American Hotel Income Properties REIT (AHIP) has completed a commercial mortgage-backed securities (CMBS) refinancing for five hotel properties, generating gross proceeds of $43m.

This strategic financial move has allowed the repayment of $38.4m towards the term loans within AHIP's senior credit facility, following the Sixth Amendment governing the facility.

The CMBS loan, secured through a term sheet with a leading US bank, encompasses four properties previously under the senior credit facility and one unencumbered property.

With a principal amount of $43m, including an initial capital reserves contribution of about $3m, the loan carries a fixed interest rate of 7.63% over a five-year term.

The net proceeds from the CMBS loan, which were slightly lower than initially estimated due to the reduction of refinanced hotels from seven to five, were fully utilised to repay a part of the outstanding term loans under the senior credit facility.

Consequently, the aggregate balance of the revolving credit facility and term loans has been reduced significantly from $133.2m as of 3 December 2024, to $89.3m. 

The remaining 12 hotel properties, which form the borrowing base properties, have an appraised value of $182.2m, leading to a loan-to-value ratio of 49%.  

The current maximum borrowing availability under the facility stands at $104.3m. Looking ahead, AHIP is exploring refinancing options for the remaining balance of the senior credit facility and aims to finalise this process by the end of the first quarter of 2025.

In September 2024, AHIP took a step ahead in its leverage reduction strategy by offloading five hotel properties to generate total gross proceeds of $45.9m.

The board of directors approved the sale of these properties, which comprise two hotels in Statesville, North Carolina; and one each in Melbourne, Florida; Kingsland, Georgia; and Houston, Texas.