================================================================================
Prospectus Supplement
July 11, 2000
(To prospectus dated January 15, 1998)
Hospitality Properties Trust
$35,000,000
9.125% Senior Notes due 2010
--------------------------------------------------------------------------------
The notes bear interest at the rate of 9.125% per year. Interest on the
notes is payable semiannually on each January 15 and July 15, beginning January
15, 2001. The notes mature on July 15, 2010 and are redeemable at any time at
the option of Hospitality Properties Trust, in whole or in part. The redemption
price will equal the outstanding principal of the notes being redeemed plus
accrued interest and the Make-Whole Amount (as defined in the Glossary to this
prospectus supplement). The notes do not have the benefit of any sinking fund.
The notes are unsecured and rank equally with all of our other unsecured
senior indebtedness. The notes will be issued only in registered form in
denominations of $1,000.
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Per Note Total
------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Public Offering Price (1)......................................... 99.826% $34,939,100
Underwriting Discount............................................. .644% $ 225,400
Proceeds, before expenses, to Hospitality Properties Trust........ 99.182% $34,713,700
------------------------------------------------------------------------------------------------------------------
<FN>
(1) Plus accrued interest from July 14, 2000, if settlement occurs after that date.
</FN>
</TABLE>
--------------------------------------------------------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus supplement or the accompanying prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
We expect that the notes will be ready for delivery in book-entry form only
through The Depository Trust Company on or about July 14, 2000.
--------------------------------------------------------------------------------
Donaldson, Lufkin & Jenrette
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Page
Prospectus Supplement
<S> <C>
Summary........................................................................................................ S-3
Recent Developments............................................................................................ S-6
Use of Proceeds................................................................................................ S-6
The Company.................................................................................................... S-6
Ratio of Earnings to Fixed Charges............................................................................. S-6
Description of the Notes....................................................................................... S-7
Certain Federal Income Tax Considerations...................................................................... S-13
Underwriting................................................................................................... S-16
Legal Matters.................................................................................................. S-17
Experts........................................................................................................ S-17
Incorporation of Certain Information by Reference.............................................................. S-18
Where You Can Find More Information............................................................................ S-18
Forward-Looking Statements..................................................................................... S-19
Glossary....................................................................................................... S-20
<CAPTION>
Prospectus
<S> <C>
Available Information.......................................................................................... ii
Incorporation of Certain Documents by Reference................................................................ ii
The Company.................................................................................................... 1
Use of Proceeds................................................................................................ 1
Ratio of Earnings to Fixed Charges............................................................................. 1
Description of Debt Securities................................................................................. 2
Description of Shares.......................................................................................... 10
Description of Preferred Shares................................................................................ 11
Description of Depositary Shares............................................................................... 16
Description of Warrants........................................................................................ 19
Limitation of Liability; Shareholder Liability................................................................. 19
Redemption; Trustees; Business Combinations and Control Share Acquisitions..................................... 19
Plan of Distribution........................................................................................... 24
Legal Matters.................................................................................................. 24
Experts........................................................................................................ 25
</TABLE>
In this Prospectus Supplement, the term "HPT" includes Hospitality
Properties Trust and its consolidated subsidiaries.
In presenting "as adjusted" information in this Prospectus Supplement, we
have assumed that the offering has been completed and that we have applied the
net proceeds of the notes to non-interest bearing cash balances.
S-2
<PAGE>
SUMMARY
This summary may not contain all of the information that is important to
you. You should carefully read this entire Prospectus Supplement and the
accompanying Prospectus. You should also read the documents we have referred you
to in "Incorporation of Certain Information by Reference."
THE COMPANY
Hospitality Properties Trust ("HPT") is a real estate investment trust
("REIT") formed to acquire, own and lease hotels. We currently own or have
entered agreements to acquire a total of 224 hotels with 30,389 rooms costing
approximately $2.4 billion. Our business strategy is to invest in high quality
hotels leased to experienced hotel operators for minimum rents which exceed our
cost of capital. The average age of our hotels is six years. We believe that our
hotels are among the newest, best designed and best located hotels in their
respective market segments.
HPT Investments by Hotel Brand
[graphic omitted]
FINANCING POLICIES
Since our initial public offering in 1995, we have been conservatively
capitalized. We believe that our conservative financing policy has enabled us to
access the capital markets on favorable terms and will continue to facilitate
our growth. We have completed common share offerings in each of our completed
fiscal years since 1995, raising over $1.5 billion in gross proceeds. At March
31, 2000, our total debt of $415 million constituted 21.6% of our total
capitalization.
The notes have the benefit of financial covenants. The following table
shows the financial ratios contained in these covenants for HPT at March 31,
2000 on a historical basis and an as adjusted basis. You should review our
historical financial statements in connection with this table. The section of
the Prospectus Supplement titled "Description of the Notes" contains more
information concerning the covenants.
<TABLE>
<CAPTION>
Historical as of As Adjusted as of
Covenant Required Ratio March 31, 2000 March 31, 2000
-------------------------------------------------- ---------------------- ------------------- ---------------------
<S> <C> <C> <C>
Debt/Adjusted Total Assets................. no more than 60% 17% 19%
Secured Debt/Adjusted Total Assets......... no more than 40% 0% 0%
Consolidated Income Available for Debt
Service/Annual Debt Service........... at least 1.5x 5.8x 5.3x
Total Unencumbered Assets/
Unsecured Debt........................ at least 200% 574% 537%
</TABLE>
S-3
<PAGE>
BUSINESS POLICIES
Our ability to pay debt service depends upon our receipt of rents. We
believe that our lease structure is among the most secure of all hotel REITs.
Our leases are designed to increase our rents during cyclical upturns, secure
our minimum rents during cyclical downturns and generally provide for the
dependability of our cash flow. Important features of our leases currently
include the following:
Minimum Rent. All of our leases require minimum annual rent of between 10%
and 11% of our investment in our hotels.
Percentage Rent. All of our leases require percentage rent equal to between
5% and 10% of increases in gross hotel revenues over threshold amounts.
Long Term Leases. All of the leases for our hotels expire after 2009. The
average lease term remaining for our hotels is 13 years.
Pooled Leases. Each of our hotels is part of a combination of hotels. The
leases in each combination are subject to cross default with other leases to the
same tenant. The smallest combination includes 12 hotels with 2,321 rooms in
which we have invested approximately $183 million; the largest combination
includes 53 hotels with 7,611 rooms in which we have invested approximately $508
million.
Geographic Diversification. Each combination of hotels leased to a single
tenant is geographically diversified. In addition, many of our hotels are
located in the vicinity of major demand generators such as airports, medical or
educational facilities and large suburban office parks.
All or None Renewals. All renewal options for each combination of hotels
may only be exercised on an all or none basis and not for separate hotels.
Security Deposits. All of our leases require security deposits generally
equal to one year's minimum rent.
