VANCOUVER, Oct. 29, 2015 /PRNewswire/ - American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF) announced today that it has agreed to acquire through its subsidiaries a 70-room hotel located in Fort Scott, Kansas (the "Fort Scott Property") secured by a new multiyear rail crew lodging contract. The Fort Scott Property is being acquired for an aggregate purchase price of US$3,315,000 including planned capital expenditures and excluding closing and post-acquisition adjustments.
- The Fort Scott Property is being acquired for approximately US$47,400 per guest room, which is below management's estimate of replacement cost. After completion of the transaction, the Fort Scott Property will be renovated to industry-leading Oak Tree Inn standards.
- The Fort Scott Property is secured by a new multiyear rail crew lodging contract with one of the largest railway companies in the United States, which guarantees in excess of 85% of the available guestrooms. AHIP currently owns eight Oak Tree Inn hotels servicing this railway company.
- The investment is expected to be immediately accretive to adjusted funds from operations ("AFFO") per unit.
- AHIP will fund the purchase of the Fort Scott Property with cash on hand, and expects to refinance this acquisition with a new mortgage following completion of the transaction.
- This transaction is expected to be completed by November 13, 2015, subject to customary closing conditions and documentation.
Mr. Rob O'Neill, Chief Executive Officer of AHIP commented, "We are pleased to announce this conversion opportunity where we will acquire an existing hotel at well below replacement cost and renovate it to industry-leading "Dark and Quiet" standards that satisfy the needs of our rail crew clientele. We expect this acquisition to be immediately accretive to AFFO as we continue to execute our strategy of owning the largest and highest quality chain of rail crew lodging properties in the United States."
Upon completion of the Fort Scott Property acquisition, AHIP's portfolio will consist of 79 hotels totaling 6,892 guest rooms with 44 rail crew hotels totaling 3,561 guest rooms and 35 branded hotels totaling 3,331 guest rooms.
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, references to the acquisition of the Fort Scott Property, the expected completion timing, the cost of the planned capital expenditures, the refinancing of the purchase price with new debt financing and the future performance of any Oak Tree Inn hotels.
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, the continued strength of the U.S. lodging industry, management's estimate of replacement cost of the Fort Scott Property, the ability to secure financing to fund the acquisition of the Fort Scott Property, the condition of the Fort Scott Property, the timing and scope of renovation work required to convert the Fort Scott Property to Oak Tree Inn standards and the ability to successfully complete such work, the ability to successfully integrate the Fort Scott Property, and expectations and assumptions related to the expected return on equity and accretion from the Fort Scott Property. 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 27, 2015 and under "Risks and Uncertainties" in AHIP's Management's Discussion and Analysis dated August 12, 2015, both of which are available on SEDAR at www.sedar.com.
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 rail crew lodging, transportation-oriented, and select-service lodging sectors. AHIP's properties are mostly located in secondary and tertiary markets in the United States in close proximity to railroads, airports, highway interchanges, and other demand generators. 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 NEWS RELEASE.
SOURCE American Hotel Income Properties REIT LP