American Hotel Income Properties REIT LP Increases Bought Deal Equity Financing to Cdn$45.0 Million

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VANCOUVER, May 16, 2014 /CNW/ - American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF) announced today that it has agreed to increase the size of its previously announced offering of limited partnership units ("Units"). Pursuant to a revised agreement with a syndicate of underwriters co-led by Canaccord Genuity Corp. and National Bank Financial Inc., and including CIBC World Markets Inc., TD Securities Inc., Haywood Securities Inc., Scotia Capital Inc. and Dundee Securities Ltd. (together, the "Underwriters"), the Underwriters have now agreed to purchase, on a bought deal basis, 4,348,000 Units priced at Cdn$10.35 per Unit for total gross proceeds of Cdn$45.0 million (the "Offering").

AHIP has granted to the Underwriters an over-allotment option to purchase up to an additional 652,200 Units, representing 15% of the size of the Offering. The over-allotment option may be exercised in whole or in part at any time for a period of up to 30 days following closing of the Offering, to cover over-allotments.

The closing of the Offering is expected to occur on or about June 4, 2014. The Offering is subject to customary regulatory approvals, including the Toronto Stock Exchange ("TSX"). The Units will be offered in each of the provinces and territories of Canada pursuant to National Instrument 44-101 - Short Form Prospectus Distributions.

AHIP intends to use the net proceeds from the Offering to: (i) acquire from SunOne Developments Inc., upon completion of construction, three previously announced hotel developments located in Brunswick, Maryland; Wellington, Kansas; and Glendive, Montana (the "New Oak Tree Inns") which are scheduled to open between September and December 2014; (ii) partially fund the acquisition of two additional railway lodging facilities which require renovations to meet Oak Tree Inn quality standards (the "Additional Railway Hotels"); (iii) partially fund the potential acquisition of two high-quality nationally-branded hotel portfolios (the "Other Branded Hotel Portfolios"); and (iv) fund working capital and general corporate purposes.  See AHIP's news release of May 15, 2014 for more detail.

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 STATEMENTS

This news release contains forward-looking information within the meaning of applicable securities legislation, which reflects AHIP's current expectations regarding future events. Forward-looking information is identified by the use of terms and phrases such as "anticipate", "believe", "budget", "could", "estimate", "expect", "going-in", "intend", "may", "plan", "predict", "project", "will", "would" and similar terms and phrases, including references to assumptions. Such information includes, but is not limited to: statements with respect to the closing of the Offering or the over-allotment option and the use of proceeds therefrom, including the potential acquisition, renovation, opening and operation, as applicable, of the New Oak Tree Inns, the Additional Railway Hotels and/or the Other Branded Hotel Portfolios; the cost of brand-mandated property improvement plans; AHIP's leverage and payout ratios after giving effect to any such acquisitions; and the accretive nature of such acquisitions. Actual events or results may differ materially.

Forward-looking information contained in this news release is based on certain key expectations and assumptions made by AHIP, including, without limitation: the acquisition, renovation, opening and successful integration, as applicable, of the New Oak Tree Inns, the Additional Railway Hotels and/or the Other Branded Hotel Portfolios; capitalization rates; fees and reserves; targeted opening dates; locations; appraised values; replacement costs; pro forma leverage; and payout ratios. Although the forward-looking information contained in this news release is based upon what AHIP's management believes to be reasonable assumptions, AHIP cannot assure investors that actual events or results will be consistent with such information. Forward-looking information reflects current expectations of 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. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, and a description of these factors can be found under "Risk Factors" in AHIP's Annual Information Form dated March 26, 2014 and under "Risks and Uncertainties" in AHIP's Management's Discussion and Analysis dated May 9, 2014, both of which are available on SEDAR at www.sedar.com.

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information is made as of the date of this news release and AHIP assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

The potential acquisitions described in this news release are indicative only, as these potential transactions are being evaluated and negotiated with the applicable sellers.  In addition, each acquisition, if it proceeds, would subject to conditions, including satisfactory completion of AHIP's due diligence and negotiation of formal legal documents. For example, AHIP cautions that there can be no assurance that any transaction will result from the conditional PSA and non-binding LOI described herein, or what the terms of such a transaction, if any, may be. AHIP undertakes no obligation to update investors on the status of any potential acquisitions described in this news release unless and until its acquisition due diligence is complete and the Board of Directors has approved the transaction, in each case.

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 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 TSX 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

For further information:

Andrew Greig, Investor Relations 
American Hotel Income Properties REIT LP 
Suite 1660, 401 West Georgia Street, Vancouver, BC V6B 5A1 
Phone: 604-630-3134
Email: agreig@ahipreit.com