American Hotel Income Properties REIT LP Reports Q1 2025 Results With 5.7% RevPAR Growth

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VANCOUVER, British Columbia, May 14, 2025 (GLOBE NEWSWIRE) -- American Hotel Income Properties REIT LP ("AHIP”, or the "Company”) (TSX: HOT.UN, TSX: HOT.U, TSX: HOT.DB. V), today announced its financial results for the three months ended March 31, 2025.

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

2025 FIRST QUARTER HIGHLIGHTS

• Completed the dispositions of three hotel properties for total gross proceeds of $41.2 million at a blended Cap Rate⁽¹⁾ of 6.9% on 2024 annual hotel EBITDA⁽¹⁾.
• Completed two refinancings for total gross proceeds of $144.3 million which resulted in the full repayment of AHIP's senior credit facility which was comprised of the Credit Facility Revolver and Credit Facility Term Loan (defined below).
• Diluted FFO per unit⁽¹⁾ and normalized diluted FFO per unit⁽¹⁾ were $(0.02) for the first quarter of 2025, compared to $0.03 and $0.02 respectively for the same period in the prior year.
• ADR⁽¹⁾ increased 3.1% to $135 for the first quarter of 2025, compared to $131 for the same period of 2024.
• Occupancy⁽¹⁾ was 67.9% for the first quarter of 2025, an increase of 150 bps compared to 66.4% for the same period of 2024.
• RevPAR⁽¹⁾ increased 5.7% to $92 for the first quarter of 2025, compared to $87 for the same period of 2024.
• Same property NOI⁽¹⁾ was $12.4 million for the first quarter of 2025, a decrease of 2.8% compared to $12.7 million for the same period of 2024.
• Same property NOI margin⁽¹⁾ was 27.7% for the first quarter of 2025, a decrease of 120 bps compared to 28.9% for the same period of 2024.
• AHIP has no debt maturities until the fourth quarter of 2026 assuming the properties currently under contract for sale close as expected.
• AHIP intends to continue its strategy to sell hotel properties to enhance liquidity, reduce debt and manage future financial obligations.

"AHIP continues to make significant progress on our plan to reduce debt and high-grade the portfolio through asset sales and loan refinancings,” said Jonathan Korol, CEO. "In 2025, AHIP completed the dispositions of 3 hotel properties for total gross proceeds of $41.2 million, and AHIP has 9 hotel properties under purchase and sales agreements for estimated total gross proceeds of $49.7 million. AHIP also completed several refinancings in the first quarter for total gross proceeds of $144.3 million which resulted in the full repayment and termination of AHIP's senior credit facility.”

"Dispositions completed and under contract in 2024 and 2025 have a combined Cap Rate⁽¹⁾ of 6.9%, demonstrating value beyond AHIP's current trading levels on its remaining assets. As a result of our disposition and refinancing efforts, AHIP will have no debt maturing until the fourth quarter of 2026. This time is valuable as we navigate the uncertainty in the macroeconomic environment impacting operating performance and the transaction market.”

"Over the next 12 - 18 months, AHIP's objective is to address the Series C Preferred Shares and the Convertible Debentures. With the recently completed asset sales and refinancings, AHIP has sufficient time with a stable cash position to consider alternatives to address these future obligations in an orderly manner. Alternatives may include further hotel sales, or full or partial recapitalization of Convertible Debentures and/or Series C Shares or a combination thereof. We will be considering all strategic opportunities to deliver value to unitholders.”

INITIATIVES TO STRENGTHEN FINANCIAL POSITION AND PRESERVE UNITHOLDER VALUE

The Board of Directors (the "Board”), together with management, have implemented a plan to strengthen AHIP's financial position and to preserve unitholder value. Initiatives, and progress made to date, are outlined below.

2025 REFINANCING AND REPAYMENT OF RCF AND TERM LOANS

On December 3, 2024, AHIP satisfied the conditions in the credit agreement governing its then senior credit facility (the "Sixth Amendment”) for the extension of the maturity date for the revolving credit facility (the "Credit Facility Revolver” or "RCF”) and term loans governed thereby ("Credit Facility Term Loan”).

On January 27, 2025, AHIP completed an interest only, CMBS refinancing for five hotel properties for total gross proceeds of $43.0 million (the "CMBS Loan”). The CMBS Loan has a five-year term and bears interest at a fixed annual interest rate of 7.63%. Four of the five hotel properties secured by the CMBS Loan were previously secured under the Sixth Amendment and the fifth hotel property was unencumbered prior to the completion of this CMBS Loan. The aggregate balance of the RCF and Credit Facility Term Loan was reduced to $89.3 million as a result of the pay down following the completion of this new CMBS Loan as well as the application of a portion of the net proceeds from previously announced hotel dispositions that closed in December 2024.

