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Edited Transcript of HPT earnings conference call or presentation 9-Aug-19 2:00pm GMT

Q2 2019 Hospitality Properties Trust Earnings Call

Newton Sep 6, 2019 (Thomson StreetEvents) -- Edited Transcript of Hospitality Properties Trust earnings conference call or presentation Friday, August 9, 2019 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brian E. Donley

Hospitality Properties Trust - CFO & Treasurer

* John G. Murray

Hospitality Properties Trust - President, CEO & Managing Trustee

* Katherine J. Strohacker

Hospitality Properties Trust - Senior Director, IR

* Todd Hargreaves

Hospitality Properties Trust - VP

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Conference Call Participants

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* Bryan Anthony Maher

B. Riley FBR, Inc., Research Division - Analyst

* Dori Lynn Kesten

Wells Fargo Securities, LLC, Research Division - Associate Analyst

* Michael Joseph Bellisario

Robert W. Baird & Co. Incorporated, Research Division - VP and Senior Research Analyst

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Presentation

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Operator [1]

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Good day, and welcome to Hospitality Properties Trust Second Quarter 2019 Financial Results Conference Call. This call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to Senior Director of Investor Relations Katie Strohacker. Please go ahead.

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Katherine J. Strohacker, Hospitality Properties Trust - Senior Director, IR [2]

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Good morning. Joining me on today's call are John Murray, President; Brian Donley, Chief Financial Officer; and Todd Hargreaves, Vice President. Today's call includes a presentation by management followed by a question-and-answer session with analysts. Please note that the recording, retransmission and transcription of today's conference call is prohibited without the prior written consent of HPT.

I'd like to point out that 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, August 9, 2019. 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 and adjusted EBITDAre. Reconciliations of normalized FFO and adjusted EBITDAre to net income as well as components to calculate AFFO 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 these forward-looking statements. Additional information concerning factors that could cause those differences is contained in our Form 10-Q to be filed later today with the SEC and in our supplemental operating and financial data found on our website at www.hptreit.com. Investors are cautioned not to place undue reliance upon any forward-looking statements.

And with that, I'll turn the call over to you, John.

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [3]

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Thank you, Katie, and good morning. This morning, we reported second quarter normalized FFO of $1.03 per share, a decrease of 3.7% compared to the $1.07 per share reported in the second quarter of 2018, primarily related to our disposition of 20 travel centers and the lease amendments with TA we completed in January. The most significant event this quarter was our announcement of the acquisition of a $2.4 billion net lease portfolio of service-oriented retail properties from SMTA REIT. Todd will provide an update on that transaction shortly.

For HPT's hotels, second quarter 2019 comparable RevPAR decreased by 2.1% versus the 2018 quarter resulting from a 1.2% decline in rate and a 0.7 percentage point decline in occupancy. HPT's comparable RevPAR performance trailed industry results this quarter as did HPT's comparable non-renovation hotel performance, which declined 0.3%.

Hotels that were renovated in 2018 recognized healthy double-digit RevPAR growth this quarter with multiple success stories in our Marriott 1, Marriott 234, Radisson and Sonesta portfolios. We expect lift from these hotels throughout the remainder of the year. However, renovation disruption and other factors more than offset this tailwind.

In the second quarter, we had 14 hotels under renovation versus 11 comparable renovations in Q2 2018. Of the 14 comparable renovation hotels this quarter, 9 were full-service assets versus 3 in the same period last year.

Renovations were evenly divided across the IHG, Marriott 234, Sonesta and Radisson portfolios. In addition to renovation disruption, the portfolio was negatively impacted by nonrecurring FEMA business that impacted 15 hotels and reduced demand from fewer citywide events in Chicago.

Supply remains an ongoing burden on hotels and has impeded the ability to replace non-repeat business and to ramp-up post-renovation as easily as in past years.

Turning to hotel portfolio performance, our Marriott 1 portfolio RevPAR declined by 0.6% due to a 2 percentage point decrease in occupancy, partially offset by a 2.2% increase in rate. Marriott No. 1 was materially impacted by non-repeat business at 7 hotels and 2 hotels under renovation. Hotels in this portfolio that had better RevPAR performance drove rate through yielding strategies and capitalized on local leashed demand in markets like Williamsburg and Scottsdale this quarter. Coverage at our Marriott 1 agreement remains strong at 1.18x for the trailing 12 months.

