VANCOUVER, British Columbia, Aug. 06, 2024 (GLOBE NEWSWIRE) -- American Hotel Income Properties REIT LP ("AHIP", or the "Company") (TSX:HOT, TSX:HOT, TSX:HOT), today announced its financial results for the three and six months ended June 30, 2024. All amounts presented in this news release are in United States dollars ("U.S. dollars") unless otherwise indicated. 2024 SECOND QUARTER HIGHLIGHTS Diluted FFO per unit (1) and normalized diluted FFO per unit (1) were $0.12 and $0.10, respectively, for the second quarter of 2024, compared to $0.19 and $0.14 for the same period of 2023. RevPAR (1) increased 5.1% to $103 for the second quarter of 2024, compared to $98 for the same period of 2023. ADR (1) increased 3.0% to $137 for the second quarter of 2024, compared to $133 for the same period of 2023. Occupancy (1) was 75.4% for the second quarter of 2024, an increase of 160 basis points ("bps") compared to 73.8% for the same period of 2023. NOI and normalized NOI (1) were $24.2 million for the second quarter of 2024, decreases of 4.3% and 11.0%, respectively, compared to $25.3 million and $27.2 million for the same period in 2023. AHIP had $26.7 million in available liquidity as at June 30, 2024, compared to $27.8 million as at December 31, 2023. The available liquidity of $26.7 million was comprised of an unrestricted cash balance of $16.0 million and borrowing availability of $10.7 million under the revolving credit facility. "AHIP's portfolio of premium branded select service hotel properties continued to demonstrate strong demand metrics in 2024." said Jonathan Korol, CEO. "Portfolio ADR, occupancy and RevPAR all achieved meaningful growth in the current quarter. RevPAR increased 5.1% to $103, the highest level in the history of the Company. While cost inflation is decelerating across many cost categories, costs remain elevated resulting in pressures to hotel operating margins." Mr. Korol added: "AHIP's Board and management team continue to advance our plan to preserve cash, enhance financial stability and protect long term value for our unitholders. In late 2023, we completed an amendment and extension of our revolving credit facility, reduction and deferral of hotel management fees, and temporary suspension of our monthly distribution. We are currently executing a plan to address 2024 debt obligations with asset sales and loan refinancings. In the first quarter, AHIP completed two asset sales and refinanced mortgage debt for three hotels. We currently have 6 additional hotels under contract for sale. These steps will strengthen our liquidity and balance sheet to ensure we are positioned to benefit when the industry operating and macroeconomic environment improves. We will continue to monitor conditions and operating performance, while considering further strategic opportunities to deliver value over the long term." ________________________(1)   Non-IFRS and other financial measures. See "NON-IFRS AND OTHER FINANCIAL MEASURES" section of this news release. 2024 SECOND QUARTER REVIEW FINANCIAL AND OPERATIONAL HIGHLIGHTS For the three months ended June 30, 2024, ADR was $137, and occupancy was 75.4%, increases of 3.0% and 160 bps, respectively, compared to the same period in 2023. Collectively, strong ADR and increasing occupancy resulted in an increase of 5.1% in RevPAR compared to the same period in 2023. The improved RevPAR is attributable to higher demand for the extended stay and select service properties. This is partially due to improved performance of properties disrupted in 2023 by the weather-related damage and property renovations at three hotels, as well as the disposition of properties with lower-than-average portfolio RevPAR. The ability to control and manage daily rates is a key advantage of the lodging sector, which has enabled AHIP to achieve growth in RevPAR, partially mitigating the effects of rising labor costs and general inflationary pressures across the portfolio. NOI, NOI MARGIN AND DILUTED FFO PER UNIT NOI and normalized NOI were $24.2 million for the three months ended June 30, 2024, decreases of 4.3% and 11.0%, respectively, compared to NOI of $25.3 million and normalized NOI of $27.2 million for the same period in 2023. The decrease in NOI was primarily due to the disposition of the two hotel properties completed in March 2024. The decrease in normalized NOI was due to the same factors, and $1.9 million in business interruption proceeds related to the weather-related damage at several hotel properties in late December 2022 was included in the normalized NOI in the same period of the prior year. NOI margin was 32.9% in the current quarter, a decrease of 60 bps compared to the same period in 2023. The decrease in NOI margin was due to higher operating expenses as a result of general cost inflation, escalated labor costs, and higher property insurance premiums in April and May 2024. Although certain operating expenses are expected to remain a challenge in 2024, the decline of year-over year NOI margin has been reduced from 270 bps in the first quarter of 2024 to 60 bps in the current quarter. 