American Hotel Income Properties REIT LP Reports First Quarter 2021 Results

• Q1 2021 Occupancy of 60.2%, RevPAR of $57.01, Revenues of $46.7 million
  
  
• Sequential monthly gains in top-line performance culminated in April ADR & Occupancy of $103.15 and 68.6%, respectively
  
  
• Q1 2021 diluted FFO per unit of $(0.03); FFO at breakeven prior to non-recurring items
  
  
• Operating efficiency gains contributed to Q1 Hotel EBITDA margin of 29.1% compared to 21.8% in Q4 2020 and 26.0% in Q1 2020
  
  
• $50 million strategic Preferred Equity investment reduced leverage and enhanced liquidity
  
  
• Amended credit facility provides waiver of covenants through December 31, 2021
  
  
• Chief Investment Officer departing at the end of May

(All numbers are in U.S. dollars unless otherwise indicated)

VANCOUVER, BC, May 12, 2021 /PRNewswire/ - American Hotel Income Properties REIT LP ("AHIP", or the "Company") (TSX: HOT.UN, TSX: HOT.U, TSX: HOT.DB.U) announced today its financial results for the three months ended March 31, 2021. 

"Accelerating COVID-19 vaccination rates fueled occupancy- and rate-driven revenue increases across our Portfolio in the first quarter of 2021," said Jonathan Korol, CEO. Mr. Korol continued, "March 2021 was our best revenue-generating month since the pandemic began, only to be eclipsed again by our recent performance in April. We are encouraged by the sequential monthly rate increases that have accompanied higher traffic at our properties, driven mostly by the domestic leisure traveler."

"In Q1, AHIP surpassed most industry comparables, delivering Hotel EBITDA margin of 29.1%.  As one of the only public lodging REITs to be Hotel EBITDA positive every month since April 2020, we're proud of the cost containment measures implemented by our management team at the early stages of the pandemic." Mr. Korol added: "As we enter the seasonally strongest quarters in our industry with an improved balance sheet and the addition of strategic investment partners, we will continue to be focused on driving revenue growth, enhancing margins, improving our debt profile and investing opportunistically."

OPERATIONAL & FINANCIAL HIGHLIGHTS

• AHIP's portfolio Occupancy, ADR and RevPAR improved each month during the quarter, contributing to Revenues of $46.7 million, a decrease of 24.5% from Q1 2020 ($61.9 million), resulting from lower demand caused by the ongoing impact of COVID-19 compared to Q1 2020 which was only partially impacted by the pandemic.
  
  
• Portfolio improvement continued into April, with Portfolio ADR of $103.15, the highest achieved since the pandemic began, representing ADR growth of 17.8% over December 2020.
  
  
• March portfolio Occupancy of 69.4% was driven by Sunbelt states -Texas, Florida and Arizona - that demonstrated strong occupancies of 83.1%, 82.2%, and 72.3% respectively, primarily related to spring break demand.
  
  
• AHIP's portfolio is beginning to narrow the sizeable RevPAR gap between 2021 and 2019 levels, while showing meaningful improvements from March and April 2020:

• AHIP's 24 Extended Stay properties continue to be the strongest performing segment within the portfolio since the pandemic began, with Q1 2021 occupancy of 72.4%, RevPAR of $72.95 and Hotel EBITDA margin of 37.8%.
  
  
• Funds from operations ("FFO") for Q1 2021 was $(2.0) million (Q1 2020: $4.7 million) and adjusted funds from operations ("AFFO") was $(1.6) million (Q1 2020: $3.6 million), primarily due to the impacts of COVID-19 and non-recurring finance costs and compensation charges related to executive changes during the period.
  
  
• Q1 2021 Diluted FFO per Unit was $(0.03) (Q1 2020: $0.06) and Diluted AFFO per Unit was $(0.02) (Q1 2020: $0.05).
  
  
• The STR RevPAR index, which compares the performance of AHIP-owned hotels to their competitive set in each region, indicated AHIP's 78 Premium Branded hotels have, in aggregate, significantly outperformed their identified direct competition with an average index rating of 122.6 during the quarter (Q1 2020: 122.4), with 100.0 representing a 'fair share' of the market.
  
  
• Net Operating Income ("NOI") decreased by 16.1% to $15.0 million (Q1 2020: $17.9 million) due to lower revenues, partially offset by expense reduction initiatives. NOI Margins increased to 32.1% (Q1 2020: 28.9%) attributable to extensive cost saving measures taken which reduced operating and property maintenance expenses.
  
  
• Loss and comprehensive loss for the first quarter was $14.0 million, compared to the loss and comprehensive loss of $12.6 million in Q1 2020, due to lower NOI, higher interest expense and changes in fair value of swap contracts and warrants.

