American Hotel Income Properties REIT LP announces closing of US$37.1 million hotel portfolio acquisition

VANCOUVER, March 12, 2014 /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 Virginia for an aggregate purchase price of approximately US$37.1 million, including up to US$1.6 million for defeasance of existing debt, and before customary closing and post-acquisition adjustments. The purchase price does not include a US$6.0 million restricted cash reserve established by AHIP for brand mandated property improvement plans (the "PIPs") related to the Acquisition Properties.

The Acquisition Properties represent a total of 403 guest rooms in Virginia and consist of three Hampton Inn hotels (a brand controlled by Hilton Worldwide, Inc.) and one Fairfield Inn & Suites hotel (a brand controlled by Marriott International, Inc.). 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.

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 that closed on October 31, 2013 and new CMBS financing.

Robert O'Neill, AHIP's Chief Executive Officer, commented, "This investment is consistent with 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. All four properties are proximate to Interstate highway exits. James Madison University in Harrisonburg, a NCAA Division I school with approximately 20,000 students enrolled, is an ideal lodging demand generator. The ten-year, 4.97% fixed interest rate CMBS financing also highlights a key aspect of our conservative approach to leverage, aimed at providing highly stable returns to our unitholders."

Mr. O'Neill continued, "This high-quality and well-maintained portfolio has been purchased at a price below our estimate of its replacement cost, in markets that have strong underlying fundamentals with expectations for near term growth. 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 Acquisition 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.

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 Properties; local lodging demand generators; the completion and estimated costs of PIPs; the near term growth of the Acquisition Properties and US hotel industry overall; the availability of accretive acquisition opportunities; expansion of the AHIP rail portfolio; and future availability of low cost CMBS financing.

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

Andrew Greig, Investor Relations
American Hotel Income Properties REIT LP
Suite 1660, 401 West Georgia Street
Vancouver, BC V6B 5A1
Tel: [phone]
Email: [email protected]