HOT.U American Hotel Income Properties REIT LP

American Hotel Income Properties REIT LP (“AHIP”, or the “Company”) (TSX: HOT.UN, TSX: HOT.U, TSX: HOT.DB. V), today announced its financial results for the three and nine months ended September 30, 2024.

All amounts presented in this news release are in United States dollars (“U.S. dollars”) unless otherwise indicated.

2024 THIRD QUARTER HIGHLIGHTS

• AHIP is taking decisive steps to improve its balance sheet and address near term debt maturities through strategic dispositions of non-core hotels and planned refinancings.
• Same property RevPAR (1) was $98 for the third quarter of 2024, an increase of 2.1% compared to the same period of 2023 with increases in both ADR (1) and occupancy (1).
• Same property NOI was $19.0 million for the third quarter of 2024, an increase of 0.5% compared to the same period of 2023.
• Same property NOI margin was 30.2% for the third quarter of 2024, a decrease of 50 bps compared to the same period of 2023.
• Diluted FFO per unit (1) and normalized diluted FFO per unit (1) were $0.06 and $0.07, respectively, for the third quarter of 2024, compared to $0.17 and $0.11 for the same period of 2023.
• Completed dispositions of five hotel properties for total gross proceeds of $54.7 million in the current quarter, with a blended Cap Rate (1) of 7.3% on 2023 annual hotel EBITDA (1), after adjusting for an industry standard 4% FF&E reserve.
• Since September 30, 2024, the dispositions of four hotel properties for total gross proceeds of $40.8 million were completed, and the dispositions of five additional hotel properties for total gross proceeds of $52.8 million are expected to be completed in the fourth quarter of 2024. These dispositions represent a blended Cap Rate of 6.9%, and 6.4%, respectively, both on 2023 annual hotel EBITDA, after adjusting for an industry standard 4% FF&E reserve.
• The dispositions completed in the current quarter resulted in total debt repayment of $49.5 million. Including dispositions completed since September 30, 2024, and expected to be completed in the fourth quarter of 2024, total estimated debt repayment is $78.0 million which includes estimated repayments of $35.4 million to the term loans governed by the Sixth Amendment (defined below), which will satisfy the primary remaining condition to extend the maturity of the revolving credit facility and term loans.
• Debt to gross book value (1) was 50.1% as at September 30, 2024, a decrease of 180 bps compared to 51.9% as at December 31, 2023.
• Debt to TTM EBITDA (1) was 9.1x as at September 30, 2024, a decrease of 1.0x compared to 10.1x as at September 30, 2023.
• AHIP had $36.5 million in available liquidity as at September 30, 2024, compared to $27.8 million as at December 31, 2023. The available liquidity of $36.5 million was comprised of an unrestricted cash balance of $25.8 million and borrowing availability of $10.7 million under the revolving credit facility.

“AHIP’s portfolio of premium branded select service hotel properties continued to demonstrate strong demand metrics in Q3 2024.” said Jonathan Korol, CEO. “Same property ADR, occupancy and RevPAR all achieved growth in the current quarter. Cost inflation is decelerating across many cost categories, and we are making progress on operating margins with wage increase moderating and less reliance on overtime and contract labor.”

Mr. Korol added: “In 2024, AHIP made significant progress on our plan to reduce debt and high-grade the portfolio through asset sales and loan refinancings. AHIP has completed the dispositions of eleven hotel properties and has five additional hotel properties under contract for sale for total gross proceeds of $165.2 million. These dispositions are expected to result in an improvement to the portfolio with a pro forma increase in RevPAR, NOI margin and EBITDA per hotel. AHIP also signed a non-binding term sheet with a major US Bank to refinance certain borrowing base hotel properties under our senior credit facility, which will significantly reduce the balance of our term loans and revolving credit facility in the fourth quarter of 2024.

Once completed, these steps will strengthen our liquidity and balance sheet and resolve all of our 2024 debt maturities. With the US economy remaining strong, we are positioned to benefit if the industry operating environment improves in 2025. We will continue to monitor macroeconomic conditions and operating performance, while considering further strategic opportunities to deliver value to unitholders over the long term.”

2024 THIRD QUARTER REVIEW

FINANCIAL AND OPERATIONAL HIGHLIGHTS

For the three months ended September 30, 2024, ADR, occupancy, and RevPAR were consistent with the same period in 2023. The improved RevPAR for the extended stay and select service properties was offset by lower RevPAR for the Embassy Suites properties.

NOI and normalized NOI were $19.5 million and $19.9 million for the three months ended September 30, 2024, decreases of 12.6% and 12.7%, respectively, compared to NOI of $22.3 million and normalized NOI of $22.8 million for the same period in 2023. The decrease in NOI and normalized NOI was primarily due to the disposition of the seven hotel properties completed during the nine months ended September 30, 2024.

NOI margin was 29.6% in the current quarter, a decrease of 60 bps compared to the same period in 2023. The decrease in NOI margin was due to higher operating expenses as a result of higher salaries and repair and maintenance expenses in the current quarter. Although certain operating expenses are expected to remain a challenge in 2024, the year-over-year NOI margin decline has improved from 270 bps in the first quarter of 2024 to 60 bps in the current quarter.

AHIP completed its property insurance renewal effective June 1, 2024, with a decrease in premiums compared to the prior period ended May 31, 2024. On an annualized basis, the decrease from the prior period is approximately $1.6 million, which will be recognized in earnings over a twelve-month period.

Diluted FFO per unit and normalized diluted FFO per unit were $0.06 and $0.07 for the third quarter of 2024, respectively, compared to diluted FFO per unit of $0.17 and normalized diluted FFO per unit of $0.11 for the same period in 2023. The decrease in normalized diluted FFO per unit was mainly due to lower NOI and higher financing costs, partially offset by lower corporate and administrative expenses in the current quarter.

SAME PROPERTY KPIs

The following table summarizes key performance indicators (“KPIs”) for the portfolio for the five most recent quarters with a comparison to the same period in the prior year.

