii) HRPT Advisors, Inc., a Delaware corporation (“Advisors”), (iii) Affiliates of HRP or Advisors, (iv) Persons to whom HRP’s or Advisor’s share ownership is attributable or whose share ownership is attributable to HRP or Advisors and (v) other Persons approved by the Trustees, at their option and in their sole discretion; provided, however, that such approval shall not be granted to any Person (and shall not extend to any Person described in clause (iii) above) whose ownership of more than 9.8% (individually or by attribution) in number or value of the total Shares outstanding would result, directly, indirectly or as a result of attribution of ownership, in termination of the status of the Trust as a REIT under the Internal Revenue Code.

If the foregoing provisions shall be determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the Proposed Transferee of such Excess Shares shall be deemed, at the option of the Trust, to have acted as agent on behalf of the Trust in acquiring such Excess Shares and to hold such Excess Shares on behalf of the Trust.

(d)Notwithstanding any other provision of this Declaration to the contrary, but subject to subsection (i) of this Section 5.14, any purported acquisition of shares of the Trust (whether such purported acquisition results from the direct or indirect acquisition or ownership (as hereafter defined) of Shares) which would result in the disqualification of the Trust as a REIT shall be null and void. Any such shares may be treated by the Trustees in the manner prescribed for Excess Shares in subsection (c) of this Section 5.14.

(e)Subject only to subsection (i) of this Section 5.14, nothing contained in this Section 5.14 or in any other provision of this Declaration shall limit the authority of the Trustees to take such other action as they deem necessary or advisable to protect the Trust and the interests of the Shareholders by preserving the Trust’s status as a REIT.

(f)If any provision of this Section 5.14 or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issues, the validity of the remaining provision shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. To the extent this Section 5.14 may be inconsistent with any other provision of this Declaration, this Section 5.14 shall be controlling.

(g)It shall be the policy of the Trustees to consult with the appropriate officials of any stock exchange on which the relevant Shares of the Trust are listed as far as reasonably possible in advance of the final exercise (at any time when the shares are listed on such exchange) of any powers granted by sections (b) or (c) of this Section 5.14.

(h)For purposes of this Declaration, Shares not owned directly shall be deemed to be owned indirectly by a Person if that Person or a group including that Person would be the beneficial owner of such shares, as defined as of May 1, 1995, in Rule 13d-3 under the Securities Exchange Act of 1934 and/or would be considered to own such shares by reason of the attribution rules of Section 544 or Section 856(h) of the Internal Revenue Code.

(i)Nothing in this Section 5.14 shall preclude the settlement of any transaction entered into through the facilities of the New York Stock Exchange.

5.15.Special Voting Provisions relating to Certain Business Combinations and Control Shares. The Trust elects not to be governed by the provisions of Subtitles 6 and 7 of Title 3 of the Corporations and Associations Article of the Annotated Code of Maryland.

16

ARTICLE VI

LIABILITY OF TRUSTEES, SHAREHOLDERS, OFFICERS,
EMPLOYEES AND AGENTS, AND OTHER MATTERS

6.1.Limitation of Liability of Shareholders, Trustees, Officers, Employees and Agents for Obligations of the Trust. The Trustees and the officers, employees and agents (including the Advisor) of the Trust, in incurring any debts, liabilities or obligations or in taking or omitting any other actions for or in connection with the Trust, are, and shall be deemed to be, acting as trustees, officers, employees or agents of the Trust and not in their own individual capacities. Except as otherwise provided in Sections 6.3 hereof with respect to liability of Trustees or officers, agents or employees of the Trust to the Trust or to Shareholders, no Shareholder, Trustee or officer, employee or agent (including the Advisor) of the Trust shall be liable for any debt, claim, demand, judgment decree, liability or obligation of any kind (in tort, contract or otherwise) of, against or with respect to the Trust or arising out of any action taken or omitted for or on behalf of the Trust, and the Trust shall be solely liable therefor and resort shall be had solely to the Trust Estate for the payment or performance thereof, and no Shareholder, Trustee or officer, employee or agent (including the Advisor) of the Trust shall be subject to any personal liability whatsoever, in tort, contract or otherwise, to any other Person or Persons in connection with the Trust Estate or the affairs of the Trust (or any actions taken or omitted for or on behalf of the Trust), and all such other Persons shall look solely to the Trust Estate for satisfaction of claims of any nature arising in connection with the Trust Estate or the affairs of the Trust (or any action taken or omitted for or on behalf of the Trust).

6.2.Express Exculpatory Clauses and Instruments. Any written instrument creating an obligation of the Trust shall, to the extent practicable, include a reference to this Declaration and provide that neither the Shareholders nor the Trustees nor any officers, employees or agents (including the Advisor) of the Trust shall be liable thereunder and that all Persons shall look solely to the Trust Estate for the payment of any claim thereunder or for the performance thereof; however, the omission of such provision from any such instrument shall not render the Shareholders, any Trustee, or any officer, employee or agent (including the Advisor) of the Trust liable nor shall the Shareholders, any Trustee or any officer, employee or agent (including the Advisor) of the Trust be liable to any one for such omission.

6.3.Limitation of Liability of Trustees, Officers, Employees and Agents to the Trust and to Shareholders for Acts and Omissions. To the fullest extent permitted by Maryland statutory and decisional law, as amended or interpreted, no Trustee, officer, employee or agent of the Trust (a) shall be personally liable to the Trust or its Shareholders and (b) shall have any greater duties than those established by this Declaration of Trust or, in cases as to which such duties are not so established, than those to which the directors, officers, employees and agents of a Maryland business corporation are subject from time to time. No amendment of this Declaration or repeal of any of its provisions shall limit or eliminate the limitation on liability provided to Trustees, officers, employees and agents of the Trust hereunder with respect to any act or omission occurring prior to such amendment or repeal.

6.4.Indemnification and Reimbursement of Trustees, Officers, Employees, Agents and Certain Other Persons.

(a)The Trust shall indemnify (i) its Trustees and officers, whether serving the Trust or at its request any other entity, to the full extent required or permitted by the General Laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures and to the full extent permitted by law and (ii) other employees and agents to such extent as shall be authorized by the Trustees of the Trust or the Bylaws and be permitted by law. The foregoing rights of indemnification shall not be exclusive of any other rights to which those seeking indemnification may be entitled. The Trustees may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such Bylaws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. No amendment of this Declaration of Trust or repeal of any of its provisions shall limit or eliminate the right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal.

(b)Notwithstanding anything herein to the contrary, and to the fullest extent permitted by Maryland statutory or decisional law, as amended or interpreted, no Trustee or officer of the Trust shall be personally liable to the Trust or its shareholders for money damages. No amendment of this Declaration or repeal of any of its provisions shall limit or eliminate the limitation on liability provided to Trustees and officers hereunder with respect to any act or omission occurring prior to such amendment or repeal.

6.5.Indemnification and Reimbursement of Shareholders. Any Shareholder made a party to any action, suit or proceeding or against him a claim or liabilities asserted by reason of the fact that he, his testate or intestate was or is a Shareholder shall be indemnified and held harmless by the Trust against judgments, fines, amounts paid on account thereof (whether in settlement or otherwise) and reasonable expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense of such action, suit, proceeding, claim or alleged liability or in connection with any appeal therein, whether or not the same proceeds to judgment or is settled or otherwise brought to a conclusion; provided, however, that such Shareholder gives prompt notice thereof, executes such documents and takes such action as will permit the Trust to conduct the defense or settlement thereof and cooperates therein. In the event that the assets of the Trust Estate are insufficient to satisfy the Trust’s indemnity obligations hereunder, each Shareholder shall be entitled to such indemnification pro rata from the Trust Estate.

17

6.6.Right of Trustees, Officers, Employees and Agents to Own Shares or Other Property and to Engage in Other Business. Any Trustee or officer, employee or agent of the Trust may acquire, own, hold and dispose of Shares in the Trust, for his individual account, and may exercise all rights of a Shareholder to the same extent and in the same manner as if he were not a Trustee or officer, employee or agent of the Trust. Any Trustee or officer, employee or agent of the Trust may, in his personal capacity or in the capacity of trustee, officer, director, stockholder, partner, member, advisor or employee of any Person or otherwise, have business interests and engage in business activities similar to or in addition to those relating to the Trust, which interests and activities may be similar to and competitive with those of the Trust and may include the acquisition, syndication, holding, management, development, operation or disposition, for his own account, or for the account of such Person or others, of interests in Mortgages, interests in Real Property, or interests in Persons engaged in the real estate business. Each Trustee, officer, employee and agent of the Trust shall be free of any obligation to present to the Trust any investment opportunity which comes to him in any capacity other than solely as Trustee, officer, employee or agent of the Trust even if such opportunity is of a character which, if presented to the Trust, could be taken by the Trust. Subject to the provisions of Section 6.8, any Trustee or officer, employee or agent of the Trust may be interested as trustee, officer, director, stockholder, partner, member, advisor or employee of, or otherwise have a direct or indirect interest in, any Person who may be engaged to render advice or services to the Trust, and may receive compensation from such Person as well as compensation as Trustee, officer, employee or agent or otherwise hereunder. None of these activities shall be deemed to conflict with his duties and powers as Trustee or officer, employee or agent of the Trust.

6.7.Transactions Between Trustees, Officers, Employees or Agents and the Trust. Except as otherwise provided by this Declaration, and in the absence of fraud, a contract, act or other transaction between the Trust and any other Person in which the Trust is interested, shall be valid, and no Trustee or officer, employee or agent of the Trust shall have any liability as a result of entering into any such contract, act or transaction, even though (a) one or more of the Trustees or officers, employees or agents of the Trust are directly or indirectly interested in or connected with or are trustees, partners, directors, employees, officers or agents of such other Person, or (b) one or more of the Trustees or officers, employees or agents of the Trust individually or jointly with others, is a party or are parties to, or are directly or indirectly interested in or connected with, such contract, act or transaction; provided that in each such case (i) such interest or connection is disclosed or known to the Trustees and thereafter the Trustees authorize or ratify such contract, act or other transaction by affirmative vote of a majority of the Trustees who are not so interested or (ii) such interest or connection is disclosed or known to the Shareholders, and thereafter such contract, act or transaction is approved by Shareholders holding a majority of the Shares then outstanding and entitled to vote thereon.

Notwithstanding any other provision of this Declaration, the Trust may engage in a transaction with (a) any Trustee, officer, employee or agent of the Trust (acting in his individual capacity), (b) any director, trustee, partner, officer, employee or agent (acting in his individual capacity) of the Advisor or any other investment advisor of the Trust, (c) the Advisor or any other investment advisor of the Trust or (d) an Affiliate of any of the foregoing, provided that such transaction has, after disclosure of such affiliation, been approved or ratified by the affirmative vote of a majority of the Trustees not having any interest in such transaction and not Affiliates of any party to the transaction after a determination by them that such transaction is fair and reasonable to the Trust and the Shareholders.

This Section 6.7 shall not prevent any sale of Shares issued by the Trust for the public offering thereof in accordance with a registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933. The Trustees are not restricted by this Section 6.7 from forming a corporation, partnership, trust or other business association owned by any Trustee, officer, employee or agent or by their nominees for the purpose of holding title to property of the Trust or managing property of the Trust, provided that the Trustees make a determination that the creation of such entity for such purpose is in the best interest of the Trust.

6.8.Persons Dealing with Trustees, Officers, Employees or Agents. Any act of the Trustees or of the officers, employees or agents of the Trust purporting to be done in their capacity as such, shall, as to any Persons dealing with such Trustees, officers, employees or agents, be conclusively deemed to be within the purposes of this Trust and within the powers of such Trustees or officers, employees or agents. No Person dealing with the Trustees or any of them or with the officers, employees or agents of the Trust shall be bound to see to the application of any funds or property passing into their hands or control. The receipt of the Trustees or any of them, or of authorized officers, employees or agents of the Trust, for moneys or other consideration, shall be binding upon the Trust.

6.9.Reliance. The Trustees and the officers, employees and agents of the Trust may consult with counsel (which may be a firm in which one or more of the Trustees or the officers, employees or agents of the Trust is or are members) and the advice or opinion of such counsel shall be full and complete personal protection to all the Trustees and the officers, employees and agents of the Trust in respect of any action taken or suffered by them in good faith and in reliance on or in accordance with such advice or opinion.

18

In discharging their duties, Trustees or officers, employees or agents of the Trust, when acting in good faith, may rely upon financial statements of the Trust represented to them to fairly present the financial position or results of operations of the Trust by the chief financial officer of the Trust or the officer of the Trust having charge of its books of account, or stated in a written report by an independent certified public accountant fairly to present the financial position or results of operations of the Trust. The Trustees and the officers, employees and agents of the Trust may rely, and shall be personally protected in acting, upon any instrument or other document believed by them to be genuine.

ARTICLE VII

DURATION, AMENDMENT AND TERMINATION OF TRUST

7.1.Duration of Trust. The duration of the Trust shall be perpetual; provided, however, the Trust may be terminated at any time by the affirmative vote at a meeting of Shareholders of the holders of Shares representing two-thirds of the total number of Shares then outstanding and entitled to vote thereon.

7.2.Termination of Trust.

(a)Upon the termination of the Trust:

(i)the Trust shall carry on no business except for the purpose of winding up its affairs;

(ii)the Trustees shall proceed to wind up the affairs of the Trust and all the powers of the Trustees under this Declaration shall continue until the affairs of the Trust shall have been wound up, including the power to fulfill or discharge the contracts of the Trust, collect its assets, sell, convey, assign, exchange, transfer or otherwise dispose of all or any part of the remaining Trust Estate to one or more Persons at public or private sale (for consideration which may consist in whole or in part of cash, Securities or other property of any kind), discharge or pay its liabilities, and do all other acts appropriate to liquidate its business; and

(iii)after paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and refunding agreements, as they deem necessary for their protection, the Trustees may distribute the remaining Trust Estate (in cash or in kind or partly each) among the Shareholders according to their respective rights.

(b)After termination of the Trust and distribution of the Trust Estate to the Shareholders as herein provided, the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination and such distribution, a copy of which instrument shall be filed with the Maryland Department of Assessments and Taxation, and the Trustees shall thereupon be discharged from all further liabilities and duties hereunder and the rights and interests of all Shareholders shall thereupon cease.

7.3.Amendment Procedure. This Declaration may be amended (except that the provisions governing the personal liability of the Shareholders, Trustees and of the officers, employees and agents of the Trust and the prohibition of assessments upon Shareholders may not be amended in any respect that could increase the personal liability of such Shareholders, Trustees or officers, employees and agents of the Trust) at a meeting of Shareholders by holders of Shares representing a majority (or, with respect to amendments of Article IV, the second paragraph of Section 5.1, Section 7.1 or this Section 7.3, and amendments inconsistent with Sections 2.1 and 5.14, at least two-thirds (2/3)) of the total number of votes authorized to be cast in respect of Shares then outstanding and entitled to vote thereon. The approval of a two-thirds (2/3) majority of the Trustees shall also be required for any such amendment. A two-thirds (2/3) majority of the Trustees may, after fifteen (15) days written notice to the Shareholders, also amend this Declaration without the vote or consent of Shareholders if in good faith they deem it necessary to conform this Declaration to the requirements of the REIT Provisions of the Internal Revenue Code, but the Trustees shall not be liable for failing to do so. Actions by the Trustees pursuant to Section 5.1 or pursuant to Section 8.6(a) that result in an amendment to this Declaration shall be effected without vote or consent of Shareholders.

7.4.Amendments Effective. Any amendment pursuant to any Section of this Declaration shall not become effective until it is duly filed with the Maryland Department of Assessments and Taxation.

7.5.Transfer to Successor. The Trustees, with the affirmative vote, at a meeting approving a plan for this purpose, of the holders of Shares representing two-thirds (2/3) of all votes cast at a meeting at which a quorum is present, may (a) cause the organization of a limited partnership, partnership, corporation, association, trust or other organization to take over the Trust Estate and carry on the affairs of the Trust, (b) merge the Trust into, or sell, convey and transfer the Trust Estate to, any such limited partnership, partnership, corporation, association, trust or organization in exchange for Securities thereof, or beneficial interests therein, and the

19

assumption by such transferee of the liabilities of the Trust and (c) thereupon terminate this Declaration and deliver such shares, Securities or beneficial interests among the Shareholders in accordance with such plan.

ARTICLE VIII

MISCELLANEOUS

8.1.Applicable Law. This Declaration is executed and acknowledged by the Trustees with reference to the statutes and laws of the State of Maryland, and the rights of all parties and the construction and effect of every provision hereof shall be subject to and construed according to the statutes and laws of such State.

8.2.Index and Headings for Reference Only. The index and headings preceding the text, articles and sections hereof have been inserted for convenience and reference only and shall not be construed to affect the meaning, construction or effect of this Declaration.

8.3.Successors in Interest. This Declaration and the Bylaws shall be binding upon and inure to the benefit of the undersigned Trustees and their successors, assigns, heirs, distributees and legal representatives, and every Shareholder and his successors, assigns, heirs, distributees and legal representatives.

8.4.Inspection of Records. Trust records shall be available for inspection by Shareholders at the same time and in the same manner and to the extent that comparable records of a Maryland business corporation would be available for inspection by shareholders under the laws of the State of Maryland. Except as specifically provided for in this Declaration or in Title 8 of the Annotated Code of Maryland, Shareholders shall have no greater right than shareholders of a Maryland business corporation to require financial or other information from the Trust, Trustees or officers of the Trust. Any Federal or state securities administrator or the Maryland Department of Assessments and Taxation shall have the right, at reasonable times during business hours and for proper purposes, to inspect the books and records of the Trust.

8.5.Counterparts. This Declaration may be simultaneously executed in several counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument, which shall be sufficiently evidenced by any such original counterpart.

8.6.Provisions of the Trust in Conflict with Law or Regulations; Severability.

(a)The provisions of this Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that any one or more of such provisions (the “Conflicting Provisions”) are in conflict with the REIT Provisions of the Internal Revenue Code, the Conflicting Provisions shall be deemed never to have constituted a part of the Declaration; provided, however, that such determination by the Trustees shall not affect or impair any of the remaining provisions of this Declaration or render invalid or improper any action taken or omitted (including but not limited to the election of Trustees) prior to such determination. An amendment in recordable form signed by a majority of the Trustees setting forth any such determination and reciting that it was duly adopted by the Trustees, or a copy of this Declaration, with the Conflicting Provisions removed pursuant to such a determination, in recordable form, signed by a majority of the Trustees, shall be conclusive evidence of such determination when filed with the Maryland Department of Assessments and Taxation. The Trustees shall not be liable for failure to make any determination under this Section 8.6(a). Nothing in this Section 8.6(a) shall in any way limit or affect the right of the Trustees to amend this Declaration as provided in Section 7.3.

(b)If any provision of this Declaration shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other provision of this Declaration, and this Declaration shall be carried out as if any such invalid or unenforceable provision were not contained herein.

8.7.Certifications. The following certifications shall be final and conclusive as to any Persons dealing with the Trust:

(a)a certification of a vacancy among the Trustees by reason of resignation, removal, increase in the number of Trustees, incapacity, death or otherwise, when made in writing by a majority of the remaining Trustees;

(b)a certification as to the individuals holding office as Trustees or officers at any particular time, when made in writing by the secretary of the Trust;

20

(c)a certification that a copy of this Declaration or of the Bylaws is a true and correct copy thereof as then in force, when made in writing by the secretary of the Trust;

(d)a certification as to any actions by Trustees, other than the above, when made in writing by the secretary of the Trust or by any Trustee.

These amendments do not affect the total number of common shares of beneficial interest, $.01 par value (“Common Shares”), authorized or issued by the Trust. The amendment and restatement of the Declaration was authorized by the Board of Trustees of the Trust acting by unanimous written consent on August 18, 1995 and by at least two-thirds of the stockholders of the Trust by means of unanimous written consent obtained on August 18, 1995.

8.8.Indemnification of the Trust. Each shareholder will indemnify and hold harmless the Trust from and against all costs, expenses, penalties, fines and other amounts, including, without limitation, attorneys’ and other professional fees, whether third party or internal, arising from such shareholder’s violation of any provision of this Declaration or the Bylaws, including, without limitation, Section 5.14, and shall pay such sums to the Trust upon demand, together with interest on such amounts, which interest will accrue at the lesser of 15% per annum and the maximum amount permitted by law, from the date such costs or the like are incurred until the receipt of repayment by the Trust. Nothing in this Section shall create or increase the liability of any shareholders, trustees, officers, employees or agents of the Trust for actions taken on behalf of the Trust.

21

EX-3.2

Exhibit 3.2

HOSPITALITY PROPERTIES TRUST

AMENDED AND RESTATED

DECLARATION OF TRUST

Dated May 12, 1995

As Amended and Restated on August 21, 1995

and Amended on June 2, 1997

and Amended on May 24, 2006
and Amended on March 5, 2007
and Amended on May 15, 2007

and Amended on April 15, 2010
and Amended on January 18, 2012

and Amended on June 10, 2014

Table of Contents

		Page
ARTICLE I	THE TRUST; DEFINITIONS	4
1.1.	Name	4
1.2.	Place of Business	4
1.3.	Nature of Trust	5
1.4.	Definitions	5
ARTICLE II	TRUSTEES	6
2.1.	Number, Term of Office and Qualification of Trustees	6
2.2.	Compensation and Other Remuneration	7
2.3.	Resignation, Removal and Death of Trustees	7
2.4.	Vacancies	8
2.5.	Successor and Additional Trustees	8
2.6.	Actions by Trustees	8
2.7.	Committees	8
ARTICLE III	TRUSTEES’ POWERS	8
3.1.	Power and Authority of Trustees	8
3.2.	Specific Powers and Authority	9
3.3.	Bylaws	11
ARTICLE IV	INVESTMENT POLICY AND POLICIES WITH RESPECT TO CERTAIN DISTRIBUTIONS TO SHAREHOLDERS	11
4.1.	Statement of Policy	11
4.2.	Prohibited Investments and Activities	11
4.3.	Change in Investment Policies	12
ARTICLE V	THE SHARES AND SHAREHOLDERS	12
5.1.	Description of Shares	12
5.2.	Certificates, Ownership of Shares shall be evidenced by certificates	12
5.3.	Fractional Shares	13
5.4.	Legal Ownership of Trust Estate	13
5.5.	Shares Deemed Personal Property	13
5.6.	Share Record; Issuance and Transferability of Shares	13
5.7.	Dividends or Distributions to Shareholders	14
5.8.	Transfer Agent, Dividend Disbursing Agent and Registrar	14
5.9.	Shareholders’ Meetings	14
5.10.	Proxies	14
5.11.	[Reserved]	14
5.12.	Fixing Record Date	14
5.13.	Notice to Shareholders	15
5.14.	Shareholders’ Disclosure; Restrictions on Share Transfer; Limitation on Holdings	15
5.15.	Special Voting Provisions relating to Certain Business Combinations and Control Shares	16
ARTICLE VI	LIABILITY OF TRUSTEES, SHAREHOLDERS, OFFICERS, EMPLOYEES AND AGENTS, AND OTHER MATTERS	17

		Page
6.1.	Limitation of Liability of Shareholders, Trustees, Officers, Employees and Agents for Obligations of the Trust	17
6.2.	Express Exculpatory Clauses and Instruments	17
6.3.	Limitation of Liability of Trustees, Officers, Employees and Agents to the Trust and to Shareholders for Acts and Omissions	17
6.4.	Indemnification and Reimbursement of Trustees, Officers, Employees, Agents and Certain Other Persons	17
6.5.	Indemnification and Reimbursement of Shareholders	17
6.6.	Right of Trustees, Officers, Employees and Agents to Own Shares or Other Property and to Engage in Other Business	18
6.7.	Transactions Between Trustees, Officers, Employees or Agents and the Trust	18
6.8.	Persons Dealing with Trustees, Officers, Employees or Agents	18
6.9.	Reliance	19
ARTICLE VII	DURATION, AMENDMENT AND TERMINATION OF TRUST	19
7.1.	Duration of Trust	19
7.2.	Termination of Trust	19
7.3.	Amendment Procedure	19
7.4.	Amendments Effective	19
7.5.	Transfer to Successor	20
ARTICLE VIII	MISCELLANEOUS	20
8.1.	Applicable Law	20
8.2.	Index and Headings for Reference Only	20
8.3.	Successors in Interest	20
8.4.	Inspection of Records	20
8.5.	Counterparts	20
8.6.	Provisions of the Trust in Conflict with Law or Regulations; Severability	20
8.7.	Certifications	20
8.8.	Indemnification of the Trust	21

AMENDED AND RESTATED

DECLARATION OF TRUST

OF

HOSPITALITY PROPERTIES TRUST

Dated May 12, 1995

As Amended and Restated on August 21, 1995

and Amended on June 2, 1997

and Amended on May 24, 2006
and Amended on March 5, 2007
and Amended on May 15, 2007
and Amended on April 15, 2010

and Amended on January 18, 2012

and Amended on June 10, 2014

The Declaration of Hospitality Properties Trust, as filed with the Maryland Department of Assessments and Taxation on May 12, 1995 is hereby amended and restated as follows:

DECLARATION OF TRUST made as of the date set forth above by the undersigned Trustees.

WITNESSETH:

WHEREAS, the Trustees desire to create a trust for the principal purpose of investing in real property and interests therein; and

WHEREAS, the Trustees desire that such trust qualify as a “qualified REIT subsidiary” as long as it shall remain wholly owned by Health and Retirement Properties Trust (“HRP”) and, thereafter, as a “real estate investment trust” under the REIT Provisions of the Internal Revenue Code, and as a “real estate investment trust” under Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland; and

WHEREAS, in furtherance of such purpose the Trustees intend to acquire certain real property and interests therein and to hold, manage and dispose of all such property as Trustees in the manner hereinafter stated; and

WHEREAS, it is proposed that the beneficial interest in the Trust be divided into transferable Shares of Beneficial Interest, evidenced by certificates therefor, as hereinafter provided;

NOW, THEREFORE, it is hereby agreed and declared that the Trustees will hold any and all property of every type and description which they are acquiring or may hereafter acquire as Trustees, together with the proceeds thereof, in trust, to manage and dispose of the same for the benefit of the holders from time to time of the Shares of Beneficial Interest being issued and to be issued hereunder in the manner and subject to the stipulations contained herein.

ARTICLE I

THE TRUST; DEFINITIONS

1.1.Name. The name of the Trust created by this Declaration of Trust shall be “Hospitality Properties Trust” and so far as may be practicable the Trustees shall conduct the Trust’s activities, execute all documents and sue or be sued under that name, which name (and the word “Trust” wherever used in this Declaration of Trust, except where the context otherwise requires) shall refer to the Trustees collectively but not individually or personally nor to the officers, agents, employees or Shareholders of the Trust or of such Trustees. Under circumstances under which the Trustees determine that the use of such name is not practicable or under circumstances in which the Trustees are contractually bound to change that name, they may use such other designation or they may adopt another name under which the Trust may hold property or conduct its activities.

