The Contract Renewal encompasses 15 Oak Tree Inn hotels located in 13 states covering 1,363 guestrooms, or approximately 40% of AHIP's total railway hotel guestrooms
VANCOUVER, Oct. 27, 2015 – American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF) announced today the renewal of 15 railway hotel lodging contracts (the "Contract Renewal") with its largest railway customer for a term of five years, effective November 1, 2015.
The Contract Renewal encompasses 15 Oak Tree Inn hotels located in 13 states covering 1,363 guestrooms, or approximately 40% of AHIP's total railway hotel guestrooms, and guarantees minimum occupancy at 2015 levels over the term of the agreement. The Contract Renewal will increase the weighted average remaining term of AHIP's 43 railway contracts to 5.2 years.
Mr. Rob O'Neill, Chief Executive Officer of AHIP commented, "AHIP has a very strong track record of contract renewal success with our railroad clients, as we provide excellent value at our industry-leading Oak Tree Inn rail hotels and offer a unique "Dark and Quiet" experience for our railway guests. We are pleased that all 15 new contracts have higher daily rates accompanying the minimum room guarantees, and now also include built-in cost of living escalators that will provide stable and rising cash flows over the coming years. An extensive US$1.8 million property improvement program has also begun at these 15 hotels, including significant room upgrades."
Mr. O'Neill continued, "Since its IPO 32 months ago, AHIP has increased its guaranteed room percentage on the railway portfolio from 74% to 77%, and increased the weighted average remaining contract term from 3.5 years to 5.2 years. AHIP has also added over 900 railway guestrooms – increasing its rail portfolio by over 35% – and is expanding room capacity at four high occupancy hotels to meet rising demand. AHIP has engaged its development partner, SunOne Developments Inc., to begin construction on three new 24-room expansions, which will open during the first half of 2016. This complements the recently completed expansion in Dexter, Missouri."
The Contract Renewal properties are managed by TR Lodging Enterprises Inc., a wholly-owned subsidiary of O'Neill Hotels & Resorts Ltd.
AHIP's portfolio is comprised of 78 hotels totaling 6,798 guestrooms, which includes 43 railway hotels totaling 3,467 guestrooms and 35 branded hotels totaling 3,331 guestrooms.
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 guarantees by AHIP's rail customer, expected higher daily rates, projected cost of living escalators, expected stable and rising cash flows, the expected final cost of the extensive property improvement program to the 15 hotels and AHIP's intended expansion of three railway hotels. 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 continue AHIP's railway expansion 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 August 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.
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