KPIs	Q3 2024	Q2 2024	Q1 2024	Q4 2023	Q3 2023
ADR	$135	$137	$134	$128	$134
Change compared to same period in prior year - % increase/(decrease)	0.7%	1.7%	(1.0%)	-	3.3%
Occupancy	72.7%	75.6%	67.4%	67.2%	71.9%
Change compared to same period in prior year - bps increase/(decrease)	80	86	54	(114)	(208)
RevPAR	$98	$104	$90	$86	$96
Change compared to same period in prior year - % increase/(decrease)	2.1%	2.8%	(0.2%)	(1.7%)	0.4%
NOI (thousands of dollars)	$18,983	$20,618	$15,805	$14,272	$18,882
Change compared to same period in prior year - % increase/(decrease)	0.5%	(2.4%)	(4.3%)	(20.2%)	(6.0%)
NOI Margin	30.2%	32.5%	28.1%	25.6%	30.7%
Change compared to same period in prior year - bps increase/(decrease)	(50)	(164)	(213)	(651)	(256)

Same property ADR in the current quarter is $135, an increase of 0.7% compared to the same period of 2023. Same property occupancy increased by 80 bps to 72.7% in the current quarter compared to the same period of 2023. The increase in ADR and occupancy is primarily attributable to higher demand for extended stay and select service properties.

Same property NOI margin decreased by 50 bps to 30.2% compared to the same period of 2023. The decrease in the same property NOI margin was due to higher operating expenses as a result of higher salaries and repair and maintenance expenses in the current quarter. Although certain operating expenses are expected to remain a challenge in 2024, the year-over-year same property NOI margin decline has improved for four consecutive quarters since the fourth quarter of 2023.

LEVERAGE AND LIQUIDITY

KPIs	Q3 2024	Q2 2024	Q1 2024	Q4 2023	Q3 2023
Debt-to-GBV	50.1%	52.0%	52.2%	51.9%	51.1%
Debt-to-TTM EBITDA	9.1x	9.7x	10.5x	10.6x	10.1x

Debt to gross book value as at September 30, 2024 was 50.1%, a decrease of 180 bps compared to December 31, 2023. Debt to TTM EBITDA as at September 30, 2024 was 9.1x, a decrease of 1.0x compared to September 30, 2023. The improvement in debt to gross book value and debt to TTM EBITDA was due to the use of net proceeds from the completed dispositions to pay down CMBS mortgage debt and the term loans governed by the Sixth Amendment.

As at September 30, 2024, AHIP had $36.5 million in available liquidity, compared to $27.8 million as at December 31, 2023. The available liquidity of $36.5 million was comprised of an unrestricted cash balance of $25.8 million and borrowing availability of $10.7 million under the revolving credit facility. AHIP had an additional restricted cash balance of $35.4 million as at September 30, 2024.

CAPITAL RECYCLING

2024 Hotel Dispositions Summary

Hotel	Location	Gross Proceeds (millions of dollars)		Keys	Gross proceeds per key		Cap Rateon 2023annual hotel EBITDA	Closing Date (Actual/Expected)
Completed Dispositions:
Hampton Inn Harrisonburg University	Harrisonburg, Virginia	$8.6		159	$54,000		7.9%	Q1 2024
Residence Inn Cranberry	Cranberry, Pennsylvania	$8.3		96	$86,000		9.3%	Q1 2024
Total completed in Q1 2024		$16.9		255	$66,000		8.6%
Holiday Inn Amarillo West Medical Center	Amarillo, Texas	$8.3		151	$55,000		3.6%	Q3 2024
Fairfield Inn & Suites Amarillo Airport	Amarillo, Texas	$9.3		79	$118,000		8.1%	Q3 2024
Residence Inn Egg Harbor Township	Egg Harbor, New Jersey	$11.1		101	$110,000		4.4%	Q3 2024
Residence Inn Ocala	Ocala, Florida	$11.1		87	$128,000		10.1%	Q3 2024
Courtyard Ocala	Ocala, Florida	$14.9		169	$88,000		8.8%	Q3 2024
Total completed in Q3 2024		$54.7		587	$93,000		7.3%
Courtyard Statesville Mooresville Lake Norman	Statesville, North Carolina	$13.0		94	$138,000		7.6%	Q4 2024
Hampton Inn Statesville	Statesville, North Carolina	$12.2		80	$153,000		8.0%	Q4 2024
Fairfield Inn & Suites Melbourne West	Melbourne, Florida	$6.6		83	$80,000		7.7%	Q4 2024
Home2 Suites Houston Willowbrook	Houston, Texas	$9.0		108	$84,000		3.7%	Q4 2024
Total completed in Q4 2024		$40.8		365	$112,000		6.9%
Total completed in 2024		$112.4		1,207	$93,000		7.3%
Dispositions Under Contract:
Fairfield Inn & Suites Kingsland	Kingsland, Georgia	$5.2		82	$63,000		7.3%	Q4 2024
Embassy Suites DFW Airport South	Dallas, Texas	$27.0		305	$89,000		8.3%	Q4 2024
Hampton Inn & Suites Corpus Christi	Corpus Christi, Texas	$10.3		101	$101,000		5.7%	Q4 2024
Fairfield Inn & Suites Ocala	Ocala, Florida	$7.7		96	$80,000		4.8%	Q4 2024
Sleep Inn & Suites Amarillo	Amarillo, Texas	$2.6		63	$41,000		-7.5%	Q4 2024
Total under contract		$52.8		647	$82,000		6.4%
Total completed and under contract		$165.2		1,854	$89,000		7.0%

As of the date of the news release, AHIP has completed the dispositions of eleven properties for total gross proceeds of $112.4 million during the current financial year. In addition, AHIP has five hotel properties under purchase and sales agreements for total gross proceeds of $52.8 million. AHIP intends to use the net proceeds from these dispositions to repay certain CMBS mortgage loans and reduce the balance of the term loans governed by the Sixth Amendment.