On March 7, 2025, AHIP completed an interest only, non-recourse debt refinancing and repayment in full of the RCF and Credit Facility Term Loan. The initial gross loan proceeds were $85.0 million secured against 11 hotel properties, with additional advances of up to $41.0 million available, comprised of $16.3 million upon the addition of a further hotel property and up to $24.7 million for renovations and improvements to these 12 hotel properties (the "Portfolio Loan”).

AHIP used the initial net proceeds from the Portfolio Loan to fully repay the outstanding balance of the RCF and the Credit Facility Term Loan and these facilities have been terminated. The initial 11 hotel properties secured by the Portfolio Loan were previously secured under the Sixth Amendment. The Portfolio Loan had an initial principal amount of $85.0 million, a two-year term with the option to extend the term for another one-year period subject to the satisfaction of certain conditions, and bears interest at SOFR plus 4.65% per annum.

On March 27, 2025, AHIP added the further hotel property to the Portfolio Loan with additional gross loan proceeds of $16.3 million which results in a current loan balance of $101.3 million. The net proceeds from this refinancing and the dispositions of three hotel properties in March 2025 were used to fully repay the CMBS mortgage loan of $55.2 million secured by these 4 hotel properties. To address the variable rate exposure of the Portfolio Loan, AHIP entered into a derivative contact which provides for a maximum one month SOFR rate of 4.03% on a notional value of $100.0 million for a one year period from May 2025 to May 2026.

For further details, see a copy of the agreement governing the Portfolio Loan, which has been filed under AHIP's profile on SEDAR+ at www.sedarplus.com.

ADDRESSING 2026 BALANCE SHEET OBLIGATIONS

In 2024, AHIP made significant progress on its plan to reduce debt and improve the quality of its portfolio through asset sales and loan refinancings. AHIP disposed of 16 hotel properties in 2024 for total gross proceeds of $165.2 million, which has improved the overall portfolio asset quality with pro forma increases in RevPAR, NOI margin and EBITDA per hotel, while also significantly reducing leverage. In the first quarter of 2025, AHIP completed the disposition of three hotel properties for total gross proceeds of $41.2 million. The net proceeds from these sales along with the proceeds from the recent loan refinancings, were used to repay the CMBS loan secured by those properties. AHIP has nine additional properties under purchase and sale agreements, eight of which are being sold to address a forthcoming CMBS loan maturity secured by those eight properties. The sale of these eight properties is expected to close in the second quarter of 2025. The sale of the nineth property is anticipated to close in the fourth quarter of 2025.

Excluding the CMBS loan secured by the eight aforementioned properties, AHIP has no debt maturing until the fourth quarter of 2026. However, effective January 28, 2026, the dividend rate on the $51.6 million outstanding Series C Shares increases from 9.0% to 14.0% per annum and certain other provisions under the Investor Rights Agreement will be triggered on such date, which will reduce AHIP's operational flexibility if the Series C Shares have not been fully redeemed as of such date. AHIP's 6.0% unsecured subordinated convertible debentures (the "Convertible Debentures”) are due December 31, 2026. Accordingly, over the next 12 - 18 months, AHIP's objective is to raise sufficient capital to address the redemption of the Series C Shares and the Convertible Debentures.

With the recently completed asset sales and refinancings, AHIP has sufficient time with a stable cash position to consider alternatives to address these future obligations in an orderly manner. Alternatives may include further hotel sales, full or partial recapitalization of Convertible Debentures and/or Series C Shares or a combination thereof. Regarding potential dispositions, AHIP intends to bring approximately 20 additional hotels to market in 2025. Over the coming months, AHIP will assess which of the marketed hotels will provide the most attractive combination of certainty, valuation and net proceeds to address these future obligations. The number of potential hotel dispositions will be dependent on, among other things, regional market factors, hotel performance, hotel size, nature and value of offers and whether or not any portion of the Series C Preferred Shares or Convertible Debentures are recapitalized.

2025 FIRST QUARTER REVIEW

FINANCIAL AND OPERATIONAL HIGHLIGHTS

For the three months ended March 31, 2025, ADR increased 3.1% to $135, and occupancy increased by 150 bps to 67.9%. Overall, improved ADR and occupancy resulted in an increase of 5.7% in RevPAR to $92, compared to the three months ended March 31, 2024. The improved performance is primarily attributable to higher demand for business travel and leisure, and the disposition of hotel properties with lower-than-average portfolio RevPAR.

NOI and normalized NOI⁽¹⁾ were $12.7 million for the three months ended March 31, 2025, decreases of 22.1% and 22.5%, respectively, compared to NOI and normalized NOI of $16.3 million and $16.4 million for the three months ended March 31, 2024. The decrease in NOI was primarily due to the disposition of the 16 hotel properties completed in 2024 and the 3 hotel properties in the three months ended March 31, 2025.

