American Hotel Income Properties REIT LP (“
AHIP”,
or the “
Company”) (TSX: HOT.UN, TSX: HOT.U, TSX:
HOT.DB. V), today announced its financial results for the three and
six months ended June 30, 2024.
All amounts presented in this news release are
in United States dollars (“U.S. dollars”) unless
otherwise indicated.
2024 SECOND QUARTER HIGHLIGHTS
- Diluted FFO per
unit (1) and normalized diluted FFO per unit (1) were $0.12 and
$0.10, respectively, for the second quarter of 2024, compared to
$0.19 and $0.14 for the same period of 2023.
- RevPAR (1)
increased 5.1% to $103 for the second quarter of 2024, compared to
$98 for the same period of 2023.
- ADR (1) increased
3.0% to $137 for the second quarter of 2024, compared to $133 for
the same period of 2023.
- Occupancy (1) was
75.4% for the second quarter of 2024, an increase of 160 basis
points (“bps”) compared to 73.8% for the same
period of 2023.
- NOI and normalized
NOI (1) were $24.2 million for the second quarter of 2024,
decreases of 4.3% and 11.0%, respectively, compared to $25.3
million and $27.2 million for the same period in 2023.
- AHIP had $26.7
million in available liquidity as at June 30, 2024, compared to
$27.8 million as at December 31, 2023. The available liquidity
of $26.7 million was comprised of an unrestricted cash balance of
$16.0 million and borrowing availability of $10.7 million under the
revolving credit facility.
“AHIP’s portfolio of premium branded select
service hotel properties continued to demonstrate strong demand
metrics in 2024.” said Jonathan Korol, CEO. “Portfolio ADR,
occupancy and RevPAR all achieved meaningful growth in the current
quarter. RevPAR increased 5.1% to $103, the highest level in the
history of the Company. While cost inflation is decelerating across
many cost categories, costs remain elevated resulting in pressures
to hotel operating margins.”
Mr. Korol added: “AHIP’s Board and management
team continue to advance our plan to preserve cash, enhance
financial stability and protect long term value for our
unitholders. In late 2023, we completed an amendment and extension
of our revolving credit facility, reduction and deferral of hotel
management fees, and temporary suspension of our monthly
distribution. We are currently executing a plan to address 2024
debt obligations with asset sales and loan refinancings. In the
first quarter, AHIP completed two asset sales and refinanced
mortgage debt for three hotels. We currently have 6 additional
hotels under contract for sale. These steps will strengthen our
liquidity and balance sheet to ensure we are positioned to benefit
when the industry operating and macroeconomic environment improves.
We will continue to monitor conditions and operating performance,
while considering further strategic opportunities to deliver value
over the long term.”
________________________(1) Non-IFRS
and other financial measures. See “NON-IFRS AND OTHER FINANCIAL
MEASURES” section of this news release.
2024 SECOND QUARTER REVIEW
FINANCIAL AND OPERATIONAL
HIGHLIGHTS
For the three months ended June 30, 2024, ADR
was $137, and occupancy was 75.4%, increases of 3.0% and 160 bps,
respectively, compared to the same period in 2023. Collectively,
strong ADR and increasing occupancy resulted in an increase of 5.1%
in RevPAR compared to the same period in 2023.
The improved RevPAR is attributable to higher
demand for the extended stay and select service properties. This is
partially due to improved performance of properties disrupted in
2023 by the weather-related damage and property renovations at
three hotels, as well as the disposition of properties with
lower-than-average portfolio RevPAR.
The ability to control and manage daily rates is
a key advantage of the lodging sector, which has enabled AHIP to
achieve growth in RevPAR, partially mitigating the effects of
rising labor costs and general inflationary pressures across the
portfolio.
NOI, NOI MARGIN AND DILUTED FFO PER
UNIT
NOI and normalized NOI were $24.2 million for
the three months ended June 30, 2024, decreases of 4.3% and 11.0%,
respectively, compared to NOI of $25.3 million and normalized NOI
of $27.2 million for the same period in 2023. The decrease in NOI
was primarily due to the disposition of the two hotel properties
completed in March 2024. The decrease in normalized NOI was due to
the same factors, and $1.9 million in business interruption
proceeds related to the weather-related damage at several hotel
properties in late December 2022 was included in the normalized NOI
in the same period of the prior year.
NOI margin was 32.9% in the current quarter, a
decrease of 60 bps compared to the same period in 2023. The
decrease in NOI margin was due to higher operating expenses as a
result of general cost inflation, escalated labor costs, and higher
property insurance premiums in April and May 2024. Although certain
operating expenses are expected to remain a challenge in 2024, the
decline of year-over year NOI margin has been reduced from 270 bps
in the first quarter of 2024 to 60 bps in the current quarter.
AHIP completed its property insurance renewal
effective June 1, 2024 with a decrease in premiums compared to the
prior period ended May 31, 2024. On an annualized basis, the
decrease from the prior period is approximately $1.6 million, which
will be recognized in earnings over a twelve-month period.
Diluted FFO per unit and normalized diluted FFO
per unit were $0.12 and $0.10 for the second quarter of 2024,
respectively, compared to diluted FFO per unit of $0.19 and
normalized diluted FFO per unit of $0.14 for the same period in
2023. Normalized diluted FFO per unit in the current quarter
excluded non-recurring expected insurance proceeds of $1.6 million,
mainly as a result of hail damage and a fire incident in the
current quarter. The decrease in normalized diluted FFO per unit
was due to: (i) $1.9 million in business interruption proceeds
related to the weather-related damage at several hotel properties
in late December 2022 that was included in the normalized diluted
FFO per unit in the same period of the prior year; (ii) lower NOI,
and (iii) higher financing costs in the current quarter.
LEVERAGE AND LIQUIDITY
|
KPIs |
Q2 2024 |
Q1 2024 |
Q4 2023 |
Q3 2023 |
Q2 2023 |
|
Debt-to-GBV (1) |
52.0% |
52.2% |
51.9% |
51.1% |
51.6% |
|
Debt-to-TTM EBITDA (1) |
9.7x |
10.5x |
10.6x |
10.1x |
9.8x |
________________________(1) Non-IFRS
and other financial measures. See “NON-IFRS AND OTHER FINANCIAL
MEASURES” section of this news release.
Debt to gross book value as at June 30,
2024 was 52.0%, an increase of 10 bps compared to December 31,
2023. Debt to TTM EBITDA as at June 30, 2024 was 9.7x, a decrease
of 0.1x compared to June 30, 2023. The improvement in Debt to TTM
EBITDA was mainly due to the five hotel properties that were in
managed foreclosure as of June 30, 2024.
