American Hotel Income Properties REIT LP (AHIP) has agreed to spend US$61 million to buy six hotels in Florida and pay US$10.6 million on property improvement plans, the company (TSX:HOT.UN) announced October 25.
AHIP has been expanding at a rapid clip since it went public in February 2013. Back then, the Vancouver-based REIT had 32 hotels. At the start of 2015, its hotel count had risen to 60 and that count increased to 80 hotels by the end of 2015. After the new acquisition that count is set to jump to 92 hotels.
Its new Sunshine State hotels are slated to be in Tampa, Orlando, Sarasota, and Fort Myers.
“This strategic acquisition expands and diversifies both our brand affiliation and geographic presence within the high-performing Florida market, while creating synergies and cost-saving opportunities with our existing Florida hotels,” AHIP president Ian McAuley said.
The transaction is expected to close by the end of November.
At that time, and including the previously announced acquisitions of two Embassy Suites hotels located in Texas and Arizona, as well as four Marriott-branded, select-service hotels located in Florida and Tennessee, AHIP's 92-hotel portfolio will have a total of 8,581 guest rooms. Of those, there are set to be 47 branded hotels totalling 4,792 guest rooms and 45 rail hotels totalling 3,789 guest rooms.
Many of the company’s hotels are considered rail hotels, which cater to railway workers and are in remote areas but have a stable revenue stream because of contracts with railways.
AHIP’s other niche is to own hotels that have management contracts and that enables them to have brands such as Marriott and Hilton.
Vancouver's One Hospitality, which is privately owned by brothers Rob and John O'Neill, manages most of AHIP's hotel properties. Rob O'Neill is also CEO of AHIP while John O'Neill is CEO of One Hospitality.
Robert Pratt, who is president of One Hospitality, told Business in Vancouver earlier this year that the companies are based in Vancouver because this is where the O'Neills live.
One of the main trends that has been driving recent hotel mergers and acquisitions is to focus on niche hotels.
Other mergers, such as Marriott International's September acquisition of Starwood Hotels and Resorts Worldwide Inc., are mainly to to gain efficiency with technology spending, Marriott CEO Arne Sorenson told BIV after a Board of Trade speech in January.
