Annual Meeting of Unitholders May 8, 2019 TSX: HOT.UN (CAD$) - - PowerPoint PPT Presentation

annual meeting of unitholders may 8 2019
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Annual Meeting of Unitholders May 8, 2019 TSX: HOT.UN (CAD$) - - PowerPoint PPT Presentation

Annual Meeting of Unitholders May 8, 2019 TSX: HOT.UN (CAD$) TSX: HOT.U (US$) TSX: HOT.DB.U (Debentures) ForwardLookingStatements This corporate update is a summary and should be read together with the more detailed information,


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Annual Meeting of Unitholders – May 8, 2019

TSX: HOT.UN (CAD$) TSX: HOT.U (US$) TSX: HOT.DB.U (Debentures)

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ForwardLookingStatements

This corporate update is a summary and should be read together with the more detailed information, financial data and statements made available by American Hotel Income Properties REIT LP (the “REIT”). This corporate update contains forward- looking statements which reflect management’s expectations regarding objectives, plans, goals, strategies, future growth, results of operations, performance and business prospects and opportunities of the REIT. The words “plans”, “expects”, “scheduled”, “estimates”, “intends”, “anticipates”, “projects”, “believes” or variations of such words and phrases or statements to the effect that certain actions, events or results “may”, “will”, “could”, “would”, “might”, “occur”, “be achieved” or “continue” and similar expressions identify forward-looking statements. Some of the specific forward- looking statements in this corporate update include, but are not limited to, statements with respect to the ability of the REIT to execute its growth strategies; the expected tax treatment of the REIT and of the REIT’s distribution to Unitholders; the expected growth in the U.S. lodging industry and trends; and other considerations which are outlined in the REIT’s Annual Information Form dated March 29,

  • 2018. Forward-looking statements are necessarily based on a number of estimates and assumptions that, while considered

reasonable by management of the REIT as of the date of this corporate update, are inherently subject to significant business, economic and competitive uncertainties and contingencies. The REIT’s estimates, beliefs and assumptions, which may prove to be incorrect, include the various assumptions set forth herein, including, but not limited to the REIT’s future growth potential, results of operations, future prospects and opportunities, industry trends remaining unchanged, no change in legislative or regulatory matters, future levels of indebtedness, the tax laws as currently in effect remaining unchanged, the continual availability of capital and the current economic conditions remaining

  • unchanged. When relying on forward-looking statements to make decisions, the REIT cautions readers not

to place undue reliance on these statements, as forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not the times at or by which such performance or results will be

  • achieved. A number of factors could cause actual results to differ materially from the results discussed

in the forward-looking statements, including, but not limited to, the factors discussed under the “Risk Factors” in the REIT’s latest Management’s Discussion and Analysis. The forward- looking information contained herein is made as of May 8, 2019 and, except as expressly required by applicable law, the REIT assumes no obligation to publicly update or revise such information. Allfigurespresen ented edarein inU.S.doll llars,unless ssother erwise sestated ed.

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American Hotel Income Properties REIT LP: Overview

112 hotel properties 11,523 guestrooms 67 Premium Branded Hotels; 45 45Economy Lodging Hotels 100% of hotel assets are located in the United States 32 states;89 cities 18 hotel brands operated through 5brand families TSX listed: HOT.UN (CAD ticker) & HOT.U (USD ticker) 12%+ Yield

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Hotels are about the guests they serve

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We sold3.2 million room nights Which means we had nearly 5

5 million guests sleeping at our hotels

Had approx. 4,000 dedicated staff across our 112

112hotels,

serving these guests

40 restaurants and 72 72breakfast rooms collectively service

more than 2millionmeals During 2018…

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A strategy focused on sustainable returns

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How our business and strategy has evolved

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Brand diversity – Marriott, Hilton, IHG, Wyndham

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67 Premium Branded hotels; 7,684 guestrooms 45 Economy Lodging hotels; 3,839 guestrooms

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NOI by Segment

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80% 79% 58% 20% 21% 42%

2018 2017 2016

$64,503,000 $105,752,000 $113,613,000

Premium Branded hotels Economy Lodging hotels

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Geographic diversity based on demand

Consistent with AHIP’s investment strategy, all properties are strategically located within or near: ▪ Larger population centers ▪ Transportation corridors ▪ Demand generators

112 hotels in 32 states and 89 cities totaling 11,523 guestrooms

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2018 and recent milestones

In the last 12 months we have set a strong foundation for future growth, completing the first of several important hotel renovations, making key executive appointments and welcoming our new third-party hotel manager

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March 2018: Completed Wyndham rebranding of all Economy Lodging hotels April 2018: Aimbridge appointed AHIP’s new third-party hotel manager July 2018: Completed $1 million renovation at Hilton Garden Inn White Marsh (Baltimore) August 2018: Completion of $5.2 million renovation at Embassy Suites DFW South (Irving, TX) September 2018: AHIP announces appointment of John O’Neill as CEO November 2018: Completion of $2.3 million renovation at the Embassy Suites Cincinnati (Covington, KY) February 2019: Completion of $4.2 million of renovations at the Staybridge Suites Tampa East and the Residence Inn Baltimore White Marsh February 2019: AHIP announces appointment of Chris Cameron as Chief Investment Officer April 2019: AHIP announces appointment of Bruce Pittet as SVP Asset Management and COO