As at June 30, 2024, AHIP had $26.7 million in
available liquidity, compared to $27.8 million as at
December 31, 2023. The available liquidity of $26.7 million
was comprised of an unrestricted cash balance of $16.0 million and
borrowing availability of $10.7 million under the revolving credit
facility. AHIP has an additional restricted cash balance of $40.3
million as at June 30, 2024.
AHIP has 70.6% of its debt at fixed interest
rates following the expiry of the interest rate swaps on its senior
credit facility on November 30, 2023. The notional value of the
interest rate swaps was $130.0 million prior to their expiry. As a
result of this expiry, at the current average secured overnight
financing rate (“SOFR”) of 5.3%, the
incremental annual interest expense is estimated to be
approximately $5.2 million for the twelve months ended November 30,
2024.
Northeast Portfolio III CMBS
Loan
During the first quarter of 2024, AHIP notified
the master servicer for the AHIP Northeast Portfolio III CMBS Loan
(“Loan Portfolio” or
“CMBS Loan”) of an imminent change in
circumstances which resulted in the master servicer issuing a
notice of default as well as a notice of acceleration and demand
for payment on April 19, 2024. This Loan Portfolio is
secured by four hotels: a Fairfield Inn & Suites and a Hampton
Inn located in White Marsh, MD, a Homewood Suites located in Egg
Harbor Township, NJ and a SpringHill Suites located in Brookhaven,
NY (collectively, the “Hotels” or
“Assets”). On May 16, 2024, a receiver was duly
appointed over the Hotels pursuant to an appointment order.
The principal amount of this non-recourse CMBS
Loan as of June 30, 2024 was $51.0 million and the receiver is
currently making principal and interest payments. AHIP ceased
recognizing revenue and expenses, relating to the Hotels on the
effective date of the appointment order. The CMBS Loan and Assets
will remain on AHIP’s balance sheet until the Hotels have been
transferred to or sold by the special servicer. Removal of this
Loan Portfolio from Debt to TTM EBITDA contributed to the
improvement in this measure in the second quarter of 2024.
CAPITAL RECYCLING
In March 2024, AHIP completed the strategic
dispositions of hotel properties in Harrisonburg, Virginia and
Cranberry Township, Pennsylvania for gross proceeds of $8.55
million and $8.25 million respectively. Under the terms of the
credit agreement governing the revolving credit facility and
certain terms loans (the “Sixth Amendment”), 50%
of the net proceeds from the sale of these two hotel properties,
which is 0.7 million, was used to pay down outstanding amounts
under such term loans in the second quarter of 2024.
In May and June 2024, AHIP entered into
agreements to dispose of three hotel properties in Ocala, Florida
for gross proceeds of $33.7 million. The dispositions are currently
expected to close in the third and fourth quarters of 2024.
In July and August 2024, AHIP entered into
agreements to dispose of hotel properties in each of Dallas, Texas,
Egg Harbor Township, New Jersey, and Corpus Christi, Texas for
gross proceeds of $27.0 million, $11.1 million, and $10.3 million
respectively. The dispositions are currently expected to close in
the fourth quarter of 2024.
In August 2024, AHIP completed the strategic
dispositions of two hotel properties in Amarillo, Texas for gross
proceeds of $9.3 million and $8.3 million, respectively. Under the
terms of the Sixth Amendment, 50% of the net proceeds from the sale
of these two hotel properties will be used to pay down outstanding
amounts under such term loans in the second half of 2024.
AHIP intends to use the net proceeds from these
dispositions to pay down CMBS mortgage debt and the term loans
governed by the Sixth Amendment. The combined sales price for these
properties, which have been disposed or currently under agreements
for dispositions in 2024, represents a blended Cap Rate of 7.4% on
2023 annual hotel EBITDA, after adjusting for an industry standard
4% furniture, fixtures, and equipment (“FF&E”)
reserve. This also represents $87 thousand per key and a blended
yield of 5.6% after adjusting for the expected capital expenditure
requirements.
AHIP intends to continue to execute its strategy
to divest assets to reduce debt and is currently marketing a
selected number of additional properties which are expected to
demonstrate value above the current Unit trading price.
SAME PROPERTY KPI
The following table summarizes key performance
indicators (“KPIs”) for the portfolio for the five
most recent quarters with a comparison to the same period in the
prior year.
|
KPIs |
Q2 2024 |
Q1 2024 |
Q4 2023 |
Q3 2023 |
Q2 2023 |
|
ADR |
$136 |
$133 |
$127 |
$133 |
$134 |
|
Change compared to same period in prior year - % increase
(decrease) |
1.5% |
(0.7%) |
0.1% |
3.3% |
6.6% |
|
Occupancy |
75.0% |
67.7% |
67.2% |
71.7% |
74.1% |
|
Change compared to same period in prior year - bps increase
(decrease) |
90 |
60 |
(124) |
(209) |
(102) |
|
RevPAR |
$102 |
$90 |
$86 |
$95 |
$99 |
|
Change compared to same period in prior year - % increase
(decrease) |
3.0% |
0.2% |
(1.7%) |
0.3% |
5.2% |
|
NOI Margin |
32.3% |
28.5% |
26.0% |
30.3% |
33.8% |
|
Change compared to same period in prior year - bps increase
(decrease) |
(150) |
(214) |
(584) |
(298) |
(124) |
Same property ADR in the current quarter is
$136, an increase of 1.5% compared to the same period of 2023. Same
property occupancy increased by 90 bps to 75.0% in the current
quarter compared to the same period of 2023. The increase in ADR
and occupancy is primarily attributable to higher demand for the
extended stay and select service properties.
Same property NOI margin decreased by 150 bps to
32.3% for the second quarter of 2024, compared to the same period
of 2023. The decrease in the same property NOI margin was due to
higher operating expenses as a result of general cost inflation,
escalated labor costs, and higher property insurance premiums in
April and May 2024. The labor environment is improving although
labor is expected to remain a challenge in 2024 with increased
turnover, which impacts hotel management continuity, hiring and
training expenses.
