VANCOUVER, Nov. 7, 2013 /CNW/ - American Hotel Income Properties REIT LP
("AHIP") (Toronto Stock Exchange: HOT.UN; OTCQX: AHOTF) today announced
the release of its financial results for the three and nine months
ended September 30, 2013.
2013 Q3 financial highlights and recent events
(All amounts expressed in U.S. dollars unless otherwise indicated.
Certain operating results of AHIP presented for the nine month period
ended September 30, 2013 reflect only the operational results for the
222-day period from the acquisition of Lodging Enterprises, LLC on
February 20, 2013 to September 30, 2013.)
AHIP's current property portfolio was comprised of 33 hotels located in 19 states as at September 30, 2013, representing 2,641 available guest rooms under management of AHIP's external hotel manager, which experienced an
84.7% and 83.4% occupancy rate for the three and nine months ended September 30, 2013 respectively.
Revenues at AHIP's Lodging Enterprises hotels are estimated to have increased by approximately 7.4% and 6.5% for the three month and 222-day periods ended September 30, 2013,
In addition to continued growth in the rail portfolio, AHIP has under
letter of intent and is actively pursuing high quality, select service
hotel portfolios totaling more than $100 million in its non-rail
Cash balance was $20,958,211, excluding restricted cash of $51,237 and a
cash deposit of $1,650,000 relating to the Acquisition Properties (see
below) as at September 30, 2013.
Total revenues were $14,342,715 and $33,557,014 for the three and nine months ended September 30, 2013, respectively,
all of which was attributable to the operating results of Lodging
Enterprises, LLC subsequent to the acquisition date of February 20,
Funds from operations ("FFO") were $2,745,793 ($0.264 per Unit) for the three months ended September 30, 2013.
Adjusted funds from operations ("AFFO") were $2,508,542 ($0.241 per
Unit) for the three months ended September 30, 2013.
Net operating Income ("NOI") was $4,886,447 for the three months ended September 30, 2013.
Distributions of $2,254,828 and $5,525,796 were declared during the
three and nine months ended September 30, 2013 respectively (both
representing Cdn$0.90 per Unit on an annualized basis), of which
$751,611 was included in accounts payable and accrued liabilities at
September 30, 2013 and paid on October 15, 2013.
AFFO payout ratio was 89.9% (calculated as distributions declared divided by AFFO) for the three
months ended September 30, 2013 which includes approximately
$15,000,000 of unutilized cash available for acquisitions.
Debt to gross book value was 41.6% (calculated as principal debt outstanding ($69,784,601) divided by the
sum of total assets ($165,118,468) plus depreciation ($3,261,359) and
amortization of intangible assets ($1,084,828) less the deferred income
tax liability ($1,879,962) as at September 30, 2013.
On July 9, 2013, AHIP announced a commitment with SunOne Developments
Inc. ("SunOne") to construct a 56-room Oak Tree Inn hotel and Penny's
Diner (collectively "Santa Teresa") located in Santa Teresa, New
Mexico, secured by a 10-year railway contract for all 56 rooms. The
property is expected to open for business by July, 2014.
On August 23, 2013, AHIP announced a commitment with SunOne to construct
a 25-room Oak Tree Inn hotel and Penny's Diner (collectively
"Brunswick") located in Brunswick, Maryland, secured by a 10-year
railway contract for 15 rooms. The property is expected to open for
business by September 2014.
On September 20, 2013, a distribution of Cdn$0.075 per Unit was declared
for the month of September 2013 (Cdn$0.90 per Unit on an annualized
basis), for payment on October 15, 2013.
On October 10, 2013 AHIP announced that it has agreed to acquire four
hotel properties located in metropolitan Pittsburgh, Pennsylvania (the
"Acquisition Properties") for an aggregate purchase price of
approximately $57.3 million, excluding post-acquisition adjustments and
approximately $6.0 million of brand mandated property improvement plans
("PIPs"). The Acquisition Properties comprise an aggregate of 471 guest
rooms and consists of three hotels under the 'Hampton Inn' flag (a
Hilton brand), and one hotel under the 'Residence Inn' flag (a Marriott
brand). The completion of the acquisition is expected to occur on or
about November 21, 2013.
