American HotelIncome Properties REIT LP agreedto purchase two Embassy Suites-branded properties by Hilton hotels in Dallas andTempe, Ariz., for approximately $57.6 million.
The acquisition represents a weighted-average capitalizationrate of about 8.3% on trailing 12 months NOI, including hotel management fees andbrand franchise fees, among other things. The company had recently signed a conditionalpurchase agreement with Sunstone Realty Advisors affiliates for the hotels.
The hotels offer a total of 529 guestrooms and the acquisitionprice equates to roughly $109,000 per guestroom.
The transaction amount excludes approximately $5.7 million inbrand mandated property improvement plans and customary and any negotiated closingand post-acquisition adjustments.
American Hotel Income will fund the transaction with a portionof the net proceeds from its bought-deal offering of units, the issuance of about$17.4 million in new units, and the assumption of the existing $19.0 million commercialmortgage backed securities loan on the Dallas hotel. The mortgage, which is duein October 2024, has a fixed interest rate of 5.25%.
The company will also obtain a new 10-year $13.5 million CMBSloan on the Tempe property.
American Hotel Income will also advance a $10.2 million bridgeloan to pay off the current expiring mortgage on the Tempe property. The loan willbe funded on or about Aug. 1, and will have an interest rate of 8.00% per annum.
The acquisition should close by early September, subject to customaryclosing conditions and documentation. It is expected to be accretive to AFFO perunit. Upon completion, the company's portfolio will comprise 82 hotels.