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 were $0.12 and $0.10 for the second quarter of 2024, respectively, compared to diluted FFO per unit of $0.19 and normalized diluted FFO per unit of $0.14 for the same period in 2023. Normalized diluted FFO per unit in the current quarter excluded non-recurring expected insurance proceeds of $1.6 million, mainly as a result of hail damage and a fire incident in the current quarter. The decrease in normalized diluted FFO per unit was due to: (i) $1.9 million in business interruption proceeds related to the weather-related damage at several hotel properties in late December 2022 that was included in the normalized diluted FFO per unit in the same period of the prior year; (ii) lower NOI, and (iii) higher financing costs in the current quarter. LEVERAGE AND LIQUIDITY KPIs Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 Debt-to-GBV (1) 52.0% 52.2% 51.9% 51.1% 51.6% Debt-to-TTM EBITDA (1) 9.7x 10.5x 10.6x 10.1x 9.8x ________________________(1)   Non-IFRS and other financial measures. See "NON-IFRS AND OTHER FINANCIAL MEASURES" section of this news release. Debt to gross book value as at June 30, 2024 was 52.0%, an increase of 10 bps compared to December 31, 2023. Debt to TTM EBITDA as at June 30, 2024 was 9.7x, a decrease of 0.1x compared to June 30, 2023. The improvement in Debt to TTM EBITDA was mainly due to the five hotel properties that were in managed foreclosure as of June 30, 2024. As at June 30, 2024, AHIP had $26.7 million in available liquidity, compared to $27.8 million as at December 31, 2023. The available liquidity of $26.7 million was comprised of an unrestricted cash balance of $16.0 million and borrowing availability of $10.7 million under the revolving credit facility. AHIP has an additional restricted cash balance of $40.3 million as at June 30, 2024. AHIP has 70.6% of its debt at fixed interest rates following the expiry of the interest rate swaps on its senior credit facility on November 30, 2023. The notional value of the interest rate swaps was $130.0 million prior to their expiry. As a result of this expiry, at the current average secured overnight financing rate ("SOFR") of 5.3%, the incremental annual interest expense is estimated to be approximately $5.2 million for the twelve months ended November 30, 2024. Northeast Portfolio III CMBS Loan During the first quarter of 2024, AHIP notified the master servicer for the AHIP Northeast Portfolio III CMBS Loan ("Loan Portfolio" or "CMBS Loan") of an imminent change in circumstances which resulted in the master servicer issuing a notice of default as well as a notice of acceleration and demand for payment on April 19, 2024.   This Loan Portfolio is secured by four hotels: a Fairfield Inn & Suites and a Hampton Inn located in White Marsh, MD, a Homewood Suites located in Egg Harbor Township, NJ and a SpringHill Suites located in Brookhaven, NY (collectively, the "Hotels" or "Assets"). On May 16, 2024, a receiver was duly appointed over the Hotels pursuant to an appointment order. The principal amount of this non-recourse CMBS Loan as of June 30, 2024 was $51.0 million and the receiver is currently making principal and interest payments. AHIP ceased recognizing revenue and expenses, relating to the Hotels on the effective date of the appointment order. The CMBS Loan and Assets will remain on AHIP's balance sheet until the Hotels have been transferred to or sold by the special servicer. Removal of this Loan Portfolio from Debt to TTM EBITDA contributed to the improvement in this measure in the second quarter of 2024. CAPITAL RECYCLING In March 2024, AHIP completed the strategic dispositions of hotel properties in Harrisonburg, Virginia and Cranberry Township, Pennsylvania for gross proceeds of $8.55 million and $8.25 million respectively. Under the terms of the credit agreement governing the revolving credit facility and certain terms loans (the "Sixth Amendment"), 50% of the net proceeds from the sale of these two hotel properties, which is 0.7 million, was used to pay down outstanding amounts under such term loans in the second quarter of 2024. In May and June 2024, AHIP entered into agreements to dispose of three hotel properties in Ocala, Florida for gross proceeds of $33.7 million. The dispositions are currently expected to close in the third and fourth quarters of 2024. In July and August 2024, AHIP entered into agreements to dispose of hotel properties in each of Dallas, Texas, Egg Harbor Township, New Jersey, and Corpus Christi, Texas for gross proceeds of $27.0 million, $11.1 million, and $10.3 million respectively. The dispositions are currently expected