SELECTED INFORMATION
|
|
|
Three months ended June 30 |
Six months ended June 30 |
|
(thousands of dollars, except per Unit
amounts) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
Revenue |
|
73,614 |
|
75,483 |
|
140,103 |
|
140,941 |
|
|
Income from operating activities |
|
19,619 |
|
17,919 |
|
27,188 |
|
27,337 |
|
|
Income (loss) and comprehensive income (loss) |
|
(1,591 |
) |
10,658 |
|
(9,700 |
) |
9,058 |
|
|
NOI |
|
24,194 |
|
25,287 |
|
41,384 |
|
44,025 |
|
|
NOI Margin |
|
32.9 |
% |
33.5 |
% |
29.5 |
% |
31.2 |
% |
|
|
|
|
|
|
|
|
Hotel EBITDA (1) |
|
22,634 |
|
22,867 |
|
38,307 |
|
39,469 |
|
|
EBITDA (1) |
|
19,825 |
|
20,233 |
|
33,145 |
|
34,277 |
|
|
|
|
|
|
|
|
|
Cashflow from operating activities |
|
10,644 |
|
12,403 |
|
10,687 |
|
25,497 |
|
|
Distributions declared per unit - basic and diluted |
|
- |
|
0.045 |
|
- |
|
0.09 |
|
|
Distributions declared to unitholders - basic |
|
- |
|
3,548 |
|
- |
|
7,094 |
|
|
Distributions declared to unitholders - diluted |
|
- |
|
4,033 |
|
- |
|
8,059 |
|
|
Dividends declared to Series C holders |
|
1,138 |
|
1,011 |
|
2,237 |
|
2,011 |
|
|
|
|
|
|
|
|
|
FFO diluted (1) |
|
11,014 |
|
16,653 |
|
12,220 |
|
26,454 |
|
|
FFO per unit - diluted |
|
0.12 |
|
0.19 |
|
0.15 |
|
0.30 |
|
|
Normalized FFO per unit - diluted |
|
0.10 |
|
0.14 |
|
0.12 |
|
0.21 |
|
|
|
|
|
|
|
|
|
AFFO diluted (1) |
|
9,185 |
|
13,514 |
|
7,389 |
|
20,595 |
|
|
AFFO per unit - diluted (1) |
|
0.10 |
|
0.15 |
|
0.09 |
|
0.23 |
|
| (1) See
“Non-IFRS and Other Financial Measures” |
SELECTED INFORMATION
|
(thousands of dollars) |
|
June 30,2024 |
|
December 31,2023 |
|
|
|
|
|
|
|
Total assets |
|
918,960 |
|
954,887 |
|
|
Total liabilities |
|
697,735 |
|
721,937 |
|
|
Total non-current liabilities |
|
394,825 |
|
529,178 |
|
|
Term loans and revolving credit facility |
|
565,964 |
|
599,873 |
|
|
|
|
|
|
|
Debt to gross book value |
|
52.0 |
% |
51.9 |
% |
|
Debt to TTM EBITDA (times) |
|
9.7 |
|
10.6 |
|
|
Interest coverage ratio (times) (1) |
|
1.7 |
|
1.9 |
|
|
|
|
|
|
|
Term loans and revolving credit facility: |
|
|
|
|
Weighted average interest rate |
|
5.73 |
% |
4.95 |
% |
|
Weighted average term to maturity (years) |
|
1.8 |
|
2.2 |
|
|
|
|
|
|
|
Number of rooms |
|
7,662 |
|
7,917 |
|
|
Number of properties |
|
68 |
|
70 |
|
|
Number of restaurants |
|
14 |
|
14 |
|
|
(1) See “Non-IFRS and Other Financial Measures” |
|
|
2024 SECOND QUARTER OPERATING
RESULTS
|
|
|
Three months endedJune 30 |
Six months ended June 30 |
|
(thousands of dollars) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
ADR |
|
137 |
|
133 |
|
134 |
|
132 |
|
|
Occupancy |
|
75.4 |
% |
73.8 |
% |
70.7 |
% |
69.7 |
% |
|
RevPAR |
|
103 |
|
98 |
|
95 |
|
92 |
|
|
|
|
|
|
|
|
|
Revenue |
|
73,614 |
|
75,483 |
|
140,103 |
|
140,941 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
37,882 |
|
38,732 |
|
74,271 |
|
74,258 |
|
|
Energy |
|
2,705 |
|
3,021 |
|
5,695 |
|
6,243 |
|
|
Property maintenance |
|
3,978 |
|
3,768 |
|
8,197 |
|
7,292 |
|
|
Property taxes, insurance and ground lease before IFRIC 21 |
|
4,855 |
|
4,675 |
|
10,556 |
|
9,123 |
|
|
Total expenses |
|
49,420 |
|
50,196 |
|
98,719 |
|
96,916 |
|
|
|
|
|
|
|
|
|
NOI |
|
24,194 |
|
25,287 |
|
41,384 |
|
44,025 |
|
|
NOI Margin |
|
32.9 |
% |
33.5 |
% |
29.5 |
% |
31.2 |
% |
|
|
|
|
|
|
|
|
IFRIC 21 property taxes adjustment |
|
(1,388 |
) |
(1,279 |
) |
(496 |
) |
(580 |
) |
|
Depreciation and amortization |
|
5,963 |
|
8,647 |
|
14,692 |
|
17,268 |
|
|
Income from operating activities |
|
19,619 |
|
17,919 |
|
27,188 |
|
27,337 |
|
|
|
|
|
|
|
|
|
Other expenses |
|
20,248 |
|
6,761 |
|
37,659 |
|
19,188 |
|
|
Current income tax expense (recovery) |
|
(51 |
) |
515 |
|
36 |
|
531 |
|
|
Deferred income tax expense (recovery) |
|
1,013 |
|
(15 |
) |
(807 |
) |
(1,440 |
) |
|
|
|
|
|
|
|
|
Income (loss) and comprehensive income (loss) |
|
(1,591 |
) |
10,658 |
|
(9,700 |
) |
9,058 |
|
INITIATIVES TO STRENGTHEN FINANCIAL
POSITION AND PRESERVE UNITHOLDER VALUE
The Board of Directors (the
“Board”), together with management, have
implemented a plan to strengthen AHIP’s financial position and to
preserve unitholder value. Initiatives, both planned and underway,
are outlined below.
PLAN TO ADDRESS NEAR TERM LOAN
MATURITIES
AHIP is in the process of executing its plan to
address the Company’s debt maturities in 2024. These efforts are
expected to result in modest improvements in ADR, RevPAR and
leverage metrics.
The commercial mortgage-backed securities
(“CMBS”) loan maturities were $22.3 million in the
second quarter of 2024 and are $58.7 million in the fourth quarter
of 2024.
