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