Yahoo Finance

“In 2024, AHIP made significant progress on our plan to reduce debt and high-grade the portfolio through asset sales and loan refinancings,” said Jonathan Korol, CEO. “AHIP completed the disposition of 16 hotel properties in 2024 for total gross proceeds of $165.2 million. These dispositions are expected to result in an improvement to overall portfolio asset quality with a pro forma increase in RevPAR, NOI margin and EBITDA per hotel.

As of the date of this news release, AHIP completed the dispositions of 3 hotel properties for total gross proceeds of $41.2 million in 2025, and AHIP has 8 hotel properties under purchase and sales agreements for estimated total gross proceeds of $32.3 million. AHIP also completed several refinancings in the first quarter for total gross proceeds of $144.3 million which resulted in the full repayment of AHIP’s senior credit facility.

Dispositions completed and under contract in 2024 and 2025 have a combined Cap Rate ⁽¹⁾ of 7.0%, demonstrating value beyond AHIP’s current trading levels on its remaining assets. As a result of our disposition and refinancing efforts, AHIP will have no debt maturing until the fourth quarter of 2026. We will continue to monitor macroeconomic conditions and operating performance, while considering further strategic opportunities to deliver value to unitholders over the long term.”

2024 REVIEW

FINANCIAL AND OPERATIONAL HIGHLIGHTS

For the year ended December 31, 2024, ADR increased 2.3% to $134, and occupancy increased by 220 bps to 70.9%. Overall, improved ADR and occupancy resulted in an increase of 5.6% in RevPAR to $95, compared to the year ended December 31, 2023. This result is attributable to higher demand for extended stay and select service properties, as well as the disposition of hotel properties with lower-than-average portfolio RevPAR.

NOI and normalized NOI ⁽¹⁾ were $73.4 million and $73.9 million for the year ended December 31, 2024, decreases of 11.9% and 15.0%, respectively, compared to NOI and normalized NOI of $83.4 million and $86.9 million for the year ended December 31, 2023. The decrease in NOI and normalized NOI was primarily due to the disposition of the 16 hotel properties completed in 2024.

NOI margin was 28.6% in the current year, a decrease of 110 bps compared to 29.7% for the prior year. The decrease in NOI margin was due to higher operating expenses as a result of general cost inflation, increased salaries and repair and maintenance expenses. Although certain operating expenses are expected to remain a challenge in 2025, the year-over-year NOI margin decline has improved to 110 bps in 2024 from 200 bps in 2023.

AHIP completed its property insurance renewal effective June 1, 2024, with a decrease in premiums compared to the prior period ended May 31, 2024. On an annualized basis, the decrease from the prior period is approximately $1.6 million, which will be recognized in earnings over a twelve-month period.

Diluted FFO per unit and normalized diluted FFO per unit for the year ended December 31, 2024, were $0.21 and $0.19, respectively, compared to diluted FFO per unit of $0.48 and normalized diluted FFO per unit of $0.36 for the year ended December 31, 2023. The decrease in diluted FFO per unit and normalized diluted FFO per unit was mainly due to lower NOI and higher financing costs, partially offset by lower corporate and administrative expenses in the current year.

SAME PROPERTY KPIs

The following table summarizes key performance indicators (“KPIs”) for the portfolio for the five most recent quarters with a comparison to the same period in the prior year on a same-property basis.

In the fourth quarter of 2024, same property ADR was $131, an increase of 0.8% compared to the same period in the prior year. Same property occupancy increased by 240 bps to 69.8% in the current quarter, compared to the same period of 2023. The increase in ADR and occupancy is primarily attributable to higher demand for extended stay and select service properties. Overall, the improved ADR and occupancy contributed to an increase of 5.7% in RevPAR.

Same property NOI increased 3.9% and same property NOI margin decreased by 30 bps in the current quarter, compared to the same period of 2023. The increase in same property NOI was mainly due to improved performance for hotels disrupted in 2023 by the weather-related damage in December 2022, and higher demand for extended stay and select service properties. The decrease in NOI margin was due to higher operating expenses as a result of general cost inflation, increased salaries and repair and maintenance expenses.

LEVERAGE AND LIQUIDITY

Debt to gross book value was 45.9% as at December 31, 2024, a decrease of 610 bps compared to 52.0% as at December 31, 2023. Debt to EBITDA as at December 31, 2024 was 8.0x, a decrease of 2.5x compared to December 31, 2023. The improvement in debt to gross book value and debt to EBITDA was due to the use of net proceeds from the completed dispositions to pay down CMBS mortgage debt as well as the term loans governed by the Sixth Amendment (defined below).