1.2.Places of Business. The Trust shall maintain an office in Maryland at The Prentice-Hall Corporation System, Maryland, 11 East Chase Street, Baltimore City, Maryland, 21202 or such other place in Maryland as the Trustees may determine

4

from time to time. The Resident Agent of the Trust at such office shall be The Prentice-Hall Corporation System, Maryland. The Trust may change such Resident Agent from time to time as the Trustees shall determine. The Trust may have such other offices or places of business within or without the State of Maryland as the Trustees may from time to time determine.

1.3.Nature of Trust. The Trust shall be a real estate investment trust within the meaning of Title 8 of the Corporations and Associations Article of the Annotated Code of Maryland. It is also intended that the Trust shall carry on a business as a “qualified REIT subsidiary” as described in the REIT Provisions of the Internal Revenue Code for so long as it is wholly owned by HRP and thereafter shall qualify and carry on business as a “real estate investment trust” as described therein. The Trust is not intended to be, shall not be deemed to be, and shall not be treated as a general partnership, limited partnership, joint venture, corporation or joint stock company (but nothing herein shall preclude the Trust from being treated for tax purposes as an association under the Internal Revenue Code); nor shall the Trustees or Shareholders or any of them for any purpose be, nor be deemed to be, nor be treated in any way whatsoever as, liable or responsible hereunder as partners or joint venturers. The relationship of the Shareholders to the Trustees shall be solely that of beneficiaries of the Trust in accordance with the rights conferred upon them by this Declaration.

1.4.Definitions. The terms defined in this Section 1.4, wherever used in this Declaration, shall, unless the context otherwise requires, have the respective meanings hereinafter specified. Whenever the singular number is used in this Declaration and when permitted by the context, the same shall include the plural, and the masculine gender shall include the feminine and neuter genders, and vice versa. Where applicable, calculations to be made pursuant to any such definition shall be made in accordance with generally accepted accounting principles as in effect from time to time except as otherwise provided in such definition.

(a)Advisor. “Advisor” shall mean HRPT Advisors, Inc., a Delaware corporation, or such other Person as the Trustees shall from time to time engage to supervise the operation of the Trust and to provide the Trust with a program of investments.

(b)Affiliate. “Affiliate” shall mean, as to any Person, (i) any other Person who, at the time of determination, is directly or indirectly controlling, controlled by or under common control with such Person, (ii) any other Person who, at such time, owns beneficially, directly or indirectly, five percent (5%) or more of the outstanding capital stock, shares or equity interests of such Person, or (iii) any Person who is at the time of determination an officer, director, employee, general partner or trustee of any such Person or of any Person who, at such time, is controlling, controlled by or under common control with such Person (excluding any trustee who is not otherwise an Affiliate of such Person).

(c)Annual Meeting of Shareholders. “Annual Meeting of Shareholders” shall mean the meeting described in the first sentence of Section 5.9.

(d)Annual Report. “Annual Report” shall have the meaning set forth in Section 5.11(a).

(e)Book Value. “Book Value” of an asset or assets shall mean the value of such asset or assets of the Trust on the books of the Trust, without deduction for depreciation or other asset valuation reserves and without deduction for mortgages or other security interests to which such asset or assets are subject, except that no asset shall be valued at more than its fair market value as determined by or under procedures adopted by the Trustees, and the underlying assets of a partnership, joint venture or other form of indirect ownership, to the extent of the Trust’s interest therein, shall be valued as if owned directly by the Trust.

(f)Bylaws. “Bylaws” shall have the meaning set forth in Section 3.3.

(g)Declaration. “Declaration” or “this Declaration” shall mean this Declaration of Trust, as amended, restated or modified from time to time. The use in this Declaration of “herein” and “hereunder” shall be deemed to refer to this Declaration and shall not be limited to the particular text, article or section in which such words appear.

(h)Independent Trustee. “Independent Trustee” shall mean a Trustee who is not then an officer of the Trust or an Affiliate of the Advisor.

(i)Internal Revenue Code. “Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as now enacted or hereafter amended, or successor statutes and applicable rules and regulations thereunder.

(j)Invested Assets. “Invested Assets” shall mean the Book Value of all the Real Estate Investments of the Trust.

(k)Mortgage Loans. “Mortgage Loans” shall mean notes, debentures, bonds and other evidences of indebtedness or obligations, whether negotiable or non-negotiable, which are secured or collateralized by Mortgages.

5

(l)Mortgages. “Mortgages” shall mean mortgages, deeds of trust or other security interests in Real Property.

(m)Person. “Person” shall mean and include individuals, corporations, limited partnerships, general partnerships, joint stock companies or associations, joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business trusts and other entities and governments and agencies and political subdivisions thereof.

(n)Real Estate Investment. “Real Estate Investment” shall mean any direct or indirect investment in any interest in Real Property or in any Mortgage Loan, or in any Person whose principal purpose is to make any such investment.

(o)Real Property. “Real Property” shall mean and include land, leasehold interests (including but not limited to interests of a lessor or lessee therein), rights and interests in land, and in any buildings, structures, improvements, furnishings and fixtures located on or used in connection with land or interests therein, but does not include investments in Mortgages, Mortgage Loans or interests therein.

(p)REIT. “REIT” shall mean a real estate investment trust as defined in the REIT Provisions of the Internal Revenue Code.

(q)REIT Provisions of the Internal Revenue Code. “REIT Provisions of the Internal Revenue Code” shall mean Parts II and III of Subchapter M of Chapter 1 of Subtitle A of the Internal Revenue Code or any successor provision.

(r)Securities. “Securities” shall mean any stock, shares, voting trust certificates, bonds, debentures, notes or other evidences of indebtedness or in general any instruments commonly known as “securities” or any certificates of interest, shares or participations in, temporary or interim certificates for, receipts for, guarantees of, or warrants, options or rights to subscribe to, purchase or acquire any of the foregoing.

(s)Shareholders. “Shareholders” shall mean as of any particular time all holders of record of outstanding Shares at such time.

(t)Shares. “Shares” or, as the context may require, “shares” shall mean the shares of beneficial interest of the Trust as described in Section 5.1 hereof.

(u)Trust. “Trust” shall mean the Trust created by this Declaration.

(v)Trustees. “Trustees” shall mean, as of any particular time, the original signatories hereto as long as they hold office hereunder and additional and successor Trustees, and shall not include the officers, employees or agents of the Trust or the Shareholders. Nothing herein shall be deemed to preclude the Trustees from also serving as officers, employees or agents of the Trust or owning Shares.

(w)Trust Estate. “Trust Estate” shall mean as of any particular time any and all property, real, personal or otherwise, tangible or intangible, which is transferred, conveyed or paid to or purchased by the Trust or Trustees and all rents, income, profits and gains therefrom and which at such time is owned or held by or for the Trust or the Trustees.

ARTICLE II

TRUSTEES

2.1.Number, Term of Office and Qualifications of Trustees.

(a)The number of Trustees initially need not be more than one (1).

(i)If a Person other than HRP acquires any Shares of Beneficial Interest of the Trust, the number of Trustees shall thenceforth be no fewer than three (3) and no more than seven (7). Upon acquisition by a Person other than HRP of any such Shares, tThe exact number of Trustees shall be five (5) until changed by a two-thirds (2/3) vote of the Trustees or by an amendment of this Declaration duly adopted by holders of two-thirds (2/3) of the outstanding Shares entitled to vote. Any vacancies in the Board of Trustees created thereby shall be filled by a majority of the Trustees then in office. The Board of Trustees thus constituted shall be classified into three groups, with two (2) Trustees in Group I, two (2) Trustees in Group II, and one (1) Trustee in Group II. The Trustee in Group III shall serve for a term ending at the next

6

annual meeting of Shareholders after such acquisition of Shares by a Person other than HRP; each Trustee in Group II shall serve for a term ending at the following annual meeting of Shareholders; and each Trustee in Group I shall serve for a term ending at the second following annual meeting of Shareholders. After the respective terms of the groups indicated, each such group of Trustees shall be elected for successive terms ending at the annual meeting of Shareholders held during the third year after election.  The terms of the Trustees shall be determined as follows: (i) at the annual meeting of shareholders of the Trust that is held in calendar year 2014 (the “2014 Annual Meeting”), the Trustees whose terms expire at the 2014 Annual Meeting (or such Trustees’ successors) shall be elected to hold office for a three-year term expiring at the annual meeting of shareholders of the Trust that is held in calendar year 2017 (the “2017 Annual Meeting”); (ii) at the annual meeting of shareholders of the Trust that is held in calendar year 2015 (the “2015 Annual Meeting”), the Trustees whose terms expire at the 2015 Annual Meeting (or such Trustees’ successors) shall be elected to hold office for a one-year term expiring at the annual meeting of shareholders of the Trust that is held in calendar year 2016 (the “2016 Annual Meeting”); (iii) at the 2016 Annual Meeting, the Trustees whose terms expire at the 2016 Annual Meeting (or such Trustees’ successors) shall be elected to hold office for a one-year term expiring at the 2017 Annual Meeting; and (iv) at the 2017 Annual Meeting, and at each annual meeting of shareholders of the Trust thereafter, all Trustees shall be elected to hold office for a one-year term expiring at the next annual meeting of shareholders following his or her election.  For the avoidance of doubt, each Trustee elected or appointed to the Board of Trustees to serve a term that commenced before the 2015 Annual Meeting (an “Existing Trustee”), and each Trustee elected or appointed to the Board of Trustees to fill a vacancy resulting from the death, incapacity, resignation or removal of an Existing Trustee, shall serve for the full term to which the Existing Trustee was elected or appointed.

(ii)A majority of the Trustees holding office subject to the foregoing provisions of this paragraph (ii) shall at all times be Independent Trustees; provided, however, that upon a failure to comply with this requirement as a result of the creation of a vacancy which must be filled by an Independent Trustee, whether as a result of enlargement of the Board of Trustees or the resignation, removal or death of a Trustee who is an Independent Trustee, such requirement shall not be applicable for a period of ninety (90) days.

(b)The names and business addresses of the initial Trustees, who shall serve as Trustees until the first annual meeting of Shareholders (unless their terms shall be otherwise classified pursuant to Section 2.1(a)(ii)) and until their successors shall have been elected and qualified are as follows:

Name:	Barry M. Portnoy
Address:	Sullivan & Worcester One Post Office Square Boston, MA 02109
Name:	Gerard M. Martin
Address:	M & P Partners Limited Partnership 400 Centre Street Newton, MA 02158

The initial Trustees shall be the signatories hereto. No reduction in the number of Trustees shall have the effect of removing any Trustee from office prior to the expiration of his term. Subject to the provisions of Section 2.3, each Trustee shall hold office until the election and qualification of his successor. There shall be no cumulative voting in the election of Trustees. A Trustee shall be an individual at least twenty-one (21) years of age who is not under legal disability. Unless otherwise required by law, no Trustee shall be required to give bond, surety or security in any jurisdiction for the performance of any duties or obligations hereunder. The Trustees in their capacity as Trustees shall not be required to be Shareholders or to devote their entire time to the business and affairs of the Trust.

2.2.Compensation and Other Remuneration. The Trustees shall be entitled to receive such reasonable compensation for their services as Trustees as the Trustees may determine from time to time. The Trustees and Trust officers shall be entitled to receive remuneration for services rendered to the Trust in any other capacity. Subject to Sections 6.6 and 6.7, such services may include, without limitation, services as an officer of the Trust, legal, accounting or other professional services, or services as a broker, transfer agent or underwriter, whether performed by a Trustee or any Person affiliated with a Trustee.

2.3.Resignation, Removal and Death of Trustees. A Trustee may resign at any time by giving written notice to the remaining Trustees at the principal office of the Trust. Such resignation shall take effect on the date specified in such notice, without need for prior accounting. A Trustee may be removed at any time with or without cause by the affirmative vote either of all the remaining Trustees or of the holders of Shares representing two-thirds of the total votes authorized to be cast by Shares then outstanding and entitled to vote thereon, voting as a single class. A Trustee judged incompetent or for whom a guardian or conservator

7

has been appointed shall be deemed to have resigned as of the date of such adjudication or appointment. Upon the resignation or removal of any Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver such documents as the remaining Trustees shall require for the conveyance of any Trust property held in his name, shall account to the remaining Trustees as they require for all property which he holds as Trustee and shall thereupon be discharged as Trustee. Upon the incapacity or death of any Trustee, his legal representative shall perform the acts set forth in the preceding sentence and the discharge mentioned therein shall run to such legal representative and to the incapacitated Trustee or the estate of the deceased Trustee, as the case may be.

2.4.Vacancies. If any or all the Trustees cease to be Trustees hereunder, whether by reason of resignation, removal, incapacity, death or otherwise, such event shall not terminate the Trust or affect its continuity. Until vacancies are filled, the remaining Trustee or Trustees (even though fewer than three (3)) may exercise the powers of the Trustees hereunder. Vacancies (including vacancies created by increases in number) may be filled by the remaining Trustee or by a majority of the remaining Trustees. If at any time there shall be no Trustees in office, successor Trustees shall be elected by the Shareholders as provided in Section 5.9. Any Trustee elected to fill a vacancy created by the resignation, removal or death of a former Trustee shall hold office for the unexpired term of such former Trustee.

2.5.Successor and Additional Trustees. The right, title and interest of the Trustees in and to the Trust Estate shall also vest in successor and additional Trustees upon their qualification, and they shall thereupon have all the rights and obligations of Trustees hereunder. Such right, title and interest shall vest in the Trustees whether or not conveyancing documents have been executed and delivered pursuant to Section 2.3 or otherwise. Appropriate written evidence of the election and qualification of successor and additional Trustees shall be filed with the records of the Trust and in such other offices or places as the Trustees may deem necessary, appropriate or desirable.

2.6.Actions by Trustees. The Trustees may act with or without a meeting. A quorum for all meetings of the Trustees shall be a majority of the Trustees; provided, however, that, whenever pursuant to Section 6.7 or otherwise the vote of a majority of a particular group of Trustees is required at a meeting, a quorum for such meeting shall be a majority of the Trustees which shall include a majority of such group. Unless specifically provided otherwise in this Declaration, any action of the Trustees may be taken at a meeting by vote of a majority of the Trustees present (a quorum being present) or without a meeting by written consents of a majority of the Trustees, which consents shall be filed with the records of meetings of the Trustees. Any action or actions permitted to be taken by the Trustees in connection with the business of the Trust may be taken pursuant to authority granted by a meeting of the Trustees conducted by a telephone conference call, and the transaction of Trust business represented thereby shall be of the same authority and validity as if transacted at a meeting of the Trustees held in person or by written consent. The minutes of any Trustees’ meeting held by telephone shall be prepared in the same manner as a meeting of the Trustees held in person. The acquisition or disposition of any investment (other than investments in short-term investment Securities described in Section 4.1) shall require the approval of a majority of Trustees, except as otherwise provided in Section 6.7. Any agreement, deed, mortgage, lease or other instrument or writing executed by one or more of the Trustees or by any authorized Person shall be valid and binding upon the Trustees and upon the Trust when authorized or ratified by action of the Trustees or as provided in the Bylaws.

With respect to the actions of the Trustees, Trustees who have, or are Affiliates of Persons who have, any direct or indirect interest in or connection with any matter being acted upon may be counted for all quorum purposes under this Section 2.6 and, subject to the provisions of Section 6.7, may vote on the matter as to which they or their Affiliates have such interest or connection.

2.7.Committees. The Trustees may appoint an audit committee and such other standing committees as the Trustees determine. Each standing committee shall consist of two (2) or more members; provided, however, that the Trustees may appoint a standing committee consisting of at least one Trustee and two non-Trustees. Each committee shall have such powers, duties and obligations as the Trustees may deem necessary or appropriate. The standing committees shall report their activities periodically to the Trustees.

ARTICLE III

TRUSTEES’ POWERS

3.1.Power and Authority of Trustees. The Trustees, subject only to the specific limitations contained in this Declaration, shall have, without further or other authorization, and free from any power or control on the part of the Shareholders, full, absolute and exclusive power, control and authority over the Trust Estate and over the business and affairs of the Trust to the same extent as if the Trustees were the sole owners thereof in their own right, and may do all such acts and things as in their sole judgment and discretion are necessary for or incidental to or desirable for carrying out or conducting the business of the Trust. Any construction of this Declaration or any determination made in good faith by the Trustees as to the purposes of the Trust or the existence of any power or authority hereunder shall be conclusive. In construing the provisions of this Declaration, the presumption shall be in favor of the grant of powers and authority to the Trustees. The enumeration of any specific power or authority herein shall not be construed as

8

limiting the aforesaid powers or the general powers or authority or any other specified power or authority conferred herein upon the Trustees.

3.2.Specific Powers and Authority. Subject only to the express limitations contained in this Declaration and in addition to any powers and authority conferred by this Declaration or which the Trustees may have by virtue of any present or future statute or rule or law, the Trustees without any action or consent by the Shareholders shall have and may exercise at any time and from time to time the following powers and authorities which may or may not be exercised by them in their sole judgment and discretion and in such manner and upon such terms and conditions as they may from time to time deem proper:

(a)to retain, invest and reinvest the capital or other funds of the Trust in, and to acquire, purchase, or own, real or personal property of any kind, whether tangible or intangible, wherever located in the world, and make commitments for such investments, all without regard to whether any such property is authorized by law for the investment of trust funds or produces or may produce income; to possess and exercise all the rights, powers and privileges appertaining to the ownership of the Trust Estate; and to increase the capital of the Trust at any time by the issuance of any additional authorized Shares or other Securities of the Trust for such consideration as they deem advisable;

(b)without limitation of the powers set forth in subsection (a) above, to invest in, purchase or otherwise acquire for such consideration as they deem proper, in cash or other property or through the issuance of shares or through the issuance of notes, debentures, bonds or other obligations of the Trust, and to hold for investment, the entire or any participating interests in any Mortgage Loans or interest in Real Property, including ownership of, or participations in the ownership of, or rights to acquire, equity interests in Real Property or in Persons owning, developing, improving, operating or managing Real Property, which interests may be acquired independently of or in connection with other investment activities of the Trust and, in the latter case, may include rights to receive additional payments based on gross income or rental or other income from the Real Property or improvements thereon; and to invest in loans secured by the pledge or transfer of Mortgage Loans;

(c)to sell, rent, lease, hire, exchange, release, partition, assign, mortgage, pledge, hypothecate, grant security interests in, encumber, negotiate, convey, transfer or otherwise dispose of any and all the Trust Estate by deeds (including deeds in lieu of foreclosure), trust deeds, assignments, bills of sale, transfers, leases, mortgages, financing statements, security agreements and other instruments for any of such purposes executed and delivered for and on behalf of the Trust or the Trustees by one or more of the Trustees or by a duly authorized officer, employee, agent or nominee of the Trust;

(d)to issue Shares, bonds, debentures, notes or other evidences of indebtedness, which may be secured or unsecured and may be subordinated to any indebtedness of the Trust, to such Persons for such cash, property or other consideration (including Securities issued or created by, or interests in, any Person) at such time or times and on such terms as the Trustees may deem advisable and to list any of the foregoing Securities issued by the Trust on any securities exchange and to purchase or otherwise acquire, hold, cancel, reissue, sell and transfer any of such Securities, and to cause the instruments evidencing such Securities to bear an actual or facsimile imprint of the seal of the Trust (if the Trustees shall have adopted such a seal) and to be signed by manual or facsimile signature or signatures (and to issue such Securities, whether or not any Person whose manual or facsimile signature shall be imprinted thereon shall have ceased to occupy the office with respect to which such signature was authorized), provided that, where only facsimile signatures for the Trust are used, the instrument shall be countersigned manually by a transfer agent, registrar or other authentication agent; and to issue any of such Securities of different types in combinations or units with such restrictions on the separate transferability thereof as the Trustees shall determine;

(e)to enter into leases of real and personal property as lessor or lessee and to enter into contracts, obligations and other agreements for a term, and to invest in obligations having a term, extending beyond the term of office of the Trustees and beyond the possible termination of the Trust, or having a lesser term;

(f)to borrow money and give negotiable or non negotiable instruments therefor; or guarantee, indemnify or act as surety with respect to payment or performance of obligations of third parties; to enter into other obligations on behalf of the Trust; and to assign, convey, transfer, mortgage, subordinate, pledge, grant security interest in, encumber or hypothecate the Trust Estate to secure any indebtedness of the Trust or any other of the foregoing obligations of the Trust;

(g)to lend money, whether secured or unsecured;

(h)to create reserve funds for any purpose;

(i)to incur and pay out of the Trust Estate any charges or expenses, and to disburse any funds of the Trust, which charges, expenses or disbursements are, in the opinion of the Trustees, necessary or incidental to or desirable for the carrying out of any of the purposes of the Trust or conducting the business of the Trust, including without limitation taxes and other

9

governmental levies, charges and assessments, of whatever kind or nature, imposed upon or against the Trustees in connection with the Trust or the Trust Estate or upon or against the Trust Estate or any part hereof, and for any of the purposes herein;

(j)to deposit funds of the Trust in banks, trust companies, savings and loan associations and other depositories, whether or not such deposits will draw interest, the same to be subject to withdrawal on such terms and in such manner and by such Person or Persons (including any one or more Trustees or officers, employees or agents, of the Trust) as the Trustees may determine;

(k)to possess and exercise all the rights, powers and privileges pertaining to the ownership of all or any Mortgages or Securities issued or created by, or interests in, any Person, forming part of the Trust Estate, to the same extent that an individual might do so, and, without limiting the generality of the foregoing, to vote or give any consent, request or notice, or waive any notice, either in person or by proxy or power of attorney, with or without power of substitution, to one or more Persons, which proxies and powers of attorney may be for meetings or action generally or for any particular meeting or action, and may include the exercise of discretionary powers;

(l)to cause to be organized or assist in organizing any Person under the laws of any jurisdiction to acquire the Trust Estate or any part or parts thereof or to carry on any business in which the Trust shall directly or indirectly have any interest, and to sell, rent, lease, hire, convey, negotiate, assign, exchange or transfer the Trust Estate or any part or parts thereof to or with any such Person or any existing Person in exchange for the Securities thereof or otherwise, and to merge or consolidate the Trust with or into any Person or merge or consolidate any Person into the Trust, and to lend money to, subscribe for the Securities of, and enter into any contracts with, any Person in which the Trust holds or is about to acquire Securities or any other interest;

(m)to enter into joint ventures, general or limited partnerships, participation or agency arrangements and any other lawful combinations or associations, and to act as a general or limited partner;

(n)to elect, appoint, engage or employ such officers for the Trust as the Trustees may determine, who may be removed or discharged at the discretion of the Trustees, such officers to have such powers and duties, and to serve such terms, as may be prescribed by the Trustees or by the Bylaws; to engage or employ any Persons (including, subject to the provisions of Sections 6.6 and 6.7, any Trustee or officer, agent or employee of the Trust and any Person in which any Trustee, officer or agent is directly or indirectly interested or with which he is directly or indirectly connected) as agents, representatives, employees, or independent contractors (including without limitation real estate advisors, investment advisors, transfer agents, registrars, underwriters, accountants, attorneys at law, real estate agents, managers, appraisers, brokers, architects, engineers, construction managers, general contractors or otherwise) in one or more capacities, and to pay compensation from the Trust for services in as many capacities as such Person may be so engaged or employed; and to delegate any of the powers and duties of the Trustees to any one or more Trustees, agents, representatives, officers, employees, independent contractors or other Persons;

(o)to determine or cause to be determined from time to time the value of all or any part of the Trust Estate and of any services, Securities, property or other consideration to be furnished to or acquired by the Trust, and from time to time to revalue or cause to be revalued all or any part of the Trust Estate in accordance with such appraisals or other information as are, in the Trustees’ sole judgment, necessary and/or satisfactory;

(p)to collect, sue for and receive all sums of money coming due to the Trust, and to engage in, intervene in, prosecute, join, defend, compromise, abandon or adjust, by arbitration or otherwise, any actions, suits, proceedings, disputes, claims, controversies, demands or other litigation relating to the Trust, the Trust Estate or the Trust’s affairs, to enter into agreements therefor, whether or not any suit is commenced or claim accrued or asserted and, in advance of any controversy, to enter into agreements regarding arbitration, adjudication or settlement thereof;

(q)to renew, modify, release, compromise, extend, consolidate or cancel, in whole or in part, any obligation to or of the Trust or participate in any reorganization of obligors to the Trust;

(r)to self-insure or to purchase and pay for out of the Trust Estate insurance contracts and policies, including contracts of indemnity, insuring the Trust Estate against any and all risks and insuring the Trust and/or all or any of the Trustees, the Shareholders, or the officers, employees or agents of the Trust or Persons who may directly or indirectly control the Trust against any and all claims and liabilities of every nature asserted by any Person arising by reason of any action alleged to have been taken or omitted by the Trust or by the Trustees, Shareholders, officers, employees agents or controlling Persons whether or not the Trust would have the power to indemnify such Person or Persons against any such claim or liability;

(s)to cause legal title to any of the Trust Estate to be held by and/or in the name of the Trustees, or, except as prohibited by law, by and/or in the name of the Trust or one or more of the Trustees or any other Person, on such terms, in

10

such manner and with such powers in such Person as the Trustees may determine, and with or without disclosure that the Trust or Trustees are interested therein;

(t)to adopt a fiscal year for the Trust, and from time to time to change such fiscal year;

(u)to adopt and use a seal (but the use of a seal shall not be required for the execution of instruments or obligations of the Trust);

(v)to the extent permitted by law, to indemnify or enter into agreements with respect to indemnification with any Person with which the Trust has dealings, including without limitation any broker/dealer, investment bank, investment advisor or independent contractor, to such extent as the Trustees shall determine;

(w)to confess judgment against the Trust;

(x)to discontinue the operations of the Trust;

(y)to repurchase or redeem Shares and other Securities issued by the Trust;

(z)to declare and pay dividends or distributions, consisting of cash, property or Securities, to the holders of Shares of the Trust out of any funds legally available therefor; and

(aa)to do all other such acts and things as are incident to the foregoing, and to exercise all powers which are necessary or useful to carry on the business of the Trust and to carry out the provisions of this Declaration.

3.3.Bylaws. The Trustees may make or adopt and from time to time amend or repeal Bylaws (the “Bylaws”) not inconsistent with law or with this Declaration, containing provisions relating to the business of the Trust and the conduct of its affairs and in such Bylaws may define the duties of the officers, employees and agents of the Trust.

ARTICLE IV

INVESTMENT POLICY AND POLICIES

WITH RESPECT TO CERTAIN

DISTRIBUTIONS TO SHAREHOLDERS

4.1.Statement of Policy. It shall be the general objectives of the Trust (i) to provide current income for distribution to Shareholders through investments in income-producing hotels and hospitality-related facilities and other real estate investments and (ii) to provide Shareholders with the opportunity for additional returns from a percentage of gross revenues generated by the investment properties.

