Click here to close now.

SYS-CON MEDIA Authors: SmartBear Blog, Liz McMillan, Kevin Jackson, Peter Silva, Greg Wind

News Feed Item

American Hotel Income Properties REIT LP announces US$37.1 million Hotel Portfolio acquisition and February 2014 cash distribution

VANCOUVER, Feb. 17, 2014 /PRNewswire/ - American Hotel Income Properties REIT LP ("AHIP") (Toronto Stock Exchange: HOT.UN; OTCQX: AHOTF) announced today that it has agreed to acquire, through its subsidiaries, four hotel properties located in Virginia (the "Acquisition Portfolio") for an aggregate purchase price of approximately US$37.1 million, including up to US$1.6 million for defeasance of existing debt, and excluding post-acquisition adjustments and brand mandated property improvement plans.

The Acquisition Portfolio will be purchased at a weighted average going-in capitalization rate of approximately 10.0%, after inclusion of all hotel management fees, administration fees and brand franchise fees, or approximately US$92,060 per room (excluding brand mandated property improvement plans to upgrade furniture, fixtures and equipment, which AHIP expects to be approximately US$6.0 million). Including the property improvement plans and closing costs, the aggregate cost to AHIP for the Acquisition Portfolio is expected by management to be approximately US$44.5 million.

Acquisition Highlights:

  • Quality portfolio of four select-service hotel properties located in Harrisonburg, Emporia, and South Hill, Virginia
  • The properties operate under well-established, leading national hotel brands: Hampton Inn (Hilton) and Fairfield Inn & Suites (Marriott)
  • The Acquisition Portfolio has stable historical operating metrics and all four properties are located in close proximity to Interstate highway exits
  • The Harrisonburg University hotel is close to James Madison University, which has approximately 20,000 students enrolled
  • AHIP's pro forma payout and leverage ratios remain conservative after giving effect to the Acquisition Portfolio, at approximately 73.4% on projected 2014 AFFO of the Acquisition Portfolio and a projected debt to gross book value of approximately 51.2%
  • Expected by to be immediately accretive to AFFO per unit
  • The total acquisition price including budgeted property improvement plan costs of the Acquisition Portfolio are significantly below the as-stabilized appraised value of US$45.8 million as determined by a third party appraiser, and management's estimate of replacement cost
  • Finance with a first mortgage of up to US$24.5 million, bearing an anticipated weighted average interest rate of approximately 4.85%, fixed for 10 years, with the remainder financed with cash from the bought deal offering that closed on October 31, 2013
  • The transaction is expected to close in mid-March, 2014

Rob O'Neill, AHIP's CEO commented, "We are very pleased to announce this acquisition, which is consistent with our stated growth strategy as outlined at the time of AHIP's initial public offering, 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. This acquisition represents another opportunity for AHIP to purchase a high quality, well-maintained portfolio at a price that is below our estimate of its replacement cost. We expect this acquisition to be immediately accretive to our AFFO per unit."

The Acquisition Portfolio

The Acquisition Portfolio is comprised of an aggregate of 403 guest rooms and consists of three hotels under the "Hampton Inn" flag (a Hilton brand), and one hotel under the "Fairfield Inn & Suites" flag (a Marriott brand). The properties are located in Harrisonburg, Emporia and South Hill, Virginia, near transportation hubs and other major demand generators such as James Madison University, manufacturing facilities, distribution centres and medical centres. The properties cater primarily to corporate travelers seeking select-service lodging. The following table sets out certain key characteristics of the Acquisition Portfolio:

Hotel Location Year
Built
Rooms Occup.
(2013)
ADR
(2013) US$
RevPAR
(2013) US$
Hampton Inn University Harrisonburg, Virginia 1988 160 67.90% $99.55 $67.61
Hampton Inn South Harrisonburg, Virginia 2008 90 75.20% $90.32 $67.94
Hampton Inn Emporia, Virginia 2005 85 77.00% $90.79 $69.95
Fairfield Inn & Suites South Hill, Virginia 2007 68 80.50% $81.66 $65.73
Total / Weighted Average 403 73.60% $92.21 $67.86

AHIP is also purchasing land adjacent to two of the properties for US$0.1 million, primarily to serve as a buffer to adjacent businesses.

Following the closing of the Acquisition Portfolio, AHIP's portfolio will be comprised of 41 hotels located in 20 states across the United States, representing an aggregate of 3,517 rooms, excluding the four previously announced properties currently under development through SunOne Developments Inc. ("SunOne"), which represent 241 additional rooms in the aggregate.

AHIP currently owns 37 hotel properties, of which three operate under the "Hampton Inn" flag (a Hilton brand) and one operates under the "Residence Inn" flag (a Marriott brand). The remaining 33 hotels, with an aggregate of 2,642 rooms, are focused on serving railway customers (32 operate under AHIP's proprietary "Oak Tree Inn" brand and one operates under the "Best Western" brand), with approximately 61% of the total available room-nights covered under contracts containing minimum occupancy guarantees.

February Cash Distribution

AHIP also announced the cash distribution of Cdn$0.075 per limited partnership unit ("Unit") of AHIP for the period of February 1, 2014 to February 28, 2014, which is equivalent to Cdn$0.90 per Unit on an annualized basis. The distribution will be paid on March 14, 2014 to unitholders of record at the close of business on February 28, 2014. There are currently 14,437,800 Units issued and outstanding.