As at December 31, 2024, AHIP had $42.9 million in available liquidity, compared to $27.8 million as at December 31, 2023. The available liquidity as at December 31, 2024 of $42.9 million was comprised of an unrestricted cash balance of $27.9 million and borrowing availability of $15.0 million under the revolving credit facility. AHIP had an additional restricted cash balance of $24.7 million as at December 31, 2024. As at March 28, 2025, AHIP had an unrestricted cash balance of approximately $13.1 million and a restricted cash balance of approximately $29.1 million.

NON-CASH IMPAIRMENT CHARGES

For the three months ended December 31, 2024, the Company recognized non-cash impairment charges of $21.2 million related to 15 hotel properties, and impairment reversal charges of $1.6 million related to 3 hotel properties. For the twelve months ended December 31, 2024, the Company recognized non-cash impairment charges of $32.6 million related to 21 hotel properties, and impairment reversal charges of $1.6 million related to 3 hotel properties. The impaired hotels are primarily located in Kentucky, Oklahoma and Pennsylvania, and the hotels with impairment reversal charges are located in New Jersey, Texas and Maryland. AHIP completed the valuation process based on external appraisals, purchase and sales agreements, recent market transactions and internal valuations of hotel properties. The impairment charges and impairment charges reversal are primarily due to revised expectations on the timeframe for hotel properties to achieve stabilized income levels, higher operating costs, challenges with AHIP’s hotel managers’ ability to optimize cashflow, and local competition factors in select markets.

HOTEL DISPOSITIONS

2024 Hotel Dispositions Summary

During the year ended December 31, 2024, AHIP completed the dispositions of 16 hotel properties for total gross proceeds of $165.2 million. After adjusting for an industry standard 4% FF&E reserve, the combined sales price for the 16 hotel properties sold in 2024 represents a blended Cap Rate of 7.0% on 2023 annual hotel EBITDA. The net proceeds from these dispositions were used to repay certain CMBS mortgage loans and reduce debt. AHIP’s enterprise value ⁽¹⁾ as at December 31, 2024 reflects an implied Cap Rate of 9.0% on 2023 annual hotel EBITDA for the portfolio of 49 hotel properties, based on the U.S. dollar closing price of US$0.48 per unit on the TSX on December 31, 2024.

In March 2025, AHIP completed the dispositions of 3 hotel properties for total gross proceeds of $41.2 million. As of the date of this news release, AHIP has 8 hotel properties under purchase and sales agreements for estimated total gross proceeds of $32.3 million (see “Dispositions Under Contract” table below). These dispositions are currently estimated to close in the second quarter of 2025. AHIP intends to use the net proceeds from these dispositions to repay certain CMBS mortgage loans and reduce debt.

2025 Hotel Dispositions Summary

INITIATIVES TO STRENGTHEN FINANCIAL POSITION AND PRESERVE UNITHOLDER VALUE

The Board of Directors (the “Board”), together with management, have implemented a plan to strengthen AHIP’s financial position and to preserve unitholder value. Initiatives, and progress made to date, are outlined below.

EXTENSION OF CREDIT FACILITY AND TERM LOANS

On December 3, 2024, AHIP satisfied the conditions in the credit agreement governing its senior credit facility (the “Sixth Amendment”) for the extension of the maturity date for the revolving credit facility (the “Credit Facility Revolver” or “RCF”) and term loans governed thereby (“Credit Facility Term Loan”), which primary conditions included: (i) reduction of the aggregate maximum facility size to $148.2 million from and after December 3, 2024; (ii) obtaining updated appraisals for the 16 hotel properties then secured by the Sixth Amendment (the “Borrowing Base Properties”) in order to determine the value of such properties for purposes of setting the maximum borrowing availability under the Sixth Amendment, which was set based on a maximum loan to value ratio of 67.5%; and (iii) compliance with the terms of the Sixth Amendment at the time of the extension, which included among other things compliance with financial covenants including payout ratio and fixed charge coverage ratio. On December 3, 2024, the balance of the Credit Facility was reduced to $133.2 million. As at December 31, 2024, the total appraised value of the 16 Borrowing Base Properties was $249.2 million, which resulted in a loan-to-value ratio of 53.4%. The balance of RCF and term loans pursuant to the Sixth Amendment was $127.7 million as of December 31, 2024, and nil as of the date of this news release, respectively.