The Trust may make secured borrowings to make permitted additional Real Estate Investments and secured or unsecured borrowings for normal working capital needs, including the repair and maintenance of properties in which it has invested, tenant improvements and leasing commissions. The Trust may make such borrowings from third parties or from Affiliates of the Advisor. Interest and other financing charges or fees to be paid on loans from such Affiliates will not exceed the interest and other financing charges or fees which would be charged by third party financing institutions on comparable loans for the same purpose in the same geographic area.

To the extent that the Trust Estate has assets not otherwise invested in accordance with this Section 4.1, it shall be the policy of the Trustees to invest such assets in investments selected by the Trustees or the Advisor which are consistent with the Trust’s intention to qualify as a REIT under the Internal Revenue Code.

It shall be the policy of the Trustees to make investments and to conduct the business of the Trust in such manner as to qualify as a REIT and to comply with the requirements of the Internal Revenue Code with respect to the composition of investments and the derivation of the income of a real estate investment trust as defined in the REIT Provisions of the Internal Revenue Code; provided, however, that no Trustee, officer, employee or agent of the Trust shall be liable for any act or omission resulting in the loss of tax benefits under the Internal Revenue Code, except for that arising from his own wilful misfeasance, bad faith, gross negligence or reckless disregard of duty.

4.2.Prohibited Investments and Activities. The Trustees shall not:

11

(a)engage in any undertaking or activity that would disqualify the Trust as a real estate investment trust under the provisions of the Internal Revenue Code as long as a real estate investment trust is accorded substantially the same treatment or benefits under the United States tax laws from time to time in effect as under Sections 856-860 of the Internal Revenue Code at the date of adoption of this Declaration; and/or

(b)use or apply land for farming, agriculture, horticulture or similar purposes in violation of Section 8-302(b) of the Corporations and Associations Article of the Annotated Code of Maryland.

4.3.Change in Investment Policies. The investment policies set out in this Article IV may be changed by a vote of a majority of the Trustees.

ARTICLE V

THE SHARES AND SHAREHOLDERS

5.1.Description of Shares. The interest of the Shareholders shall be divided into 300,000,000 shares of beneficial interest which shall be known collectively as “Shares”, all of which shall be validly issued, fully paid and non-assessable by the Trust upon receipt of full consideration for which they have been issued or without additional consideration if issued by way of share dividend or share split. There shall be two classes of Shares: 200,000,000 shares of one such class shall be known as “Common Shares”, $.01 par value per share, and 100,000,000 shares of the other such class shall be known as “Preferred Shares”. Each holder of Shares shall as a result thereof be deemed to have agreed to and be bound by the terms of this Declaration. The Shares may be issued for such consideration as the Trustees shall deem advisable. The Trustees are hereby expressly authorized at any time, and from time to time, to provide for issuance of Shares upon such terms and conditions and pursuant to such arrangements as the Trustees may determine. The Trustees are hereby expressly authorized at any time, and from time to time, without Shareholder approval, to amend this Declaration to increase or decrease the aggregate number of Shares or the number of Shares of any class that the Trust has the authority to issue.

The Trustees are hereby expressly authorized at any time, and from time to time, without Shareholder approval, to set (or change if such class has previously been established) the par value, preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms, or conditions of redemption, of the Preferred Shares, and such Preferred Shares may further be divided by the Trustees into classes or series.

Except as otherwise determined by the Trustees with respect to any class or series of Preferred Shares, the holders of Shares shall be entitled to the rights and powers hereinafter set forth in this Section 5.1: The holders of Shares shall be entitled to receive, when and as declared from time to time by the Trustees out of any funds legally available for the purpose, such dividends or distributions as may be declared from time to time by the Trustees. In the event of the termination of the Trust pursuant to Section 7.1 or otherwise, or upon the distribution of its assets, the assets of the Trust available for payment and distribution to Shareholders shall be distributed ratably among the holders of Shares at the time outstanding in accordance with Section 7.2. All Shares shall have equal non-cumulative voting rights at the rate of one vote per Share, and equal dividend, distribution, liquidation and other rights, and shall have no preference, conversion, exchange, sinking fund or redemption rights. Absent a contrary written agreement of the Trust authorized by the Trustees, and notwithstanding any other determination by the Trustees with respect to any class or series of Preferred Shares, no holder of Shares or Preferred Shares shall be entitled as a matter of right to subscribe for or purchase any part of any new or additional issue of Shares of any class whatsoever of the Trust, or of securities convertible into any shares of any class whatsoever of the Trust, whether now or hereafter authorized and whether issued for cash or other consideration or by way of dividend.

5.2.Certificates. At the election of the Trust, ownership of Shares may be evidenced by certificates in such form as the Trustees shall from time to time approve, specifying the number of Shares of the applicable class held by such Shareholder. Subject to Sections 5.6 and 5.14(c) hereof, such certificates shall be treated as negotiable and title thereto and to the Shares represented thereby shall be transferred by delivery thereof to the same extent in all respects as a stock certificate, and the Shares represented thereby, of a Maryland business corporation. Unless otherwise determined by the Trustees, such certificates shall be signed by the Chairman, if any, and the President and shall be countersigned by a transfer agent, and registered by a registrar if any, and such signatures may be facsimile signatures in accordance with Section 3.2(d) hereof. There shall be filed with each transfer agent a copy of the form of certificate so approved by the Trustees, certified by the Chairman, President, or Secretary, and such form shall continue to be used unless and until the Trustees approve some other form.

In furtherance of the provisions of Sections 5.1 and 5.14(c) hereof, each Certificate evidencing Shares shall contain a legend imprinted thereon to substantially the following effect or such other legend as the Trustees may from time to time adopt:

12

REFERENCE IS MADE TO THE DECLARATION OF TRUST OF THE TRUST FOR A STATEMENT OF ALL THE DESIGNATIONS, PREFERENCES, LIMITATIONS, AND RELATIVE RIGHTS OF EACH CLASS OR SERIES OF SHARES THAT THE TRUST IS AUTHORIZED TO ISSUE, THE VARIATIONS IN THE RELATIVE RIGHTS AND PREFERENCES OF ANY PREFERRED OR SPECIAL CLASS OF SHARES IN SERIES, TO THE EXTENT THEY HAVE BEEN FIXED AND DETERMINED, AND THE AUTHORITY OF THE TRUSTEES TO FIX AND DETERMINE THE RELATIVE RIGHTS AND PREFERENCES OF SUBSEQUENT SERIES. ANY SUCH STATEMENT SHALL BE FURNISHED WITHOUT CHARGE ON REQUEST TO THE TRUST AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED OFFICE.

IF NECESSARY TO EFFECT COMPLIANCE BY THE TRUST WITH REQUIREMENTS OF THE INTERNAL REVENUE CODE RELATING TO REAL ESTATE INVESTMENT TRUSTS, THE PURPORTED TRANSFER OF THE SHARES EVIDENCED BY THIS CERTIFICATE MAY BE PROHIBITED AND OR INVALIDATED UPON THE TERMS AND CONDITIONS SET FORTH IN THE DECLARATION OF TRUST. THE TRUST WILL FURNISH A COPY OF SUCH TERMS AND CONDITIONS TO THE REGISTERED HOLDER OF THIS CERTIFICATE UPON REQUEST AND WITHOUT CHARGE.

5.3.Fractional Shares. In connection with any issuance of Shares, the Trustees may issue fractional Shares or may adopt provisions for the issuance of scrip including, without limitation, the time within which any such scrip must be surrendered for exchange into full Shares and the rights, if any, of holders of scrip upon the expiration of the time so fixed, the rights, if any, to receive proportional distributions, and the rights, if any, to redeem scrip for cash, or the Trustees may in their discretion, or if they see fit at the option of, each holder, provide in lieu of scrip for the adjustment of the fractions in cash. The provisions of Section 5.2 hereof relative to certificates for Shares shall apply so far as applicable to such scrip, except that such scrip may in the discretion of the Trustees be signed by a transfer agent alone.

5.4.Legal Ownership of Trust Estate. The legal ownership of the Trust Estate and the right to conduct the business of the Trust are vested exclusively in the Trustees (subject to Section 3.2(s)), and the Shareholders shall have no interest therein (other than beneficial interest in the Trust conferred by their Shares issued hereunder) and they shall have no right to compel any partition, division, dividend or distribution of the Trust or any of the Trust Estate.

5.5.Shares Deemed Personal Property. The Shares shall be personal property and shall confer upon the holders thereof only the interest and rights specifically set forth or provided for in this Declaration. The death, insolvency or incapacity of a Shareholder shall not dissolve or terminate the Trust or affect its continuity nor give his legal representative any rights whatsoever, whether against or in respect of other Shareholders, the Trustees or the Trust Estate or otherwise, except the sole right to demand and, subject to the provisions of this Declaration, the Bylaws and any requirements of law, to receive a new certificate for Shares registered in the name of such legal representative, in exchange for the certificate held by such Shareholder.

5.6.Share Record; Issuance and Transferability of Shares. Records shall be kept by or on behalf of and under the direction of the Trustees, which shall contain the names and addresses of the Shareholders, the number of Shares held by them respectively, and the numbers of the certificates representing the Shares, and in which there shall be recorded all transfers of Shares. The Trust, the Trustees and the officers, employees and agents of the Trust shall be entitled to deem the Persons in whose names certificates are registered on the records of the Trust to be the absolute owners of the Shares represented thereby for all purposes of the Trust; but nothing herein shall be deemed to preclude the Trustees or officers, employees or agents of the Trust from inquiring as to the actual ownership of Shares. Until a transfer is duly effected on the records of the Trust, the Trustees shall not be affected by any notice of such transfer, either actual or constructive.

Shares shall be transferable on the records of the Trust only by the record holder thereof or by his agent thereunto duly authorized in writing upon delivery to the Trustees or a transfer agent of the certificate or certificates therefor, properly endorsed or accompanied by duly executed instruments of transfer and accompanied by all necessary documentary stamps together with such evidence of the genuineness of each such endorsement, execution or authorization and of other matters as may reasonably be required by the Trustees or such transfer agent. Upon such delivery, the transfer shall be recorded in the records of the Trust and a new certificate for the Shares so transferred shall be issued to the transferee and in case of a transfer of only a part of the Shares represented by any certificate, a new certificate for the balance shall be issued to the transferor. Any Person becoming entitled to any Shares in consequence of the death of a Shareholder or otherwise by operation of law shall be recorded as the holder of such Shares and shall receive a new certificate therefor but only upon delivery to the Trustees or a transfer agent of instruments and other evidence required by the Trustees or the transfer agent to demonstrate such entitlement, the existing certificate for such Shares and such releases from applicable governmental authorities as may be required by the Trustees or transfer agent. In case of the loss, mutilation or destruction of any certificate for shares, the Trustees may issue or cause to be issued a replacement certificate on such terms and subject to such rules and regulations as the Trustees may from time to time prescribe. Nothing in this Declaration shall impose upon the Trustees or a transfer agent a duty, or limit their rights, to inquire into adverse claims.

13

5.7.Dividends or Distributions to Shareholders. Subject to Section 5.1, the Trustees may from time to time declare and pay to Shareholders such dividends or distributions in cash, property or assets of the Trust or Securities issued by the Trust, out of current or accumulated income, capital, capital gains, principal, interest, surplus, proceeds from the increase or financing or refinancing of Trust obligations, or from the sale of portions of the Trust Estate or from any other source as the Trustees in their discretion shall determine. Shareholders shall have no right to any dividend or distribution unless and until declared by the Trustees. The Trustees shall furnish the Shareholders with a statement in writing advising as to the source of the funds so distributed not later than ninety (90) days after the close of the fiscal year in which the distribution was made.

5.8.Transfer Agent, Dividend Disbursing Agent and Registrar. The Trustees shall have power to employ one or more transfer agents, dividend disbursing agents and registrars (including the Advisor or its Affiliates) and to authorize them on behalf of the Trust to keep records to hold and to disburse any dividends or distributions and to have and perform, in respect of all original issues and transfers of Shares, dividends and distributions and reports and communications to Shareholders, the powers and duties usually had and performed by transfer agents, dividend disbursing agents and registrars of a Maryland business corporation.

5.9.Shareholders’ Meetings. There shall be an annual meeting of the Shareholders, at such time and place as shall be determined by or in the manner prescribed in the Bylaws, at which the Trustees shall be elected and any other proper business may be conducted. The Annual Meeting of Shareholders shall be held no fewer than 30 days after delivery to the Shareholders of the Annual Report and within six (6) months after the end of each fiscal year, commencing with the fiscal year ending December 31, 1995. Special meetings of Shareholders may only be called by a majority of the Trustees. If there shall be no Trustees, the officers of the Trust shall promptly call a special meeting of the Shareholders entitled to vote for the election of successor Trustees.

No business shall be transacted by the Shareholders at a special meeting other than business that is either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Trustees (or any duly authorized committee thereof) or (ii) otherwise properly brought before the Shareholders by or at the direction of the Trustees.

The holders of Shares entitled to vote at the meeting representing a majority of the total number of votes authorized to be cast by Shares then outstanding and entitled to vote on any question present in person or by proxy shall constitute a quorum at any such meeting for action on such question. Any meeting may be adjourned from time to time by a majority of the votes properly cast upon the question, without regard to class, whether or not a quorum is present, and, except as otherwise provided in the Bylaws, the meeting may be reconvened without further notice. At any reconvened session of the meeting at which there shall be a quorum, any business may be transacted at the meeting as originally noticed.

Except as otherwise clearly indicated in this Declaration or the Bylaws, whenever any action is to be taken by the Shareholders, it shall be authorized by the affirmative vote of the holders of Shares representing a majority of the total number of votes authorized to be cast by shares then outstanding and entitled to vote thereon. At all elections of Trustees, voting by Shareholders shall be conducted under the non-cumulative method and the election of Trustees shall be by the affirmative vote of the holders of Shares representing a majority of the total number of votes authorized to be cast by shares then outstanding and entitled to vote thereon; provided, however, the election of a Managing Trustee or an Independent Trustee in an uncontested election, which is an election in which the number of nominees for election equals (or is less than) the number to be elected at the meeting, shall be by the affirmative vote of Shares representing a majority of the total number of Share votes cast.

Whenever Shareholders are required or permitted to take any action by a vote at a meeting of Shareholders, at any time any of the outstanding Shares are held by a Person other than HRP, such action shall not be taken except by such a vote at such a meeting of Shareholders and the Shareholders shall have no power or right to take any action by executing written consents in lieu thereof.

5.10.Proxies. Whenever the vote or consent of a Shareholder entitled to vote is required or permitted under this Declaration, such vote or consent may be given either directly by such Shareholder or by a proxy in the form prescribed in, and subject to the provisions of, the Bylaws. The Trustees may solicit such proxies from the Shareholders or any of them entitled to vote in any matter requiring or permitting the Shareholders’ vote or consent.

5.11.[Reserved.]

5.12.Fixing Record Date. The Bylaws may provide for fixing or, in the absence of such provision, the Trustees may fix, in advance, a date as the record date for determining the Shareholders entitled to notice of or to vote at any meeting of Shareholders or to express consent to any proposal without a meeting or for the purpose of determining Shareholders entitled to receive payment of any dividend or distribution (whether before or after termination of the Trust) or any Annual Report or other communication from the Trustees, or for any other purpose.

14

5.13.Notice to Shareholders. Any notice of meeting or other notice, communication or report to any Shareholder shall be deemed duly delivered to such Shareholder when such notice, communication or report is deposited, with postage thereon prepaid, in the United States mail, addressed to such Shareholder at his address as it appears on the records of the Trust or is delivered in person to such Shareholder.

5.14.Shareholders’ Disclosure; Restrictions on Share Transfer; Limitation on Holdings. At such time as any Person other than HRP shall hold any Shares of Beneficial Interest and thereafter:

(a)Every Shareholder shall upon demand disclose to the Trustees in writing such information with respect to direct and indirect ownership of any Shares as the Trustees deem necessary or appropriate, in their discretion, to comply with the REIT Provisions of the Internal Revenue Code, or to comply with the requirements of any taxing authority or governmental agency.

(b)Whenever in good faith the Trustees deem it reasonably necessary to protect the status of the Trust as a REIT under the Internal Revenue Code, they may require a statement or affidavit from each Shareholder or proposed transferee of Shares setting forth the number of Shares already owned, directly or indirectly, by such Shareholder or proposed transferee and any related Person specified in the form prescribed by the Trustees for that purpose. If, in the opinion of the Trustees, which shall be binding upon any Shareholder and any proposed transferee of Shares, but subject to subsection (i) of this Section 5.14, any proposed transfer of Shares would jeopardize the status of the Trust as a REIT under the Internal Revenue Code, the Trustees shall have the right, but not the duty, to refuse to permit such transfer.

(c)As a condition to the transfer (including, without limitation, any sale, transfer, gift, assignment, devise or other disposition of Shares, whether voluntary or involuntary, whether beneficially or of record, and whether effected constructively, by operation of law or otherwise) and/or registration of transfer of any Shares (“Excess Shares”) which could in the opinion of the Trustees result in

(i)direct or indirect ownership (as hereafter defined) of Shares representing more than 9.8% in number, value or voting power of the total Shares outstanding becoming concentrated in the hands of one owner other than an Excepted Person (as such term is defined hereafter),

(ii)the outstanding Shares of the Trust being owned by fewer than one hundred (100) persons or

(iii)the Trust being “closely held” within the meaning of Section 856(h) of the Internal Revenue Code,

such potential owner (a “Proposed Transferee”) shall file with the Trust the statement or affidavit described in subsection (b) of this Section 5.14 no later than the fifteenth (15th) day prior to any proposed transfer, registration of transfer or transaction which, if consummated, would have any of the results set forth above; provided, however, that the Trustees may waive such requirement of prior notice upon determination that such waiver is in the best interests of the Trust. Subject to the subsection (i) of this Section 5.14, the Trustees shall have the power and right (i) to refuse to transfer or issue Excess Shares or share certificates to any Proposed Transferee whose acquisition of such Excess Shares would, in the opinion of the Trustees, result in the direct or indirect beneficial ownership of any Excess Shares by a Person other than an Excepted Person and (ii) to treat such Excess Shares as having been transferred not to the Proposed Transferee but rather to a trustee, who shall be designated by the Trustees but unaffiliated with either the Trust or the Proposed Transferee, for the benefit of one or more organizations described in Sections 170(b)(1)(a) and 170(c) of the Internal Revenue Code (each such organization being referred to herein as a “Charitable Beneficiary”) that have been designated by the Trustees. Any such trust shall be deemed to have been established by the Shareholder for the benefit of the Charitable Beneficiary on the day prior to the date of the purported transfer to the Proposed Transferee, which purported transfer shall be void ab initio and the Proposed Transferee shall be deemed never to have acquired any interest in or with respect to the Excess Shares purportedly transferred.

Any dividends paid or other distributions made with respect to any Excess Shares prior to the Trust discovering that such Excess Shares have been transferred into trust for the Charitable Beneficiary as set forth above shall be repaid and disgorged by the Proposed Transferee to the Trust and any dividend or other distribution declared but still unpaid or unmade shall be rescinded as void ab initio with respect to the Proposed Transferee. Any dividends or other distributions so repaid, disgorged or rescinded shall then be paid over to the trustee and held in trust for the Charitable Beneficiary. Any vote cast by the Proposed Transferee prior to the Trust discovering that such Excess Shares had been transferred to the trustee shall be rescinded as being void ab initio and the Proposed Transferee shall be deemed to have given an irrevocable proxy to the trustee to vote the Excess Shares held for the benefit of the Charitable Beneficiary.

15

All Excess Shares shall be deemed to be offered by the trustee for sale to the Trust or a Person or Persons designated by the Trust for a period of ninety (90) days following the receipt by the Trust of notice of the event that has caused the Excess Shares to be transferred into trust as set forth above at a price equal to the lesser of (i) the price that was paid for the Excess Shares by the Proposed Transferee and (ii) the market price of the Excess Shares on the date that the Trust or its designee accepts the trustee’s offer to sell.

At the direction of the Trust, the trustee of any such trust shall sell any Excess Shares held by the trust to a Person whose ownership of such shares will not, in the judgment of the Trustees, jeopardize the Trust’s status as a REIT (a “Permitted Transferee”). If such a transfer is made, the interests of the Charitable Beneficiary with respect to the Excess Shares shall cease and the proceeds of the sale to the Permitted Transferee shall be payable to the Proposed Transferee and to the Charitable Beneficiary as follows: The Proposed Transferee shall be entitled to receive the lesser of (i) the price paid by the Proposed Transferee for the Excess Shares or, if the Proposed Transferee did not give value for the Excess Shares, the market price of the Excess Shares on the day of the event that resulted in the Excess Shares being transferred into trust as set forth above, and (ii) the price received by the trustee from the sale of the Excess Shares. Any proceeds from the sale of Excess Shares in excess of the amount payable to the Proposed Transferee as set forth above shall be payable to the Charitable Beneficiary.

The following Persons are “Excepted Persons”: (i) HRP, (ii) HRPT Advisors, Inc., a Delaware corporation (“Advisors”), (iii) Affiliates of HRP or Advisors, (iv) Persons to whom HRP’s or Advisor’s share ownership is attributable or whose share ownership is attributable to HRP or Advisors and (v) other Persons approved by the Trustees, at their option and in their sole

discretion; provided, however, that such approval shall not be granted to any Person (and shall not extend to any Person described in clause (iii) above) whose ownership of more than 9.8% (individually or by attribution) in number or value of the total Shares outstanding would result, directly, indirectly or as a result of attribution of ownership, in termination of the status of the Trust as a REIT under the Internal Revenue Code.

If the foregoing provisions shall be determined to be void or invalid by virtue of any legal decision, statute, rule or regulation, then the Proposed Transferee of such Excess Shares shall be deemed, at the option of the Trust, to have acted as agent on behalf of the Trust in acquiring such Excess Shares and to hold such Excess Shares on behalf of the Trust.

(d)Notwithstanding any other provision of this Declaration to the contrary, but subject to subsection (i) of this Section 5.14, any purported acquisition of shares of the Trust (whether such purported acquisition results from the direct or indirect acquisition or ownership (as hereafter defined) of Shares) which would result in the disqualification of the Trust as a REIT shall be null and void. Any such shares may be treated by the Trustees in the manner prescribed for Excess Shares in subsection (c) of this Section 5.14.

(e)Subject only to subsection (i) of this Section 5.14, nothing contained in this Section 5.14 or in any other provision of this Declaration shall limit the authority of the Trustees to take such other action as they deem necessary or advisable to protect the Trust and the interests of the Shareholders by preserving the Trust’s status as a REIT.

(f)If any provision of this Section 5.14 or any application of any such provision is determined to be invalid by any federal or state court having jurisdiction over the issues, the validity of the remaining provision shall not be affected and other applications of such provision shall be affected only to the extent necessary to comply with the determination of such court. To the extent this Section 5.14 may be inconsistent with any other provision of this Declaration, this Section 5.14 shall be controlling.

(g)It shall be the policy of the Trustees to consult with the appropriate officials of any stock exchange on which the relevant Shares of the Trust are listed as far as reasonably possible in advance of the final exercise (at any time when the shares are listed on such exchange) of any powers granted by sections (b) or (c) of this Section 5.14.

(h)For purposes of this Declaration, Shares not owned directly shall be deemed to be owned indirectly by a Person if that Person or a group including that Person would be the beneficial owner of such shares, as defined as of May 1, 1995, in Rule 13d-3 under the Securities Exchange Act of 1934 and/or would be considered to own such shares by reason of the attribution rules of Section 544 or Section 856(h) of the Internal Revenue Code.

(i)Nothing in this Section 5.14 shall preclude the settlement of any transaction entered into through the facilities of the New York Stock Exchange.

5.15.Special Voting Provisions relating to Certain Business Combinations and Control Shares. The Trust elects not to be governed by the provisions of Subtitles 6 and 7 of Title 3 of the Corporations and Associations Article of the Annotated Code of Maryland.

16

ARTICLE VI

LIABILITY OF TRUSTEES, SHAREHOLDERS, OFFICERS,
EMPLOYEES AND AGENTS, AND OTHER MATTERS

6.1.Limitation of Liability of Shareholders, Trustees, Officers, Employees and Agents for Obligations of the Trust. The Trustees and the officers, employees and agents (including the Advisor) of the Trust, in incurring any debts, liabilities or obligations or in taking or omitting any other actions for or in connection with the Trust, are, and shall be deemed to be, acting as trustees, officers, employees or agents of the Trust and not in their own individual capacities. Except as otherwise provided in Sections 6.3 hereof with respect to liability of Trustees or officers, agents or employees of the Trust to the Trust or to Shareholders, no Shareholder, Trustee or officer, employee or agent (including the Advisor) of the Trust shall be liable for any debt, claim, demand, judgment decree, liability or obligation of any kind (in tort, contract or otherwise) of, against or with respect to the Trust or arising out of any action taken or omitted for or on behalf of the Trust, and the Trust shall be solely liable therefor and resort shall be had solely to the Trust Estate for the payment or performance thereof, and no Shareholder, Trustee or officer, employee or agent (including the Advisor) of the Trust shall be subject to any personal liability whatsoever, in tort, contract or otherwise, to any other Person or Persons in connection with the Trust Estate or the affairs of the Trust (or any actions taken or omitted for or on behalf of the Trust), and all such other Persons shall look solely to the Trust Estate for satisfaction of claims of any nature arising in connection with the Trust Estate or the affairs of the Trust (or any action taken or omitted for or on behalf of the Trust).

6.2.Express Exculpatory Clauses and Instruments. Any written instrument creating an obligation of the Trust shall, to the extent practicable, include a reference to this Declaration and provide that neither the Shareholders nor the Trustees nor any officers, employees or agents (including the Advisor) of the Trust shall be liable thereunder and that all Persons shall look solely to the Trust Estate for the payment of any claim thereunder or for the performance thereof; however, the omission of such provision from any such instrument shall not render the Shareholders, any Trustee, or any officer, employee or agent (including the Advisor) of the Trust liable nor shall the Shareholders, any Trustee or any officer, employee or agent (including the Advisor) of the Trust be liable to any one for such omission.

6.3.Limitation of Liability of Trustees, Officers, Employees and Agents to the Trust and to Shareholders for Acts and Omissions. To the fullest extent permitted by Maryland statutory and decisional law, as amended or interpreted, no Trustee, officer, employee or agent of the Trust (a) shall be personally liable to the Trust or its Shareholders and (b) shall have any greater duties than those established by this Declaration of Trust or, in cases as to which such duties are not so established, than those to which the directors, officers, employees and agents of a Maryland business corporation are subject from time to time. No amendment of this Declaration or repeal of any of its provisions shall limit or eliminate the limitation on liability provided to Trustees, officers, employees and agents of the Trust hereunder with respect to any act or omission occurring prior to such amendment or repeal.

6.4.Indemnification and Reimbursement of Trustees, Officers, Employees, Agents and Certain Other Persons.