On October 10, 2013 AHIP announced it had entered into an agreement with
a syndicate of underwriters (the "Underwriters"), to sell, on a bought
deal basis up to 3,967,500 subscription receipts ("Subscription
Receipts"), inclusive of 517,500 Subscriptions Receipts issued pursuant
to the exercise in full of the over-allotment option, at a price of
Cdn$10.15 per Subscription Receipt for gross proceeds to AHIP of
approximately Cdn$40.3 million (the "Offering"). AHIP filed the related
final prospectus (the "Prospectus") on October 24, 2013.
On October 31, 2013 AHIP announced the completion of the Offering,
including the full exercise of the over-allotment option. The
Subscription Receipts are listed on the TSX under the symbol HOT.R.
Additional information relating to the Subscription Receipts is
included in the Prospectus.
On November 4, 2013, AHIP entered a forward interest rate lock agreement
with a major international bank (the "Lender") to lock the interest
rate at 5.02% on the four proposed loans relating to the Acquisition
Properties for an aggregate gross loan amount of $38 million. The terms
of the Rate Lock for a 30 day period, with a 30 day extension option.
The loans remain subject to final approval by the Lender.
Two new Railway Contracts signed today
AHIP announced today the commitment with SunOne Developments Inc.
("SunOne") to construct a 110-room Oak Tree Inn hotel located in Wellington, Kansas, and a 50-room Oak Tree Inn hotel and Penny's Diner located in Glendive,
Montana. The two Oak Tree Inn hotels and 24-hour Penny's Diner will be
financed and developed in accordance with the Master Development
Agreement between SunOne and AHIP. AHIP has agreed to provide mezzanine
financing of US$1.57 million to SunOne for the developments, and upon
completion AHIP has agreed to a total purchase price of US$12.35
million, which is equal to 95% of the as-stabilized appraised value, as
determined by a nationally recognized appraisal company. Both hotels
are secured by long-term railway contracts that guarantee greater than
80% of the 160 total guestrooms for 10 years. Management anticipates
that the two investments will be highly accretive to unit holders and
is satisfied that all AHIP investment criteria have been met.
The Wellington property will be constructed on a 2.00 acre site and is
expected to open by September 1, 2014. Wellington is located in
southern Kansas, approximately 23 miles north of the Kansas/Oklahoma
border and 35 miles south of Wichita along I-35.
The Glendive property will be constructed on a 2.00 acre site and is
expected to open by November 1, 2014. Glendive is located in eastern
Montana, approximately 35 miles west of the Montana/North Dakota
border. The properties will be managed by TR Lodging Enterprises Inc.
AHIP's portfolio of dedicated railway facilities is currently comprised
of 32 operating hotels with a total count of 2,564 guestrooms, and 23
24-hour diners. This excludes the 77 room hotel property in Jefferson
City, Missouri and the four Oak Tree Inn hotel construction projects
(Santa Teresa, NM; Brunswick, MD; Wellington, KS; and Glendive, MT)
featuring 241 rooms and three new 24-hour diners that are under
development in accordance with development agreements between AHIP and
SunOne Developments Inc.
"Following our February 20, 2013 IPO and the smooth transition of the
management of our hotel assets to AHIP's external hotel manager, we
have experienced three successive quarters of stable operating results,
with overall revenues from properties purchased at the IPO in line with
our expectations and an improvement over the last year under the
previous owners' management" said Mr. Rob O'Neill, Chief Executive
Officer. "In addition to providing for the growth of our initial
portfolio through an accretive acquisition program and participation in
strategic development opportunities, we have continued to sharpen our
focus on deploying AHIP's excess cash on an accretive basis through the
acquisition of additional high quality economy and select service hotel
assets in the U.S. The two ten-year contracts signed today further
expand AHIP's rail portfolio and strengthen the relationship with one
of our key railway partners, BNSF. These contracts are in addition to
the previously announced 56 room $5.1 million property at Santa Teresa,
New Mexico and the 25 room $2.8 million property at Brunswick, Maryland
developments with two of our other key railway partners."
In reference to the four non-rail Pittsburgh Acquisition Properties, Mr.