2025 REFINANCING AND REPAYMENT OF RCF AND TERM LOANS

On January 27, 2025, AHIP completed an interest only, CMBS refinancing for five hotel properties with total gross proceeds of $43.0 million (the “CMBS Loan”). The CMBS Loan has a five-year term and bears interest at a fixed annual interest rate of 7.63%.  Four of the five hotel properties secured by the CMBS Loan were Borrowing Base Properties and the fifth hotel property was unencumbered prior to the completion of this CMBS Loan. The aggregate balance of the Credit Facility Revolver and Credit Facility Term Loan was reduced to $89.3 million as a result of the pay down following the completion of this new CMBS Loan as well as the application of a portion of the net proceeds from previously announced hotel dispositions that closed in December 2024.

On March 7, 2025, AHIP completed an interest only, non-recourse debt refinancing and repayment in full of its Credit Facility Revolver and Credit Facility Term Loan governed by the Sixth Amendment. The initial gross loan proceeds were $85.0 million secured against 11 hotel properties, with additional advances of up to $41.0 million available, comprised of $16.3 million upon the addition of a further hotel property and up to $24.7 million for renovations and improvements to these 12 hotel properties (the “Portfolio Loan”).

AHIP used the initial net proceeds from the Portfolio Loan to fully repay the outstanding balance under the Credit Facility Revolver and Credit Facility Term Loan governed by the Sixth Amendment, and these facilities have been terminated. The initial 11 hotel properties secured by the Portfolio Loan were previously secured under the Sixth Amendment. The Portfolio Loan has an initial principal amount of $85.0 million, a two-year term with the option to extend the term for another one-year period subject to the satisfaction of certain conditions, and bears interest at SOFR plus 4.65% per annum.

On March 27, 2025, AHIP added the further hotel property to the Portfolio Loan with additional gross loan proceeds of $16.3 million. The net proceeds from this refinancing and the dispositions of the 3 hotel properties in March 2025, were used to fully repay the CMBS mortgage loan of $55.2 million secured by these 4 hotel properties.

For further details, see a copy of the agreement governing the Portfolio Loan, which has been filed under AHIP’s profile on SEDAR+ at www.sedarplus.com.

CMBS LOAN MATURITIES

AHIP has made significant progress with its plan to address the Company’s upcoming debt maturities. These efforts continue to improve leverage metrics.

During the year ended December 31, 2024, AHIP completed the dispositions of 16 properties for total gross proceeds of $165.2 million. These dispositions resulted in total debt repayment of $139.8 million which includes CMBS mortgage loan repayment of $84.4 million, and repayments of $55.4 million to the term loans governed by the Sixth Amendment.

To address Q3 2025 CMBS loan maturities of $30.5 million, AHIP entered into agreements in January 2025 to dispose of 8 hotel properties located in Chickasha, Oklahoma, Bethany, Oklahoma, Dubuque, Iowa, Nevada, Missouri, Mattoon, Illinois, Emporia, Kansas, and South Jacksonville, Illinois for total gross proceeds of $32.3 million. These dispositions are currently estimated to close in the second quarter of 2025.

Upon the completion of these dispositions and repayment of related CMBS mortgages loans, AHIP will not have any debt maturing until the fourth quarter of 2026.

AMENDMENT OF THE MASTER HOTEL MANAGEMENT AGREEMENT WITH REDUCED AND DEFERRED FEES

On September 30, 2023, with a retroactive effective date of July 1, 2023, AHIP entered into a third amendment to its master hotel management agreement with One Lodging Management LLC (an affiliate of Aimbridge Hospitality LLC) (the “Amendment”).

In accordance with the Amendment, the management fee on certain hotel properties has been reduced or deferred. The fees in the years 2027 through 2032 will be slightly higher to offset the fee deferral in the first three years. The cash savings in 2024 were $3.1 million, and the cumulative cash savings since the Amendment to December 31, 2024 were $5.3 million, which savings are comprised of fee reductions and fee deferrals.

NORMAL COURSE ISSUER BID AND AUTOMATIC SECURITIES PURCHASE PLAN

In December 2024, the TSX accepted AHIP’s notice of intention to make a normal course issuer bid (the “NCIB”). The notice provides that AHIP may, during the twelve-month period commencing December 30, 2024 and ending December 29, 2025, purchase up to 7,521,189 AHIP’s Units trading under the symbols HOT.UN and HOT.U, representing 10% of the “public float” (as defined in the TSX Company Manual) as of December 19, 2024. AHIP also entered into an Automatic Securities Purchase Plan (“ASPP”) with a designated broker. The ASPP allows for the purchase of Units under the NCIB when AHIP would ordinarily not be permitted to purchase Units due to regulatory restrictions and customary self-imposed blackout periods.

