VANCOUVER, Aug. 6, 2015 /CNW/ - 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 three
Marriott-branded, select-service hotel properties (the "Acquisition Properties") for an aggregate purchase price of US$30.8 million excluding
approximately US$3.2 million for brand-mandated property improvement
plans (the "PIPs"), approximately US$1.0 million for the defeasance of existing loans ("Defeasance") and before customary closing and post-acquisition adjustments.
The Acquisition Properties are located in Ocala, Florida with a total of
352 guestrooms that have been acquired below management's estimate of
replacement cost. The Acquisition Properties include a 169-room
Courtyard, a 96-room Fairfield Inn & Suites and an 87-room Residence
Inn. The three hotels are franchised by Marriott International and are
strategically located in Florida on a transportation corridor near a
variety of major demand generators. Ocala is located in north central
Florida and is approximately a 90-minute drive to both the Gulf and
Atlantic coasts, Tampa Bay and Orlando. Ocala is one of the top
thoroughbred centres in the world, with nearly 500 farms, breeding and
training facilities.
AHIP funded the purchase price and the PIPs using a combination of cash
on hand and a new US$19.0 million commercial mortgage-backed securities
("CMBS") mortgage. The new interest-only mortgage is for a 10-year term with a
fixed interest rate of 4.21%. The lender has also 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 assets at prices well below replacement
cost in a strong transportation-oriented market with solid underlying
fundamentals. PKF Hospitality Research is forecasting RevPAR growth of
9.9% in 2015 and 8.0% in 2016, respectively, for these types of hotels,
compared to national growth rates of 7.3% and 6.5%. The properties
complement our existing Marriott-branded Florida hotels in Melbourne
and Titusville, and further diversifies our portfolio. In total, AHIP
now has 12 Marriott-branded, select-service hotels in its portfolio. We
intend to capitalize on the ongoing growth in the U.S. hotel industry
and utilize the availability of low cost CMBS financing to fund a
steady pipeline of accretive acquisitions and provide stable returns in
order to deliver value to AHIP's unitholders."
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 post-acquisition
adjustments to the purchase price for the Acquisition Properties; the
cost for the PIPs; the terms of the new CMBS mortgage for the
Acquisition Properties; the future growth of the Ocala, Florida hotel
market and the broader U.S. hotel industry; PKF Hospitality Research's
forecasts with respect to RevPar growth; the future availability of low
cost CMBS financing; the availability of accretive acquisition
opportunities; and references to the management of the Acquisition
Properties by AHIP's exclusive hotel manager, Tower Rock Hotels &
Resorts Inc.
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 73 hotels including 38 hotels serving
the U.S. rail industry pursuant to long-term railway contracts and 35
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
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
