VANCOUVER, Feb. 26, 2015 – American Hotel Income Properties REIT LP (“AHIP”) (TSX: HOT.UN; OTCQX: AHOTF) announced today the acquisition of a newly built 110-room Oak Tree Inn hotel in Wellington, Kansas (the “Property”) from SunOne Developments Inc. (“SunOne”) for a total purchase price of US$7,410,000 plus closing adjustments. The acquisition was financed by a combination of: (i) approximately US$1,435,000 from cash on hand; (ii) a new US$4,725,000 mortgage on the Property; (iii) the offset of approximately US$650,000 in mezzanine loans owed by SunOne to a subsidiary of AHIP; and (iv) the issuance of US$600,000 (or 66,927 units) of AHIP units from treasury.
The new mortgage has a variable rate of the 30-day LIBOR rate plus 3.00% with a floor interest rate of 4.00%. It has a 10-year term with a 20-year amortization schedule. The newly-issued AHIP units were issued at Cdn$11.20 per unit, which represents the five-day volume-weighted average trading price of the units on the Toronto Stock Exchange.
Mr. Rob O’Neill, Chief Executive Officer of AHIP, commented, “The new Wellington hotel will be the flagship of the Oak Tree Inn portfolio, the highest quality chain of crew lodging facilities presently serving the U.S. freight railway industry. This is the fourth property delivered by SunOne to AHIP over the past year and is secured by a long-term railway contract that guarantees the majority of its available room nights, and also extends its 20-year relationship with the railway in Wellington for another decade.” The Property is located in Wellington, Kansas, which is approximately 30 miles south of Wichita, Kansas. The new hotel includes an existing Penny’s Diner and will be managed by TR Lodging Enterprises Inc., a wholly-owned subsidiary of O’Neill Hotels & Resorts Ltd. The existing Wellington hotel will continue to be used in operations. The grand opening is scheduled for Thursday March 5, 2015 with a formal ceremony including city officials, railway representatives and other key dignitaries.
Following this acquisition, AHIP’s 61-hotel portfolio will consist of 38 Oak Tree Inn hotels with 2,882 guestrooms and 23 branded hotels with 2,347 guestrooms franchised with leading national and international hotel brands.
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