FF&E Reserves. All of our leases require the tenants to deposit 5%-6% of
gross hotel revenues into escrow to fund periodic renovations (the "FF&E
Reserve"). For hotels owned throughout the 12 months ended March 31, 2000, the
FF&E Reserve averaged $1,350 per room per year.
Subordinated Fees. All management fees for our hotels are subordinated to
the rent due to us.
Guarantees for New Hotels. When we purchase and lease recently built
hotels, we require that payment of rent be guaranteed until the operations of
the hotels achieve negotiated rent coverage levels. Except for guarantors whose
obligations are investment grade rated, these guarantees are secured.
Rent Coverage. When we purchase hotels which have historical operations, we
set the purchase prices and rents at levels to provide historical as well as
projected rent coverage. During the 12 months ended March 31, 2000, our
portfolio of hotels averaged cash flow available for rent (after paying all
non-subordinated expenses and after required FF&E Reserve deposits) of 1.4 times
the minimum rent due to us. We believe that this is the highest rent coverage
ratio among all public hotel REITs.
We may change these policies in the future.
PRINCIPAL PLACE OF BUSINESS
HPT is organized as a Maryland real estate investment trust. Its principal
place of business is 400 Centre Street, Newton, Massachusetts 02458, and its
telephone number is (617) 964-8389.
S-4
<PAGE>
THE OFFERING
The following is a brief summary of certain terms of this offering. For a
more complete description of the terms of the notes (including capitalized
terms), see "Description of the Notes" and "Glossary" in this Prospectus
Supplement and "Description of Debt Securities" in the accompanying Prospectus.
Aggregate Principal Amount......... $35,000,000.
Maturity Date...................... The notes will mature on July 15, 2010,
unless previously redeemed.
Interest Payment Dates............. Semiannually on January 15 and July 15,
beginning January 15, 2001.
Ranking............................ The notes are senior obligations of
Hospitality Properties Trust. They are
not secured by any of our property or
assets, and as a result, you will be one
of our unsecured creditors. The notes
are not obligations of any of our
subsidiaries. The notes will be
effectively subordinated to any
mortgages and other secured indebtedness
we incur and to all indebtedness and
other liabilities of our subsidiaries.
The notes, however, will rank equally
with all of our other unsecured senior
indebtedness, including indebtedness we
incur in the future.
Optional Redemption................ The notes are redeemable at any time at
the option of the Company, in whole or
in part. The redemption price will equal
the outstanding principal of the notes
being redeemed plus accrued interest and
the Make-Whole Amount. The notes will
not have the benefit of a sinking fund.
Use of Proceeds.................... We estimate that our net proceeds from
the offering will be approximately $34.7
million. We intend to use these proceeds
to repay amounts outstanding under our
bank revolving credit facility, for
acquisitions of additional hotels or for
general business purposes.
Limitations on Incurrence
of Debt....................... Various covenants will apply to the
notes, including the following:
(1) HPT will not incur Debt if the new
Debt would cause total Debt to be
more than 60% of Adjusted Total
Assets.
(2) HPT will not incur Secured Debt if
the new Secured Debt would cause
total Secured Debt to be more than
40% of Adjusted Total Assets.
(3) HPT will not incur Debt if the new
Debt would cause the ratio of
Consolidated Income Available for
Debt Service to Annual Debt
Service for our most recently
completed four fiscal quarters to
be less than 1.5 to 1, determined
on a pro forma basis after giving
effect to certain assumptions.
(4) HPT will maintain Total
Unencumbered Assets of at least
200% of Unsecured Debt.
The capitalized terms used in this description of certain covenants
have meanings specified in the indenture and supplemental indenture under which
the notes will be issued. The specific meanings are described in "Description of
the Notes" and "Glossary" in this Prospectus Supplement.
S-5
<PAGE>
RECENT DEVELOPMENTS
On June 16, 2000, we announced our agreement to purchase ten hotels,
including three Residence Inn by Marriott(R), four Courtyard by Marriott(R), two
TownePlace Suites by Marriott(R) and one SpringHill Suites by Marriott(R)
hotels, for $145 million from Marriott International, Inc. (NYSE: MAR). We
purchased eight of these ten hotels on June 16, 2000, and we expect to purchase
the remaining two hotels later in 2000 when construction is completed. These ten
hotels contain 1,420 rooms or suites and are located in eight states. The lease
for these ten hotels has been structured as a portfolio transaction with nine
other Courtyard and Residence Inn hotels that we previously owned, and all 19
hotels will be leased on a combined basis to a subsidiary of Crestline Capital
Corporation (NYSE: CLJ) and managed by a subsidiary of Marriott under long-term
agreements through 2015, plus renewal options.
On July 11, 2000, we announced our consent to the assignment of a lease for
24 hotels now leased to ShoLodge, Inc. (NASDQ: LODG) to Prime Hospitality Corp.
(NYSE: PDQ). All 24 hotels, which are now branded as Sumner Suites(R), will be
rebranded as AmeriSuites(R)hotels. The terms of the lease assigned to Prime for
these hotels have remained substantially similar to the terms of the former
lease with ShoLodge. The initial lease term was extended two years to 2013.
USE OF PROCEEDS
We estimate that the net proceeds of this offering of the notes will be
approximately $34.7 million. We expect to use the net proceeds of this offering
to repay amounts outstanding under our bank revolving credit facility, for
acquisitions of additional hotels or for general business purposes. The credit
facility bears interest at LIBOR plus a spread and matures on March 19, 2002. At
July 6, 2000, the credit facility had an outstanding balance of $42 million and
an effective interest rate on outstanding loans of 7.8125% per annum.
THE COMPANY
HPT is a REIT which acquires, owns and leases hotels to unaffiliated hotel
operators. One of our principal business objectives is to ensure stability of
cash flow from dependable and diverse revenue sources. To achieve this
objective, we seek to operate as follows:
o maintain a strong base of shareholders' equity;
o invest in high quality properties operated by unaffiliated hotel
operating companies;
o use moderate debt leverage to fund additional investments;
o design leases which require minimum rents which provide positive
spreads over our cost of investment capital;
o when market conditions permit, refinance debt with additional equity
or long term debt; and
o pursue diversification so that we receive our rents from diverse
properties and operators.
Upon completion of the acquisitions described in "Recent Developments," we
will have investments totaling $2.4 billion in 224 hotels, with 30,389 rooms,
located in 36 states.
RATIO OF EARNINGS TO FIXED CHARGES
Our consolidated ratio of earnings to fixed charges was 4.35 and 3.30 for
the three months ended March 31, 2000 and 1999, respectively, and 4.00, 5.04 and
4.81 for the years ended December 31, 1999, 1998 and 1997, respectively.
S-6
<PAGE>
DESCRIPTION OF THE NOTES
The following description of the particular terms of the notes supplements
and, to the extent inconsistent with, replaces the description of the general
terms and provisions of debt securities set forth under "Description of Debt
Securities" in the accompanying Prospectus, to which reference is hereby made.
