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Concentration
 12 Months Ended
Dec. 31, 2011
Concentration  
Concentration

 

9. Concentration

 

Geographic Concentration

 

At December 31, 2011, our 473 properties were located in 44 states in the United States, Ontario, Canada and Puerto Rico. Between 6% and 12% of our properties, by investment, were located in each of California, Texas and Georgia. Our two hotels in Ontario, Canada and our hotel in Puerto Rico represent 1% and 2% of our hotels, by investment, respectively.

 

Credit Concentration

 

All of our managers and tenants are subsidiaries of other companies.  The percentage of our minimum return payments and minimum rents, for each management or lease agreement is shown below, as of December 31, 2011.

 

Agreement Reference
Name 

 

Number of
Properties

 

Minimum Return/
Minimum Rent

 

% of
Total

 

Investment(1)

 

% of
Total

 

Marriott (No. 1)

 

53

 

$

67,557

 

12%

 

$

676,948

 

10%

 

Marriott (No. 234)

 

71

 

98,854

 

17%

 

957,026

 

15%

 

Marriott (No. 5)

 

1

 

9,495

 

2%

 

90,078

 

1%

 

InterContinental

 

130

 

156,220

 

28%

 

1,820,743

 

27%

 

Hyatt

 

22

 

22,037

 

4%

 

301,942

 

5%

 

Carlson

 

11

 

12,920

 

2%

 

202,251

 

3%

 

TA (No. 1)(2) 

 

145

 

144,391

 

25%

 

1,897,029

 

28%

 

TA (No. 2)

 

40

 

55,852

 

10%

 

725,407

 

11%

 

Total

 

473

 

$

567,326

 

100%

 

$

6,671,424

 

100%

 

 

(1)         Amounts exclude expenditures made from FF&E reserves funded from hotel operations, but include amounts funded by us separately.

 

(2)         In addition to minimum rents, the minimum rent amount for the TA No. 1 lease includes approximately $5,069 of ground rent due to us from TA in 2012.

 

Minimum return and minimum rent payments due to us under some of our hotel management agreements and leases are supported by guarantees. The guarantee provided by Marriott, with respect to the 71 hotels (Marriott No. 234 Contract) managed by Marriott is limited to $40,000 ($30,873 remaining at December 31, 2011) and expires on December 31, 2017.  The guarantee provided by Hyatt, with respect to the 22 hotels managed by Hyatt is limited to $50,000 ($21,020 remaining at December 31, 2011). The guarantee provided by Carlson, with respect to the 11 hotels managed by Carlson is limited to $40,000 ($25,598 remaining at December 31, 2011). The guarantee provided by Marriott with respect to the one hotel leased by Marriott (Marriott No. 5 Contract) is unlimited and does not expire.

 

Security deposits support minimum return and minimum rent payments that may be due to us under some of our management agreements and leases.  As of December 31, 2011, we hold security deposits for our 53 hotels leased by Host ($50,540) and 130 hotels managed or leased by InterContinental ($55,820).  The security deposit we held for our Marriott No. 234 Contract has been exhausted, but may be replenished in the future from available cash flow.

 

Certain of our managed hotel portfolios had net operating results that were, in the aggregate, $60,264, $85,592 and $75,205 less than the minimum returns due to us in 2011, 2010 and 2009, respectively. When the shortfalls are funded by the managers of these hotels under the terms of our operating agreements, we reflect such fundings (including security deposit applications) in our consolidated statements of income as a reduction of hotel operating expenses.  The reduction to operating expenses was $58,771, $85,592 and $75,205 in 2011, 2010 and 2009, respectively.

 

Significant Tenant

 

TA is the lessee of 39% of our investments, at cost, as of December 31, 2011.  See Note 8 for further information regarding our leases with TA.  The following table presents summary audited financial information for TA for the years ended December 31, 2011, 2010 and 2009, as revised and reported by TA in its Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

 

 

 

For the Year Ended December 31,

 

 

 

2011

 

2010

 

2009

 

Operations

 

 

 

 

 

 

 

 

 

 

Total revenues

 

$

7,888,857

 

$

5,962,481

 

$

4,699,820

 

Total cost of goods sold

 

6,850,039

 

5,019,630

 

3,822,277

 

Net income (loss)

 

23,574

 

(66,690

)

(95,085

)

 

 

 

 

 

 

 

 

Cash Flows

 

 

 

 

 

 

 

Net cash provided by operating activities

 

30,141

 

29,933

 

52,708

 

Net cash used in investing activities

 

(86,798

)

(58,584

)

(42,644

)

Net cash provided by (used in) financing activities

 

49,547

 

(1,628

)

—

 

Net increase (decrease) in cash

 

(7,141

)

(30,236

)

10,116

 

Cash and cash equivalents at the beginning of the period

 

125,396

 

155,632

 

145,516

 

Cash and cash equivalents at the end of the period

 

118,255

 

125,396

 

155,632

 

 

 

 

As of December 31,

 

Financial Position

 

2011

 

2010

 

2009

 

Current assets

 

$

484,250

 

$

407,426

 

$

410,598

 

Noncurrent assets

 

532,281

 

483,666

 

467,012

 

Current liabilities

 

287,748

 

239,055

 

219,685

 

Noncurrent liabilities

 

410,182

 

412,521

 

353,842

 

Total shareholders’ equity

 

318,601

 

239,516

 

304,083

 

 

The summary financial information of TA is presented to comply with applicable accounting regulations of the SEC.  References in these financial statements to the Annual Report on Form 10-K for TA are included as textual references only, and the information in such Annual Report is not incorporated by reference into these financial statements.