Executive Brief

Chief Financial Officer
American Hotel Income Properties REIT

February 2021

Organizational Profile

About American Hotel Income Properties REIT

American Hotel Income Properties REIT (AHIP) is a TSX listed LP focused on investing in hotel properties in the United States and engaged primarily in growing a portfolio of premium branded, select-service hotels in larger secondary markets with diverse and stable demand generators.

AHIP completed its initial public offering in 2013 with a portfolio of 32 properties in tertiary markets across the US. Since then, the company has seen tremendous growth, expanding and diversifying the portfolio to focus on premium branded select service hotels Presently, the Company has 78 hotels in 22 separate States and is looking to expand its footprint as transaction activity increases following demand disruption caused by the COVID-19 pandemic. Portfolio growth will focus on Marriott, Hilton, IHG and Hyatt branded properties in higher density suburban locations across the US.

Led by an experienced management team comprised of proven hotel industry leaders, AHIP has consistently delivered high yields for their investors, while achieving exponential growth of their portfolio. This success has fueled AHIP’s growing profile and attention in the markets and expanded coverage by leading North American securities analysts.

Objectives

AHIP is focused on and guided by the relentless pursuit of three primary business objectives:

Generate monthly cash distributions from hotel properties located in the United States;
Enhance the value of its assets and maximize the long-term value of the hotel properties through active management; and
Expand its asset base and increase its Funds from Operations per Unit through an accretive acquisition program and improvements to the properties through targeted value-added capital expenditure programs.

Strategic Priorities

Portfolio

American Hotel Income Properties' hotels span the United States and are comprised of 78 hotels in 51 cities and 22 States. AHIP’s investment strategy is sharply focused on the select-service category of hotels. Select service hotels are distinguished as having rooms-only operations without extensive food & beverage or banquet facilities. A “select” range of hotel amenities may include a fitness area, swimming pool, small meeting rooms and complimentary breakfast. Examples of select service hotels include Hampton Inn or Fairfield Inn. A further category of select service hotel would include rooms with kitchens catering to the “Extended Stay” customer. Examples of Extended Stay hotels include Residence Inn or Homewood Suites. With strong consumer demand and broad appeal, Select Service hotels have a simple and efficient operating model that consistently delivers higher margins with lower volatility than typical full-service hotels. The attractiveness of the business model has been evidenced by the relative outperformance of select service hotels during the challenged demand environment caused by the COVID-19 pandemic. See AHIP’s full portfolio here.

Using rigorous due diligence, AHIP seeks out properties distinguished by the following criteria:

Select-service hotels in secondary and/or suburban US markets with:
- focused transportation hubs and thoroughfares,
- established noncyclical demand generators (such as established businesses, colleges & universities, government/ military presence, and tourist attractions).
Markets with limited new supply in the development pipeline, given fewer barriers to entry in secondary markets
Focus on Marriott, Hilton, IHG and Hyatt select service and extended stay brands
Buildings constructed less than 20 years ago and/or recently PIP’d
Clustered properties geographically, for administrative efficiencies
Targeted in-place yield of 8% with opportunities to grow income through active asset management for turnaround and or repositioning
Willing to provide a take-out to developers with delivery at Certificate of Occupancy
All-in trailing capitalization rate >8%
Acquisition cost below replacement cost