We have provided a Glossary at the end of this Prospectus Supplement to define
certain capitalized words used in discussing the terms of the notes.
General
We will issue the notes under an Indenture dated as of February 25, 1998
and a Supplemental Indenture dated as of July 14, 2000 (together, the
"Indenture") between us and State Street Bank and Trust Company, as Trustee. The
Indenture is subject to, and governed by, the Trust Indenture Act of 1939, as
amended. This Prospectus Supplement briefly outlines some of the provisions of
the Indenture. These summaries are not complete. If you would like more
information on these provisions, review the copy of the Indenture that we have
filed with the Securities and Exchange Commission. See "Incorporation of Certain
Information By Reference" in this Prospectus Supplement and "Available
Information" in the accompanying Prospectus for information about how to locate
these documents. You may also review the Indenture at the Trustee's corporate
trust office at Two Avenue de Lafayette, Boston, Massachusetts 02111. All
section references appearing below are to sections of the Indenture.
The notes will be a separate series under the Indenture, initially in the
aggregate principal amount of $35,000,000. The Indenture does not limit the
amount of debt securities that we may issue under the Indenture, and we may
issue debt securities in one or more series up to the aggregate initial offering
price authorized by us for each series. We may, without the consent of the
holders of the notes, reopen this series of notes and issue additional notes
under the Indenture in addition to the $35,000,000 of notes authorized as of the
date of this Prospectus Supplement. This series may be "reopened," and we may
from time to time issue additional notes of the same series. The notes will
mature (unless previously redeemed) on July 15, 2010. The notes will be issued
only in fully registered form without coupons, in denominations of $1,000 and
integral multiples thereof. The notes will be evidenced by a global note in
book-entry form, except under the limited circumstances described below under
"--Book Entry System and Form of Notes."
The notes will be senior unsecured obligations of HPT and will rank equally
with each other and with all of our other unsecured and unsubordinated
indebtedness outstanding from time to time. The notes will be effectively
subordinated to our mortgages and other secured indebtedness and to indebtedness
and other liabilities of our Subsidiaries. Accordingly, this indebtedness will
have to be satisfied in full before you will be able to realize any value from
the secured or indirectly held properties.
As of March 31, 2000, on an adjusted basis after giving effect to the
issuance of the notes and the application of the proceeds from the sale of the
notes, our total outstanding indebtedness (including under our revolving credit
facility) was approximately $450 million, and the total indebtedness and other
liabilities (excluding certain security deposit obligations and the obligations
to refund guarantee deposits when the operating performance of the related
hotels reaches negotiated rent coverage levels) of our Subsidiaries was less
than $1 million. In addition, our Subsidiaries are guarantors of the credit
facility. The credit facility is currently an unsecured revolving credit
facility in the amount of $300 million. As of March 31, 2000, we had no secured
indebtedness. We and our Subsidiaries may incur additional indebtedness,
including secured indebtedness, subject to the provisions described below under
"--Certain Covenants--Limitations on Incurrence of Debt."
Except as described under "--Certain Covenants" and "--Merger,
Consolidation or Sale" below and under "Description of Debt Securities--Merger,
Consolidation or Sale" and "--Certain Covenants" in the accompanying Prospectus,
the Indenture does not contain any other provisions that would afford you
protection in the event of (1) a highly leveraged or similar transaction
involving us or any of our affiliates, (2) a change of control or (3) a
reorganization, restructuring, merger or similar transaction involving us that
may adversely
S-7
<PAGE>
affect you. In addition, subject to the limitations set forth under "--Certain
Covenants" and "--Merger, Consolidation or Sale" below or under "Description of
Debt Securities--Merger, Consolidation or Sale" and "--Certain Covenants" in the
accompanying Prospectus, we may enter into certain transactions such as the sale
of all or substantially all of our assets or a merger or consolidation that
would increase the amount of our indebtedness or substantially reduce or
eliminate our assets, which might have an adverse effect on our ability to
service our indebtedness, including the notes. We have no present intention of
engaging in a highly leveraged or similar transaction.
Interest and Maturity
The notes will bear interest at the rate per annum set forth on the cover
page of this Prospectus Supplement from July 14, 2000 or from the immediately
preceding Interest Payment Date (as defined below) to which interest has been
paid. Interest is payable semiannually in arrears on each January 15 and July 15
(the "Interest Payment Dates"), commencing January 15, 2001, to the persons in
whose names the notes are registered in the security register applicable to the
notes at the close of business on the date 14 calendar days immediately
preceding the applicable Interest Payment Date (the "Regular Record Date"),
regardless of whether the Regular Record Date is a Business Day. Accrued
interest is also payable on the date of maturity or earlier redemption of the
notes. Interest on the notes will be computed on the basis of a 360-day year of
twelve 30-day months.
Optional Redemption of the Notes
We may redeem the notes in whole at any time or in part from time to time
before they mature. The redemption price will equal the outstanding principal of
the notes being redeemed plus accrued interest and the Make-Whole Amount.
We are required to give notice of such a redemption not less than 30 days
nor more than 60 days prior to the redemption date by first class mail to each
holder's address appearing in the securities register maintained by the Trustee.
In the event we elect to redeem less than all of the notes, the particular notes
to be redeemed will be selected by the Trustee by such method as the Trustee
shall deem fair and appropriate.
We are not required to make any sinking fund or redemption payments prior
to the stated maturity of the notes.
Certain Covenants
Limitations on Incurrence of Debt. We will not, and will not permit any
Subsidiary to, incur any Debt if, immediately after giving effect to the
incurrence of such additional Debt and the application of the proceeds thereof,
the aggregate principal amount of all outstanding Debt of HPT and its
Subsidiaries on a consolidated basis determined in accordance with generally
accepted accounting principles ("GAAP") is greater than 60% of the sum
("Adjusted Total Assets") of (without duplication) (1) the Total Assets of HPT
and its Subsidiaries as of the end of the calendar quarter covered in HPT's
Annual Report on Form 10-K, or the Quarterly Report on Form 10-Q, as the case
may be, most recently filed with the SEC (or, if such filing is not permitted
under the Securities Exchange Act of 1934, as amended, with the Trustee) prior
to the incurrence of such additional Debt and (2) the purchase price of any real
estate assets or mortgages receivable acquired, and the amount of any securities
offering proceeds received (to the extent that such proceeds were not used to
acquire real estate assets or mortgages receivable or used to reduce Debt), by
HPT or any Subsidiary since the end of such calendar quarter, including those
proceeds obtained in connection with the incurrence of such additional Debt.
In addition to the above limitations on the incurrence of Debt, we will
not, and will not permit any Subsidiary to, incur any Secured Debt if,
immediately after giving effect to the incurrence of such additional Secured
Debt and the application of the proceeds thereof, the aggregate principal amount
of all outstanding Secured Debt of HPT and its Subsidiaries on a consolidated
basis is greater than 40% of Adjusted Total Assets.
