Welcome!

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
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
IoT solutions exploit operational data generated by Internet-connected smart “things” for the purpose of gaining operational insight and producing “better outcomes” (for example, create new business models, eliminate unscheduled maintenance, etc.). The explosive proliferation of IoT solutions will result in an exponential growth in the volume of IoT data, precipitating significant Information Governance issues: who owns the IoT data, what are the rights/duties of IoT solutions adopters towards t...
It is ironic, but perhaps not unexpected, that many organizations who want the benefits of using an Agile approach to deliver software use a waterfall approach to adopting Agile practices: they form plans, they set milestones, and they measure progress by how many teams they have engaged. Old habits die hard, but like most waterfall software projects, most waterfall-style Agile adoption efforts fail to produce the results desired. The problem is that to get the results they want, they have to ch...
With the introduction of IoT and Smart Living in every aspect of our lives, one question has become relevant: What are the security implications? To answer this, first we have to look and explore the security models of the technologies that IoT is founded upon. In his session at @ThingsExpo, Nevi Kaja, a Research Engineer at Ford Motor Company, discussed some of the security challenges of the IoT infrastructure and related how these aspects impact Smart Living. The material was delivered interac...
The current age of digital transformation means that IT organizations must adapt their toolset to cover all digital experiences, beyond just the end users’. Today’s businesses can no longer focus solely on the digital interactions they manage with employees or customers; they must now contend with non-traditional factors. Whether it's the power of brand to make or break a company, the need to monitor across all locations 24/7, or the ability to proactively resolve issues, companies must adapt to...
Wooed by the promise of faster innovation, lower TCO, and greater agility, businesses of every shape and size have embraced the cloud at every layer of the IT stack – from apps to file sharing to infrastructure. The typical organization currently uses more than a dozen sanctioned cloud apps and will shift more than half of all workloads to the cloud by 2018. Such cloud investments have delivered measurable benefits. But they’ve also resulted in some unintended side-effects: complexity and risk. ...
With major technology companies and startups seriously embracing Cloud strategies, now is the perfect time to attend 21st Cloud Expo October 31 - November 2, 2017, at the Santa Clara Convention Center, CA, and June 12-14, 2018, at the Javits Center in New York City, NY, and learn what is going on, contribute to the discussions, and ensure that your enterprise is on the right path to Digital Transformation.
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, Doug Vanderweide, an instructor at Linux Academy, discussed why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers wit...
The taxi industry never saw Uber coming. Startups are a threat to incumbents like never before, and a major enabler for startups is that they are instantly “cloud ready.” If innovation moves at the pace of IT, then your company is in trouble. Why? Because your data center will not keep up with frenetic pace AWS, Microsoft and Google are rolling out new capabilities. In his session at 20th Cloud Expo, Don Browning, VP of Cloud Architecture at Turner, posited that disruption is inevitable for comp...
While DevOps most critically and famously fosters collaboration, communication, and integration through cultural change, culture is more of an output than an input. In order to actively drive cultural evolution, organizations must make substantial organizational and process changes, and adopt new technologies, to encourage a DevOps culture. Moderated by Andi Mann, panelists discussed how to balance these three pillars of DevOps, where to focus attention (and resources), where organizations might...
No hype cycles or predictions of zillions of things here. IoT is big. You get it. You know your business and have great ideas for a business transformation strategy. What comes next? Time to make it happen. In his session at @ThingsExpo, Jay Mason, Associate Partner at M&S Consulting, presented a step-by-step plan to develop your technology implementation strategy. He discussed the evaluation of communication standards and IoT messaging protocols, data analytics considerations, edge-to-cloud tec...
New competitors, disruptive technologies, and growing expectations are pushing every business to both adopt and deliver new digital services. This ‘Digital Transformation’ demands rapid delivery and continuous iteration of new competitive services via multiple channels, which in turn demands new service delivery techniques – including DevOps. In this power panel at @DevOpsSummit 20th Cloud Expo, moderated by DevOps Conference Co-Chair Andi Mann, panelists examined how DevOps helps to meet the de...
When growing capacity and power in the data center, the architectural trade-offs between server scale-up vs. scale-out continue to be debated. Both approaches are valid: scale-out adds multiple, smaller servers running in a distributed computing model, while scale-up adds fewer, more powerful servers that are capable of running larger workloads. It’s worth noting that there are additional, unique advantages that scale-up architectures offer. One big advantage is large memory and compute capacity...
In the world of DevOps there are ‘known good practices’ – aka ‘patterns’ – and ‘known bad practices’ – aka ‘anti-patterns.' Many of these patterns and anti-patterns have been developed from real world experience, especially by the early adopters of DevOps theory; but many are more feasible in theory than in practice, especially for more recent entrants to the DevOps scene. In this power panel at @DevOpsSummit at 18th Cloud Expo, moderated by DevOps Conference Chair Andi Mann, panelists discussed...
"When we talk about cloud without compromise what we're talking about is that when people think about 'I need the flexibility of the cloud' - it's the ability to create applications and run them in a cloud environment that's far more flexible,” explained Matthew Finnie, CTO of Interoute, in this SYS-CON.tv interview at 20th Cloud Expo, held June 6-8, 2017, at the Javits Center in New York City, NY.