Good day, and welcome to the Hospitality Properties Trust First Quarter Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Vice President of Investor Relations, Mr. Tim Bonang. Please go ahead, sir.

Thank you. Good afternoon. Joining me on today's call are John Murray, President; and Mark Kleifges, Chief Financial Officer. John and Mark will make a short presentation, which will be followed by a question-and-answer session. I would note that the recording and retransmission of today's conference call is strictly prohibited without prior written consent of HPT. Before we begin today's call, I would like to read our Safe Harbor statement. Today's conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based on HPT's present beliefs and expectations as of today, May 7, 2012. The company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's conference call other than through filings with the Securities and Exchange Commission or SEC. In addition, this call may contain non-GAAP financial measures including normalized funds from operations or normalized FFO. A reconciliation of normalized FFO and EBITDA to net income, as well as components to calculate AFFO, CAD or FAD, are available in our supplemental package found in the Investor Relations section of the company's website. Actual results may differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause those differences is contained in our Form 10-Q to be filed with the SEC and in our Q1 supplemental operating and financial data package found on our website at www.hptreit.com. Investors are cautioned not to place undue reliance upon any forward-looking statements. Now I would like to turn the call over to John Murray.

Thank you, Tim. Good afternoon, and welcome to our first quarter 2012 earnings call. Today, HPT reported first quarter normalized FFO of $0.78 per share. Focusing first on our travel center investments, first quarter performance of HPT's 185 travel centers included continued strong per gallon fuel margins on flat fuel volumes and increases in non-fuel sales and gross margin. Property level rent coverage for HPT's travel centers was approximately 1.3x for the quarter, up from approximately 1.2x in the 2011 quarter. In addition to its improved operating results, TA's financial position remains sound with approximately $95 million of cash on hand at quarter end. Turning to HPT's hotel investments. First quarter RevPAR decreased 0.5% for our comparable 288 hotels and increased 0.4% at our 290 hotels, including the 2 new Royal Sonesta Hotels, driven by a 3.5 percentage point decrease in average occupancy to 64.1% and a 5.9% increase in average daily rate to $100.88. During the quarter, we had 86 hotels under renovation for all or part of the period, including one hotel in our Marriott No. 1 portfolio, 25 hotels in our Marriott 234 portfolio, 52 hotels in our IHG portfolio, 7 Hyatt Place hotels and one Radisson. The impact of these renovations, primarily from reduced occupancies because rooms were out of service, was significant as RevPAR was up 5.6% quarter-over-quarter for the 204 non-renovation hotels but was down 14.6% at the comparable -- at the 86 comparable renovation properties. GOP margins at the 204 non-renovation hotels increased 160 basis points. Average daily rate growth for our 290 hotels was 5.9% in the first quarter of 2012, an increase in each portfolio and for 14 of our 15 brands this quarter, compared to last year as our operators continued to manage guest mix and pushed rate during peak…

Thanks, John. First, let's review the first quarter operating results for our hotel properties. As John discussed, we had 86 properties or about 30% of our hotels under renovation for all the parts of the first quarter. As would be expected, this level of renovation activity had a negative impact on the operating results of our hotel portfolio, with revenues at our 288 comparable hotels down approximately $920,000 or less than 0.5% versus the prior year quarter. Results were more favorable if you exclude hotels under renovation during the first quarter, with revenues at our remaining 202 comparable hotels up $8.7 million or 4.2% quarter-over-quarter. Our strongest performing portfolio was our Marriott No. 1 portfolio with a revenue increase of 6.4%, while revenue for our IHG portfolio, which had 52 properties under renovation, decreased 4.2% quarter-over-quarter. Our newly acquired Royal Sonesta Hotels in Cambridge and New Orleans generated revenue increases of approximately 42% and 18%, respectively, for the months of February and March. Renovation activity also took its toll on hotel profitability, with gross operating profit for our comparable hotels down $4.1 million or about 4% quarter-over-quarter and GOP margin percentage down 130 basis points to 33.3%. Excluding hotels under renovation during the quarter, GOP increased $5.5 million or 8.1%, and GOP margin percentage increased 120 basis points to 34% for our comparable hotels. The Marriott No. 1 portfolio, which had only one hotel under renovation during the quarter, performed very well with a 14% increase in gross operating profit and a 280 basis point increase in GOP margin percentage. Cash flow available to pay on minimum rents and returns for our comparable hotels increased $2.5 million or 4.5% quarter-over-quarter. Excluding hotels under renovation, cash flow available to pay our minimum rents and returns increased $10.2 million or about 27%…

[Operator Instructions] And we'll go to the line of Jeffrey Donnelly.