(a)The Trust shall indemnify (i) its Trustees and officers, whether serving the Trust or at its request any other entity, to the full extent required or permitted by the General Laws of the State of Maryland now or hereafter in force, including the advance of expenses under the procedures and to the full extent permitted by law and (ii) other employees and agents to such extent as shall be authorized by the Trustees of the Trust or the Bylaws and be permitted by law. The foregoing rights of indemnification shall not be exclusive of any other rights to which those seeking indemnification may be entitled. The Trustees may take such action as is necessary to carry out these indemnification provisions and is expressly empowered to adopt, approve and amend from time to time such Bylaws, resolutions or contracts implementing such provisions or such further indemnification arrangements as may be permitted by law. No amendment of this Declaration of Trust or repeal of any of its provisions shall limit or eliminate the right to indemnification provided hereunder with respect to acts or omissions occurring prior to such amendment or repeal.

(b)Notwithstanding anything herein to the contrary, and to the fullest extent permitted by Maryland statutory or decisional law, as amended or interpreted, no Trustee or officer of the Trust shall be personally liable to the Trust or its shareholders for money damages. No amendment of this Declaration or repeal of any of its provisions shall limit or eliminate the limitation on liability provided to Trustees and officers hereunder with respect to any act or omission occurring prior to such amendment or repeal.

6.5.Indemnification and Reimbursement of Shareholders. Any Shareholder made a party to any action, suit or proceeding or against him a claim or liabilities asserted by reason of the fact that he, his testate or intestate was or is a Shareholder shall be indemnified and held harmless by the Trust against judgments, fines, amounts paid on account thereof (whether in settlement or otherwise) and reasonable expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the

17

defense of such action, suit, proceeding, claim or alleged liability or in connection with any appeal therein, whether or not the same proceeds to judgment or is settled or otherwise brought to a conclusion; provided, however, that such Shareholder gives prompt notice thereof, executes such documents and takes such action as will permit the Trust to conduct the defense or settlement thereof and cooperates therein. In the event that the assets of the Trust Estate are insufficient to satisfy the Trust’s indemnity obligations hereunder, each Shareholder shall be entitled to such indemnification pro rata from the Trust Estate.

6.6.Right of Trustees, Officers, Employees and Agents to Own Shares or Other Property and to Engage in Other Business. Any Trustee or officer, employee or agent of the Trust may acquire, own, hold and dispose of Shares in the Trust, for his individual account, and may exercise all rights of a Shareholder to the same extent and in the same manner as if he were not a Trustee or officer, employee or agent of the Trust. Any Trustee or officer, employee or agent of the Trust may, in his personal capacity or in the capacity of trustee, officer, director, stockholder, partner, member, advisor or employee of any Person or otherwise, have business interests and engage in business activities similar to or in addition to those relating to the Trust, which interests and activities may be similar to and competitive with those of the Trust and may include the acquisition, syndication, holding, management, development, operation or disposition, for his own account, or for the account of such Person or others, of interests in Mortgages, interests in Real Property, or interests in Persons engaged in the real estate business. Each Trustee, officer, employee and agent of the Trust shall be free of any obligation to present to the Trust any investment opportunity which comes to him in any capacity other than solely as Trustee, officer, employee or agent of the Trust even if such opportunity is of a character which, if presented to the Trust, could be taken by the Trust. Subject to the provisions of Section 6.8, any Trustee or officer, employee or agent of the Trust may be interested as trustee, officer, director, stockholder, partner, member, advisor or employee of, or otherwise have a direct or indirect interest in, any Person who may be engaged to render advice or services to the Trust, and may receive compensation from such Person as well as compensation as Trustee, officer, employee or agent or otherwise hereunder. None of these activities shall be deemed to conflict with his duties and powers as Trustee or officer, employee or agent of the Trust.

6.7.Transactions Between Trustees, Officers, Employees or Agents and the Trust. Except as otherwise provided by this Declaration, and in the absence of fraud, a contract, act or other transaction between the Trust and any other Person in which the Trust is interested, shall be valid, and no Trustee or officer, employee or agent of the Trust shall have any liability as a result of entering into any such contract, act or transaction, even though (a) one or more of the Trustees or officers, employees or agents of the Trust are directly or indirectly interested in or connected with or are trustees, partners, directors, employees, officers or agents of such other Person, or (b) one or more of the Trustees or officers, employees or agents of the Trust individually or jointly with others, is a party or are parties to, or are directly or indirectly interested in or connected with, such contract, act or transaction; provided that in each such case (i) such interest or connection is disclosed or known to the Trustees and thereafter the Trustees authorize or ratify such contract, act or other transaction by affirmative vote of a majority of the Trustees who are not so interested or (ii) such interest or connection is disclosed or known to the Shareholders, and thereafter such contract, act or transaction is approved by Shareholders holding a majority of the Shares then outstanding and entitled to vote thereon.

Notwithstanding any other provision of this Declaration, the Trust may engage in a transaction with (a) any Trustee, officer, employee or agent of the Trust (acting in his individual capacity), (b) any director, trustee, partner, officer, employee or agent (acting in his individual capacity) of the Advisor or any other investment advisor of the Trust, (c) the Advisor or any other investment advisor of the Trust or (d) an Affiliate of any of the foregoing, provided that such transaction has, after disclosure of such affiliation, been approved or ratified by the affirmative vote of a majority of the Trustees not having any interest in such transaction and not Affiliates of any party to the transaction after a determination by them that such transaction is fair and reasonable to the Trust and the Shareholders.

This Section 6.7 shall not prevent any sale of Shares issued by the Trust for the public offering thereof in accordance with a registration statement filed with the Securities and Exchange Commission under the Securities Act of 1933. The Trustees are not restricted by this Section 6.7 from forming a corporation, partnership, trust or other business association owned by any Trustee, officer, employee or agent or by their nominees for the purpose of holding title to property of the Trust or managing property of the Trust, provided that the Trustees make a determination that the creation of such entity for such purpose is in the best interest of the Trust.

6.8.Persons Dealing with Trustees, Officers, Employees or Agents. Any act of the Trustees or of the officers, employees or agents of the Trust purporting to be done in their capacity as such, shall, as to any Persons dealing with such Trustees, officers, employees or agents, be conclusively deemed to be within the purposes of this Trust and within the powers of such Trustees or officers, employees or agents. No Person dealing with the Trustees or any of them or with the officers, employees or agents of the Trust shall be bound to see to the application of any funds or property passing into their hands or control. The receipt of the Trustees or any of them, or of authorized officers, employees or agents of the Trust, for moneys or other consideration, shall be binding upon the Trust.

18

6.9.Reliance. The Trustees and the officers, employees and agents of the Trust may consult with counsel (which may be a firm in which one or more of the Trustees or the officers, employees or agents of the Trust is or are members) and the advice or opinion of such counsel shall be full and complete personal protection to all the Trustees and the officers, employees and agents of the Trust in respect of any action taken or suffered by them in good faith and in reliance on or in accordance with such advice or opinion. In discharging their duties, Trustees or officers, employees or agents of the Trust, when acting in good faith, may rely upon financial statements of the Trust represented to them to fairly present the financial position or results of operations of the Trust by the chief financial officer of the Trust or the officer of the Trust having charge of its books of account, or stated in a written report by an independent certified public accountant fairly to present the financial position or results of operations of the Trust. The Trustees and the officers, employees and agents of the Trust may rely, and shall be personally protected in acting, upon any instrument or other document believed by them to be genuine.

ARTICLE VII

DURATION, AMENDMENT AND TERMINATION OF TRUST

7.1.Duration of Trust. The duration of the Trust shall be perpetual; provided, however, the Trust may be terminated at any time by the affirmative vote at a meeting of Shareholders of the holders of Shares representing two-thirds of the total number of Shares then outstanding and entitled to vote thereon.

7.2.Termination of Trust.

(a)Upon the termination of the Trust:

(i)the Trust shall carry on no business except for the purpose of winding up its affairs;

(ii)the Trustees shall proceed to wind up the affairs of the Trust and all the powers of the Trustees under this Declaration shall continue until the affairs of the Trust shall have been wound up, including the power to fulfill or discharge the contracts of the Trust, collect its assets, sell, convey, assign, exchange, transfer or otherwise dispose of all or any part of the remaining Trust Estate to one or more Persons at public or private sale (for consideration which may consist in whole or in part of cash, Securities or other property of any kind), discharge or pay its liabilities, and do all other acts appropriate to liquidate its business; and

(iii)after paying or adequately providing for the payment of all liabilities, and upon receipt of such releases, indemnities and refunding agreements, as they deem necessary for their protection, the Trustees may distribute the remaining Trust Estate (in cash or in kind or partly each) among the Shareholders according to their respective rights.

(b)After termination of the Trust and distribution of the Trust Estate to the Shareholders as herein provided, the Trustees shall execute and lodge among the records of the Trust an instrument in writing setting forth the fact of such termination and such distribution, a copy of which instrument shall be filed with the Maryland Department of Assessments and Taxation, and the Trustees shall thereupon be discharged from all further liabilities and duties hereunder and the rights and interests of all Shareholders shall thereupon cease.

7.3.Amendment Procedure. This Declaration may be amended (except that the provisions governing the personal liability of the Shareholders, Trustees and of the officers, employees and agents of the Trust and the prohibition of assessments upon Shareholders may not be amended in any respect that could increase the personal liability of such Shareholders, Trustees or officers, employees and agents of the Trust) at a meeting of Shareholders by holders of Shares representing a majority (or, with respect to amendments of Article IV, the second paragraph of Section 5.1, Section 7.1 or this Section 7.3, and amendments inconsistent with Sections 2.1 and 5.14, at least two-thirds (2/3)) of the total number of votes authorized to be cast in respect of Shares then outstanding and entitled to vote thereon. The approval of a two-thirds (2/3) majority of the Trustees shall also be required for any such amendment. A two-thirds (2/3) majority of the Trustees may, after fifteen (15) days written notice to the Shareholders, also amend this Declaration without the vote or consent of Shareholders if in good faith they deem it necessary to conform this Declaration to the requirements of the REIT Provisions of the Internal Revenue Code, but the Trustees shall not be liable for failing to do so. Actions by the Trustees pursuant to Section 5.1 or pursuant to Section 8.6(a) that result in an amendment to this Declaration shall be effected without vote or consent of Shareholders.

7.4.Amendments Effective. Any amendment pursuant to any Section of this Declaration shall not become effective until it is duly filed with the Maryland Department of Assessments and Taxation.

19

7.5.Transfer to Successor. The Trustees, with the affirmative vote, at a meeting approving a plan for this purpose, of the holders of Shares representing two-thirds (2/3) of all votes cast at a meeting at which a quorum is present, may (a) cause the organization of a limited partnership, partnership, corporation, association, trust or other organization to take over the Trust Estate and carry on the affairs of the Trust, (b) merge the Trust into, or sell, convey and transfer the Trust Estate to, any such limited partnership, partnership, corporation, association, trust or organization in exchange for Securities thereof, or beneficial interests therein, and the assumption by such transferee of the liabilities of the Trust and (c) thereupon terminate this Declaration and deliver such shares, Securities or beneficial interests among the Shareholders in accordance with such plan.

ARTICLE VIII

MISCELLANEOUS

8.1.Applicable Law. This Declaration is executed and acknowledged by the Trustees with reference to the statutes and laws of the State of Maryland, and the rights of all parties and the construction and effect of every provision hereof shall be subject to and construed according to the statutes and laws of such State.

8.2.Index and Headings for Reference Only. The index and headings preceding the text, articles and sections hereof have been inserted for convenience and reference only and shall not be construed to affect the meaning, construction or effect of this Declaration.

8.3.Successors in Interest. This Declaration and the Bylaws shall be binding upon and inure to the benefit of the undersigned Trustees and their successors, assigns, heirs, distributees and legal representatives, and every Shareholder and his successors, assigns, heirs, distributees and legal representatives.

8.4.Inspection of Records. Trust records shall be available for inspection by Shareholders at the same time and in the same manner and to the extent that comparable records of a Maryland business corporation would be available for inspection by shareholders under the laws of the State of Maryland. Except as specifically provided for in this Declaration or in Title 8 of the Annotated Code of Maryland, Shareholders shall have no greater right than shareholders of a Maryland business corporation to require financial or other information from the Trust, Trustees or officers of the Trust. Any Federal or state securities administrator or the Maryland Department of Assessments and Taxation shall have the right, at reasonable times during business hours and for proper purposes, to inspect the books and records of the Trust.

8.5.Counterparts. This Declaration may be simultaneously executed in several counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute one and the same instrument, which shall be sufficiently evidenced by any such original counterpart.

8.6.Provisions of the Trust in Conflict with Law or Regulations; Severability.

(a)The provisions of this Declaration are severable, and if the Trustees shall determine, with the advice of counsel, that any one or more of such provisions (the “Conflicting Provisions”) are in conflict with the REIT Provisions of the Internal Revenue Code, the Conflicting Provisions shall be deemed never to have constituted a part of the Declaration; provided, however, that such determination by the Trustees shall not affect or impair any of the remaining provisions of this Declaration or render invalid or improper any action taken or omitted (including but not limited to the election of Trustees) prior to such determination. An amendment in recordable form signed by a majority of the Trustees setting forth any such determination and reciting that it was duly adopted by the Trustees, or a copy of this Declaration, with the Conflicting Provisions removed pursuant to such a determination, in recordable form, signed by a majority of the Trustees, shall be conclusive evidence of such determination when filed with the Maryland Department of Assessments and Taxation. The Trustees shall not be liable for failure to make any determination under this Section 8.6(a). Nothing in this Section 8.6(a) shall in any way limit or affect the right of the Trustees to amend this Declaration as provided in Section 7.3.

(b)If any provision of this Declaration shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other provision of this Declaration, and this Declaration shall be carried out as if any such invalid or unenforceable provision were not contained herein.

8.7.Certifications. The following certifications shall be final and conclusive as to any Persons dealing with the Trust:

20

(a)a certification of a vacancy among the Trustees by reason of resignation, removal, increase in the number of Trustees, incapacity, death or otherwise, when made in writing by a majority of the remaining Trustees;

(b)a certification as to the individuals holding office as Trustees or officers at any particular time, when made in writing by the secretary of the Trust;

(c)a certification that a copy of this Declaration or of the Bylaws is a true and correct copy thereof as then in force, when made in writing by the secretary of the Trust;

(d)a certification as to any actions by Trustees, other than the above, when made in writing by the secretary of the Trust or by any Trustee.

These amendments do not affect the total number of common shares of beneficial interest, $.01 par value (“Common Shares”), authorized or issued by the Trust. The amendment and restatement of the Declaration was authorized by the Board of Trustees of the Trust acting by unanimous written consent on August 18, 1995 and by at least two-thirds of the stockholders of the Trust by means of unanimous written consent obtained on August 18, 1995.

8.8.Indemnification of the Trust. Each shareholder will indemnify and hold harmless the Trust from and against all costs, expenses, penalties, fines and other amounts, including, without limitation, attorneys’ and other professional fees, whether third party or internal, arising from such shareholder’s violation of any provision of this Declaration or the Bylaws, including, without limitation, Section 5.14, and shall pay such sums to the Trust upon demand, together with interest on such amounts, which interest will accrue at the lesser of 15% per annum and the maximum amount permitted by law, from the date such costs or the like are incurred until the receipt of repayment by the Trust. Nothing in this Section shall create or increase the liability of any shareholders, trustees, officers, employees or agents of the Trust for actions taken on behalf of the Trust.

21

EX-10.3

Exhibit 10.3

Schedule to Exhibit 10.3

There are 15 management agreements with Sonesta International Hotels Corporation for limited service hotels, a representative form of which is filed herewith.  The other 14 management agreements, with the respective parties and applicable to the respective hotels listed below, are substantially identical in all material respects to the representative form of management agreement filed herewith.

Owner	Hotel	Landlord	Date of Agreement	Effective Date	Invested Capital Amount			Section 2.02(1) Date
Cambridge TRS, Inc.	Sonesta ES Suites Burlington 11 Old Concord Road Burlington, MA	HPT IHG-2 Properties Trust	June 12, 2012	June 12, 2012	$	18,240,000		January 31, 2015
Cambridge TRS, Inc.	Sonesta ES Suites Orlando 8480 International Drive Orlando, FL	HPT IHG-2 Properties Trust	July 6, 2012	July 9, 2012	$		7,900,000	January 31, 2015
Cambridge TRS, Inc.	Sonesta ES Suites Andover 4 Technology Drive Andover, MA	HPT IHG-2 Properties Trust	July 25, 2012	July 25, 2012	$		17,100,000	January 31, 2016
Cambridge TRS, Inc.	Sonesta ES Suites Parsippany 61 Interpace Parkway Parsippany, NJ	HPT IHG-2 Properties Trust	July 30, 2012	July 30, 2012	$		22,312,500	January 1, 2016
Cambridge TRS, Inc.	Sonesta ES Suites Somerset 260 Davidson Avenue Somerset, NJ	HPT IHG-2 Properties Trust	July 30, 2012	August 1, 2012	$		7,200,000	January 1, 2016

Owner	Hotel	Landlord	Date of Agreement	Effective Date	Invested Capital Amount		Section 2.02(1) Date
Cambridge TRS, Inc.	Sonesta ES Suites Princeton 4375 U.S. Route 1 South Princeton, NJ	HPT IHG-2 Properties Trust	July 30, 2012	August 3, 2012	$	5,810,000	January 1, 2016
Cambridge TRS, Inc.	Sonesta ES Suites Malvern 20 Morehall Road Malvern, PA	HPT IHG-2 Properties Trust	July 27, 2012	August 6, 2012	$	17,398,113	January 1, 2016
Cambridge TRS, Inc.	Sonesta ES Suites Dublin 435 Metro Place South Dublin, OH	HPTMI Properties Trust	August 6, 2012	August 11, 2012	$	6,750,000	January 1, 2016
Cambridge TRS, Inc.	Sonesta ES Suites Flagstaff 3440 Country Club Drive Flagstaff, AZ	HPTMI Properties Trust	August 6, 2012	August 11, 2012	$	5,625,000	January 1, 2016
Cambridge TRS, Inc.	Sonesta ES Suites Houston 5190 Hidalgo Street Houston, TX	HPT IHG-2 Properties Trust	August 6, 2012	August 13, 2012	$	10,260,000	January 1, 2016
Cambridge TRS, Inc.	Sonesta ES Suites Columbia 8844 Columbia 100 Parkway Columbia, MD	HPT IHG-2 Properties Trust	August 6, 2012	August 14, 2012	$	12,540,000	January 1, 2016
Cambridge TRS, Inc.	Sonesta ES Suites Charlotte 7925 Forest Pine Drive Charlotte, NC	HPT IHG-2 Properties Trust	August 6, 2012	August 16, 2012	$	6,810,000	January 1, 2016

Owner	Hotel	Landlord	Date of Agreement	Effective Date	Invested Capital Amount		Section 2.02(1) Date
Cambridge TRS, Inc.	Sonesta ES Suites St. Louis 1855 Craigshire Road St. Louis, MO	HPT IHG-2 Properties Trust	August 6, 2012	August 22, 2012	$	3,780,000	January 1, 2016
Cambridge TRS, Inc.	Sonesta Fort Lauderdale 999 North Fort Lauderdale Beach Boulevard Fort Lauderdale, FL	HPT IHG-2 Properties Trust	May 30, 2014	May 30, 2014	$	65,000,000	January 1, 2018

EX-10.4

Exhibit 10.4

POOLING AGREEMENT

THIS POOLING AGREEMENT (this “Agreement”) is made as of April 23, 2012, by and among Sonesta International Hotels Corporation (“Manager”) and the parties listed on Schedule A (each an “Owner” and collectively, “Owners”).

RECITALS:

Each Owner has entered into a Management Agreement with Manager (each a “Management Agreement” and collectively, the “Management Agreements”) with respect to the real estate and personal property described in Schedule B opposite such Owner’s name which is operated as a full service or a limited service hotel (each a “Hotel” and collectively, the “Hotels”), which Management Agreements are listed on Schedule C.

The parties desire that working capital of each of the Hotels and all revenues from operation of each of the Hotels be pooled for purposes of paying operating expenses of the Hotels, fees and other amounts due to Manager and Owners.

NOW, THEREFORE, the parties agree as follows:

ARTICLE I
DEFINED TERMS

1.01.Definitions.  Capitalized terms used, but not otherwise defined in this Agreement shall have the meanings given to such terms in the Management Agreements. The following capitalized terms as used in this Agreement shall have the meanings set forth below:

“Additional Hotel” is defined in Section 7.01.

“Additional Owner” is defined in Section 7.01.

“Agreement” is defined in the Preamble.

“Aggregate Additional Manager Advances” means the sum of Additional Manager Advances under all Management Agreements.

“Aggregate Annual Operating Statement” is defined in Article IV.

“Aggregate Base Management Fee” means an amount equal to 3% of the Aggregate Gross Revenues attributable to full service Hotels and 5% of the Aggregate Gross Revenues attributable to limited service Hotels.

“Aggregate Deductions” means the sum of Deductions of the Hotels.

“Aggregate Gross Room Revenues” mean the sum of Gross Room Revenues of the Hotels.

“Aggregate Gross Revenues” means the sum of Gross Revenues of the Hotels.

“Aggregate Incentive Management Fee” means with respect to each Year or portion thereof, an amount equal to twenty percent (20%) of Aggregate Operating Profit remaining after deducting amounts paid or payable in respect of Aggregate Owner’s Priority Return and Aggregate Reimbursable Advances for such Year; provided that for purposes of determining the Aggregate Incentive Management Fee, Aggregate Operating Profit shall be determined based upon ninety-five percent (95%) of Aggregate Gross Revenues.

“Aggregate Invested Capital” means the sum of the Invested Capital for each of the Hotels.

“Aggregate Monthly Statement” is defined in Article IV.

“Aggregate Operating Profit” means an amount equal to Aggregate Gross Revenues less Aggregate Deductions.

“Aggregate Owner Advances” means the sum of Owner Advances under all Management Agreements.

“Aggregate Owner’s Priority” means, for each Year or portion thereof, an amount equal to eight percent (8%) of Aggregate Invested Capital.

“Aggregate Owner’s Residual Payment” means with respect to each Year or portion thereof, an amount equal to Aggregate Operating Profit remaining after deducting amounts paid or payable in respect of Aggregate Owner’s Priority, Aggregate Reimbursable Advances and the Aggregate Incentive Management Fee for such Year.

“Aggregate Reservation Fee” means for each Year or portion thereof, an amount equal to one and one-half percent (1.5%) of Aggregate Gross Room Revenues.

“Aggregate Reimbursable Advances” means the sum of Reimbursable Advances of the Hotels.

“Aggregate System Fee” means with respect to each Year or portion thereof, an amount equal to one and one-half percent (1.5%) of Aggregate Gross Revenues.

“Hotel” and “Hotels” is defined in the Recitals.

“Landlord(s)” means the owner of the Hotel(s) set forth on Exhibit B.

“Management Agreement” and “Management Agreements” is defined in the Recitals.

“Manager” is defined in the Preamble.

“Marketing Party” is defined in Section 5.01.

“Non-Economic Hotel” is defined in Section 5.01.

“Non-Marketing Party” is defined in Section 5.02.

2

“Owner” and “Owners” are defined in the Preamble.

ARTICLE II
GENERAL

The parties agree that so long as a Hotel is subject to this Agreement, all Working Capital and all Gross Revenues of such Hotel shall be pooled pursuant to this Agreement and disbursed to pay all Aggregate Disbursements, fees and other amounts due Manager and Owners (not including amounts due pursuant to Section 11.20 of the Management Agreements) with respect to the Hotels and that the corresponding provisions of each Management Agreement shall be superseded as provided in Section 3.03.  The parties further agree that (a) if Manager gives a notice of non-renewal of the Term with respect to any Hotel, it shall be deemed to be a notice of non-renewal of the Term with respect to all the Hotels and (b) if Owner gives notice of termination of any Management Agreement without cause pursuant to Section 2.02 1. of the Management Agreements, or upon a Change in Control of Manager pursuant to Section 2.02 4. of the Management Agreements, or if Manager gives notice of termination of any Management Agreement upon a Change in Control of Owner pursuant to Section 2.02 3. of the Management Agreements, in any such case, it shall be deemed to be a notice of termination with respect to all Management Agreements.

ARTICLE III
PRIORITIES FOR
DISTRIBUTION OF AGGREGATE GROSS REVENUES

3.01.Priorities for Distribution of Aggregate Gross Revenues.  Aggregate Gross Revenues shall be distributed in the following order of priority:

A.First, to pay all Aggregate Deductions (excluding the Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee);

B.Second, to Manager, an amount equal to the Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee;

C.Third, to Owners, an amount equal to Aggregate Owner’s Priority;

D.Fourth, pari passu, to (i) Owners, in an amount necessary to reimburse Owners for all Aggregate Owner Advances which have not yet been repaid pursuant to this Section 3.01, and (ii) to Manager, in an amount necessary to reimburse Manager for all Aggregate Additional Manager Advances which have not yet been repaid pursuant to this Section 3.01.  If at any time the amounts available for distribution to Owners and Manager pursuant to this Section 3.01 are insufficient (a) to repay all outstanding Aggregate Owner Advances, and (b) all outstanding Aggregate Additional Manager Advances, then Owner and Manager shall be paid from such amounts the amount obtained by multiplying a number equal to the amount of the funds available for distribution by a fraction, the numerator of which is the sum of all outstanding Aggregate Owner Advances, or all outstanding Aggregate Additional Manager Advances, as the case may be, and the denominator of which is the sum of all outstanding Aggregate Owner Advances plus the sum of all outstanding Aggregate Additional Manager Advances;

3

E.Fifth, to Manager, an amount equal to the Aggregate Incentive Management Fee;

F.Finally, to Owners, the Aggregate Owner’s Residual Payment.

3.02.Timing of Payments.  Payment of the Aggregate Deductions, excluding the Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee, shall be made in the ordinary course of business.  The Aggregate Base Management Fee, the Aggregate Reservation Fee and the Aggregate System Fee shall be paid on the last Business Day of each calendar month, in arrears, based upon the prior month’s Aggregate Gross Revenues or Aggregate Gross Room Revenues, as the case may be, as reflected in the Aggregate Monthly Statement for such prior month.  The Aggregate Owner’s Priority shall be paid on the last Business Day of each calendar month, in arrears, in equal monthly installments, based upon Aggregate Invested Capital most recently reported to Manager by Owners.  If any installment of the Aggregate Base Management Fee, the Aggregate Reservation Fee, the Aggregate System Fee or the Aggregate Owner Priority is not paid when due, it shall accrue interest at the Interest Rate. The Aggregate Incentive Fee and Aggregate Owner’s Residual Payment shall be paid on the last Business Day of the calendar month following the calendar quarter to which such Aggregate Incentive Fee and/or Aggregate Owner’s Residual Payment relates, in arrears, based upon the year-to-date Aggregate Operating Profit as reflected in the Aggregate Monthly Statement for the last calendar month of such calendar quarter and shall be adjusted, after the first calendar quarter, to reflect distributions for prior calendar quarters.  Additional adjustments to all payments will be made on an annual basis based upon the Aggregate Annual Operating Statement for the Year and any audit conducted pursuant to Section 4.02 of the Management Agreements.

