WELLINGTON, KS—American Hotel Income Properties REIT LP (AHIP) has acquired a newly built 110-room Oak Tree Inn hotel here from SunOne Developments Inc. for a total purchase price of $7,410,000 plus closing adjustments.
The acquisition was financed by a combination of approximately $1,435,000 from cash on hand, a new $4,725,000 mortgage on the property; the offset of approximately $650,000 in mezzanine loans owed by SunOne to a subsidiary of AHIP; and the issuance of $600,000 of the REIT’s units from treasury.
The new mortgage has a variable rate of the 30-day LIBOR rate plus 3.00% with a floor interest rate of 4.00%. It has a 10-year term with a 20-year amortization schedule. The newly-issued AHIP units were issued at Cdn$11.20 per unit, which represents the five-day volume-weighted average trading price of the units on the Toronto Stock Exchange.
Rob O’Neill, CEO of AHIP, said, “The new Wellington hotel will be the flagship of the Oak Tree Inn portfolio, the highest quality chain of crew lodging facilities presently serving the U.S. freight railway industry. This is the fourth property delivered by SunOne to AHIP over the past year and is secured by a long-term railway contract that guarantees the majority of its available room nights, and also extends its 20-year relationship with the railway in Wellington for another decade.”
The hotel, approximately 30 miles south of Wichita, KS, hotel includes an existing Penny’s Diner and will be managed by TR Lodging Enterprises Inc., a wholly-owned subsidiary of O’Neill Hotels & Resorts Ltd. The existing Wellington hotel will continue to be used in operations. The grand opening is scheduled for Thursday March 5, 2015.
Following this acquisition, AHIP’s 61-hotel portfolio will consist of 38 Oak Tree Inn hotels with 2,882 guestrooms and 23 branded hotels with 2,347 guestrooms franchised with national and international hotel brands.