to close in the fourth quarter of 2024. In August 2024, AHIP completed the strategic dispositions of two hotel properties in Amarillo, Texas for gross proceeds of $9.3 million and $8.3 million, respectively. Under the terms of the Sixth Amendment, 50% of the net proceeds from the sale of these two hotel properties will be used to pay down outstanding amounts under such term loans in the second half of 2024. AHIP intends to use the net proceeds from these dispositions to pay down CMBS mortgage debt and the term loans governed by the Sixth Amendment. The combined sales price for these properties, which have been disposed or currently under agreements for dispositions in 2024, represents a blended Cap Rate of 7.4% on 2023 annual hotel EBITDA, after adjusting for an industry standard 4% furniture, fixtures, and equipment ("FF&E") reserve. This also represents $87 thousand per key and a blended yield of 5.6% after adjusting for the expected capital expenditure requirements. AHIP intends to continue to execute its strategy to divest assets to reduce debt and is currently marketing a selected number of additional properties which are expected to demonstrate value above the current Unit trading price. SAME PROPERTY KPI 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. KPIs Q2 2024 Q1 2024 Q4 2023 Q3 2023 Q2 2023 ADR $136 $133 $127 $133 $134 Change compared to same period in prior year - % increase (decrease) 1.5% (0.7%) 0.1% 3.3% 6.6% Occupancy 75.0% 67.7% 67.2% 71.7% 74.1% Change compared to same period in prior year - bps increase (decrease) 90 60 (124) (209) (102) RevPAR $102 $90 $86 $95 $99 Change compared to same period in prior year - % increase (decrease) 3.0% 0.2% (1.7%) 0.3% 5.2% NOI Margin 32.3% 28.5% 26.0% 30.3% 33.8% Change compared to same period in prior year - bps increase (decrease) (150) (214) (584) (298) (124) Same property ADR in the current quarter is $136, an increase of 1.5% compared to the same period of 2023. Same property occupancy increased by 90 bps to 75.0% in the current quarter compared to the same period of 2023. The increase in ADR and occupancy is primarily attributable to higher demand for the extended stay and select service properties. Same property NOI margin decreased by 150 bps to 32.3% for the second quarter of 2024, compared to the same period of 2023. The decrease in the same property NOI margin was due to higher operating expenses as a result of general cost inflation, escalated labor costs, and higher property insurance premiums in April and May 2024. The labor environment is improving although labor is expected to remain a challenge in 2024 with increased turnover, which impacts hotel management continuity, hiring and training expenses. SELECTED INFORMATION     Three months ended June 30 Six months ended June 30 (thousands of dollars, except per Unit amounts)   2024   2023   2024   2023               Revenue   73,614   75,483   140,103   140,941   Income from operating activities   19,619   17,919   27,188   27,337   Income (loss) and comprehensive income (loss)   (1,591 ) 10,658   (9,700 ) 9,058   NOI   24,194   25,287   41,384   44,025   NOI Margin   32.9 % 33.5 % 29.5 % 31.2 %             Hotel EBITDA (1)   22,634   22,867   38,307   39,469   EBITDA (1)   19,825   20,233   33,145   34,277               Cashflow from operating activities   10,644   12,403   10,687   25,497   Distributions declared per unit - basic and diluted   -   0.045   -   0.09   Distributions declared to unitholders - basic   -   3,548   -   7,094   Distributions declared to unitholders - diluted   -   4,033   -   8,059   Dividends declared to Series C holders   1,138   1,011   2,237   2,011               FFO diluted (1)   11,014   16,653   12,220   26,454   FFO per unit - diluted   0.12   0.19   0.15   0.30   Normalized FFO per unit - diluted   0.10   0.14   0.12   0.21               AFFO diluted (1)   9,185   13,514   7,389   20,595   AFFO per unit - diluted (1)   0.10   0.15   0.09   0.23   (1) See "Non-IFRS and Other Financial Measures" SELECTED INFORMATION (thousands of dollars)   June 30,2024   December 31,2023           Total assets   918,960   954,887   Total liabilities   697,735   721,937   Total non-current liabilities   394,825   529,178   Term loans and revolving credit facility   565,964   599,873           Debt to gross book value   52.0 % 51.9 % Debt to TTM EBITDA (times)   9.7   10.6   Interest coverage ratio (times) (1)   1.7   1.9           Term loans and revolving credit facility:       Weighted average interest rate   5.73 % 4.95 % Weighted average term to maturity (years)   1.8   2.2           Number of rooms   7,662   7,917   Number of properties   68   70   Number of restaurants   14   14   (1) See "Non-IFRS and Other Financial Measures"     2024 SECOND QUARTER OPERATING RESULTS     Three months endedJune 30 Six months ended June 30 (thousands of dollars)