American Hotel Income Properties REIT LP Announces Fourth Quarter and Full Year 2014 Financial Results

"GROWTH AND MOMENTUM ACCELERATE"

All amounts expressed in U.S. dollars unless otherwise indicated.

VANCOUVER, March 19, 2015 /CNW/ - American Hotel Income Properties REIT LP ("AHIP") (TSX: HOT.UN; OTCQX: AHOTF) announced today the release of its financial results for the three months and fiscal year ended December 31, 2014.

Rob O'Neill, CEO of AHIP, commented "Portfolio and profit growth are accelerating.  AHIP has performed well since its IPO in February 2013. Our market capitalization has almost tripled from Cdn$100 million to over Cdn$270 million during the past two years.  We continue to see exceptional year-over-year growth in the Branded Hotel portfolios, which are benefiting from historically strong U.S. hotel lodging fundamentals.  Our hotel manager, ONE Hospitality Group, has made significant progress in integrating the new hotels added during the last quarter and implementing various strategies to improve net operating income.  The U.S. dollar continues to strengthen, which provides a positive tailwind for our monthly Canadian Dollar denominated distributions and our net asset values. Furthermore, capital and debt markets continue to be receptive to AHIP's strategy of building a solid and reliable income stream for investors through contracted growth in its Oak Tree Inn Rail Hotels segment and accretive, conservatively financed acquisitions, below replacement cost, in the select-service Branded Hotels segment."

FOURTH QUARTER 2014 HIGHLIGHTS

• Funds from operations ("FFO") and adjusted funds from operations ("AFFO") were $4.7 million and $4.2 million, respectively, for the current quarter compared to $1.3 million and $1.7 million, respectively, for the same period last year reflecting the addition of 22 new hotels comprising over 2,000 guestrooms
• For the current quarter, Diluted FFO per Unit – As Reported was $0.21 (2013 - $0.10). Diluted Core FFO per Unit (which adjusts for securities-based compensation expenses and a one-time recovery of insurance proceeds) was $0.19 (2013 - $0.15)
• For the current quarter, Diluted AFFO per Unit – As Reported was $0.18 (2013 - $0.13). Diluted Core AFFO per Unit (which adjusts for a one-time recovery of insurance proceeds) was $0.16 (2013 - $0.13)
• The portfolio generated RevPAR gains of 20.0% to $56.19 (2013 - $46.66) resulting from occupancy for the current quarter at 77.9% (2013 – 77.7%) reflecting the stability of the Rail Hotels and average daily rates ("ADR") for the quarter rising by 20.1% to $72.15 (2013 - $60.07). The Branded Hotels contributed to the higher ADR as these properties benefited from the growth in the U.S. lodging industry
• Pro-forma RevPAR for the Branded Hotels acquired during the year, which includes operating results for periods prior to their ownership by AHIP, was up 6.4%
• Same-property occupancy, which includes the Rail Hotels only for this quarter, was up to 84.0% compared to 79.4% in the prior year
• Total revenues for the quarter increased to $27.8 million compared to $14.5 million for the prior period
• Net operating income ("NOI") for the quarter was $9.1 million compared to $4.4 million in the same period last year
• Acquired 11 Branded Hotels in Florida, North Carolina, Oklahoma and Texas adding 1,086 guestrooms to the Branded Hotel segment
• Acquired two new railway hotels (75 guestrooms) in Maryland and Montana from SunOne Developments Inc. ("SunOne"). Both hotels have long-term railway agreements that guarantee the majority of the available room nights
• Completed a successful bought deal equity offering in October 2014 which raised Cdn$50.3 million and was fully deployed during the quarter