AHIP believes that its Units are currently trading, or due to market volatility, may trade in a price range that does not adequately reflect their underlying value based on AHIP’s assets, business prospects and financial position. Accordingly, depending upon future price movements and other factors, AHIP may purchase outstanding Units from time to time, provided that the repurchase of Units at such market prices continue to be an appropriate use of AHIP’s resources and will benefit remaining unitholders by increasing their proportionate equity interest in AHIP.

AHIP’s strategic investor HCI-BGO Victora JB LP (the “Investor”), a joint venture limited partnership of BentallGreenOak Real Estate Advisors LP and Highgate Capital Investments, LP, provided its consent to the NCIB under the terms of the Investor Rights Agreement between AHIP, the Investor and certain of their respective affiliates, subject to the aggregate purchase price of the Units acquired under the NCIB not exceeding CAD$5.0 million.

As of the date of this news release, AHIP had purchased 1,301,832 units for gross proceeds of CDN$0.9 million which results in an average purchase price of CDN$0.69. All of these 1,301,832 units have been cancelled and are no longer outstanding.

SUBSEQUENT EVENTS

DISPUTE WITH AIMBRIDGE

On July 19, 2024, AHIP announced that AHIP and certain of its subsidiaries are in a dispute with hotel manager ONE Lodging Holdings LLC, itself a subsidiary of Aimbridge Hospitality, and various of its own subsidiaries (collectively, “Aimbridge”) related to Aimbridge’s mismanagement of AHIP’s hotel portfolio.

Earlier in July 2024, AHIP delivered a detailed notice of default (the “Default Notice”) to Aimbridge providing notice that Aimbridge is in material default of the Master Hotel Management Agreement dated February 20, 2013, as amended (the “Master HMA”) and the individual hotel management agreements made thereunder (the “Individual HMAs”, and together with the Master HMA, the “HMAs”).

AHIP also delivered a notice of appointment to Aimbridge referring to the matters set forth in the Default Notice to an independent expert for a determination that Aimbridge is in default of the Master HMA and confirming that AHIP can terminate the HMAs and recover damages.

On July 18, 2024, AHIP received a notice of civil claim (the “Claim”) filed by Aimbridge in the Supreme Court of British Columbia. Aimbridge claimed, amongst other things, that the matters identified in the appointment notice must be resolved by the courts of British Columbia and not by the independent expert. AHIP opposed the Claim and subsequently brought an application to stay the Claim in favor of arbitration, which Aimbridge opposed and brought a cross application seeking interlocutory relief prohibiting AHIP from proceeding with arbitration.

In December 2024, the Supreme Court of British Columbia dismissed AHIP’s application to stay the Claim and granted Aimbridge an interlocutory (interim) injunction preventing AHIP from taking any steps to advance the dispute initiated by AHIP under arbitration with the independent expert.

Following the court’s decision, AHIP filed a response to the Claim and delivered a counterclaim to Aimbridge in the Supreme Court of British Columbia in January 2025 seeking a declaration that Aimbridge is in material default of the HMAs and that the HMAs were, or are, terminated as well as damages and other monetary awards.

Notwithstanding the dispute, AHIP’s entire portfolio of premium branded, select-service hotels continue to be in operation and AHIP remains focused on creating long-term value for its Unitholders.

SELECTED ANNUAL INFORMATION

SELECTED ANNUAL INFORMATION

OPERATING RESULTS

FINANCIAL INFORMATION

This news release should be read in conjunction with AHIP’s audited consolidated financial statements (the “Financial Statements”), and management’s discussion and analysis for the three and twelve months ended December 31, 2024 and 2023, that are available on AHIP’s website at www.ahipreit.com, and under AHIP’s profile on SEDAR+ at www.sedarplus.com.

RESTATEMENT OF PRIOR PERIODS

AHIP restated certain amounts in the comparative column in its Financial Statements for the three and twelve months ended December 31, 2023, and as of December 31, 2023. In addition, AHIP has restated certain amounts previously reported in its 2024 and 2023 interim financial statements. The amounts included in this news release reflect the restatements retroactively. For further details, see Note 2 to the Financial Statements, and the management’s discussion and analysis for the three and twelve months ended December 31, 2024 and 2023.

Q4 2024 CONFERENCE CALL

Management will host a webcast and conference call at 10:00 a.m. Pacific time on April 1, 2025, to discuss the financial and operational results for the three and twelve months ended December 31, 2024 and 2023.

To participate in the conference call, participants should register online via AHIP’s website. A dial-in and unique PIN will be provided to join the call. Participants are requested to register a minimum of 15 minutes before the start of the call. Following the call, an audio webcast of the conference call may be accessed on AHIP’s website at www.ahipreit.com.

ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT LP

American Hotel Income Properties REIT LP (TSX: HOT.UN, TSX: HOT.U, TSX: HOT.DB.V), or AHIP, is a limited partnership formed to invest in hotel real estate properties across the United States. AHIP’s portfolio of premium branded, select-service hotels are located in secondary metropolitan markets that benefit from diverse and stable demand. AHIP hotels operate under brands affiliated with Marriott, Hilton, IHG and Choice Hotels through license agreements. AHIP’s long-term objectives are to increase the value of its hotel properties through operating excellence, active asset management and value-adding capital expenditures and increase unitholder value and distributions to unitholders. More information is available at www.ahipreit.com.

NON-IFRS AND OTHER FINANCIAL MEASURES

Management believes the following non-IFRS financial measures, non-IFRS ratios, capital management measures and supplementary financial measures are relevant measures to monitor and evaluate AHIP’s financial and operating performance. These measures and ratios do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures and ratios are included to provide investors and management additional information and alternative methods for assessing AHIP’s financial and operating results and should not be considered in isolation or as a substitute for performance measures prepared in accordance with IFRS.

NON-IFRS FINANCIAL MEASURES:

FFO: FFO measures operating performance and is calculated in accordance with Real Property Association of Canada’s (“REALPAC”) definition. FFO – basic is calculated by adjusting income (loss) and comprehensive income (loss) for depreciation and amortization, gain or loss on disposal of property, IFRIC 21 property taxes, fair value gain or loss, impairment of property, deferred income tax, and other applicable items. FFO – diluted is calculated as FFO – basic plus the interest, accretion, and amortization on convertible debentures if convertible debentures are dilutive. The most comparable IFRS measure to FFO is income (loss) and comprehensive income (loss), for which a reconciliation is provided in this news release.

AFFO: AFFO is defined as a recurring economic earnings measure and calculated in accordance with REALPAC’s definition. AFFO – basic is calculated as FFO – basic less maintenance capital expenditures. AFFO – diluted is calculated as FFO – diluted less maintenance capital expenditures. The most comparable IFRS measure to AFFO is income (loss) and comprehensive income (loss), for which a reconciliation is provided in this news release.

Normalized FFO: calculated as FFO adjusting for non-recurring items. For the three months ended December 31, 2024, normalized FFO is calculated as FFO excluding the non-recurring property damage insurance adjustment of $0.1 million recorded in the same period. For the twelve months ended December 31, 2024, normalized FFO is calculated as FFO excluding the non-recurring property damage insurance proceeds of $1.5 million recorded in the same period. For the three months ended December 31, 2023, normalized FFO is calculated as FFO adding back the $1.7 million non-recurring insurance proceeds adjustment for weather-related damage at several hotel properties in late December 2022. For the twelve months ended December 31, 2023, normalized FFO is calculated as FFO excluding the non-recurring insurance proceeds of $11.2 million for weather-related damage at several hotel properties in late December 2022. The most comparable IFRS measure to normalized FFO is income (loss) and comprehensive income (loss), for which a reconciliation is provided in this news release.

Normalized NOI: calculated as NOI adjusting for non-recurring items. For the twelve months ended December 31, 2024, normalized NOI included the non-recurring insurance proceeds of $0.5 million for business interruption claims. For the three and twelve months ended December 31, 2023, normalized NOI included $0.1 million and $3.5 million in business interruption insurance proceeds, respectively, related to the weather-related damage at several hotel properties in late December 2022. The most comparable IFRS measure to normalized NOI is NOI, for which a reconciliation is provided in this news release.

Hotel EBITDA: calculated by adjusting NOI for hotel management fees. The most comparable IFRS measure to hotel EBITDA is NOI, for which a reconciliation is provided in this news release.

EBITDA: calculated by adjusting NOI for hotel management fees and general administrative expenses. The sum of hotel management fees and general administrative expenses is equal to corporate and administrative expenses in the Financial Statements. The most comparable IFRS measure to EBITDA is NOI, for which a reconciliation is provided in this news release.

Debt: calculated as the sum of term loans and revolving credit facility, the face value of convertible debentures, unamortized portion of debt financing costs, lease liabilities and unamortized portion of mark-to-market adjustments. The most comparable IFRS measure to debt is total liabilities, for which a reconciliation is provided in this news release.

Gross book value: calculated as the sum of total assets, accumulated depreciation and impairment on property, buildings and equipment, and accumulated amortization on intangible assets. The most comparable IFRS measure to gross book value is total assets, for which a reconciliation is provided in this news release.