What is the rent coverage and RevPAR of the 4 IHG hotels that are now to be pulled out of IHG and put into Sonesta?

The rent coverage is about 0.8x. I don't know the RevPAR off the top of my head.

And do you guys have a sense of how much you'll be investing in the remaining IHG portfolio assuming that they all remain with IHG?

Well, we know that for the hotels that are definitely staying with IHG, we know that we have another $172 million -- $171 million, $172 million this year, and there'll be additional monies in 2013. And we're still -- we're firming up those estimates.

And just from a practical standpoint, how do you guys end up, I guess, negotiating the arrangements with Sonesta just considering that RMR is sort of on both sides of the transaction? Do you guys have to get a third party involved or I'm just curious from a logistical standpoint?

The valuations and exit rates for hotels that are still part of the IHG arrangement were negotiated with IHG, so those -- and they were then shared with our independent trustees who approved the IHG amendments. So we have approval to remove those and rebrand those properties at those values or higher. So it was approved by our independent trustees.

Just one last question. I don't know if you guys have it. But I think you said in your release that at the end of the quarter, from the Marriott 234 agreement, there was $24 million of guarantees or deposits left. Do you have a sense of where that stands today, like maybe in early May or at the end of April?

No. We're going to put -- we're in the process of updating that -- those numbers through -- I think that the -- Marriott is on the 13-period system, so we're going to provide in our Q when we file it tomorrow. We'll provide an update through the most recent period.

[Operator Instructions] And we'll go to the line of David Loeb. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: John, I'm not sure you really answered the question that I thought Jeff was asking, and I was interested in that, so let me ask it a different way. When you're negotiating a management arrangement for a newly rebranded Sonesta Hotel, who negotiates that?

There was a negotiation that took place at the time that we were acquiring Sonesta, and we engaged an outside consultant to do a benchmark study of a third-party management contract terms in the hotel industry. And based on that benchmarking study that was done by an independent firm, our independent trustees signed off on contract terms that were within those parameters and also on the pooling agreement. So that as we converted hotels from the IHG portfolio to the Sonesta portfolio, if we decided to do that, that the new rebranded hotels would fall under that same -- those same contract terms and become pooled together. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: Okay. So basically, any additional contracts that you sign with Sonesta, any hotels that are rebranded will have those same terms as the initial ones?

Yes, I think that's what everybody should expect going forward. Unless there's something particularly different, we could go -- we could run that by a new scenario by our independent trustees. But I think we've got -- it was an extensive study done, and I think that both sides are comfortable with the terms. They look very similar to most other third-party hotel management contracts that you see among all REITs out there. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: Okay. And then in the supplement, it talks about -- it actually has a number in -- for annual minimum return, minimum rent for the Sonesta 1, Sonesta 2, which, I guess, are now 2 hotels but soon going to more. Is that really only relevant in measuring whether HPT has the right to terminate Sonesta?

To terminate as well as for purposes of calculating when the manager would qualify for incentive fees on the contract. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: Okay. So that's -- so that 1.0 coverage, that's the threshold for incentive fees to kick in?

Correct, and keep in mind that John mentioned the pooling agreement. So all hotels managed by Sonesta, with the exception of the New Orleans leased hotel, will be pooled for purposes of calculating whether we received our minimum return. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: Okay that does make sense. So as you go forward -- I guess this is another thing that maybe Jeff was kind of getting around the edges of. But as you take hotels out of IHG where there is a minimum return requirement and put them into Sonesta where there's not except for the calculation or basically where you're floating relative to the market as any other REIT TRS leased hotel would be, do you expect in the near term or in the intermediate term that there will be a decrease in the cash flow coming from that?

Well, for the 4 hotels that we have announced that we're going to rebrand, there will be a shortfall initially because the minimum return under the IHG contract will be reduced by $9.9 million. And as I said, these hotels were covering at about 0.8x on a trailing 12-month basis, so there's a shortfall there. If you look at all of the hotels combined that we're thinking of converting potentially to the Sonesta brand, they actually -- hotel cash flow over -- on a trailing 12-month basis is greater than the amount or minimum return under the IHG contract will be reduced. So if we convert all of the hotels that we're considering, there will be no -- at least on -- based on historical cash flows, there will be no decline in our cash flow. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: And in fact, an increase in your cash flow, if I heard your numbers right?