If the portion of Aggregate Gross Revenues to be distributed to Manager or Owner pursuant to Section 3.01 is insufficient to pay amounts then due in full, any amounts left unpaid shall be paid from and to the extent of Aggregate Gross Revenues available therefor at the time distributions are made in successive calendar months until such amounts are paid in full, together with interest thereon, if applicable, and such payments shall be made from such available Aggregate Gross Revenues in the same order of priority as other payments made on account of such items in successive calendar months.

Calculations and payments of the fees and other payments in Section 3.01 and distributions of Aggregate Gross Revenues within a Year shall be accounted for cumulatively within a Year, but shall not be cumulative from one Year to the next.  Calculations and payments of Aggregate Reimbursable Advances shall be accounted for cumulatively within a Year, and shall be cumulative from one Year to the next.

The Aggregate Owner’s Priority and Aggregate Owner’s Residual Payment shall be allocated among Owners as the Owners shall determine in their sole discretion and Manager shall have no responsibility or liability in connection therewith.

3.03.Relationship with Management Agreements.  For as long as this Agreement is in effect with respect to a Hotel, the provisions of Section 3.01 and 3.02 shall supersede Sections 3.02 and 3.03 of the Management Agreement then in effect with the applicable Hotel.

4

ARTICLE IV
FINANCIAL STATEMENTS

Manager shall prepare and deliver the following financial statements to the Owners:

(a)Within twenty (20) days after the close of each calendar month, Manager shall deliver an accounting to Owner showing Aggregate Gross Revenues, Aggregate Gross Room Revenues, occupancy percentage and average daily rate, Aggregate Deductions, Aggregate Operating Profit, and applications and distributions thereof for the preceding calendar month and year-to-date (“Aggregate Monthly Statement”).

(b)Within sixty (60) days after the end of each Year, Manager shall deliver to Owner and Landlord a statement (the “Aggregate Annual Operating Statement”) in reasonable detail summarizing the operations of the Hotels for the immediately preceding Year and an Officer’s Certificate setting forth the totals of Aggregate Gross Revenues, Aggregate Deductions, and the calculation of the Aggregate Incentive Management Fee and Aggregate Owner’s Residual Payment for the preceding Year and certifying that such Aggregate Annual Operating Statement is true and correct.  Manager and Owner shall, within ten (10) Business Days after Owner’s receipt of such statement, make any adjustments, by cash payment, in the amounts paid or retained for such Year as are required because of variances between the Aggregate Monthly Statements and the Aggregate Annual Operating Statement.  Any payments shall be made together with interest at the Interest Rate from the date such amounts were due or paid, as the case may be, until paid or repaid.  The Aggregate Annual Operating Statement shall be controlling over the Aggregate Monthly Statements and shall be final, subject to adjustments required as a result of an audit requested by Owner or Landlord pursuant to Section 4.02.B of the Management Agreements.

(c)Manager shall also prepare and deliver such other statements or reports as any Owner may, from time to time, reasonably request.

The financial statements delivered pursuant to this Article IV are in addition to any financial statements required to be prepared and delivered pursuant to the Management Agreements.

ARTICLE V
NON-ECONOMIC HOTELS

5.01.Non-Economic Hotels.  If the Gross Revenues of any Hotel are insufficient to pay the Owner’s Priority for such Hotel in full during any two (2) out of four (4) consecutive Years, each of Manager and the relevant Owner shall, upon thirty (30) days notice to the other, be entitled to designate such Hotel a “Non-Economic Hotel.”  Notwithstanding the foregoing, Manager and Owners shall not be entitled to designate Hotels for which the Invested Capital in the aggregate would exceed twenty percent (20%) of Aggregate Invested Capital and further provided for purposes of this Section 5.01 only, Aggregate Invested Capital shall be determined without giving effect to the termination of the Management Agreement of a Non-Economic

5

Hotel and without reduction for proceeds from the sale, or deemed sale, of any Non-Economic Hotel.

The party designating a Hotel as a Non-Economic Hotel (“Marketing Party”) shall market such Non-Economic Hotel for sale and any costs incurred by the Marketing Party or any other Person in connection with such marketing activities and the sale of such Hotel shall be paid out of the net proceeds of such sale.  The relevant Owner, Landlord and Manager, as the case may be, shall cooperate with the Marketing Party in compiling any relevant information, preparing marketing materials and otherwise in connection with the sale of a Non-Economic Hotel.

5.02.Sale Process.  If a Non-Economic Hotel is marketed for sale in accordance with Section 5.01 and the Marketing Party receives an offer therefor which it wishes to accept on behalf of the relevant Owner and relevant Landlord, the Marketing Party shall give the relevant Owner, or the Manager, as the case may be (the “Non-Marketing Party”), prompt notice thereof, which notice shall include a copy of the offer and any other information reasonably requested by the non-Marketing Party.  If Manager is the Non-Marketing Party, Manager shall have a right of first refusal to purchase such Non-Economic Hotel on the terms of the offer by notice given to the Marketing Party within seven (7) Business Days after receipt of such notice and other information from the Marketing Party.  If an Owner is the Non-Marketing Party, such Owner, on behalf of the relevant Landlord, may reject the offer by notice given to the Marketing Party within seven (7) Business Days after receipt of such notice and other information from the Marketing Party, in which event the Non-Economic Hotel shall be deemed to have been sold to the relevant Landlord on the date, at the price and on the other terms contained in the offer.  If a Non-Economic Hotel is sold to a third party or deemed to have been sold to the relevant Landlord, in each case pursuant to such offer, effective as of the date of sale or deemed sale: (i) the Management Agreement shall terminate with respect to such Non-Economic Hotel; (ii) the Aggregate Invested Capital shall be reduced by an amount equal to the net proceeds of sale after reduction for the costs and expenses of the relevant Landlord, relevant Owner and/or Manager (or, in the case of a deemed sale, the net proceeds of sale determined by reference to such offer, after reduction for any amounts actually expended and any amounts which would reasonably have been expected to have been expended if the sale had been consummated, by the relevant Owner, relevant Landlord and/or Manager).  If the reduction of Aggregate Invested Capital is less than the Invested Capital of the Non-Economic Hotel sold or deemed sold, the difference shall be proportionately reallocated to the Invested Capital of the remaining Hotels.

ARTICLE VI
ACCOUNTS

All Working Capital and all Gross Revenues of each of the Hotels may be pooled and deposited in one or more bank accounts in the name(s) of Owners designated by Manager, which accounts may, except as required by any Mortgage and related loan documentation or applicable law, be commingled accounts containing other funds owned by or managed by Manager.  Manager shall be authorized to access the accounts without the approval of Owners, subject to any limitation on the maximum amount of any check, if any, established between Manager and Owners as part of the Annual Operating Projections.  One or more Owners shall be a signatory on all accounts maintained with respect to the Hotel, and Owners shall have the right to require that one or more Owner’s signature be required on all checks/withdrawals after the

6

occurrence of an Event of Default by Manager.  The Owners shall provide such instructions to the applicable bank(s) as are necessary to permit Manager to implement the Manager’s rights and obligations under this Agreement.  The failure of any Owner to provide such instructions shall relieve Manager of its obligations hereunder until such time as such failure is cured.

ARTICLE VII
ADDITION AND REMOVAL OF HOTELS

7.01.Addition of Hotels.  At any time and from time to time, Manager and any Owner or any Affiliate of an Owner (an “Additional Owner”) which enters into a management agreement with Manager for the operation of an additional Hotel (an “Additional Hotel”), the Additional Owner may become a party to this Agreement by signing an accession agreement confirming the applicability of this Agreement to such Additional Hotel.  If an Additional Hotel is made subject to this Agreement other than on the first day of a calendar month, the parties shall include such prorated amounts of the Gross Revenues and Deductions (and other amounts as may be necessary) applicable to the Additional Hotel for such calendar month, as mutually agreed in their reasonable judgment, in the calculation of Aggregate Gross Revenues and Aggregate Deductions (and other amounts as may be necessary) for the calendar month in which the Additional Hotel became subject to this Agreement and shall make any other prorations, adjustments, allocations and changes required.  Additionally, any amounts held as Working Capital for the Additional Hotel or to fund capital expenditures, if any, shall be held by Manager under this Agreement.

7.02.Removal of Hotels.  From and after the date of termination of any Management Agreement, the Hotel managed thereunder shall no longer be subject to this Agreement.  If the termination occurs on a day other than the last day of a calendar month, the parties shall exclude such prorated amounts of the Gross Revenues and Deduction (and other amounts as may be necessary) applicable to such Hotel for such calendar month, as mutually agreed in their reasonable judgment, in the calculation of Aggregate Gross Revenues and Aggregate Deductions (and other amounts as may be necessary) for the calendar month in which the termination occurred.  Additionally, the relevant Owner and Manager, both acting reasonably, shall mutually agree to the portion of the Aggregate Working Capital and Aggregate Gross Revenues allocable to the Hotel being removed from this Agreement and the amount of the Aggregate Working Capital, Aggregate Gross Revenues so allocated and any amounts held to fund capital expenditures, shall be remitted to the relevant Owner and the relevant Owner and Manager shall make any other prorations, adjustments, allocations and changes required.

ARTICLE VIII
TERM AND TERMINATION

8.01.Term.  This Agreement shall continue and remain in effect indefinitely unless terminated pursuant to Section 8.02.

8.02.Termination.  This Agreement may be terminated as follows:

(a)By the mutual consent of Manager and Owners which are parties to this Agreement.

7

(b)Automatically, if all Management Agreements terminate or expire for any reason.

(c)By Manager, if any or all Owners do not cure a material breach of this Agreement by any Owner or Landlord within thirty (30) days of written notice of such breach from Manager and if such breach is not cured, it shall be an Owner Event of Default under the Management Agreements.

(d)By Owners, if Manager does not cure a material breach of this Agreement by Manager within thirty (30) days of written notice of such breach from any Owner and if such breach is not cured, it shall be a Manager Event of Default under the Management Agreements.

8.03.Effect of Termination.  Upon the termination of this Agreement, except as otherwise provided in Section 2.02.1. or 9.04.B. of the Management Agreements, Manager shall be compensated for its services only through the date of termination and all amounts remaining in any accounts maintained by Manager pursuant to Article VI, after payment of such amounts as may be due to Manager hereunder, shall be distributed to Owners.  Notwithstanding the foregoing, upon the termination of any single Management Agreement, pooled funds shall be allocated as described in Section 7.02.

8.04.Survival.  The following Sections of this Agreement shall survive the termination of this Agreement:  8.03 and Article IX.

ARTICLE IX
MISCELLANEOUS PROVISIONS

9.01.Notices.  All notices, demands, consents, approvals, and requests given by any party to another party hereunder shall be in writing and shall be deemed to have been duly given when delivered in person, upon confirmation of receipt when transmitted by facsimile transmission, or on the next business day if transmitted by nationally recognized overnight courier, to the parties at the following addresses:

To Owners:

Cambridge TRS, Inc.

Two Newton Place

225 Washington Street

Newton, Massachusetts 02458

Attn:  President

Facsimile:

8

To Manager:

Sonesta International Hotels Corporation

Two Newton Place

225 Washington Street

Newton, Massachusetts 02458

Attn:  President

Facsimile:

9.02.Applicable Law; Arbitration.  This Agreement shall be interpreted, construed, applied and enforced in accordance with the laws of the Commonwealth of Massachusetts, with regard to its “choice of law” rules.  Any “Dispute” (as such term is defined in the Management Agreements) under this Agreement shall be resolved through final and binding arbitration conducted in accordance with the procedures and with the effect of, arbitration as provided for in the Management Agreements.

9.03.Severability.  If any term or provision of this Agreement or the application thereof in any circumstance is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.

9.04.Gender and Number.  Whenever the context of this Agreement requires, the gender of all words herein shall include the masculine, feminine, and neuter, and the number of all words herein shall include the singular and plural.

9.05.Headings and Interpretation.  The descriptive headings in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.  References to “Section” in this Agreement shall be a reference to a Section of this Agreement unless otherwise indicated.  Whenever the words “include,” “includes” or “including” are used in this Agreement they shall be deemed to be followed by “without limitation.”   The words “hereof,” “herein,” “hereby,” and “hereunder, when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision unless otherwise indicated.  The word “or” shall not be exclusive.  This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting.

9.06.Confidentiality of Information.  Any information exchanged between the Manager and each Owner pursuant to the terms and conditions of this Agreement shall be subject to Section 11.07 of the Management Agreements.

9.07.Assignment.  Neither Manager nor any Owner may assign its rights and obligations under this Agreement to any other Person without the prior written consent of the other parties.

9

9.08.Entire Agreement; Construction; Amendment.  With respect to the subject matter hereof, this Agreement supersedes all previous contracts and understandings between the parties and constitutes the entire Agreement between the parties with respect to the subject matter hereof.  Accordingly, in the event of any conflict between the provisions of this Agreement and the Management Agreements, the provisions of this Agreement shall control, and the provisions of the Management Agreements are deemed amended and modified, in each case as required to give effect to the intent of the parties in this Agreement.  All other terms and conditions of the Management Agreements shall remain in full force and effect; provided that, to the extent that compliance with this Agreement shall cause a default, breach or other violation of the Management Agreement by one party, the other party waives any right of termination, indemnity, arbitration or otherwise under the Management Agreement related to that specific default, breach or other violations, to the extent caused by compliance with this Agreement.  This Agreement may not be modified, altered or amended in any manner except by an amendment in writing, duly executed by the parties hereto.

9.09.Third Party Beneficiaries.  The terms and conditions of this Agreement shall inure to the benefit of, and be binding upon, the respective successors, heirs, legal representatives or permitted assigns of each of the parties hereto and except for Landlord(s), which are intended third party beneficiaries, no Person other than the parties hereto and their successors and permitted assigns is intended to be a beneficiary of this Agreement.

[Signatures begin on the following page.]

10

IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement with the intention of creating an instrument under seal.

SONESTA INTERNATIONAL HOTELS CORPORATION
By:	/s/ William J. Sheehan
	William J. Sheehan
	Chairman and Chief Executive Officer
CAMBRIDGE TRS, INC.
By:	/s/ John G. Murray
	John G. Murray
	President and Chief Operating Officer

11

Schedule A

Owners

Cambridge TRS, Inc.

Schedule B

(amended and restated as of May 30, 2014)

Hotels

Owner	Hotel	Landlord
Cambridge TRS, Inc.	Royal Sonesta Cambridge	HPT Cambridge LLC
	40 Edwin H. Land Boulevard
	Cambridge, MA 02142
	(effective January 31, 2012)
	Sonesta Hilton Head Resort	HPT IHG-2 Properties Trust
	130 Shipyard Drive
	Hilton Head, SC 29928
	(effective April 27, 2012)
	Royal Sonesta Harbor Court Baltimore	Harbor Court Associates, LLC
	550 Light Street
	Baltimore, MD
	(effective May 31, 2012)
	Sonesta ES Suites Burlington	HPT IHG-2 Properties Trust
	11 Old Concord Road
	Burlington, MA
	(effective June 12, 2012)
	Sonesta Hotel Philadelphia	HPT IHG-2 Properties Trust
	1800 Market Street
	Philadelphia, PA
	(effective June 18, 2012)
	Sonesta ES Suites Orlando	HPT IHG-2 Properties Trust
	8480 International Drive
	Orlando, FL
	(effective July 9, 2012)
	Royal Sonesta Houston Hotel	HPT IHG-2 Properties Trust
	2222 West Loop South
	Houston, TX
	(effective July 16, 2012)

Sonesta ES Suites Andover	HPT IHG-2 Properties Trust
4 Technology Drive
Andover, MA
(effective July 25, 2012)
Sonesta ES Suites Parsippany	HPT IHG-2 Properties Trust
61 Interpace Parkway
Parsippany, NJ
(effective July 30, 2012)
Sonesta ES Suites Somerset	HPT IHG-2 Properties Trust
260 Davidson Avenue
Somerset, NJ
(effective August 1, 2012)
Sonesta ES Suites Princeton	HPT IHG-2 Properties Trust
4375 U.S. Route 1 South
Princeton, NJ
(effective August 3, 2012)
Sonesta ES Suites Malvern	HPT IHG-2 Properties Trust
20 Morehall Road
Malvern, PA
(effective August 6, 2012)
Sonesta ES Suites Dublin	HPTMI Properties Trust
435 Metro Place South
Dublin, OH
(effective August 11, 2012)
Sonesta ES Suites Flagstaff	HPTMI Properties Trust
3440 Country Club Drive
Flagstaff, AZ
(effective August 11, 2012)
Sonesta ES Suites Houston	HPT IHG-2 Properties Trust
5190 Hidalgo Street
Houston, TX
(effective August 13, 2012)
Sonesta ES Suites Columbia	HPT IHG-2 Properties Trust
8844 Columbia 100 Parkway
Columbia, MD
(effective August 14, 2012)

Sonesta ES Suites Charlotte	HPT IHG-2 Properties Trust
7925 Forest Pine Drive
Charlotte, NC
(effective August 16, 2012)
Sonesta ES Suites Atlanta	HPT IHG-2 Properties Trust
760 Mt. Vernon Highway, N.E.
Atlanta, GA
(effective August 20, 2012)
Sonesta ES Suites St. Louis	HPT IHG-2 Properties Trust
1855 Craigshire Road
St. Louis, MO
(effective August 22, 2012)
Sonesta Gwinnett Place	HPT Cambridge LLC
1775 Pleasant Hill Road
Duluth, GA
(effective as of the Effective Date of the applicable Management Agreement)
Royal Sonesta New Orleans	Royal Sonesta, Inc.
300 Bourbon Street
New Orleans, LA 70130
(effective June 28, 2013)
Sonesta Fort Lauderdale	HPT IHG-2 Properties Trust
999 North Fort Lauderdale Beach Boulevard
Fort Lauderdale, FL
(effective May 30, 2014)

Schedule C

(amended and restated as of May 30, 2014)

Management Agreements

Management Agreement between Sonesta Acquisition Corp. (now known as Sonesta International Hotels Corporation) and Cambridge TRS, Inc., dated as of January 31, 2012.

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of April 23, 2012 (effective April 27, 2012).  (Hilton Head, SC)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of May 31, 2012.  (Baltimore, MD)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of June 12, 2012.  (Burlington, MA)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of June 18, 2012.  (Philadelphia, PA)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of July 6, 2012 (effective July 9, 2012).  (Orlando, FL).

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of July 16, 2012 (effective July 16, 2012).  (Houston, TX)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of July 25, 2012 (effective July 25, 2012).  (Andover, MA)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of July 27, 2012 (effective August 6, 2012).  (Malvern, PA)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of July 30, 2012 (effective July 30, 2012).  (Parsippany, NJ)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of July 30, 2012 (effective August 1, 2012).  (Somerset, NJ)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of July 30, 2012 (effective August 3, 2012).  (Princeton, NJ)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of August 6, 2012 (effective August 11, 2012).  (Dublin, OH)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of August 6, 2012 (effective August 11, 2012).  (Flagstaff, AZ)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of August 6, 2012 (effective August 13, 2012).  (Houston, TX)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of August 6, 2012 (effective August 14, 2012).  (Columbia, MD)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of August 6, 2012 (effective August 16, 2012).  (Charlotte, NC)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of August 6, 2012 (effective August 20, 2012).  (Atlanta, GA)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of August 6, 2012 (effective August 22, 2012).  (St. Louis, MO)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of February 21, 2013 (effective as of the Effective Date of the applicable Management Agreement).  (Duluth, GA)

Amended and Restated Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of June 28, 2013.  (New Orleans, LA)

Management Agreement between Sonesta International Hotels Corporation and Cambridge TRS, Inc., dated as of May 30, 2014 (effective May 30, 2014).  (Fort Lauderdale, FL)

EX-12.1

EXHIBIT 12.1

HOSPITALITY PROPERTIES TRUST

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(IN THOUSANDS, EXCEPT RATIO AMOUNTS)

	Six Months Ended June 30,		Year Ended December 31,
	2014		2013		2012		2011		2010		2009
Pre-tax income from continuing operations before equity in earnings of an investee	$	92,378	$	127,750	$	153,219	$	191,803	$	21,990	$	198,671
Fixed charges	70,309		145,954		136,111		134,110		138,712		143,410
Adjusted Earnings	$	162,687	$	273,704	$	289,330	$	325,913	$	160,702	$	342,081
Fixed Charges:
Interest on indebtedness and amortization of deferred finance costs and debt discounts	$	70,309	$	145,954	$	136,111	$	134,110	$	138,712	$	143,410
Ratio of earnings to fixed charges	2.31x		1.88x		2.13x		2.43x		1.16x		2.39x

EX-12.2

EXHIBIT 12.2

HOSPITALITY PROPERTIES TRUST

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES AND PREFERRED DISTRIBUTIONS

(IN THOUSANDS, EXCEPT RATIO AMOUNTS)

	Six Months Ended June 30,		Year Ended December 31,
	2014		2013		2012		2011		2010			2009
Pre-tax income from continuing operations before equity in earnings of an investee	$	92,378	$	127,750	$	153,219	$	191,803	$	21,990		$	198,671
Fixed charges	70,309		145,954		136,111		134,110		138,712			143,410
Adjusted earnings	$	162,687	$	273,704	$	289,330	$	325,913	$	160,702		$	342,081
Fixed charges:
Interest on indebtedness and amortization of deferred finance costs and debt discounts	$	70,309	$	145,954	$	136,111	$	134,110	$	138,712		$	143,410
Preferred distributions	5,166		26,559		40,145		29,880		29,880			29,880
Combined fixed charges and preferred distributions	$	75,475	$	172,513	$	176,256	$	163,990	$	168,592		$	173,290
Ratio of earnings to fixed charges and preferred distributions	2.16x		1.59x		1.64x		1.99x		0.95x		(1)	1.97x

(1)The deficiency for this period was approximately $7,890.

EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Barry M. Portnoy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hospitality Properties Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2014	/s/ Barry M. Portnoy
	Barry M. Portnoy
	Managing Trustee

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Adam D. Portnoy, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hospitality Properties Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2014	/s/ Adam D. Portnoy
	Adam D. Portnoy
	Managing Trustee

EX-31.3

EXHIBIT 31.3

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, John G. Murray, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hospitality Properties Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2014	/s/ John G. Murray
	John G. Murray
	President and Chief Operating Officer

EX-31.4

EXHIBIT 31.4

CERTIFICATION PURSUANT TO EXCHANGE ACT RULES 13a-14(a) AND 15d-14(a)

I, Mark L. Kleifges, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Hospitality Properties Trust;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2014	/s/ Mark L. Kleifges
	Mark L. Kleifges
	Treasurer and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

Certification Required by 18 U.S.C. Sec. 1350

In connection with the filing by Hospitality Properties Trust (the “Company”) of the Quarterly Report on Form 10-Q for the period ended June 30, 2014 (the “Report”), each of the undersigned hereby certifies, to the best of his knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Barry M. Portnoy	/s/ John G. Murray
Barry M. Portnoy	John G. Murray
Managing Trustee	President and Chief Operating Officer
/s/ Adam D. Portnoy	/s/ Mark L. Kleifges
Adam D. Portnoy	Mark L. Kleifges
Managing Trustee	Treasurer and Chief Financial Officer

Date: August 11, 2014

XML

Fair Value of Assets and Liabilities (Details 2) (USD $) In Thousands, unless otherwise specified	Feb. 15, 2014 Senior Notes, due 2014 at 7.875%	Dec. 31, 2013 Senior Notes, due 2014 at 7.875%	Jun. 30, 2014 Senior Notes, due 2015 at 5.125%	Dec. 31, 2013 Senior Notes, due 2015 at 5.125%	Jun. 30, 2014 Senior Notes, due 2016 at 6.3%	Dec. 31, 2013 Senior Notes, due 2016 at 6.3%	Jun. 30, 2014 Senior Notes, due 2017 at 5.625%	Dec. 31, 2013 Senior Notes, due 2017 at 5.625%	Jun. 30, 2014 Senior Notes, due 2018 at 6.7%	Dec. 31, 2013 Senior Notes, due 2018 at 6.7%	Jun. 30, 2014 Senior Notes, due 2022 at 5%	Dec. 31, 2013 Senior Notes, due 2022 at 5%	Jun. 30, 2014 Senior Notes, due 2023 at 4.5%	Dec. 31, 2013 Senior Notes, due 2023 at 4.5%	Jun. 30, 2014 Senior Notes, due 2024 at 4.65%	Mar. 12, 2014 Senior Notes, due 2024 at 4.65%	Jun. 30, 2014 Convertible senior notes, due 2027 at 3.8%	Dec. 31, 2013 Convertible senior notes, due 2027 at 3.8%	Jun. 30, 2014 Carrying Amount	Dec. 31, 2013 Carrying Amount	Dec. 31, 2013 Carrying Amount Senior Notes, due 2014 at 7.875%	Jun. 30, 2014 Carrying Amount Senior Notes, due 2015 at 5.125%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2015 at 5.125%	Jun. 30, 2014 Carrying Amount Senior Notes, due 2016 at 6.3%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2016 at 6.3%	Jun. 30, 2014 Carrying Amount Senior Notes, due 2017 at 5.625%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2017 at 5.625%	Jun. 30, 2014 Carrying Amount Senior Notes, due 2018 at 6.7%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2018 at 6.7%	Jun. 30, 2014 Carrying Amount Senior Notes, due 2022 at 5%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2022 at 5%	Jun. 30, 2014 Carrying Amount Senior Notes, due 2023 at 4.5%	Dec. 31, 2013 Carrying Amount Senior Notes, due 2023 at 4.5%	Jun. 30, 2014 Carrying Amount Senior Notes, due 2024 at 4.65%	Jun. 30, 2014 Carrying Amount Convertible senior notes, due 2027 at 3.8%	Dec. 31, 2013 Carrying Amount Convertible senior notes, due 2027 at 3.8%	Jun. 30, 2014 Fair Value	Dec. 31, 2013 Fair Value	Dec. 31, 2013 Fair Value Senior Notes, due 2014 at 7.875%	Jun. 30, 2014 Fair Value Senior Notes, due 2015 at 5.125%	Dec. 31, 2013 Fair Value Senior Notes, due 2015 at 5.125%	Jun. 30, 2014 Fair Value Senior Notes, due 2016 at 6.3%	Dec. 31, 2013 Fair Value Senior Notes, due 2016 at 6.3%	Jun. 30, 2014 Fair Value Senior Notes, due 2017 at 5.625%	Dec. 31, 2013 Fair Value Senior Notes, due 2017 at 5.625%	Jun. 30, 2014 Fair Value Senior Notes, due 2018 at 6.7%	Dec. 31, 2013 Fair Value Senior Notes, due 2018 at 6.7%	Jun. 30, 2014 Fair Value Senior Notes, due 2022 at 5%	Dec. 31, 2013 Fair Value Senior Notes, due 2022 at 5%	Jun. 30, 2014 Fair Value Senior Notes, due 2023 at 4.5%	Dec. 31, 2013 Fair Value Senior Notes, due 2023 at 4.5%	Jun. 30, 2014 Fair Value Senior Notes, due 2024 at 4.65%	Jun. 30, 2014 Fair Value Convertible senior notes, due 2027 at 3.8%	Dec. 31, 2013 Fair Value Convertible senior notes, due 2027 at 3.8%
Fair Value of Assets and Liabilities
Financial liabilities																					$ 300,000	$ 280,000	$ 280,000	$ 275,000	$ 275,000	$ 300,000	$ 300,000	$ 350,000	$ 350,000	$ 500,000	$ 500,000	$ 300,000	$ 300,000	$ 350,000	$ 8,478	$ 8,478			$ 304,035	$ 281,323	$ 283,150	$ 294,040	$ 297,443	$ 328,899	$ 327,681	$ 393,652	$ 399,560	$ 529,893	$ 524,810	$ 306,272	$ 289,950	$ 359,394	$ 8,963	$ 8,983
Unamortized discounts																			(9,473)	(9,473)
Financial liabilities																			$ 2,354,005	$ 2,304,005																	$ 2,502,436	$ 2,435,612
Interest rate stated percentage	7.875%	7.875%	5.125%	5.125%	6.30%	6.30%	5.625%	5.625%	6.70%	6.70%	5.00%	5.00%	4.50%	4.50%	4.65%	4.65%	3.80%	3.80%

XML

Shareholders' Equity (Details) (USD $) In Thousands, except Share data, unless otherwise specified	0 Months Ended							1 Months Ended	6 Months Ended	1 Months Ended
	Apr. 15, 2014 Series D	Jan. 15, 2014 Series D	Jun. 10, 2014 Common Shares item	May 21, 2014 Common Shares	Feb. 20, 2014 Common Shares	Jul. 15, 2014 Subsequent event Series D	Jul. 10, 2014 Subsequent event Common Shares	Mar. 31, 2014 RMR	Jun. 30, 2014 RMR	Mar. 31, 2014 RMR Common Shares	Aug. 10, 2014 RMR Subsequent event
Common Share Issuances
Common shares issued									54,423		21,444
Common shares issued for services rendered by RMR								102,536	65,018	102,536
Common shares granted to trustees in period			2,500
Common stock price per share which is the closing price at New York Stock Exchange (in dollars per share)			$ 29.28
Number of Trustees			5
Distribution to preferred shareholders (in dollars per share)	$ 0.4453	$ 0.4453				$ 0.4453
Distribution paid to preferred shareholders	$ 5,166	$ 5,166				$ 5,166
Distribution to common shareholders (in dollars per share)				$ 0.49	$ 0.48
Distribution paid to common shareholders				73,373	71,811
Cash distributions paid or payable (in dollars per share)							$ 0.49
Distribution declared to common shareholders							$ 73,395

XML

Revenue Recognition

6 Months Ended

Jun. 30, 2014

Revenue Recognition

Revenue Recognition

Note 3.  Revenue Recognition

We report hotel operating revenues for managed hotels in our condensed consolidated statements of income and comprehensive income. We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when services are provided. Our share of the net operating results of our managed hotels in excess of the minimum returns due to us and certain other amounts as provided under the management agreements, or additional returns, are generally determined annually. We recognize additional returns due to us under our management agreements at year end when all contingencies are met and the income is earned. We had no deferred additional returns for the three and six months ended June 30, 2014 and 2013.