Interest expense: calculated by adjusting finance costs for gain/loss on debt settlement, amortization of debt financing costs, accretion of debenture liability, amortization of debenture costs, dividends on series B preferred shares and amortization of mark-to-market adjustments, accretion of management fee because interest expense excludes certain non-cash accounting items and dividends on preferred shares. The most comparable IFRS measure to interest expense is finance costs, for which a reconciliation is provided in this news release.

NON-IFRS RATIOS:

FFO per unit – basic/diluted: calculated as FFO – basic/diluted divided by weighted average number of units outstanding - basic/diluted respectively for the reporting periods.

Normalized FFO per unit – basic/diluted: calculated as normalized FFO – basic/diluted divided by weighted average number of units outstanding - basic/diluted respectively for the reporting periods.

AFFO per unit – basic/diluted: calculated as AFFO – basic/diluted divided by weighted average number of units outstanding - basic/diluted respectively for the reporting periods.

NOI margin: calculated as NOI divided by total revenue.

Hotel EBITDA margin: calculated as hotel EBITDA divided by total revenue.

EBITDA margin: calculated as EBITDA divided by total revenue.

Capitalization rate (“Cap Rate”): calculated as 2023 or 2024 annual hotel EBITDA, after adjusting for an industry standard 4% furniture, fixtures, and equipment (“FF&E”) reserve, divided by the actual and estimated gross proceeds of the asset dispositions.

Implied capitalization rate (“implied Cap Rate”): calculated as 2023 annual hotel EBITDA, after adjusting for an industry standard 4% FF&E reserve, for the portfolio of 49 hotel properties divided by the enterprise value.

CAPITAL MANAGEMENT MEASURES:

Debt to gross book value: calculated as debt divided by gross book value. Debt to gross book value is a primary measure of capital management and leverage.

Debt to EBITDA: calculated as debt divided by the trailing twelve months (“TTM”) EBITDA. Debt to EBITDA measures the amount of income generated and available to pay down debt before covering interest, taxes, depreciation, and amortization expenses.

Interest coverage ratio: calculated as TTM EBITDA divided by interest expense for the trailing twelve months. The interest coverage ratio is a measure of AHIP’s ability to service the interest requirements of its outstanding debt.

SUPPLEMENTARY FINANCIAL MEASURES:

Occupancy is a major driver of room revenue as well as food and beverage revenues. Fluctuations in occupancy are normally accompanied by fluctuations in most categories of variable hotel operating expenses, including housekeeping and other labor costs. Higher ADR increases room revenue with limited impact on hotel operating expenses. Increase in RevPAR attributable to increase in occupancy may reduce EBITDA and EBITDA margins, while increase in RevPAR attributable to increase in ADR typically result in increases in EBITDA and EBITDA margins.

Occupancy: calculated as total number of hotel rooms sold divided by total number of rooms available for the reporting periods. Occupancy is a metric commonly used in the hotel industry to measure the utilization of hotels’ available capacity.

Average daily rate (“ADR”): calculated as total room revenue divided by total number of rooms sold for the reporting periods. ADR is a metric commonly used in the hotel industry to indicate the average revenue earned per occupied room in a given time period.

Revenue per available room (“RevPAR”): calculated as occupancy multiplied by ADR for the reporting periods.

Same property ADR, occupancy, RevPAR, and NOI margin: measured for properties owned by AHIP for both the current reporting periods and the same periods in 2023. In Q2 2024 and Q1 2024, the same property ADR, occupancy, RevPAR and NOI margin calculations excluded the Residence Inn Neptune and Courtyard Wall in New Jersey as these two hotels had limited availability in Q2 2023 and Q1 2023 comparative periods, due to remediation and rebuilding after the weather-related damage in late December 2022.

Enterprise value: is a supplementary financial measure and is calculated as the sum of (i) total debt obligations as reflected on the December 31, 2024 balance sheet (ii) AHIP’s market capitalization (which is calculated as the U.S. dollar closing price of the units on the TSX as of December 31, 2024, multiplied by the total number of units issued and outstanding as at such date), and (iii) face value of series C preferred shares, less (iv) the amount of cash and cash equivalents reflected on the December 31, 2024 balance sheet.

NON-IFRS RECONCILIATION

INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) TO FFO

RECONCILIATION OF FFO TO AFFO

DEBT TO GROSS BOOK VALUE

DEBT TO EBITDA

INTEREST COVERAGE RATIO

The reconciliation of NOI to hotel EBITDA and EBITDA is shown below:

The reconciliation of NOI to normalized NOI is shown below:

The reconciliation of finance costs to interest expense is shown below:

For information on the most directly comparable IFRS measures, composition of the measures, a description of how AHIP uses these measures, and an explanation of how these measures provide useful information to investors, please refer to AHIP’s management discussion and analysis for the three and twelve months ended December 31, 2024 and 2023, available on AHIP’s website at www.ahipreit.com, and under AHIP’s profile on SEDAR+ at www.sedarplus.com.

