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Based upon that evaluation, our Managing Trustees, our President and Chief Investment Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.
−Removed: There have been no changes in our internal control over financial reporting during the quarter ended March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
+Added: There have been no changes in our internal control over financial reporting during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Warning Concerning Forward-Looking Statements
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• The likelihood and extent to which our managers and tenants will pay the contractual amounts of returns, rents or other obligations due to us,
−Removed: • Our ability to maintain sufficient liquidity during the duration of the COVID-19 pandemic and any resulting economic conditions,
+Added: • Our ability to maintain sufficient liquidity during the duration of the COVID-19 pandemic, increasing interest rates and any resulting economic conditions,
• If and when hotel business will return to historical pre-pandemic levels and whether any improved conditions are sustained,
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Risks, uncertainties and other factors that could have a material adverse effect on our forward-looking statements and upon our business, results of operations, financial condition, FFO, Normalized FFO, cash flows, liquidity and prospects include, but are not limited to:
−Removed: • The impact of economic conditions, including the impact of the COVID-19 pandemic, and the capital markets on us and our managers and tenants,
+Added: • The impact of economic conditions, including the impact of the COVID-19 pandemic, increasing interest rates, inflation, labor costs and availability, and possible economic recession and the capital markets on us and our managers and tenants,
• Competition within the real estate, hotel, transportation and travel center and other industries in which our managers and tenants operate, particularly in those markets in which our properties are located,
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We may be unable to pay our debt obligations or to increase or maintain our current rate of distributions on our common shares and future distributions may be reduced or eliminated,
−Removed: • Sonesta operated 256 of our 298 hotels as of March 31, 2022, many of which were transitioned to Sonesta over the past year.
−Removed: Transitioning hotels to another operator is disruptive to the hotels’ operations and requires significant capital investment.
+Added: • Sonesta operated 205 of our 247 hotels as of June 30, 2022.
If Sonesta were to fail to provide quality services and amenities or to maintain a quality brand, our income from these properties may be adversely affected.
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If other operators or guarantors do not honor their obligations, we may seek to terminate our arrangements with them or other actions to enforce our rights,
−Removed: • Recent improvements in lodging demand may not be sustained, may stall or could decline further and lodging demand may fail to return to historic pre-pandemic levels,
+Added: • Recent improvements in lodging demand may not be sustained, may stall or could decline and lodging demand may fail to return to historic pre-pandemic levels,
• If general economic activity in the country declines, the operating results of certain of our properties may decline, the financial results of our managers and our tenants may suffer and these managers and tenants may be unable to pay our returns or rents.
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• Hotel and other competitive forms of temporary lodging supply have been increasing and may affect our hotel operators’ ability to grow ADR and occupancy, and ADR and occupancy could decline due to increased competition which may cause our hotel operators to become unable to pay our returns or rents,
−Removed: • If the current level of commercial activity in the country declines, including as a result of the COVID-19 pandemic, if the price of diesel fuel increases significantly, if fuel conservation measures are increased, if freight business is directed away from trucking, if TA is unable to effectively compete or operate its business, if fuel efficiencies, the use of alternative fuels or energy sources or transportation technologies reduce the demand for products and services TA sells, if TA is unable to make substantial capital investments or for various other reasons, TA may become unable to pay current and deferred rents due to us,
+Added: • If the current level of commercial activity in the country declines, including as a result of the COVID-19 pandemic, inflation or possible economic recession, if the price of diesel fuel increases significantly, if fuel conservation measures are increased, if freight business is directed away from trucking, if TA is unable to effectively compete or operate its business, if fuel efficiencies, the use of alternative fuels or energy sources or transportation technologies reduce the demand for products and services TA sells, if TA is unable to make substantial capital investments or for various other reasons, TA may become unable to pay current and deferred rents due to us,
• Our ability to grow our business and increase our distributions depends in large part upon our ability to buy properties that generate returns or can be leased for rents which exceed our operating and capital costs.
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• Market conditions may cause the process of selling properties to continue to take longer than previously expected.
−Removed: We may not complete the sales of any properties we currently plan to sell, and we may determine to sell fewer properties.
+Added: We may not complete the sales of any properties we plan to sell, and we may determine to sell fewer properties.