Our Marriott 234 portfolio experienced RevPAR declines of 2.3% due to occupancy declines of 1.8 percentage points and flat rates. This portfolio had 3 hotels under renovation in Q2, where RevPAR declined by 6.2%. Market weakness in Chicago from fewer citywides resulted in significant revenue declines at the residence in downtown Chicago.

Coverage at our Marriott 234 agreement remains solid at 1.06x for the trailing 12 months. On previous calls, we have told you we have been in discussions with Marriott regarding the Marriott Kauai and possible outcomes, which include combining the Kauai hotel with the Marriott 1 and 234 hotel portfolios when the Kauai lease expires on December 31, 2019.

Other possible outcomes include the sale or re-branding of the Kauai Marriott. In connection with the discussions with Marriott, we're also considering the possibility of selling approximately 30 hotels. Discussions are ongoing and it's too soon to provide more clarity on until these discussions will finally conclude.

RevPAR at our comparable IHG portfolio declined 4.6% caused by a 3.5% decline in rate and a 0.9 percentage point decline in occupancy. Our comparable full-service non-renovation and comparable extended stay portfolios, both experienced decreases in RevPAR of 1.7%.

Renovation disruption was experienced at our InterContinental Toronto, Hotel Alexis Seattle and Crowne Plaza Columbus hotels. Other negative factors included non-repeat FEMA business in Miami and Houston and occupancy declines at Hotel Allegro in Chicago due to fewer citywides.

Our comparable Sonesta portfolio increased RevPAR by 2.5%, driven by occupancy increases of 1.9 percentage points, partially offset by a 20 basis point decline in rate. Comparable portfolio RevPAR outpaced industry growth by 1.4 percentage points, driven by solid transient performance, strong results at the Royal Sonesta Clift Hotel and ramp up associated with 14 recently renovated ES Suites hotels.

Full-service hotels renovations at the Sonestas in the Silicon Valley, Fort Lauderdale, and St. Louis negatively impacted RevPAR performance by 3.3 percentage points. RevPAR at our Wyndham hotels was down 2.1% this quarter, caused by a 3.6% decline in rate, partially offset by 1.1 percentage point increase in occupancy.

RevPAR declines were driven by non-repeat FEMA business in Houston and a reduced citywide compression in Chicago. Wyndham has continued to pay HPT 85% of their returns due under the management agreement, approximately $1 million less than the contractual amounts due for the second quarter. For several quarters, we have been telling you, we were having discussions with Wyndham regarding possible restructuring of this portfolio and amendment of the management agreement. Both sides have concluded that we are unable to find a mutually agreeable way forward and instead have begun work to amend the contracts to a short-term agreement where both sides were cooperatively to sell or rebrand the 22 hotels in the next 12 months.

Our Hyatt portfolio RevPAR declined 5.7%, caused by a 4% decline in rate and a 1.5 percentage point decline in occupancy. During the quarter, supply growth in approximately 1/3 of the Hyatt portfolio markets exceeded industry average supply growth and market demand growth.

Our comparable Radisson Hotel Group's RevPAR was essentially flat this quarter versus last year. Strong post-renovation gains at 5 hotels were offset by renovation disruption at 3 hotels during the quarter, including the Country Inn & Suites Sunnyvale that was recently repositioned as a Radisson Hotel. The 5 comparable hotels that were under renovation last year are ramping nicely and experienced a RevPAR lift of 7.9% compared to pre-renovation performance in the second quarter 2 years ago.

Turning to investment activity. In addition to the SMTA portfolio announcement, in the second quarter, we acquired the 198-room Crowne Plaza located in Milwaukee, Wisconsin for a purchase price of $30 million and added this hotel to our IHG agreement. The hotel features over 7,000 square feet of flexible meeting space. This hotel benefits from demand generated that include Milwaukee Regional Medical Center, Wisconsin's largest hospital and medical campus as well as GE Healthcare's global headquarters.