S-8
<PAGE>
In addition to the above limitations on the incurrence of Debt, we will
not, and will not permit any Subsidiary to, incur any Debt if the ratio of
Consolidated Income Available for Debt Service to the Annual Debt Service for
the four consecutive fiscal quarters most recently ended prior to the date on
which such additional Debt is to be incurred shall have been less than 1.5x, on
a pro forma basis after giving effect thereto and to the application of the
proceeds therefrom, and calculated on the assumption that (1) such Debt and any
other Debt incurred by HPT and its Subsidiaries since the first day of such
four-quarter period and the application of the proceeds therefrom, including to
refinance other Debt, had occurred at the beginning of such period; (2) the
repayment or retirement of any other Debt by HPT and its Subsidiaries since the
first date of such four-quarter period had been repaid or retired at the
beginning of such period (except that, in making such computation, the amount of
Debt under any revolving credit facility shall be computed based upon the
average daily balance of such Debt during such period); (3) in the case of
Acquired Debt or Debt incurred in connection with any acquisition since the
first day of such four-quarter period, the related acquisition had occurred as
of the first day of such period with appropriate adjustments with respect to
such acquisition being included in such pro forma calculation; and (4) in the
case of any acquisition or disposition by HPT or its Subsidiaries of any asset
or group of assets since the first day of such four-quarter period, whether by
merger, stock purchase or sale, or asset purchase or sale, such acquisition or
disposition or any related repayment of Debt had occurred as of the first day of
such period with the appropriate adjustments with respect to such acquisition or
disposition being included in such pro forma calculation. If the Debt giving
rise to the need to make the foregoing calculation or any other Debt incurred
after the first day of the relevant four-quarter period bears interest at a
floating rate then, for purposes of calculating the Annual Debt Service, the
interest rate on such Debt will be computed on a pro forma basis as if the
average interest rate which would have been in effect during the entire such
four-quarter period had been the applicable rate for the entire such period.
Maintenance of Total Unencumbered Assets. We and our Subsidiaries will at
all times maintain Total Unencumbered Assets of not less than 200% of the
aggregate outstanding principal amount of the Unsecured Debt of HPT and its
Subsidiaries on a consolidated basis.
See "Description of Debt Securities--Certain Covenants" in the accompanying
Prospectus for a description of additional covenants applicable to us.
Merger, Consolidation or Sale
The Indenture permits us to consolidate with, or sell, lease or convey all
or substantially all of our assets to, or merge with or into, any other entity,
provided that:
(1) either we are the continuing entity, or the successor entity (if other
than us) formed by or resulting from any such consolidation or merger
or which shall have received the transfer of such assets is an entity
organized and existing under the laws of the United States or any
state thereof and shall expressly assume the due and punctual payment
of the principal of (and premium or the Make-Whole Amount on) and any
interest on all of the notes and the due and punctual performance and
observance of all of the covenants and conditions contained in the
Indenture to be performed by us;
(2) immediately after giving effect to such transaction and treating any
indebtedness which becomes an obligation of HPT or any Subsidiary as a
result thereof as having been incurred by HPT or such Subsidiary at
the time of such transaction, no event of default under the Indenture,
and no event which after notice or the lapse of time, or both, would
become such an event of default, shall have occurred and be
continuing; and
(3) an officers' certificate and legal opinion covering such conditions is
delivered to the Trustee.
S-9
<PAGE>
Events of Default, Notice and Waiver
The Indenture provides that the following events are "events of default"
with respect to the notes:
(1) default for 30 days in the payment of any installment of interest
payable on any note when due and payable;
(2) default in the payment of the principal of (or premium or the
Make-Whole Amount on) any note when due and payable;
(3) default in the performance, or breach, of any covenant of HPT
contained in the Indenture (other than a covenant added to the
Indenture solely for the benefit of a series of debt securities other
than the notes), which continues for 60 days after written notice as
provided in the Indenture;
(4) default under any bond, debenture, note, mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any indebtedness for money borrowed by HPT (or by
any Subsidiary, the repayment for which HPT is directly responsible or
liable as obligor or guarantor) having an aggregate principal amount
outstanding of at least $20,000,000, whether such indebtedness now
exists or shall hereafter be incurred or created, which default shall
have resulted in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have become due
and payable, without such indebtedness having been discharged or such
acceleration having been rescinded or annulled within a period of 10
days after written notice to HPT by the Trustee or to HPT and the
Trustee by the holders of at least 25% in principal amount of the
outstanding notes as provided in the Indenture; or
(5) certain events of bankruptcy, insolvency or reorganization, or court
appointment of a receiver, liquidator or trustee of HPT or any
Significant Subsidiary or for all or substantially all of either of
their property.
Upon the acceleration of notes in accordance with the terms of the
Indenture following the occurrence of an event of default, the principal amount
of the notes, plus accrued and unpaid interest thereon and the Make-Whole
Amount, will become due and payable. See "Description of Debt Securities--Events
of Default, Notice and Waiver" in the accompanying Prospectus for a description
of rights, remedies and other matters relating to events of default.
Discharge, Defeasance and Covenant Defeasance
The provisions of the Indenture relating to defeasance and covenant
defeasance described under "Description of Debt Securities--Discharge,
Defeasance and Covenant Defeasance" in the accompanying Prospectus will apply to
the notes.
Book-Entry System and Form of Notes
The notes will be issued in the form of a single fully registered global
note without coupons that will be deposited with The Depository Trust Company,
New York, New York, and registered in the name of its nominee, Cede & Co. This
means that we will not issue certificates to each owner of notes. One global
note will be issued to DTC, which will keep a computerized record of its
participants whose clients have purchased the notes. The participant will then
keep a record of its clients who purchased the notes. Unless it is exchanged in
whole or in part for a certificated note, the global note may not be
transferred, except that DTC, its nominees and their successors may transfer the
global note as a whole to one another.
Beneficial interests in the global note will be shown on, and transfers of
the global note will be made only through, records maintained by DTC and its
participants.
DTC has provided us with the following information: DTC is a
limited-purpose trust company organized under the New York Banking Law, a
"banking organization" within the meaning of the New York Banking Law, a member
of the United States Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the provisions of Section 17A of the Securities Exchange Act of
1934, as amended. DTC holds securities that its participants ("Direct
S-10
<PAGE>
Participants") deposit with DTC. DTC also facilitates the settlement among
Direct Participants of securities transactions, such as transfers and pledges,
in deposited securities through computerized book-entry changes in the Direct
Participants' accounts. This eliminates the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers (including the Underwriter), banks, trust companies, clearing
corporations and certain other organizations. DTC is owned by a number of its
Direct Participants and by the New York Stock Exchange, Inc., the American Stock
Exchange LLC and the National Association of Securities Dealers, Inc.
DTC's book-entry system is also used by other organizations such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly. The rules that apply to DTC and its Direct Participants are on file
with the SEC.