After adjusting for an industry standard 4% FF&E reserve, the combined sales price for the 16 properties either sold in 2024 or currently under contract for sale represents a blended Cap Rate of 7.0% on 2023 annual hotel EBITDA. AHIP’s current enterprise value reflects an implied Cap Rate of 8.7% on 2023 annual hotel EBITDA for the portfolio of 58 hotel properties, excluding the five hotel properties in respect of which AHIP is in managed foreclosure as of September 30, 2024, based on the U.S. dollar closing price of US$0.44 per unit on the TSX on November 5, 2024.

AHIP intends to continue to execute its strategy to divest assets to reduce debt and is currently marketing a selected number of additional properties which are expected to demonstrate value above the current unit trading price.

INITIATIVES TO STRENGTHEN FINANCIAL POSITION AND PRESERVE UNITHOLDER VALUE

The Board of Directors (the “Board”), together with management, have implemented a plan to strengthen AHIP’s financial position and to preserve unitholder value. Initiatives, and progress made to date, are outlined below.

PLAN TO ADDRESS LOAN MATURITIES

AHIP has made significant progress with its plan to address the Company’s upcoming debt maturities. These efforts continue to improve leverage metrics.

To address the Q2 2024 commercial mortgage-backed securities (“CMBS”) loan maturities of $22.3 million, AHIP completed the disposition of one hotel property and refinanced the balance of the loan in March 2024, specifically:

• AHIP completed the disposition of a hotel property in Harrisonburg, Virginia for gross proceeds of $8.6 million. The net proceeds were used to partially satisfy the non-recourse mortgage debt; and
• AHIP completed the CMBS refinancing for the remaining three assets secured against this loan with gross proceeds of $17.5 million prior to initial capital reserves contribution of approximately $5.0 million. The term of this new CMBS loan is five years at a fixed annual interest rate of 7.8%.

To address upcoming CMBS loan maturities, AHIP completed the dispositions of seven hotel properties since the beginning of the third quarter for total gross proceeds of $75.4 million, specifically:

• In August 2024, AHIP completed the dispositions of two hotel properties in Amarillo, Texas for gross proceeds of $9.3 million and $8.3 million, respectively. The CMBS mortgage loan of $16.0 million was fully repaid in the third quarter of 2024.
• In September 2024, AHIP completed the dispositions of two hotel properties in Ocala, Florida for gross proceeds of $11.1 million and $14.9 million, respectively. The CMBS mortgage loan of $19.0 million was fully repaid in the third quarter of 2024.
• In October and November 2024, AHIP completed the dispositions of two hotel properties in Statesville, North Carolina, and one hotel property in Melbourne, Florida for gross proceeds of $13.0 million, $12.2 million and $6.6 million, respectively. The CMBS mortgage loan of $24.9 million was fully repaid in the fourth quarter of 2024.
• In addition, 50% of the net proceeds remaining after the CMBS mortgage loan repayment from the dispositions of these seven hotel properties, which was $8.0 million, was used to pay down outstanding amounts under the term loans governed by the Sixth Amendment in the third and fourth quarters of 2024.

The Sixth Amendment dated November 7, 2023 (the “Sixth Amendment”), which governs AHIP’s revolving credit facility (the “RCF” or “revolving credit facility”) and certain term loans, includes a borrower option to extend the maturity of the RCF and term loans to June 2025, subject to three primary conditions: (i) reduction of the aggregate maximum facility size to $148.2 million from and after December 3, 2024; (ii) obtaining updated appraisals for the borrowing base properties in order to determine the value of such properties for purposes of setting the maximum borrowing availability under the Sixth Amendment, which is set based on a maximum loan to value ratio of 67.5%; and (iii) compliance with the terms of the Sixth Amendment at the time of the extension which includes among other things compliance with financial covenants including payout ratio and fixed charge coverage ratio.

• During the current quarter, AHIP completed the disposition of one hotel property in Egg Harbor, New Jersey for gross proceeds of $11.1 million. The net proceeds of $10.3 million were used to repay the term loans governed by the Sixth Amendment in the same period.
• In November 2024, AHIP completed the disposition of one hotel property in Houston, Texas for gross proceeds of $9.0 million. The net proceeds of $8.2 million were used to repay the term loans governed by the Sixth Amendment in the same period.
• AHIP made total repayments of $11.0 million during the current quarter, and additional repayments of $15.5 million since September 30, 2024, which reduced the balance of RCF and term loans pursuant to the Sixth Amendment to $156.0 million as of the date of the news release.

To further reduce the aggregate facility size before December 3, 2024:

• As of the date of the news release, AHIP has five hotel properties under purchase and sales agreements for total gross proceeds of $52.8 million with expected closing dates prior to December 3, 2024. The completion of these dispositions is expected to reduce the aggregate facility balance by approximately $23.4 million, which represents the required repayment amount under the terms of the Sixth Amendment.
• AHIP has also signed a non-binding term sheet with a major US Bank to refinance in the CMBS market certain borrowing base properties currently secured under the Sixth Amendment. Management is currently targeting to close this refinancing by the end of November 2024, subject to the completion of definitive legal documentation and other customary closing conditions. This refinancing, if completed, is expected to reduce the aggregate facility balance outstanding under the Sixth Amendment by approximately $60.0 million.
• Accordingly, AHIP expects to achieve the required paydown with either the asset sales or the refinancing prior to December 3, 2024. With both achieved, the aggregate facility balance under the Sixth Amendment would be reduced to approximately $72.6 million.

SELECTED INFORMATION

	Three months ended September 30				Nine months ended September 30
(thousands of dollars, except per Unit amounts)	2024		2023		2024		2023
Revenue	65,728		73,743		205,831		214,684
Income from operating activities	12,603		13,322		39,791		40,659
Income (loss) and comprehensive income (loss)	374		(1,345	)	(9,326	)	7,713
NOI (2)	19,475		22,270		61,355		66,875
NOI margin (2)	29.6	%	30.2	%	29.8	%	31.2	%
Hotel EBITDA (1)	18,045		20,054		56,848		60,102
Hotel EBITDA margin (1)	27.5	%	27.2	%	27.6	%	28.0	%
EBITDA (1)	16,479		17,517		50,120		52,374
EBITDA margin (1)	25.1	%	23.8	%	24.4	%	24.4	%
Cashflow from operating activities	6,007		7,668		16,694		33,165
Distributions declared per unit - basic and diluted	-		0.045		-		0.14
Distributions declared to unitholders - basic	-		3,550		-		10,643
Distributions declared to unitholders - diluted	-		4,044		-		12,103
Dividends declared to Series C holders	1,150		1,022		3,387		3,033
FFO diluted (1)	4,605		15,578		16,825		42,032
FFO per unit - diluted (1)	0.06		0.17		0.21		0.47
Normalized FFO per unit - diluted (1)	0.07		0.11		0.19		0.33
AFFO diluted (1)	1,048		12,776		8,437		33,371
AFFO per unit - diluted (1)	0.01		0.14		0.10		0.37
(1) See “Non-IFRS and Other Financial Measures”
(2) NOI and NOI margin included the IFRIC 21 property taxes adjustment.

