All amounts expressed in U.S. dollars unless
otherwise indicated.
VANCOUVER, May 9,
2014 /PRNewswire/ - American Hotel Income Properties REIT LP
("AHIP") (TSX: HOT.UN; OTCQX: AHOTF) today announced the
release of its financial results for the three months ended
March 31, 2014.
AHIP's current property portfolio is comprised of
43 hotels located in 20 states, representing 3,572
available guest rooms. Including its IPO in February 2013, AHIP has raised Cdn$140 million of equity and has acquired
$228 million of hotel investment
properties and has commitments to acquire an additional
$15 million of contracted
rail hotel opportunities by year end.
Q1 2014 FINANCIAL HIGHLIGHTS
- Total revenues were $17.2
million for the three months ended March 31, 2014 boosted by new Oak Tree Inn
properties, the acquisition of four Pittsburgh hotels in November 2013 and four Virginia hotels in March 2014.
- Net operating Income ("NOI") was $5.4
million for the three months ended March 31, 2014.
- Funds from operations ("FFO") and adjusted funds from
operations ("AFFO") were $2.0 million
and $1.9 million ($0.14 and $0.13 per
Unit, respectively) for the three months ended March 31, 2014.
- Total distributions of Cdn$0.225
per limited partnership unit ("Unit") were declared during the
three months March 31, 2014,
representing Cdn$0.90 per Unit on an
annualized basis.
- AHIP's cash balance was $20.7
million, including restricted cash of $12.4 million, as at March
31, 2014.
- Debt to gross book value was 52.6% as at March 31, 2014, in line with AHIP's targeted debt
to gross book value ratio of between 50-55%.
- AHIP's pro forma payout and leverage ratios remain
conservative, after giving effect to the completion of the
previously announced development projects, the Jefferson City renovation project, the
Pittsburgh Portfolio acquisition and the Virginia Portfolio
acquisition (see below), at approximately 79.5% on projected 2014
AFFO and a projected debt to gross book value of approximately
51.2%.
- The Oak Tree Inn hotels, Pittsburgh and Virginia Portfolios achieved a
combined 5.3% year-over-year increase in revenues (from the same
period in 2013) with occupancy, average daily rate ("ADR"), revenue
per available room ("RevPAR") all higher during the quarter ended
March 31, 2014:
- Total Oak Tree Inn revenue increased by 5.4%,
- Pittsburgh Portfolio revenue increased by 4.3%, and
- Virginia Portfolio revenue increased by 9.5%
It should be noted that AHIP purchased the
Virginia Portfolio on March 12, 2014
and its year-over-year increase is a comparison of partial
quarters. The Pittsburgh Portfolio was purchased on November 21, 2013.
- The U.S. hotel industry reported increased in 3 key performance
metrics for the first quarter 2014 in year-over-year measurements
with occupancy up 2.9%; ADR rose 3.8% and RevPAR was up 6.8%,
according to data from STR released on April
25, 2014.
RECENT EVENTS
- On March 12, 2014, AHIP completed
the acquisition of four hotel properties located in Virginia (the "Virginia Portfolio") for
an aggregate purchase price of approximately $37.2 million excluding closing adjustments and
the funding of a $6.0 million
restricted cash reserve for brand mandated property improvement
plans. The Virginia Portfolio comprises an aggregate of 403 guest
rooms and consists of three hotels under the "Hampton Inn" flag, (a
Hilton brand) and one hotel under the "Fairfield Inn & Suites"
flag (a Marriott brand). The properties are located in Harrisonburg, Emporia and South
Hill, Virginia, near transportation hubs and other major
demand generators such as James Madison
University, manufacturing facilities, distribution centers,
and medical centers. The Virginia Portfolio was partially financed
by CMBS mortgage debt of $24.5
million with an interest rate fixed for ten years at
4.97%. The loan is interest only for the first four years and
then amortized over a 30 year period.
- On February 4, 2014 AHIP
announced the grand re-opening of a 77-room fully renovated Oak
Tree Inn hotel located in Jefferson City,
Missouri. This hotel was acquired on September 12, 2013, and on November 21, 2013, AHIP announced the signing of
a long-term contract for railway crew accommodation at the
hotel.
- On May 1, 2014, AHIP acquired a
brand new 56-room Oak Tree Inn hotel and Penny's Diner in
Santa Teresa, New Mexico, for a
total purchase price of $5.1 million.
$1.0 million of the purchase price
was paid through the issuance of 101,247 newly-issued HOT.UN units
at a five-day weighted average issue price of Cdn$10.825, with the remainder of the purchase
price a combination of mortgage financing and available cash. The
Oak Tree Inn hotel is secured by a long-term railway contract for
100% occupancy.
Mr. Robert
O'Neill, Chief Executive Officer, commented, "We are pleased
with our Q1 2014 revenues and results, which are in line with our
expectations and reflect the seasonally weakest quarter for revenue
and EBITDA for our portfolio. The cold weather conditions
experienced across most of North
America during the past few months did impact our operating
results, most notably as our energy expenses came in higher than
expected. Our results also reflect our excess cash holdings, which
were fully deployed on March 12, 2014
with the acquisition of our Virginia Portfolio."