We expect that, pursuant to procedures established by DTC, ownership of
beneficial interests in the notes evidenced by the global note will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by DTC or its nominee (with respect to beneficial interests of Direct
Participants) and records of Direct Participants (with respect to beneficial
interests of persons who hold through Direct Participants). Neither we nor the
Trustee will have any responsibility or liability for any aspect of the records
of DTC or for maintaining, supervising or reviewing any records of DTC or any of
its Direct Participants relating to beneficial ownership interests in the notes.
The laws of some states require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and laws
may impair your ability to own, pledge or transfer beneficial interests in the
global note.
So long as DTC or its nominee is the registered owner of the global note,
DTC or such nominee, as the case may be, will be considered the sole owner or
holder of the notes represented by the global note for all purposes under the
Indenture. Except as described below, as an owner of a beneficial interest in
notes evidenced by the global note you will not be entitled to have any of the
individual notes represented by such global note registered in your name, you
will not receive or be entitled to receive physical delivery of any such notes
in definitive form and you will not be considered the owner or holder thereof
under the Indenture for any purpose, including with respect to the giving of any
direction, instructions or approvals to the Trustee thereunder. Accordingly, you
must rely on the procedures of DTC and, if you are not a Direct Participant, on
the procedures of the Direct Participant through which you own your interest, to
exercise any rights of a "holder" under the Indenture. We understand that, under
existing industry practice, if we request any action of holders or if an owner
of a beneficial interest in a global note desires to give or take any action
which a holder is entitled to give or take under the Indenture, DTC would
authorize the Direct Participants holding the relevant beneficial interest to
give or take such action, and such Direct Participants would authorize
beneficial owners through such Direct Participants to give or take such actions
or would otherwise act upon the instructions of beneficial owners holding
through them.
Payments of principal, premium, if any, and interest or additional amount,
if any, on individual notes represented by a global note registered in the name
of the holder of the global note or its nominee will be made by the Trustee to
or at the direction of the holder of the global note or its nominee, as the case
may be, as the registered owner of the global note under the Indenture. Under
the terms of the Indenture, we and the Trustee may treat the persons in whose
name notes, including a global note, are registered as the owners thereof for
the purpose of receiving such payments. Consequently, neither we nor the Trustee
has or will have any responsibility or liability for the payment of such amounts
to beneficial owners of notes (including principal, premium, if any, and
interest or additional amount, if any).
DTC's practice is to credit the accounts of relevant Direct Participants on
the applicable payment date in accordance with their respective holdings of
beneficial interests in the relevant security as shown on the records of DTC.
Payments by Direct Participants to the beneficial owners of notes will be
governed by standing instructions and customary practice and will be the
responsibility of DTC's Direct Participants. Redemption notices with respect to
any notes will be sent to the holder of the global note (i.e., DTC, its nominee
or any subsequent holder). If less than all of the
S-11
<PAGE>
notes of any series are to be redeemed, we expect the holder of the global note
to determine the amount of interest of each Direct Participant in the notes to
be redeemed by lot. Neither we, the Trustee, any paying agent nor the security
registrar for such notes will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests in the global note for such notes.
Neither we nor the Trustee will be liable for any delay by the holder of a
global note or DTC in identifying the beneficial owners of notes and we and the
Trustee may conclusively rely on, and will be protected in relying on,
instructions from the holder of a global note or DTC for all purposes.
The notes, which are represented by the global note, will be exchangeable
for certificate notes with the same terms in authorized denominations only if:
o DTC notifies us that it is unwilling or unable to continue as
depositary or if DTC ceases to be a clearing agency registered under
applicable law and a successor depositary is not appointed by us
within 90 days; or
o we determine not to require all of the notes to be represented by a
global note and notify the Trustee of our decision, in which case we
will issue individual notes in denominations of $1,000 and integral
multiples thereof.
Same-Day Settlement and Payment
The Underwriter will make settlement for the notes in immediately available
funds. We will make all payments of principal and interest in respect of the
notes in immediately available funds.
So long as DTC continues to make its "Same-Day Funds Settlement System,"
the notes will trade in DTC's Same-Day Funds Settlement System until maturity or
until the notes are issued in certificated form, and secondary market trading
activity in the notes will therefore be required by DTC to settle in immediately
available funds. We expect that secondary trading in the certificated
securities, if any, will also be settled in immediately available funds. No
assurance can be given as to the effect, if any, of settlement in immediately
available funds on trading activity in the notes.
S-12
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following summary of certain United States Federal income tax
consequences of the purchase, ownership and disposition of the notes is based
upon the Internal Revenue Code of 1986, as amended (the "Tax Code"), United
States treasury regulations, and rulings and decisions now in effect, all of
which are subject to change (including changes in effective dates) or possible
differing interpretations. The following discussion deals only with notes held
as capital assets and does not purport to deal with persons in special tax
situations, such as financial institutions, banks, insurance companies,
regulated investment companies, dealers in securities or currencies, persons
holding notes as a hedge against currency risks or as a position in a "straddle"
for tax purposes, or persons whose functional currency is not the United States
dollar. It also does not deal with holders other than original purchasers
(except where otherwise specifically noted). Before purchasing the notes, you
should consult your own tax advisor concerning the application of United States
Federal income tax laws to your particular situation as well as any consequences
of the purchase, ownership and disposition of the notes arising under the laws
of any other taxing jurisdiction.
"U.S. Holder" means a beneficial owner of a note that is for United States
Federal income tax purposes:
(1) a citizen or resident of the United States,
(2) a corporation or partnership (or other entity treated as a corporation
or partnership for United States Federal income tax purposes) created
or organized in or under the laws of the United States, any State
thereof or the District of Columbia (unless otherwise provided by
United States treasury regulations),
(3) an estate the income of which is subject to United States Federal
income taxation regardless of its source,
(4) a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or
more United States persons have the authority to control all
substantial decisions of the trust (or certain electing trusts in
existence on August 20, 1996 to the extent provided in United States
treasury regulations), or
(5) any other person whose income or gain in respect of a note is
effectively connected with the conduct of a United States trade or
business,
in each case except as otherwise provided under the provisions of an applicable
tax treaty. A "non-U.S. Holder" means a beneficial owner of a note that is not a
U.S. Holder.
The Notes
For United States Federal income tax purposes, each note will be treated as
indebtedness issued by HPT.
U.S. Holders
If you are a U.S. Holder:
Payments of Interest. Interest on a note will generally be includable in
your gross income as ordinary interest income at the time such payments are
received or accrued in accordance with your regular method of tax accounting.
Such interest will be treated as U.S. source income for United States Federal
income tax purposes. Purchase price for a note that is allocable to prior
accrued interest may be treated as offsetting a portion of the interest income
from the next scheduled interest payment on the note.