CAPITAL METRICS

• As at March 31, 2021, AHIP had an unrestricted cash balance of $30.1 million, restricted cash balances of $31.1 million, and available revolver capacity of approximately $29.5 million.
  
  
• AHIP's debt-to-gross book value as at March 31, 2021 was 56.0% (March 31, 2020: 57.9%).
  
  
• As at March 31, 2021, AHIP's debt had a weighted average remaining term of 4.3 years (2020: 5.3 years) and a weighted average interest rate of 4.56% (2020: 4.36% including continuing and discontinued operations).

FIRST QUARTER DEVELOPMENTS

• On January 28, 2021, HCI-BGO Victoria JV LP (the "Investor"), a joint venture limited partnership formed by BentallGreenOak Real Estate Advisors LP and Highgate Capital Investments, LP, made an aggregate $50 million strategic investment in AHIP and its direct subsidiary American Hotel Income Properties REIT Inc. ("US REIT"), on a private placement basis, through the issuance of 50,000 newly-created shares of Series C preferred stock of the US REIT (the "Series C Preferred Stock") and 19,608,755 warrants to acquire Units of AHIP (the "Warrants"), which Warrants may only be exercised on a cashless basis (the "Investment").
  
  
• In connection with the Investment, Mr. Mark Van Zandt, Managing Partner of BentallGreenOak, and Mr. Mahmood Khimji, Co-Founder and Managing Principal of Highgate, were appointed to the Board of Directors of AHIP's general partner.
  
  
• On January 28, 2021, AHIP amended its $225 million corporate credit facility with its lending syndicate. These amendments included, among others:
• waiver of key financial covenants through December 31, 2021 and modified covenants through December 31, 2022;
  
  
• availability under the Facility was fixed at approximately $159 million through December 31, 2021; and
  
  
• borrowings not subject to swap agreements will remain at LIBOR + 300 basis points with a minimum LIBOR balance of 0.25%.
  
  
• During the first quarter of 2021, various AHIP subsidiaries obtained government-guaranteed loans totaling approximately $5.0 million. AHIP received an additional $0.2 million in April 2021. The loans carry an interest rate of 1.00% per annum, and are repayable over five years. Under the terms of these loans, all or a portion of the loans may be forgiven if the loan proceeds are used for qualifying expenses and if other specific criteria are met.

SUBSEQUENT EVENTS

On April 1, 2021, AHIP repaid $16.1 million plus accrued interest on the purchase price payable on the acquisition of 12 Premium Branded hotel properties in 2019, which was included in accounts payable on the consolidated statements of financial position as at March 31, 2021, thereby fully discharging the liability. 

Chris Cameron, Chief Investment Officer, will be departing the Company at the end of May 2021 to pursue other opportunities.  "On behalf of AHIP, I would like to thank Chris for his service to the Company", said Jonathan Korol, CEO. Mr. Korol continued, "Chris's involvement with AHIP began during its initial public offering and he has been a valuable member of the AHIP executive team since 2019. We wish him all the best in his future endeavors." 

"It has been a pleasure working with the AHIP team." said Mr. Cameron.  He added, "I am proud of what we accomplished during my time in advancing AHIP's transformative portfolio change that will provide a solid asset base for continued growth.  I look forward to AHIP's continued success in the years to come."

Q1 2021 FINANCIAL RESULTS CONFERENCE CALL

Management will host a conference call at 1:00 p.m. Eastern time / 10:00 a.m. Pacific time on Thursday, May 13, 2021 to review the financial results for the three months ended March 31, 2021.

To participate in this conference call, please dial one of the following numbers at least five minutes prior to the commencement of the call and ask to join the American Hotel Income Properties' Q1 2021 Analyst Call.

The conference call will also be webcast live (in listen-only mode).   The link to the webcast can be found on the Events tab of the following webpage:  https://www.ahipreit.com/news-and-events/

CONFERENCE CALL REPLAY

A replay of the conference call will be available by dialing one of the following replay numbers. The replay will be available after 11:30 a.m. Eastern time / 8:30 a.m. Pacific time on May 13, 2021 until June 3, 2021. The webcast recording of this conference call will also be available at www.ahipreit.com on the Events and Presentation page.

Please enter replay PIN number 2984505 followed by the # key.

NON-IFRS MEASURES

Certain non-IFRS financial measures are included in this news release, which include NOI, FFO, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, 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 issuers often refer to NOI, FFO, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit 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, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, 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, Diluted FFO per Unit, AFFO, Diluted AFFO per Unit, and debt-to-gross book value may differ from other issuers' methods and accordingly may not be comparable to measures used by other issuers. For further information, including reconciliations of certain of these non-IFRS financial measures to the closest comparable IFRS measure, please refer to AHIP's MD&A dated March 9, 2021, which is available on SEDAR at www.sedar.com and on AHIP's website at www.ahipreit.com.