Looking ahead in 2019, renovation disruption will continue. However, there will only be 15 hotels under renovation in the third quarter compared to 29 last year, 8 of which are full service versus 6 last year. While we're expecting to see positive lift this year from the 49 hotels that completed renovations in 2018, operators are contending with continued room supply growth, coupled with stagnant or declining demand growth in many markets.

As a result, rate growth expectations have declined. Hotels are increasingly taking longer to fill, allowing less opportunity to push higher short-term rates. HPT's managers now project that for the remainder of 2019, we will experience RevPAR growth from occupancy gains driven by post-renovation improvement, but with little change in rate, which results in a reduction to prior forecast such that full year comparable RevPAR is likely to be in the minus 1% to plus 1% range. Full year GOP margin is expected to be down 0.5% to 1.5% given flat revenue and continued pressure on wages and benefits. Brian will discuss our travel center portfolio results in a moment. But first, Todd will discuss our transaction with SMTA.

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Todd Hargreaves, Hospitality Properties Trust - VP [4]

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Thanks, John. As John mentioned, in June, we an announced our agreement to acquire a net lease portfolio of service-oriented retail properties from SMTA REIT for $2.4 billion. The transaction will add 770 net lease properties to HPT's portfolio in 22 different industries, spanning 164 brands across the United States. The acquisition of this portfolio evolves HPT to a hospitality and service retail focus with net lease properties and complements HPT's strategy by providing a reliable income stream and should require minimal capital expenditures.

SMTA's shareholders vote on the transaction is scheduled to occur on September 4, and assuming a favorable outcome, we will close the transaction later in September. Integration efforts are ongoing across the organization, and we believe we are well positioned to transition this portfolio to HPT.

As previously announced, we expect to sell approximately $500 million of the properties we will acquire from SMTA. We have commenced marketing efforts and believe we will be in a position to execute the majority of these sales in the fourth quarter of 2019. The assets we are selecting for sale will generally be a cross-section of assets across various industries and certain assets that do not strategically fit the portfolio. We are hopeful that by the time we announce third quarter earnings, we may have selected a buyer.

I will now turn the call over to Brian.

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Brian E. Donley, Hospitality Properties Trust - CFO & Treasurer [5]

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Thanks, Todd. Starting with operating results at our 322 comparable hotels this quarter, RevPAR decreased 2.1%, GOP margin percentages decreased by a 222 basis points and cash flow available to pay HPT's minimum returns and rents decreased by 8.2%, which was the result of the negative impact of renovations and increased operating costs. Our Hyatt and comparable IHG portfolios had the weakest RevPAR performance with declines of 5.7% and 4.6%, respectively versus the prior year quarter. Our comparable Sonesta and Radisson Hotel portfolios had the strongest RevPAR performances with increases of 2.5% and 0.2%, respectively versus the prior year quarter.

GOP margin percentage for our comparable hotels decreased by 222 basis points from the 2018 quarter to 40.6% and the gross operating profit decreased approximately $16.2 million. All our comparable portfolios experienced declines in GOP. Results from our IHG, Marriott 234, Sonesta and Hyatt portfolios made up the majority of the decrease.

Revenue losses were associated with renovation activity, fewer citywide events in certain markets, supply growth and non-repeat FEMA business in our Miami, Houston area hotels.

Labor-related cost increased approximately 3.6% across the portfolio, while additional marketing efforts also contributed to its increased expenses this quarter. Below the GOP line cost at our comparable hotels declined by $2.4 million from the prior year, driven by lower insurance and real estate tax expenses.

Cash flow available to pay our minimum returns and rents for our comparable hotels declined $13.8 million or 8.2%. Cash flow coverage of our minimum returns and rents for our 322 comparable hotels decreased to 1.11x for the 2019 quarter compared to 1.22x for the prior year quarter.

Our available security features under our hotel operating agreements were replenished by $9 million during the quarter from cash flows in excess of our minimum returns and rents. In total, the balance of our security deposits and guarantees at quarter end was $217.4 million.

