VANCOUVER, Nov. 21, 2014 /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 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 before customary
closing and post-acquisition adjustments. The purchase price does
not include a US$2.5 million
restricted cash reserve for the completion of brand mandated
property improvement plans ("PIPs").
The Acquisition Properties are being purchased at a
weighted-average capitalization rate of 8.3% on trailing twelve
months net operating income (after inclusion of all hotel
management fees, brand franchise fees, a 4.0% FF&E reserve
contribution and PIPs).
Acquisition Highlights:
- The Acquisition Properties contain 353 total guest rooms and
are being acquired for approximately US$123,000 per guest room inclusive of the cost
of the PIPs, which is below management's estimate of replacement
cost
- The four select-service hotel properties consist of three
Marriott branded properties (a 94-room Courtyard hotel in
Statesville, North Carolina, an
83-room Fairfield Inn and Suites in Melbourne, Florida and a 96-room Fairfield Inn
and Suites in Titusville, Florida)
and one Hilton branded property (an 80-room Hampton Inn in
Statesville, North Carolina). The
properties are located along major U.S. Interstate Highways near
transportation hubs and other significant demand generators
- The investment is expected to be immediately accretive to
adjusted funds from operations ("AFFO") per unit
- AHIP will fund the purchase price, including 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 with an expected fixed interest rate of 4.30% for the
entire term. In addition, the lender has agreed to provide an
FF&E reserve waiver for the first two years
- The transaction is expected to close imminently
Robert O'Neill, AHIP's Chief
Executive Officer, commented, "This investment is consistent with
our stated growth strategy targeting acquisitions of
transportation-oriented and branded, select-service hotels located
in secondary markets in the United
States close to major demand generators. Statesville, North Carolina is an important
transportation hub given its location at the intersections of I-77
and I-40 and proximity to numerous manufacturing and distribution
centres. Melbourne and
Titusville are both located on the
I-95 corridor on Florida's Space
Coast. The two Florida
hotels will benefit from the Kennedy
Space Center, Cape Canaveral Air Force Station, Port
Canaveral along with leisure demand generators." Mr. O'Neill
continued, "The availability of long-term, low-cost, fixed-rate
CMBS debt with a significant interest-only period highlights a key
aspect of our conservative approach to leverage, aimed at providing
highly stable returns to AHIP's unitholders. During the past
12 months, we have acquired 23 branded hotels totaling 2,347 guest
rooms in order to participate in the growing U.S. lodging
industry."
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 Acquisition Properties;
regional lodging demand generators; the completion and estimated
costs of PIPs; the near term growth of the Acquisition Properties
and U.S. hotel industry overall; the degree to which the
Acquisition Properties are accretive; the anticipated closing date
of the Acquisition Properties transaction; and the availability of
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, the ability to secure CMBS financing 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
the United States in close
proximity to railroads, airports, highway interchanges, and other
demand generators. AHIP currently owns 55 hotels including 36
hotels serving the U.S. rail industry pursuant to long-term railway
contracts and 19 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
RELEASE.
SOURCE American Hotel Income Properties REIT LP