Also, we may sell assets at prices that are less than we expect and less than their carrying values and we may incur losses on these sales or with respect to these assets,
• Contingencies in our pending sale agreements may not be satisfied and any expected sales and any related management or lease arrangements we expect to enter may not occur, may be delayed or the terms of such transactions or arrangements may change,
−Removed: • As of May 3, 2022, we had approximately $916,106 of cash or cash equivalents.
+Added: • As of August 3, 2022, we had approximately $790,011 of cash or cash equivalents.
This statement may imply that we have sufficient working capital and liquidity to meet our obligations and fund our business and investments.
However, the amounts we receive from our operators may be insufficient to operate our business profitably.
−Removed: Certain tenants have requested and we have granted certain rent relief and these requests could increase.
In addition, our managers and tenants may not be able to fund owner's priority returns and rents due to us from operating our properties or from other resources.
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Accordingly, we may not have sufficient working capital or liquidity,
−Removed: • Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions.
−Removed: The ratio of income available for debt service to debt service was below the 1.5x requirement under our public debt covenants as of March 31, 2022.
−Removed: We are currently unable to incur additional debt while this ratio is below 1.5x.
−Removed: Our ability to incur additional debt may be limited for an extended period of time.
−Removed: We may not have any immediately available borrowing capacity to meet any funding needs beyond our cash on hand if our operating results and financial condition are significantly and adversely impacted by current economic conditions or otherwise.
−Removed: If we cannot incur additional debt, we may be forced to raise additional sources of capital or take other measures to maintain adequate liquidity and we may not succeed in raising any capital we may need and any capital we may obtain may be expensive,
−Removed: • We expect the borrowings under our revolving credit facility to strengthen our financial position;
−Removed: however, we may not obtain the financial flexibility we expect due to the ongoing COVID-19 pandemic or for other reasons,
+Added: • Continued availability of borrowings under our revolving credit facility is subject to our satisfying certain financial covenants and other credit facility conditions that we may be unable to satisfy,
• We may be unable to repay our debt obligations when they become due.
+Added: Rising interest rates and other factors could cause real estate and capital market conditions to deteriorate.
Also, our revolving credit facility matures on January 15, 2023 and we may not be able to meet the conditions required to exercise the remaining extension option available to us under the agreement or be able to refinance the balance with new debt,
+Added: • Although we met the minimum financial covenant levels under our senior notes indentures as of June 30, 2022, the margin by which we satisfied some of those covenants was relatively small.
+Added: We may be unable to meet these requirements in future periods and these requirements may continue to restrict or limit our ability to incur additional debt,
• We intend to conduct our business activities in a manner that will afford us reasonable access to capital for investment and financing activities.
−Removed: However, we may not succeed in this regard and we may not have reasonable access to capital, including due to the COVID-19 pandemic and the resulting economic conditions.
−Removed: If challenging market conditions last for a long period or worsen, our managers and tenants may experience liquidity constraints and as a result may be unable or unwilling to pay returns or rents to us and our ability to operate our business effectively may be challenged,
+Added: However, we may not succeed in this regard and we may not have reasonable access to capital, including due to the COVID-19 pandemic, capital market disruptions, increasing interest rates, current inflationary conditions and a possible recession.
+Added: If challenging market conditions last for a long period or worsen or if a recession occurs, our managers and tenants may experience liquidity constraints and as a result may be unable or unwilling to pay returns or rents to us and our ability to operate our business effectively may be challenged,
• Hotels require significant capital investments to remain competitive.
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However, the advantages we believe we may realize from these relationships may not materialize.
−Removed: Currently unexpected results could occur due to many different circumstances, some of which are beyond our control, such as pandemics, acts of terrorism, war or other hostilities, pandemics, natural disasters, climate change and climate related events, changes in our tenants’ financial conditions, the market demand for leased space or changes in capital markets or the economy generally, including impacts from inflation.
+Added: Currently unexpected results could occur due to many different circumstances, some of which are beyond our control, such as economic conditions, including increasing interest rates, high inflation and a possible recession, other changes in capital markets or the economy generally, pandemics, acts of terrorism, war or other hostilities, pandemics, natural disasters, climate change and climate related events, changes in our tenants’ financial conditions or the market demand for leased space.
The information contained elsewhere in this Quarterly Report on Form 10-Q, our 2021 Annual Report or in our other filings with the SEC, including under the caption “Risk Factors,” or incorporated herein or therein, identifies other important factors that could cause differences from our forward-looking statements.
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Part II Other Information
+Added: There have been no material changes to risk factors from those we previously disclosed in our 2021 Annual Report.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.