Disposition of a Note. Upon the sale, exchange, redemption, retirement or
other disposition of a note, you generally will recognize taxable gain or loss
in an amount equal to the difference, if any, between the amount realized upon
such sale, exchange, redemption, retirement, or other disposition (other than
amounts representing
S-13
<PAGE>
accrued and unpaid interest which will be taxable as interest income) and your
adjusted tax basis in the note. Such gain or loss generally will be capital gain
or loss, and will be long-term capital gain or loss if you have held the note
for more than one year at the time of disposition; preferential rates of tax may
apply to gains recognized upon the disposition of notes held for more than one
year.
Gain or Income Received by a Foreign Corporation. A foreign corporation
whose income or gain in respect of a note is effectively connected with the
conduct of a United States trade or business, in addition to being subject to
regular United States Federal income tax, may be subject to a branch profits tax
equal to 30% of its "effectively connected earnings and profits" within the
meaning of the Tax Code, for the taxable year, as adjusted for certain items,
unless it qualifies for a lower rate under an applicable tax treaty (as modified
by the branch profits tax rules under the Tax Code).
Non-U.S. Holders
If you are a non-U.S. Holder:
General. Generally, you will not be subject to United States Federal income
taxes on payments of principal, premium (if any), or interest on a note, or on
any gain upon disposition or retirement of a note, if (1) you do not own
directly or indirectly 10% or more of the shares of beneficial interest of HPT
and (2) the last United States payor in the chain of payment (the "Withholding
Agent") has received from you in the year in which a payment of interest or
principal occurs, or in either of the two preceding calendar years, a statement
signed by you under penalties of perjury certifying that you are not a U.S.
Holder and providing your name and address. You may make this statement on an
Internal Revenue Service Form W-8 or a substantially similar form, and you must
inform the Withholding Agent of any change in the information on the statement
within 30 days of such change. If you hold a note through a securities clearing
organization or certain other financial institutions, the organization or
institution may provide a signed statement to the Withholding Agent. However, in
such case, the signed statement must be accompanied by a copy of the applicable
IRS Form W-8 or substantially similar form you provided to the organization or
institution. Interest received or gain recognized by you which does not qualify
for exemption from taxation will be subject to United States Federal income tax
and withholding tax at a rate of 30% unless reduced or eliminated by an
applicable tax treaty.
New Treasury Regulations. United States treasury regulations issued on
October 6, 1997 alter the withholding rules on interest paid to a non-U.S.
Holder of a note. Under subsequent administrative guidance, these new
regulations are generally effective with respect to interest paid after December
31, 2000. Withholding will generally be excused under these new regulations if
you own (directly or indirectly) less than 10% of the shares of beneficial
interest of HPT and if you execute the applicable IRS Form W-8 or substantially
similar form. Moreover, under the new regulations, to obtain a reduced rate of
withholding under an income tax treaty, you generally will be required to
provide an applicable IRS Form W-8 or substantially similar form certifying your
entitlement to benefits under the treaty. The new regulations also provide
special rules to determine whether, for purposes of determining the
applicability of a tax treaty, interest paid to a non-U.S. Holder that is an
entity should be treated as paid to the entity or to those holding the ownership
interests in that entity, and whether such entity or such holders in the entity
are entitled to benefits under the tax treaty. The new regulations also alter
the information reporting and backup withholding rules applicable to non-U.S.
Holders and, among other things, provide certain presumptions under which a
non-U.S. Holder is subject to backup withholding and information reporting until
certification of non-U.S. status is received from such non-U.S. Holder. The
foregoing is not intended to be a complete discussion of the new regulations,
and we urge you to consult your tax advisor regarding the effect of the new
regulations on an investment in the notes.
Estate Taxes. The notes will not be includable in your estate unless you
own directly or indirectly 10% or more of the shares of beneficial interest of
HPT or, at the time of your death, payments in respect of the notes would have
been effectively connected with your conduct of a trade or business in the
United States.
S-14
<PAGE>
Backup Withholding
Backup withholding of United States Federal income tax at a rate of 31% may
apply to payments made in respect of the notes if you are not an "exempt
recipient" and you fail to provide certain identifying information (such as your
taxpayer identification number) in the required manner. Generally, individuals
are not exempt recipients, whereas corporations and certain other entities
generally are exempt recipients. If you are a U.S. Holder, payments made to you
in respect of the notes must be reported to the IRS, unless you are an exempt
recipient or establish an exemption. Compliance with the identification
procedures described in the preceding section would establish an exemption from
backup withholding for you if you are a non-U.S. Holder and are not an exempt
recipient.
In addition, if you sell a note through a broker, the broker must withhold
31% of your entire sales proceeds, unless either (1) the broker determines that
the seller is a corporation or other exempt recipient or (2) you provide, in the
required manner, certain identifying information and, if you are a non-U.S.
Holder, you certify that you are a non-U.S. Holder (and certain other conditions
are met). Such a sale must also be reported by the broker to the IRS, unless
either (1) the broker determines that you are an exempt recipient or (2) you
certify your non-U.S. status (and certain other conditions are met).
Certification of your non-U.S. status if you are a non-U.S. Holder would be made
normally on an IRS Form W-8 or substantially similar form under penalties of
perjury, although in certain cases it may be possible to submit other
documentary evidence.
Any amounts withheld under the backup withholding rules from a payment to
you would be allowed as a refund or a credit against your United States Federal
income tax provided you furnish the required information to the IRS.
S-15
<PAGE>
UNDERWRITING
Subject to the terms and conditions contained in the Purchase Agreement
that relates to the notes, we have agreed to sell to Donaldson, Lufkin &
Jenrette Securities Corporation (the "Underwriter"), and the Underwriter has
agreed to purchase from us, all of the notes offered hereby.
The Purchase Agreement states that the obligation of the Underwriter to
purchase and accept delivery of the notes offered by this Prospectus Supplement
is subject to the approval of certain legal matters by its counsel and certain
other conditions. Pursuant to the Purchase Agreement, the Underwriter has agreed
to purchase all of the notes if any of them are purchased.
The Underwriter has told us they intend to offer the notes to the public
initially at the public offering price that appears on the cover page of this
Prospectus Supplement. After the completion of the initial offering of the
notes, the Underwriter may change the offering price and other selling terms at
any time, without notice.
We have agreed to indemnify the Underwriter against certain liabilities,
including liabilities under the Securities Act of 1933, as amended (the
"Securities Act"). Alternately, we may contribute to payments that the
Underwriter may be required to make as a result of these liabilities. These
indemnification provisions would require us to hold the Underwriter harmless
from and against any and all losses, claims, damages, liabilities and judgments
caused by any false statement of or any failure to state a material fact in this
Prospectus Supplement, the accompanying Prospectus or the documents incorporated
by reference therein. The indemnification provisions would not apply to false
statements or omissions that are based on information that is furnished in
writing to us by the Underwriter expressly for use in this Prospectus Supplement
or the Prospectus and are subject to certain other limitations.