SELECTED INFORMATION

(thousands of dollars)	September 30, 2024		December 31, 2023
Total assets	872,406		954,887
Total liabilities	651,801		721,937
Total non-current liabilities	363,415		529,178
Term loans and revolving credit facility	534,705		599,873
Debt to gross book value (1)	50.1	%	51.9	%
Debt to EBITDA (times) (1)	9.1		10.6
Interest coverage ratio (times) (1)	1.7		1.9
Term loans and revolving credit facility:
Weighted average interest rate	5.76	%	4.95	%
Weighted average term to maturity (years)	1.6		2.2
Number of rooms	7,075		7,917
Number of properties	63		70
Number of restaurants	14		14
(1) See “Non-IFRS and Other Financial Measures”

2024 THIRD QUARTER OPERATING RESULTS

	Three months ended September 30					Nine months ended September 30
(thousands of dollars)	2024		2023			2024			2023
ADR (1)	133		133			133			133
Occupancy (1)	71.5	%	71.5		%	69.5		%	69.5	%
RevPAR (1)	95		95			92			92
Revenue	65,728		73,743			205,831			214,684
Operating expenses	35,057		38,980			109,328			113,238
Energy	2,977		3,272			8,672			9,515
Property maintenance	3,805		3,956			12,002			11,248
Property taxes, insurance and ground lease	4,414		5,265			14,474			13,808
Total expenses	46,253		51,473			144,476			147,809
NOI (2)	19,475		22,270			61,355			66,875
NOI margin % (2)	29.6	%	30.2		%	29.8		%	31.2	%
Depreciation and amortization	6,872		8,948			21,564			26,216
Income from operating activities	12,603		13,322			39,791			40,659
Other expenses	12,820		15,043			50,479			34,231
Current income tax expense	11		32			47			563
Deferred income tax expense (recovery)	(602	)	(408		)	(1,409		)	(1,848	)
Income (loss) and comprehensive income (loss)	374		(1,345		)	(9,326		)	7,713
(1) See “Non-IFRS and Other Financial Measures”
(2) NOI and NOI margin included the IFRIC 21 property taxes adjustment.

FINANCIAL INFORMATION

This news release should be read in conjunction with AHIP’s unaudited condensed consolidated interim financial statements, and management’s discussion and analysis for the three and nine months ended September 30, 2024 and 2023, that are available on AHIP’s website at www.ahipreit.com, and under AHIP’s profile on SEDAR+ at www.sedarplus.com.

Q3 2024 CONFERENCE CALL

Management will host a webcast and conference call at 10:00 a.m. Pacific time on Thursday, November 7, 2024, to discuss the financial and operational results for the three and nine months ended September 30, 2024 and 2023.

To participate in the conference call, participants should register online via AHIP’s website. A dial-in and unique PIN will be provided to join the call. Participants are requested to register a minimum of 15 minutes before the start of the call. An audio webcast of the conference call may be accessed on AHIP’s website at www.ahipreit.com.

ABOUT AMERICAN HOTEL INCOME PROPERTIES REIT LP

American Hotel Income Properties REIT LP (TSX: HOT.UN, TSX: HOT.U, TSX: HOT.DB.V), or AHIP, is a limited partnership formed to invest in hotel real estate properties across the United States. AHIP’s portfolio of premium branded, select-service hotels are located in secondary metropolitan markets that benefit from diverse and stable demand. AHIP hotels operate under brands affiliated with Marriott, Hilton, IHG and Choice Hotels through license agreements. AHIP’s long-term objectives are to build on its proven track record of successful investment, deliver monthly U.S. dollar denominated distributions to unitholders, and generate value through the continued growth of itsdiversified hotel portfolio. More information is available at www.ahipreit.com.

NON-IFRS AND OTHER FINANCIAL MEASURES

Management believes the following non-IFRS financial measures, non-IFRS ratios, capital management measures and supplementary financial measures are relevant measures to monitor and evaluate AHIP’s financial and operating performance. These measures and ratios do not have any standardized meaning prescribed by IFRS and are therefore unlikely to be comparable to similar measures presented by other issuers. These measures and ratios are included to provide investors and management additional information and alternative methods for assessing AHIP’s financial and operating results and should not be considered in isolation or as a substitute for performance measures prepared in accordance with IFRS.

NON-IFRS FINANCIAL MEASURES:

FFO: FFO measures operating performance and is calculated in accordance with Real Property Association of Canada’s (“REALPAC”) definition. FFO – basic is calculated by adjusting loss and comprehensive income (loss) for depreciation and amortization, gain or loss on disposal of property, IFRIC 21 property taxes, fair value gain or loss, impairment of property, deferred income tax, and other applicable items. FFO – diluted is calculated as FFO – basic plus the interest, accretion, and amortization on convertible debentures if convertible debentures are dilutive. The most comparable IFRS measure to FFO is income (loss) and comprehensive income (loss), for which a reconciliation is provided in this news release.

AFFO: AFFO is defined as a recurring economic earnings measure and calculated in accordance with REALPAC’s definition. AFFO – basic is calculated as FFO – basic less maintenance capital expenditures. AFFO – diluted is calculated as FFO – diluted less maintenance capital expenditures. The most comparable IFRS measure to AFFO is income (loss) and comprehensive income (loss), for which a reconciliation is provided in this news release.