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Aimbridge Hospitality: Benefits of a larger manager

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On April 25, 2018, Aimbridge Hospitality assumed all hotel management responsibilities

  • Stronger purchasing power
  • Deeper talent pools
  • More powerful technology and reporting systems
  • Aimbridge has long-standing and deep-seeded

relationships with many of the brands AHIP operates hotels under

Benefits of our new larger hotel management company:

The largest independent U.S. hotel management company

  • Manage more than 800 upscale,

independent and branded hotel properties encompassing 100,000+ hotel rooms

  • Manage propertieswith hotel

brands such as Marriott, Hilton, IHG, Wyndham, and Choice hotels (all of AHIP’s hotel brands)

  • Manage more than 300 Marriott

hotels for their clients

  • Managefor many other hotel REITs,

as well as many well known institutional hotel investors

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Renovations Program

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Updating some of our largest properties

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Major hotel renovations and upgrades

Embassy Suites, DFW South (Irving, TX) – approx. $5.2 million

Complete atrium and lobby renovation

Modernized restaurant and lobby bar concept

Elevator replacements and modernization

Embassy Suites, Cincinnati RiverCenter (Covington, KY) – approx. $2.3 million

Complete atrium and lobby renovation

Modernized restaurant and lobby bar concept

Guestroom corridor updates

Guestroom furniture /artwork updates

Guestroom bathroom updates

Updated public restrooms

Embassy Suites, Columbus (OH) – approx. $2.9 million

Complete atrium and lobby renovation

Modernized restaurant and lobby bar concept

Updated public restrooms

Renovated conference and boardrooms and pre-conference lobby

Guestroom bathroom updates

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COMPLETED NOVEMBER 2018 COMPLETED AUGUST 2018 COMPLETED JANUARY 2019

Total 2018 Capital Renovation Program Spend: Approx. $14.0 million

LARGEST PROPERTY UPDATES:

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Embassy Suites DFW Airport South (Dallas, TX) $5.2 million

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Embassy Suites DFW (Irving, TX)

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After Renovations:

  • 1. New Atrium and lounge
  • 2. New Lobby and Front Desk
  • 3. Updated Restaurant

1. 2.

3.

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Embassy Suites Cincinnati (Covington, KY) $2.3 million

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Embassy Suites – Cincinnati upgrades and renovations

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After Renovations:

  • 1. Front Desk
  • 2. New Atrium Bar
  • 3. Breakfast Buffet

1. 2.

3.

2.

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Embassy Suites Columbus $2.9 million

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Embassy Suites – Columbus upgrades and renovations

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After Renovation:

  • 1. New Atrium
  • 2. New Lobby Restaurant/Bar
  • 3. Updated Breakfast Room

1. 2. 1. 1.

3. 3.

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Other hotel renovations completed since January 2018

Hilton Garden Inn White Marsh (Baltimore, MD) – approx. $1.0 million

COMPLETED AUGUST 2018

Modernized guestrooms

Renovated lobby and meeting rooms

Updated pool area

Residence Inn Baltimore White Marsh –

  • approx. $1.9 million

COMPLETED FEBRUARY 2019

Complete guestroom renovations – carpet, kitchens, bathrooms, lighting, window treatments, artwork

Corridors renovated

Staybridge Suites Tampa East –

  • approx. $2.3 million

COMPLETED FEBRUARY 2019

Updated exterior

Complete lobby renovation

Complete guestroom renovations – carpet, furniture, beds, lighting, window treatments

Modernized breakfast buffet

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2019 Property Improvements

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Scheduled Renovation Dates

Hotel Name and and Guestroo

  • oms

Q1 2019 Q2 2019 Q3 2019 Q4 2019

Fair irfield ield Inn n & Suites Jacksonville

  • nville (89 guestrooms)

X X Resid idenc nce Inn Chattanooga nooga (87 guestrooms) X X Homewood ewood Suites Allen entown

  • wn (108 guestrooms)

X X Homewood ewood Suites Bethle hlehem hem (108 guestrooms) X X Homewood ewood Suites Dover ver (108 guestrooms) X X Holid iday y Inn Expr press ess Fort Myers (111 guestrooms) X X Holid iday y Inn Expr press ess Sarasot

  • ta (101 guestrooms)

X X Embassy y Suit ites es Tempe pe (224 guestrooms) X X Embassy y Suit ites es Clev evela eland nd (271 guestrooms) X X X Townep epla laceSuit ites es Chattanoog nooga (87 guestrooms) X

