American Hotel Income Properties REIT to Acquire $37.1M Portfolio

VANCOUVER—American Hotel Income Properties REIT LP (AHIP) has agreed to acquire, through its subsidiaries, four hotel properties located in Virginia for an aggregate purchase price of approximately $37.1 million, including up to $1.6 million for defeasance of existing debt and excluding post-acquisition adjustments and brand mandated property improvement plans.

The Acquisition Portfolio will be purchased at a weighted average going-in capitalization rate of approximately 10.0%, after inclusion of all hotel management fees, administration fees and brand franchise fees, or approximately $92,060 per room. Including the property improvement plans and closing costs, the aggregate cost to AHIP for the Acquisition Portfolio is expected by management to be approximately $44.5 million.

The portfolio consists of four select-service hotel properties located in Harrisonburg, Emporia and South Hill, VA. The properties operate under national hotel brands: Hampton Inn and Fairfield Inn & Suites.

The Acquisition Portfolio has stable historical operating metrics and all four properties are located in close proximity to Interstate highway exits, according to AHIP.

AHIP’s pro forma payout and leverage ratios remain conservative after giving effect to the Acquisition Portfolio, at approximately 73.4% on projected 2014 AFFO of the Acquisition Portfolio and a projected debt to gross book value of approximately 51.2%.

Rob O’Neill, AHIP’s CEO said in a statement, “We are very pleased to announce this acquisition, which is consistent with our stated growth strategy as outlined at the time of AHIP’s initial public offering, targeting acquisitions of transportation-oriented and select and limited-service hotels, located in secondary markets in the U.S. in close proximity to railroads, airports, highway interchanges and other transportation hubs and demand generators.”

O’Neill added, “This acquisition represents another opportunity for AHIP to purchase a high quality, well-maintained portfolio at a price that is below our estimate of its replacement cost. We expect this acquisition to be immediately accretive to our AFFO per unit.”

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