Business Context and Reporting Period
This Form 8-K filing by Hospitality Properties Trust (referred to as the Trust) reports events occurring on January 13, 2010, with the report filed on January 20, 2010. The Trust is a Maryland corporation engaged in the ownership of hotel and travel center properties. The filing details the execution of amended and restated management agreements and amendments to the Trust's bylaws.
Key Financial Metrics
This filing is a current report regarding corporate governance and contractual agreements. It does not contain financial statements, revenue, profit, cash flow, margin, debt, or liquidity metrics. The filing text does not provide a clear value for any financial performance indicators.
Material Changes and Agreements
- Business Management Agreement: On January 13, 2010, the Trust entered into an amended and restated agreement with Reit Management & Research LLC (Reit Management) and key individuals (Barry M. Portnoy, Gerard M. Martin, Adam D. Portnoy). The agreement continues historical service levels and fee structures. It includes non-competition clauses preventing Reit Management and the named individuals from managing other hotel/travel center REITs without consent. The term expires December 31, 2010, with automatic annual renewals unless terminated with 60 days' notice.
- Property Management Agreement: An amended and restated agreement was also executed on January 13, 2010, covering property management services for the office building component of a Baltimore, Maryland property (which includes an InterContinental Hotel). Terms mirror the business agreement regarding fees and duration. A unique provision allows Reit Management to terminate with five business days' notice if the Trust undergoes a change of control.
- Bylaw Amendments: The Board of Trustees adopted amended bylaws changing the deadline for shareholder nominations and proposals. If an annual meeting is scheduled more than 30 days earlier or later than the prior year's anniversary, notice must be given by 5:00 p.m. on the 10th day following the earlier of the mailing of notice or the first public announcement of the meeting date.
Related Party Transactions and Risks
The filing discloses significant related party relationships:
- Management Overlap: Barry M. Portnoy (Managing Trustee) is the majority owner of Reit Management. Adam D. Portnoy (Managing Trustee) owns the remainder of Reit Management and serves as its CEO. Gerard M. Martin is a former owner and current director of Reit Management. Executive officers of the Trust also serve as officers of Reit Management.
- Affiliates Insurance Company: The Trust owns approximately 14.29% of Affiliates Insurance. Reit Management provides management services to this entity, and all Trust trustees serve as directors of Affiliates Insurance.
- TravelCenters of America LLC: Formerly a subsidiary, TravelCenters is now the Trust's principal tenant and a significant shareholder. Reit Management provides management services to TravelCenters, and Barry M. Portnoy serves as a managing trustee/director of TravelCenters.
The agreements include arbitration provisions for dispute resolution and restrict assignment without consent, with specific exceptions for successors under the control of current Reit Management operators.
Investor Verification Checklist
- Review the full text of the Amended and Restated Business Management Agreement (Exhibit 10.1) and Property Management Agreement (Exhibit 10.2) for specific fee calculations and termination conditions.
- Verify the extent of the non-competition restrictions on Reit Management regarding other hotel or travel center REITs.
- Examine the Trust's 2008 Form 10-K and 2009 Form 10-Q for detailed disclosures on related person transactions with TravelCenters and Affiliates Insurance.
- Confirm the impact of the bylaw amendment on the timeline for upcoming shareholder proposals relative to the scheduled annual meeting date.