Normalized FFO: calculated as FFO adjusting for non-recurring items. For the three months ended September 30, 2024, normalized FFO is calculated as FFO excluding the non-recurring property damage insurance proceeds adjustment of $1.1 million recorded in the same period. For the nine months ended September 30, 2024, normalized FFO is calculated as FFO excluding the non-recurring property damage insurance proceeds of $1.6 million recorded in the same period. For the three and nine months ended September 30, 2023, normalized FFO is calculated as FFO excluding the non-recurring insurance proceeds of $5.4 million and $12.9 million, respectively, for property damage related to the weather-related damage at several hotel properties in late December 2022. The most comparable IFRS measure to normalized FFO is income (loss) and comprehensive income (loss), for which a reconciliation is provided in this news release.

Normalized NOI: calculated as NOI adjusting for non-recurring items. For the three and nine months ended September 30, 2024, normalized NOI included the non-recurring insurance proceeds of $0.4 million and $0.5 million, respectively, for business interruption claims. For the three and nine months ended September 30, 2023, normalized NOI included the non-recurring insurance proceeds of $0.5 million and $3.4 million, respectively, for business interruption claims related to the weather-related damage at several hotel properties in late December 2022. The most comparable IFRS measure to normalized NOI is NOI, for which a reconciliation is provided in this news release.

Hotel EBITDA: calculated by adjusting NOI for hotel management fees. The most comparable IFRS measure to hotel EBITDA is NOI, for which a reconciliation is provided in this news release.

EBITDA: calculated by adjusting NOI for hotel management fees and general administrative expenses. The sum of hotel management fees and general administrative expenses is equal to corporate and administrative expenses in the Financial Statements. The most comparable IFRS measure to EBITDA is NOI, for which a reconciliation is provided in this news release.

Debt: calculated as the sum of term loans and revolving credit facility, the face value of convertible debentures, unamortized portion of debt financing costs, lease liabilities and unamortized portion of mark-to-market adjustments. The most comparable IFRS measure to debt is total liabilities, for which a reconciliation is provided in this news release.

Gross book value: calculated as the sum of total assets, accumulated depreciation and impairment on property, buildings and equipment, and accumulated amortization on intangible assets. The most comparable IFRS measure to gross book value is total assets, for which a reconciliation is provided in this news release.

Interest expense: calculated by adjusting finance costs for gain/loss on debt settlement, amortization of debt financing costs, accretion of debenture liability, amortization of debenture costs, dividends on series B preferred shares and amortization of mark-to-market adjustments, accretion of management fee because interest expense excludes certain non-cash accounting items and dividends on preferred shares. The most comparable IFRS measure to interest expense is finance costs, for which a reconciliation is provided in this news release.

Enterprise value: is a supplementary financial measure and is calculated as the sum of (i) total debt obligations as reflected on the September 30, 2024 balance sheet, less the term loans of the five hotel properties in respect of which AHIP is in managed foreclosure as of September 30, 2024, (ii) AHIP’s market capitalization (which is calculated as the U.S. dollar closing price of the units on the TSX as of November 5, 2024, multiplied by the total number of units issued and outstanding), and (iii) face value of series C preferred shares, less (iv) the amount of cash and cash equivalents reflected on the September 30, 2024 balance sheet.

NON-IFRS RATIOS:

FFO per unit – basic/diluted: calculated as FFO – basic/diluted divided by weighted average number of units outstanding - basic/diluted respectively for the reporting periods.

Normalized FFO per unit – basic/diluted: calculated as normalized FFO – basic/diluted divided by weighted average number of units outstanding - basic/diluted respectively for the reporting periods.

AFFO per unit – basic/diluted: calculated as AFFO – basic/diluted divided by weighted average number of units outstanding - basic/diluted respectively for the reporting periods.

Hotel EBITDA margin: calculated as hotel EBITDA divided by total revenue.

EBITDA margin: calculated as EBITDA divided by total revenue.

Capitalization rate (“Cap Rate”): calculated as 2023 annual hotel EBITDA, after adjusting for an industry standard 4% furniture, fixtures, and equipment (“FF&E”) reserve, divided by the actual and expected gross proceeds of the asset dispositions.

Implied capitalization rate (“implied Cap Rate”): calculated as 2023 annual hotel EBITDA, after adjusting for an industry standard 4% FF&E reserve, for the portfolio of 58 hotel properties by excluding the five hotel properties in respect of which AHIP is in managed foreclosure as of September 30, 2024, divided by the enterprise value as at November 5, 2024.

CAPITAL MANAGEMENT MEASURES:

Debt to gross book value: calculated as debt divided by gross book value. Debt to gross book value is a primary measure of capital management and leverage.

Debt to TTM EBITDA: calculated as debt divided by the trailing twelve months (“TTM”) of EBITDA. Debt to EBITDA measures the amount of income generated and available to pay down debt before covering interest, taxes, depreciation, and amortization expenses. In Q3 2024, the debt to TTM EBITDA calculation excluded five hotels in respect of which AHIP is in managed foreclosure as of September 30, 2024.

Interest coverage ratio: calculated as TTM EBITDA divided by interest expense for the trailing twelve months. The interest coverage ratio is a measure of AHIP’s ability to service the interest requirements of its outstanding debt. In Q3 2024, the interest coverage ratio calculation excluded five hotels in respect of which AHIP is in managed foreclosure as of September 30, 2024.

SUPPLEMENTARY FINANCIAL MEASURES:

Occupancy is a major driver of room revenue as well as food and beverage revenues. Fluctuations in occupancy are normally accompanied by fluctuations in most categories of variable hotel operating expenses, including housekeeping and other labor costs. Higher ADR increases room revenue with limited impact on hotel operating expenses. Increase in RevPAR attributable to increase in occupancy may reduce EBITDA and EBITDA margins, while increase in RevPAR attributable to increase in ADR typically result in increases in EBITDA and EBITDA margins.

Occupancy: calculated as the total number of hotel rooms sold divided by the total number of rooms available for the reporting periods. Occupancy is a metric commonly used in the hotel industry to measure the utilization of hotels’ available capacity.