Turning to the performance of our comparable travel centers, for the quarter, fuel volumes increased by 2.6% over the prior year. Fuel gross margin increased by $1.9 million or 3.1%. The increase in fuel gross margin is primarily a result of TA managing gasoline pricing to balance sales volume and profitability. Nonfuel travel center revenue was flat versus the prior year as store and quick-serve restaurant revenues increased 3.5% and 3.3%, respectively. This was offset by declines in repair shop and restaurant revenues of 3.1% and 2.1%, respectively.

Nonfuel gross margin percentage was down 30 basis points compared to the prior year at 60.7%. As a result, our travel centers' nonfuel gross margin declined $1.1 million or 0.5% versus the 2018 quarter to $237.3 million. Nonfuel sales generated approximately 78% from the total gross margin dollars of our travel centers in the quarter.

Site level operating expenses decreased $879,000 or 0.5% from the prior year due to lower maintenance costs. Second quarter property level adjusted EBITDA of our travel centers increased by approximately $1.7 million or 1.5% compared to the second quarter of 2018 and rent coverage under our leases was 1.91x compared to 1.9x last year.

Turning to HPT's consolidated financial results. Normalized FFO was $168.8 million in the 2019 second quarter compared to $176.2 million in the 2018 quarter, a decrease of $0.04 per share. The decrease was due primarily to a $13.3 million reduction to GAAP rental income related to the disposition of 20 travel centers in our lease amendments with TA in January and declines in additional returns recognized from cash flow in excess of our minimum returns under our IHG and Marriott No. 1 agreements. This was partially offset by increases in minimum returns and rents from our hotel acquisition activity and our funding of capital improvements at our properties.

Adjusted EBITDAre was $219 million in the 2019 second quarter, a 3.5% decrease from the 2018 quarter. Our adjusted EBITDAre to interest coverage ratio was 4.4x in the quarter and debt to annualized adjusted EBITDAre was 4.7x at quarter end.

Turning to our capital improvement activity. We funded $42.2 million of hotel improvements in the second quarter. For the rest of 2019, we expect to fund approximately $176.3 million of hotel improvements and no travel center improvements. The majority of these improvements are expected to be funded from operating cash flow.

Turning to our balance sheet. As of quarter end, debt was 40.4% of total gross assets, and we had $53.5 million of cash, including $37.8 million of cash escrowed primarily for future improvements to our hotels.

On July 1, we sold all the shares we held of the RMR Group, Inc. at a price of -- to the public of $40 per share, resulting in net proceeds of $93.6 million. This investment generated a total return to us of 283%. The sale was our first step in executing our plan to manage overall leverage in connection with the SMTA transaction.

To finance the SMTA transaction, we have secured commitments from lenders for up to $2 billion unsecured term loan facility. When we use the proceeds from this term loan facility, borrowings under our existing credit facility, proceeds from asset sales, proceeds from the issuance of new unsecured senior notes or other sources to find this acquisition. As of today, we have no outstanding balance on our revolving credit facility and no term debt maturities until February 2021.

In May, we paid a regular quarterly dividend to our common shareholders of $0.54 per share. In July, we declared a regular quarterly dividend to our common shareholders of $0.54 per share or $2.16 per year to be payable on or about August 15. Our dividend is well covered, and we had a normalized FFO payout ratio of 52.4% for the second quarter.

Operator, that concludes our prepared remarks, we're ready to open up the line for questions.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And the first question comes from Bryan Maher with B. Riley FBR.

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Bryan Anthony Maher, B. Riley FBR, Inc., Research Division - Analyst [2]

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Couple of questions on the SMTA portfolio. I guess you noted that you expect to close in the fourth quarter, and I thought I heard from your comments that it would be going to just 1 buyer. Is that correct?

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [3]

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Well, we expect to close on the SMTA transaction in the end of September, and we hope and expect to close on the sale of the $500 million of assets in the fourth quarter. We have a couple of properties that we identified that are -- that just don't fit the portfolio that we're selling individually and then we have a large portfolio, which Todd mentioned on the call, and he will give you more detail. But that's being offered as a single portfolio initially, but could be broken up into several sub portfolios. Todd, do you want to?