FORWARD-LOOKING INFORMATION

Certain statements in this news release may constitute "forward-looking information" within the meaning of applicable securities laws (also known as forward-looking statements). Forward looking information 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. Some of the specific forward-looking statements in this news release include, but are not limited to, statements with respect to: AHIP being encouraged by sequential monthly rate increases at its hotel properties; AHIP continuing to focus on driving revenue growth, enhancing margins, improving its debt profile and investing opportunistically; the potential for forgiveness of all or a portion of the government guaranteed loans received by certain AHIP subsidiaries; and AHIP's stated long-term objectives.

Forward-looking information is based on a number of key expectations and assumptions made by AHIP, including, without limitation: the COVID-19 pandemic will continue to negatively impact the U.S. economy, U.S. hotel industry and AHIP's business, and the extent and duration of such impact; recent recovery trends at AHIP's properties will continue and not deteriorate; the vaccination programs in the U.S. will be successful and vaccines effective, and government restrictions related to COVID-19 will alleviate and the expected positive impacts thereof on the U.S. economy, U.S. hotel industry, consumer confidence in travel, consumer behavior and AHIP's business will be consistent with AHIP's expectations; AHIP's strategies with respect to revenue growth, margin enhancement, improving its debt profile and opportunistic investments will be successful; and a portion of the government-guaranteed loans received by certain AHIP subsidiaries will be forgivable. Although the forward-looking information 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 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 as actual results may differ materially from those expressed or implied in such forward-looking statements. Those risks and uncertainties include, among other things, risks related to: : the impacts of the COVID-19 pandemic on the U.S. economy, the hotel industry, the willingness of the general public to travel, demand for travel, transient and group business, guest traffic and guest reservations, the level of consumer confidence in the safety of travel, consumer and corporate behavior with respect to travel and AHIP's business, all of which have negatively impacted, and are expected to continue to negatively impact, AHIP and may materially adversely affect AHIP's investments, results of operations, financial condition and AHIP's ability to obtain additional equity or debt financing, or re-finance existing debt, or make interest and principal payments to its lenders and to holders of AHIP's debentures, and otherwise satisfy its financial obligations and may cause AHIP to be in non-compliance with one or more of the financial or other covenants under its existing credit facilities and cause a default, or engage certain restrictive provisions (including cash management provisions), thereunder; the pace of recovery following the COVID-19 pandemic cannot be accurately predicated and may be slow; the speed of vaccinations may decline, the effectiveness, acceptance and availability of vaccines, the duration of associated immunity and efficacy of the vaccines against emerging variants of COVID-19 all may be less than expected, which may prolong the impacts of COVID-19 on the U.S. economy, lodging industry and AHIP and cause various levels of government to consider the imposition of new travel and other restrictions and may negatively impact corporate travel policies and consumer behavior, which could put further downward pressure on occupancy levels and revenues for an extended period of time; recent recovery trends may not continue and may decline and AHIP may not achieve its expected performance improvements in 2021; AHIP may not satisfy the criteria for forgiveness of certain government guaranteed loans obtained by certain of AHIP's subsidiaries; 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 dated May 11, 2021 and annual information form for the year ended December 31, 2020, 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.

THIRD PARTY INFORMATION

This news release includes market information and industry data from independent industry publications, market research and analyst reports, surveys and other publicly available sources. Although AHIP management believes these sources to be generally reliable, market and industry data is subject to interpretation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Accordingly, the accuracy and completeness of this data are not guaranteed. AHIP has not independently verified any of the data from third party sources referred to in this news release nor ascertained the underlying assumptions relied upon by such sources.

ADDITIONAL INFORMATION

Additional information relating to AHIP, including AHIP's Interim Financial Statements for the three months ended March 31, 2021, AHIP's MD&A dated May 11, 2021, and other public filings are available on SEDAR at www.sedar.com.

ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT LP

American Hotel Income Properties REIT LP (TSX: HOT.UN, TSX: HOT.U, TSX: HOT.DB.U), or AHIP, is a limited partnership formed to invest in hotel real estate properties across the United States. AHIP's 78 premium branded, select-service hotels are located in secondary metropolitan markets that benefit from diverse and typically stable demand. AHIP's hotels operate under brands affiliated with Marriott, Hilton, IHG and Choice Hotels through license agreements.  The Company'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.

    FIRST QUARTER HIGHLIGHTS AND KEY PERFORMANCE INDICATORS

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SOURCE American Hotel Income Properties REIT LP