American Hotel Income Properties REIT LP agreed to buy three hotels in Ohio and Kentucky through its subsidiaries for approximately US$124.0 million.

The Embassy Suites by Hilton-branded hotels comprise 782 guest rooms in total and are located in proximity to Columbus, Ohio;Cleveland; and Cincinnati.

The company plans to fund the acquisition via a combination of proceeds from its recent bought deal offering and a new US$65.0 million CMBS loan.

The mortgage loan is expected to have a 10-year term with interest-only payments for the first three years and then amortized over a 30-year period for the next seven years. It is expected to have a fixed interest rate of 4.70% for the entire term.

The properties include the 284-room Embassy Suites Columbus Dublin, located in Dublin, Ohio, north of downtown Columbus; the 271-room Embassy Suites Cleveland Rockside, located in Independence, Ohio, south of downtown Cleveland; and the 227-room Embassy Suites Cincinnati Rivercenter on the bank of the Ohio River overlooking downtown Cincinnati in Covington, Ky.

The deal, which reflects a weighted-average cap rate of approximately 8.0% on trailing 12-months NOI, is expected to close in late January 2017, subject to customary conditions. The transaction will be immediately accretive to AFFO per unit.

The hotels will be managed by the company's exclusive hotel manager Tower Rock Hotels & Resorts Inc.