To address the Q2 2024 CMBS loan maturity of
$22.3 million, AHIP completed the disposition of one hotel property
and refinanced the balance of the loan in March 2024,
specifically:
- AHIP completed the
strategic disposition of a hotel property in Harrisonburg, Virginia
for $8.55 million. The net proceeds were used to partially satisfy
the non-recourse mortgage debt; and
- AHIP completed the
CMBS refinancing for the remaining three assets secured against
this loan with gross proceeds of $17.5 million prior to initial
capital reserves contribution of approximately $5.0 million. The
term of this new CMBS loan is five years at a fixed annual interest
rate of 7.8%.
To address the Q4 2024 CMBS loan maturities of
$58.7 million, AHIP intends to dispose of properties and refinance
the balance of the loan, specifically:
- In July 2024, AHIP
entered into an agreement to dispose of one hotel property in
Dallas, Texas for gross proceeds of $27.0 million.
- In August 2024,
AHIP completed the strategic dispositions of two hotel properties
in Amarillo, Texas for gross proceeds of $9.3 million and $8.3
million, respectively. Under the terms of the Sixth Amendment, 50%
of the net proceeds from the sale of these two hotel properties
will be used to pay down outstanding amounts under such term loans
in the second half of 2024.
- In addition, AHIP
is currently in the process of refinancing and marketing hotel
properties in Florida and North Carolina before the loan maturity
dates in the fourth quarter of 2024.
AMENDMENT OF THE MASTER HOTEL MANAGEMENT
AGREEMENT WITH REDUCED AND DEFERRED FEES
On September 30, 2023, with a retroactive
effective date of July 1, 2023, AHIP entered into a third amendment
to its master hotel management agreement with One Lodging
Management LLC (an affiliate of Aimbridge Hospitality LLC) (the
“Amendment”), with an estimated annual savings for
the first three years following the amendment of approximately $3.7
million.
In accordance with the Amendment, the management
fee on certain hotel properties has been reduced or deferred. The
reduction of management fees is estimated to provide approximately
$0.3 million of cash savings per annum, and the deferral of
management fees is estimated to provide approximately $3.4 million
of cash savings on average per annum from July 1, 2023 to June 30,
2026. The fees in the years 2027 through 2032 will be slightly
higher to offset the fee deferral in the first three years. The
cash savings in the second quarter of 2024 were $0.9 million, and
the cumulative savings in the first year after the Amendment were
$3.9 million.
TEMPORARY SUSPENSION OF U.S. DOLLAR
DISTRIBUTION
From February 2022 to October 2023, AHIP’s
distribution policy provided for the payment of regular monthly
U.S. dollar distributions at an annual rate of $0.18 per unit
(monthly rate of $0.015 per unit). On November 7, 2023, AHIP
announced a temporary suspension of monthly distributions. The
Board and management made this decision based on the considerations
of recent and forecast operating results, industry and economic
conditions, interest rates for debt refinancing, the general
financing environment, and future compliance with the adjusted FFO
payout ratio covenant in the Sixth Amendment.
FINANCIAL INFORMATION
This news release should be read in conjunction
with AHIP’s unaudited condensed consolidated interim financial
statements, and management’s discussion and analysis for the three
and six months ended June 30, 2024 and 2023, that are available on
AHIP’s website at www.ahipreit.com, and under AHIP’s profile on
SEDAR+ at www.sedarplus.com.
Q2 2024 CONFERENCE CALL
Management will host a webcast and conference
call at 10:00 a.m. Pacific time on Wednesday, August 7, 2024, to
discuss the financial and operational results for the three and six
months ended June 30, 2024 and 2023.
To participate in the conference call,
participants should register online via AHIP’s website. A dial-in
and unique PIN will be provided to join the call. Participants are
requested to register a minimum of 15 minutes before the start of
the call. An audio webcast of the conference call may be accessed
on AHIP’s website at www.ahipreit.com.
ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT
LP
American Hotel Income Properties REIT LP (TSX:
HOT.UN, TSX: HOT.U, TSX: HOT.DB.V), or AHIP, is a limited
partnership formed to invest in hotel real estate properties across
the United States. AHIP’s portfolio of premium branded,
select-service hotels are located in secondary metropolitan markets
that benefit from diverse and stable demand. AHIP hotels operate
under brands affiliated with Marriott, Hilton, IHG and Choice
Hotels through license agreements. AHIP’s long-term objectives are
to build on its proven track record of successful investment,
deliver monthly U.S. dollar denominated distributions to
unitholders, and generate value through the continued growth of
itsdiversified hotel portfolio. More information is available at
www.ahipreit.com
NON-IFRS AND OTHER FINANCIAL
MEASURESManagement believes the following non-IFRS
financial measures, non-IFRS ratios, capital management measures
and supplementary financial measures are relevant measures to
monitor and evaluate AHIP’s financial and operating performance.
These measures and ratios do not have any standardized meaning
prescribed by IFRS and are therefore unlikely to be comparable to
similar measures presented by other issuers. These measures and
ratios are included to provide investors and management additional
information and alternative methods for assessing AHIP’s financial
and operating results and should not be considered in isolation or
as a substitute for performance measures prepared in accordance
with IFRS.
NON-IFRS FINANCIAL
MEASURES:
FFO: FFO measures operating
performance and is calculated in accordance with Real Property
Association of Canada’s (“REALPAC”) definition. FFO – basic is
calculated by adjusting loss and comprehensive income (loss) for
depreciation and amortization, gain or loss on disposal of
property, IFRIC 21 property taxes, fair value gain or loss,
impairment of property, deferred income tax, and other applicable
items. FFO – diluted is calculated as FFO – basic plus the
interest, accretion, and amortization on convertible debentures if
convertible debentures are dilutive. The most comparable IFRS
measure to FFO is income (loss) and comprehensive income (loss),
for which a reconciliation is provided in this news release.
AFFO: AFFO is defined as a
recurring economic earnings measure and calculated in accordance
with REALPAC’s definition. AFFO – basic is calculated as FFO –
basic less maintenance capital expenditures. AFFO – diluted is
calculated as FFO – diluted less maintenance capital expenditures.
The most comparable IFRS measure to AFFO is income (loss) and
comprehensive income (loss), for which a reconciliation is provided
in this news release.
