Sunstone Hotel Investors (SHO) 2017年年度報告「NYSE」.pdf

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1、2017 Annual ReportSUNSTONE HOTEL INVESTORS,INC.2017 ANNUAL REPORTCaliforniaCourtyard by Marriott Los Angeles,Los Angeles,187 Embassy Suites La Jolla,La Jolla,340Hilton San Diego Bayfront,San Diego,1,190Hyatt Regency Newport Beach,Newport Beach,408Hyatt Regency San Francisco,San Francisco,804Renaissa

2、nce Long Beach,Long Beach,374Renaissance Los Angeles Airport,Los Angeles,501OregonMarriott Portland,Portland,249HawaiiWailea Beach Resort,Wailea,547TexasHilton North Houston,Houston,480Marriott Houston,Houston,390LouisianaHilton New Orleans St.Charles,New Orleans,252JW Marriott New Orleans,New Orlea

3、ns,501IllinoisEmbassy Suites Chicago,Chicago,368Hilton Garden Inn Chicago Downtown/Magnificent Mile,Chicago,361 Hyatt Centric Chicago Magnificent Mile,Chicago,419FloridaOceans Edge Resort&Marina,Key West,175Renaissance Orlando at SeaWorld,Orlando,781MassachusettsBoston Park Plaza,Boston,1,060Marriot

4、t Boston Long Wharf,Boston,412New YorkHilton Times Square,New York City,478Renaissance Westchester,West Harrison,348MD/DC/VAMarriott Tysons Corner,Tysons Corner,396Renaissance Harborplace,Baltimore,622Renaissance Washington,DC,Washington DC,807Property Locations and Room Counts11FEB201600460395Befor

5、e reviewing our 2017 results and providing anWe refrain from owning or acquiring commodity orupdate on the current environment,I would like topedestrian hotels in secondary and tertiary markets,share with you our strategy,which is regularly reviewed,despite their siren song of higher initial cash fl

6、ow yields.challenged and approved by our Board of Directors.We are also mindful of hotels that are subject to groundleases.Since most ground leases will eventually revert toanother party,and the long-term optionality related toThis is our Strategythese hotels is owned by someone else,we are verysele

7、ctive in the type and overall percentage of groundWe create long-term stakeholder value through theleased properties we maintain in our portfolio.We haveactive ownership of long-term relevant real estate withinreduced,and over time,expect to continue to reducethe hospitality sector.our hotels subjec

8、t to ground leases.This is a simple concept,yet added color may beNot all of our hotels currently stack up as long-termworthwhile.relevant real estate.A small portion of the overall valueof our portfolio is made up of hotels we view to beWe own long-term relevant real estate.That is,we owncommodity

9、hotels.The percentage of our asset valuehotels at which we believe travelers will want to stay,attributed to commodity hotels has shrunk materially inrather than have to stay,for decades to come.Forthe past several years and should continue to shrinkexample,we are highly confident that locations suc

10、h asover time.We view these few remaining commoditythe Boston Public Gardens and Long Wharf in Boston,hotels as a bank of value that will be methodicallyWailea Beach in Maui,Downtown San Diego adjacentmonetized and used to fund future investments,to the Bay and convention center,Washington,D.C.inclu

11、ding the disciplined acquisition of long-termadjacent to the convention center and walking distancerelevant real estate.This process is likely to take time,to the White House,and the Embarcadero Center inand may occasionally result in higher than normal cashSan Francisco are,and will continue to be,

12、relevant to abalances as is the case today.We are comfortablevariety of travelers for generations.We believe owningcapital recycling these assets as we believe our strategylong-term relevant real estateif well maintainedwill result in superior long-term returns for ourreduces the risk of waning dema

13、nd as is generally thestakeholders.case with commodity or pedestrian assets that lose theirearnings power over time as their improvements age,asWe take a long-term view of our business,even at thehotel brands mandate uneconomic improvements,andexpense of short-term disruption or cyclical volatility.

14、as these hotels face competition from newer products.While some in the investment community are focusedWe believe that long-term relevant real estate takeson near-term trends measured in terms of days,monthsmany forms,shapes and sizes,but the appeal of theand quarters,our focus is on asset value ove

15、r years andhotel is generally in the hotels unique attributes,thedecades.Yes,decades.It is this focus that gives us thedifficulty in replicating the product,and most of all,theconfidence to acquire and reposition hotels despite thelong-term desirability of its location.Most of the time,inherent shor

16、t-term disruption to earnings.Thethe lasting value is in the dirt rather than theacquisition and extensive renovation of the Boston Parkimprovements.For example,I am confident that ourPlaza and the Wailea Beach Resort have been wildlyWailea Beach Resort may change in form over time yetsuccessful and

17、 have created substantial shareholderwill remain a highly coveted destination for generationsvalue.We will continue to look for,and invest in,similarto come and that the value of the asset will be a multipleopportunities as we believe we are skilled in creatingof our investment in the asset today.va

18、lue through such endeavors.T O T H E S H A R E H O L D E R S O FS U N S T O N E H O T E L I N V E S T O R S,I N C.:We believe in active ownership.As a hotel Real Estateshort-term levered earnings in good times,but in ourInvestment Trust(REIT),we are precluded fromview,will result in higher earnings

19、and value over longeroperating our hotels,and therefore,we rely on third-periods of time.The hotel business is operationallyparty operators for the day-to-day management of theintensive,capital intensive and economically sensitive.properties.That said,our asset management,design&Combining these attr

20、ibutes with high financial leverageconstruction,engineering,legal and finance teams workis simply not prudent if one wants to be a long-termcollaboratively and actively with our hotel operators toinvestor;or at least a successful long-term investor.drive profitability and to maintain and enhance the

21、History is on our side of this argument.Our lowlong-term value of our portfolio.This is our day job andleverage provides us with more optionality to takeI think we are good at it.advantage of various investments over time withoutbeing beholden to the often-fickle equity markets.Heretofore,hotel REIT

22、s have more often than notWe own hotels that generate a sufficient level oftraded at a discount to their intrinsic value based on theeconomic earnings that they can support their long-termprivate-market values of the hotels they own.Therefore,capital needs while also providing an attractiveraising r

23、easonably priced equity capital may not be anunlevered equity return.This is not always the case withoption when an attractive opportunity presents itself.hotels,particularly older full-service,branded hotelsThis is the reason we have proactively built up ourthat have low room ratesjust the types of

24、 hotels wefinancial flexibility and strength and remain one of thehave sold.Furthermore,we keep our hotels in goodlowest-levered institutional hotel owners.condition in order to maximize their long-term appealto guests.We routinely make significant investments innon-guest-facing areas and building s

25、ystems thatWe believe in,and actively employ,shareholder-friendlyshort-term hotel owners are often unwilling to make.corporate governance,a strong alignment betweenThese investments are often costly,but in our view,aremanagement and shareholder interests,and robustthe right long-term business decisi

26、ons.After all,if anstakeholder disclosure.We know that shareholders notowner doesnt take care of the employees and theonly own the company but also have the finalbuilding,how should one expect the employees and thedetermination of the companys future.In terms ofbuilding to take care of the guests th

27、at are vital to ourcorporate governance,we elect all directors annually,long-term success?allow bylaws to be amended by shareholders,haverestrictions on the boards ability to classify directors,and require executives and directors to hold aWe believe the cost basis of our investments is asmeaningful

28、 ownership interest in the company.important as the quality of the real estate we acquire.Furthermore,providing robust and honest disclosureInvesting in long-term relevant real estate at long-termallows us to have direct conversations with ouruneconomic prices may feel good and be applauded inshareh

29、olders regarding the business they own.the short term,but is more likely than not to result invalue destruction nonetheless.As a result,there arelikely to be time periods that,despite significant effortsThis is our strategy and our approach to our business.by our investment team,we acquire very litt

30、le.Too oftenNot everyone will agree with this strategy nor invest inin the investment environment,motion is confused withSunstone.That is ok by us,as we wont try to be allprogress and patience is not as practiced as it should be.things to all investors.We employ a low-leveraged capital structure.Alo

31、w-leveraged capital structure is unlikely to maximize2017 ANNUAL REPORTA Review of Recent Eventsenhance the strengths of these hotels,make them morecompetitive in their respective markets,and driveIt was a productive year at Sunstone.Here are thelong-term profitability.highlights.On the external gro

32、wth front,we continue to capitalOur comparable portfolio generated a healthy 6.5%recycle properties and increase the percentage of hotelsincrease in same-property EBITDA as a result of a 4%within our portfolio that we deem to be long-termincrease in comparable revenues and a 3%increase inrelevant re

33、al estate.In 2017 we sold the Fairmontcomparable property expenses.These operating resultsNewport Beach and the Park City Marriott,and then inexceeded both our expectations and the results of manyJanuary of 2018 we sold two Marriott-branded hotels inof our hotel REIT competitors.suburban Boston and

34、Philadelphia.In the past threeyears we have disposed of roughly$900 million oflower-quality,commodity hotels and hotels subject toOur two properties that completed substantialground leases at a blended trailing EBITDA multiple ofrenovations in 2016 have performed very well and haveapproximately 17 t

35、imeswell in excess of the valueincreased significantly in value.Our 1,060-room Bostonascribed by the public markets.In addition to thePark Plaza hotel,located in the heart of Boston,and ourattractive pricing,the dispositions reduced our ground547-room Wailea Beach Resort,located in Maui,lease exposu

36、re,increased our near-term portfolioHawaii,delivered combined property-level EBITDARevPAR growth rate,reduced our near-term capitalgrowth of 67%in 2017 compared to 2016 when underexpenditures,resulted in incremental commonrenovation,and 47%EBITDA growth compared todividends and provided us with seve

37、ral hundred millionpre-renovation years of 2014.Both properties aredollars of incremental buying capacity to fund futureexpected to have another year or two of outsizedacquisitions of long-term relevant real estate.earnings growth in 2018 and beyond.Our all-ininvestment basis in these two hotels in