O'Neill said, "As the first significant acquisition since AHIP's
February 2013 IPO, we believe that this transaction highlights
management's ability to source accretive acquisitions which should
contribute meaningfully to cash flow and increasing our AFFO. With an
increasing volume of transactions coming onto the market, AHIP has
under letter of intent and is actively pursuing high quality, select
service hotel portfolios totaling more than $100 million in its
non-rail acquisition pipeline."
Mr. O'Neill concluded, "With the continuing strengthening of average
daily rates and occupancies to historic levels in the U.S. hotel
Industry, AHIP's properties are well-positioned to benefit from this
trend. Through accretive acquisitions and the expansion of our existing
rail portfolio, we intend to capitalize on the growth in the U.S. hotel
industry and simultaneously utilize the substantial availability of low
interest CMBS financing, as with the Acquisition Properties, to provide
high returns to our stakeholders."
Rob O'Neill, CEO, Robert Hibberd, CFO and Dan Miller, CIO, of AHIP, will
host a conference call at 8:00am (Eastern time) or 5:00am (Pacific
time), on Friday November 8, 2013, to review the financial results and
corporate developments for the three and nine month period ended
September 30, 2013.
To participate in this conference call, please dial one of the following
numbers approximately 10 minutes prior to the commencement of the call,
and ask to join the AHIP conference call.
Dial in numbers:
International or Local Toronto......................1-416-764-8688
Conference Call Replay
If you cannot participate on November 8, 2013, a replay of the
conference call will be available by dialing one of the following
replay numbers. You will be able to dial in and listen to the
conference call replay two hours after the call end time, and the
replay will be available until November 15, 2013.
Please enter the replay PIN number 880859 followed by the # key.
International or Local Toronto......................1-416-764-8677
Certain non-IFRS financial measures are included in this news release,
which include debt to gross book value, funds from operations ("FFO"),
adjusted funds from operations ("AFFO") and net operating income
("NOI"). These terms are not measures recognized under International
Financial Reporting Standards ("IFRS") and do not have standardized
meanings prescribed by IFRS. Real estate investment trusts often refer
to FFO, AFFO and NOI as supplemental measures of performance and debt
to gross book value as a supplemental measure of financial condition.
Debt to gross book value, FFO, AFFO and NOI should not be construed as
alternatives to measurements determined in accordance with IFRS as
indicators of AHIP's performance or financial condition. AHIP's method
of calculating debt, gross book value, FFO, AFFO and NOI may differ
from other issuers' methods and accordingly may not be comparable to
measures used by other issuers. For further information, please refer
to AHIP's Management's Discussion and Analysis dated November 7, 2013
which is available on SEDAR at www.sedar.com and on AHIP's website at www.ahipreit.com.
Certain statements in this press release may constitute
"forward-looking" information that involves known and unknown risks,
uncertainties and other factors, and it may cause actual results,
performance or achievements or industry results, to be materially
different from any future results, performance or achievements or
industry results expressed or implied by such forward-looking
information. Forward-looking information is identified by the use of
terms and phrases such as "anticipate", "believe", "could", "estimate",
"expect", "intend", "may", "plan", "predict", "project", "subject to",
"will", "would", and similar terms and phrases, including references to
Forward-looking information contained in this press release is based on
certain key expectations and assumptions made by AHIP, including,
without limitation, expectations and assumptions respecting the amount
of the expected monthly cash distributions and annual yield for the
Units and the timing to pay such cash distributions to unitholders, and
a reasonably stable North American economy and stock market. Although
the forward-looking information contained in this press release is
based upon what the 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 management regarding future events and
operating performance as of the date of this press 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 final prospectus dated February 12, 2013 and
Management's Discussion and Analysis dated November 7, 2013, which are
available on SEDAR at www.sedar.com and on AHIP's website at www.ahipreit.com.
The forward-looking information contained herein is expressly qualified
in its entirety by this cautionary statement. Forward-looking
information reflects management's current beliefs and is based on
information currently available to AHIP. The forward-looking
information is made as of the date of this press 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
About American Hotel Income Properties REIT LP
AHIP is a limited partnership formed under the Limited Partnership 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 relating to AHIP, including AHIP's interim
financial statements for the three and nine months ended September 30,
2013, AHIP's Management's Discussion and Analysis dated November 7,
2013, and other public filings are available on SEDAR at www.sedar.com and on AHIP's website at www.ahipreit.com.
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