Item 8.01. Other Events.

On January 25, 2006, Hospitality Properties Trust (the “Company”) announced that it has agreed to acquire seven hotels from Felcor Lodging Trust Incorporated and two hotels from InterContinental Hotels Group, plc (“IHG”) for an aggregate of $196.2 million. The nine hotels to be purchased include five upscale Crowne Plaza Hotels, one full service Holiday Inn Select Hotel, two upscale, extended stay Staybridge Suites Hotels and one Holiday Inn SunSpree Resort Hotel. These hotels have a total of 2,712 rooms/suites and over 68,000 square feet of meeting space. Eight of the hotels are located in three states in the United States (2 hotels in California, 2 hotels in Georgia and 4 hotels in Texas), and the Holiday Inn SunSpree Resort Hotel is located in Jamaica. The transactions announced were effective Friday, January 20, 2006, except the closing for the Jamaican hotel which will be delayed pending certain third party approvals, such as Jamaican tax and regulatory approval. The Company funded the acquisition of the eight U.S. hotels by drawing under its unsecured revolving bank credit facility.

Simultaneously with this purchase, the Company entered into a long term management contract for the eight U.S. hotels with a subsidiary of IHG. Because of tax law issues affecting the Holiday Inn SunSpree Resort in Jamaica, it will be leased to a separate subsidiary of IHG. The management contract for the eight U.S. hotels and the lease, once entered into, will be supported by a limited, partial guaranty from IHG and have combined renewal options. Further, once the lease relating to the Jamaican hotel is entered into, the obligations to pay owner's priority return under the management contract relating to the eight U.S. hotels will be supported by a limited, partial guaranty from the IHG subsidiary tenant. The management contract has and the lease, once entered into, will have terms similar to other contracts entered by the Company including: initial terms of 25 years, plus two consecutive 15 year renewal options; escrowed reserves for anticipated capital expenditures; subordination of IHG management fees to the payment of defined owner’s priority returns to the Company; and a limited guaranty from IHG for the rent and certain priority returns to the Company.

In addition to the purchase price, the Company will invest $25.1 million in these hotels during the three years following the closing to fund capital improvements. The Company’s annual owner’s priority payments, which are guaranteed by IHG, will be initially $15.8 million/year in 2006, increase to $17.8 million/year in 2007, $18.7 million/year in 2008 and approximately $19.0 million/year after the full $25.1 million of planned hotel improvements are funded. The Company may also receive additional non-guaranteed priority payments, a percentage of gross revenue increases at these hotels starting in 2008 and the cash flow remaining after payment of management fees to IHG at the managed hotels. 

The acquisition of the Jamaican hotel represents the first time the Company has agreed to purchase a hotel located in Jamaica. Jamaica and most other countries generally do not provide the full tax benefits available to real estate investment trusts, or REITs, in the USA. Nonetheless, the Company expects it may reduce its taxes due in Jamaica through 2015 as a result of certain tax concessions granted by the Government of Jamaica to promote investment in its tourism industry. Also, to reduce the risks to the Company which may arise from changes in currency exchange rates, the purchase price and the rent for the Jamaica hotel were set and will be paid in U.S. dollars.

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