Fast-growing American Hotel Income Properties REIT (AHIP) announced December 22 that it has bought its 80th U.S. hotel – a 133-room property in Lincoln, Nebraska for US$3.9 million.
The Vancouver-based real estate investment trust (TSX:HOT.UN) has been expanding at a rapid clip since it went public in February 2013. Back then, the REIT had 32 hotels. At the start of 2015, its hotel count had risen to 60.
“We are pleased to acquire this rail crew hotel at a trailing, fully loaded, capitalization rate of approximately 10% after our planned renovation,” said AHIP CEO Rob O’Neill.
One of AHIP’s niches within the U.S. accommodation sector is hotels that have contracts with railway companies, such as Union Pacific and BNSF, to house workers.
These hotels are branded Oak Tree Inn and are in smaller markets such as Winslow, Arizona – a town with only about 10,000 people and famous for being in the Eagles song Take It Easy.
AHIP has 45 rail hotels including today’s announcement. At the start of the year, it had 37 hotels that were largely for railway company employees.
O’Neill did not name the railway company that will use the Lincoln hotel but said in a release that today’s transaction allows his REIT to “build on an existing relationship with one of our key railway customers with the opportunity to accommodate further rail client demand as the railway undertakes major capital projects in the area.”
AHIP’s other niche is to own hotels that have management contracts to enable them to have brands such as Marriott and Hilton.
AHIP owns 35 of these hotels, which are usually located near airports or other transportation hubs. That’s up from 23 at the start of the year.
The Lincoln hotel transaction is expected to close in January 2016.