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Todd Hargreaves, Hospitality Properties Trust - VP [4]

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Sure. Bryan, this is Todd. So we have -- in terms of timing, we have engaged a broker. We are in the market. We're talking with potential buyers. We are marketing approximately 125 properties as 1 portfolio. But we are also showing it to investors as 3 different tranches as well ranging from $100 million to $200 million, and it's really broken up more by property type. So pool 1 is restaurants, QSRs casual dining. Pool 2 is automotive dealers, carwashes, specialty retail. And pool 3 is movie theaters, home furnishings, daycare, health and fitness, apparel and dollar stores. We -- I think, we probably put in about 25% that it goes to 1 buyer. We think it's more likely that it gets split up. But again, we are not likely to split it up between more than 3 buyers.

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Bryan Anthony Maher, B. Riley FBR, Inc., Research Division - Analyst [5]

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Okay. So there was the 3 tranches, the 125 properties, and I think you said at the beginning of the answer, some single assets as well in addition to the 125. Is that correct?

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [6]

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Yes. There's a Class A office building in Las Vegas and there is an industrial property in -- just outside south of Boston in Massachusetts. With those we have different brokers marketing those 2 properties individually.

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Todd Hargreaves, Hospitality Properties Trust - VP [7]

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Right. We're in the market on the office building and in the broker selection process for the industrial building.

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Bryan Anthony Maher, B. Riley FBR, Inc., Research Division - Analyst [8]

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Okay. Great. That's helpful. And then switching on to Wyndham. I know you don't want to get probably too much in the weeds with what happened there, but what was the big holdup? What was the -- was there some big thing, in particular, that kind of kept you guys from getting a deal? And I'm guessing you're not terribly upset by the outcome.

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [9]

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Well, Wyndham worked really hard on that portfolio, and I think, in some respects, it would be -- it's a positive for HPT to have a diverse group of hotel operators. So I wish we could have worked something out. But Wyndham took over a portfolio of properties that we took away from another major brand during the -- or just after the great recession. And they rebranded those hotels, and we acquired a couple of the hotels, 1 in Chicago and 1 near their office in New Jersey. And there were -- the market softened after that. Their basis was high, so they had a fairly hurdle to hit. The Chicago market weakened dramatically as a result of a lot of new supply that came on. So there were a lot of headwinds that they faced. And as we tried to negotiate an alternative portfolio, we just -- we couldn't figure out a way to slide some dice things so that it was going to be a long-term positive portfolio going forward without obvious challenges. And so at the end of the day, both sides agreed that we're better off trying to find a cooperative way to bring the relationship to a conclusion. And it is possible that some of the hotels or maybe even a majority of the hotels may have remained Wyndham branded depending on who the buyers are. So there's a lot remains to be seen, but we are moving forward with -- we have several national brokers working on opinions of value for us currently. And we expect to be in the market evaluating the potential sales of some of the assets possible rebrandings of others fairly soon.

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Bryan Anthony Maher, B. Riley FBR, Inc., Research Division - Analyst [10]

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And so as you look at the portfolio, and John, you've been doing this for a while, how many of the 22 do you think ultimately -- or would your goal be to sell versus how many do you think you want to keep and maybe rebrand to something else?

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [11]

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Well, it's a -- I think, I would say, it's maybe too early to say. I think that there'll definitely be interest in a couple of hotels for rebranding. Chicago and the property in Irvine, California are probably likely to be rebranded. The major brands are in a constant battle for unit growth. And so I think that our existing partners will probably look at these assets to see if there are maybe some that they might be want to add to our existing portfolios. So we may -- there may be some properties that shift from one portfolio to another. But I would suspect that if I had to guess right now, I would say probably somewhere between 15 and 20 of the properties are sold in the Wyndham portfolio. And there's a good chance that a bunch of them, bunch of the Hawthorns, in particular, might remain -- may keep the brand.

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Operator [12]

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(Operator Instructions) And the next question comes from Michael Bellisario with Baird.

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Michael Joseph Bellisario, Robert W. Baird & Co. Incorporated, Research Division - VP and Senior Research Analyst [13]

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Just on the same Wyndham topic, kind of high level how you're thinking about balancing the CapEx needs for the few that you might keep and rebrand versus just simply selling all of them to reduce your leverage a little bit quicker given that it's stepping up after the Spirit transaction?