FORWARD-LOOKING INFORMATION

This news release contains forward-looking information and financial outlook within the meaning of applicable securities laws. Forward-looking information and financial outlook generally can be identified by words such as “anticipate”, “believe”, “continue”, “expect”, “estimates”, “intend”, “may”, “outlook”, “objective”, “plans”, “should”, “will” and similar expressions suggesting future outcomes or events. Forward-looking information and financial outlook include, but are not limited to, statements made or implied relating to the objectives of AHIP, AHIP’s strategies to achieve those objectives and AHIP’s beliefs, plans, estimates, projections and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts. Forward-looking information and financial outlook in this news release include, but are not limited to, statements with respect to: AHIP management’s expectation as to the impacts on AHIP’s business of the seasonal nature of the lodging industry, inflation (including on labor and materials costs), competition, overall economic cycles and weather conditions; AHIP’s leverage and liquidity strategies and goals; AHIP’s expectations with respect to the performance of its hotel portfolio, including specific segments thereof; AHIP’s expectations with respect to inflation, labor supply, labor costs, interest rates, supply chain and other market financial and macroeconomic conditions in 2025 and the expected impacts thereof on AHIP’s financial position and performance, including on ADR, occupancy and RevPAR, NOI and NOI margins; AHIP’s expectation that operating expenses will remain a challenge in 2025; AHIP’s strategic initiatives and the intended outcomes thereof, including improved liquidity, addressing near-term debt maturities and providing AHIP with financial stability and protecting long-term value for unitholders; AHIP’s expectations with respect to the macroeconomic and operating environment, including certain specific expectations for the 2025 fiscal year; the decrease in property insurance premiums will be recognized in earnings over a twelve-month period; AHIP continuing to execute its strategy to sell hotel properties to enhance liquidity and reduce debt; AHIP’s planned property dispositions, including the currently expected terms and timing thereof and the financial impact thereof on AHIP (including the estimated amount and uses of the proceeds from such dispositions) and AHIP’s expectation that following the sale of such properties AHIP will not have any debt maturities until the fourth quarter of 2026; AHIP’s expectation that planned dispositions will improve AHIP’s overall portfolio asset quality with a pro forma increase in RevPAR, NOI margin and EBITDA per hotel; AHIP’s intentions and expectations with respect to the NCIB and ASPP and their impact on unitholders; AHIP’s intended strategies for near-term debt maturities, including planned sales of assets and loan refinancing and the expected impacts thereof on AHIP’s financial performance and position; AHIP remaining focused on creating long-term value for its Unitholders; and AHIP’s stated long-term objectives.

Although AHIP believes that the expectations reflected in the forward-looking information and financial outlook contained in this news release are reasonable, AHIP can give no assurance that these expectations will prove to be correct. The estimates and assumptions, which may prove to be incorrect, include, but are not limited to, the various assumptions set forth in this news release as well as the following: inflation, labor shortages, and supply chain disruptions will negatively impact the U.S. economy, U.S. hotel industry and AHIP’s business; the U.S. will not enter an economic recession; AHIP will continue to have sufficient funds to meet its financial obligations; AHIP’s strategies with respect to completion of capital projects, liquidity, addressing near-term debt maturities, and divestiture of assets will be successful and achieve their intended effects; AHIP will complete its currently planned divestitures and loan refinancings on the terms currently contemplated and in accordance with the timing currently contemplated; AHIP will receive insurance proceeds in an amount consistent with AHIP’s estimates in respect of its weather and fire-damaged properties; the ability of AHIP to achieve the anticipated benefits of the NCIB; that Units will trade below their value from time to time; that AHIP will complete purchases of Units pursuant to the NCIB and ASPP; AHIP will continue to have good relationships with its Brand partners; AHIP will be successful in opposing the Claim and its counter-claim in a manner that is acceptable to AHIP; capital markets will provide AHIP with readily available access to equity and/or debt financing on terms acceptable to AHIP, including the ability to refinance maturing debt as it becomes due on terms acceptable to AHIP; the Federal Reserve will reduce interest rates in 2025; AHIP will be successful in curing the existing defaults under certain of its Marriott franchise agreements, and in turn the related defaults under certain of its CMBS loan agreements; AHIP’s future level of indebtedness will remain consistent with AHIP’s current expectations; the useful lives and replacement cost of AHIP’s assets being consistent with management’s estimates thereof; the U.S. REIT will continue to qualify as a real estate investment trust for U.S. federal income tax purposes; the impact of the current economic climate and the current global financial conditions on AHIP’s operations, including AHIP’s financing capability and asset value, will remain consistent with AHIP’s current expectations; there will be no material changes to tax laws, government and environmental regulations adversely affecting AHIP’s operations, financing capability, structure or distributions; conditions in the international and, in particular, the U.S. hotel and lodging industry, including competition for acquisitions, will be consistent with the current economic climate; and AHIP will achieve its long term objectives.