We recognize rental income from operating leases on a straight line basis over the term of the lease agreements except for one lease in which there is uncertainty regarding the collection of scheduled future rent increases.  Rental income includes $33 and $75 for the three and six months ended June 30, 2014, respectively, of adjustments necessary to record rent on the straight line basis and $36 and $98 for the three and six months ended June 30, 2013, respectively, of adjustments necessary to record rent on the straight line basis.  Other assets, net, include $5,531 and $5,456 of straight line rent receivables at June 30, 2014 and December 31, 2013, respectively.

We determine percentage rent due to us under our leases annually and recognize it at year end when all contingencies have been met and the rent is earned. We had deferred percentage rent of $698 and $1,572 for the three and six months ended June 30, 2014 and $672 and $1,282 for the three and six months ended June 30, 2013, respectively.

We own all the capital expenditure reserves, or FF&E reserves, for our hotels. We do not report the amounts which are escrowed as FF&E reserves for our managed hotels as FF&E reserve income. We report deposits by our third party hotel tenants into the escrow accounts as FF&E reserve income.

XML

Segment Information (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013
Segment Information
Hotel operating revenues	$ 387,248	$ 349,877	$ 717,184	$ 641,528
Rental income	63,736	61,856	127,122	124,068
FF&E reserve income	916	589	1,844	1,192
Total revenue	451,900	412,322	846,150	766,788
Hotel operating expenses	270,778	248,543	501,395	455,192
Depreciation and amortization	78,763	73,598	157,050	145,878
General and administrative	13,166	11,918	24,631	24,062
Acquisition related costs	162	1,814	223	2,090
Loss on asset impairment		2,171		2,171
Total expenses	362,869	338,044	683,299	629,393
Operating income (loss)	89,031	74,278	162,851	137,395
Interest income	25	60	50	79
Interest expense	(34,941)	(35,014)	(70,309)	(70,202)
Loss on early extinguishment of debt			(214)
Income before income taxes and equity in earnings of an investee	54,115	39,324	92,378	67,272
Income tax expense	(455)	5,950	(1,071)	5,432
Equity in earnings of an investee	125	79	28	155
Income before gain on sale of real estate	53,785	45,353	91,335	72,859
Gain on sale of real estate	130		130
Net income	53,915	45,353	91,465	72,859
Total assets	5,988,925		5,988,925		5,967,544
Corporate
Segment Information
General and administrative	13,166	11,918	24,631	24,062
Total expenses	13,166	11,918	24,631	24,062
Operating income (loss)	(13,166)	(11,918)	(24,631)	(24,062)
Interest income	25	60	50	79
Interest expense	(34,941)	(35,014)	(70,309)	(70,202)
Loss on early extinguishment of debt			(214)
Income before income taxes and equity in earnings of an investee	(48,082)	(46,872)	(95,104)	(94,185)
Income tax expense	(455)	5,950	(1,071)	5,432
Equity in earnings of an investee	125	79	28	155
Income before gain on sale of real estate	(48,412)		(96,147)
Net income	(48,412)	(40,843)	(96,147)	(88,598)
Total assets	42,396		42,396		42,357
Hotels
Segment Information
Hotel operating revenues	387,248	349,877	717,184	641,528
Rental income	8,341	7,908	16,444	16,630
FF&E reserve income	916	589	1,844	1,192
Total revenue	396,505	358,374	735,472	659,350
Hotel operating expenses	270,778	248,543	501,395	455,192
Depreciation and amortization	53,362	49,550	106,378	98,227
Acquisition related costs	162	1,814	223	2,090
Loss on asset impairment		2,171		2,171
Total expenses	324,302	302,078	607,996	557,680
Operating income (loss)	72,203	56,296	127,476	101,670
Income before income taxes and equity in earnings of an investee	72,203	56,296	127,476	101,670
Income before gain on sale of real estate	72,203		127,476
Gain on sale of real estate	130		130
Net income	72,333	56,296	127,606	101,670
Total assets	3,758,872		3,758,872		3,701,850
Travel Centers
Segment Information
Rental income	55,395	53,948	110,678	107,438
Total revenue	55,395	53,948	110,678	107,438
Depreciation and amortization	25,401	24,048	50,672	47,651
Total expenses	25,401	24,048	50,672	47,651
Operating income (loss)	29,994	29,900	60,006	59,787
Income before income taxes and equity in earnings of an investee	29,994	29,900	60,006	59,787
Income before gain on sale of real estate	29,994		60,006
Net income	29,994	29,900	60,006	59,787
Total assets	$ 2,187,657		$ 2,187,657		$ 2,223,337

XML

Income Taxes (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Income Taxes
Income tax expense	$ 455	$ 907	$ 1,071	$ 1,637
Federal taxes included in current tax expense	(22)	547	(22)	897
Foreign taxes included in current tax expense	40	31	71	62
Certain state taxes that are payable without regard to entity's REIT status and TRS tax loss carry forwards, included in current tax expense	437	329	1,022	678
Deferred tax benefit primarily related to the restructuring of certain of our TRSs		$ (6,857)		$ (7,068)

XML

Related Person Transactions (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		6 Months Ended			1 Months Ended	0 Months Ended				3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended				0 Months Ended	1 Months Ended		3 Months Ended		6 Months Ended		3 Months Ended		6 Months Ended			12 Months Ended	1 Months Ended	3 Months Ended		6 Months Ended
	Jun. 30, 2014 item	Jun. 30, 2013	Jun. 30, 2014 item	Jun. 30, 2013	Dec. 31, 2013	Jan. 31, 2014 Travel centers TA No. 1 Travel center located in Roanoke, VA	Jul. 14, 2014 Travel centers TA No. 1 Land adjacent to travel center in Florence, KY Subsequent event	Jun. 30, 2014 Hotels Sonesta agreements property	Jun. 30, 2014 TA item	Dec. 31, 2013 TA	Jun. 30, 2014 TA Travel centers property item	Jun. 30, 2013 TA Travel centers	Jun. 30, 2014 TA Travel centers property item	Jun. 30, 2013 TA Travel centers	Jun. 30, 2014 TA Travel centers TA No. 1 property	Jun. 30, 2013 TA Travel centers TA No. 1	Jun. 30, 2014 TA Travel centers TA No. 1 property	Jun. 30, 2013 TA Travel centers TA No. 1	Jun. 30, 2014 TA Travel centers TA No. 2 property	Jun. 30, 2014 TA Travel centers TA No. 2 Maximum item	May 09, 2014 RMR	Jun. 30, 2014 RMR item property agreement	Mar. 31, 2014 RMR	Jun. 30, 2014 RMR property item agreement	Jun. 30, 2013 RMR	Jun. 30, 2014 RMR property item agreement	Jun. 30, 2013 RMR	Jun. 30, 2014 Sonesta Sonesta agreements	Jun. 30, 2013 Sonesta Sonesta agreements	Jun. 30, 2014 Sonesta Sonesta agreements	Jun. 30, 2013 Sonesta Sonesta agreements	Dec. 31, 2013 Sonesta Sonesta agreements	Dec. 31, 2012 Sonesta SNSTA	Jun. 30, 2014 AIC	Jun. 30, 2014 AIC	Jun. 30, 2013 AIC	Jun. 30, 2014 AIC item	Jun. 30, 2013 AIC	May 09, 2014 AIC	Dec. 31, 2013 AIC	Jun. 30, 2014 AIC Maximum
Related Person Transactions
Percentage of ownership formerly held in subsidiary									100.00%
Number of common shares owned									3,420,000
Common shares of TA held by company as a percent of total TA shares outstanding									9.10%
Lessee as percentage of real estate properties									35.00%
Number of Managing Trustees who are Managing Directors									1
Number of Independent Trustees who are Independent Directors									1
Number of management agreements or leases	11		11								2		2
Number of properties leased											185		185		145		145		40
Number of renewal options available																				2
Term of renewal option																			15 years
Percentage of non-fuel revenue over threshold amounts											3.00%		3.00%
Percentage of fuel revenue over threshold amounts											0.30%		0.30%
Ground rent payable per year																	$ 5,253
Deferred rent due in December 2022											107,085		107,085
Deferred rent due in June 2024											42,915		42,915
Rental income	63,736	61,856	127,122	124,068							55,395	53,948	110,678	107,438
Adjustments included in rental income necessary to record rent on the straight line basis	33	36	75	98											408	432	845	899
Accruals for unpaid rent, excluding any deferred rents									39,251	37,034
Deferred rent accrued	698	672	1,572	1,282											698	672	1,572	1,282
Estimated annual percentage rent waived																			612
Annual percentage rent to be waived																			2,500
Capital improvements from leased facilities, funded													21,923
Increase (decrease) in minimum annual rent			7,355			(525)							1,863
Rate of decrease in minimum annual amount (as a percent)															8.50%		8.50%
Proceeds received from the VDOT in connection with the eminent domain taking			6,178			6,178
Ground lease monthly rent to be paid						40
Increase in annual rent payable by TA as a percentage of the total investment							8.50%
Number of employees	0		0
Number of agreements to provide management and administrative services																						2		2		2
Number of properties under property management agreement								22														1		1		1
Number of Managing Trustees who are Chairmen, majority owners and employees of RMR																						1		1		1
Business management, property management																								10,925	10,050	20,585	19,967	4,717	3,007	8,330	5,080
Incentive fee expected to be paid in common shares																								1,445		2,296
Common shares issued for services rendered by RMR																							102,536			65,018
Period before which the written notice is required to be given for cancellation of the business management agreement or the property management agreement																					120 days
Period before which the written notice was required to be given for cancellation of the business management agreement or the property management agreement before amendment																					60 days
Number of business days before which the notice is required to be given for termination of property management agreement																					5 days
Period over which transition services will be provided by the related party after termination of the agreement																					120 days
Number of entities to whom RMR provides management services																						4
Premium paid for combined directors' and officers' liability insurance policy																						50
Aggregate purchase price advanced																																	150,500
Procurement and construction supervision fees																												1,200	1,150	1,747	1,634
Accruals for unpaid amount	39,251		39,251		38,064																							398		398		893
Amount owed for capital expenditure reimbursements	19,155		19,155		13,194																							13,678		13,678		6,625
Number of other companies to which management services are provided holding shares in related party																																					4
Shares purchased																																							2,857
Price of shares purchased																																							825
Equity method investments, ownership percentage																																							14.30%		20.00%
Term of property insurance policy																																		1 year
Coverage of property insurance policy																																		500,000
Total premium due, including taxes and fees																																		11,851	11,851		11,851
Amount funded in equity investee																																		6,034	6,034		6,034
Equity in earnings of an investee	125	79	28	155																															125	79	28	155
Equity method investments, carrying value																																		$ 6,807	$ 6,807		$ 6,807			$ 5,913

XML

Hotel Management Agreements and Leases and Renovation Funding (Details) (USD $)	3 Months Ended		6 Months Ended			3 Months Ended		6 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended	1 Months Ended	3 Months Ended	6 Months Ended	12 Months Ended	1 Months Ended	3 Months Ended	6 Months Ended			12 Months Ended			3 Months Ended	6 Months Ended	12 Months Ended		3 Months Ended	6 Months Ended	12 Months Ended				3 Months Ended	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Hotels property	Jun. 30, 2013 Hotels	Jun. 30, 2014 Hotels property	Jun. 30, 2013 Hotels	Jun. 30, 2014 Hotels Marriott No. 1 agreement property	Jun. 30, 2014 Hotels Marriott No. 1 agreement property	Dec. 31, 2014 Hotels Marriott No. 1 agreement Forecast	Aug. 10, 2014 Hotels Marriott No. 234 agreement	Jun. 30, 2014 Hotels Marriott No. 234 agreement	Jun. 30, 2014 Hotels Marriott No. 234 agreement	Dec. 31, 2014 Hotels Marriott No. 234 agreement Forecast	Aug. 10, 2014 Hotels InterContinental agreement	Jun. 30, 2014 Hotels InterContinental agreement property	Jun. 30, 2014 Hotels InterContinental agreement property	Jan. 06, 2014 Hotels InterContinental agreement	Jan. 03, 2014 Hotels InterContinental agreement	Dec. 31, 2014 Hotels InterContinental agreement Forecast	Jun. 30, 2014 Hotels InterContinental agreement Minimum	Jan. 03, 2014 Hotels InterContinental agreement Minimum	Jun. 30, 2014 Hotels Sonesta agreements	Jun. 30, 2014 Hotels Sonesta agreements	Dec. 31, 2015 Hotels Sonesta agreements Forecast	Dec. 31, 2014 Hotels Sonesta agreements Forecast	Jun. 30, 2014 Hotels Wyndham agreement property	Jun. 30, 2014 Hotels Wyndham agreement property	Dec. 31, 2015 Hotels Wyndham agreement Forecast	Dec. 31, 2014 Hotels Wyndham agreement Forecast	Jun. 30, 2014 Hotels Hyatt Hotels Corporation property	Jun. 30, 2014 Hotels Carlson property	Jun. 30, 2014 Hotels Marriott No 5 contract property	Jun. 30, 2014 Hotels Marriott No 5 contract property
Management Agreements and Leases
Number of properties leased to TRSs						288		288
Number of properties leased to third parties						3		3																					1	1
Number of real estate properties leased or managed										53	53							91	91										22	22			22	11	1	1
Operating agreement annual rent and return											$ 67,711,000				$ 105,860,000				$ 139,498,000							$ 67,369,000
Realized returns and rents										18,771,000	33,807,000			26,330,000	50,136,000			34,875,000	69,749,000						11,205,000	13,300,000			6,704,000	13,239,000
Recovery of minimum return shortfalls										1,857,000
Security deposit balance required to be maintained with the entity in 2014																							30,000,000
Security deposit balance required to be maintained with the entity after 2014																							37,000,000
Reduction in the minimum security deposit balance required to be maintained with the entity during 2014 and 2015 for every dollar of additional security deposit paid																				2
Security deposit balance required to be maintained with the entity beginning January 1, 2016																							37,000,000
Additional security deposits paid																					4,283,000
Security deposit balance required to be maintained with the entity																								21,434,000
Amount by which the cash flow available to pay the entity's minimum rent or return was less than the minimum amount	4,449,000	5,424,000	25,291,000	29,836,000									1,751,000	2,634,000	5,269,000
Reduction of hotel operating expenses						0	1,267,000	5,331,000	8,772,000
Shortfalls due to unguaranteed portions of minimum returns						4,449,000	4,157,000	19,960,000	21,064,000
Amount paid by lessee for funding annual rent or return shortfall														2,548,000
Guaranty payments threshold as percentage of minimum returns															90.00%
Guarantee provided to the entity, remaining amount														30,672,000	30,672,000														8,833,000	8,833,000			14,062,000	20,534,000
Amount expected to be provided for renovation												4,400,000				7,350,000						22,990,000					22,800,000	108,200,000			10,075,000	27,500,000
Amount funded for renovation											1,761,000				750,000											53,117,000				20,936,000
Percentage increase in minimum returns after funding for renovation of hotels											10.00%				9.00%				8.00%							8.00%				8.00%
Lease rent received																																			2,501,000	5,002,000
Aggregate amount of replenished available security deposit																		3,286,000
Amount by which the cash flow available to pay entity's minimum rent or return was more than the minimum amount																	1,649,000
Security deposit balance	32,979,000		32,979,000		27,876,000												34,535,000
Fixed minimum return as a percentage of invested capital																										8.00%
Percentage of minimum returns not paid for cancellation of management agreements																									75.00%	75.00%
Guarantee provided to the entity, maximum																													35,656,000	35,656,000			50,000,000	40,000,000
Annual guarantee provided to the entity, maximum																													17,828,000	17,828,000
Guaranty replenished																													309,000
Guaranty payments made																														$ 5,331,000

XML

New Accounting Pronouncements

6 Months Ended

Jun. 30, 2014

New Accounting Pronouncements

New Accounting Pronouncements

Note 2.  New Accounting Pronouncements

In April 2014, the FASB issued Accounting Standards Update No. 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.  This update amends the criteria for reporting discontinued operations to, among other things, change the criteria for disposals to qualify as discontinued operations. The update is effective for interim and annual reporting periods beginning after December 15, 2014 with early adoption permitted.  The implementation of this update is not expected to cause any significant changes to our condensed consolidated financial statements.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. This update is effective for interim and annual reporting periods beginning after December 15, 2016.  We are currently in the process of evaluating the impact, if any, the adoption of this update will have on our condensed consolidated financial statements.

XML

Fair Value of Assets and Liabilities (Details) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014
TA
Fair Value of Assets and Liabilities
Shares included in investment securities	3,420,000
Quoted Prices in Active Markets for Identical Assets (Level 1) | TA
Fair Value of Assets and Liabilities
Shares included in investment securities	3,420,000
Historical cost of securities	$ 17,407
Recurring | Fair Value
Fair Value of Assets and Liabilities
Investment securities	30,370
Recurring | Quoted Prices in Active Markets for Identical Assets (Level 1)
Fair Value of Assets and Liabilities
Investment securities	$ 30,370

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Real estate properties, at cost:
Land	$ 1,485,077	$ 1,470,513
Buildings, improvements and equipment	6,073,936	5,946,852
Total real estate properties, gross	7,559,013	7,417,365
Accumulated depreciation	(1,865,135)	(1,757,151)
Total real estate properties, net	5,693,878	5,660,214
Cash and cash equivalents	15,520	22,500
Restricted cash (FF&E reserve escrow)	29,239	30,873
Due from related persons	39,251	38,064
Other assets, net	211,037	215,893
Total assets	5,988,925	5,967,544
LIABILITIES AND SHAREHOLDERS' EQUITY
Unsecured revolving credit facility	40,000
Unsecured term loan	400,000	400,000
Senior notes, net of discounts	2,345,527	2,295,527
Convertible senior notes	8,478	8,478
Security deposits	32,979	27,876
Accounts payable and other liabilities	112,836	130,448
Due to related persons	19,155	13,194
Dividends payable	5,166	5,166
Total liabilities	2,964,141	2,880,689
Commitments and contingencies
Preferred shares of beneficial interest, no par value, 100,000,000 shares authorized:
Common shares of beneficial interest, $.01 par value; 200,000,000 shares authorized; 149,775,483 and 149,606,024 shares issued and outstanding, respectively	1,498	1,496
Additional paid in capital	4,114,477	4,109,600
Cumulative net income	2,609,519	2,518,054
Cumulative other comprehensive income	13,053	15,952
Cumulative preferred distributions	(290,317)	(279,985)
Cumulative common distributions	(3,703,553)	(3,558,369)
Total shareholders' equity	3,024,784	3,086,855
Total liabilities and shareholders' equity	5,988,925	5,967,544
Series D
Preferred shares of beneficial interest, no par value, 100,000,000 shares authorized:
Preferred shares	$ 280,107	$ 280,107

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:
Net income	$ 91,465	$ 72,859
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization	157,050	145,878
Amortization of deferred financing costs and debt discounts as interest	3,184	3,036
Straight line rental income	(75)	(98)
Security deposits replenished	5,123
FF&E reserve income and deposits	(26,852)	(14,311)
Loss on extinguishment of debt	214
Loss on asset impairment		2,171
Equity in earnings of an investee	(28)	(155)
Gain on sale of real estate	(130)
Deferred income taxes		(7,068)
Other non-cash (income) expense, net	1,884	(1,764)
Changes in assets and liabilities:
Increase in due from related persons	(342)	(8,673)
Increase in other assets	(4,221)	(11,063)
Decrease in accounts payable and other liabilities	(9,355)	(2,613)
Decrease in due to related persons	(815)	(6,295)
Cash provided by operating activities	217,102	171,904
Cash flows from investing activities:
Real estate acquisitions and deposits	(60,000)	(168,409)
Real estate improvements	(96,081)	(113,712)
FF&E reserve fundings	(2,511)	(29,720)
Net proceeds from sale of real estate	4,288
Eminent domain proceeds	6,178
Investment in Affiliates Insurance Company	(825)
Cash used in investing activities	(148,951)	(311,841)
Cash flows from financing activities:
Proceeds from issuance of common shares, net		393,474
Proceeds from issuance of senior notes, net of discount	346,616	299,661
Repayment of senior notes	(300,000)
Borrowings under revolving credit facility	420,000	245,000
Repayments of revolving credit facility	(380,000)	(475,000)
Deferred financing costs	(6,231)	(2,529)
Distributions to preferred shareholders	(10,332)	(16,194)
Distributions to common shareholders	(145,184)	(123,787)
Cash (used in) provided by financing activities	(75,131)	320,625
Increase (decrease) in cash and cash equivalents	(6,980)	180,688
Cash and cash equivalents at beginning of period	22,500	20,049
Cash and cash equivalents at end of period	15,520	200,737
Supplemental cash flow information:
Cash paid for interest	71,365	66,407
Cash paid for income taxes	3,754	1,944
Non-cash investing activities:
Hotel managers' deposits in FF&E reserve	23,608	13,718
Hotel managers' purchases with FF&E reserve	$ (27,753)	$ (49,382)

XML

Basis of Presentation (Details) (USD $) In Thousands, unless otherwise specified	Jun. 30, 2014
Basis of Presentation
Ownership interest in subsidiaries (as a percent)	100.00%
Assets of TRSs	$ 31,463
Liabilities of TRSs	$ 56,092

XML

Per Common Share Amounts (Details)	6 Months Ended
	Jun. 30, 2014
Per Common Share Amounts
Dilutive common share equivalents	0

XML

Basis of Presentation

6 Months Ended

Jun. 30, 2014

Basis of Presentation

Basis of Presentation

Note 1.  Basis of Presentation

The accompanying condensed consolidated financial statements of Hospitality Properties Trust and its subsidiaries, or HPT, we, our or us, are unaudited. Certain information and disclosures required by U.S. generally accepted accounting principles, or GAAP, for complete financial statements have been condensed or omitted. We believe the disclosures made are adequate to make the information presented not misleading. However, the accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes contained in our Annual Report on Form 10-K for the year ended December 31, 2013, or our 2013 Annual Report.  In the opinion of our management, all adjustments, which include only normal recurring adjustments considered necessary for a fair presentation, have been included in these condensed consolidated financial statements.  These condensed consolidated financial statements include the accounts of HPT and its subsidiaries, all of which are 100% owned directly or indirectly by HPT.  All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated. Our operating results for interim periods and those of our managers and tenants are not necessarily indicative of the results that may be expected for the full year. Reclassifications have been made to the prior year’s condensed consolidated financial statements to conform to the current year’s presentation.

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates.  Significant estimates in our condensed consolidated financial statements include the allowance for doubtful accounts, purchase price allocations, useful lives of fixed assets and impairment of real estate and intangible assets.

We have determined that each of our taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards CodificationTM.   We have concluded that we must consolidate each of our TRSs because we are the entity with the power to direct the activities that most significantly impact the VIEs’ economic performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE, and are, therefore, the primary beneficiary of each VIE.  The assets of our TRSs were $31,463 as of June 30, 2014 and consist primarily of amounts due from, and working capital advances to, certain of their hotel managers.  These assets can be used to settle obligations of both us and our TRSs.  The liabilities of our TRSs were $56,092 as of June 30, 2014 and consist primarily of security deposits they hold from and amounts payable to certain of their hotel managers.  Creditors have recourse to both us and our TRSs for these liabilities.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Jun. 30, 2014	Dec. 31, 2013
Common shares, par value (in dollars per share)	$ 0.01	$ 0.01
Common shares, shares authorized	200,000,000	200,000,000
Common shares, shares issued	149,775,483	149,606,024
Common shares, shares outstanding	149,775,483	149,606,024
Series D
Preferred shares, par value (in dollars per share)
Preferred shares, shares authorized	100,000,000	100,000,000
Preferred shares, dividend yield (as a percent)	7.125%	7.125%
Preferred shares, shares issued	11,600,000	11,600,000
Preferred shares, shares outstanding	11,600,000	11,600,000
Preferred shares, aggregate liquidation preference (in dollars)	$ 290,000	$ 290,000

XML

Hotel Management Agreements and Leases and Renovation Funding

6 Months Ended

Jun. 30, 2014

Hotel Management Agreements and Leases and Renovation Funding

Hotel Management Agreements and Leases and Renovation Funding

Note 11. Hotel Management Agreements and Leases and Renovation Funding

As of June 30, 2014, 288 of our hotels are leased to our TRSs and managed by independent hotel operating companies and three are leased to third parties.

