AHIP Board approves commitment to purchase a new 25-room Oak Tree
Inn and Penny's Diner located in Brunswick, Maryland, secured by a
long-term contract
VANCOUVER, Aug. 23, 2013 /PRNewswire/ - American Hotel
Income Properties REIT
LP ("AHIP") (Toronto Stock Exchange: HOT.UN) announced today that
its
Board of Directors have approved the commitment with SunOne
Developments Inc. ("SunOne") to purchase a new 25-room Oak Tree Inn
and
Penny's Diner located in Brunswick,
Maryland, secured by a long-term
railway contract. The Oak Tree Inn and 24-hour Penny's Diner
(collectively, the "Brunswick Facilities") will be financed and
developed in accordance with the Master Development Agreement
already
in place between SunOne and AHIP. AHIP has agreed to provide
mezzanine
financing of US$0.4 million to
SunOne, and upon completion, AHIP has
agreed to a total purchase price of US$2.7
million. This price is equal
to 95% of the as-stabilized appraised value, as determined by a
nationally recognized appraisal company. Based upon a
first-year
budgeted net operating income projected by the appraiser, the
going-in
capitalization rate is 10.7% and the expected return on equity
is
12.5%. Management anticipates that its investment in the
Brunswick
Facilities will be accretive to unitholders and is satisfied that
all
AHIP investment criteria have been met.
The Brunswick Facilities will be constructed on a 2.14 acre
site,
approximately 1.3 miles from the railway crew change office, and
they
are expected to open for business by June
30, 2014. A contract has been
executed for a 10-year period with a major US railway, which
has
invested more than US$69 million in
its Maryland network during
2012.
Commercial lodging demand from a variety of sources is expected
to
supplement railway demand and would thereby enable this Oak Tree
Inn to
operate in excess of 90% occupancy.
Rob O'Neill, Chief Executive
Officer, commented "We are pleased to work
with our railway client to provide a uniquely sized Oak Tree Inn,
along
with a 24-hour Penny's Diner, that was economic for our client
and
accretive for our Unitholders."
The Brunswick Facilities are one of the four properties
previously
referred to by Mr. O'Neill in AHIP's August
8, 2013 news release. There
is an anticipated purchase price of approximately US$14.7 for the three
remaining properties currently under preliminary agreement as
additions
to AHIP's portfolio.
AHIP`s portfolio is currently comprised of 32 fully operational
hotel
properties, including 2,564 guest rooms and 23 diners. AHIP's
commitment to purchase the new 25-room Oak Tree Inn and Penny's
Diner
at Brunswick, Maryland is in
addition to the previously announced
approval for AHIP's commitment to purchase the 56-room Oak Tree Inn
and
Penny's Diner scheduled to open by May 1,
2014 at Santa Teresa, New
Mexico. Along with AHIP's existing properties, both of these
new
properties will be managed by TR Lodging Enterprises Inc.
Forward-Looking Information
This news release contains forward-looking information within
the
meaning of applicable securities legislation, which reflects
AHIP's
current expectations regarding future events. Forward-looking
information is identified by the use of terms and phrases such
as
"anticipate", "believe", "budget", "could", "estimate",
"expect",
"going-in", "intend", "may", "plan", "predict", "project",
"will",
"would" and similar terms and phrases, and includes, but is not
limited
to, the closing of the acquisition of the Brunswick Facilities,
the
accretive nature of AHIP's investment in the Brunswick Facilities,
the
expected occupancy level for the Brunswick Oak Tree Inn and the
anticipated purchase price for three remaining properties under
preliminary agreement. Forward-looking information is based on a
number
of assumptions and is subject to a number of risks and
uncertainties,
many of which are beyond AHIP's control, that could cause
actual
results and events to differ materially from those that are
disclosed
in, or implied by, such forward-looking information. Such
assumptions
include, but are not limited to, construction of the Brunswick
Facilities not experiencing any material delays, and a
reasonably
stable North American economy and stock market. Such risks and
uncertainties include, but are not limited to, budgeted net
operating
income, going-in capitalization rate and expected return on
equity
being materially different than projected as well as the
factors
discussed under "Risk Factors" in AHIP`s Management's Discussion
and
Analysis dated August 8, 2013. The
forward-looking information
contained herein is made as of the date of this news release
and,
except as expressly required by applicable law, AHIP assumes no
obligation to publicly update or revise such information.
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 ("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 NEWS
RELEASE.
SOURCE American Hotel Income Properties REIT LP