VANCOUVER, Nov. 26, 2014 /PRNewswire/ - American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN;OTCQX: AHOTF) today announced the completion of its previously announced acquisition of a portfolio of four branded hotel properties (the "Acquisition Properties") located in North Carolina and Florida for an aggregate purchase price of US$41.0 million (or approximately $116,000 per room), excluding US$2.5 million for brand mandated property improvement plans (the "PIPs") and before customary closing and post-acquisition adjustments.
The Acquisition Properties contain a total of 353 guestrooms and are comprised of three Marriott branded properties (a 94-room Courtyard by Marriott hotel in Statesville, North Carolina, an 83-room Fairfield Inn & Suites hotel in Melbourne, Florida and a 96-room Fairfield Inn & Suites hotel in Titusville, Florida) and one Hilton branded property (an 80-room Hampton Inn in Statesville, North Carolina). The properties are all located along major U.S. Interstate Highways near transportation hubs and other significant demand generators.
AHIP funded the purchase price for the acquisition and the financing of the PIPs using a combination of cash on hand and a new US$26.1 million CMBS mortgage. The new CMBS mortgage will be for a 10-year term, interest-only for the first seven years and will carry a fixed interest rate of 4.27% for the entire term. The lender has also provided an FF&E reserve waiver for the first 24 months.
Robert O'Neill, AHIP's Chief Executive Officer, commented: "These high-quality and well-maintained properties have been purchased at a price below our estimate of replacement cost in strong transportation-oriented markets with solid underlying fundamentals. We intend to capitalize on the ongoing growth in the U.S. hotel industry and continue to utilize the availability of low cost CMBS financing to fund a steady pipeline of acquisitions and provide stable distributions to our unitholders. After the completion of this accretive transaction, I am pleased to report that we have successfully deployed the cash proceeds from the October 2014 bought deal unit offering."
The Acquisition Properties will be managed for AHIP by its exclusive hotel manager, Tower Rock Hotels & Resorts Inc., a wholly owned subsidiary of O'Neill Hotels & Resorts Ltd.
Certain statements contained in this news release may constitute forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as "anticipate", "plan", "expect", "may", "will", "intend", "should", and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. Forward-looking statements in this news release include, without limitation, the following: references to the purchase and closing costs of the Acquisition Properties; local lodging demand generators; the completion and estimated costs of the PIPs; the degree to which the Acquisition Properties are accretive; the future growth of the local lodging markets and the U.S. hotel industry overall; the availability of accretive acquisition opportunities; and future availability of low cost CMBS financing.
Forward-looking information is based on a number of key expectations and assumptions made by AHIP, including, without limitation: a reasonably stable North American economy and stock market and the ability to successfully integrate the Acquisition Properties. Although the forward-looking information contained in this news release is based on what AHIP's management believes to be reasonable assumptions, AHIP cannot assure investors that actual results will be consistent with such information.
Forward-looking information reflects current expectations of AHIP's management regarding future events and operating performance as of the date of this news release. Such information involves significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not such results will be achieved. Actual results could differ materially from those currently anticipated due to a number of factors and risks. These include, without limitation, those factors that can be found under "Risk Factors" in AHIP's Annual Information Form dated March 26, 2014.
The forward-looking statements contained herein represent AHIP's expectations as of the date of this news release, and are subject to change after this date. AHIP assumes no obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.
About American Hotel Income Properties REIT LP
AHIP is a limited partnership formed under the Limited Partnerships Act (Ontario) to invest in hotel real estate properties located substantially in the United States and is engaged primarily in the railroad employee accommodation, transportation-oriented, and select-service lodging sectors. AHIP's properties are mostly located in secondary and tertiary markets in close proximity to railroads, airports, highway interchanges, and other demand generators. AHIP currently owns 60 hotels including 37 hotels serving the U.S. rail industry pursuant to long-term railway contracts and 23 hotels affiliated with leading national and international hotel brands. AHIP's long-term objectives are to: (i) generate stable and growing cash distributions from hotel properties substantially in the U.S.; (ii) enhance the value of its assets and maximize the long-term value of the hotel properties through active management; and (iii) expand its asset base and increase its AFFO per unit through an accretive acquisition program, participation in strategic development opportunities and improvements to its properties through targeted value-added capital expenditure programs.
THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.
SOURCE American Hotel Income Properties REIT LP