During 2019, AHIP expects to invest approx. $25 million of capital in hotel renovations. Due to the type of hotel upgrades being completed, AHIP forecasts less than $2 million of impact to NOI from renovation displacement The following hotel properties are scheduled to undergo renovation projects in 2019:

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SOLD:

Livonia (West), LA, Economy Lodging Hotel August 23, 2018

(Our Livonia East property continues to serve our guests)

SOLD:

Ravenna, NE, Economy Lodging Hotel May 14, 2018

Capital recycling

Actively selling hotels that no longer fit our long-term strategy

SOLD:

Comfort, WV, Economy Lodging Hotel

  • Nov. 28, 2018

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Financial Performance

As at Q4 2018

(Q1 2019 performance will be released this afternoon)

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$58,597 $52,750 $55,648 $51,483 $0 $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000 $80,000

FFO AFFO 2017 2018

2018 Financial Performance

$303,710 $89,761 $338,561 $93,839 $0 $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 $350,000

Revenue EBITDA 2017 2018

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+ 11.5% + 4.5%

  • 5.0%
  • 2.4%
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Financial Highlights (USD$)

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2018 18

12 months ended December 31, 2017

2017 17

12 months ended December 31, 2017

2016 16

12 months ended December 31, 2016

Number of Guestrooms 11,523 11,708 8,156 Revenue (‘000) $338,561 $303,710 $173,515 EBITDA (‘000) $93,839 $89,761 $52,355 EBITDA Margin 27.7% 29.6% 30.2% FFO per diluted unit $0.70 $0.82 $0.92 FFO Payout Ratio 91.0% 77.6% 72.9% Debt/Gross Book Value 53.6% 53.9% 44.0% WA Loan Interest Rate 4.65% 4.61% 4.59% WA Loan Term 6.4 years 7.6 years 7.7 years

Analyst consensus for 2019 FFO Payout ratio is currently 85.3%

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Well positioned for today’s economic environment

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Evaluating our external environment

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Debt structure shields AHIP from rising interest rates

Long-term, fixed rate debt structure shields AHIP from short-term changes in interest rates

▪ 97% of AHIP’s debt is fixed rate ▪ No significant debt maturities until June 2022

$0 $50 $100 $150 $200 $250 2019 2020 2021 2022 2023 2024 2025 2026 2027

DEBT MATURITY LADDER (USD$ millions)

Mortgages Convertible Debentures

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Well positioned for changing economic conditions

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Daily guestroom rates can change daily, to mitigate any inflationary risk

▪ Hotel REITs provide a natural inflationary hedge due to the daily pricing adjustments of guestroom rates ▪ Useful in offsetting cost pressures in inflationary times

Hilton Garden Inn White Marsh

Secondary market locations are better positioned for recessionary periods

▪ AHIP hotels are located in secondary markets that often benefit from multiple demand generators (such as hospitals and universities), as opposed to tourism-led markets ▪ Business travellers often downgrade from luxury hotels to mid-scale hotels (such as AHIP’s hotels) in challenging economic periods

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U.S. hotel sector forecasted for continued growth

STR1 forecasts for 2019 and 2020 demonstrate a growing hotel sector

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¹ STR Forecasts provided in January 2019 for total United States hotel sector

STR Forecasts for U.S. hotel sector1

Metric 2019 Forecast 2020 Forecast Supply 2.0% 1.9% Demand 2.1% 1.9% Occupancy 0.1% 0.0% ADR 2.3% 2.3% RevPAR 2.4% 2.4%

STR Forecasts for 2019 by Chain Scale

Chain Scale Occupancy

(% chg)

ADR

(% chg)

RevPAR

(% chg)

Upper Upscale

  • 0.1%

2.2% 2.2% Upscale

  • 0.1%

1.9% 1.8% Upper Midscale

  • 0.1%

1.8% 1.7% Midscale 0.1% 1.9% 2.0% Economy

  • 0.2%

2.1% 2.0%

(For relevant chain scales that AHIP owns; luxury and Independent segments not shown)

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Driving stronger performance

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What are we doing to strengthen

  • ur business?
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Well positioned

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TAKING ACTION TO DRIVE STRONGER PERFORMANCE

Investing in our hotels to make them best in class and drive higher market share and demand

  • Approximately $14 million of hotel renovations were

completed during 2018.

  • Approximately $25 million of hotel renovations to be

completed in 2019. (Expect less hotel disruption and displacement in 2019 than in 2018 due to the kinds of renovations occurring and the layout of these hotels).

Actively reviewing Capital Recycling opportunities Growing our internal asset management team with appointment of SVP, Asset Management & COO Currently providing unitholders with a 12%+ yield, as we invest in upgrading our hotel properties, and work with

  • ur new hotel manager to

drive stronger margins and better returns

For 2019, we estimate 60% of distributions will be taxable, and 40% will be Return of Capital (non-taxable).

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Thank you for attending our Annual Meeting

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Questions?

Available to take your questions:

Michael Murphy, Chairman John O’Neill, CEO Brian Canfield, Corporate Counsel