FULL YEAR 2014 FINANCIAL HIGHLIGHTS

• FFO and AFFO were $16.6 million and $15.0 million, respectively, for the current year compared to $7.4 million and $7.2 million, respectively, for the same period last year reflecting the portfolio acquisitions during the year
• For the current year, Diluted FFO per Unit – As Reported was $0.91 (2013 - $0.74). Diluted Core FFO per Unit (which adjusts for securities-based compensation expenses and a one-time recovery of insurance proceeds) was $0.91 (2013 - $0.80)
• For the current year, Diluted AFFO per Unit – As Reported was $0.82 (2013 - $0.72). Diluted Core AFFO per Unit (which adjusts for a one-time recovery of insurance proceeds) was $0.80 (2013 - $0.72)
• RevPAR gains of 22% to $57.47 compared to $47.12 for the same period last year reflecting the impact of the higher ADR contribution from the Branded Hotels as these properties benefited from the growth in the U.S. lodging industry
• Pro-forma RevPAR for the Branded Hotels acquired during the year, which includes operating results for periods prior to their ownership by AHIP, was up 6.7% in line with industry growth rates
• Total revenues increased to $93.1 million compared to $48.1 million for the prior period reflecting gains of 93.8%
• NOI for the current year was up 99.4% to $32.0 million compared to $16.0 million in the same period last year
• AFFO payout ratio was 100.2% down from 114.9% in the prior year. Management estimates that at current exchange rates the run-rate AFFO payout ratio will be well below 100%
• A conservative debt-to-gross book value ratio of 51.5% as at December 31, 2014
• Interest coverage ratio was 3.0x (2013 – 3.1x); weighted average interest rate declined to 4.73% (2013 - 4.89%) and the weighted average loan term to maturity increased to 7.5 years (2013 - 6.3 years)
• As at December 31, 2014, AHIP had cash balances of $12.0 million, excluding restricted cash of $17.6 million for brand mandated property improvement plans
• Acquired 19 Branded Hotels in Florida, Georgia, North Carolina, Oklahoma, Texas and Virginia adding 1,876 guestrooms to the Branded Hotel segment
• Acquired four railway hotels, totaling 208 guestrooms, from SunOne. These hotels have long-term railway contracts that guarantee occupancy for a majority of the available room nights
• Completed two successful bought deal equity offerings which raised over Cdn$100 million and were fully deployed during the year
• Total distributions of Cdn$0.90 per Unit were declared during the year

U.S. lodging fundamentals continued to exhibit strength through 2014 with RevPAR growth of 8.3%.  Smith Travel Research ("STR") expects positive lodging fundamentals to continue in 2015 with annualized occupancy expected to hit record levels of 65% and ADR is expected to grow by 5.2% resulting in expected RevPAR growth of 6.4%.

Overall, U.S. rail traffic continued at decade high levels as intermodal transport continues to outpace all other categories. The strong performance has resulted in railway companies increasing short term room requirements at selected hotels. For the Oak Tree Inn Hotels portfolio, the number of railway rooms currently guaranteed is approximately 75%.

Hotel transactions continue at a brisk pace in the U.S., fueled by demand for high quality products and availability of low cost debt for hotel transactions, particularly deals with modest leverage in the 50-55% range. AHIP continues to review its existing debt maturities in an effort to extend the term and reduce refinancing risk during the current low interest rate environment.

FOURTH QUARTER 2014 AND FISCAL YEAR END 2014 FINANCIAL RESULTS CONFERENCE CALL

AHIP will host a conference call at 4:00 p.m. (EST), 1:00 p.m. (PST) on Friday March 20, 2015, to review the financial results and corporate developments for the year ended December 31, 2014.

To participate in this conference call, please dial one of the following numbers approximately 10 minutes prior to the commencement of the call, and ask to join the AHIP conference call.

Dial in numbers

Toll free (Canada and U.S.)…………………………………..1-888-390-0546
International or Local Toronto………………………………..1-416-764-8688

Conference Call Replay

If you cannot participate on Friday March 20, 2015, a replay of the conference call will be available by dialing one of the following replay numbers. You will be able to dial in and listen to the conference call two hours after the call end time, and the replay will be available until Friday March 27, 2015.  An audio recording of this conference call will also be available at www.ahipreit.com under the "Presentations and Calls" tab.

Please enter the Replay ID#319586 followed by the # key.

Replay dial–in toll free (from Canada and U.S.)……………..1-888-390-0541
International or Local Toronto………………………………......1-416-764-8677

NON-IFRS MEASURES

Certain non-IFRS financial measures are included in this news release, which include ADR, RevPAR, Pro-forma RevPAR, NOI, FFO, FFO per Unit, Core FFO per Unit, AFFO, AFFO per Unit, Core AFFO per Unit, payout ratio and debt-to-gross book value. These terms are not measures recognized under International Financial Reporting Standards ("IFRS") and do not have standardized meanings prescribed by IFRS. Real estate investment trusts often refer to NOI, FFO, FFO per Unit, Core FFO per Unit, AFFO, AFFO per Unit, Core AFFO per Unit and payout ratio as supplemental measures of performance and debt-to-gross book value as a supplemental measure of financial condition.

