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$) TSX: HOT.DB.U (Debentures) ForwardLookingStatements This corporate update is a summary and should be read together with the more detailed information,
TSX: HOT.UN (CAD$) TSX: HOT.U (US$) TSX: HOT.DB.U (Debentures)
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,
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
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
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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80% 79% 58% 20% 21% 42%
2018 2017 2016
$64,503,000 $105,752,000 $113,613,000
Premium Branded hotels Economy Lodging hotels
Consistent with AHIP’s investment strategy, all properties are strategically located within or near: ▪ Larger population centers ▪ Transportation corridors ▪ Demand generators
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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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relationships with many of the brands AHIP operates hotels under
The largest independent U.S. hotel management company
independent and branded hotel properties encompassing 100,000+ hotel rooms
brands such as Marriott, Hilton, IHG, Wyndham, and Choice hotels (all of AHIP’s hotel brands)
hotels for their clients
as well as many well known institutional hotel investors
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Embassy Suites, DFW South (Irving, TX) – approx. $5.2 million
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Complete atrium and lobby renovation
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Modernized restaurant and lobby bar concept
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Elevator replacements and modernization
Embassy Suites, Cincinnati RiverCenter (Covington, KY) – approx. $2.3 million
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Complete atrium and lobby renovation
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Modernized restaurant and lobby bar concept
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Guestroom corridor updates
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Guestroom furniture /artwork updates
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Guestroom bathroom updates
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Updated public restrooms
Embassy Suites, Columbus (OH) – approx. $2.9 million
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Complete atrium and lobby renovation
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Modernized restaurant and lobby bar concept
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Updated public restrooms
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Renovated conference and boardrooms and pre-conference lobby
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Guestroom bathroom updates
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COMPLETED NOVEMBER 2018 COMPLETED AUGUST 2018 COMPLETED JANUARY 2019
LARGEST PROPERTY UPDATES:
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After Renovations:
3.
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After Renovations:
3.
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After Renovation:
3. 3.
Hilton Garden Inn White Marsh (Baltimore, MD) – approx. $1.0 million
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COMPLETED AUGUST 2018
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Modernized guestrooms
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Renovated lobby and meeting rooms
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Updated pool area
Residence Inn Baltimore White Marsh –
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COMPLETED FEBRUARY 2019
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Complete guestroom renovations – carpet, kitchens, bathrooms, lighting, window treatments, artwork
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Corridors renovated
Staybridge Suites Tampa East –
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COMPLETED FEBRUARY 2019
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Updated exterior
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Complete lobby renovation
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Complete guestroom renovations – carpet, furniture, beds, lighting, window treatments
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Modernized breakfast buffet
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Scheduled Renovation Dates
Hotel Name and and Guestroo
Q1 2019 Q2 2019 Q3 2019 Q4 2019
Fair irfield ield Inn n & Suites Jacksonville
X X Resid idenc nce Inn Chattanooga nooga (87 guestrooms) X X Homewood ewood Suites Allen entown
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
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:
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
SOLD:
Comfort, WV, Economy Lodging Hotel
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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
$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%
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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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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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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
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
2.2% 2.2% Upscale
1.9% 1.8% Upper Midscale
1.8% 1.7% Midscale 0.1% 1.9% 2.0% Economy
2.1% 2.0%
(For relevant chain scales that AHIP owns; luxury and Independent segments not shown)
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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
completed during 2018.
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
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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Available to take your questions:
Michael Murphy, Chairman John O’Neill, CEO Brian Canfield, Corporate Counsel