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American Hotel Income Properties REIT Closes Acquisition of Nebraska Rail Crew Hotel.

MANews-(C)2009-2016

12 January 2016 - Canadian real estate investor American Hotel Income Properties REIT LP (TSX: HOT.UN) (OTCQX: AHOTF) has closed its acquisition of a 133-room hotel located in Lincoln, Nebraska, the company said.

This is the REIT's 80th income property.

The Lincoln Property features a rail crew lodging contract with a large national US railway and is being acquired for an aggregate purchase price of approximately USD 3.9m, including approximately USD 1.2m for planned capital expenditures, and excluding closing and post-acquisition adjustments.

American Hotel Income Properties REIT said that the Lincoln Property is being purchased at a trailing twelve month capitalization rate of approximately 14% after all management fees and an FF/E reserve excluding renovation costs (or approximately 10% after renovation costs are included).

The Lincoln Property is being purchased for approximately USD 21,000 per guestroom, which is well below management's estimate of replacement cost.

Planned renovations include conversion of the property to an industry leading Oak Tree Inn rail crew hotel including the addition of "Dark and Quiet" guestrooms, common area upgrades and new property management systems.

AHIP will fund the purchase of the Lincoln Property with cash on-hand and expects to refinance this acquisition with a conventional mortgage during 1Q16.

The Lincoln Property has a rail crew contract with one of the largest railway companies in the United States, which currently guarantees 50 guestrooms per night.

AHIP owns ten hotels that currently service this railway company.

Lincoln is the state capital of Nebraska and has a population base of approximately 275,000. One of the major demand generators in the area includes the University of Nebraska-Lincoln, a member of the Big Ten Conference, a Division I collegiate athletic conference.

The property will be managed by TR Lodging Enterprises Inc., a wholly-owned subsidiary of O'Neill Hotels and Resorts Ltd.

Upon completion of the Lincoln acquisition, AHIP's portfolio will consist of 80 hotels totaling 7,048 guest rooms, with 45 rail crew hotels totaling 3,718 guest rooms and 35 branded hotels totaling 3,330 guest rooms.

AHIP is a limited partnership formed under the Ltd. Partnerships Act (Ontario) to invest in hotel real estate properties located substantially in the United States and is engaged primarily in the rail crew lodging, transportation-oriented, and select-service lodging sectors.

Country: USA

Sector: Hotels/Restaurants/Casinos/Catering

Target: 133-room hotel located in Lincoln, Nebraska

Buyer: American Hotel Income Properties REIT LP

Vendor:

Deal size in USD: 3.9m

Type: LBO

Financing: Cash

Status: Closed

Buyer advisor: , ,

Comment:

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Publication:M & A Navigator
Geographic Code:1U4NE
Date:Jan 12, 2016
Words:420
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