The policy of AHIP is to pay cash distributions on or about the 15th day of each month to the unitholders of record on the last business day of the preceding month.

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 Portfolio; the components used in the determination of weighted average going-in capitalization rates, pro forma leverage and payout ratios; the completion and estimated costs of property improvement plans; as stabilized values of the Acquisition Portfolio; accretive effect of the Acquisition Portfolio on AFFO per unit; the expected time of closing of the transaction; the obtainment and interest rates of new mortgage financing on the Acquisition Portfolio; the development of four hotels by SunOne and the focus on acquiring additional suitable hotels in strategic locations.

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 Acquisition 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 28, 2013 and AHIP's Management's Discussion and Analysis dated November 7, 2013.

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 US; (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

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
SYS-CON Events announced today that SoftLayer, an IBM company, has been named “Gold Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place June 9-11, 2015 at the Javits Center in New York City, NY, and the 17th International Cloud Expo®, which will take place November 3–5, 2015 at the Santa Clara Convention Center in Santa Clara, CA. SoftLayer operates a global cloud infrastructure platform built for Internet scale. With a global footprint of data centers and network points...
SYS-CON Events announced today that Cisco, the worldwide leader in IT that transforms how people connect, communicate and collaborate, has been named “Gold Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Cisco makes amazing things happen by connecting the unconnected. Cisco has shaped the future of the Internet by becoming the worldwide leader in transforming how people connect, communicate and collaborat...
SYS-CON Events announced today that Liaison Technologies, a leading provider of data management and integration cloud services and solutions, has been named "Silver Sponsor" of SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York, NY. Liaison Technologies is a recognized market leader in providing cloud-enabled data integration and data management solutions to break down complex information barriers, enabling enterprises to make sm...
SYS-CON Events announced today that Ciqada will exhibit at SYS-CON's @ThingsExpo, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Ciqada™ makes it easy to connect your products to the Internet. By integrating key components - hardware, servers, dashboards, and mobile apps - into an easy-to-use, configurable system, your products can quickly and securely join the internet of things. With remote monitoring, control, and alert messaging capability, you will mee...
SYS-CON Events announced today that Windstream, a leading provider of advanced network and cloud communications, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Windstream (Nasdaq: WIN), a FORTUNE 500 and S&P 500 company, is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company also offers broadband, p...
SYS-CON Media announced today that Blue Box as launched a popular blog feed on Cloud Computing Journal. Cloud Computing Journal aims to help open the eyes of Enterprise IT professionals to the economics and strategies that utility/cloud computing provides. Blue Box Cloud gives you unequaled agility, without the burden of designing, deploying and managing your own infrastructure. It’s the right choice when public cloud just won’t do. Blue Box Cloud is a managed Private Cloud as a Service (...
SYS-CON Events announced today that Stratoscale, the new data center operating system, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Based in Herzeliya, Israel, Stratoscale is redefining the data center, developing a hardware-agnostic, software platform hyper-converging compute, storage and networking across the rack or data center. The self-optimizing platform automatically distributes all physical...
SYS-CON Events announced today that ProfitBricks, the provider of painless cloud infrastructure, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY., and the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. ProfitBricks is the IaaS provider that offers a painless cloud experience for all IT users, with no learning curve. ...
SYS-CON Events announced today that Emcien will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Emcien’s vision is to let anyone use data to know the future. Emcien has built an automated, predictive analysis product that improves the lives of real people. Emcien allows people to automate their data analysis so they can build a better future.
SYS-CON Events announced today that Dyn, the worldwide leader in Internet Performance, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. Dyn is a cloud-based Internet Performance company. Dyn helps companies monitor, control, and optimize online infrastructure for an exceptional end-user experience. Through a world-class network and unrivaled, objective intelligence into Internet conditions, Dyn ensures...
SYS-CON Events announced today that GENBAND, a leading developer of real time communications software solutions, has been named “Silver Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. The GENBAND team will be on hand to demonstrate their newest product, Kandy. Kandy is a communications Platform-as-a-Service (PaaS) that enables companies to seamlessly integrate more human communications into their Web and mobile applicatio...
SYS-CON Events announced today that Open Data Centers (ODC), a carrier-neutral colocation provider, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. Open Data Centers is a carrier-neutral data center operator in New Jersey and New York City offering alternative connectivity options for carriers, service providers and enterprise customers.
SYS-CON Events announced today that On the Avenue Marketing Group, a sales and marketing firm that utilizes events to market and sell products to consumers, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. On the Avenue Marketing Group (OTA) is a sales and marketing firm that utilizes events to market and sell products to consumers. On behalf of our clients, we attend thousands of fairs, festivals, exp...
SYS-CON Events announced today that BroadSoft, the leading global provider of Unified Communications and Collaboration (UCC) services to operators worldwide, has been named “Gold Sponsor” of SYS-CON's WebRTC Summit, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. BroadSoft is the leading provider of software and services that enable mobile, fixed-line and cable service providers to offer Unified Communications over their Internet Protocol networks. The Compa...
SYS-CON Events announced today that ActiveState, the leading independent Cloud Foundry and Docker-based PaaS provider, has been named “Silver Sponsor” of SYS-CON's DevOps Summit New York, which will take place June 9-11, 2015, at the Javits Center in New York City, NY. ActiveState believes that enterprises gain a competitive advantage when they are able to quickly create, deploy and efficiently manage software solutions that immediately create business value, but they face many challenges that ...