Mr. Jonathan Korol reports

AMERICAN HOTEL INCOME PROPERTIES REIT LP ANNOUNCES STRATEGIC DISPOSITIONS

American Hotel Income Properties REIT LP has made further progress on leverage reduction through strategic dispositions.

All amounts presented in this news release are in U.S. dollars unless otherwise indicated.

On Sept. 2, 2024, the board of directors approved the dispositions of five hotel properties with total gross proceeds of $45.9-million. These properties include two hotels in Statesville, N.C., and one hotel in each of Melbourne, Fla., Kingsland, Ga., and Houston, Tex. Each disposition is subject to a binding agreement, which was entered into following the conclusion of American Hotel's previously disclosed marketing process for the properties. American Hotel has received total non-refundable deposits of $4.7-million under such agreements, and the dispositions are currently expected to close in the fourth quarter of 2024.

The dispositions reflect a value per key of $103,000 based on gross proceeds. American Hotel's current enterprise value per key is $95,000, based on the U.S.-dollar closing price of 35 U.S. cents per unit on the Toronto Stock Exchange on Aug. 30, 2024. After adjusting for an industry standard of 4 per cent on furniture, fixtures and equipment reserve, the combined sales price for these properties represents a blended cap rate of 6.9 per cent on 2023 annual hotel EBITDA (earnings before interest, taxes, depreciation and amortization). American Hotel's current enterprise value reflects an implied cap rate of 8.4 per cent on 2023 annual hotel EBITDA, based on the U.S.-dollar closing price of 35 U.S. cents per unit on the TSX on Aug. 30, 2024. After adjusting for the expected future capital expenditure requirements, these sales represent a blended cap rate of 5.5 per cent on 2023 annual hotel EBITDA.

The dispositions of the five hotel properties bring the total gross proceeds of the hotel properties that have been disposed or are currently under agreements for dispositions in 2024 to $162.0-million. These sales are a key component of the company's previously announced plan to address 2024 loan maturities and reduce leverage. Specifically, American Hotel intends to use proceeds from the disposition of these five hotel properties to pay off the commercial mortgage-backed security mortgage debt secured against three of the properties and to pay down the term loans which form part of American Hotel's senior credit facility, as discussed further below. Two of the five properties form part of the borrowing base for the credit facility. Accordingly, the proceeds from the sale of such properties will be used solely to pay down the outstanding term loans under such facility.

"We are pleased to announce further progress on our 2024 plan to demonstrate hotel property value and address our loan maturities," said Jonathan Korol, chief executive officer. "These dispositions reflect strong demand in the hotel transaction market at values accretive to our current unit price. The streamlined portfolio is expected to generate both higher RevPAR and margins after the dispositions are completed. Further, the completion of the dispositions of the five hotel properties will allow the company to meet a key requirement to extend the maturity of our senior credit facility."

The balance of American Hotel's credit facility, which is composed of a revolving credit facility and term loans, was $182.5-million as of June 30, 2024, with a maturity date of Dec. 3, 2024. The credit facility includes an option to extend the maturity to June, 2025, subject to three primary conditions: (i) reduction of the aggregate maximum facility size to $148.2-million from and after Dec. 3, 2024; (ii) obtaining updated appraisals for the remaining properties under the credit facility to determine the value of such properties for purposes of setting the maximum borrowing availability under the credit facility, which is set based on a maximum loan to value ratio of 67.5 per cent; and (iii) compliance with the terms of the agreement governing the credit facility at the time of the extension, which includes, among other things, compliance with financial covenants, including payout ratio and fixed-charge coverage ratio. Subject to the completion of the dispositions of the five hotel properties, the aggregate credit facility balance is expected to be reduced to approximately $135.0-million, which will allow the company to meet one of the three primary requirements to extend the maturity of the credit facility to June, 2025.

About American Hotel Income Properties REIT LP

American Hotel is a limited partnership formed to invest in hotel real estate properties across the United States. American Hotel's premium branded, select-service hotels are located in secondary metropolitan markets that benefit from diverse and stable demand. American Hotel hotels operate under brands affiliated with Marriott, Hilton, IHG and Choice Hotels through licence agreements. American Hotel's long-term objectives are to build on its proven record of successful investment, deliver monthly U.S.-dollar-denominated distributions to unitholders and generate value through the continued growth of its diversified hotel portfolio.

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