38、Boston andWailea equate to approximately$365,000 and$830,000To that end,in the past 12-18 months,we haveper guest room,respectively.We feel good about theseunderwritten some$5 billon of potential investmentsinvestments as hotels in the respective neighborhoodsand of this figure acquired only$175 mil

39、lion with thehave very recently been acquired at substantially higherpurchase of Oceans Edge Resort&Marina in Keyprices.Owning long-term relevant real estate is great.West,Florida.This newly built resort is of high qualityOwning long-term relevant real estate at an attractiveand is located in a long

40、-term desirable market withbasis is even better.meaningful barriers to entry.We were hopeful that wewould have been more acquisitive in the past year.However,the competition for quality assets isDuring the past year we began work on several internalsignificant and initial yields on acquisitions seem

41、 to beinvestments that will be completed within the next yeardeclining despite Father Times progressive marchand are expected to fuel incremental growth into thecloser to the peak of the operating cycle,when initialfuture.These projects include the addition of overyields should generally be increasi

42、ng.This gives us46,000 square feet of meeting space to our Orlandopause and makes us highly selective as the margin ofRenaissance hotel,the addition of 8,000 square feet oferror at current private-market pricing levels appearsmeeting space at Boston Park Plaza,andrazor thin in many situations.more-e

43、xtensive-than-normal rooms renovations at ourJW Marriott New Orleans and at the Marriott LongWharf in Boston.Despite modest short-term revenueWe continued to improve our already strong balancedisruption,these internal investments are expected tosheet and increase our financial flexibility throughSUN

44、STONE HOTEL INVESTORS,INC.13MAR201622162810various financing initiatives,including the earlythese observations are yet to be broad based and it istoo early to determine whether or not theserefinancing of our San Diego Hilton Bayfront with aobservations represent a sustainable reacceleration ofnew mo

45、rtgage that will reduce interest expense byrevenue and profit growth.approximately$2.6 million per year.Only five of our 25hotels are encumbered with mortgages,down from 21hotels encumbered by mortgages at the end of 2011.We expect to continue to sell the few remainingUnsecured borrowings and perpet

46、ual preferred equitypedestrian hotels within our portfolio and torepresents over half of our corporate leverage,whichmethodically reinvest these proceeds if and when wegives us considerable flexibility to manage our assetsfind the right investments at the right price.Given theand company.As of the e

47、nd of 2017,adjusting for thesignificant level of competition for quality hotels,we aresale of the two suburban Marriott hotels and themore confident in our ability to sell assets at this time,payment of our sizable fourth quarter dividend,we haveand therefore,may hold a higher-than-normal level ofmo

48、re than$400 million of investable cash to fundcash in the interim.We remain mindful that the industryinternal and external investments.This representsis likely in the later part of an operating cycle,albeit oneunrecognized earnings growth for our shareholdersthat has had muted growth in comparison t

49、o pastonce this sizable cash balance is invested.recoveries.In any event,we are well prepared from afinancial and human capital standpoint to successfullynavigate nearly any scenario that may come.Our Net Income per diluted share was$0.59 in 2017.Our Adjusted EBITDA of$339 million increasedalmost 3%

50、versus 2016.Similarly,our Adjusted Funds*From Operations per diluted shares increased 1%fromthe prior year to$1.22.These unlevered and leveredIn closing,I would like to thank Sunstones Board ofearnings metrics increased modestly as strongDirectors and our 47 employees for their significantcomparable

51、 hotel EBITDA growth was partially offsettalents and tireless focus and efforts to createby lost earnings from asset sales completed in 2016 andstakeholder value.I want to thank the hotel teams2017.some of the most talented,caring and hardworkingpeople I have ever metfor their constant dedication to

52、Despite fairly modest earnings growth,our totalserving our guests and making their days better.I wouldshareholder returns were approximately 13.2%in 2017,also like to thank our brand,operating,investment andbringing our three-year and five-year total shareholdercapital partners for their energy,tale

53、nts,ongoingreturns to 21.7%and 95.1%,respectively.Our one-,support and collaborationwe could not be successfulthree-,and five-year total shareholder returns havewithout them.And finally,I would like to thank ourmaterially exceeded the average total returns of ourshareholdersthe owners of our company

54、for theirprimary peers,which averaged 3.5%,?11.0%andsupport and trust,for investing in us,and for giving us50.7%,respectively,over these time periods.the opportunity to run this great business.Our OutlookWarmest regards,In general,business remains stable in the marketswithin which we operate and top

55、 line revenues areexpected to increase modestly in 2018.We continue towitness increased pressure on employee costs,which istypical in this phase of the operating cycle.We have alsoseen a modest uptick in overall demand trends in thefew months since the tax reform was enacted;however,2017 ANNUAL REPO

56、RTJOHN V.ARABIAPRESIDENT&CHIEF EXECUTIVE OFFICER UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington,D.C.20549 FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2017 OR TRANSITION REPORT PURSUANT TO SECTION 13

57、OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-32319 Sunstone Hotel Investors,Inc.(Exact Name of Registrant as Specified in Its Charter)Maryland 20-1296886(State or Other Jurisdiction of (I.R.S.Employer Incorporation or Organization)Identi

58、fication Number)120 Vantis,Suite 350 Aliso Viejo,California 92656(Address of Principal Executive Offices)(Zip Code)Registrants telephone number,including area code:(949)330-4000 Securities registered pursuant to Section 12(b)of the Act:Title of Each Class Name of Each Exchange on Which Registered Co

59、mmon Stock,$0.01 par value New York Stock Exchange Series E Cumulative Redeemable Preferred Stock,$0.01 par value New York Stock Exchange Series F Cumulative Redeemable Preferred Stock,$0.01 par value New York Stock Exchange Securities registered pursuant to Section 12(g)of the Act:None Indicate by

60、check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed

61、 all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934,as amended(the“Exchange Act”),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 pas

62、t 90 days.Yes No 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(232.405 of this chapter)during the preceding 12 months(or for

63、 such shorter period that the registrant was required to submit and post such files).Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,and will not be contained,to the best of registrants knowledge,in definitive proxy or i

64、nformation statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company or an emerging growth company(as define

65、d in Rule 12b-2 of the Exchange Act).Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No The aggregate market value of t

66、he voting stock held by non-affiliates of the registrant based upon the closing sale price of the registrants common stock on June 30,2017 as reported on the New York Stock Exchange(“NYSE”)was approximately$3.6 billion.The number of shares of the registrants common stock outstanding as of February 8

67、,2018 was 225,321,660.Documents Incorporated by Reference Part III of this Report incorporates by reference information from the definitive Proxy Statement for the registrants 2018 Annual Meeting of Stockholders.2 SUNSTONE HOTEL INVESTORS,INC.ANNUAL REPORT ON FORM 10-K For the Year Ended December 31

68、,2017 TABLE OF CONTENTS Page PART I Item 1 Business 3Item 1A Risk Factors 11Item 1B Unresolved Staff Comments 32Item 2 Properties 33Item 3 Legal Proceedings 34Item 4 Mine Safety Disclosures 35 PART II Item 5 Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equ

69、ity Securities 35Item 6 Selected Financial Data 36Item 7 Managements Discussion and Analysis of Financial Condition and Results of Operations 37Item 7A Quantitative and Qualitative Disclosures About Market Risk 67Item 8 Financial Statements and Supplementary Data 67Item 9 Changes in and Disagreement

70、s with Accountants on Accounting and Financial Disclosure 67Item 9A Controls and Procedures 67Item 9B Other Information 70 PART III Item 10 Directors,Executive Officers and Corporate Governance 70Item 11 Executive Compensation 70Item 12 Security Ownership of Certain Beneficial Owners and Management

71、and Related Stockholder Matters 70Item 13 Certain Relationships and Related Transactions,and Director Independence 70Item 14 Principal Accounting Fees and Services 70 PART IV Item 15 Exhibits,Financial Statement Schedules 71 SIGNATURES 75 3 The“Company”means Sunstone Hotel Investors,Inc.,a Maryland

72、corporation,and one or more of its subsidiaries,including Sunstone Hotel Partnership,LLC,or the Operating Partnership,and Sunstone Hotel TRS Lessee,Inc.,or the TRS Lessee,and,as the context may require,Sunstone Hotel Investors only or the Operating Partnership only.SPECIAL NOTE REGARDING FORWARD-LOO

73、KING STATEMENTS This report,together with other statements and information publicly disseminated by the Company,contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Exchange Act.The Company intends such forward-

74、looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and includes this statement for purposes of complying with these safe harbor provisions.Forward-looking statements,which are based on certai

75、n assumptions and describe the Companys future plans,strategies and expectations,are generally identifiable by use of the words“believe,”“expect,”“intend,”“anticipate,”“estimate,”“project”or similar expressions.You should not rely on forward-looking statements because they involve known and unknown

76、risks,uncertainties and other factors that are,in some cases,beyond the Companys control and which could materially affect actual results,performances or achievements.Factors that may cause actual results to differ materially from current expectations include,but are not limited to the risk factors

77、discussed in this Annual Report on Form 10-K.Accordingly,there is no assurance that the Companys expectations will be realized.Except as otherwise required by the federal securities laws,the Company disclaims any obligations or undertaking to publicly release any updates or revisions to any forward-

78、looking statement contained herein(or elsewhere)to reflect any change in the Companys expectations with regard thereto or any change in events,conditions or circumstances on which any such statement is based.Item 1.Business Our Company We were incorporated in Maryland on June 28,2004.We are a real e

79、state investment trust,or REIT,under the Internal Revenue Code of 1986,as amended(the“Code”).As of December 31,2017,we had interests in 27 hotels(the“27 hotels”),including the Marriott Philadelphia and the Marriott Quincy which we classified as held for sale and subsequently sold in January 2018,lea

80、ving 25 hotels currently held for investment(the“25 hotels”).The 25 hotels are comprised of 12,450 rooms,located in 11 states and in Washington,DC.Our primary business is to acquire,own,asset manage and renovate primarily hotels that we consider to be long-term relevant real estate in the United Sta