In connection with the offering of the notes, the Underwriter may engage in
transactions that stabilize, maintain or otherwise affect the price of the
notes. Specifically, the Underwriter may overallot the offering, creating a
syndicate short position. The Underwriter may bid for and purchase notes in the
open market after the distribution has been completed to cover syndicate short
positions. In addition, the Underwriter may bid for and purchase notes in the
open market to stabilize the price of the notes. These activities may stabilize
or maintain the market price of the notes above independent market levels. The
Underwriter is not required to engage in these activities and may end these
activities at any time.
Prior to this offering, there has been no public market for the notes. The
Underwriter has informed us that it may make a market in the notes from time to
time. The Underwriter is not obligated to do this, and it may discontinue this
market making at any time without notice. Therefore, no assurance can be given
concerning the liquidity of the trading market for the notes or that an active
market will develop. We do not intend to apply for the notes to be listed on any
national securities exchange or national securities quotation system.
S-16
<PAGE>
LEGAL MATTERS
Sullivan & Worcester LLP, Boston, Massachusetts, our lawyers, have issued
an opinion about the legality of the notes. Milbank, Tweed, Hadley & McCloy LLP,
New York, New York, the Underwriter's lawyers, will also issue an opinion for
the Underwriter. Sullivan & Worcester LLP and Milbank, Tweed, Hadley & McCloy
LLP will rely, as to certain matters of Maryland law, upon an opinion of Ballard
Spahr Andrews & Ingersoll, LLP, Baltimore, Maryland. Barry M. Portnoy was a
partner in the firm of Sullivan & Worcester LLP until March 31, 1997 and is one
of our Managing Trustees. Mr. Portnoy is also a Managing Trustee of HRPT
Properties Trust and Senior Housing Properties Trust and a director and 50%
owner of REIT Management & Research, Inc., the investment advisor to HPT.
Sullivan & Worcester LLP represents HRPT Properties Trust, Senior Housing
Properties Trust, REIT Management & Research, Inc. and certain of their
affiliates on various matters.
EXPERTS
The financial statements and schedule included in HPT's Form 10-K for the
year ended December 31, 1999 incorporated in this prospectus and elsewhere in
the registration statement have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their reports with respect thereto, and are
included herein in reliance upon the authority of said firm as expert in giving
said reports.
S-17
<PAGE>
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus Supplement, and information that we
subsequently file with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below which were
filed with the SEC under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"):
o Annual Report on Form 10-K for the year ended December 31, 1999;
o Quarterly Report on Form 10-Q for the quarter ended March 31, 2000;
and
o Current Reports on Form 8-K dated May 16, 2000 and July 11, 2000.
We also incorporate by reference each of the following documents that we
will file with the SEC after the date of this Prospectus Supplement but before
the end of the notes offering:
o Reports filed under Sections 13(a) and (c) of the Exchange Act;
o Definitive proxy or information statements filed under Section 14 of
the Exchange Act in connection with any subsequent shareholders'
meeting; and
o Any reports filed under Section 15(d) of the Exchange Act.
You may request a copy of any of the filings (excluding exhibits), at no
cost, by writing or telephoning us at the following address:
Investor Relations
Hospitality Properties Trust
400 Centre Street
Newton, Massachusetts 02458
(617) 964-8389
WHERE YOU CAN FIND MORE INFORMATION
You may read and copy any material that we file with the SEC at the SEC's
Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. You may also access our SEC filings over the Internet at
the SEC's site at http://www.sec.gov.
S-18
<PAGE>
FORWARD-LOOKING STATEMENTS
Statements contained in this Prospectus Supplement and the accompanying
Prospectus, including the documents that are incorporated by reference, that are
not historical facts are forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Also, when we use any of the words
"believe," "expect," "anticipate" or similar expressions, we are making
forward-looking statements. This Prospectus Supplement contains forward-looking
statements including statements regarding the security of our rental income and
our leases, the rebranding of certain hotels, our intent to purchase hotels and
make future investments, our access to capital and the ability of our hotels to
compete effectively. We have based these forward-looking statements on possible
or assumed future results of our operations. These forward-looking statements
are subject to certain risks and uncertainties which could cause actual results
or events to differ materially from those we anticipate or project. Prospective
purchasers should not place undue reliance on these forward-looking statements.
We undertake no obligation to update or revise any forward-looking statements as
a result of new information, future events or otherwise.
You should rely only on the information contained or incorporated by
reference in this Prospectus Supplement or the accompanying Prospectus. We have
not, and the Underwriter has not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not, and the
Underwriter is not, making an offer to sell these securities in any jurisdiction
where the offer or sale is not permitted. You should assume that the information
appearing in this Prospectus Supplement or the accompanying Prospectus, as well
as information we previously filed with the SEC and incorporated by reference,
is accurate as of the date on the front cover of this Prospectus Supplement
only. Our business, financial condition, results of operations and prospects may
have changed since that date.
The Declaration of Trust of HPT, amended and restated on August 21, 1995, a
copy of which, together with all amendments thereto, is duly filed in the office
of the Department of Assessments and Taxation of the State of Maryland, provides
that the name "Hospitality Properties Trust" refers to the trustees under the
Declaration of Trust, as so amended, collectively as trustees, but not
individually or personally, and that no trustee, officer, shareholder, employee
or agent of HPT shall be held to any personal liability, jointly or severally,
for any obligation of, or claim against, HPT. All persons dealing with HPT, in
any way, shall look only to the assets of HPT for the payment of any sum or the
performance of any obligation.
S-19
<PAGE>
GLOSSARY
"Acquired Debt" means Debt of a person or entity (1) existing at the time
such person becomes a Subsidiary or (2) assumed in connection with the
acquisition of assets from such person or entity, in each case, other than Debt
incurred in connection with, or in contemplation of, such person or entity
becoming a Subsidiary or such acquisition. Acquired Debt is deemed to be
incurred on the date of the related acquisition of assets from any person or
entity or the date the acquired entity becomes a Subsidiary.
"Annual Debt Service" as of any date means the maximum amount which is
expensed in any 12-month period for interest on Debt of HPT and its
Subsidiaries.
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in The City of New York are required or authorized to
close.
"Capital Stock" means, with respect to any entity, any capital stock
(including preferred stock), shares, interests, participation or other ownership
interests (however designated) of such entity and any rights (other than debt
securities convertible into or exchangeable for capital stock), warrants or
options to purchase any thereof.
"Consolidated Income Available for Debt Service" for any period means
Earnings from Operations of HPT and its Subsidiaries plus amounts which have
been deducted, and minus amounts which have been added, for the following
(without duplication): (1) interest on Debt of HPT and its Subsidiaries, (2)
cash reserves made by lessees as required by our leases for periodic replacement
and refurbishment of our assets, (3) provision for taxes of HPT and its
Subsidiaries based on income, (4) amortization of debt discount and deferred
financing costs, (5) provisions for gains and losses on properties and property
depreciation and amortization, (6) the effect of any noncash charge resulting
from a change in accounting principles in determining Earnings from Operations
for such period and (7) amortization of deferred charges.
