American Hotel Income Properties REIT LP Completes Portfolio Acquisition of Nine Branded, Select-Service Hotels For US$53.5 Million
Jun 18, 2015, 09:00 ET
VANCOUVER, June 18, 2015 /PRNewswire/ - American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF) announced today the completion of its previously announced acquisition of a portfolio of nine branded, select-service hotel properties (the "Acquisition Properties") for an aggregate purchase price of US$53.5 million excluding US$3.5 million for brand mandated property improvement plans (the "PIPs") to be completed over the next 30 months and before customary closing and post-acquisition adjustments.
The Acquisition Properties are located in five states with a total of 632 guestrooms and are approximately five years old. The hotels are franchised by major global brands including Intercontinental Hotels Group, Hilton Hotels & Resorts and Carlson Rezidor Hotel Group and are situated along major U.S. Interstate Highways near transportation hubs and other major demand generators.
AHIP funded the purchase price and the PIPs using a combination of cash on hand and a new US$32.0 million commercial mortgage-backed securities ("CMBS") mortgage. The new mortgage will be for a 10-year term, interest-only for the first seven years and then amortized over a 30-year period for the remaining three years. The mortgage has a fixed interest rate of 4.24% for the entire term and the lender has agreed to provide an FF&E reserve waiver for the first 24 months.
Rob O'Neill, AHIP's Chief Executive Officer, commented, "We are pleased to acquire these high-quality, newer assets in strong transportation-oriented markets with solid underlying fundamentals at prices well below replacement cost. 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 accretive acquisitions and provide stable returns and deliver value to AHIP's unitholders. Our hotel manager has carefully planned and implemented a successful transition of all nine properties on the same day. We look forward to the implementation of value enhancement opportunities over the coming quarters."
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 post-acquisition adjustments to the purchase price for the Acquisition Properties; the cost and completion timing for the PIPs; the terms of the new CMBS mortgage for the Acquisition Properties; the future growth of the U.S. hotel industry; the future availability of low cost CMBS financing; the availability of accretive acquisition opportunities; and the implementation of value enhancement opportunities at the Acquisition Properties.
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, the ability to secure CMBS financing, the ability to successfully integrate the Acquisition Properties and expectations and assumptions related to capitalization rates, fees and reserves and replacement costs for the Acquisition Properties, as applicable. 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 May 13, 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 railroad employee accommodation, 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 currently owns 70 hotels including 38 hotels serving the U.S. rail industry pursuant to long-term railway contracts and 32 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.
Additional information relating to AHIP, including its other public filings, is available on SEDAR at www.sedar.com and on AHIP's website at www.ahipreit.com.
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
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