81、tes.As part of our ongoing portfolio management strategy,we may also sell hotel properties from time to time.All but two(the Boston Park Plaza and the Oceans Edge Hotel&Marina)of our 25 hotels are operated under nationally recognized brands such as Marriott,Hilton and Hyatt,which are among the most

82、respected and widely recognized brands in the lodging industry.We believe the largest and most stable segment of travelers prefer the consistent service and quality associated with nationally recognized brands and well-known independent hotels.Our portfolio primarily consists of urban and resort upp

83、er upscale hotels in the United States.Of the 25 hotels,we include 22 as upper upscale,two as upscale and one as luxury as defined by STR,Inc.,an independent provider of lodging industry statistical data.STR,Inc.classifies hotel chains into the following segments:luxury;upper upscale;upscale;upper m

84、idscale;midscale;economy;and independent.Our hotels are operated by third-party managers pursuant to long-term management agreements with our TRS Lessee or its subsidiaries.As of December 31,2017,our third-party managers included:subsidiaries of Marriott International,Inc.or Marriott Hotel Services,

85、Inc.(collectively“Marriott”),managers of nine of the Companys 25 hotels;Interstate Hotels&Resorts,Inc.(“IHR”),manager of four of the Companys 25 hotels;Highgate Hotels L.P.and an affiliate(“Highgate”),manager of three of the Companys 25 hotels;Crestline Hotels&Resorts(“Crestline”),Hilton Worldwide(“

86、Hilton”)and Hyatt Corporation(“Hyatt”),each a manager of two of the Companys 25 hotels;and Davidson Hotels&Resorts(“Davidson”),HEI Hotels&Resorts(“HEI”)and Singh Hospitality,LLC(“Singh”),each a manager of one of the Companys 25 hotels.4 Competitive Strengths We believe the following competitive stre

87、ngths distinguish us from other owners of lodging properties:High Quality Portfolio.Focus on Owning Long-Term Relevant Real Estate.We believe that we will create lasting stockholder value through the active ownership of long-term relevant real estate.Long-term relevant real estate consists of hotels

88、 that we believe possess unique attributes that are difficult to replicate,and most of all,whose locations are relevant today and will remain relevant for generations to come.We believe that owning long-term relevant real estate reduces the risk of waning demand that often happens to undercapitalize

89、d and pedestrian hotels.Presence in Key Markets.A cornerstone of long-term relevant real estate is location.We believe that our hotels are located in many desirable long-term relevant markets with major and diverse demand generators and significant barriers to entry for new supply.In 2017,approximat

90、ely 96%of the revenues generated by the 25 hotels were earned by hotels located in key gateway markets and unique resort locations such as Boston,New York,Washington,DC/Baltimore,Chicago,Orlando,Key West,New Orleans,San Francisco,Los Angeles/Orange County,San Diego and Maui.Over time,we expect the r

91、evenues of hotels located in key gateway markets and unique resort locations to generate superior long-term growth rates as compared to the average for U.S.hotels,as a result of stronger and more diverse economic drivers.Nationally Recognized Brands and Well Known Independents.All but two of our 25

92、hotels are operated under nationally recognized brands,including Marriott,Hilton and Hyatt.We believe that affiliations with strong brands improve the appeal of our hotels to a broad set of travelers and help to drive business to our hotels.Our two unbranded hotels are located in top urban and resor

93、t markets that have enabled them to build awareness with both group and transient customers.Recently Renovated Hotels.From January 1,2013 through December 31,2017,we invested$652.2 million in capital renovations throughout the 25 hotels.We believe that these capital renovations have improved the com

94、petitiveness of our hotels and have helped to position our portfolio for future growth.Significant Cash Position.As of December 31,2017,we had total cash of$559.3 million,including$71.3 million of restricted cash.Adjusting for the significant cash transactions that occurred in January 2018,including

95、 the$133.9 million payment of our common and preferred dividends and the approximately$139.0 million received from the sales of the Marriott Philadelphia and the Marriott Quincy,our total pro forma cash including restricted cash as of December 31,2017 would be$564.4 million.By minimizing our need to

96、 access external capital by maintaining higher than typical cash balances,our financial security and flexibility are meaningfully enhanced because we are able to fund our business needs,debt maturities,capital investment and acquisitions with cash on hand.Flexible Capital Structure.We believe our ca

97、pital structure provides us with appropriate financial flexibility to execute our strategy.As of December 31,2017,the weighted average term to maturity of our debt was approximately five years,and 77.8%of our debt was fixed rate with a weighted average interest rate of 4.5%,including the effects of

98、our interest rate swap agreements.Including our variable-rate debt obligation based on the variable rate at December 31,2017,the weighted average interest rate on our debt was 4.1%.Our mortgage debt is in the form of single asset non-recourse loans rather than in cross-collateralized multi-property

99、pools.In addition to our mortgage debt,as of December 31,2017,we had two unsecured corporate-level term loans,and two series of senior unsecured corporate-level notes.We currently believe our unsecured debt structure is appropriate for the operating characteristics of our business as it provides fle

100、xibility for various portfolio management initiatives,including asset sales,capital investment and management changes.Low Leverage.Over the past six years,we have been committed to thoughtfully and methodically reducing our leverage while maintaining a focus on creating and protecting stockholder va

101、lue.We believe that our low leverage capital structure not only minimizes the risk of potential value destructive consequences in periods of 5 economic recession,but also provides the company with significant optionality to create stockholder value through all phases of the operating cycle.Strong Ac

102、cess to Low Cost Capital.As a publicly traded REIT,over the long-term,we may benefit from greater access to a variety of forms of capital as compared to non-public investment vehicles.In addition,over the long-term,we may benefit from a lower cost of capital as compared to non-public investment vehi

103、cles as a result of our investment liquidity,balance sheet optionality,professional management and portfolio diversification.Seasoned Management Team.Each of our core disciplines,including asset management,acquisitions,finance and legal,are overseen by industry leaders with demonstrated track record

104、s.Asset Management.Our asset management team is responsible for maximizing the long-term value of our real estate investments by achieving above average revenue and profit performance through proactive oversight of hotel operations.Our asset management team leads property-level innovation,benchmarks

105、 best practices and aggressively oversees hotel management teams and property plans.We work with our operators to develop hotel-level“business plans,”which include positioning and capital renovation plans.We believe that a proactive asset management program can help grow the revenues of our hotel po

106、rtfolio and maximize operational efficiency by leveraging best practices and innovations across our various hotels,and by initiating well-timed and focused capital improvements aimed at improving the appeal of our hotels.Acquisitions.Our acquisitions team is responsible for enhancing our portfolio q

107、uality and scale by executing well-timed acquisitions and dispositions that generate attractive risk-adjusted returns on our investment dollars.We believe that our significant acquisition and disposition experience will allow us to continue to execute our strategy to redeploy capital from slower gro

108、wth assets to long-term relevant real estate with higher long-term growth rates.Our primary focus is on acquiring long-term relevant real estate.We intend to select the branding and operators for our hotels that we believe will lead to the highest returns.We will also focus on capital recycling,and

109、may selectively sell hotels that no longer fit our target profile,will not offer long-term returns in excess of our cost of capital,will achieve a sale price in excess of our internal valuation,or that have high risk relative to their anticipated returns.Finance.We have a highly experienced finance

110、team focused on minimizing our cost of capital and maximizing our financial flexibility by proactively managing our capital structure and opportunistically sourcing appropriate capital for growth,while maintaining a best in class disclosure and investor relations program.Accordingly,our financial ob

111、jectives include the maintenance of appropriate levels of liquidity throughout the cycle.During 2017,we reduced our total mortgage debt by$9.9 million through principal payments,and by an additional$176.0 million through repayment of one mortgage.We also refinanced an existing$219.6 million mortgage

112、 bearing interest at a variable rate of one-month LIBOR plus 225 basis points maturing in August 2019 with a new interest only$220.0 million loan bearing interest at a variable rate of one-month LIBOR plus 105 basis points maturing in December 2020.The new loan contains three one-year extension opti

113、ons,subject to the satisfaction of certain conditions.Legal.Our legal team is responsible for overseeing and supporting all company-wide legal matters,including all legal matters related to corporate(including corporate oversight and governance),investment,asset management,design and construction,fi

114、nance initiatives and litigation.We believe active and direct oversight of legal matters allows the company the flexibility to pursue opportunities while minimizing legal exposure,protecting corporate assets,and ultimately maximizing stockholder returns.Business Strategy Our mission is to create mea

115、ningful value for our stockholders by producing superior long-term returns through the ownership of long-term relevant real estate in the lodging sector.Our values include transparency,trust,ethical conduct,honest communication and discipline.As demand for lodging generally fluctuates with the overa

116、ll economy,we seek to own hotels that will maintain a high appeal with travelers over long periods of time and will generate economic earnings 6 materially in excess of recurring capital requirements.Our strategy is to maximize stockholder value through focused asset management and disciplined capit

117、al recycling,which is likely to include selective acquisitions and dispositions,while maintaining balance sheet flexibility and strength.Our goal is to maintain low leverage and high financial flexibility to position the company to create value throughout all phases of the operating and financial cy

118、cles.Competition The hotel industry is highly competitive.Our hotels compete with other hotels for guests in each of their markets.Competitive advantage is based on a number of factors,including location,physical attributes,service levels and reputation.Competition is often specific to the individua

119、l markets in which our hotels are located and includes competition from existing and new hotels operated under brands in the luxury,upper upscale and upscale segments.Increased competition could harm our occupancy or revenues or may lead our operators to unnecessarily increase service or amenity lev

120、els,which may reduce the profitability of our hotels.We believe that competition for the acquisition of hotels is fragmented.We face competition from institutional pension funds,private equity investors,high net worth individuals,other REITs and numerous local,regional,national and international own

121、ers in each of our markets.Some of these entities may have substantially greater financial resources than we do and may be able and willing to accept more risk than we believe we can prudently manage.During times when we seek to acquire hotels,competition among potential buyers may increase the barg