Debt-to-gross book value, NOI, FFO, FFO per Unit, Core FFO per Unit, AFFO, AFFO per Unit, Core AFFO per Unit and payout ratio should not be construed as alternatives to measurements determined in accordance with IFRS as indicators of AHIP's performance or financial condition. AHIP's method of calculating NOI, FFO, FFO per Unit, Core FFO per Unit, AFFO, AFFO per Unit, Core AFFO per Unit, payout ratio, debt and gross book value may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers. For further information, please refer to AHIP's Management's Discussion and Analysis ("MD&A") dated March 19, 2015, which is available on SEDAR at www.sedar.com and on AHIP's website at www.ahipreit.com.

Management believes that the computation of FFO per Unit – As Reported and AFFO per Unit – As Reported includes certain items that are not indicative of the results provided by AHIP's operating portfolio and affect the comparability of AHIP's period-over-period performance. These items include the impact of securities-based compensation and a one-time recovery of insurance proceeds. Therefore, in addition to FFO per Unit – As Reported and AFFO per Unit – As Reported, management uses Core FFO per Unit and Core AFFO per Unit to exclude such items. Management believes that Core FFO per Unit and Core AFFO per Unit are useful supplemental measures, however, these may not be comparable to the adjusted or modified FFOs per unit or modified AFFOs per unit of other issuers.

FORWARD-LOOKING INFORMATION

Certain statements in this news release may constitute "forward-looking" information that involves known and unknown risks, uncertainties and other factors, and it may cause actual results, performance or achievements or industry results, to be materially different from any future results, performance or achievements or industry results expressed or implied by such forward-looking information. Forward-looking information generally can be identified by the use of terms and phrases such as "anticipate", "believe", "could", "estimate", "expect", "feel", "intend", "may", "plan", "predict", "project", "subject to", "will", "would", and similar terms and phrases, including references to assumptions. Forward information includes, but is not limited, statements with respect to expectations, projections or other characterizations of future events or circumstances, and AHIP's objectives, goals, strategies, beliefs, intentions, plans, estimates, projections and outlook, including statements relating to the estimates or predictions of actions of customers, competitors or regulatory authorities, and statements regarding AHIP's future economic performance. Some of the specific forward-looking statements in this news release include, but are not limited to, statements with respect to: management's estimate of the impact of the exchange rate of the U.S. dollar to Canadian Dollar on the AFFO payout ratio; STR's expectations with respect to annualized occupancy, ADR and RevPAR; AHIP's hosting of a conference call to discuss financial results set out herein; and AHIP's long-term objectives.

Forward-looking statements are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking statements involve significant risks and uncertainties and should not be read as guarantees of future performance or results. Those risks and uncertainties include, among other things, risks related to: general economic conditions; future growth potential; Unit prices; liquidity; tax risk; tax laws currently in effect remaining unchanged; ability to access capital markets; competition for real property investments; environmental matters; the value of the U.S. Dollar; and changes in legislation or regulations. Management believes that the expectations reflected in forward-looking statements are based upon reasonable assumptions and information currently available; however, management can give no assurance that actual results will be consistent with these forward-looking statements. Additional information about risks and uncertainties is contained in AHIP's MD&A and in its annual information form for the year ended December 31, 2013, copies of which are available on SEDAR at www.sedar.com.

The forward-looking information contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information reflects management's current beliefs and is based on information currently available to AHIP. The forward-looking information is 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.

ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT LP

AHIP's current property portfolio is comprised of 61 hotels located in 24 states, representing 5,229 available guestrooms.  The Oak Tree Inn Hotel segment, serving the U.S. freight railway industry, consists of 38 hotels comprising 2,882 guestrooms and 26 Penny's Diner restaurants.  The Branded Hotel segment consists of 23 hotels comprising 2,347 guestrooms and is affiliated with leading hotel brands including Marriott and Hilton.

AHIP is a limited partnership formed under the Limited Partnerships Act (Ontario) to invest in hotel real estate properties located substantially in the United States and engaged primarily in the railway employee accommodation, transportation and branded, select service lodging sectors.

AHIP's long-term objectives are to: (i) generate stable and growing cash distributions from hotel properties substantially in the U.S.; (ii) enhance the value of its assets and maximize the long-term value of the hotel properties through active management; and (iii) expand its asset base and increase its AFFO per unit through an accretive acquisition program, participation in strategic development opportunities and improvements to its properties through targeted value-added capital expenditure programs.

ADDITIONAL INFORMATION

Additional information relating to AHIP, including AHIP's financial statements for the three months and year ended December 31, 2014, AHIP's MD&A dated March 19, 2015, and other public filings are available on SEDAR at www.sedar.com.

THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS NEWS RELEASE.

SOURCE American Hotel Income Properties REIT LP

Related Links

www.ahipreit.com

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