Normalized FFO: calculated as
FFO adjusting for non-recurring items. For the three months ended
June 30, 2024, normalized FFO is calculated as FFO excluding the
non-recurring insurance proceeds of $1.6 million for property
damage incurred in the second quarter of 2024. For the six months
ended June 30, 2024, normalized FFO is calculated as FFO excluding
the non-recurring insurance proceeds of $1.6 million for property
damage incurred in the second quarter of 2024, and $1.1 million for
property damage related to the weather-related damage at several
hotel properties in late December 2022. For the three and six
months ended June 30, 2023, normalized FFO is calculated as FFO
excluding the non-recurring insurance proceeds of $4.1 million and
$7.5 million, respectively, for property damage related to the
weather-related damage at several hotel properties in late December
2022. The most comparable IFRS measure to normalized FFO is income
(loss) and comprehensive income (loss), for which a reconciliation
is provided in this news release.
Normalized NOI: calculated as
NOI adjusting for non-recurring items. For the three and six months
ended June 30, 2024, normalized NOI included the non-recurring
insurance proceeds of nil and $0.1 million, respectively, for
business interruption claims related to the weather-related damage
at several hotel properties in late December 2022. For the three
and six months ended June 30, 2023, normalized NOI included the
non-recurring insurance proceeds of $1.9 million and $2.9 million
respectively, for business interruption claims related to the
weather-related damage at several hotel properties in late December
2022. The most comparable IFRS measure to normalized NOI is NOI,
for which a reconciliation is provided in this news release.
Hotel EBITDA: calculated by
adjusting NOI for management fees for hotel. The most comparable
IFRS measure to hotel EBITDA is NOI, for which a reconciliation is
provided in this news release.
EBITDA: calculated by adjusting
NOI for management fees for hotel and general administrative
expenses. The sum of management fees for hotel and general
administrative expenses is equal to corporate and administrative
expenses in the Financial Statements. The most comparable IFRS
measure to EBITDA is NOI, for which a reconciliation is provided in
this news release.
Debt: calculated as the sum of
term loans and revolving credit facility, the face value of
convertible debentures, unamortized portion of debt financing
costs, lease liabilities and unamortized portion of mark-to-market
adjustments. The most comparable IFRS measure to debt is total
liabilities, for which a reconciliation is provided in this news
release.
Gross book value: calculated as
the sum of total assets, accumulated depreciation and impairment on
property, buildings and equipment, and accumulated amortization on
intangible assets. The most comparable IFRS measure to gross book
value is total assets, for which a reconciliation is provided in
this news release.
Interest expense: calculated by
adjusting finance costs for gain/loss on debt settlement,
amortization of debt financing costs, accretion of debenture
liability, amortization of debenture costs, dividends on series B
preferred shares and amortization of mark-to-market adjustments,
accretion of management fee because interest expense excludes
certain non-cash accounting items and dividends on preferred
shares. The most comparable IFRS measure to interest expense is
finance costs, for which a reconciliation is provided in this news
release.
NON-IFRS RATIOS:
FFO per unit – basic/diluted:
calculated as FFO – basic/diluted divided by weighted average
number of units outstanding - basic/diluted respectively for the
reporting periods.
Normalized FFO per unit –
basic/diluted: calculated as normalized FFO –
basic/diluted divided by weighted average number of units
outstanding - basic/diluted respectively for the reporting
periods.
AFFO per unit – basic/diluted: calculated as
AFFO – basic/diluted divided by weighted average number of units
outstanding - basic/diluted respectively for the reporting
periods.
NOI margin: calculated as NOI
divided by total revenue.
Hotel EBITDA margin: calculated as hotel EBITDA
divided by total revenue.
EBITDA margin: calculated as
EBITDA divided by total revenue.
Capitalization rate (“Cap
Rate”): calculated as 2023 annual hotel EBITDA, after
adjusting for an industry standard 4% FF&E reserve, divided by
the actual and expected gross proceeds of the asset
dispositions.
CAPITAL MANAGEMENT
MEASURES:
Debt to gross book value:
calculated as debt divided by gross book value. Debt to gross book
value is a primary measure of capital management and leverage.
Debt to TTM EBITDA: calculated
as debt divided by the trailing twelve months (“TTM”) of EBITDA.
Debt to EBITDA measures the amount of income generated and
available to pay down debt before covering interest, taxes,
depreciation, and amortization expenses. In Q2 2024, debt to TTM
EBITDA calculation excluded five hotels in respect of which AHIP is
in managed foreclosure as of June 30, 2024.
Interest coverage ratio:
calculated as TTM EBITDA divided by interest expense for the
trailing twelve months. The interest coverage ratio is a measure of
AHIP’s ability to service the interest requirements of its
outstanding debt. In Q2 2024, interest coverage ratio calculation
excluded five hotels in respect of which AHIP is in managed
foreclosure as of June 30, 2024.
SUPPLEMENTARY FINANCIAL
MEASURES:
Occupancy is a major driver of room revenue as
well as food and beverage revenues. Fluctuations in occupancy are
normally accompanied by fluctuations in most categories of variable
hotel operating expenses, including housekeeping and other labor
costs. Higher ADR increases room revenue with limited impact on
hotel operating expenses. Increase in RevPAR attributable to
increase in occupancy may reduce EBITDA and EBITDA margins, while
increase in RevPAR attributable to increase in ADR typically result
in increases in EBITDA and EBITDA margins.
Occupancy: calculated as total
number of hotel rooms sold divided by total number of rooms
available for the reporting periods. Occupancy is a metric commonly
used in the hotel industry to measure the utilization of hotels’
available capacity.
Average daily rate (“ADR”):
calculated as total room revenue divided by total number of rooms
sold for the reporting periods. ADR is a metric commonly used in
the hotel industry to indicate the average revenue earned per
occupied room in a given time period.
Revenue per available room
(“RevPAR”): calculated as occupancy multiplied by ADR for
the reporting periods.
Same property occupancy, ADR, RevPAR,
revenue, expense, NOI and NOI margin: measured for
properties owned by AHIP for both the current reporting periods and
the same periods in 2023. In Q1 2024 and Q2 2024, the same property
ADR, occupancy, RevPAR and NOI margin calculations excluded seven
hotel properties, which is comprised of five hotels in respect of
which AHIP is in managed foreclosure as of June 30, 2024, as well
as the Residence Inn Neptune and Courtyard Wall in New Jersey as
these two hotels had limited availability due to remediation and
rebuilding after the weather-related damage in late December 2022.
In Q1 2023 and Q2 2023, the same property ADR, occupancy, RevPAR
and NOI margin calculations excluded the same seven hotel
properties mentioned in the immediately preceding sentence for
comparison purposes. In Q3 2023 and Q4 2023, the same property ADR,
occupancy, RevPAR and NOI margin calculations excluded five hotels
in respect of which AHIP is in managed foreclosure as of June 30,
2024.