122、aining power of potential sellers,which may reduce the number of suitable investment opportunities available to us or increase pricing.Similarly,during times when we seek to sell hotels,competition from other sellers may increase the bargaining power of the potential property buyers.Management Agree

123、ments All of our 25 hotels are managed by third parties pursuant to management agreements with our TRS Lessee or its subsidiaries.The following is a general description of our third-party management agreements as of December 31,2017.Marriott.Our management agreements with Marriott require us to pay

124、Marriott a base management fee equal to 3.0%of total revenue.Inclusive of renewal options and absent prior termination by either party,these management agreements expire between 2031 and 2078.Additionally,five of the aforementioned management agreements require payment of an incentive fee of 20.0%of

125、 the excess of gross operating profit over a certain threshold;one management agreement requires payment of an incentive fee of 20%of the excess of gross operating profit over a certain threshold,however the total base and incentive fees were capped at 4.25%of gross revenue for 2013,4.5%of gross rev

126、enue for 2014,4.75%of gross revenue for 2015,5.0%of gross revenue for the first seven months of 2016,and are capped at 5.25%of gross revenue for the remaining term of the agreement;one management agreement requires payment of an incentive fee of 35.0%of the excess of gross operating profit over a ce

127、rtain threshold;one management agreement requires payment of a tiered incentive fee ranging from 15.0%to 20.0%of the excess of gross operating profit over certain thresholds;and one management agreement requires payment of an incentive fee of 10.0%of adjusted gross operating profit,capped at 3.0%of

128、gross revenue.The management agreements with Marriott may be terminated earlier than the stated term if certain events occur,including the failure of Marriott to satisfy certain performance standards,a condemnation of,a casualty to,or force majeure event involving a hotel,the withdrawal or revocatio

129、n of any license or permit required in connection with the operation of a hotel and upon a default by Marriott or us that is not cured prior to the expiration of any applicable cure periods.In certain instances,Marriott has rights of first refusal to either purchase or lease hotels,or to terminate t

130、he applicable management agreement in the event we sell the respective hotel.IHR.Our management agreements with IHR require us to pay a management fee of 2.0%of gross revenue;plus an incentive fee of 10.0%of the excess of net operating income over a certain threshold.The incentive fee,however,may no

131、t exceed 1.5%of the total revenue for all the hotels managed by IHR for any fiscal year.The IHR management agreements expire in 2024 and provide us the right to renew each management agreement for up to two additional terms of five years each,absent a prior termination by either party.Highgate.Our B

132、oston Park Plaza,Hilton Times Square and Renaissance Westchester hotels are operated under management agreements with Highgate.The management agreement at the Boston Park Plaza required us to pay Highgate a base management fee of 2.5%of gross revenue until July 1,2014.From July 2,2014 to July 1,2015

133、,the base management fee increased to 2.75%of gross revenue,and thereafter the base management fee is 3.0%of gross revenue.In 7 addition,the management agreement at the Boston Park Plaza requires us to pay an incentive fee of 15.0%of the excess of net operating income over a certain threshold.The ag

134、reement expires in 2023,absent a prior termination by either party.The management agreements at the Hilton Times Square and the Renaissance Westchester require us to pay Highgate a base management fee of 3.0%of gross revenue.In addition,the management agreement at the Hilton Times Square requires us

135、 to pay an incentive fee of 50.0%of the excess of net operating income over a certain threshold,limited to 1.25%of total revenue.The management agreement at the Hilton Times Square expires in 2021 and provides Highgate with the right to renew for two additional terms of five years upon the achieveme

136、nt of certain performance thresholds,absent a prior termination by either party.The management agreement at the Renaissance Westchester expires in 2022,absent early termination by either party,and does not require payment of an incentive fee.Crestline.Our Embassy Suites Chicago and Hilton Garden Inn

137、 Chicago Downtown/Magnificent Mile hotels are operated under management agreements with Crestline.The management agreement at the Embassy Suites Chicago expires in 2019(absent early termination by either party),and provides no renewal options.The agreement required us to pay Crestline a base managem

138、ent fee of 1.5%of gross revenue through May 31,2016,increasing to 2.0%of gross revenue thereafter.The management agreement at the Hilton Garden Inn Chicago Downtown/Magnificent Mile expires in 2022(absent early termination by either party),and provides us with the right to renew for up to two additi

139、onal terms of five years each.The agreement requires us to pay 2.0%of gross revenue as a base management fee,and requires us to pay an incentive fee of 10.0%of the excess of operating profit over a certain threshold.Hilton.Our Embassy Suites La Jolla and Hilton San Diego Bayfront hotels are operated

140、 under management agreements with Hilton.The management agreement at the Embassy Suites La Jolla expires in 2026(absent early termination by Hilton),and provides no renewal options.The agreement required us to pay a base management fee of 2.25%of gross revenue through 2016,decreasing to 1.75%of gros

141、s revenue thereafter.There is no incentive fee under the agreement.The management agreement at the Hilton San Diego Bayfront,which originally provided for an extension option at Hiltons election up through 2033,was amended in February 2017,with the new expiration date established as December 31,2046

142、.The amended agreement provides no renewal options.The agreement requires us to pay a base fee of 2.5%of total revenue and an incentive fee of 15.0%of the excess of operating cash flow over a certain percentage.Hyatt.Our Hyatt Regency Newport Beach hotel is operated under a management agreement with

143、 Hyatt.The agreement expires in 2019 and provides either party the right to renew for successive periods of 10 years(provided that the term of the agreement shall in no event extend beyond 2039),absent early termination by either party.The agreement requires us to pay 3.5%of total hotel revenue as a

144、 base management fee,with an additional 0.5%of total revenue payable to Hyatt based upon the hotel achieving specific operating thresholds.The agreement also requires us to pay an incentive fee equal to 10.0%of the excess of adjusted profit over$2.0 million,and 5.0%of the excess of adjusted profit o

145、ver$6.0 million.Our Hyatt Regency San Francisco hotel is operated by Hyatt under an operating lease with economics that follow a typical management fee structure.The lease expires in 2050,and provides no renewal options.Pursuant to the lease,Hyatt retains 3.0%of total revenue as a base management fe

146、e.The lease also provides Hyatt the opportunity to earn an incentive fee if gross operating profit exceeds certain thresholds.Davidson.Our Hyatt Centric Chicago Magnificent Mile hotel is operated under a management agreement with Davidson.The management agreement at the Hyatt Centric Chicago Magnifi

147、cent Mile expires in 2019,and provides us with the right to renew for up to two additional terms of five years each,absent a prior termination by either party.The agreement requires us to pay 2.5%of total revenue as a base management fee and calls for an incentive fee of 10.0%of the excess of net op

148、erating income over a certain threshold,limited to 1.5%of total revenue.The base and incentive management fees payable to Davidson under the Hyatt Centric Chicago Magnificent Mile management agreement have an aggregate cap of 4.0%of total revenue.HEI.Our Hilton New Orleans St.Charles hotel is operat

149、ed under a management agreement with HEI.The agreement expired in 2017,but currently automatically renews on a month-to-month basis.The agreement requires us to pay 2.0%of 8 gross revenue as a base management fee and calls for an incentive fee of 20.0%of the excess of adjusted gross operating profit

150、 over a certain threshold.Singh.Our Oceans Edge Hotel&Marina hotel is operated under a management agreement with Singh.The management agreement at the Oceans Edge Hotel&Marina expires in 2027(absent early termination by either party),and provides no renewal options.The agreement requires us to pay 3

151、.0%of gross revenue as a base management fee and calls for an incentive fee of 10.0%of adjusted net operating income,capped at 1.5%of gross revenue.The existing management agreements with Marriott,Hilton and Hyatt require the manager to furnish chain services that are generally made available to oth

152、er hotels managed by that operator.Costs for these chain services are reimbursed by us.Such services include:(1)the development and operation of computer systems and reservation services;(2)management and administrative services;(3)marketing and sales services;(4)human resources training services;an

153、d(5)such additional services as may from time to time be more efficiently performed on a national,regional or group level.Franchise Agreements As of December 31,2017,11 of the 25 hotels were operated subject to franchise agreements.Franchisors provide a variety of benefits to franchisees,including n

154、ationally recognized brands,centralized reservation systems,national advertising,marketing programs and publicity designed to increase brand awareness,training of personnel and maintenance of operational quality at hotels across the brand system.The franchise agreements generally specify management,

155、operational,record-keeping,accounting,reporting and marketing standards and procedures with which our subsidiary,as the franchisee,must comply.The franchise agreements obligate the subsidiary to comply with the franchisors standards and requirements with respect to training of operational personnel,

156、safety,maintaining specified insurance,the types of services and products ancillary to guest room services that may be provided by the subsidiary,display of signage and the type,quality and age of furniture,fixtures and equipment included in guest rooms,lobbies and other common areas.The franchise a

157、greements for our hotels require that we reserve up to 5.0%of the gross revenues of the hotels into a reserve fund for capital expenditures.The franchise agreements also provide for termination at the franchisors option upon the occurrence of certain events,including failure to pay royalties and fee

158、s or to perform other obligations under the franchise license,bankruptcy and abandonment of the franchise or a change in control.The subsidiary that is the franchisee is responsible for making all payments under the franchise agreements to the franchisors;however,the Company guaranties certain oblig

159、ations under a majority of the franchise agreements.Tax Status We have elected to be taxed as a REIT under Sections 856 through 859 of the Code,commencing with our taxable year ended December 31,2004.Under current federal income tax laws,we are required to distribute at least 90%of our net taxable i

160、ncome to our stockholders each year in order to satisfy the REIT distribution requirement.While REITs enjoy certain tax benefits relative to C corporations,as a REIT we may still be subject to certain federal,state and local taxes on our income and property.We may also be subject to federal income a

161、nd excise tax on our undistributed income.Taxable REIT Subsidiary Subject to certain limitations,a REIT is permitted to own,directly or indirectly,up to 100%of the stock of a taxable REIT subsidiary,or TRS.A TRS is a fully taxable corporation that may earn income that would not be qualifying income