Average daily rate (“ADR”): calculated as total room revenue divided by total number of rooms sold for the reporting periods. ADR is a metric commonly used in the hotel industry to indicate the average revenue earned per occupied room in a given time period.

Revenue per available room (“RevPAR”): calculated as occupancy multiplied by ADR for the reporting periods.

Same property occupancy, ADR, RevPAR, revenue, expense, NOI and NOI margin: measured for properties owned by AHIP for both the current reporting periods and the same periods in 2023. In Q3 2024, Q4 2023 and Q3 2023, the same property ADR, occupancy, RevPAR and NOI margin calculations excluded the five hotel properties in respect of which AHIP is in managed foreclosure as of September 30, 2024. In Q2 2024 and Q1 2024, the same property ADR, occupancy, RevPAR and NOI margin calculations excluded the same five hotel properties mentioned in the immediately preceding sentence, as well as the Residence Inn Neptune and Courtyard Wall in New Jersey as these two hotels had limited availability in Q2 2023 and Q1 2023 comparative periods, due to remediation and rebuilding after the weather-related damage in late December 2022.

NON-IFRS RECONCILIATION

INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) TO FFO

	Three months ended September 30				Nine months ended September 30
(thousands of dollars, except per unit amounts)	2024		2023		2024		2023
Income (loss) and comprehensive income (loss)	374		(1,345	)	(9,326	)	7,713
Adjustments:
Income attributable to non-controlling interest	(1,150	)	(1,022	)	(3,387	)	(3,033	)
Depreciation and amortization	6,872		8,948		21,564		26,216
Impairment of cash-generating units	2,229		4,737		11,402		4,737
(Recovery) write-off of property, building and equipment	(2,032	)	3,766		188		7,934
Gain on sale of properties	(1,105	)	(540	)	(1,347	)	(2,941	)
IFRIC 21 property taxes adjustment	15		308		(481	)	(272	)
Change in fair value of warrants	4		(1,239	)	(134	)	(2,958	)
Change in fair value of interest rate swap contracts	-		1,263		-		3,188
Gain on convertible debt conversion	-		-		(245	)	-
Deferred income tax expense (recovery)	(602	)	(408	)	(1,409	)	(1,848	)
FFO basic (1)	4,605		14,468		16,825		38,736
Interest, accretion and amortization on convertible debentures	-		1,110		-		3,296
FFO diluted (1)	4,605		15,578		16,825		42,032
FFO per unit – basic (1)	0.06		0.18		0.21		0.49
FFO per unit – diluted (1)	0.06		0.17		0.21		0.47
Non-recurring items:
Other expenses (income)	1,098		(5,421	)	(1,591	)	(12,889	)
Measurements excluding non-recurring items:
Normalized FFO diluted (1)	5,703		10,157		15,234		29,143
Normalized FFO per unit – diluted (1)	0.07		0.11		0.19		0.33
Weighted average number of units outstanding:
Basic (000’s)	79,234		78,877		79,155		78,837
Diluted (000’s) (2)	81,562		89,864		80,979		89,612
(1) See “Non-IFRS and Other Financial Measures”(2) The calculation of FFO diluted, FFO per unit – diluted, normalized FFO diluted, normalized FFO per unit – diluted, weighted average number of units outstanding – diluted for the three and nine months ended September 30, 2024, excluded the convertible debentures because they were anti-dilutive. The calculation of FFO diluted, FFO per unit – diluted, normalized FFO diluted, normalized FFO per unit – diluted, weighted average number of units outstanding – diluted for the three and nine months ended September 30, 2023, included the convertible debentures because they were dilutive.

RECONCILIATION OF FFO TO AFFO

	Three months ended September 30				Nine months ended September 30
(thousands of dollars, except per Unit amounts)	2024		2023		2024		2023
FFO basic (1)	4,605		14,468		16,825		38,736
FFO diluted (1)	4,605		15,578		16,825		42,032
Maintenance capital expenditures	(3,557	)	(2,802	)	(8,388	)	(8,661	)
AFFO basic (1)	1,048		11,666		8,437		30,075
AFFO diluted (1)	1,048		12,776		8,437		33,371
AFFO per unit - basic (1)	0.01		0.15		0.11		0.38
AFFO per unit - diluted (1)	0.01		0.14		0.10		0.37
Measurements excluding non-recurring items:
AFFO diluted (1)	2,146		7,355		6,846		20,482
AFFO per unit - diluted (1)	0.03		0.08		0.08		0.23
(1) See “Non-IFRS and Other Financial Measures”

DEBT TO GROSS BOOK VALUE

(thousands of dollars)	September 30, 2024		December 31, 2023
Debt	624,626		688,585
Gross Book Value	1,247,511		1,326,070
Debt to Gross Book Value	50.1	%	51.9	%
(thousands of dollars)	September 30, 2024		December 31, 2023
Term loans and revolving credit facility	571,749		633,298
2026 debentures (at face value)	49,730		50,000
Unamortized portion of debt financing costs	2,277		4,065
Lease liabilities	870		1,239
Unamortized portion of mark-to-market adjustments	-		(17	)
Debt	624,626		688,585
(thousands of dollars)	September 30, 2024		December 31, 2023
Total assets	872,406		954,887
Accumulated depreciation and impairment on property, buildings and equipment	369,274		365,970
Accumulated amortization on intangible assets	5,831		5,213
Gross Book Value	1,247,511		1,326,070

DEBT TO TTM EBITDA

(thousands of dollars)	September 30, 2024		December 31, 2023
Debt (2)	564,406		688,585
EBITDA (trailing twelve months) (2)	61,979		64,732
Debt to TTM EBITDA (times) (2)	9.1x		10.6x
2) The calculation of Debt to TTM EBITDA for the trailing twelve months ended September 30, 2024 excluded the five hotels in respect of which AHIP is in managed foreclosure as of September 30, 2024.