NON-IFRS RECONCILIATION
INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) TO
FFO
|
|
Three months ended June 30 |
Six months ended June 30 |
|
(thousands of dollars, except per Unit
amounts) |
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
Income (loss) and comprehensive income (loss) |
(1,591 |
) |
10,658 |
|
(9,700 |
) |
9,058 |
|
|
Adjustments: |
|
|
|
|
|
Income attributable to non-controlling interest |
(1,138 |
) |
(1,011 |
) |
(2,237 |
) |
(2,011 |
) |
|
Depreciation and amortization |
5,963 |
|
8,647 |
|
14,692 |
|
17,268 |
|
|
Impairment of cash-generating units |
5,070 |
|
- |
|
9,173 |
|
- |
|
|
Write-off of property, building and equipment |
2,220 |
|
276 |
|
2,220 |
|
4,168 |
|
|
Gain on sale of properties |
- |
|
(2,401 |
) |
(242 |
) |
(2,401 |
) |
|
IFRIC 21 property taxes adjustment |
(1,388 |
) |
(1,279 |
) |
(496 |
) |
(580 |
) |
|
Change in fair value of warrants |
(18 |
) |
(149 |
) |
(138 |
) |
(1,719 |
) |
|
Change in fair value of interest rate swap contracts |
- |
|
834 |
|
- |
|
1,925 |
|
|
Gain on convertible debenture conversion |
(245 |
) |
- |
|
(245 |
) |
- |
|
|
Deferred income tax expense (recovery) |
1,013 |
|
(15 |
) |
(807 |
) |
(1,440 |
) |
|
|
|
|
|
|
|
FFO basic (1) |
9,886 |
|
15,560 |
|
12,220 |
|
24,268 |
|
|
Interest, accretion and amortization on convertible debentures |
1,128 |
|
1,093 |
|
- |
|
2,186 |
|
|
|
|
|
|
|
|
FFO diluted |
11,014 |
|
16,653 |
|
12,220 |
|
26,454 |
|
|
|
|
|
|
|
|
FFO per unit – basic (1) |
0.12 |
|
0.20 |
|
0.15 |
|
0.31 |
|
|
FFO per unit – diluted |
0.12 |
|
0.19 |
|
0.15 |
|
0.30 |
|
|
|
|
|
|
|
|
Non-recurring items: |
|
|
|
|
|
Other income |
(1,587 |
) |
(4,126 |
) |
(2,689 |
) |
(7,468 |
) |
|
|
|
|
|
|
|
Measurements excluding non-recurring items: |
|
|
|
|
|
Normalized FFO diluted (1) |
9,427 |
|
12,527 |
|
9,531 |
|
18,986 |
|
|
Normalized FFO per unit – diluted |
0.10 |
|
0.14 |
|
0.12 |
|
0.21 |
|
|
|
|
|
|
|
|
Weighted average number of units outstanding: |
|
|
|
|
|
Basic (000’s) |
79,186 |
|
78,834 |
|
79,115 |
|
78,817 |
|
|
Diluted (000’s) (2) |
91,598 |
|
89,622 |
|
80,723 |
|
89,484 |
|
|
(1) See “Non-IFRS and Other Financial
Measures”(2) The calculation of FFO diluted, FFO
per unit – diluted, normalized FFO diluted, normalized FFO per unit
– diluted, weighted average number of units outstanding – diluted
for the six months ended June 30, 2024, excluded the convertible
debentures because they were anti-dilutive. The calculation of FFO
diluted, FFO per unit – diluted, normalized FFO diluted, normalized
FFO per unit – diluted, weighted average number of units
outstanding – diluted for the three months ended June 30, 2024, the
three and six months ended June 30, 2023, included the convertible
debentures because they were dilutive. |
RECONCILIATION OF FFO TO
AFFO
|
|
Three months ended June 30 |
Six months ended June 30 |
|
(thousands of dollars, except per Unit
amounts) |
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
FFO basic |
9,886 |
|
15,560 |
|
12,220 |
|
24,268 |
|
|
FFO diluted |
11,014 |
|
16,653 |
|
12,220 |
|
26,454 |
|
|
Maintenance capital expenditures |
(1,829 |
) |
(3,139 |
) |
(4,831 |
) |
(5,859 |
) |
|
|
|
|
|
|
|
AFFO basic (1) |
8,057 |
|
12,421 |
|
7,389 |
|
18,409 |
|
|
AFFO diluted |
9,185 |
|
13,514 |
|
7,389 |
|
20,595 |
|
|
AFFO per unit - basic (1) |
0.10 |
|
0.16 |
|
0.09 |
|
0.23 |
|
|
AFFO per unit - diluted |
0.10 |
|
0.15 |
|
0.09 |
|
0.23 |
|
|
|
|
|
|
|
|
Measurements excluding non-recurring items: |
|
|
|
|
|
AFFO diluted |
7,598 |
|
9,388 |
|
4,700 |
|
13,127 |
|
|
AFFO per unit - diluted |
0.08 |
|
0.10 |
|
0.06 |
|
0.15 |
|
|
(1) See “Non-IFRS and Other Financial Measures” |
|
|
|
|
DEBT TO GROSS BOOK VALUE
|
(thousands of dollars) |
|
June 30, 2024 |
|
December 31, 2023 |
|
|
|
|
|
|
|
Debt |
|
672,171 |
|
688,585 |
|
|
Gross book value |
|
1,292,692 |
|
1,326,070 |
|
|
Debt-to-Gross Book Value |
|
52.0 |
% |
51.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
(thousands of dollars) |
|
June 30, 2024 |
|
December 31, 2023 |
|
|
|
|
|
|
|
Term loans and revolving credit facility |
|
618,428 |
|
633,298 |
|
|
2026 debentures (at face value) |
|
49,730 |
|
50,000 |
|
|
Unamortized portion of debt financing costs |
|
3,094 |
|
4,065 |
|
|
Lease liabilities |
|
919 |
|
1,239 |
|
|
Unamortized portion of mark-to-market adjustments |
|
- |
|
(17 |
) |
|
Debt |
|
672,171 |
|
688,585 |
|
|
|
|
|
|
|
|
|
|
|
|
(thousands of dollars) |
|
June 30, 2024 |
|
December 31, 2023 |
|
|
|
|
|
|
|
Total assets |
|
918,960 |
|
954,887 |
|
|
Accumulated depreciation and impairment |
|
368,175 |
|
365,970 |
|
|
on property, buildings and equipment |
|
|
|
|
Accumulated amortization on intangible assets |
|
5,557 |
|
5,213 |
|
|
Gross Book Value |
|
1,292,692 |
|
1,326,070 |
|
DEBT TO TTM EBITDA
|
(thousands of dollars) |
|
June 30, 2024 |
|
December 31, 2023 |
|
|
|
|
|
|
|
|
|
Debt (2) |
|
612,089 |
|
688,585 |
|
|
EBITDA (trailing twelve months) (2) |
|
63,205 |
|
64,732 |
|
|
Debt-to-TTM EBITDA (times)
(2) |
|
9.7x |
|
10.6x |
|
|
2) The calculation of Debt to TTM EBIDTA for the
trailing twelve months ended June 30, 2024 excluded the five hotels
in respect of which AHIP is in managed foreclosure as of June 30,
2024. |
INTEREST COVERAGE RATIO
|
(thousands of dollars) |
|
June 30, 2024 |
|
December 31, 2023 |
|
|
|
|
|
|
|
|
|
EBITDA (trailing twelve months) (2) |
|
63,205 |
|
64,732 |
|
|
Interest expense (trailing twelve months) (2) |
|
36,551 |
|
33.752 |
|
|
Interest Coverage Ratio (times)
(2) |
|
1.7x |
|
1.9x |
|
|
2) The calculation of interest coverage ratio for the
trailing twelve months ended June 30, 2024 excluded the five hotels
in respect of which AHIP is in managed foreclosure as of June 30,
2024. |
|
|
|
|
|
|
|
The reconciliation of NOI to hotel EBITDA and
EBITDA is shown below:
|
|
|