162、if earned directly by us.A TRS may perform activities such as development,and other independent business activities that may be prohibited to a REIT.A hotel REIT is permitted to own a TRS that leases hotels from the REIT,rather than requiring the lessee to be an unaffiliated third party,provided cer

163、tain conditions are satisfied.However,a hotel leased to a TRS still must be managed by an unaffiliated third party in the business of managing hotels because a TRS may not directly or indirectly operate or manage any hotels or provide rights to any brand name under which any hotel is operated.The TR

164、S provisions are complex and impose certain conditions on the use of TRSs.This is to assure that TRSs are subject to an appropriate level of federal corporate taxation.We and the TRS Lessee must make a joint election with the Internal Revenue Service(“IRS”)for the TRS Lessee to be treated as a TRS.A

165、 corporation of which a qualifying TRS owns,directly or indirectly,more than 35%of the voting 9 power or value of the corporations stock will automatically be treated as a TRS.Overall,for taxable years beginning after December 31,2017,no more than 20%(25%for taxable years beginning after July 30,200

166、8 and on or before December 31,2017)of the value of our assets may consist of securities of one or more TRS,and no more than 25%of the value of our assets may consist of the securities of TRSs and other assets that are not qualifying assets for purposes of the 75%asset test.The 75%asset test general

167、ly requires that at least 75%of the value of our total assets be represented by real estate assets,cash,or government securities.The rent that we receive from a TRS qualifies as“rents from real property”as long as the property is operated on behalf of the TRS by a person who qualifies as an“independ

168、ent contractor”and who is,or is related to a person who is,actively engaged in the trade or business of operating“qualified lodging facilities”for any person unrelated to us and the TRS(an“eligible independent contractor”).A“qualified lodging facility”is a hotel,motel or other establishment in which

169、 more than one-half of the dwelling units are used on a transient basis.A“qualified lodging facility”does not include any facility where wagering activities are conducted.A“qualified lodging facility”includes customary amenities and facilities operated as part of,or associated with,the lodging facil

170、ity as long as such amenities and facilities are customary for other properties of a comparable size and class owned by other unrelated owners.We have formed the TRS Lessee as a wholly owned TRS.We lease each of our hotels to the TRS Lessee or one of its subsidiaries.These leases provide for a base

171、rent plus variable rent based on occupied rooms and departmental gross revenues.These leases must contain economic terms which are similar to a lease between unrelated parties.If they do not,the IRS could impose a 100%excise tax on certain transactions between the TRS Lessee and us or our tenants th

172、at are not conducted on an arms-length basis.We believe that all transactions between us and the TRS Lessee are conducted on an arms-length basis.The TRS Lessee has engaged eligible independent contractors to manage the hotels it leases from the Operating Partnership.Ground,Building and Air Lease Ag

173、reements At December 31,2017,six of the 25 hotels are subject to ground,building and/or air leases with unaffiliated parties that cover either all or portions of their respective properties.As of December 31,2017,the remaining terms of these ground,building and air leases(including renewal options)r

174、ange from approximately 26 to 80 years.These leases generally require us to make rental payments and payments for all or portions of costs and expenses,including real and personal property taxes,insurance and utilities associated with the leased property.Any proposed sale of a property that is subje

175、ct to a ground,building or air lease or any proposed assignment of our leasehold interest as lessee under the ground,building or air lease may require the consent of the applicable lessor.As a result,we may not be able to sell,assign,transfer or convey our interest in any such property in the future

176、 absent the consent of the ground,building or air lessor,even if such transaction may be in the best interests of our stockholders.Three of the six leases prohibit the sale or conveyance of the hotel and assignment of the lease by us to another party without first offering the lessor the opportunity

177、 to acquire our interest in the associated hotel and property upon the same terms and conditions as offered by us to the third party.Two of these same leases also allow us the option to acquire the ground or building lessors interest in the ground or building lease subject to certain exercisability

178、provisions.From time to time,we evaluate our options to purchase the lessors interests in the leases.Offices We currently lease our headquarters located at 120 Vantis,Suite 350,Aliso Viejo,California 92656 from an unaffiliated third party.We occupy our headquarters under a lease that terminates on A

179、ugust 30,2018.During 2017,we entered into a new lease with an unaffiliated third party to occupy the premises located at 200 Spectrum Center Drive,Suite 2100,Irvine,California 92618.Our new lease begins on September 1,2018 and terminates on August 31,2028.Employees As of February 1,2018,we had 49 em

180、ployees.We believe that our relations with our employees are positive.All persons employed in the day-to-day operations of the hotels are employees of the management companies engaged by the TRS Lessee or its subsidiaries to operate such hotels.10 Environmental Environmental reviews have been conduc

181、ted on all of our hotels.From time to time,our secured lenders have requested environmental consultants to conduct Phase I environmental site assessments on many of our properties.In certain instances,these Phase I assessments relied on older environmental assessments prepared in connection with pri

182、or financings.Phase I assessments are designed to evaluate the potential for environmental contamination of properties based generally upon site inspections,facility personnel interviews,historical information and certain publicly available databases.Phase I assessments will not necessarily reveal t

183、he existence or extent of all environmental conditions,liabilities or compliance concerns at the properties.In addition,material environmental conditions,liabilities or compliance concerns may arise after the Phase I assessments are completed,or may arise in the future,and future laws,ordinances or

184、regulations may impose material additional environmental liabilities.Under various federal,state and local laws and regulations,an owner or operator of real estate may be liable for the costs of removal or remediation of certain hazardous or toxic substances on the property.These laws often impose s

185、uch liability without regard to whether the owner knew of,or was responsible for,the presence of hazardous or toxic substances.Furthermore,a person that arranges for the disposal or transports for disposal or treatment of a hazardous substance at another property may be liable for the costs of remov

186、al or remediation of hazardous substances released into the environment at that property.The costs of remediation or removal of such substances may be substantial,and the presence of such substances,or the failure to promptly remediate such substances,may adversely affect the owners ability to sell

187、such real estate or to borrow using such real estate as collateral.In connection with the ownership and operation of our properties,we or the TRS Lessee,as the case may be,may be potentially liable for such costs.Although we have tried to mitigate environmental risk through insurance,this insurance

188、may not cover all or any of the environmental risks we encounter.As an owner of real estate,we are not directly involved in the operation of our properties or other activities that could produce meaningful levels of greenhouse gas emissions.As a result,we have not implemented a formal program to mea

189、sure or manage emissions associated with our corporate office or hotels.Although we do not believe that climate change represents a direct material risk to our business,we could be indirectly affected by climate change and other environmental issues to the extent these issues negatively affect the b

190、roader economy,result in increased regulation or costs,or have a negative impact on travel.We have provided unsecured environmental indemnities to certain lenders and buyers of our properties.We have performed due diligence on the potential environmental risks including obtaining an independent envi

191、ronmental review from outside environmental consultants.These indemnities obligate us to reimburse the guaranteed parties for damages related to environmental matters.There is generally no term or damage limitation on these indemnities;however,if an environmental matter arises,we could have recourse

192、 against other previous owners.ADA Regulation Our properties must comply with various laws and regulations,including Title III of the Americans with Disabilities Act(“ADA”)to the extent that such properties are“public accommodations”as defined by the ADA.The ADA may require removal of structural bar

193、riers to access by persons with disabilities in certain public areas of our properties where such removal is readily achievable.We believe that our properties are in substantial compliance with the ADA;however,noncompliance with the ADA could result in capital expenditures,the imposition of fines or

194、 an award of damages to private litigants.The obligation to make readily achievable accommodations is an ongoing one,and we will continue to assess our properties and to make alterations as appropriate in this respect.Inflation Inflation may affect our expenses,including,without limitation,by increa

195、sing costs such as labor,food,taxes,property and casualty insurance,borrowing costs and utilities.Securities Exchange Act Reports Our internet address is .Periodic and current Securities and Exchange Commission(“SEC”)reports and amendments to those reports,such as our annual proxy statement,our annu

196、al reports on Form 10-K,quarterly 11 reports on Form 10-Q and current reports on Form 8-K,are available,free of charge,through links displayed on our website as soon as reasonably practicable after we file such material with,or furnish it to,the SEC.In addition,the SEC maintains a website that conta

197、ins these reports at www.sec.gov.Our website and the SEC website and the information on our and the SECs website is not a part of this Annual Report on Form 10-K.Information relating to revenue,operating profit and total assets is set forth in Part I,Item 6 of this Annual Report on Form 10-K.Item 1A

198、.Risk Factors The statements in this section describe some of the significant risks to our business and should be considered carefully in evaluating our business and the other information in this Form 10-K.In addition,these statements constitute our cautionary statements under the Private Securities

199、 Litigation Reform Act of 1995,as amended.Risks Related to Our Business In the past,events beyond our control,including economic slowdowns,natural disasters,civil unrest and terrorism,harmed the operating performance of the hotel industry generally and the performance of our hotels,and if these or s

200、imilar events occur again,our operating and financial results may be harmed by declines in average daily room rates and/or occupancy.The operating and financial performance of the lodging industry has traditionally been closely linked with the performance of the general economy.The majority of our h

201、otels are classified as upper upscale hotels.In an economic downturn,this type of hotel may be more susceptible to a decrease in revenue,as compared to hotels in other categories that have lower room rates in part because upper upscale hotels generally target business and high-end leisure travelers.

