American Hotel Income Properties REIT LP completes portfolio acquisition of three Marriott-branded, select-service hotels in Florida for US$30.8 Million

VANCOUVER, Aug. 6, 2015 /CNW/ - American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF) announced today the completion of its previously announced acquisition of a portfolio of three Marriott-branded, select-service hotel properties (the "Acquisition Properties") for an aggregate purchase price of US$30.8 million excluding approximately US$3.2 million for brand-mandated property improvement plans (the "PIPs"), approximately US$1.0 million for the defeasance of existing loans ("Defeasance") and before customary closing and post-acquisition adjustments.

The Acquisition Properties are located in Ocala, Florida with a total of 352 guestrooms that have been acquired below management's estimate of replacement cost. The Acquisition Properties include a 169-room Courtyard, a 96-room Fairfield Inn & Suites and an 87-room Residence Inn. The three hotels are franchised by Marriott International and are strategically located in Florida on a transportation corridor near a variety of major demand generators. Ocala is located in north central Florida and is approximately a 90-minute drive to both the Gulf and Atlantic coasts, Tampa Bay and Orlando. Ocala is one of the top thoroughbred centres in the world, with nearly 500 farms, breeding and training facilities.

AHIP funded the purchase price and the PIPs using a combination of cash on hand and a new US$19.0 million commercial mortgage-backed securities ("CMBS") mortgage. The new interest-only mortgage is for a 10-year term with a fixed interest rate of 4.21%. The lender has also agreed to provide an FF&E reserve waiver for the first 24 months.

Rob O'Neill, AHIP's Chief Executive Officer, commented, "We are pleased to acquire these high-quality assets at prices well below replacement cost in a strong transportation-oriented market with solid underlying fundamentals. PKF Hospitality Research is forecasting RevPAR growth of 9.9% in 2015 and 8.0% in 2016, respectively, for these types of hotels, compared to national growth rates of 7.3% and 6.5%. The properties complement our existing Marriott-branded Florida hotels in Melbourne and Titusville, and further diversifies our portfolio. In total, AHIP now has 12 Marriott-branded, select-service hotels in its portfolio. We intend to capitalize on the ongoing growth in the U.S. hotel industry and utilize the availability of low cost CMBS financing to fund a steady pipeline of accretive acquisitions and provide stable returns in order to deliver value to AHIP's unitholders."

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 post-acquisition adjustments to the purchase price for the Acquisition Properties; the cost for the PIPs; the terms of the new CMBS mortgage for the Acquisition Properties; the future growth of the Ocala, Florida hotel market and the broader U.S. hotel industry; PKF Hospitality Research's forecasts with respect to RevPar growth; the future availability of low cost CMBS financing; the availability of accretive acquisition opportunities; and references to the management of the Acquisition Properties by AHIP's exclusive hotel manager, Tower Rock Hotels & Resorts Inc.

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, the ability to secure CMBS financing, the ability to successfully integrate the Acquisition Properties and expectations and assumptions related to capitalization rates, fees and reserves and replacement costs for the Acquisition Properties, as applicable. 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 May 13, 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 railroad 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 currently owns 73 hotels including 38 hotels serving the U.S. rail industry pursuant to long-term railway contracts and 35 hotels affiliated with leading national and international hotel brands. 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]