AHIP makes deal for Fla. Marriott select-service portfolio

American Hotel Income Properties has agreed to acquire a portfolio of three Marriott-branded, select-service hotels located in Ocala, Fla., for an aggregate purchase price of $30.8 million. The purchase price does not include $3.2 million for the completion of brand-mandated property improvement plans and $1.0 million for the defeasance of existing loans.

The three hotels encompass 352 total guestrooms that are being acquired below management's estimate of replacement cost. The three select-service hotels are an 87-room Residence Inn; a 96-room Fairfield Inn & Suites; and a 169-room Courtyard. 

AHIP will fund the purchase price, including the PIPs and defeasance costs, using a combination of cash on hand and a new $19.0 million commercial mortgage backed securities loan. The new mortgage will be for a 10-year term, interest-only for the entire term and is expected to have a fixed interest rate of approximately 4.26%. In addition, the lender has agreed to provide an FF&E reserve waiver for the first two years.

This transaction is expected to close by the end of July 2015, subject to customary closing conditions and documentation.

Rob O'Neill, AHIP's CEO, commented, "This investment strengthens our presence in the Florida market and we are excited to acquire this portfolio of Marriott-branded hotels in Ocala, which is a major world thoroughbred center with over 1,200 horse farms and is the horse capital of the world.

"The availability of long-term, low-cost, fixed-rate, interest-only CMBS debt highlights a key aspect of our conservative approach to leverage, aimed at providing highly stable returns and delivering value to unitholders. Upon the completion of this acquisition and the previously announced acquisition of the nine branded, select-service hotels, AHIP will have deployed all of the capital raised from its April 2015 bought deal offering. AHIP's portfolio will then consist of 73 hotels totaling 6,212 guest rooms with 35 branded hotels totaling 3,331 guest rooms and 38 rail hotels totaling 2,881 guest rooms."

The properties will be managed by Tower Rock Hotels & Resorts Inc., a wholly owned subsidiary of O'Neill Hotels & Resorts Ltd.

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