202、In periods of economic difficulties,business and leisure travelers may reduce travel costs by limiting travel or by using lower cost accommodations.In addition,operating results at our hotels in key gateway markets may be negatively affected by reduced demand from international travelers due to fina

203、ncial conditions in their home countries or a material strengthening of the U.S.dollar in relation to other currencies.Also,volatility in transportation fuel costs,increases in air and ground travel costs and decreases in airline capacity may reduce the demand for our hotel rooms.In addition,we own

204、seven hotels located in seismically active areas of California and seven hotels located in areas that have an increased potential to experience hurricanes(Florida,Hawaii,Louisiana and Texas).We have acquired and intend to maintain comprehensive insurance on each of our hotels,including liability,ter

205、rorism,fire and extended coverage,of the type and amount that we believe are customarily obtained for or by hotel owners.We cannot guarantee that such coverage will continue to be available at reasonable coverage levels,at reasonable rates or at reasonable deductible levels.Additionally,deductible l

206、evels are typically higher for earthquakes,floods and named windstorms.Accordingly,our financial results may be harmed if any of our hotels are damaged by natural disasters resulting in losses(either insured or uninsured)or causing a decrease in average daily room rates and/or occupancy.Even in the

207、absence of direct physical damage to our hotels,the occurrence of any natural disasters,terrorist attacks,military actions,outbreaks of diseases,such as Zika,Ebola,H1N1 or other similar viruses,or other casualty events,may have a material adverse effect on our business,the impact of which could resu

208、lt in a material adverse effect on our financial condition,results of operations and our ability to make distributions to our stockholders.Volatility in the debt and equity markets may adversely affect our ability to acquire,renovate,refinance or sell hotel assets.Volatility in the global financial

209、markets may have a material adverse effect on our financial condition or results of operations.Among other things,over time,the capital markets have experienced periods of extreme price volatility,dislocations and liquidity disruptions,all of which have exerted downward pressure on stock prices,wide

210、ned credit spreads on debt financing and led to declines in the market values of U.S.and foreign stock exchanges.Future dislocations in the debt markets may reduce the amount of capital that is available to finance real estate,which,in turn may limit our ability to finance the acquisition of hotels

211、or the ability of purchasers to obtain financing for hotels that we wish to sell,either of which may have a material adverse impact on revenues,income and/or cash flow.We have historically used capital obtained from debt and equity markets,including both secured mortgage debt and unsecured corporate

212、 debt,to acquire,renovate and refinance hotel assets.If these markets become difficult to access as a 12 result of low demand for debt or equity securities,higher capital costs and interest rates,a low value for capital securities(including our common or preferred stock),and more restrictive lending

213、 standards,our business could be adversely affected.In particular,rising interest rates could make it more difficult or expensive for us to obtain debt or equity capital in the future.Similar factors could also adversely affect the ability of others to obtain capital and therefore could make it more

214、 difficult for us to sell hotel assets.Changes in the debt and equity markets may adversely affect the value of our hotels.The value of hotel real estate has an inverse correlation to the capital costs of hotel investors.If capital costs increase,real estate values may decrease.Capital costs are gen

215、erally a function of the perceived risks associated with our assets,interest rates on debt and return expectations of equity investors.While interest rates may have increased from cyclical lows,they remain low relative to historic averages,but may continue to increase in the future.Interest rate vol

216、atility,both in the U.S.and globally,could reduce our access to capital markets or increase the cost of funding our debt requirements.If the income generated by our hotels does not increase by amounts sufficient to cover such higher capital costs,the market value of our hotel real estate may decline

217、.In some cases,the value of our hotel real estate has previously declined,and may in the future decline,to levels below the principal amount of the debt securing such hotel real estate.As of December 31,2017,we had approximately$990.4 million of consolidated outstanding debt,and carrying such debt m

218、ay impair our financial flexibility or harm our business and financial results by imposing requirements on our business.Of our total debt outstanding as of December 31,2017,approximately$403.0 million matures over the next four years(none in either 2018 or 2019,$296.1 million in 2020 and$106.9 milli

219、on in 2021).The$403.0 million in debt maturities due over the next four years does not include$7.4 million of scheduled loan amortization payments due in 2018,$8.0 million due in each of the years 2019 and 2020,or$4.4 million due in 2021.Carrying our outstanding debt may adversely impact our busines

220、s and financial results by:requiring us to use a substantial portion of our funds from operations to make required payments on principal and interest,which will reduce the amount of cash available to us for our operations and capital expenditures,future business opportunities and other purposes,incl

221、uding distributions to our stockholders;making us more vulnerable to economic and industry downturns and reducing our flexibility in responding to changing business and economic conditions;limiting our ability to undertake refinancings of debt or borrow more money for operations or capital expenditu

222、res or to finance acquisitions;and compelling us to sell or deed back properties,possibly on disadvantageous terms,in order to make required payments of interest and principal.We also may incur additional debt in connection with future acquisitions of real estate,which may include loans secured by s

223、ome or all of the hotels we acquire or our existing hotels.In addition to our outstanding debt,at December 31,2017,we had$0.5 million in outstanding letters of credit.We anticipate that we will refinance our indebtedness from time to time to repay our debt,and our inability to refinance on favorable

224、 terms,or at all,could impact our operating results.Because we anticipate that our internally generated cash will be adequate to repay only a portion of our indebtedness prior to maturity,we expect that we will be required to repay debt from time to time through refinancings of our indebtedness and/

225、or offerings of equity,preferred equity or debt.The amount of our existing indebtedness may impede our ability to repay our debt through refinancings.If we are unable to refinance our indebtedness with property secured debt or corporate debt on acceptable terms,or at all,and are unable to negotiate

226、an extension with the lender,we may be in default or forced to sell one or more of our properties on potentially disadvantageous terms,which might increase our borrowing costs,result in losses to us and reduce the amount of cash available to us for distributions to our stockholders.If prevailing int

227、erest rates or other factors at the time of any refinancing result in higher interest rates on new debt,our interest expense would increase,and potential proceeds we would be able to secure from future debt refinancings may decrease,which would harm our operating results.13 If we were to default on

228、our secured debt in the future,the loss of our property securing the debt may negatively affect our ability to satisfy other obligations.All of our mortgage debt,excluding letters of credit,unsecured term loans and unsecured senior notes,as of December 31,2017 is secured by first deeds of trust on o

229、ur properties.Using our properties as collateral increases our risk of property losses because defaults on indebtedness secured by properties may result in foreclosure actions initiated by lenders and ultimately our loss of the property that secures any loan under which we are in default.Additionall

230、y,defaulting on indebtedness may damage our reputation as a borrower,and may limit our ability to secure financing in the future.For tax purposes,a foreclosure on any of our properties would be treated as a sale of the property.If the outstanding balance of the debt secured by the mortgage exceeds o

231、ur tax basis in the property,we would recognize taxable income on foreclosure but would not necessarily receive any cash proceeds.As a result,we may be required to identify and utilize other sources of cash or employ a partial cash and partial stock dividend to satisfy our taxable income distributio

232、n requirements.Financial covenants in our debt instruments may restrict our operating or acquisition activities.Our credit facility,unsecured term loans and unsecured senior notes contain,and other potential financings that we may incur or assume in the future may contain,restrictions,requirements a

233、nd other limitations on our ability to incur additional debt and make distributions to our stockholders,as well as financial covenants relating to the performance of our hotel properties.Our ability to borrow under these agreements is subject to compliance with these financial and other covenants.If

234、 we are unable to engage in activities that we believe would benefit our hotel properties or we are unable to incur debt to pursue those activities,our growth may be limited.Obtaining consents or waivers from compliance with these covenants may not be possible,or if possible,may cause us to incur ad

235、ditional costs or result in additional limitations.Many of our existing mortgage debt agreements contain“cash trap”provisions that could limit our ability to use funds for other corporate purposes or to make distributions to our stockholders.Certain of our loan agreements contain cash trap provision

236、s that may be triggered if the performance of the hotels securing the loans decline.If these provisions are triggered,substantially all of the profit generated by the secured hotel would be deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of the l

237、ender.As of December 31,2017,no cash trap provisions were triggered at any of our hotels.Cash generated by our hotels that secure our existing mortgage debt agreements is distributed to us only after the related debt service and certain impound amounts are paid,which could affect our liquidity and l

238、imit our ability to use funds for other corporate purposes or to make distributions to our stockholders.Cash generated by our hotels that secure our existing mortgage debt agreements is distributed to us only after certain items are paid,including,but not limited to,deposits into leasing and mainten

239、ance reserves and the payment of debt service,insurance,taxes,operating expenses,and extraordinary capital expenditures and leasing expenses.This limit on distributions could affect our liquidity and our ability to use cash generated by those hotels for other corporate purposes or to make distributi

240、ons to our stockholders.Our organizational documents contain no limitations on the amount of debt we may incur,so we may become too highly leveraged.Our organizational documents do not limit the amount of indebtedness that we may incur.If we were to increase the level of our borrowings,then the resu

241、lting increase in cash flow that must be used for debt service would reduce cash available for capital investments or external growth,and could harm our ability to make payments on our outstanding indebtedness and our financial condition.We face competition for hotel acquisitions and dispositions,an

242、d we may not be successful in completing hotel acquisitions or dispositions that meet our criteria,which may impede our business strategy.Our business strategy is predicated on a cycle-appropriate approach to hotel acquisitions and dispositions.We may not be successful in identifying or completing a

243、cquisitions or dispositions that are consistent with our strategy of owning long-term relevant real estate.We compete with institutional pension funds,private equity investors,high net worth individuals,other REITs,and numerous local,regional,national and international owners who are engaged in the

244、acquisition of hotels,and we rely on such entities as purchasers of hotels we seek to sell.These competitors may affect the 14 supply/demand dynamics and,accordingly,increase the price we must pay for hotels or hotel companies we seek to acquire,and these competitors may succeed in acquiring those h

245、otels or hotel companies themselves.Furthermore,our potential acquisition targets may find our competitors to be more attractive suitors because they may have greater financial resources,may be willing to pay more,or may have a more compatible operating philosophy.In addition,the number of entities

246、competing for suitable hotels may increase in the future,which would increase demand for these hotels and the prices we must pay to acquire them,which,although beneficial to dispositions of hotels,may materially impact our ability to acquire new properties.We are also unable to predict certain marke

247、t changes including changes in supply of,or demand for,similar real properties in a particular area.If we pay higher prices for hotels,our profitability may be reduced.Also,future acquisitions of hotels or hotel companies may not yield the returns we expect and,if financed using our equity,may resul