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [14]

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Yes. Well, we have been investing in the portfolio, so I think that the hotels are in okay shape. So I imagine whoever ends up with some of the -- with a couple of those larger full-service hotels, like Chicago and Irvine, if they do get rebranded, there will be capital associated with those. But it's still too early to tell how big a number that will be. But I don't think that will have a material impact on HPT, on its leverage. So there is capital. It's been a 6 or 7 years since Wyndham rebranded the Hawthorn. So I expect that there will be capital that goes into those properties. I don't want to give anybody their own pep, I'll let them figure it out. But there will be capital required on the Hawthorn.

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Michael Joseph Bellisario, Robert W. Baird & Co. Incorporated, Research Division - VP and Senior Research Analyst [15]

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Got it. And then just to clarify on Chicago and Irvine, when you say rebrand, you mean rebrand by you or a potential buyer of the property?

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [16]

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I think that the -- what I meant when I said rebrand on those 2 properties is that we would probably keep them in the portfolio and then may change to one of the other operators. It could be a Sonesta or somebody else.

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Michael Joseph Bellisario, Robert W. Baird & Co. Incorporated, Research Division - VP and Senior Research Analyst [17]

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Got it. Okay. Got it. Okay. That's what I thought. And then just lastly on, Kauai, I know it's early there, but just thinking about if you do sell 30 properties, where would that take your hotel exposure? I know you mentioned 50% to 60% was kind of a target in June after the Spirit transaction. Has your view changed at all on what that 50% to 60% range should look like? And does this -- the potential 30 hotels sale change that thinking at all?

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [18]

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I guess just stepping backward, we're -- we currently have brokers doing opinions of value for us on both portfolios. About a little over 30 properties in out of 2 Marriott, Marriott 1 and Marriott 234 portfolios, and the 22 properties in the Wyndham portfolio. And depending on where those valuations come in and where that levels of interest come in from other operators that we do business with, that is how -- once we have all that data, we'll make the decisions on how much to sell. Right now, we have between the SMTA portfolio, that Todd talked about earlier, and the RMR shares that have already been sold. I think to meet the targets that we had, Brian will correct me if I get this wrong, but to meet the targets that we had previously discussed, we only need to sell about $200 million worth of hotels. And I think we have in excess of that in these 2 portfolios. So we have a fair amount of flexibility. So we could -- if we sell more and rebrand less then our leverage will be -- will come down a little further than we initially told people.

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Operator [19]

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And the next question comes from Dori Kesten with Wells Fargo.

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Dori Lynn Kesten, Wells Fargo Securities, LLC, Research Division - Associate Analyst [20]

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Your operators RevPAR expectations for the year came down considerably quarter-over-quarter. And I was just wondering was this evenly distributed across the agreements? Or was it concentrated in some? And then what would then imply for rent coverage by year-end?

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [21]

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I'll take the first part and I'll let Brian fill in the coverage part. But I think it will be fair to say that all of our operators have reduced their expectations. They're all expecting to see occupancy grow largely because of the amount of renovations we've had as properties come off renovation. So they are expected to regain some of the disruption. So -- but rates are -- if there's any growth, it will be -- it's expected to be modest. And so -- and there's a lot of continued wage benefits pressure. So I think it's across-the-board that we're -- everybody is experiencing some weakness. Suppliers impacting everybody. Supply growth. So yes, there's no one culprit, it's evenly spread.

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Brian E. Donley, Hospitality Properties Trust - CFO & Treasurer [22]

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Dori, as far as coverage goes, we expect our 2 Marriott portfolios and our Radisson portfolio to be above 1x, but decreased over from prior years. Our IHG and Hyatt portfolios will hover around 1x. And then the other portfolio, Sonesta and Wyndham, will track to similar to prior years. So overall, coverage for the whole consolidated hotel portfolio will be under 1x, but the major components of that will be around 1x or greater.

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Operator [23]

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And as there are no more questions, I would like to return the floor to John Murray for any closing comments.

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John G. Murray, Hospitality Properties Trust - President, CEO & Managing Trustee [24]

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Thank you, everyone, for joining us on today's call.

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Operator [25]

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Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.