"Coming into 2014, our focus has been to
deploy our available cash for acquisitions and to intensify our
efforts to identify, negotiate and close accretive acquisitions"
said Mr. O'Neill. To date in 2014, we have acquired our second
portfolio acquisition of non-rail, branded hotels (the Virginia
Portfolio) and our first development property at Santa Teresa, New Mexico, from our development
partner SunOne Developments Inc. ("SunOne"). In addition, we
have enhanced our senior management team to lead the company
through this exciting period with the transition of our founding
CFO, Robert Hibberd, to the position
of Executive Vice President to focus on acquisitions and capital
markets, and the addition of our new CFO, Azim Lalani."
"Our resources are now firmly in place to achieve
our key objectives. We continue to actively evaluate a significant
pipeline of accretive external acquisitions of high quality,
branded hotels. Furthermore, our railway hotel development pipeline
is scheduled to deliver three more new Oak Tree Inn hotels in 2014,
an increase of 185 rooms. Each of these three hotels have signed
long-term contracts for railway crew accommodation with national
rail companies which guarantee greater than 78.4% of their
available room nights. Upon completion of these previously
announced development projects, AHIP will own a total of 46 hotels
in 20 states comprising 3,757 guest rooms. This represents a 50.0%
increase in AHIP's total guest rooms in just over 12 months.
Following completion of development projects currently underway,
57% of AHIP's total rooms will be covered under minimum occupancy
guarantees from railway operators."
Mr. O'Neill continued, "The U.S. hotel market
continues to demonstrate solid industry fundamentals. AHIP is well
positioned to expand its portfolio through organic growth,
accretive acquisitions of branded focused-service hotels, further
development of hotels with occupancy guarantees under long term
contracts with railway operators, and secure long term financing at
low fixed interest rates. As AHIP earns substantially all of its
revenues in U.S. dollars, the recent strength of the U.S. dollar
has had a positive impact on cash flows to support our Canadian
dollar distributions."
CONFERENCE CALL
Robert O'Neill,
CEO, Robert Hibberd, Executive Vice
President and Azim Lalani, CFO, of
AHIP will host a conference call at 3:00
p.m. (Eastern time) or 12:00 p.m.
(Pacific time), on Friday May 9,
2014, to review the financial results and corporate
developments for the three month period ended March 31, 2014.
To participate in this conference call, please
dial one of the following numbers approximately 10 minutes prior to
the commencement of the call, and ask to join the American Hotel
Income Properties conference call.
Dial in numbers
Toll free dial in number (from Canada and USA)...................................
1-888-390-0546
International or Local
Toronto.............................................................
1-416-764-8688
Conference Call Replay
If you cannot participate on May 9, a replay of the conference call will be
available by dialing one of the following replay numbers. You will
be able to dial in and listen to the conference 120 minutes after
the meeting end time, and the replay will be available until
May 16, 2014.
Please enter the Replay ID# 564311, followed by
the # key.
Replay Dial in number (Toll Free from Canada or the USA).................. 1-888-390-0541
International or Local Toronto
...........................................................
1-416-764-8677
NON-IFRS MEASURES
Certain non-IFRS financial measures are included
in this news release, which include NOI, FFO, AFFO and debt to
gross book value. These terms are not measures recognized under
International Financial Reporting Standards ("IFRS") and do
not have standardized meanings prescribed by IFRS. Real estate
investment trusts often refer to NOI, FFO and AFFO as supplemental
measures of performance and debt to gross book value as a
supplemental measure of financial condition.
Debt to gross book value, NOI, FFO and AFFO
should not be construed as alternatives to measurements determined
in accordance with IFRS as indicators of AHIP's performance or
financial condition. AHIP's method of calculating NOI, FFO, AFFO,
debt and gross book value may differ from other issuers' methods
and accordingly may not be comparable to measures used by other
issuers. For further information, please refer to AHIP's
Management's Discussion and Analysis dated May 9, 2014, which is available on SEDAR at
www.sedar.com and on AHIP's website at www.ahipreit.com.
FORWARD-LOOKING INFORMATION
Certain statements in this press release may
constitute "forward-looking" information that involves known and
unknown risks, uncertainties and other factors, and it may cause
actual results, performance or achievements or industry results, to
be materially different from any future results, performance or
achievements or industry results expressed or implied by such
forward-looking information. Forward-looking information is
identified by the use of terms and phrases such as "anticipate",
"believe", "could", "estimate", "expect", "intend", "may", "plan",
"predict", "project", "subject to", "will", "would", and similar
terms and phrases, including references to assumptions.
Forward-looking information contained in this
press release is based on certain key expectations and assumptions
made by AHIP, including, without limitation, expectations and
assumptions respecting the amount of the expected monthly cash
distributions and annual yield for the Units and the timing to pay
such cash distributions to unitholders, and actual costs to
complete hotel property improvement plans. Although the
forward-looking information contained in this press release is
based upon what the 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 management regarding future events
and operating performance as of the date of this press 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 26, 2014, which is
available on SEDAR at www.sedar.com and on AHIP's website at
www.ahipreit.com.
The forward-looking information contained herein
is expressly qualified in its entirety by this cautionary
statement. Forward-looking information reflects management's
current beliefs and is based on information currently available to
AHIP. The forward-looking information is made as of the date of
this press 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.
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 railway 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 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
Additional information relating to AHIP,
including AHIP's interim financial statements for the three months
ended March 31, 2014, AHIP's
Management's Discussion and Analysis dated May 9, 2014, and other public filings are
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