American Hotel Income Properties REIT LP announces US$106 million rail crew hotel secured credit facility

VANCOUVER, Dec. 16, 2015 /CNW/ - American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF) announced today that it has finalized a new secured credit facility for approximately US$106.0 million consisting of mortgage debt (the "New Mortgage"), an expansion term loan facility ("Expansion Term Loan"), a revolving line of credit (the "Revolver") and an accordion credit facility (the "Accordion Facility") which will provide significant additional borrowing capacity as and when required in connection with any future acquisitions. 

The new credit facility will replace: (i) two existing mortgages totaling approximately US$62.1 million which were scheduled to mature in 2018 and 2019; and (ii) a further two existing mortgages totaling approximately US$15.5 million which were scheduled to mature in 2024 and 2025.  In addition, the new credit facility will include new mortgage financing of approximately US$4.3 million for the recent acquisitions of the rail crew hotel in Fort Scott, Kansas as well as the recently completed expansions of existing Oak Tree Inn hotels located in Dexter, Missouri and Glendive, Montana.  The new credit facility, once completed, will also: (i) provide an Expansion Term Loan with loan proceeds of approximately US$3.2 million to fund three previously announced expansions to be completed during 2016; (ii) increase the Revolver from US$4.0 million to US$10.0 million; and (iii) provide a new Accordion Facility with additional borrowing capacity up to US$10.0 million to fund potential acquisitions. 

The New Mortgage will have a seven-year term and will be priced at 30-day LIBOR plus 280 basis points with amortization periods of between 18 to 20 years.  The Revolver will have an annual renewal and will be priced at 30-day LIBOR plus 280 basis points.  The Accordion Facility will also have an annual renewal and will be priced at 30-day LIBOR plus 300 basis points, subject to a floor rate of 3.50%. The Expansion Term Loan will be a variable rate, multi-year term loan priced at 30-day LIBOR plus 280 basis points.  Additionally, AHIP has entered into a notional value interest rate swap ("Swap") which will fix the New Mortgage interest rate at 4.72% for the entire term.  The first payment under the Swap will be on March 1, 2016.

rate at 4.72% for the entire term.  The first payment under the Swap will be on March 1, 2016.

The credit facility will be secured by AHIP's industry leading Oak Tee Inn rail crew portfolio along with a limited guarantee from AHIP's wholly owned subsidiary, American Hotel Income Properties Inc., a Maryland-incorporated REIT.  The credit facility and Swap will be provided by a syndicate of U.S. chartered banks.  After the completion of this financing and reflecting acquisitions completed since September 30, 2015, AHIP's pro-forma Debt-to-Gross Book Value ratio will increase to 50.5% from 50.1% as at September 30, 2015.

Mr. Rob O'Neill, Chief Executive Officer of AHIP commented, "We are pleased to announce this important secured credit facility that has significantly improved our company's debt profile.  The benefits will include annual cash savings of approximately US$1 million due to the longer amortization periods, additional liquidity of US$16 million to fund potential acquisitions, extending the maturity date of a significant mortgage due in 2018, pushing our weighted average loan term to 8.4 years and reducing our average interest rates to approximately 4.63%.  We continue to evaluate various accretive growth opportunities for both the rail crew and branded hotel portfolios, and will use the additional liquidity to capitalize on them.  AHIP has no significant debt maturities in the short term with approximately 3% of its mortgages maturing over the next seven years."

AHIP's current portfolio is comprised of 79 hotels totaling 6,915 guestrooms, which includes 44 Oak Tree Inn hotels totaling 3,585 guestrooms and 35 branded hotels totaling 3,330 guestrooms. AHIP's hotels are managed by ONE Hospitality Group, 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, references to: the expected completion of the credit facility, the terms of the New Mortgage, Revolver, Accordion Facility and Swap including, among other items, maturity and payment dates and interest rates; AHIP's cash savings of approximately $1 million per year; and AHIP's intention to continue to evaluate accretive growth opportunities and its intention to utilize additional liquidity to capitalize on such opportunities.

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, the continued strength of the U.S. lodging industry, and the ability to continue AHIP's growth strategy. 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 27, 2015 and under "Risks and Uncertainties" in AHIP's Management's Discussion and Analysis dated November 12, 2015, both of which are available on SEDAR at www.sedar.com.

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 is engaged primarily in the rail crew employee accommodation, transportation-oriented, and select-service lodging sectors. AHIP's properties are mostly located in secondary and tertiary markets in the United States in close proximity to railroads, airports, highway interchanges, and other demand generators. 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 TORONTO STOCK EXCHANGE 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

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