INTEREST COVERAGE RATIO

(thousands of dollars)	September 30, 2024		December 31, 2023
EBITDA (trailing twelve months) (2)	61,979		64,732
Interest expense (trailing twelve months) (2)	36,978		33,725
Interest Coverage Ratio (times) (2)	1.7x		1.9x
2) The calculation of Interest Coverage Ratio for the trailing twelve months ended September 30, 2024 excluded the five hotels in respect of which AHIP is in managed foreclosure as of September 30, 2024.

The reconciliation of NOI to hotel EBITDA and EBITDA is shown below:

	Three months ended September 30						Nine months ended September 30
(thousands of dollars)	2024			2023			2024			2023
NOI	19,475			22,270			61,355			66,875
Management fees	(1,430		)	(2,216		)	(4,507		)	(6,773		)
Hotel EBITDA	18,045			20,054			56,848			60,102
General administrative expenses	(1,566		)	(2,538		)	(6,728		)	(7,729		)
EBITDA	16,479			17,517			50,120			52,374

The reconciliation of NOI to normalized NOI is shown below:

	Three months ended September 30				Nine months endedSeptember 30
(thousands of dollars)	2024		2023		2024		2023
NOI	19,475		22,270		61,355		66,875
Business interruption insurance proceeds	409		516		501		3,446
Normalized NOI	19,884		22,786		61,856		70,321

The reconciliation of finance costs to interest expense is shown below:

	Three months ended September 30				Nine months ended September 30
(thousands of dollars)	2024		2023		2024		2023
Finance costs	10,386		8,335		31,948		26,260
Amortization of debt financing costs	(658	)	(536	)	(1,983	)	(1,387	)
Accretion of debenture liability	(273	)	(254	)	(796	)	(737	)
Amortization of debenture costs	(120	)	(105	)	(353	)	(305	)
Gain on debt settlement	-		1,155		-		1,155
Dividends on Series B preferred shares	-		(4	)	-		(12	)
Debt defeasance and other costs	(296	)	5		(307	)	(14	)
Interest Expense	9,039		8,596		28,509		24,960

For information on the most directly comparable IFRS measures, composition of the measures, a description of how AHIP uses these measures, and an explanation of how these measures provide useful information to investors, please refer to AHIP’s management discussion and analysis for the three and nine months ended September 30, 2024 and 2023, available on AHIP’s website at www.ahipreit.com, and under AHIP’s profile on SEDAR+ at www.sedarplus.com.

FORWARD-LOOKING INFORMATION

Certain statements in this news release may constitute “forward-looking information” and “financial outlook” within the meaning of applicable securities laws. Forward-looking information and financial outlook generally can be identified by words such as “anticipate”, “believe”, “continue”, “expect”, “estimates”, “intend”, “may”, “outlook”, “objective”, “plans”, “should”, “will” and similar expressions suggesting future outcomes or events. Forward-looking information and financial outlook include, but are not limited to, statements made or implied relating to the objectives of AHIP, AHIP’s strategies to achieve those objectives and AHIP’s beliefs, plans, estimates, projections and intentions and similar statements concerning anticipated future events, results, circumstances, performance, or expectations that are not historical facts. Forward-looking information and financial outlook in this news release includes, but is not limited to, statements with respect to: AHIP management’s expectation as to the impacts on AHIP’s business of the seasonal nature of the lodging industry, inflation (including on labor and materials costs), competition, overall economic cycles, weather conditions; AHIP’s expectations with respect to the timing and amount of insurance proceeds for weather and fire-related damage and lost income in respect of certain hotel properties; AHIP’s leverage and liquidity strategies and goals; AHIP’s expectations with respect to the performance of its hotel portfolio, including specific segments thereof; AHIP’s expectations with respect to inflation, labor supply, labor costs, interest rates, supply chain and other market financial and macroeconomic conditions in 2024 and beyond and the expected impacts thereof on AHIP’s financial position and performance, including on ADR, occupancy, RevPAR, NOI and NOI margins; AHIP’s expectation that operating costs will remain a challenge in 2024; AHIP’s strategic initiatives and the intended outcomes thereof, including improved liquidity, addressing near-term debt maturities and providing AHIP with financial stability and protecting long-term value for unitholders; AHIP’s expectations with respect to the macroeconomic and operating environment, including certain specific expectations for the fourth quarter of 2024 and for the 2025 fiscal year; AHIP continuing to execute its strategy to divest assets and reduce debt; AHIP’s planned property dispositions, including the expected terms and timing thereof and the financial impact thereof on AHIP (including the estimated amount and uses of the proceeds from such dispositions) and AHIP’s expectation that the sale of such properties will demonstrate value above the current unit trading price and result in an improvement to the portfolio with a pro forma increase in RevPAR, NOI margin and EBITDA per hotel; AHIP’s intended strategies for near-term debt maturities, including planned sales of assets and loan refinancing and the expected impacts thereof on AHIP’s financial performance and position; AHIP targeting the completion of the refinancing of certain borrowing base properties on or about the end of November 2024, subject to the completion of definitive legal documentation and other customary closing conditions and the expected reduction to the credit facilities governed by the Sixth Amendment as a result thereof; AHIP’s expectation that it will satisfy the conditions for the extension of the maturity date for the credit facilities governed by the Sixth Amendment, including its obligation to reduce the facility size by December 3, 2024; AHIP’s expectation that it will be able to refinance the remaining RCF balance due to the strong loan to value ratio of the assets securing the revolving credit facility, six prior amendments, and progress made on asset sales and refinancing activities; AHIP’s belief that it is positioned to benefit if the industry operating and macroeconomic environment improves in 2025;and AHIP’s stated long-term objectives.

