American Hotel Income Properties REIT LP Announces Extension of Its Revolving Credit Facility and Term Loans and Update on Property Dispositions

/EIN News/ -- VANCOUVER, British Columbia, Dec. 03, 2024 (GLOBE NEWSWIRE) -- American Hotel Income Properties REIT LP (“AHIP”) (TSX: HOT.UN, TSX: HOT.U, TSX: HOT.DB. V), today announced the extension of the maturity date for its revolving credit facility (the “RCF”) and certain term loans to June 2025 in accordance with the terms of the agreement governing such credit facilities (the “Sixth Amendment”) and provided an update on previously announced property dispositions.

All amounts presented in this news release are in United States dollars (“U.S. dollars”) unless otherwise indicated.

AHIP has satisfied the conditions in the Sixth Amendment for the extension of the maturity date for the RCF and term loans, which primary conditions include: (i) reduction of the aggregate maximum facility size to $148.2 million from and after December 3, 2024; (ii) obtaining updated appraisals for the Borrowing Base Properties (defined below) in order to determine the value of such properties for purposes of setting the maximum borrowing availability under the Sixth Amendment, which is set based on a maximum loan to value ratio of 67.5%; and (iii) compliance with the terms of the Sixth Amendment at the time of the extension, which includes among other things compliance with financial covenants including payout ratio and fixed charge coverage ratio. For further details, see a copy of the Sixth Amendment, which
has been filed under AHIP’s profile on SEDAR+ at www.sedarplus.com.

As of the date of the news release, the balance of the RCF and term loans under the Sixth Amendment has been reduced to $133.2 million. The total appraised value of the 16 hotel properties (the "Borrowing Base Properties") is $249.2 million, which results in a loan-to-value ratio of 53.4%. The current maximum borrowing availability under the RCF and term loans is $148.2 million. The appraised value of $249.2 million for the 16 Borrowing Base Properties (1,678 keys) is equivalent to $149 thousand per key, which is significantly higher than AHIP’s enterprise value per key⁽¹⁾ of $95 thousand, based on the U.S. dollar closing price of US$0.36 per unit on the TSX on December 2, 2024.

In November and December 2024, AHIP completed the previously announced dispositions of three hotel properties, in Kingsland, Georgia, Ocala, Florida, and Corpus Christi, Texas, for gross proceeds of $5.2 million, $7.7 million, and $10.3 million, respectively. A portion of the total net proceeds from these dispositions, $18.0 million, was used to partially repay the term loans governed by the Sixth Amendment in the same period.

As of the date of the news release, AHIP had two hotel properties under purchase and sales agreements in Dallas, Texas, and Amarillo, Texas for gross proceeds of $27.0 million and $2.6 million, respectively, with expected closing dates in December 2024.

As previously announced, AHIP signed a non-binding term sheet with a major US Bank to refinance certain Borrowing Base Properties. As a result of the completed RCF extension and the additional time available to maturity, management is currently evaluating a number of refinancing options for the credit facilities governed by the Sixth Amendment, which include closing this refinancing in the near term. This refinancing, if completed, is expected to reduce the aggregate facility balance under the Sixth Amendment by approximately $60.0 million.

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 its diversified hotel portfolio. More information is available at www.ahipreit.com.

NON-IFRS AND OTHER FINANCIAL MEASURES

Management believes the following supplementary financial measures are relevant measures to monitor and evaluate AHIP’s financial and operating performance. These measures 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 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.

Enterprise value: is a supplementary financial measure and is calculated as (i) the sum of total debt obligations as reflected on the September 30, 2024 balance sheet, AHIP’s market capitalization (which is calculated as the U.S. dollar closing price of the units on the TSX as of December 2, 2024, multiplied by the total number of units issued and outstanding), and face value of series C preferred shares, less (ii) the amount of cash and cash equivalents reflected on the September 30, 2024 balance sheet.

Enterprise value per key: is a supplementary financial measure and is calculated as enterprise value divided by the total number of hotel keys/rooms in the portfolio.

NON-IFRS RECONCILIATION

The following calculation is for the AHIP portfolio of 63 hotel properties:

(thousands of dollars except unit price and number of keys)	September 30, 2024
Number of units outstanding – (a)	79,234
Unit price at December 2, 2024 – (b)	0.36
Market capitalization – (A) = (a) * (b)	28,524
Term loans and revolving credit facility	534,705
Liabilities related to assets held for sale	37,044
Face value of convertible debenture	49,730
Total debt – (B)	621,479
Face value of Series C preferred shares – (C)	50,000
Unrestricted cash – (D)	25,811
Total Enterprise Value – (E) = (A) + (B) + (C) – (D)	674,192
Number of keys – (F)	7,075
Enterprise value per key = (E)/(F)	95

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 include, but is not limited to, statements with respect to: AHIP’s planned disposition of hotels in Dallas, Texas and Amarillo, Texas and the expected proceeds therefrom and timing thereof; AHIP management contemplating a number of refinancing options for the credit facilities governed by the Sixth Amendment, including completion of the refinancing for certain of the Borrowing Base Properties contemplated by the non-binding term sheet signed with a major US Bank in the near term and the estimated reduction in the loan facilities governed by the Sixth Amendment to result therefrom; and AHIP’s stated long-term objectives.

Although the forward-looking information and financial outlook contained in this news release is 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 and financial outlook is based on a number of key expectations and assumptions made by AHIP, including, without limitation: AHIP will complete its planned disposition of hotels in Dallas, Texas and Amarillo, Texas in accordance with the terms and timing currently contemplated; AHIP will complete the refinancing for certain of the Borrowing Base Properties contemplated by the non-binding term sheet signed with a major US Bank in accordance with the terms and timing currently contemplated; AHIP will be successful in refinancing the credit facilities governed by the Sixth Amendment prior to their revised maturity date; 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’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; AHIP will continue to have good relationships with its hotel brand partners; 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; 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 a guarantee 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 and financial outlook. Those risks and uncertainties include, among other things, risks related to: AHIP may not complete its planned disposition of hotels in Dallas, Texas and Amarillo, Texas in accordance with the terms and timing currently contemplated, or at all; AHIP may not complete the loan refinancing for certain of the Borrowing Base Properties contemplated by the non-binding term sheet signed with a major US Bank in accordance with the timing or on the terms currently contemplated or at all; AHIP may not be successful in refinancing the credit facilities governed by the Sixth Amendment prior to their revised maturity date; AHIP may not achieve its expected performance levels in 2024 and beyond; inflation, labor shortages, supply chain disruptions; AHIP’s brand partners may impose revised service standards and capital requirements which are adverse to AHIP; 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 be successful in reducing its leverage; 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; general economic conditions and consumer confidence; the growth in the U.S. hotel and lodging industry; prices for AHIP’s units and its 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; increased geopolitical instability; and changes in legislation and AHIP may not achieve its long term objectives. Management believes that the expectations reflected in the forward-looking information and financial outlook are based upon reasonable assumptions and information currently available; however, management can give no assurance that actual results will be consistent with the forward-looking information and financial outlook contained herein. Additional information about risks and uncertainties is contained in AHIP’s management’s discussion and analysis for the three and nine months ended September 30, 2024 and 2023, and AHIP’s annual information form for the year ended December 31, 2023, copies of which are 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: estimated proceeds from the planned disposition of certain hotel properties and the expected impact of the potential refinancing with a US Bank on the credit facilities governed by the Sixth Amendment.

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

(1) Non-IFRS and other financial measures. See “NON-IFRS AND OTHER FINANCIAL MEASURES” section of this news release.