NOI margin was 26.1% for the three months ended March 31, 2025, an increase of 120 bps compared to 24.9% for the same period in the prior year. The increase in NOI margin was due to disposal of underperforming hotels in 2024 offset by higher operating expenses as a result of general cost inflation, utilities and repair and maintenance expenses.

Diluted FFO per unit and normalized diluted FFO per unit for the three months ended March 31, 2025, were $(0.02) compared to diluted FFO per unit of $0.03 and normalized diluted FFO per unit of $0.02 for the three months ended March 31, 2024. The decrease in diluted FFO per unit and normalized diluted FFO per unit was mainly due to lower NOI as a result of sold properties and higher operating expenses on same properties, partially offset by lower corporate and administrative expenses in the current year.

SAME PROPERTY KPIs

The following table summarizes key performance indicators ("KPIs”) for the portfolio for the five most recent quarters with a comparison to the same period in the prior year on a same-property basis.

In the first quarter of 2025, same property ADR was $136, which is comparable to the same period in the prior year. Same property occupancy increased by 200 bps to 68.8% in the current quarter, compared to the same period of 2024. The increase in occupancy is primarily attributable to higher demand for extended stay and select service properties. Overall, the ADR and improved occupancy contributed to an increase of 2.2% in RevPAR.

Same property NOI decreased by 2.8% and same property NOI margin decreased by 120 bps in the current quarter, compared to the same period in 2024. The decrease in same property NOI and NOI margin was driven by a decline in government group travel, representing approximately 16% of total government revenue, due to U.S. government travel restrictions introduced during the first quarter. Additionally, higher operating expenses contributed to the decline, including higher utility and snow removal costs due to colder weather and greater snowfall in the Midwest and Northeast compared to the prior year, as well as general cost inflation and elevated repair and maintenance expenses.

LEVERAGE AND LIQUIDITY

Debt to gross book value⁽¹⁾ was 48.7% as at March 31, 2025, a decrease of 60 bps compared to December 31, 2024. Debt to EBITDA⁽¹⁾ as at March 31, 2025 was 7.9x, a decrease of 0.1x compared to December 31, 2024. The change in debt to gross book value and debt to EBITDA ratios was driven by the use of net proceeds from completed dispositions to reduce outstanding debt.

As at March 31, 2025, AHIP had an unrestricted cash balance of $17.8 million compared to $27.8 million as at December 31, 2024. The reduction in cash was primarily due to net outflows from completed refinancings and debt repayment, which resulted in one property becoming unencumbered as of March 31, 2025. As at March 31, 2025, AHIP held a restricted cash balance of $30.5 million and had an additional $24.7 million available under the Portfolio Loan for capital improvements related to the properties secured by the loan.

HOTEL DISPOSITIONS

2025 Hotel Dispositions Summary

⁽¹⁾See "Non-IFRS and Other Financial Measures”

During the three months ended March 31, 2025, AHIP completed the dispositions of 3 hotel properties for total gross proceeds of $41.2 million. After adjusting for an industry standard 4% FF&E reserve, the combined sales price for the three hotel properties sold in Q1 2025 represents a blended Cap Rate of 6.9% on 2024 annual hotel EBITDA. The net proceeds from these dispositions were used to repay certain CMBS mortgage loans. AHIP's enterprise value as at March 31, 2025 reflects an implied Cap Rate of 9.4% on 2024 annual hotel EBITDA for the portfolio of 46 hotel properties, based on the Canadian dollar closing price of CDN$0.58 per unit on the TSX on March 31, 2025 and converted to US dollars at a foreign exchange rate of CDN$1.43 to USD$1.

As of the date of this news release, AHIP has 9 hotel properties under purchase and sales agreements for estimated total gross proceeds of $49.7 million. Eight of these nine dispositions are currently estimated to close in the second quarter of 2025 and one disposition is estimated to close in the fourth quarter of 2025. AHIP intends to use the net proceeds from these dispositions to repay certain CMBS mortgage loans and a portion of the Portfolio Loan.

CAPITAL IMPROVEMENTS

AHIP's capital projects include hotel brand mandated property improvement plans ("PIPs”) and FF&E improvements. Select projects may generate positive return on investment through the refreshment and upgrade of guest-facing items, ensuring that each property maintains its competitive advantage in the marketplace. AHIP currently has four hotel projects in the design phase for future renovations.

The 2025 capital plan is estimated to include $6.9 million in PIPs and $7.5 million in FF&E improvements, which will be funded through existing restricted cash and cash flow from operating activities. Actual capital spend on PIPs and FF&E was $0.1 million and $2.4 million, respectively, for the three months ended March 31, 2025. The majority of this capital spend will be funded through restricted cash contributed by AHIP in prior periods.

SELECTED INFORMATION