Although the forward-looking information and financial outlook contained in this news release are based on what AHIP’s management believes to be reasonable assumptions, AHIP cannot assure investors that actual results will be consistent with such information. Forward-looking information is based on a number of key expectations and assumptions made by AHIP, including, without limitation: inflation, labor shortages, and supply chain disruptions will negatively impact the U.S. economy, U.S. hotel industry and AHIP’s business; AHIP will continue to have sufficient funds to meet its financial obligations; AHIP will be able generate sufficient funds to meet any paydown obligations under the loan-to-value covenants set forth in the Sixth Amendment; AHIP’s strategies with respect to completion of capital projects, liquidity, addressing near-term debt maturities, and divestiture of assets will be successful and achieve their intended effects; AHIP will satisfy the conditions to extend the maturity of the term loans and RCF governed by the Sixth Amendment; AHIP will complete its currently planned divestitures and loan refinancings on the terms currently contemplated and in accordance with the timing currently contemplated; AHIP will receive insurance proceeds in an amount consistent with AHIP’s estimates in respect of its weather and fire-damaged properties; AHIP will continue to have good relationships with its hotel brand partners; AHIP will be successful in opposing the Claim and will resolve the matters set out in the Default Notice in a manner that is acceptable to AHIP; capital markets will provide AHIP with readily available access to equity and/or debt financing on terms acceptable to AHIP, including the ability to refinance maturing debt as it becomes due on terms acceptable to AHIP; AHIP will be successful in reducing the size of the RCF and term loans and in carrying out its planned strategies for refinancing or extending the RCF and term loans; the Federal Reserve will reduce interest rates in the fourth quarter of 2024 and in 2025; AHIP’s future level of indebtedness and its future growth potential will remain consistent with AHIP’s current expectations; the useful lives and replacement cost of AHIP’s assets being consistent with management’s estimates thereof; AHIP will be able to successfully integrate properties acquired into its portfolio, if any; the U.S. REIT will continue to qualify as a real estate investment trust for U.S. federal income tax purposes; the impact of the current economic climate and the current global financial conditions on AHIP’s operations, including AHIP’s financing capability and asset value, will remain consistent with AHIP’s current expectations; there will be no material changes to tax laws, government and environmental regulations adversely affecting AHIP’s operations, financing capability, structure or distributions; conditions in the international and, in particular, the U.S. hotel and lodging industry, including competition for acquisitions, will be consistent with the current economic climate; and AHIP will achieve its long term objectives.

Forward-looking information and financial outlook involve significant risks and uncertainties and should not be read as guarantees of future performance or results as actual results may differ materially from those expressed or implied in such forward-looking information and financial outlook, accordingly undue reliance should not be placed on such forward-looking information or financial outlook. Those risks and uncertainties include, among other things, risks related to: AHIP may not achieve its expected performance levels in 2024 and 2025; AHIP’s brand partners may impose revised service standards and capital requirements which are adverse to AHIP; PIP renovations may not commence or complete in accordance with currently expected timing and may suffer from increased material costs; AHIP’s strategic initiatives with respect to liquidity, addressing upcoming debt maturities and providing AHIP with financial stability may not be successful and may not achieve their intended outcomes; AHIP’s strategies for divesting assets to reduce debt may not be successful; AHIP may not complete its currently planned divestures and loan refinancings on the terms currently contemplated or in accordance with the timing currently contemplated, or at all; AHIP may not enter into definitive legal documentation with respect to the loan refinancing for certain of the borrowing base properties contemplated by the non-binding term sheet signed with a major US Bank in accordance with the timing or on the terms currently contemplated or at all, and may not complete such refinancing; AHIP’s planned dispositions, once completed, may not demonstrate value above the current unit trading price; AHIP may not be successful in reducing its leverage; there is no guarantee that monthly distributions will be reinstated, and if reinstated, as to the timing thereof or what the amount of the monthly distribution will be; AHIP may not be able to refinance debt obligations as they become due or may do so on terms less favorable to AHIP than under AHIP’s existing loan agreements; AHIP may not be successful in reducing the size of the RCF and term loans and in carrying out its planned strategies for refinancing or extending the RCF and term loans on terms acceptable to AHIP or at all; AHIP may not complete the refinancing of certain borrowing base properties in November 2024 on the terms currently contemplated, or at all; AHIP has not replaced its interest rate swaps, which is expected to create continued increased interest expense; refinanced loans are expected to be refinanced at significantly higher interest rates; the Federal Reserve may not reduce interest rates in accordance with the timing or the quantum anticipated by management, or at all; the outcome of the Claim, the Default Notice and the dispute resolution procedures under the HMAs cannot be predicted, and may be determined in a manner unfavorable to AHIP, which may have a substantial negative impact on AHIP’s financial position and results of operations; AHIP may incur significant costs in relation to the Claim, regardless of its merit, the Default Notice and the dispute resolution procedures under the HMAs and may be ordered to pay damages and costs in any such proceedings; the outcome of the Claim may be subject to appeal; if Aimbridge is removed, the financial terms of the engagement of any replacement hotel manager cannot be determined at this time and could less advantageous to AHIP than the terms of the HMAs, and AHIP may suffer some operational disruption in the course of any replacement of Aimbridge; general economic conditions and consumer confidence; the growth in the U.S. hotel and lodging industry; prices for the Units and debentures; liquidity; tax risks; ability to access debt and capital markets; financing risks; changes in interest rates; the financial condition of, and AHIP’s relationships with, its external hotel manager and franchisors; real property risks, including environmental risks; the degree and nature of competition; ability to acquire accretive hotel investments; ability to integrate new hotels; environmental matters; and changes in legislation. Additional information about risks and uncertainties is contained in this new release, in AHIP’s most recently filed AIF and most recently filed MD&A, a copies of each of which are available on SEDAR+ at www.sedarplus.com.

To the extent any forward-looking information constitutes a “financial outlook” within the meaning of applicable securities laws, such information is being provided to investors to assist in their understanding of: estimated proceeds from the planned disposition of certain hotel properties and the expected use thereof and impact thereon on AHIP’s outstanding term loans and RCF; and management’s expectations for certain aspects of AHIP’s financial performance for the remainder of 2024 and for 2025.

The forward-looking information and financial outlook contained herein is expressly qualified in its entirety by this cautionary statement. Forward-looking information and financial outlook reflect management's current beliefs and are based on information currently available to AHIP. The forward-looking information and financial outlook are made as of the date of this news release and AHIP assumes no obligation to update or revise such information to reflect new events or circumstances, except as may be required by applicable law.

For additional information, please contact:

Investor Relationsir@ahipreit.com

(1) Non-IFRS and other financial measures. See “NON-IFRS AND OTHER FINANCIAL MEASURES” section of this news release.