- All 79 hotels are currently open for business and are serving guests in compliance with government health guidelines
- Decline in occupancy rates in the past week as a result of social distancing mandates, travel restrictions and overall heightened awareness of COVID-19
- Aggressive cost saving and cash management strategies have been implemented to preserve cash and liquidity
- March 2020 distribution of US$0.038 will be paid on April 15, 2020
- Temporary suspension of monthly distributions starting April 2020
VANCOUVER, March 20, 2020 /CNW/ - American Hotel Income Properties REIT LP ("AHIP" or "the Company") (TSX: HOT.UN, HOT.U, and HOT.DB.U) is providing an update on its hotel operations with the impacts of COVID-19 and related government initiated measures. All 79 of AHIP's hotels are currently open and accommodating guests; however, based on reduced business levels the Company has implemented a comprehensive expense reduction program and cash management strategy to help preserve capital during this period of uncertainty. As previously announced, a March 2020 distribution of US$0.038 per unit will be paid on April, 15, 2020. However, AHIP will subsequently suspend monthly distributions until economic conditions improve and COVID-19 issues abate.
"We continue to focus on actively managing our assets during these unprecedented and unique circumstances," said John O'Neill, CEO. "Our current liquidity and the brand-supported deferral of all capital expenditures to 2021 is providing us with a strong foundation to manage through this period of economic uncertainty. In addition, even though our select-service hotels in secondary markets have continued to perform at higher occupancy and rate levels than many of our peers, we have worked closely with our hotel manager to proactively respond to changing business levels by aggressively reducing operating expenses. However, with such unprecedented economic uncertainty facing our sector, the decision was made by AHIP's board of directors to temporarily suspend our monthly cash distribution based on the long-term best interests of AHIP and our unitholders. We believe this is a sensible and prudent decision to preserve liquidity during this ongoing period of disruption."
Update on Hotel Operations:
All 79 hotels in AHIP's recently re-focused premium branded portfolio are currently open for business. The portfolio in aggregate is well positioned for continued operations as the properties are primarily select-service, rooms-focused, located in U.S. secondary cities and non-gateway markets, and often cater to vehicle-based travelers. Hotel management has modified operations at each property to ensure the health and safety of hotel employees and guests as well as adherence to regional and national health mandates. These modifications include closing or limiting food and beverage offerings at the hotels.
Recent measures enacted by U.S. government agencies due to COVID-19 concerns have in the past week caused a rapid deterioration in the pace of guestroom bookings and occupancy rates, and have impacted hotel performance in the month of March.
Cost Saving and Cash Preservation Strategy:
In anticipation of further volume declines within the industry over the coming months, AHIP, in conjunction with its hotel manager, has implemented aggressive and comprehensive cost savings measures, including: significantly reducing staffing levels; consolidating hotel personnel where clusters of hotels are located within close proximity; modifying food and beverage operations; and brand supported deferral of capital expenditure programs into 2021.
Temporary Suspension of Monthly Cash Distribution:
AHIP's board of directors has approved the temporary suspension of the Company's monthly distribution, beginning in April 2020, until economic conditions and the performance of AHIP's hotels sufficiently improve. This was a decision based on the recent deteriorating demand across the hotel sector which is expected to continue to negatively impact future guest bookings and occupancy levels at AHIP's properties – due in part to government mandated social distancing measures that have severely restricted travel within the United States. While this economic uncertainty continues, AHIP's board and management believe cash preservation is of upmost importance and the temporary suspension of the monthly distribution is a prudent measure to ensure the long-term health of the business. AHIP's board of directors will continue to regularly review the Company's performance in order to determine an appropriate time for reinstatement of monthly distributions. The previously declared March 2020 distribution of US$0.038 per unit will be paid on April 15, 2020 to unitholders of record as of the close of business on March 31, 2020.
Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable securities laws (also known as forward-looking statements). Forward looking information 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 generally can be identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "feel", "intend", "may", "plan", "predict", "project", "subject to", "will", "would", and similar terms and phrases, including references to assumptions. Some of the specific forward-looking statements in this news release include, but are not limited to, statements with respect to: the temporary suspension of AHIP's monthly distribution starting in April 2020 and the reasons for such suspension; AHIP's board will continue to monitor performance in order to determine the appropriate time for reinstatement of monthly distributions; the payment of the March 2020 distribution on April 15, 2020; AHIP's cost saving and cash preservation strategy and the components and intended outcomes thereof; AHIP's liquidity and brand-supported deferral of all capital expenditures to 2021 providing AHIP with a strong foundation to manage through this period of economic uncertainty; AHIP's portfolio being well positioned for continued operations and the supporting reasons; anticipated further volume declines within the industry over the coming months; AHIP's expectation that recent deteriorating demand across the hotel sector will continue to negatively impact future guest bookings and occupancy levels at AHIP's properties; and AHIP's stated long-term objectives.
Forward-looking information is based on a number of key expectations and assumptions made by AHIP, including, without limitation: the COVID-19 outbreak will continue to negatively impact the U.S. economy, U.S. hotel industry and AHIP's business, and the extent and duration of such impact; AHIP's properties being well positioned for continued operations; AHIP will be able to continue to operate its 79 hotels during the COVID-19 outbreak and will not be forced to close any properties as a result of government regulations or lack of sufficient guest bookings; AHIP's cost savings and cash management strategies will achieve their stated objectives and AHIP will continue to have sufficient funds to meet its financial obligations. 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 statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future performance or results as actual results may differ materially from those expressed or implied in such forward-looking statements. Those risks and uncertainties include, among other things, risks related to: the impacts of the COVID-19 outbreak on the U.S. economy, the hotel industry, the willingness of the general public to travel, the level of consumer confidence in the safety of travel and AHIP's business, all of which are expected to negatively impact AHIP and may materially adversely affect AHIP's investments, results of operations, financial condition and AHIP's ability to obtain additional equity or debt financing, or re-finance existing debt, or make interest and principal payments to its lenders and to holders of AHIP's debentures, and otherwise satisfy its financial obligations and may cause AHIP to be in non-compliance with the financial covenants under its existing credit facilities and cause a default thereunder; there is no guarantee that monthly distributions will be reinstated, and if reinstated, as to the timing thereof or what the amount of the monthly distribution will be; the suspension of monthly distributions is expected to negatively impact the market price of AHIP's units and debentures; the pace of recovery following the COVID-19 outbreak cannot be accurately predicated and may be slow; AHIP's properties may not perform better than those of other hotel REIT's or other comparable properties during the COVID-19 outbreak or thereafter; AHIP's cost saving and cash management initiatives may not achieve their stated objectives; occupancy may continue to decline and AHIP may be forced to close certain of its hotels; and further government restrictions on travel, additional mandated social distancing and other health related regulations related to the COVID-19 outbreak may force AHIP to close its hotels. Management believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions and information currently available; however, management can give no assurance that actual results will be consistent with these forward-looking statements. Additional information about risks and uncertainties is contained in AHIP's MD&A dated March 10, 2020 and annual information form for the year ended December 31, 2018, copies 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. 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 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.
ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT LP
American Hotel Income Properties REIT LP (TSX: HOT.UN,TSX: HOT.U,TSX: HOT.DB.U), or AHIP, is a limited partnership formed to invest in hotel real estate properties across the United States. AHIP's portfolio of 79 premium branded, select-service hotels are located in secondary metropolitan markets that benefit from diverse and stable demand. AHIP hotels operate under brands affiliated with Marriott, Hilton, IHG, Wyndham and Choice Hotels through license agreements. The Company's long-term objectives are to build on its proven track record of successful investment, deliver monthly U.S. dollar denominated distributions to unitholders, and generate value through the continued growth of its diversified hotel portfolio. More information is available at www.ahipreit.com.
SOURCE American Hotel Income Properties REIT LP
For further information: Jamie Kokoska, Director, Investor Relations, Phone: 604-670-6242, Email: [email protected]