VANCOUVER, Oct. 27, 2014 /CNW/ - American Hotel Income Properties REIT LP ("AHIP") (Toronto Stock Exchange: HOT.UN; OTCQX: AHOTF) today announced the completion of its previously announced acquisition (the "Acquisition") of a portfolio of three branded hotel properties located in Amarillo, Texas (the "Texas Portfolio") for an aggregate purchase price of US$31.4 million (or approximately $107,000 per room), excluding up to US$0.4 million for brand mandated property improvement plans (the "PIPs") and before customary closing and post-acquisition adjustments.
The Texas Portfolio represents a total of 293 guestrooms all located in Amarillo, Texas and consists of the Holiday Inn Amarillo West Medical Centre hotel (an Intercontinental Hotels Group brand), the Fairfield Inn & Suites Amarillo Airport hotel (a Marriott International brand) and the Sleep Inn & Suites West Medical Centre hotel (a Choice Hotels brand). The properties are all less than five years old and are in very good physical condition. The properties are situated on the I-40 corridor between Oklahoma City, Oklahoma and Albuquerque, New Mexico and the US-287 corridor between Dallas, Texas and Denver, Colorado. Amarillo is located 260 miles west of Oklahoma City, and is considered the regional economic center for the Texas Panhandle as well as Eastern New Mexico and the Oklahoma Panhandle. The properties cater primarily to corporate travelers seeking select-service lodging.
AHIP funded the purchase price for the acquisition and the financing of the PIPs using a combination of cash from AHIP's bought deal offering that closed on June 4, 2014 and a new US$16.0 million, 10 year, interest only, CMBS mortgage with a fixed interest rate of 4.20%. The lender has also provided an FF&E reserve waiver for the first 12 months.
Robert O'Neill, AHIP's Chief Executive Officer, commented, "This investment is consistent with our stated growth strategy targeting acquisitions of transportation-oriented and select and limited-service hotels, located in secondary markets in the United States in close proximity to railroads, airports, highway interchanges and other transportation hubs and demand generators. The ten-year, 4.20% fixed interest rate CMBS financing also highlights a key aspect of our conservative approach to leverage, aimed at providing highly stable returns to our unitholders."
Mr. O'Neill continued, "This high-quality and well-maintained portfolio has been purchased at a price below our estimate of its replacement cost, in markets that have strong underlying fundamentals with expectations for near term growth. We intend to capitalize on the continued growth in the U.S. hotel industry and continue to utilize the substantial availability of low cost CMBS financing."
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.
Forward-Looking Information
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 Texas Portfolio; local lodging demand generators; the completion and estimated costs of the PIPs; the near term growth of the market for the Texas Portfolio 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 Texas Portfolio. 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, AHIP's Management's Discussion and Analysis dated August 14, 2014 and AHIP's short form prospectus dated October 21, 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 engaged primarily in the railroad employee accommodation, transportation and contract-focused lodging sectors. 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 RELEASE.
SOURCE American Hotel Income Properties REIT LP
Andrew Greig, Investor Relations, American Hotel Income Properties REIT LP, Suite 1660 - 401 West Georgia Street, Vancouver, B.C. V6B 5A1, Tel: (604) 633-2857, Email: agreig@ahipreit.comCopyright CNW Group 2014