"Debt" of HPT or any Subsidiary means, without duplication, any
indebtedness of HPT or any Subsidiary, whether or not contingent, in respect of
(1) borrowed money or evidenced by bonds, notes, debentures or similar
instruments,
(2) indebtedness for borrowed money secured by any encumbrance existing on
property owned by HPT or any Subsidiary, to the extent of the lesser
of (x) the amount of indebtedness so secured and (y) the fair market
value of the property subject to such encumbrance,
(3) the reimbursement obligations, contingent or otherwise, in connection
with any letters of credit actually issued (other than letters of
credit issued to provide credit enhancement or support with respect to
other indebtedness of HPT or any Subsidiary otherwise reflected as
Debt hereunder) or amounts representing the balance deferred and
unpaid of the purchase price of any property or services, except any
such balance that constitutes an accrued expense or trade payable, or
all conditional sale obligations or obligations under any title
retention agreement,
(4) the principal amount of all obligations of HPT or any Subsidiary with
respect to redemption, repayment or other repurchase of any
Disqualified Stock, or
(5) any lease of property by HPT or any Subsidiary as lessee which is
reflected on HPT's consolidated balance sheet as a capitalized lease
in accordance with GAAP, to the extent, in the case of items of
indebtedness under (1) through (3) above, that any such items (other
than letters of credit) would appear as a liability on HPT's
consolidated balance sheet in accordance with GAAP.
Debt also includes, to the extent not otherwise included, any obligation by HPT
or any Subsidiary to be liable for, or to pay, as obligor, guarantor or
otherwise (other than for purposes of collection in the ordinary course of
S-20
<PAGE>
business), Debt of another Person (other than HPT or any Subsidiary) (it being
understood that Debt shall be deemed to be incurred by HPT or any Subsidiary
whenever HPT or such Subsidiary shall create, assume, guarantee or otherwise
become liable in respect thereof).
"Disqualified Stock" means, with respect to any entity, any Capital Stock
of such entity which by the terms of such Capital Stock (or by the terms of any
security into which it is convertible or for which it is exchangeable or
exercisable), upon the happening of any event or otherwise (1) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise
(other than Capital Stock which is redeemable solely in exchange for common
stock or shares), (2) is convertible into or exchangeable or exercisable for
Debt or Disqualified Stock, or (3) is redeemable at the option of the holder
thereof, in whole or in part (other than Capital Stock which is redeemable
solely in exchange for common stock or shares), in each case on or prior to the
stated maturity of the notes.
"Earnings from Operations" for any period means net earnings excluding
gains and losses on sales of investments, extraordinary items and property
valuation losses, as reflected in the financial statements of HPT and its
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP.
"Make-Whole Amount" means, in connection with any optional redemption or
accelerated payment of any notes, the excess, if any, of (i) the aggregate
present value as of the date of such redemption or accelerated payment of each
dollar of principal being redeemed or paid and the amount of interest (exclusive
of interest accrued to the date of redemption or accelerated payment) that would
have been payable in respect of such dollar if such redemption or accelerated
payment had not been made, determined by discounting, on a semiannual basis,
such principal and interest at the Reinvestment Rate (determined on the third
Business Day preceding the date such notice of redemption is given or
declaration of acceleration is made) from the respective dates on which such
principal and interest would have been payable if such redemption or accelerated
payment had not been made, over (ii) the aggregate principal amount of the Notes
being redeemed or paid.
"Reinvestment Rate" means a rate per annum equal to the sum of 0.50% plus
the yield on treasury securities at constant maturity under the heading "Week
Ending" published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the remaining life to maturity, as of the payment date of the
principal being redeemed or paid. If no maturity exactly corresponds to such
maturity, yields for the two published maturities most closely corresponding to
such maturity shall be calculated pursuant to the immediately preceding sentence
and the Reinvestment Rate shall be interpolated or extrapolated from such yields
on a straight-line basis, rounding in each of such relevant periods to the
nearest month. For purposes of calculating the Reinvestment Rate, the most
recent Statistical Release published prior to the date of determination of the
Make-Whole Amount shall be used.
"Secured Debt" means Debt secured by any mortgage, lien, charge, pledge or
security interest of any kind.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" (within the meaning of Regulation S-X, promulgated by the SEC under
the Securities Act of 1933, as amended) of HPT.
"Statistical Release" means the statistical release designated "H.15(519)"
or any successor publication which is published weekly by the Federal Reserve
System and which establishes yields on actively traded United States government
securities adjusted to constant maturities or, if such statistical release is
not published at the time of any determination under the Indenture, then any
publicly available source of similar market data which shall be designated by
the Company.
"Subsidiary" means any corporation or other entity of which a majority of
(1) the voting power of the voting equity securities or (2) the outstanding
equity interests of which are owned, directly or indirectly, by HPT or one or
more other Subsidiaries of HPT. For the purposes of this definition, "voting
equity securities" means equity securities having voting power for the election
of directors, whether at all times or only so long as no senior class of
security has such voting power by reason of any contingency.
S-21
<PAGE>
"Total Assets" as of any date means the sum of (1) the Undepreciated Real
Estate Assets and (2) all other assets of HPT and its Subsidiaries determined in
accordance with GAAP (but excluding accounts receivable and intangibles).
"Total Unencumbered Assets" means the sum of (1) those Undepreciated Real
Estate Assets not subject to an encumbrance for borrowed money and (2) all other
assets of HPT and its Subsidiaries not subject to an encumbrance for borrowed
money determined in accordance with GAAP (but excluding accounts receivable and
intangibles).
"Undepreciated Real Estate Assets" as of any date means the cost (original
cost plus capital improvements) of real estate assets of HPT and its
Subsidiaries on such date, before depreciation and amortization determined on a
consolidated basis in accordance with GAAP.
"Unsecured Debt" means Debt which is not secured by any of the properties
of HPT or any Subsidiary.
S-22
<PAGE>
================================================================================
July 11, 2000
Hospitality Properties Trust
$35,000,000
9.125% Senior Notes due 2010
------------------------
PROSPECTUS SUPPLEMENT
------------------------
Donaldson, Lufkin & Jenrette
--------------------------------------------------------------------------------
We have not authorized any dealer, salesperson or other person to give you
written information other than this Prospectus Supplement or the Prospectus in
connection with the offering made by this Prospectus Supplement. You must not
rely on unauthorized information. Neither this Prospectus Supplement nor the
Prospectus is an offer to sell these notes or our solicitation of your offer to
buy the notes in any jurisdiction where that would not be permitted or legal.
Neither the delivery of this Prospectus Supplement and Prospectus nor any sales
made hereunder after the date of the Prospectus Supplement shall create an
implication that the information contained herein or the affairs of the Company
have not changed since the date hereof.
--------------------------------------------------------------------------------
