AHIP REIT Acquires 2 Embassy Suites by Hilton

By IvyLee Rosario

Dallas & Phoenix—American Hotel Income Properties REIT LP has completed the acquisition of two Embassy Suites by Hilton hotels in Dallas, Texas and Tempe, Ariz. for $57.6 million. The two acquisitions comprise the 305-key Embassy Suites by Hilton Dallas DFW Airport South and the 224-key Embassy Suites by Hilton Phoenix Tempe. The assets, totaling 529 guestrooms, sold for $109,000 per key, excluding the cost of the PIPs.

Embassy Suites by Hilton Phoenix Tempe hotel

“The acquisition of two larger, upscale select service hotels located within two of the Top 25 U.S. markets further diversifies our expanding branded portfolio,” said Rob O’Neill, CEO of AHIP, in prepared remarks. “With the application of conservative long-term, fixed rate leverage, we continue to focus on providing consistent and stable returns to our unitholders.”

The company funded the purchase price and the PIPs with cash on hand from its bought deal unit offerings completed in 2016, the issuance to the vendors of $17.4 million in new AHIP units, the assumption of an existing $19 million commercial mortgage backed securities loan on the Dallas property and a new $13.5 million CMBS loan on the Tempe property. The Dallas mortgage is interest-only until November 2019 and matures in October 2024. The Tempe bridge loan of $10.2 million was repaid by the Vendors at the closing of the transaction. The mortgage has a 10-year term and matures in January 2027.

With the addition of these two properties, AHIP’s portfolio now includes 93 hotels totaling 8,685 guestrooms with 47 branded hotels and 46 rail crew hotels. The properties will be managed by AHIP’s hotel manager, Tower Rock Hotels & Resorts Inc., a wholly-owned subsidiary of O’Neill Hotels & Resorts Ltd.

Image courtesy of Embassy Suites by Hilton Phoenix Tempe