Three months ended June 30 |
Six months ended June 30 |
|
(thousands of dollars) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
NOI |
|
24,194 |
|
25,287 |
|
41,384 |
|
44,025 |
|
|
Management fees |
|
(1,560 |
) |
(2,420 |
) |
(3,077 |
) |
(4,556 |
) |
|
Hotel EBITDA |
|
22,634 |
|
22,867 |
|
38,307 |
|
39,469 |
|
|
|
|
|
|
|
|
|
General administrative expenses |
|
(2,809 |
) |
(2,634 |
) |
(5,162 |
) |
(5,192 |
) |
|
EBITDA |
|
19,825 |
|
20,233 |
|
33,145 |
|
34,277 |
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation of NOI to normalized NOI is
shown below:
|
|
|
Three months ended June 30 |
Six months ended June 30 |
|
(thousands of dollars) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NOI |
|
24,194 |
|
25,287 |
|
41,384 |
|
44,025 |
|
|
Business interruption insurance proceeds |
|
- |
|
1,930 |
|
92 |
|
2,930 |
|
|
Normalized NOI |
|
24,194 |
|
27,217 |
|
41,476 |
|
46,955 |
|
|
|
|
|
|
|
|
|
|
|
|
The reconciliation of finance costs to interest
expense is shown below:
|
|
|
Three months ended June 30 |
Six months ended June 30 |
|
(thousands of dollars) |
|
2024 |
|
2023 |
|
2024 |
|
2023 |
|
|
|
|
|
|
|
|
|
Finance costs |
|
10,514 |
|
9,233 |
|
21,562 |
|
17,925 |
|
|
Amortization of debt financing costs |
|
(660 |
) |
(496 |
) |
(1,325 |
) |
(851 |
) |
|
Accretion of Debenture liability |
|
(260 |
) |
(241 |
) |
(523 |
) |
(483 |
) |
|
Amortization of Debenture costs |
|
(120 |
) |
(100 |
) |
(233 |
) |
(200 |
) |
|
Gain on debt settlement |
|
- |
|
- |
|
(11 |
) |
- |
|
|
Dividends on Series B preferred shares |
|
- |
|
12 |
|
- |
|
(9 |
) |
|
Debt defeasance and other costs |
|
- |
|
(19 |
) |
- |
|
(19 |
) |
|
Interest Expense |
|
9,474 |
|
8,389 |
|
19,470 |
|
16,363 |
|
|
|
|
|
|
|
|
|
|
|
|
For information on the most directly comparable
IFRS measures, composition of the measures, a description of how
AHIP uses these measures, and an explanation of how these measures
provide useful information to investors, please refer to AHIP’s
management discussion and analysis for the three and six months
ended June 30, 2024 and 2023, available on AHIP’s website at
www.ahipreit.com, and under AHIP’s profile on SEDAR+ at
www.sedarplus.com.
FORWARD-LOOKING INFORMATION
Certain statements in this news release may
constitute “forward-looking information” and “financial outlook”
within the meaning of applicable securities laws. Forward-looking
information and financial outlook generally can be identified by
words such as “anticipate”, “believe”, “continue”, “expect”,
“estimates”, “intend”, “may”, “outlook”, “objective”, “plans”,
“should”, “will” and similar expressions suggesting future outcomes
or events. Forward-looking information and financial outlook
include, but are not limited to, statements made or implied
relating to the objectives of AHIP, AHIP’s strategies to achieve
those objectives and AHIP’s beliefs, plans, estimates, projections
and intentions and similar statements concerning anticipated future
events, results, circumstances, performance, or expectations that
are not historical facts. Forward-looking information and financial
outlook in this news release includes, but is not limited to,
statements with respect to: AHIP management’s expectation as to the
impacts on AHIP’s business of the seasonal nature of the lodging
industry, inflation (including on labor and materials costs),
competition, overall economic cycles, weather conditions; AHIP’s
expectations with respect to the timing and amount of insurance
proceeds for weather and fire-related damage and lost income in
respect of certain hotel properties; AHIP’s expectations with
respect to the amount and timing of the receipt of such insurance
proceeds; AHIP’s leverage and liquidity strategies and goals;
AHIP’s expectations with respect to the performance of its hotel
portfolio, including specific segments thereof; AHIP’s expectations
with respect to inflation, labor supply, labor costs, interest
rates, consumer spending, supply chain, new hotel construction and
other market financial and macroeconomic conditions in 2024 and
beyond and the expected impacts thereof on AHIP’s financial
position and performance, including on ADR, occupancy, RevPAR, NOI,
NOI margins and cash flows; AHIP’s expectation that labor and
certain other operating costs will remain a challenge in 2024
resulting in pressures to hotel operating margins; AHIP’s strategic
initiatives and the intended outcomes thereof, including improved
liquidity, addressing near-term debt maturities and providing AHIP
with financial stability and protecting long-term value for
unitholders; AHIP’s expectations with respect to the macroeconomic
and operating environment, including certain specific expectations
for the 2024 fiscal year; AHIP continuing to execute its strategy
to divest assets and reduce debt; AHIP’s planned property
dispositions, including the expected terms and timing thereof and
the financial impact thereof on AHIP and AHIP’s expectation that
the sale of such properties will demonstrate value above the
current unit trading price; the hotels secured by the CMBS Loan
remaining on AHIP’s balance sheet until transferred to or sold by
the special servicer; AHIP’s intended strategies for near-term debt
maturities, including planned sales of assets and loan refinancing
and the expected impacts thereof on AHIP’s financial performance
and position; AHIP’s expectations as to the financial impact of the
expired of interest rate swaps for certain term loans, which will
be dependent on SOFR; the expectation that insurance premiums may
reduce expenses and increase earnings; the estimated savings as a
result of reductions and deferrals of management fees under the
master hotel management agreement as well as increased fees in
certain future years when deferred fees become payable; and AHIP’s
stated long-term objectives.