Forward-looking information and financial outlook involve significant risks and uncertainties and should not be read as guarantees of future performance or results as actual results may differ materially from those expressed or implied in such forward-looking information and financial outlook, accordingly undue reliance should not be placed on such forward-looking information or financial outlook. Those risks and uncertainties include, among other things, risks related to: AHIP may not achieve its expected performance levels in 2025; inflation, labor shortages, supply chain disruptions may continue to negatively impact AHIP’s financial performance and position; risk of an economic recession in the U.S.; AHIP’s brand partners may impose revised service standards and capital requirements which are adverse to AHIP; PIP renovations may not commence or complete in accordance with currently expected timing and may suffer from increased material costs; AHIP’s strategic initiatives with respect to liquidity, addressing near-term debt maturities and providing AHIP with financial stability may not be successful and may not achieve their intended outcomes; AHIP’s strategies for selling hotel properties to enhance liquidity and reduce debt may not be successful; AHIP may not complete its currently planned divestures and loan refinancings on the terms currently contemplated or in accordance with the timing currently contemplated, or at all; AHIP may not be successful in reducing its leverage; there is no guarantee that monthly distributions will be reinstated, and if reinstated, as to the timing thereof or what the amount of the monthly distribution will be; AHIP may not be able to refinance debt obligations as they become due or may do so on terms less favorable to AHIP than under AHIP’s existing loan agreements; AHIP has not replaced its interest rate swaps, which is expected to create continued increased interest expense; refinanced loans are expected to be refinanced at significantly higher interest rates; the Federal Reserve may not reduce interest rates in accordance with the timing or the quantum anticipated by management, or at all; the failure to realize the anticipated benefits of the NCIB; the risk that the market price of the Units will be too high to permit purchases under the NCIB and/or ASPP; a failure to execute purchases under the NCIB and ASPP; the outcome of the Claim and counter-claim under the HMAs cannot be predicted, and may be determined in a manner unfavorable to AHIP, which may have a substantial negative impact on AHIP’s financial position and results of operations; AHIP may incur significant costs in relation to the Claim and counter-claim and may be ordered to pay damages and costs in any such proceedings; the outcome of the Claim and counter-claim may be subject to appeal; if Aimbridge is removed as the hotel manager, the financial terms of the engagement of any replacement hotel manager cannot be determined at this time and could less advantageous to AHIP than the terms of the HMAs, and AHIP may suffer some operational disruption in the course of any replacement of Aimbridge; AHIP may not be successful in curing the existing defaults under certain of its Marriott franchise agreements and the related defaults under certain of its CMBS loan agreements, which if not cured could result in the termination of the related franchise agreements, and acceleration of the related CMBS loans, forced foreclosure proceedings and claims for damages against AHIP; general economic conditions and consumer confidence; the growth in the U.S. hotel and lodging industry; prices for the Units and debentures; liquidity; tax risks; ability to access debt and capital markets; financing risks; changes in interest rates; the financial condition of, and AHIP’s relationships with, its external hotel manager and franchisors; real property risks, including environmental risks; the degree and nature of competition; ability to acquire accretive hotel investments; ability to integrate new hotels; environmental matters; and changes in legislation. Additional information about risks and uncertainties is contained in this new release, in AHIP’s most recently filed AIF and most recently filed MD&A, copies of each of which are available on SEDAR+ at www.sedarplus.com.

To the extent any forward-looking information constitutes a “financial outlook” within the meaning of applicable securities laws, such information is being provided to investors to assist in their understanding of estimated proceeds from the planned disposition of certain hotel properties and the expected use thereof and impact thereon on AHIP’s financial position; and management’s expectations for certain aspects of AHIP’s financial performance for 2025.

The forward-looking information and financial outlook contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information and financial outlook reflect management's current beliefs and are based on information currently available to AHIP. The forward-looking information and financial outlook are made as of the date of this news release and AHIP assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

For additional information, please contact:

Investor Relations
ir@ahipreit.com

(1)   Non-IFRS and other financial measures. See “NON-IFRS AND OTHER FINANCIAL MEASURES” section of this news release.