Marriott No. 1 agreement.  Our management agreement with Marriott International Inc., or Marriott, for 53 hotels provides that as of June 30, 2014 we are paid a fixed annual minimum return of $67,711, to the extent that gross revenues of the hotels, after payment of hotel operating expenses, are sufficient to do so.  We do not have any security deposits or guarantees for the 53 hotels included in our Marriott No. 1 agreement.  Accordingly, the returns we receive from these hotels managed by Marriott are limited to available hotel cash flows after payment of operating expenses. We realized returns of $18,771 and $33,807 during the three and six months ended June 30, 2014, respectively, under this agreement.  The realized returns for the three months ended June 30, 2014 includes the recovery of $1,857 of minimum return shortfalls from the first quarter of 2014.  Marriott’s management and incentive fees are only earned after we receive our minimum returns.

We currently expect to fund $4,400 of capital improvements during 2014 at certain of the hotels included in our Marriott No. 1 agreement. We funded $1,761 of this amount during the six months ended June 30, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 10% of the amounts funded.

Marriott No. 234 agreement. During the three and six months ended June 30, 2014, the payments we received under our Marriott No. 234 agreement, which requires annual minimum returns to us of $105,860 as of June 30, 2014, were $2,634 and $5,269 less than the minimum amounts contractually required, respectively. We realized returns of $26,330 and $50,136 during the three and six months ended June 30, 2014, respectively, under this agreement.  Pursuant to our Marriott No. 234 agreement, Marriott provided us with a limited guarantee for shortfalls up to 90% of our minimum returns through 2019. During the three months ended June 30, 2014, $2,548 of payments made to us under Marriott’s guaranty during the first quarter of 2014 were repaid from the net operating results these hotels generated during the period in excess of the guaranty threshold.  The available balance of this guaranty was $30,672 as of June 30, 2014. Also, during the period from June 30, 2014 to August 10, 2014, the payments we received for these hotels were $1,751 less than the contractual minimum returns due to us.

We currently expect to fund $7,350 of capital improvements during 2014 to complete renovations at certain of the hotels included in our Marriott No. 234 agreement. We funded $750 of this amount during the six months ended June 30, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 9% of the amounts funded.

Marriott No. 5 agreement. We lease one hotel in Kauai, Hawaii to Marriott.  This lease is guaranteed by Marriott and we received $2,501 and $5,002 of rent for this hotel during the three and six months ended June 30, 2014, respectively.  As of August 10, 2014, all rents due from Marriott for this hotel are current.  The guarantee provided by Marriott with respect to the one hotel leased by Marriott is unlimited.

InterContinental agreement. During the three and six months ended June 30, 2014, we realized returns and rents of $34,875 and $69,749, respectively, under our management agreement with InterContinental Hotels Group, plc, or InterContinental, covering 91 hotels and requiring annual minimum returns to us of $139,498 as of June 30, 2014. During the six months ended June 30, 2014, we have been paid all of our minimum returns due for the period.  During the three months ended June 30, 2014, we replenished the available security deposit by $3,286 for the payments we received during the period in excess of the minimum returns due to us for the period.   Also, during the period from June 30, 2014 to August 10, 2014, we received $1,649 more than the minimum amounts contractually required under our InterContinental agreement.

Under this agreement, InterContinental is required to maintain a minimum security deposit of $30,000 in 2014 and $37,000 thereafter. We were advised by InterContinental that it expects interim period shortfalls during 2014 and 2015 in the required minimum security deposit balance under the agreement. As a result, on January 6, 2014, we entered into a letter agreement with InterContinental under which the minimum security deposit balance required to be maintained during 2014 and 2015 will be reduced by two dollars for every dollar of additional security deposit InterContinental provides to us. Beginning January 1, 2016, any resulting reductions to the minimum security deposit amount will cease to be in effect and the minimum deposit balance required under the InterContinental agreement will revert to $37,000. Since January 1, 2014, InterContinental has provided $4,283 of additional security deposits, which reduced the minimum security deposit amount required to $21,434.  The remaining balance of the security deposit was $34,535 as of August 10, 2014.

We currently expect to fund $22,990 of capital improvements in 2014 to complete renovations at certain of the hotels included in our InterContinental agreement. We did not make any of these renovation fundings during the six months ended June 30, 2014.  As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded.

Sonesta agreement. Our management agreement with Sonesta provides that we are paid a fixed minimum return equal to 8% of our invested capital, as defined in the management agreement ($67,369 as of June 30, 2014), to the extent that gross revenues of the hotels, after payment of hotel operating expenses and certain base management fees to Sonesta, are sufficient to do so.  We do not have any security deposits or guarantees for our hotels managed by Sonesta.  Accordingly, the returns we receive from hotels managed by Sonesta are limited to available hotel cash flows after payment of operating expenses. Sonesta’s incentive management fees, but not its other fees, are only earned after we receive our minimum returns, and we may cancel these management agreements if approximately 75% of our minimum returns are not paid for certain periods. We realized returns of $11,205 and $13,300 during the three and six months ended June 30, 2014, respectively, under this agreement.

In addition to recurring capital expenditures, we currently expect to fund approximately $108,200 in 2014 and $22,800 in 2015 for renovations and other improvements at certain of the hotels included in our Sonesta agreement. We funded $53,117 of these amounts during the six months ended June 30, 2014. The annual minimum returns due to us under the Sonesta agreement increase by 8% of the amounts funded in excess of threshold amounts, as defined therein. See Note 10 for further information regarding our relationship with Sonesta.

Wyndham agreement. During the three and six months ended June 30, 2014, we realized returns and rents of $6,704 and $13,239, respectively, from our hotels managed or leased by Wyndham. The guarantee provided by Wyndham with respect to 22 hotels managed by Wyndham is limited to $35,656 ($8,833 remaining at June 30, 2014), subject to an annual payment limit of $17,828 and expires on July 28, 2020.  This guaranty was replenished by $309 during the three months ended June 30, 2014 from the net operating results these hotels generated during the period in excess of our minimum returns.  During the six months ended June 30, 2014, Wyndham has made $5,331 of guaranty payments to us.  The guarantee provided by Wyndham with respect to the lease with Wyndham Vacation Resorts, Inc., or Wyndham Vacation, for part of one hotel is unlimited.

We currently expect to fund approximately $27,500 of capital improvements in 2014 and $10,075 in 2015 to complete renovations at certain of the hotels included in our Wyndham Hotel Group, or Wyndham, agreement. We funded $20,936 of these amounts during the six months ended June 30, 2014. As we fund these improvements, the annual minimum returns payable to us increase by 8% of the amounts funded.

Other management agreement and lease matters.  As of August 10, 2014, all payments due to us from our managers and tenants under our other operating agreements were current.  Minimum return and minimum rent payments due to us under some of these other hotel management agreements and leases are supported by guarantees.  The guarantee provided by Hyatt Hotels Corporation, or Hyatt, with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($14,062 remaining at June 30, 2014). The guarantee provided by Carlson Hotels Worldwide, or Carlson, with respect to the 11 hotels managed by Carlson is limited to $40,000 ($20,534 remaining at June 30, 2014).

Guarantees and security deposits generally.  Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $4,449 and $5,424 less than the minimum returns due to us for the three months ended June 30, 2014 and 2013, respectively and $25,291 and $29,836 less than the minimum returns due to us for the six months ended June 30, 2014 and 2013, 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 condensed consolidated statements of income and comprehensive income as a reduction of hotel operating expenses. The reduction to hotel operating expenses was $1,267 in the three months ended June 30, 2013 and $5,331 and $8,772 in the six months ended June 30, 2014 and 2013, respectively. There was no reduction to hotel operating expenses in the three months ended June 30, 2014.  We had shortfalls in the minimum returns at certain of our managed hotel portfolios not funded by the managers of these hotels under the terms of our operating agreements of $4,449 and $4,157 during the three months ended June 30, 2014 and 2013, respectively, and $19,960 and $21,064 during the six months ended June 30, 2014 and 2013, respectively, which represents the unguaranteed portion of our minimum returns from Marriott and Sonesta.  When we reduce the amounts of the security deposits we hold for any of our operating agreements for payment deficiencies, we record income equal to the amounts by which the deposit is reduced up to the minimum return or minimum rent due to us. However, reducing the security deposits does not result in additional cash flow to us of the deficiency amounts, but reducing amounts of security deposits may reduce the refunds due to the respective lessees or managers who have provided us with these deposits upon expiration of the respective lease or management agreement.  The security deposits are non-interest bearing and are not held in escrow.  Certain of our guarantees and our security deposits under the InterContinental and Marriott No. 234 agreements may be replenished by future cash flows from the applicable hotel operations pursuant to the terms of the respective agreements.

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 10, 2014
Document and Entity Information
Entity Registrant Name	HOSPITALITY PROPERTIES TRUST
Entity Central Index Key	0000945394
Document Type	10-Q
Document Period End Date	Jun. 30, 2014
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		149,796,927
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	Q2

XML

Fair Value of Assets and Liabilities

6 Months Ended

Jun. 30, 2014

Fair Value of Assets and Liabilities

Fair Value of Assets and Liabilities

Note 12.  Fair Value of Assets and Liabilities

The table below presents certain of our assets carried at fair value at June 30, 2014, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.

			Fair Value at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Investment securities (1)	$	30,370	$	30,370	$	—	$	—

(1) Our investment securities, consisting of our 3,420,000 shares of TA, which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs).  Our historical cost basis for these securities is $17,407.  The unrealized gain for these securities as of June 30, 2014 is included in cumulative other comprehensive income in our condensed consolidated balance sheets.

In addition to the investment securities included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, unsecured term loan, senior notes and security deposits. At June 30, 2014 and December 31, 2013, the fair values of these additional financial instruments approximated their carrying values in our condensed consolidated financial statements due to their short term nature or variable interest rates, except as follows:

	June 30, 2014					December 31, 2013
	Carrying			Fair		Carrying			Fair
	Amount			Value		Amount			Value
Senior Notes, due 2014 at 7.875%	$	—		$	—	$	300,000		$	304,035
Senior Notes, due 2015 at 5.125%	280,000			281,323		280,000			283,150
Senior Notes, due 2016 at 6.3%	275,000			294,040		275,000			297,443
Senior Notes, due 2017 at 5.625%	300,000			328,899		300,000			327,681
Senior Notes, due 2018 at 6.7%	350,000			393,652		350,000			399,560
Senior Notes, due 2022 at 5%	500,000			529,893		500,000			524,810
Senior Notes, due 2023 at 4.5%	300,000			306,272		300,000			289,950
Senior Notes, due 2024 at 4.65%	350,000			359,394		—			—
Convertible Senior Notes, due 2027 at 3.8%	8,478			8,963		8,478			8,983
Unamortized discounts	(9,473		)	—		(9,473		)	—
Total financial liabilities	$	2,354,005		$	2,502,436	$	2,304,005		$	2,435,612

At June 30, 2014, we estimated the fair values of our unsecured senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 1 inputs).  We estimated the fair value of our convertible unsecured senior notes using discounted cash flow analyses and currently prevailing market interest rates (Level 3 inputs) because no market quotes for these notes were available at June 30, 2014 and December 31, 2013.

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenues:
Hotel operating revenues	$ 387,248	$ 349,877	$ 717,184	$ 641,528
Rental income	63,736	61,856	127,122	124,068
FF&E reserve income	916	589	1,844	1,192
Total revenue	451,900	412,322	846,150	766,788
Expenses:
Hotel operating expenses	270,778	248,543	501,395	455,192
Depreciation and amortization	78,763	73,598	157,050	145,878
General and administrative	13,166	11,918	24,631	24,062
Acquisition related costs	162	1,814	223	2,090
Loss on asset impairment		2,171		2,171
Total expenses	362,869	338,044	683,299	629,393
Operating income	89,031	74,278	162,851	137,395
Interest income	25	60	50	79
Interest expense (including amortization of deferred financing costs and debt discounts of $1,354, $1,524, $3,184 and $3,036, respectively)	(34,941)	(35,014)	(70,309)	(70,202)
Loss on early extinguishment of debt			(214)
Income before income taxes and equity in earnings of an investee	54,115	39,324	92,378	67,272
Income tax benefit (expense)	(455)	5,950	(1,071)	5,432
Equity in earnings of an investee	125	79	28	155
Income before gain on sale of real estate	53,785	45,353	91,335	72,859
Gain on sale of real estate	130		130
Net income	53,915	45,353	91,465	72,859
Preferred distributions	(5,166)	(8,097)	(10,332)	(16,194)
Net income available for common shareholders	48,749	37,256	81,133	56,665
Net income	53,915	45,353	91,465	72,859
Other comprehensive income (loss):
Unrealized gain (loss) on TravelCenters of America common shares	2,497	3,429	(2,941)	15,849
Equity interest in investee's unrealized gains (losses)	23	(73)	42	(81)
Other comprehensive income (loss)	2,520	3,356	(2,899)	15,768
Comprehensive income	$ 56,435	$ 48,709	$ 88,566	$ 88,627
Weighted average common shares outstanding (in shares)	149,753	139,743	149,695	132,624
Basic and diluted net income available for common shareholders per common share (in dollars per share)	$ 0.33	$ 0.27	$ 0.54	$ 0.43

XML

Indebtedness

6 Months Ended

Jun. 30, 2014

Indebtedness

Indebtedness

Note 6.  Indebtedness

Our principal debt obligations at June 30, 2014 were: (1) our outstanding borrowings under our $750,000 unsecured revolving credit facility; (2) our $400,000 unsecured term loan; (3) an aggregate outstanding principal amount of $2,355,000 of public issuances of unsecured senior notes; and (4) an aggregate outstanding principal amount of $8,478 of public issuances of convertible senior notes.

On January 8, 2014, we amended the agreements governing our unsecured revolving credit facility and unsecured term loan with Wells Fargo Bank, National Association, as administrative agent, and a syndicate of other lenders.

As a result of the amendment, the stated maturity date of our $750,000 revolving credit facility was extended from September 7, 2015 to July 15, 2018. Subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date by an additional one year to July 15, 2019. The amended credit agreement provides that we can borrow, repay and reborrow funds available under the revolving credit facility until maturity, and no principal repayment is due until maturity. The $750,000 maximum amount of our revolving credit facility and the $400,000 amount of the term loan remained unchanged by the amendment. The amended credit agreement includes a feature under which maximum borrowings under the revolving credit facility and term loan may be increased up to $2,300,000 on a combined basis in certain circumstances.

Under the amendment, the interest rate paid on borrowings under the revolving credit facility was reduced from LIBOR plus a premium of 130 basis points to LIBOR plus a premium of 110 basis points, and the facility fee was reduced from 30 basis points to 20 basis points per annum on the total amount of lending commitments. Both the interest rate premium and the facility fee are subject to adjustment based upon changes to our credit ratings. As of both June 30, 2014 and August 10, 2014, we had $40,000 outstanding and $710,000 available under our revolving credit facility.  As of June 30, 2014, the interest rate for the amount outstanding under our revolving credit facility was 1.26%.  The weighted average interest rate for borrowings under our revolving credit facility was 1.25% for both the three and six months ended June 30, 2014 and 1.50% and $1.51% for the three and six months ended June 30, 2013, respectively.

As a result of the amendment, the stated maturity date of our $400,000 unsecured term loan was extended from March 13, 2017 to April 15, 2019. Our term loan is prepayable without penalty at any time. Under the amendment, the interest rate paid on borrowings under the term loan agreement was reduced from LIBOR plus a premium of 145 basis points to LIBOR plus a premium of 120 basis points. The interest rate premium is subject to adjustment based on changes to our credit ratings. As of June 30, 2014, the interest rate for the amount outstanding under our term loan was 1.35%. The weighted average interest rate for borrowings under our term loan was 1.35% and 1.36% for the three and six months ended June 30, 2014 and 1.66% for both the three and six months ended June 30, 2013, respectively.

As a result of the amendments to our revolving credit facility and term loan, we recorded a loss on early extinguishment of debt of $214 during the six months ended June 30, 2014.

Our borrowings under the amended credit facilities continue to be unsecured. Prior to the effectiveness of the amendment, certain of our subsidiaries had guaranteed our obligations under the revolving credit facility and term loan. As a result of the amendment, none of those subsidiary guarantees remain in effect. The amended credit agreement provides that, with certain exceptions, a subsidiary of ours is required to guaranty our obligations under the revolving credit facility and term loan only if that subsidiary has separately incurred debt (other than nonrecourse debt), within the meaning specified in the amended credit agreement, or provided a guarantee of debt incurred by us or any of our other subsidiaries.

Our revolving credit facility and term loan agreement provides for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as a change of control of us, which includes RMR ceasing to act as our business manager. Our revolving credit facility and term loan agreement contains a number of covenants that restrict our ability to incur debt in excess of calculated amounts, restrict our ability to make distributions under certain circumstances and generally require us to maintain certain financial ratios. We believe we were in compliance with the terms and conditions of the agreement governing our revolving credit facility and term loan at June 30, 2014.

On February 15, 2014, we redeemed at par all of our outstanding 7.875% senior notes due 2014 for $300,000 plus accrued and unpaid interest (an aggregate of $311,813).

On March 12, 2014, we issued $350,000 of 4.65% unsecured senior notes due 2024 in a public offering for net proceeds of $345,949 after underwriting discounts and other offering expenses.

On July 15, 2014, we announced we will redeem at par plus accrued interest all $280,000 of our 51/8% Senior Notes due 2015 on August 15, 2014.

XML

Shareholders' Equity

6 Months Ended

Jun. 30, 2014

Shareholders' Equity

Shareholders' Equity

Note 5.  Shareholders’ Equity

Common Share Issuances

During the six months ended June 30, 2014 and the period July 1, 2014 to August 10, 2014, we issued 54,423 and 21,444, respectively, of our common shares to Reit Management & Research LLC, or RMR, as part of the business management fees payable by us under our business management agreement.  In March 2014, we also issued 102,536 of our common shares to RMR for the incentive fee for 2013 pursuant to the business management agreement.  See Note 10 for further information regarding this agreement.

On June 10, 2014, we granted 2,500 of our common shares valued at $29.28 per share, the closing price of our common shares on the New York Stock Exchange, or NYSE, on that day, to each of our five Trustees as part of their annual compensation.

Distributions

On each of January 15, 2014, April 15, 2014 and July 15, 2014, we paid a $0.4453 per share distribution, or $5,166, to our Series D preferred shareholders.

On February 20, 2014, we paid a $0.48 per share distribution, or $71,811, to our common shareholders.  On May 21, 2014, we paid a $0.49 per share distribution, or $73,373, to our common shareholders.  On July 10, 2014, we declared a $0.49 per share distribution, or $73,395, to our common shareholders of record on July 25, 2014.  We expect to pay this amount on or about August 22, 2014.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) represents the unrealized gain (loss) on the TravelCenters of America LLC, or TA, shares we own and our share of the comprehensive income (loss) of Affiliates Insurance Company, or AIC.  See Note 10 for further information regarding these investments.

XML

Revenue Recognition (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014 item	Jun. 30, 2013	Dec. 31, 2013
Revenue Recognition
Deferred additional returns	$ 0	$ 0	$ 0	$ 0
Number of operating leases for which rental income is not recognized on straight line basis over the term of the lease agreements			1
Adjustments necessary to record rent on straight line basis	33	36	75	98
Straight line rent receivables	5,531		5,531		5,456
Deferred percentage rent	$ 698	$ 672	$ 1,572	$ 1,282

XML

Real Estate Properties (Tables) (Full service hotel in Ft. Lauderdale, FL)

6 Months Ended

Jun. 30, 2014

Full service hotel in Ft. Lauderdale, FL

Real estate properties

Schedule of allocation of the acquisition cost to the estimated fair value of assets acquired

Land	$	14,592
Building	40,525
Furniture, fixtures and equipment	9,883
	$	65,000

XML

Segment Information

6 Months Ended

Jun. 30, 2014

Segment Information

Segment Information

Note 9.  Segment Information

	For the Three Months Ended June 30, 2014
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	387,248	$	—	$	—		$	387,248
Rental income	8,341		55,395		—			63,736
FF&E reserve income	916		—		—			916
Total revenues	396,505		55,395		—			451,900
Hotel operating expenses	270,778		—		—			270,778
Depreciation and amortization	53,362		25,401		—			78,763
General and administrative	—		—		13,166			13,166
Acquisition related costs	162		—		—			162
Total expenses	324,302		25,401		13,166			362,869
Operating income (loss)	72,203		29,994		(13,166		)	89,031
Interest income	—		—		25			25
Interest expense	—		—		(34,941		)	(34,941		)
Income (loss) before income taxes and equity in earnings of an investee	72,203		29,994		(48,082		)	54,115
Income tax expense	—		—		(455		)	(455		)
Equity in earnings of an investee	—		—		125			125
Income before gain on sale of real estate	72,203		29,994		(48,412		)	53,785
Gain on sale of real estate	130		—		—			130
Net income (loss)	$	72,333	$	29,994	$	(48,412	)	$	53,915

	For the Six Months Ended June 30, 2014
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	717,184	$	—	$	—		$	717,184
Rental income	16,444		110,678		—			127,122
FF&E reserve income	1,844		—		—			1,844
Total revenues	735,472		110,678		—			846,150
Hotel operating expenses	501,395		—		—			501,395
Depreciation and amortization	106,378		50,672		—			157,050
General and administrative	—		—		24,631			24,631
Acquisition related costs	223		—		—			223
Total expenses	607,996		50,672		24,631			683,299
Operating income (loss)	127,476		60,006		(24,631		)	162,851
Interest income	—		—		50			50
Interest expense	—		—		(70,309		)	(70,309		)
Loss on early extinguishment of debt	—		—		(214		)	(214		)
Income (loss) before income taxes and equity in earnings of an investee	127,476		60,006		(95,104		)	92,378
Income tax expense	—		—		(1,071		)	(1,071		)
Equity in earnings of an investee	—		—		28			28
Income before gain on sale of real estate	127,476		60,006		(96,147		)	91,335
Gain on sale of real estate	130		—		—			130
Net income (loss)	$	127,606	$	60,006	$	(96,147	)	$	91,465

	As of June 30, 2014
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,758,872	$	2,187,657	$	42,396	$	5,988,925

	For the Three Months Ended June 30, 2013
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	349,877	$	—	$	—		$	349,877
Rental income	7,908		53,948		—			61,856
FF&E reserve income	589		—		—			589
Total revenues	358,374		53,948		—			412,322
Hotel operating expenses	248,543		—		—			248,543
Depreciation and amortization	49,550		24,048		—			73,598
General and administrative	—		—		11,918			11,918
Acquisition related costs	1,814		—		—			1,814
Loss on asset impairment	2,171		—		—			2,171
Total expenses	302,078		24,048		11,918			338,044
Operating income (loss)	56,296		29,900		(11,918		)	74,278
Interest income	—		—		60			60
Interest expense	—		—		(35,014		)	(35,014		)
Income (loss) before income taxes and equity in earnings of an investee	56,296		29,900		(46,872		)	39,324
Income tax benefit	—		—		5,950			5,950
Equity in earnings of an investee	—		—		79			79
Net income (loss)	$	56,296	$	29,900	$	(40,843	)	$	45,353

	For the Six Months Ended June 30, 2013
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	641,528	$	—	$	—		$	641,528
Rental income	16,630		107,438		—			124,068
FF&E reserve income	1,192		—		—			1,192
Total revenues	659,350		107,438		—			766,788
Hotel operating expenses	455,192		—		—			455,192
Depreciation and amortization	98,227		47,651		—			145,878
General and administrative	—		—		24,062			24,062
Acquisition related costs	2,090		—		—			2,090
Loss on asset impairment	2,171		—		—			2,171
Total expenses	557,680		47,651		24,062			629,393
Operating income (loss)	101,670		59,787		(24,062		)	137,395
Interest income	—		—		79			79
Interest expense	—		—		(70,202		)	(70,202		)
Income (loss) before income taxes and equity in earnings of an investee	101,670		59,787		(94,185		)	67,272
Income tax benefit	—		—		5,432			5,432
Equity in earnings of an investee	—		—		155			155
Net income (loss)	$	101,670	$	59,787	$	(88,598	)	$	72,859

	As of December 31, 2013
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,701,850	$	2,223,337	$	42,357	$	5,967,544

XML

Real Estate Properties

6 Months Ended

Jun. 30, 2014

Real Estate Properties

Real Estate Properties

Note 7.  Real Estate Properties

At June 30, 2014, we owned 291 hotels and owned or leased 185 travel centers which are operated under 11 operating agreements.

During the six months ended June 30, 2014, we funded $98,592 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 $7,355.  See Notes 10 and 11 for further information about our fundings of improvements to certain of our properties.

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.  In January 2014, we received $6,178 of proceeds from the VDOT in connection with the taking.  See Note 10 for more information regarding this transaction.

On April 29, 2014, we sold our Sonesta ES Suites branded hotel in Myrtle Beach, SC for net proceeds of $4,288.  As a result of this sale, we recorded a $130 gain on sale of real estate in the three months ended June 30, 2014.  See Note 10 for further information regarding this transaction.

On May 30, 2014, we acquired a 240 room full service hotel located in Ft. Lauderdale, FL for $65,000, excluding related acquisition costs of $191.  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	$	14,592
Building	40,525
Furniture, fixtures and equipment	9,883
	$	65,000

We converted this hotel to a Sonesta branded hotel and added it to our Sonesta agreement.  See Notes 10 and 11 for more information regarding this transaction and our Sonesta agreement.

On July 14, 2014, we agreed to acquire a land parcel adjacent to one of our other travel centers for $450, excluding closing costs.  We currently expect to acquire this property in the third quarter of 2014 using cash on hand.  This pending acquisition is subject to completion of diligence and other customary closing conditions; accordingly, we can provide no assurance that we will acquire this property, that the terms of the acquisition will not change or that the closing will not be delayed.  See Note 10 for more information regarding this transaction.

XML

Income Taxes

6 Months Ended

Jun. 30, 2014

Income Taxes

Income Taxes

Note 8. Income Taxes

We have elected to be taxed as a real estate investment trust, or REIT, under the Internal Revenue Code of 1986, as amended, and, accordingly are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements.  We are subject to income tax in Canada, Puerto Rico and certain states despite our REIT status.  Also, we lease our managed hotels to our wholly owned TRSs that, unlike most of our other subsidiaries, file separate consolidated federal corporate income tax returns and are subject to federal, state and foreign income taxes.  Our consolidated income tax provision included in our condensed consolidated statements of income and comprehensive income includes the income tax provision related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our REIT status.