Although the forward-looking information and
financial outlook contained in this news release are 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 is based on a number
of key expectations and assumptions made by AHIP, including,
without limitation: inflation, labor shortages, and supply chain
disruptions will negatively impact the U.S. economy, U.S. hotel
industry and AHIP’s business; AHIP will continue to have sufficient
funds to meet its financial obligations; AHIP will be able generate
sufficient funds to meet any paydown obligations under the new LTV
covenants set forth in the Sixth Amendment; AHIP’s strategies with
respect to completion of capital projects, liquidity, addressing
near-term debt maturities, and divestiture of assets will be
successful and achieve their intended effects; estimated savings
from the amendment to the master hotel management agreement are
based on assumptions about future hotel revenues and certain
expenses; capital projects will be completed on time and on budget;
AHIP will complete its currently planned divestitures and loan
refinancings on the terms currently contemplated and in accordance
with the timing currently contemplated; AHIP will receive insurance
proceeds in an amount consistent with AHIP’s estimates in respect
of its weather and fire-damaged properties; AHIP will continue to
have good relationships with its hotel brand partners; AHIP will be
successful in opposing the Claim and will resolve the matters set
out in the Default Notice in a manner that is acceptable to AHIP;
capital markets will provide AHIP with readily available access to
equity and/or debt financing on terms acceptable to AHIP, including
the ability to refinance maturing debt as it becomes due on terms
acceptable to AHIP; AHIP’s future level of indebtedness and its
future growth potential will remain consistent with AHIP’s current
expectations; the useful lives and replacement cost of AHIP’s
assets being consistent with management’s estimates thereof; AHIP
will be able to successfully integrate properties acquired into its
portfolio, if any; the U.S. REIT will continue to qualify as a real
estate investment trust for U.S. federal income tax purposes; the
impact of the current economic climate and the current global
financial conditions on AHIP’s operations, including AHIP’s
financing capability and asset value, will remain consistent with
AHIP’s current expectations; there will be no material changes to
tax laws, government and environmental regulations adversely
affecting AHIP’s operations, financing capability, structure or
distributions; conditions in the international and, in particular,
the U.S. hotel and lodging industry, including competition for
acquisitions, will be consistent with the current economic climate;
and AHIP will achieve its long term objectives.
Forward-looking information and financial
outlook involve significant risks and uncertainties and should not
be read as guarantees of future performance or results as actual
results may differ materially from those expressed or implied in
such forward-looking information and financial outlook, accordingly
undue reliance should not be placed on such forward-looking
information or financial outlook. Those risks and uncertainties
include, among other things, risks related to: AHIP may not achieve
its expected performance levels in 2024 and beyond; inflation,
labor shortages, supply chain disruptions may continue to
negatively impact AHIP’s financial performance and position; AHIP’s
insurance claims with respect to its weather and fire-damaged
properties may be denied in whole or in part; AHIP’s brand partners
may impose revised service standards and capital requirements which
are adverse to AHIP; PIP renovations may not commence or complete
in accordance with currently expected timing and may suffer from
increased material costs; AHIP’s strategic initiatives with respect
to liquidity, addressing near-term debt maturities and providing
AHIP with financial stability may not be successful and may not
achieve their intended outcomes; AHIP’s strategies for divesting
assets to reduce debt may not be successful; AHIP may not complete
its currently planned divestures and loan refinancings on the terms
currently contemplated or in accordance with the timing currently
contemplated, or at all; AHIP’s planned dispositions, once
completed, may not demonstrate value above the current unit trading
price; savings from the amendments to the master hotel management
agreement may be less than expected; AHIP may not be successful in
reducing its leverage; there is no guarantee that monthly
distributions will be reinstated, and if reinstated, as to the
timing thereof or what the amount of the monthly distribution will
be; AHIP may not be able to refinance debt obligations as they
become due or may do so on terms less favorable to AHIP than under
AHIP’s existing loan agreements; AHIP has not replaced its interest
rate swaps, which is expected to create continued increased
interest expense; refinanced loans are expected to be refinanced at
significantly higher interest rates; general economic conditions
and consumer confidence; the growth in the U.S. hotel and lodging
industry; prices for the Units and debentures; liquidity; tax
risks; ability to access debt and capital markets; financing risks;
changes in interest rates; the financial condition of, and AHIP’s
relationships with, its external hotel manager and franchisors;
real property risks, including environmental risks; the degree and
nature of competition; ability to acquire accretive hotel
investments; ability to integrate new hotels; environmental
matters; and changes in legislation. Additional information about
risks and uncertainties is contained in this new release and in
AHIP’s most recently filed AIF, a copy of which is available on
SEDAR+ at www.sedarplus.com.
To the extent any forward-looking information
constitutes a “financial outlook” within the meaning of applicable
securities laws, such information is being provided to investors to
assist in their understanding of: expected proceeds of insurance in
respect of AHIP’s weather and fire-damaged properties; estimated
potential cash savings from the amendment to the master hotel
management agreement; the estimated financial impact on AHIP of
increased insurance premiums; the estimated financial impact on
AHIP of increased interest costs associated with the expiry of
interest swaps for certain term loans and the refinancing of
certain loans; estimated proceeds from the planned disposition of
certain hotel properties; and management’s expectations for certain
aspects of AHIP’s financial performance for the remainder of
2024.
The forward-looking information and financial
outlook contained herein is expressly qualified in its entirety by
this cautionary statement. Forward-looking information and
financial outlook reflect management's current beliefs and are
based on information currently available to AHIP. The
forward-looking information and financial outlook are 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.
For additional information, please
contact:
Investor Relations ir@ahipreit.com