VANCOUVER, BRITISH COLUMBIA--(Marketwired - Dec. 5, 2016) -


American Hotel Income Properties REIT LP ("AHIP") (TSX:HOT.UN)(OTCQX:AHOTF) announced today that it has entered into an agreement with a syndicate of underwriters (the "Underwriters") co-led by CIBC Capital Markets and National Bank Financial Inc., with CIBC Capital Markets acting as sole bookrunner, to sell on a bought deal basis, 9,810,000 limited partnership units (each, a "Unit") of AHIP at a price of Cdn$10.20 per Unit for gross proceeds to AHIP of approximately Cdn$100 million (the "Offering").

AHIP has granted to the Underwriters an over-allotment option to purchase up to an additional 1,471,500 Units, representing 15% of the size of the Offering. The over-allotment option may be exercised in whole or in part at any time for a period of up to 30 days following closing of the Offering, to cover over-allotments, if any.

The closing of the Offering is expected to occur on or about December 22, 2016. The Offering is subject to customary regulatory approvals, including the Toronto Stock Exchange ("TSX"). The Units will be offered in each of the provinces of Canada pursuant to National Instrument 44-101 - Short Form Prospectus Distributions.

AHIP intends to use the net proceeds from the Offering to: (i) partially fund the potential acquisition (the "Acquisition") of three high-quality Embassy Suites by Hilton branded hotels located within the Midwestern region of the United States (the "Midwestern 3 Embassy Suites Portfolio"); and (ii) fund working capital, potential future acquisitions, and for general corporate purposes. In the event that the Acquisition does not close, the net proceeds will be used for general corporate purposes, which may include other potential future acquisitions.

Midwestern 3 Embassy Suites Portfolio

  • AHIP is in advanced negotiations for the purchase of the Midwestern 3 Embassy Suites Portfolio containing approximately 800 total guestrooms located within three large metropolitan cities of the Midwestern United States. The aggregate purchase price for the Midwestern 3 Embassy Suites Portfolio is approximately US$120 million including brand-mandated property improvement plans, before customary closing and post-acquisition adjustments. If the Acquisition is completed, the purchase price is expected to fall within AHIP's customary capitalization rate range for commercial hotel portfolios of 8.0% - 8.5% after taking into account all hotel management fees, a reserve for furniture, fixtures and equipment ("FF&E Reserve") and brand-mandated property improvement plans. The negotiations are not yet completed and are subject to various conditions, including finalization of a purchase and sale agreement, satisfactory completion of due diligence by AHIP, approval by AHIP's Board of Directors, and negotiation of formal legal documents.

  • The Acquisition is priced below management's estimates of replacement cost and is expected to be accretive to Adjusted Funds from Operations ("AFFO") per unit.

  • Embassy Suites by Hilton is a leading chain of upscale all-suite hotels within the Hilton brand with an atrium style layout and includes the trademark "Cooked-to-Order Breakfast".

  • If it proceeds, the closing date of the Acquisition is currently expected to occur during January 2017.

Rob O'Neill, AHIP's CEO, commented, "AHIP continues its stated growth strategy in our branded hotel segment. The potential announced acquisition is strategic, would expand our relationship with a leading hotel franchisor, and would further diversify our high quality branded hotel portfolio both geographically and through the movement to more upscale select-service hotels located within larger regional centers, as all three of these Embassy Suites hotels are located within cities with populations which exceed two million people."

AHIP's pro-forma leverage and payout ratios are expected by management to remain conservative and within management's target range after giving effect to the Acquisition. After the completion of the Acquisition and the previously announced acquisition of two Embassy Suites hotels located in Texas and Arizona, AHIP's Rail portfolio will be comprised of 46 properties containing 3,893 guestrooms and its Branded portfolio will consist of 50 properties containing 5,592 guestrooms, for a total of 96 hotels containing 9,485 guestrooms.

This news release shall not constitute an offer to sell or a solicitation of any offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. The securities being offered have not been, nor will they be, registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and such securities may not be offered or sold within the United States absent registration under the U.S. Securities Act or an applicable exemption from the registration requirements thereunder.


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", "opportunities", "plan", "potential", "predict", "project", "will", "would" and similar terms and phrases, including references to assumptions. Such information includes, but is not limited to: statements with respect to the closing of the Offering or the over-allotment option and the use of proceeds therefrom, including to partially fund the Acquisition; references to the capitalization rates associated with the Acquisition; references to the purchase price and closing costs of the Acquisition; calculations of the costs of the property improvement plans for the Acquisition; references to the strategic impacts of the potential Acquisition; the degree to which the Acquisition is expected to be accretive; pricing of the Midwestern 3 Embassy Suites Portfolio relative to replacement cost; the expected date of the completion of the Acquisition; the total number of hotels and rooms owned by AHIP after giving effect to the Acquisition and AHIP's other previously announced acquisitions; and AHIP's leverage and payout ratios after giving effect to the Acquisition. Actual events or results may differ materially.

Forward-looking information contained in this news release is based on certain 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 successfully integrate newly-acquired hotels; capital markets will provide AHIP with readily available access to equity and/or debt financing on terms acceptable to AHIP; and assumptions and expectations related to capitalization rates, fees and reserves, targeted completion dates, pro-forma leverage and payout ratios for the Acquisition. Although the forward-looking information contained in this news release is based upon what AHIP's management believes to be reasonable assumptions, AHIP cannot assure investors that actual events or results will be consistent with such information. Forward-looking information reflects current expectations of 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. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information, and a description of these factors can be found under "Risk Factors" in AHIP's Annual Information Form dated March 17, 2016 and under "Risks and Uncertainties" in AHIP's Management's Discussion and Analysis dated November 7, 2016, both of which are available on SEDAR at

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. The forward-looking information is made as of the date of this news release and AHIP assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

The potential Acquisition described in this news release is indicative only, as this potential transaction is being evaluated and negotiated with the seller. In addition, the Acquisition, if it proceeds, would be subject to conditions, including satisfactory completion of AHIP's due diligence, as applicable, and negotiation of formal legal documents. For example, AHIP cautions that there can be no assurance that any transaction will result from the negotiations for the Midwestern 3 Embassy Suites Portfolio described herein, or what the terms of such transaction, if any, may be. AHIP undertakes no obligation to update investors on the status of the potential Acquisition described in this news release unless and until its transaction due diligence is complete and the Board of Directors has approved the transaction.

In addition, consistent with its past practice and in the normal course, AHIP may have outstanding non-binding letters of intent and/or conditional agreements or may otherwise be engaged in discussions with respect to possible acquisitions of new properties which may or may not be material. However, there can be no assurance that any of these letters, agreements and/or discussions will result in an acquisition and, if they do, what the final terms or timing of any acquisition would be. AHIP expects to continue to actively pursue other acquisition and investment opportunities during the course of the Offering.


AHIP's current property portfolio is comprised of 91 hotels located in 28 U.S. states, representing 8,156 available guestrooms. The Rail Hotel segment, serving the U.S. freight railway industry, consists of 46 hotels comprising 3,893 guestrooms and 27 Penny's Diner restaurants. The Branded Hotel segment consists of 45 hotels comprising 4,263 guestrooms and is affiliated with leading hotel brands including Marriott, Hilton, and IHG.

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 rail crew accommodation, transportation-oriented, and branded, select service lodging sectors.

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 relating to AHIP, including its other public filings, is available on SEDAR at and on AHIP's website at


Contact Information:

American Hotel Income Properties REIT LP
Andrew Greig
Investor Relations