During the three and six months ended June 30, 2014, we recognized income tax expense of $455 and $1,071, respectively, which includes ($22) and ($22), respectively, of federal taxes, $40 and $71, respectively, of foreign taxes and $437 and $1,022, respectively, of certain state taxes that are payable without regard to our REIT status and TRS tax loss carry forwards.

During the three and six months ended June 30, 2013, we recognized a current income tax expense of $907 and $1,637, respectively, which includes $547 and $897, respectively, of federal taxes, $31 and $62, respectively, of foreign taxes and $329 and $678, respectively, of certain state taxes that are payable without regard to our REIT status and TRS tax loss carry forwards. In addition, during the three and six months ended June 30, 2013, we recognized a deferred tax benefit of $6,857 and $7,069, respectively, related primarily to the restructuring of certain of our TRSs.

XML

Related Person Transactions

6 Months Ended

Jun. 30, 2014

Related Person Transactions

Related Person Transactions

Note 10. Related Person Transactions

TA

TA is our former 100% owned subsidiary and our largest tenant, and we are TA’s largest shareholder.  TA was created as a separate public company in 2007 as a result of its spin-off from us.  As of June 30, 2014, we owned 3,420,000 common shares, representing approximately 9.1% of TA’s outstanding common shares.  TA is the lessee of 35% of our real estate properties, at cost, as of June 30, 2014.  Mr. Barry Portnoy, one of our Managing Trustees, is a managing director of TA.  Mr. Thomas O’Brien, an officer of RMR and a former officer of ours prior to the TA spin-off, is President and Chief Executive Officer and the other managing director of TA.  Mr. Arthur Koumantzelis, who was one of our Independent Trustees prior to the TA spin-off, serves as an independent director of TA.  RMR provides management services to both us and TA.

Financial information about TA may be found on the Securities and Exchange Commission’s, or the SEC, 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. TA has not yet filed its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014.  TA filed its Annual Report on Form 10-K for the year ended December 31, 2013, on June 6, 2014.  TA publicly disclosed that it had been delayed in filing that Annual Report due to unanticipated delays encountered in connection with TA’s accounting for income taxes as well as general delays encountered in connection with the completion of the TA’s accounting processes and procedures.  TA has also publicly disclosed that, as a result of the delay in completing its 2013 Annual Report, it has been delayed in filing its Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014.  There is no assurance as to when TA’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2014 will be completed and filed with the SEC.

TA has two leases with us, the TA No. 1 lease and the TA No. 2 lease, pursuant to which TA leases 185 travel centers from us.  The TA No. 1 lease is for 145 travel centers that TA operates under the “TravelCenters of America” or “TA” brand names.  The TA No. 2 lease is for 40 travel centers that TA operates under the “Petro” brand name.  The TA No. 1 lease expires on December 31, 2022.  The TA No. 2 lease expires on June 30, 2024, and may be extended by TA for up to two additional periods of 15 years each.

Both of these leases require TA to: (1) make payments to us of minimum rents; (2) pay us percentage rent equal to 3% of non-fuel revenues and 0.3% of fuel revenues above applicable base year revenues subject to certain limitations; (3) pay us at lease expiration an amount equal to an estimate of the cost of removing underground storage tanks on our leased sites; and (4) maintain the leased travel centers, including structural and non-structural components.  In addition to minimum and percentage rent, TA is obligated to pay us ground rent of approximately $5,253 per year under the TA No. 1 lease.  Previously deferred rent due from TA of $107,085 and $42,915 is due in December 2022 and June 2024, respectively; however, we have not recognized any of the deferred rent as rental income or as rents receivable due to uncertainties regarding future collection.

We recognized rental income of $55,395 and $53,948 for the three months ended June 30, 2014 and 2013, respectively, and $110,678 and $107,438 for the six months ended June 30, 2014 and 2013, respectively, under our leases with TA.  Rental income for the three and six months ended June 30, 2014 and 2013 includes $408 and $845 and $432 and $899, respectively, of adjustments necessary to record the scheduled rent increase on our TA No. 1 lease and the estimated future payment to us by TA for the cost of removing underground storage tanks on a straight line basis.  As of June 30, 2014 and December 31, 2013, we had accruals for unpaid amounts of $39,251 and $37,034, respectively, owed to us by TA (excluding any deferred rents), which amounts are included in due from related persons on our condensed consolidated balance sheets.  We had deferred percentage rent under our TA No. 1 lease of $698 and $672 for the three months ended June 30, 2014 and 2013, respectively, and $1,572 and $1,282 for the six months ended June 30, 2014 and 2013, respectively.  We have waived an estimated $612 of percentage rent under our TA No. 2 lease as of June 30, 2014 because we previously agreed to waive the first $2,500 of percentage rents under the TA No. 2 lease.  The waived percentage rent is not included in the deferred percentage rent amounts we have disclosed in Note 3. We determine percentage rent due under our TA leases annually and recognize it at year end when all contingencies are met.

Under the TA No. 1 and No. 2 leases, TA may request that we fund approved amounts for renovations, improvements and equipment at leased travel centers in return for increases in TA’s minimum annual rent.  We are not required to fund these improvements and TA is not required to sell them to us.  For the six months ended June 30, 2014, we funded $21,923 for capital improvements purchased under this lease provision; and, as a result, TA’s minimum annual rent payable to us increased by approximately $1,863.

On August 13, 2013, a travel center located in Roanoke, VA that we leased to TA under the TA No. 1 lease was taken by eminent domain proceedings brought by the VDOT in connection with certain highway construction.  Our TA No. 1 lease provides that the annual rent payable by TA to us is reduced by 8.5% of the amount of the proceeds we receive from the taking or, at our option, the fair market value rent of the property on the commencement date of the TA No. 1 lease.  In January 2014, we received proceeds from the VDOT of $6,178, which is a substantial portion of the VDOT’s estimate of the value of the property, and as a result the annual rent payable by TA to us under the TA No. 1 lease was reduced by $525 effective January 6, 2014.  We and TA intend to challenge the VDOT’s estimate of the property’s value.  We entered a lease agreement with the VDOT to lease this property through November 15, 2014 for $40 per month, and under the terms of the TA No. 1 lease TA will be responsible to pay this ground lease rent.  We entered into a sublease for this property with TA for TA to continue operating the property as a travel center through November 15, 2014.

On July 14, 2014, we agreed to purchase and lease to TA under the TA No. 1 lease land adjacent to a travel center that we own in Florence, KY.  We and TA expect to amend the TA No. 1 lease upon the closing of the transaction to add this property to the lease and to increase the annual rent payable by TA to us by 8.5% of our total investment in that purchased property.  See Note 7 for further information regarding this transaction.

RMR

We have no employees.  Personnel and various services we require to operate our business are provided to us by RMR.  We have two agreements with RMR to provide management and administrative services to us: (i) a business management agreement, which relates to our business generally, and (ii) a property management agreement, which relates to the property level operations of the office building component of only one property in Baltimore, MD, which also includes a Royal Sonesta hotel.

One of our Managing Trustees, Mr. Barry Portnoy, is Chairman, majority owner and an employee of RMR.  Our other Managing Trustee, Mr. Adam Portnoy, is the son of Mr. Barry Portnoy, and an owner, President, Chief Executive Officer and a director of RMR.  Each of our executive officers is also an officer of RMR, including Mr. Ethan Bornstein, who is the son-in-law of Mr. Barry Portnoy and the brother-in-law of Mr. Adam Portnoy.  Certain of TA’s and Sonesta’s executive officers are officers of RMR.  Our Independent Trustees also serve as independent directors or independent trustees of other public companies to which RMR provides management services.  Mr. Barry Portnoy serves as a managing director or managing trustee of a majority of the companies that RMR or its affiliates provide management services to and Mr. Adam Portnoy serves as a managing trustee of a majority of those companies.  In addition, officers of RMR serve as officers of those companies.

We incurred aggregate business management, property management and incentive fees of $10,925 and $10,050 for the three months ended June 30, 2014 and 2013, respectively, and $20,585 and $19,967 for the six months ended June 30, 2014 and 2013, respectively.  The fees for the three and six months ended June 30, 2014, include $1,445 and $2,296, respectively, of estimated 2014 incentive fees payable in common shares in 2015 based on our common share total return. These amounts are included in general and administrative expenses in our condensed consolidated financial statements.  In accordance with the terms of our business management agreement, we issued 65,018 of our common shares to RMR for the six months ended June 30, 2014 as payment for a portion of the base business management fee we recognized for such period.  In March 2014, we also issued 102,536 of our common shares to RMR for the incentive fee for 2013 pursuant to the business management agreement.

On May 9, 2014, we and RMR entered into amendments to our business management agreement and property management agreement.  As amended, RMR may terminate the agreements upon 120 days’ written notice.  Prior to the amendments, RMR could terminate the agreements upon 60 days’ written notice and could also terminate the property management agreement upon five business days’ notice if we underwent a change of control.  The amendments also provide for certain termination payments by us to RMR in the event that we terminate the agreements other than for cause, including certain proportional adjustments to the termination fees if we merge with another REIT to which RMR is providing management services or if we spin-off a subsidiary of ours to which we contributed properties and to which RMR is providing management services both at the time of the spin-off and on the date of the expiration or termination of the agreement.  Also, as amended, RMR agrees to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR.

Directors’ and Officers’ Liability Insurance

In June 2014, we, RMR and four other companies to which RMR provides management services extended our and their combined directors’ and officers’ liability insurance policy, and we extended our separate directors’ and officers’ liability insurance policy, in each case for an interim period.  We paid an aggregate premium of approximately $50 for these extensions.  Further information about those policies is contained in note 8 to our audited financial statements contained in our Annual Report.

Sonesta

The stockholders of Sonesta are Mr. Barry Portnoy and Mr. Adam Portnoy, who are our Managing Trustees, and they also serve as directors of Sonesta. Sonesta’s Chairman and Chief Executive Officer is an officer of RMR and formerly was our Director of Internal Audit, and other officers and employees of Sonesta are current or former officers or employees of RMR.  In addition, RMR also provides certain services to Sonesta.

In 2012, pursuant to a series of transactions, we purchased the entities that owned the Royal Sonesta Hotel Boston in Cambridge, MA, or the Cambridge Hotel, and leased the Royal Sonesta Hotel New Orleans in New Orleans, LA, or the New Orleans Hotel, for approximately $150,500.  In connection with these transactions, we entered into hotel management agreements with Sonesta International Hotels Corporation, or Sonesta, that provide for Sonesta to manage for us each of the Cambridge Hotel and the New Orleans Hotel.  Since that time, we have rebranded additional hotels we own to Sonesta brands and management, and, as of June 30, 2014, Sonesta was managing 22 of our hotels pursuant to long term management agreements.  We currently lease all hotels that we own and which are managed by Sonesta to one of our TRSs.

On June 28, 2013, we acquired the fee interest in the New Orleans Hotel from the third party owner from which we previously leased that hotel and, as a result, the lease with the third party terminated.  Simultaneous with this acquisition, we and Sonesta amended and restated the prior management agreement we had with Sonesta for this hotel.  The terms of the amended and restated management agreement are substantially the same as those contained in our other management agreements with Sonesta relating to full service hotels.

In April 2012, we entered into a pooling agreement with Sonesta that combined our management agreements with Sonesta for hotels that we owned for purposes of calculating gross revenues, payment of hotel operating expenses, payment of fees and distributions and the calculation of minimum returns due to us.  We previously referred to this agreement and combination of hotels and management agreements as our Sonesta No. 1 agreement.  The management agreements for all of our hotels then managed by Sonesta, excluding, until June 28, 2013, the New Orleans Hotel, were included in the Sonesta No. 1 agreement.  The amended and restated management agreement we entered with Sonesta for the New Orleans Hotel upon our acquiring the fee interest in that hotel was added to our pooling agreement with Sonesta.  We now refer to the pooling agreement and combination of our Sonesta branded hotels and management agreements as our Sonesta agreement.  See Note 11 for further information about our management agreements with Sonesta.

Pursuant to our management agreements with Sonesta, we incurred management, system, reservation fees and reimbursement of certain guest loyalty, marketing program and third party reservation transmission expenses payable to Sonesta of $4,717 and $3,007 for the three months ended June 30, 2014 and 2013, respectively, and $8,330 and $5,080 for the six months ended June 30, 2014 and 2013, respectively.  These amounts are included in hotel operating expenses in our condensed consolidated financial statements.  In addition, we also incurred procurement and construction supervision fees payable to Sonesta in connection with capital expenditures at our hotels managed by Sonesta of $1,200 and $1,150 for the three months ended June 30, 2014 and 2013, respectively, and $1,747 and $1,634 for the six months ended June 30, 2014 and 2013, respectively.  These amounts have been capitalized in our condensed consolidated financial statements.  Under our hotel management agreements with Sonesta, routine property maintenance, which is expensed, is an operating expense of the hotels and improvements and periodic renovations, which are capitalized, are funded by us, except in the case of the New Orleans Hotel for capital expenditures incurred prior to June 28, 2013, which were borne in large part by the former lessor.   As of June 30, 2014 and December 31, 2013, we had accruals for unpaid amounts of $398 and $893, respectively, owed to us by Sonesta, which amounts are included in due from related persons in our condensed consolidated balance sheets.  As of June 30, 2014 and December 31, 2013 we had accrued amounts due to Sonesta for capital expenditure reimbursements of $13,678 and $6,625, respectively, which amounts are included in due to related persons in our condensed consolidated balance sheets.

On April 29, 2014, we sold our Sonesta ES Suites in Myrtle Beach, SC.  In connection with this sale, the hotel management agreement with Sonesta for this property was terminated and removed from our Sonesta agreement.  See Note 7 for further information regarding this transaction.

On May 30, 2014, we acquired a hotel in Ft. Lauderdale, FL and this hotel has been rebranded as a Sonesta hotel.  Sonesta is managing this hotel pursuant to a hotel management agreement on terms consistent with our other hotel management agreements with Sonesta and that hotel management agreement has been added to our Sonesta agreement.  See Note 7 for further information regarding this transaction.

AIC

We, RMR, TA and four other companies to which RMR provides management services currently own Affiliates Insurance Company, or AIC, an Indiana insurance company.  All of our Trustees and most of the trustees and directors of the other AIC shareholders currently serve on the board of directors of AIC. RMR provides management and administrative services to AIC pursuant to a management and administrative services agreement with AIC.

On March 25, 2014, as a result of the removal, without cause, of all of the trustees of Equity Commonwealth (formerly known as CommonWealth REIT), or EQC, this shareholder of AIC underwent a change in control, as defined in the shareholders agreement among us, the other shareholders of AIC and AIC.  As a result of that change in control and in accordance with the terms of the shareholders agreement, on May 9, 2014, we and those other shareholders purchased pro rata the AIC shares EQC owned.  Pursuant to that purchase, we purchased 2,857 AIC shares from EQC for $825.  Following these purchases, we and the other remaining six shareholders each own approximately 14.3% of AIC.

In June 2014, we and the other shareholders of AIC renewed our participation in an insurance program arranged by AIC.  In connection with that renewal, we purchased a one-year property insurance policy providing $500,000 of coverage, with respect to which AIC is a reinsurer of certain coverage amounts.  The total premium due to AIC, including taxes and fees, is approximately $11,851 in connection with that policy, which amount may be adjusted from time to time as we acquire or dispose of properties that are covered in the policy. 

As of June 30, 2014, we had invested $6,034 in 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 as all of our Trustees are also directors of AIC.  Our investment in AIC had a carrying value of $6,807 and $5,913 as of June 30, 2014 and December 31, 2013, respectively, which amounts are included in other assets on our condensed consolidated balance sheet.  We recognized income of $125 and $79 for the three months ended June 30, 2014 and 2013, respectively, and $28 and $155 for the six months ended June 30, 2014 and 2013, respectively, related to our investment in AIC.

XML

Fair Value of Assets and Liabilities (Tables)

6 Months Ended

Jun. 30, 2014

Fair Value of Assets and Liabilities

Schedule of certain of the entity's assets carried at fair value, categorized by the level of inputs used in the valuation of each asset

			Fair Value at Reporting Date Using
			Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	Total		(Level 1)		(Level 2)		(Level 3)
Investment securities (1)	$	30,370	$	30,370	$	—	$	—

(1) Our investment securities, consisting of our 3,420,000 shares of TA, which are included in other assets in our condensed consolidated balance sheets, are reported at fair value which is based on quoted market prices (Level 1 inputs).  Our historical cost basis for these securities is $17,407.  The unrealized gain for these securities as of June 30, 2014 is included in cumulative other comprehensive income in our condensed consolidated balance sheets.

Schedule of fair value of additional financial instruments

	June 30, 2014					December 31, 2013
	Carrying			Fair		Carrying			Fair
	Amount			Value		Amount			Value
Senior Notes, due 2014 at 7.875%	$	—		$	—	$	300,000		$	304,035
Senior Notes, due 2015 at 5.125%	280,000			281,323		280,000			283,150
Senior Notes, due 2016 at 6.3%	275,000			294,040		275,000			297,443
Senior Notes, due 2017 at 5.625%	300,000			328,899		300,000			327,681
Senior Notes, due 2018 at 6.7%	350,000			393,652		350,000			399,560
Senior Notes, due 2022 at 5%	500,000			529,893		500,000			524,810
Senior Notes, due 2023 at 4.5%	300,000			306,272		300,000			289,950
Senior Notes, due 2024 at 4.65%	350,000			359,394		—			—
Convertible Senior Notes, due 2027 at 3.8%	8,478			8,963		8,478			8,983
Unamortized discounts	(9,473		)	—		(9,473		)	—
Total financial liabilities	$	2,354,005		$	2,502,436	$	2,304,005		$	2,435,612

XML

Indebtedness (Details) (USD $) In Thousands, unless otherwise specified	6 Months Ended			3 Months Ended		6 Months Ended			3 Months Ended		6 Months Ended			0 Months Ended		0 Months Ended				6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Dec. 31, 2013	Jun. 30, 2014 Unsecured revolving credit facility	Jun. 30, 2013 Unsecured revolving credit facility	Jun. 30, 2014 Unsecured revolving credit facility	Jun. 30, 2013 Unsecured revolving credit facility	Aug. 10, 2014 Unsecured revolving credit facility	Jun. 30, 2014 Unsecured term loan	Jun. 30, 2013 Unsecured term loan	Jun. 30, 2014 Unsecured term loan	Jun. 30, 2013 Unsecured term loan	Jun. 30, 2014 Unsecured senior notes	Feb. 15, 2014 Senior Notes, due 2014 at 7.875%	Dec. 31, 2013 Senior Notes, due 2014 at 7.875%	Mar. 12, 2014 Senior Notes, due 2024 at 4.65%	Jun. 30, 2014 Senior Notes, due 2024 at 4.65%	Jun. 30, 2014 Convertible senior notes, due 2027 at 3.8%	Dec. 31, 2013 Convertible senior notes, due 2027 at 3.8%	Jun. 30, 2014 Revolving credit facility and term loan	Jun. 30, 2014 5.125% Senior Notes due 2015	Dec. 31, 2013 5.125% Senior Notes due 2015	Jul. 15, 2014 5.125% Senior Notes due 2015 Forecast
Indebtedness
Unsecured revolving credit facility				$ 750,000		$ 750,000
Unsecured term loan outstanding									400,000		400,000
Unsecured senior notes													2,355,000
Convertible senior notes	8,478		8,478															8,478
Current amount outstanding under revolving credit facility				40,000		40,000		40,000
Extendable term of credit facility						1 year
Amount available under revolving credit facility				710,000		710,000		710,000
Maximum borrowing capacity that may be increased																				2,300,000
Debt instrument, interest rate description						LIBOR					LIBOR
Margin over base rate before amendment, in basis points (as a percent)						1.30%					1.45%
Margin over base rate, in basis points (as a percent)						1.10%					1.20%
Interest rate payable for facility fees before amendment, (as a percent)						0.30%
Interest rate payable for facility fees (as a percent)						0.20%
Weighted average interest rate for borrowings (as a percent)				1.25%	1.50%	1.25%	1.51%		1.35%	1.66%	1.36%	1.66%
Loss on extinguishment of debt	214																			214
Interest rate (as a percent)				1.26%		1.26%			1.35%		1.35%
Issuance of senior notes	2,345,527		2,295,527													350,000
Interest rate stated percentage														7.875%	7.875%	4.65%	4.65%	3.80%	3.80%		5.125%	5.125%	5.125%
Principal balance of debt repaid														300,000									280,000
Aggregate debt including accrued and unpaid interest redeemed														311,813
Proceeds from issuance of senior notes, net of underwriting discounts and other offering expenses	$ 346,616	$ 299,661														$ 345,949

XML

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) (USD $) In Thousands, unless otherwise specified	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Interest expense, amortization of deferred financing costs and debt discounts	$ 1,354	$ 1,524	$ 3,184	$ 3,036

XML

Per Common Share Amounts

6 Months Ended

Jun. 30, 2014

Per Common Share Amounts

Per Common Share Amounts

Note 4.  Per Common Share Amounts

We compute per common share amounts using the weighted average number of our common shares outstanding during the period. We had no dilutive common share equivalents during the periods presented.

XML

Real Estate Properties (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	6 Months Ended	0 Months Ended		0 Months Ended	3 Months Ended			1 Months Ended
	Jun. 30, 2014 item	Jun. 30, 2014 item	May 30, 2014 Full service hotel in Ft. Lauderdale, FL item	Jul. 14, 2014 Subsequent event Land parcel adjacent to other travel centers	Apr. 29, 2014 Sonesta ES Suites	Jun. 30, 2014 Sonesta ES Suites	Jun. 30, 2014 Hotels property	Jun. 30, 2014 Travel centers property	Jan. 31, 2014 Travel centers Travel center located in Roanoke, VA TA No. 1
Real estate properties
Number of properties owned							291	185
Number of operating agreements	11	11
Funded real estate improvements		$ 98,592
Increase (decrease) in annual minimum returns and rents		7,355							(525)
Proceeds received from the VDOT in connection with the eminent domain taking		6,178							6,178
Purchase price				450
Net proceeds from sale of hotel					4,288
Gain on sale of property	130	130				130
Number of rooms			240
Acquisition costs			191
Land			14,592
Building			40,525
Furniture, fixtures and equipment			9,883
Total			$ 65,000

XML

Segment Information (Tables)

6 Months Ended

Jun. 30, 2014

Segment Information

Schedule of segment information

	For the Three Months Ended June 30, 2014
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	387,248	$	—	$	—		$	387,248
Rental income	8,341		55,395		—			63,736
FF&E reserve income	916		—		—			916
Total revenues	396,505		55,395		—			451,900
Hotel operating expenses	270,778		—		—			270,778
Depreciation and amortization	53,362		25,401		—			78,763
General and administrative	—		—		13,166			13,166
Acquisition related costs	162		—		—			162
Total expenses	324,302		25,401		13,166			362,869
Operating income (loss)	72,203		29,994		(13,166		)	89,031
Interest income	—		—		25			25
Interest expense	—		—		(34,941		)	(34,941		)
Income (loss) before income taxes and equity in earnings of an investee	72,203		29,994		(48,082		)	54,115
Income tax expense	—		—		(455		)	(455		)
Equity in earnings of an investee	—		—		125			125
Income before gain on sale of real estate	72,203		29,994		(48,412		)	53,785
Gain on sale of real estate	130		—		—			130
Net income (loss)	$	72,333	$	29,994	$	(48,412	)	$	53,915

	For the Six Months Ended June 30, 2014
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	717,184	$	—	$	—		$	717,184
Rental income	16,444		110,678		—			127,122
FF&E reserve income	1,844		—		—			1,844
Total revenues	735,472		110,678		—			846,150
Hotel operating expenses	501,395		—		—			501,395
Depreciation and amortization	106,378		50,672		—			157,050
General and administrative	—		—		24,631			24,631
Acquisition related costs	223		—		—			223
Total expenses	607,996		50,672		24,631			683,299
Operating income (loss)	127,476		60,006		(24,631		)	162,851
Interest income	—		—		50			50
Interest expense	—		—		(70,309		)	(70,309		)
Loss on early extinguishment of debt	—		—		(214		)	(214		)
Income (loss) before income taxes and equity in earnings of an investee	127,476		60,006		(95,104		)	92,378
Income tax expense	—		—		(1,071		)	(1,071		)
Equity in earnings of an investee	—		—		28			28
Income before gain on sale of real estate	127,476		60,006		(96,147		)	91,335
Gain on sale of real estate	130		—		—			130
Net income (loss)	$	127,606	$	60,006	$	(96,147	)	$	91,465

	As of June 30, 2014
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,758,872	$	2,187,657	$	42,396	$	5,988,925

	For the Three Months Ended June 30, 2013
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	349,877	$	—	$	—		$	349,877
Rental income	7,908		53,948		—			61,856
FF&E reserve income	589		—		—			589
Total revenues	358,374		53,948		—			412,322
Hotel operating expenses	248,543		—		—			248,543
Depreciation and amortization	49,550		24,048		—			73,598
General and administrative	—		—		11,918			11,918
Acquisition related costs	1,814		—		—			1,814
Loss on asset impairment	2,171		—		—			2,171
Total expenses	302,078		24,048		11,918			338,044
Operating income (loss)	56,296		29,900		(11,918		)	74,278
Interest income	—		—		60			60
Interest expense	—		—		(35,014		)	(35,014		)
Income (loss) before income taxes and equity in earnings of an investee	56,296		29,900		(46,872		)	39,324
Income tax benefit	—		—		5,950			5,950
Equity in earnings of an investee	—		—		79			79
Net income (loss)	$	56,296	$	29,900	$	(40,843	)	$	45,353

	For the Six Months Ended June 30, 2013
	Hotels		Travel Centers		Corporate			Consolidated
Hotel operating revenues	$	641,528	$	—	$	—		$	641,528
Rental income	16,630		107,438		—			124,068
FF&E reserve income	1,192		—		—			1,192
Total revenues	659,350		107,438		—			766,788
Hotel operating expenses	455,192		—		—			455,192
Depreciation and amortization	98,227		47,651		—			145,878
General and administrative	—		—		24,062			24,062
Acquisition related costs	2,090		—		—			2,090
Loss on asset impairment	2,171		—		—			2,171
Total expenses	557,680		47,651		24,062			629,393
Operating income (loss)	101,670		59,787		(24,062		)	137,395
Interest income	—		—		79			79
Interest expense	—		—		(70,202		)	(70,202		)
Income (loss) before income taxes and equity in earnings of an investee	101,670		59,787		(94,185		)	67,272
Income tax benefit	—		—		5,432			5,432
Equity in earnings of an investee	—		—		155			155
Net income (loss)	$	101,670	$	59,787	$	(88,598	)	$	72,859

	As of December 31, 2013
	Hotels		Travel Centers		Corporate		Consolidated
Total assets	$	3,701,850	$	2,223,337	$	42,357	$	5,967,544