248、t in stockholder dilution.In addition,our profitability may suffer because of acquisition-related costs or amortization costs for acquired intangible assets,and the integration of such acquisitions may cause disruptions to our business and may strain management resources.Delays in the acquisition an

249、d renovation or repositioning of hotel properties may have adverse effects on our results of operations and returns to our stockholders.Delays we encounter in the selection,acquisition,renovation,repositioning and development of real properties could adversely affect investor returns.Our ability to

250、commit to purchase specific assets will depend,in part,on the amount of our available cash at a given time.Renovation or repositioning programs may take longer and cost more than initially expected.Therefore,we may experience delays in receiving cash distributions from such hotels.If our projections

251、 are inaccurate,we may not achieve our anticipated returns.Accounting for the acquisition of a hotel property or other entity as a purchase combination requires an allocation of the purchase price to the assets acquired and the liabilities assumed in the transaction at their estimated fair values.Sh

252、ould the allocation be incorrect,our assets and liabilities may be overstated or understated,which may also affect depreciation expense on our statement of operations.Accounting for the acquisition of a hotel property or other entity as a purchase combination requires an allocation of the purchase p

253、rice to the assets acquired and the liabilities assumed in the transaction at their respective estimated fair values.The most difficult estimations of individual fair values are those involving long-lived assets,such as property,equipment,intangible assets and capital lease obligations that are assu

254、med as part of the acquisition of a leasehold interest.As with previous acquisitions,should we acquire a hotel property or other entity as a purchase combination in the future,we will use all available information to make these fair value determinations,and engage independent valuation specialists t

255、o assist in the fair value determinations of the long-lived assets acquired and the liabilities assumed.Should any of these allocations be incorrect,our assets and liabilities may be overstated or understated,which may also affect depreciation expense on our statement of operations.In January 2018,w

256、e adopted the Financial Accounting Standard Boards(“FASB”)Accounting Standards Update No.2017-01,“Business Combinations(Topic 805):Clarifying the Definition of a Business”(“ASU No.2017-01”),which changes the definition of a business to assist entities with evaluating when a set of transferred assets

257、 and activities is a business.If,and when,we acquire a hotel property or other entity as a purchase combination in the future,we will be required to analyze the acquisition to determine if the transaction qualifies as the purchase of a business or an asset.The result of this analysis will affect bot

258、h our balance sheet and our statement of operations as transaction costs associated with asset acquisitions will be capitalized and subsequently depreciated over the life of the related asset,while the same costs associated with a business combination will continue to be expensed as incurred and inc

259、luded in corporate overhead.In addition,asset acquisitions will not be subject to a measurement period,as are business combinations.The acquisition of a portfolio of hotels or a company presents more risks to our business and financial results than the acquisition of a single hotel.We have acquired

260、in the past,and may acquire in the future,multiple hotels in single transactions.We may also evaluate acquiring companies that own hotels.Multiple hotel and company acquisitions,however,are generally more complex than single hotel acquisitions and,as a result,the risk that they will not be completed

261、 is greater.These acquisitions may also result in our owning hotels in new markets,which places additional demands on our ability to actively asset manage the hotels.In addition,we may be required by a seller to purchase a group of hotels as a package,even though one or more of the hotels in the pac

262、kage do not meet our investment criteria.In those events,we expect to attempt to sell the hotels that do not meet our investment criteria,but may not be able to do so on acceptable terms,or if successful,the sales 15 may be recharacterized by the IRS as dealer sales and subject to a 100%“prohibited

263、transactions”tax on any gain.These hotels may harm our operating results if they operate below our underwriting or if we sell them at a loss.Also,a portfolio of hotels may be more difficult to integrate with our existing hotels than a single hotel,may strain our management resources and may make it

264、more difficult to find one or more management companies to operate the hotels.Any of these risks could harm our operating results.The sale of a hotel or a portfolio of hotels is typically subject to contingencies,risks and uncertainties,any of which may cause us to be unsuccessful in completing the

265、disposition.We may not be successful in completing the sale of a hotel or a portfolio of hotels,which may negatively impact our business strategy.Hotel sales are typically subject to customary risks and uncertainties.In addition,there may be contingencies related to,among other items,seller financin

266、g,franchise agreements,ground leases and other agreements.As such,we can offer no assurances as to whether any closing conditions will be satisfied on a timely basis or at all,or whether the closing of a sale will fail to occur for these or any other reasons.Joint venture investments could be advers

267、ely affected by our lack of sole decision-making authority,our reliance on a co-venturers financial condition and disputes between us and our co-venturers.We have co-invested,and may in the future co-invest,with third parties through partnerships,joint ventures or other entities,acquiring noncontrol

268、ling interests in or sharing responsibility for managing the affairs of a property,partnership,joint venture or other entity.For example,in April 2011,we acquired a 75.0%majority equity interest in One Park Boulevard,LLC,a Delaware limited liability company(“One Park”),the joint venture that holds t

269、itle to the 1,190-room Hilton San Diego Bayfront hotel located in San Diego,California.As of December 31,2017,Park Hotels&Resorts,Inc.is the 25.0%minority equity partner in One Park.Accordingly,we are not in a position,and may not be in a position in the future to exercise sole decision-making autho

270、rity regarding a property,partnership,joint venture or other entity.Investments in partnerships,joint ventures or other entities may,under certain circumstances,involve risks not present were a third party not involved,including the possibility that partners or co-venturers might become bankrupt or

271、fail to fund their share of required capital contributions.Partners or co-venturers may have economic or other business interests or goals which are inconsistent with our business interests or goals,and may be in a position to take actions contrary to our policies or objectives.Such investments may

272、also have the potential risk of impasses on decisions,such as a sale,because neither we nor the partner or co-venturer would have full control over the partnership or joint venture.Disputes between us and partners or co-venturers may result in litigation or arbitration that would increase our expens

273、es and prevent our officers and/or trustees from focusing their time and effort on our business.Consequently,actions by,or disputes with,partners or co-venturers might result in subjecting properties owned by the partnership or joint venture to additional risk.In addition,we may in certain circumsta

274、nces be liable for the actions of our third party partners or co-venturers.The hotel loans in which we may invest in the future involve greater risks of loss than senior loans secured by income-producing real properties.We have invested in hotel loans,and may invest in additional loans in the future

275、,including mezzanine loans that take the form of subordinated loans secured by second mortgages on the underlying real property or loans secured by a pledge of the ownership interests of the entity owning the real property,the entity that owns the interest in the entity owning the real property or o

276、ther assets.These types of investments involve a higher degree of risk than direct hotel investments because the investment may become unsecured as a result of foreclosure by the senior lender.In the event of a bankruptcy of the entity providing the pledge of its ownership interests as security,we m

277、ay not have full recourse to the assets of such entity,or the assets of the entity may not be sufficient to satisfy our mezzanine loan.If a borrower defaults on our mezzanine loan or debt senior to our loan,or in the event of a borrower bankruptcy,our mezzanine loan will be satisfied only after the

278、senior debt.As a result,we may not recover some or all of our investment.In addition,mezzanine loans may have higher loan-to-value ratios than conventional mortgage loans,resulting in less equity in the real property and increasing the risk of loss of principal.If we make or invest in mortgage loans

279、 with the intent of gaining ownership of the hotel secured by or pledged to the loan,our ability to perfect an ownership interest in the hotel is subject to the sponsors willingness to forfeit the property in lieu of the debt.If we invest in a mortgage loan or note secured by the equity interest in

280、a property with the intention of gaining ownership through the foreclosure process,the time it will take for us to perfect our interest in the property may depend on 16 the sponsors willingness to cooperate during the foreclosure process.The sponsor may elect to file bankruptcy which could materiall

281、y impact our ability to perfect our interest in the property and could result in a loss on our investment in the debt or note.Certain of our long-lived assets and goodwill have in the past become impaired and may become impaired in the future.We periodically review the fair value of each of our hote

282、ls and related goodwill for possible impairment.For example,in 2017,we identified indicators of impairment at our two Houston,Texas hotels associated with continued operational declines due to weakness in the Houston market,combined with the effects of Hurricane Harvey on our two hotels.As such,we r

283、ecorded a total impairment charge of$40.1 million on the two Houston hotels.In the future,additional hotels and related goodwill may become impaired,or our hotels which have previously become impaired may become further impaired,which may adversely affect our financial condition and results of opera

284、tions.We own primarily urban and resort upper upscale hotels,and the upper upscale segment of the lodging market is highly competitive and may be subject to greater volatility than other segments of the market,which could negatively affect our profitability.The upper upscale segment of the hotel bus

285、iness is highly competitive.Our hotels compete on the basis of location,physical attributes,service levels and reputation,among many other factors.There are many competitors that may have hotels that are better located,have a stronger reputation or possess superior physical attributes than our hotel

286、s.This competition could reduce occupancy levels and room revenue at our hotels,which would harm our operations.Over-building in the hotel industry may increase the number of rooms available and may decrease occupancy and room rates.We may also face competition from nationally recognized hotel brand

287、s with which we are not associated.In addition,in periods of weak demand,profitability is negatively affected by the relatively high fixed costs of operating upper upscale hotels when compared to other classes of hotels.Rising operating expenses or low occupancy rates could reduce our cash flow and

288、funds available for future distributions.Our hotels,and any hotels we buy in the future,are and will be subject to operating risks common to the lodging industry in general.If any hotel is not occupied at a level sufficient to cover our operating expenses,then we could be required to spend additiona

289、l funds for that hotels operating expenses.In the future,our hotels will be subject to increases in real estate and other tax rates,utility costs,operating expenses,insurance costs,repairs and maintenance and administrative expenses,which could reduce our cash flow and funds available for future dis

290、tributions.A significant portion of our hotels are geographically concentrated and,accordingly,we could be disproportionately harmed by economic downturns or natural disasters in these areas of the country.As of December 31,2017,seven of the 25 hotels are located in California,which is the largest c

