VANCOUVER, BC--(Marketwired - December 16, 2016) - American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN) (OTCQX: AHOTF)
NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES
American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN) (OTCQX: AHOTF) announced today that it has agreed to acquire through its subsidiaries the previously announced strategic portfolio of three Embassy Suites by Hilton branded hotels totaling 782 guestrooms located in proximity to Columbus, Cleveland and Cincinnati, Ohio (the "Midwestern 3 Embassy Suites Portfolio") for approximately US$124.0 million, including the expected cost of capital work on acquisition and the brand-mandated property improvement plans (the "PIPs").
The Midwestern 3 Embassy Suites Portfolio is being acquired at a weighted-average capitalization rate of approximately 8.0% on trailing twelve months net operating income (after inclusion of all hotel management fees, brand franchise fees, a 4.0% furniture, fixtures and equipment ("FF&E") reserve and the PIPs).
ACQUISITION HIGHLIGHTS
Ian McAuley, President of AHIP, commented, "This strategic investment builds upon our previously-announced acquisitions of larger, select service hotels located in larger markets. These specific hotels are well located with great visibility and perform very well within their respective markets. When I toured these properties, I was impressed with their overall institutional quality." Rob O'Neill, AHIP's CEO continued, "AHIP's ability to use conservatively financed, long-term, low-cost, fixed-rate debt with a significant interest-only period highlights a key aspect of our strategy of providing consistent and stable returns to our unitholders."
This news release shall not constitute an offer to sell or a solicitation of any offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and such securities may not be offered or sold within the United States absent registration under the U.S. Securities Act or an applicable exemption from the registration requirements thereunder.
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, references to the following: the acquisition of the Midwestern 3 Embassy Suites Portfolio; the acquisition cost of the Midwestern 3 Embassy Suites Portfolio, including the cost of the capital work upon acquisition and the PIPs; closing and post-acquisition adjustments to the purchase price of the Midwestern 3 Embassy Suites Portfolio; management's expectation that the acquisition of the Midwestern 3 Embassy Suites Portfolio will be immediately accretive to AFFO per unit; AHIP's intention to use a portion of the net proceeds of the Offering and the new Mortgage to finance the acquisition of the Midwestern 3 Embassy Suites Portfolio; the amount and expected terms of the new Mortgage; the term of the ground lease in Covington; the capitalization rates associated with the acquisition of the Midwestern 3 Embassy Suites Portfolio; the expected strategic impacts of the acquisition of the Midwestern 3 Embassy Suites Portfolio; pricing of the Midwestern 3 Embassy Suites Portfolio relative to replacement cost; the expected date of the completion of the acquisition of the Midwestern 3 Embassy Suites Portfolio; the total number of hotels and rooms owned by AHIP after giving effect to the acquisition of the Midwestern 3 Embassy Suites Portfolio and AHIP's other previously announced acquisitions; and the management of the Midwestern 3 Embassy Suites Portfolio by 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 Mortgage financing on the Midwestern 3 Embassy Suites Portfolio on the terms currently contemplated, the ability to successfully complete the Offering, the ability to get consent to assignment of the ground lease in Covington, the timing and scope of the PIPs and the ability to successfully complete such renovation work, the ability to successfully integrate the Midwestern 3 Embassy Suites Portfolio into AHIP's existing portfolio of branded hotels, the accuracy of third party reports with respect to data about the Cincinnati, Cleveland and Columbus metropolitan areas, the value of the U.S. Dollar and assumptions and expectations related to capitalization rates, fees and reserves, replacement costs and targeted completion dates. 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 17, 2016 and under "Risks and Uncertainties" in AHIP's Management's Discussion and Analysis dated November 7, 2016, 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 rail crew accommodation, transportation-oriented, and select-service lodging sectors. AHIP's hotels 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'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.
FOR FURTHER INFORMATION, PLEASE CONTACT:
Andrew Greig
Investor Relations
American Hotel Income Properties REIT LP
Suite 1660 - 401 West Georgia Street
Vancouver, B.C. V6B 5A1
Phone: 604-630-3134
Email: [email protected]