Based on historical numbers, yes.

But we will be renovating all of the properties within 6 months after conversion, so that's another reason why there will be a drop off. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: Okay. So that makes sense. There would be a drop off during renovation but presumably, you would expect to have an increased return from those going forward, albeit with a slightly higher risk profile?

Yes. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: And for the hotels that you may decide to retain in Marriott or InterContinental, am I looking at the math right to say that you'll keep the 8% or 9% minimum return on those, but any additional dollars that you put in to renovate those under those systems will also carry that 8% or 9% minimum return?

That's correct. David Loeb - Robert W. Baird & Co. Incorporated, Research Division: That sounds like a good deal.

We'll go to the line of Dan Donlan.

Was just curious on the 4 hotels that you guys are rebranding as Sonesta. Why did you decide to rebrand those? And then secondly, what portion of the guests are -- were being derived from the IHG reservation systems?

The -- those are art and -- a combination of art and science in terms of the timing and which hotels went first. And it involved -- to some extent, it involved a negotiation with IHG. Contractually, we were required to convert the Hilton Head property first. The other properties, we converted based on the timing that seem to work best for Sonesta and that -- there were a few different reasons why that would work out better. We thought -- Sonesta's currently manages larger full-service hotels in the Royal Sonesta Hotel brand here in the U.S. And so converting hotels like Baltimore that fit nicely into that type of hotel asset work best, so that's why Baltimore is one of the next ones. There -- Sonesta's created a new upscale extended-stay brand, and so that's one of the -- and Burlington is the closest hotel to Sonesta's headquarters here in Boston, so that's why Burlington was next. Philadelphia, again, is a large center city hotel close to Baltimore and close to Boston, and so it was really for ease. Second part of the question was -- I'm sorry?

Yes, just what portion of the guests -- I guess really, Baltimore and Philadelphia, what portion of the guests are generated to the IHG system?

It varies. It varies, but it was probably in the 30-ish percent range.

Okay. And then as you go forward, are these kind of like test cases, to a degree, with Sonesta in how you guys decide to revamp future hotels? I guess it would seem to me, given Sonesta's full service experience that the Crowne Plazas might be better rebranched for Sonesta initially. Is that a fair assumption for us to be making or?

Well, there are more hotels that have potential under the Staybridge brand right now that are potential conversion candidates. So -- and I think that not having created a new brand, there will be an effort to get a little bit of mass within that brand. So I think you'll see a mix of Staybridge and Crowne Plaza conversions.

Okay. And then I might have missed this because I got disconnected from the call. But I think you guys were talking with another major brand about potentially rebranding hotels, some of your hotels, I think, in the -- maybe the IHG portfolio. What's going on there?

We're still in the process of negotiating documents. We're hopeful that, that will move forward, but we don't have a firmly committed deal. We have an agreed term sheet and documents that are going back and forth. It covers 20 hotels. We're hopeful that we'll be able to complete and announce that transaction this quarter. But until it's done, it's not done.

Next, we'll go to the line of Wes Golladay.

You mentioned the potential for acquisitions. Can you give us some color on the size of your pipeline and what markets you might be looking at?

Well, we're looking at a number of different possible alternatives. The footprint that we're initially laying out with the Sonesta brand is really from the Baltimore -- from the Boston market where they are today down through New Orleans and to Houston, but primarily along the coast. And so our initial focus with acquisitions that are going to go to the Sonesta brand is going to focus on key markets that -- where we don't have that representation today. So we've been looking at hotels in New York, Washington D.C., Miami, and those would probably be the area -- the markets that get the most attention for Sonesta now. We won't -- obviously, we won't ignore opportunities that come up in Chicago or San Francisco, but the focus is really on the East Coast right now that -- as we increase the awareness for the Sonesta brands.

Okay. And on the term loan, you guys currently have that floating. Is the game plan to leave that float for awhile or are you guys looking at permanent financing on that?

I think that the game plan right now is to allow that to float. We think the interest rate environment on floating rate debt is very favorable today. We don't see that changing in the near term. However, if our view changes, we can prepay that at any time. And if we decided to do that, we'd probably issue senior notes to take it out.

At this time, I have no further questions. I'll turn it back over to Mr. John Murray.

Thank you all for joining us today. We look forward to seeing you at NAREIT and the NYU Hotel Conference in New York later or next month. Thanks.