VANCOUVER, June 15, 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 portfolio of three Marriott-branded, select-service
hotels (the "Acquisition Properties") located in
Ocala, Florida for an aggregate
purchase price of US$30.8 million,
excluding closing and post-acquisition adjustments. The
purchase price does not include US$3.2
million for the completion of brand-mandated property
improvement plans ("PIPs") and US$1.0
million for the defeasance of existing loans
("Defeasance").
The Acquisition Properties are being purchased at a
weighted-average capitalization rate of approximately 8.1% on
trailing twelve months net operating income (after inclusion of all
hotel management fees, franchise fees, a 4.0% FF&E reserve
contribution, PIPs and Defeasance costs).
Acquisition Highlights:
- The Acquisition Properties consist of three hotels containing
352 total guest rooms that are being acquired below management's
estimate of replacement cost.
- The three select-service hotels branded by Marriott
International include an 87-room Residence Inn; a 96-room Fairfield
Inn & Suites; and a 169-room Courtyard. All of the Acquisition
Properties are strategically located in central Florida near a variety of demand generators
including transportation hubs, industrial manufacturing, commercial
distribution, agricultural, tourist attractions and retail
centres.
- 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 and
Defeasance costs, using a combination of cash on hand and a new
US$19.0 million commercial mortgage
backed securities ("CMBS") loan. The new mortgage will be
for a 10-year term, interest-only for the entire term and is
expected to have a fixed interest rate of approximately 4.26%. In
addition, the lender has agreed to provide an FF&E reserve
waiver for the first two years.
- This transaction is expected to close by the end of
July 2015, subject to customary
closing conditions and documentation.
Rob O'Neill, AHIP's Chief
Executive Officer, commented, "This investment strengthens our
presence in the Florida market and
we are excited to acquire this portfolio of Marriott-branded hotels
in Ocala, which is a major world
thoroughbred center with over 1,200 horse farms and is the horse
capital of the world." Mr. O'Neill continued, "The availability of
long-term, low-cost, fixed-rate, interest-only CMBS debt highlights
a key aspect of our conservative approach to leverage, aimed at
providing highly stable returns and delivering value to
unitholders. Upon the completion of this acquisition and the
previously announced acquisition of the nine branded,
select-service hotels, AHIP will have deployed all of the capital
raised from its April 2015 bought
deal offering. AHIP's portfolio will then consist of 73 hotels
totaling 6,212 guest rooms with 35 branded hotels totaling 3,331
guest rooms and 38 rail hotels totaling 2,881 guest rooms."
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 acquisition of the Acquisition Properties, including
purchase prices and closing costs therefor; the completion timing
for the Acquisition Properties; the estimated costs of PIPs and
Defeasance for the Acquisition Properties; the degree to which the
Acquisition Properties are expected to be accretive; the amount and
terms of the CMBS financing for the Acquisition Properties; the
availability of future CMBS financing; the deployment of all
capital raised from AHIP's April 2015
bought deal offering; and the total number of hotels and rooms
owned by AHIP after giving effect to the acquisition of 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 defease the existing loans and secure new CMBS
financing; the ability to successfully integrate the Acquisition
Properties; the completion by AHIP of the acquisition of the
portfolio of nine branded, select-service hotels previously
announced in AHIP's news release dated June
1, 2015 prior to the completion of AHIP's acquisition of 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 owns hotels serving the U.S. rail industry
pursuant to long-term railway contracts and 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