/NOT FOR DISTRIBUTION IN THE U.S. OR OVER U.S. NEWSWIRES./
VANCOUVER, Nov. 21, 2013 /CNW/ - American Hotel Income Properties REIT LP ("AHIP") (Toronto Stock Exchange: HOT.UN; OTCQX: AHOTF) today announced the closing of its previously announced acquisition (the "Acquisition") of a portfolio of four hotel properties (the "Acquisition Properties") located in metropolitan Pittsburgh, Pennsylvania for a total purchase price of approximately US$57.3 million (before customary closing and post-closing acquisition adjustments and the funding of a US$6.0 million restricted cash reserve for brand mandated property improvement plans (the "PIPs") related to the Acquisition Properties).
The Acquisition Properties represent a total of 471 guest rooms in the Pittsburgh area and are comprised of three Hampton Inn hotels (a brand controlled by Hilton Worldwide) and one Residence Inn by Marriott hotel (an extended-stay brand controlled by Marriott International, Inc.). The Acquisition Properties are extended-stay and focused-service hotels that cater primarily to corporate-transient travelers. Additional information about the Acquisition Properties is included in AHIP's short form prospectus dated October 24, 2013 (the "Prospectus"), available on SEDAR at www.sedar.com.
AHIP funded the purchase price for the Acquisition and the financing of the PIPs using a combination of cash from AHIP's bought deal offering of subscription receipts (each, a "Subscription Receipt") that closed on October 31, 2013 and new mortgage debt.
Robert O'Neill, AHIP's Chief Executive Officer, commented, "This acquisition represents a major step in the execution of our stated growth strategy 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. The ten-year, 5.02% fixed interest rate CMBS financing also highlights a key aspect of our conservative financing strategy, aimed at providing high stable returns to our stakeholders."
Mr. O'Neill continued, "This high-quality and well-maintained portfolio in the Pittsburgh area has been purchased at a price that is below its independently appraised value and below our estimate of its replacement cost, in a market that has strong underlying fundamentals with expectations for near term growth. We believe these properties are well-positioned to benefit from the trend of strengthening average daily rates and occupancies to historic levels in the US hotel industry. Through accretive acquisitions and the expansion of our existing rail portfolio, we intend to capitalize on the growth in the US hotel industry and continue to utilize the substantial availability of low cost CMBS financing."
The four Pittsburgh hotel properties will be managed for AHIP by its exclusive hotel manager, Tower Rock Hotels & Resorts Inc., a wholly owned subsidiary of O'Neill Hotels & Resorts Ltd. ("OHR"). Through its various operating entities, OHR currently manages more than 40 hotels across Canada and the U.S, and is an approved hotel management company by Hilton Worldwide, Marriott International and Starwood Worldwide.
One limited partnership unit (each, a "Unit") of AHIP has been issued in exchange for each outstanding Subscription Receipt without payment of additional consideration, which resulted in the issuance of 3,967,500 Units. The Toronto Stock Exchange (the "TSX") has advised that trading in the Subscription Receipts has been halted and the Subscription Receipts will be de-listed as at the close of trading today. The Units issued upon exchange of the Subscription Receipts have been listed on the TSX.
AHIP's Units are listed on the TSX under the symbol HOT.UN. After the issuance of the Units in exchange for the Subscription Receipts, AHIP has 14,372,500 Units issued and outstanding.
An amount per Subscription Receipt equal to the amount per Unit of any cash distributions made by AHIP for which record dates have occurred during the period that the Subscription Receipts were issued and outstanding has become payable in respect of each Subscription Receipt. AHIP paid a cash distribution of Cdn$0.075 per Unit on November 15, 2013 to unitholders of record at the close of business on October 31, 2013. An equivalent amount per Subscription Receipt will be paid to the final holders of the Subscription Receipts no later than November 26, 2013.
November 2013 Cash Distribution
AHIP announced today the cash distribution of Cdn$0.075 per Unit for the period of November 1, 2013 to November 30, 2013, which is equivalent to Cdn$0.90 per Unit on an annualized basis. The distribution will be paid on December 16, 2013 to unitholders of record at the close of business on November 29, 2013.
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.
Long-Term Railway Contract in Jefferson City, Missouri
AHIP further announces the signing of a long-term contract with a national rail company for its previously purchased 77 room hotel in Jefferson City, Missouri. Renovations to bring the property up to Oak Tree Inn standards are expected to be completed by January 2014, at which time the rail contract, guaranteeing the majority of guestrooms, will commence. The investment is highly accretive to AHIP and meets AHIP's investment criteria.
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: market trends in the US Hotel Industry; AHIP's growth strategy; the management of the Acquisition Properties by OHR; the date and time when the Subscription Receipts will be de-listed by the TSX; the date on which the Subscription Receipt Adjustment Payment will be paid; and the timing of the completion of renovations at the Jefferson City, Missouri property and the corollary commencement of the rail contract guaranteeing the majority of the guestrooms for such property.
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 Properties. 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 the Prospectus.
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 Adjusted Funds From Operations per Unit through an accretive acquisition program, participation in strategic development opportunities and improvements to its properties through targeted value-added capital expenditure programs.
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
For further information:
Andrew Greig, Investor Relations
American Hotel Income Properties REIT LP
Suite 1660, 401 West Georgia Street
Vancouver, BC V6B 5A1
Tel: (604) 633-2857