American Hotel Income Properties REIT reached a definitive agreement to acquire a portfolio of 12 hotels for $191 million, excluding closing and post-closing adjustments. The real estate investment trust expects the transaction to close this month, at which point its portfolio will consist of 79 hotels and 8,887 total guestrooms. The company would not disclose the name of the seller.
The 12 hotels, which total 1,203 guestrooms, consist of six Marriott International-branded properties, five Hilton-branded properties and one IHG-branded property. All have been constructed within the past five years and have minimal brand-mandated property improvement plans. Aimbridge Hospitality, AHIP’s exclusive hotel manager, already operates all 12 properties.
The deal is part of AHIP’s recent pivot away from the economy segment to upper-midscale to upper-upscale brands. As part of that shift, the company recently sold its entire 45-hotel economy-lodging portfolio to VCM, an affiliate of Vukota Capital Management, for $215.5 million. AHIP plans to use net proceeds from the deal, as well as an approximately $105 million fixed-rate term loan, to help finance this acquisition.
"We're very excited to complete a significant component of our 2019 capital recycling program by adding these 12 high-quality, mostly all-suite focused, recently built select-service hotels to our portfolio of premium-branded hotels," John O'Neill, AHIP’s CEO, said in a statement. "We're especially pleased with the acquisition cap rate and short closing timeline for this transaction, as the cash flow from these newer hotels will minimize the dilution from the sale of the economy-lodging portfolio. With no major capital renovations required, the hotels in this portfolio should perform without any income displacement."
The 12 hotels AHIP plans to buy are:
- The 108-room Home2 Suites by Hilton Houston Willowbrook
- The 101-room Hampton Inn & Suites Corpus Christi (Texas)
- The 98-room Staybridge Suites Midland (Texas)
- The 93-room Home2 Suites by Hilton Midland
- The 93-room Home2 Suites by Hilton San Angelo (Texas)
- The 92-room Residence Inn by Marriott San Angelo
- The 103-room Fairfield Inn & Suites by Marriott Pittsburgh Airport/Robinson Township
- The 93-room TownePlace Suites by Marriott Pittsburgh Airport/Robinson Township
- The 97-room Homewood Suites by Hilton Kalamazoo-Portage (Mich.)
- The 120-room Courtyard by Marriott St. Paul Woodbury (Minn.)
- The 116-room Residence Inn by Marriott St. Paul Woodbury
- The 89-room Courtyard by Marriott Bismarck (N.D.) North