VANCOUVER, Sept. 17, 2015 – American Hotel Income Properties REIT LP (“AHIP“) (TSX: HOT.UN; OTCQX: AHOTF) announced today the completion of its previously announced strategic acquisition of a portfolio of five railway lodging facilities (the “Railway Portfolio“) for an aggregate purchase price of approximately US$44.8 million, excluding closing and post-acquisition adjustments.
The Railway Portfolio is comprised of 586 guestrooms across five hotels located in Belen, New Mexico; Edgemont, South Dakota; Gillette, Wyoming; Guernsey, Wyoming; and Ravenna, Nebraska.
The Railway Portfolio is secured by long term lodging contracts with one of the top three railway companies in the United States. The contracts guarantee in excess of 80% of the available guestrooms for contract terms averaging approximately nine years. AHIP already has an existing relationship with this railway company through the current operations of three existing Oak Tree Inn hotels.
AHIP funded the acquisition of the Railway Portfolio with cash on hand from the proceeds of the bought deal completed on August 11, 2015 and a new US$ 20.0 million mortgage. The new mortgage has a 10-year term and a fixed interest rate of 4.25% for the first five years. The mortgage is also interest only for the first year and is then amortized over a 17-year term.
Rob O’Neill, AHIP’s Chief Executive Officer, commented, “I am pleased to report that AHIP has completed the acquisition of a substantial railway lodging portfolio. This acquisition has achieved a number of key objectives for us. We have now become this railway client’s sole dedicated crew lodging provider enabling us to move discussions forward on other new opportunities totaling more than 250 guestrooms in multiple states. By completing this acquisition, we have also firmly consolidated our leadership position within the industry as the largest and highest quality, dedicated railway lodging provider in the United States. The Railway Portfolio is an accretive acquisition, acquired below our estimate of replacement cost. We continue to pursue additional acquisitions in order to provide stable returns and create value for our unitholders. AHIP’s diversified portfolio is now comprised of 78 hotels totaling 6,798 guestrooms, which includes 43 rail hotels totaling 3,467 guestrooms and 35 branded hotels totaling 3,331 guestrooms.”
The Railway Portfolio will be managed for AHIP by TR Lodging Enterprises Inc., a wholly owned subsidiary of AHIP’s exclusive hotel manager Tower Rock Hotels & Resorts Inc. (“Tower Rock”). Tower Rock is a wholly owned subsidiary of O’Neill Hotels & Resorts Ltd.