291、oncentration of our hotels in any state,representing 31%of our rooms and 35%of the revenue generated by the 25 hotels during 2017.In addition,as of December 31,2017,three of the 25 hotels are located in Illinois,as well as three in the greater Washington DC area,and two of the 25 hotels are located

292、in Massachusetts.The three hotels located in Illinois represented 9%of our rooms and 7%of the revenue generated by the 25 hotels during 2017.The three hotels located in the greater Washington DC area represented 15%of our rooms and 14%of the revenue generated by the 25 hotels during 2017.The two hot

293、els located in Massachusetts represented 12%of our rooms and 14%of the revenue generated by the 25 hotels during 2017.To a lesser,but still significant extent,our hotels in Florida,Hawaii and Louisiana represented 8%,4%and 6%of our rooms,respectively,and 8%,8%,and 5%of the revenue generated by the 2

294、5 hotels during 2017,respectively.The concentration of our hotels in California,Florida,Hawaii,Illinois,Massachusetts,Louisiana and the greater Washington DC area exposes our business to economic conditions,competition and real and personal property tax rates unique to these locales.In addition,natu

295、ral disasters in these locales would disproportionately affect our hotel portfolio.The economies and tourism industries in these locales,in comparison to other parts of the country,are negatively affected to a greater extent by changes and downturns in certain industries,including the entertainment,

296、high technology,financial and government industries.It is also possible that because of our California,Florida,Hawaii,Illinois,Massachusetts,Louisiana and the greater Washington DC area concentrations,a change in laws applicable to such hotels and the lodging industry may have a greater impact on us

297、 than a change in comparable laws in another geographical area in which we have hotels.Adverse developments in these locales could harm our revenue or increase our operating expenses.17 The operating results of some of our individual hotels are significantly impacted by group contract business and r

298、oom nights generated by large corporate transient customers,and the loss of such customers for any reason could harm our operating results.Group contract business and room nights generated by other large corporate transient customers can significantly impact the results of operations of our hotels.T

299、hese contracts and customers vary from hotel to hotel and change from time to time.Such group contracts are typically for a limited period of time after which they may be put up for competitive bidding.The impact and timing of large events are not always easy to predict.Some of these contracts and e

300、vents may also be cancelled,which could reduce our expectations for future revenues or result in potential litigation in order to collect cancellation fees.As a result,the operating results for our individual hotels can fluctuate as a result of these factors,possibly in adverse ways,and these fluctu

301、ations can affect our overall operating results.The need for business-related travel,and,therefore,demand for rooms in our hotels may be materially and adversely affected by the increased use of business-related technology.The increased use of teleconferencing and video-conference technology by busi

302、nesses could result in decreased business travel as companies increase the use of technologies that allow multiple parties from different locations to participate in meetings without traveling to a centralized meeting location,such as our hotels.To the extent that such technologies,or new technologi

303、es,play an increased role in day-to-day business interactions and the necessity for business-related travel decreases,demand for hotel rooms may decrease and our hotels could be materially and adversely affected.A substantial number of our hotels operate under a brand owned by Marriott,Hilton or Hya

304、tt.Should any of these brands experience a negative event,or receive negative publicity,our operating results may be harmed.We believe the largest and most stable segment of travelers prefer the consistent service and quality associated with nationally recognized brands.As of December 31,2017,13 of

305、our 25 hotels utilized brands owned by Marriott.In addition,seven and three of our 25 hotels were utilized by Hilton and Hyatt brands,respectively.As a result,a significant concentration of our success is dependent in part on the success of Marriott,Hilton and Hyatt,or their respective brands.Conseq

306、uently,if market recognition or the positive perception of Marriott,Hilton and/or Hyatt is reduced or compromised,the goodwill associated with our Marriott,Hilton and/or Hyatt branded hotels may be adversely affected,which may have an adverse effect on our results of operations,as well as our abilit

307、y to make distributions to our stockholders.Additionally,any negative perceptions or negative impact to operating results from any proposed or future consolidations between nationally recognized brands could have an adverse effect on our results of operations,as well as our ability to make distribut

308、ions to our stockholders.In addition,during 2016,Marriott and Starwood Hotels&Resorts completed a merger between the two companies.Should additional hotel brands consolidate in the future,the merger could reduce our bargaining power in negotiating management agreements and franchise agreements due t

309、o decreased competition among major brand companies,as well as contracts between our hotels and various unions.In addition,the potential combined company could have more leverage when negotiating for property improvement plans upon the acquisition of a hotel in cases where the franchisor or hotel br

310、and requires non-economic renovations to bring the physical condition of a hotel into compliance with the specifications and standards each franchisor or hotel brand has developed.Because all but two of our hotels are operated under franchise agreements or are brand managed,termination of these fran

311、chise,management or operating lease agreements or circumstances that negatively affect the franchisor or the hotel brand could cause us to lose business at our hotels or lead to a default or acceleration of our obligations under certain of our notes payable.As of December 31,2017,all of the 25 hotel

312、s except the Boston Park Plaza and the Oceans Edge Hotel&Marina were operated under franchise,management or operating lease agreements with franchisors or hotel management companies,such as Marriott,Hilton and Hyatt.In general,under these arrangements,the franchisor or brand manager provides marketi

313、ng services and room reservations and certain other operating assistance,but requires us to pay significant fees to it and to maintain the hotel in a required condition.If we fail to maintain these required standards,then the franchisor or hotel brand may terminate its agreement with us and obtain d

314、amages for any liability we may have caused.Moreover,from time to time,we may receive notices from franchisors or the hotel brands regarding our alleged non-compliance with the franchise agreements or brand standards,and we may disagree with these claims that we are not in compliance.Any disputes ar

315、ising under these agreements could also lead to a termination of a franchise,management or 18 operating lease agreement and a payment of liquidated damages.Such a termination may trigger a default or acceleration of our obligations under some of our notes payable.In addition,as our franchise,managem

316、ent or operating lease agreements expire,we may not be able to renew them on favorable terms or at all.If we were to lose a franchise or hotel brand for a particular hotel,it could harm the operation,financing,or value of that hotel due to the loss of the franchise or hotel brand name,marketing supp

317、ort and centralized reservation system.Moreover,negative publicity affecting a franchisor or hotel brand in general could reduce the revenue we receive from the hotels subject to that particular franchise or brand.Any loss of revenue at a hotel could harm the ability of the TRS Lessee,to whom we hav

318、e leased our hotels,to pay rent to the Operating Partnership and could harm our ability to pay dividends on our common stock or preferred stock.Our franchisors and brand managers may require us to make capital expenditures pursuant to property improvement plans,or PIPs,and the failure to make the ex

319、penditures required under the PIPs or to comply with brand standards could cause the franchisors or hotel brands to terminate the franchise,management or operating lease agreements.Our franchisors and brand managers may require that we make renovations to certain of our hotels in connection with rev

320、isions to our franchise,management or operating lease agreements.In addition,upon regular inspection of our hotels,our franchisors and hotel brands may determine that additional renovations are required to bring the physical condition of our hotels into compliance with the specifications and standar

321、ds each franchisor or hotel brand has developed.In connection with the acquisitions of hotels,franchisors and hotel brands may also require PIPs,which set forth their renovation requirements.If we do not satisfy the PIP renovation requirements,the franchisor or hotel brand may have the right to term

322、inate the applicable agreement.In addition,in the event that we are in default under any franchise agreement as a result of our failure to comply with the PIP requirements,in general,we will be required to pay the franchisor liquidated damages,generally equal to a percentage of gross room revenue fo

323、r the preceding two-,three-or five-year period for the hotel or a percentage of gross revenue for the preceding twelve-month period for all hotels operated under the franchised brand if the hotel has not been operating for at least two years.Our franchisors and brand managers may change certain poli

324、cies or cost allocations that could negatively impact our hotels.Our franchisors and brand managers incur certain costs that are allocated to our hotels subject to our franchise,management or operating lease agreements.Those costs may increase over time or our franchisors and brand managers may elec

325、t to introduce new programs that could increase costs allocated to our hotels.In addition,certain policies,such as our third-party managers frequent traveler programs,may be altered resulting in reduced revenue or increased costs to our hotels.Because we are a REIT,we depend on third parties to oper

326、ate our hotels,which could harm our results of operations.In order to qualify as a REIT,we cannot directly operate our hotels.Accordingly,we must enter into management or operating lease agreements(together,“management agreements”)with eligible independent contractors to manage our hotels.Thus,indep

327、endent management companies control the daily operations of our hotels.As of December 31,2017,our 25 hotels were managed as follows:Marriott nine hotels;IHR four hotels;Highgate three hotels;Crestline two hotels;Hilton two hotels;Hyatt two hotels;and Davidson,HEI and Singh one hotel each.We depend o

328、n these independent management companies to operate our hotels as provided in the applicable management agreements.Thus,even if we believe a hotel is being operated inefficiently or in a manner that does not result in satisfactory ADR,occupancy rates or profitability,we may not necessarily have cont

329、ractual rights to cause our independent management companies to change their method of operation at our hotels.We can only seek redress if a management company violates the terms of its applicable management agreement with us or fails to meet performance objectives set forth in the applicable manage

330、ment agreement,and then our remedies may be limited by the terms of the management agreement.Additionally,while our management agreements typically provide for limited contractual penalties in the event that we terminate the applicable management agreement upon an event of default,such terminations

331、could result in significant disruptions at the affected hotels.If any of the foregoing occurs at franchised hotels,our relationships with the franchisors may be damaged,and we may be in breach of one or more of our franchise or management agreements.Of these agreements,one was entered into during 20

332、17,two were entered into during 2015,one was entered into during 2014,and three were entered into during 2013.If we were to terminate any of these agreements and enter into new agreements with different hotel operators,the day to day operations of our hotels may be disrupted.In addition,we cannot 19

333、 assure you that any new management agreement would contain terms that are favorable to us,or that a new management company would be successful in managing our hotels.We also cannot assure you that our existing management companies will successfully manage our hotels.A failure by our management companies to successfully manage our hotels could lead to an increase in our operating expenses or a dec