American Hotel Income Properties REIT has completed the acquisition of 12 Premium Branded hotels for $191m.
AHIP signed a definitive agreement in November to acquire the 12 hotels.
To partially fund the purchase, AHIP secured a five-year $105m interest-only term loan. For this purpose, it signed a swap rate agreement to fix the interest rate on a term loan to a maximum of 3.52% for a period of four years.
AHIP has also secured a $60m variable-rate revolving credit facility with an initial term of four years. This new credit facility will help to replace its existing revolving credit facility with the same lender.
These 12 hotels, which were acquired for around $158,800 per key, were all constructed in the last five years.
Given that these properties were being managed by Aimbridge Hospitality, which is AHIP’s exclusive hotel manager, AHIP expects a seamless transition of hotel systems and staff into its portfolio.
AHIP CEO John O’Neill said: “We’re very pleased with how quickly this acquisition was completed, as it has allowed us to redeploy the proceeds from the sale of the 45 Economy Lodging properties in less than a week. Now that these two strategic initiatives have been accomplished, we look forward to focusing on driving growth from our higher-quality portfolio of 79 Premium Branded select-service hotels.”
O’Neill further continued: “This acquisition further diversifies our geographic markets across the U.S. and expands our portfolio of suites-focused and extended-stay hotels, which generally benefit from higher margins. As well, the favourable debt terms we’ve secured to partially finance this acquisition will provide AHIP with meaningful cost savings and improve our cash flow. For example, we estimate this new term loan will generate more than $6 million in improved cash flow in 2020 compared to the debt previously secured for the 45 Economy Lodging properties we sold.”