VANCOUVER, June 26, 2014 /PRNewswire/ – American Hotel Income Properties REIT
LP (“AHIP“) (TSX: HOT.UN; OTCQX: AHOTF) announced today that it has agreed to
acquire through its subsidiaries a portfolio of four branded hotel
properties (the “Acquisition Properties“) located in North Carolina and Georgia for an aggregate purchase price
of approximately US$30.5 million before customary closing and
post-acquisition adjustments. The purchase price does not include a
US$1.5 million restricted cash reserve to be established by AHIP for
the completion of brand mandated property improvement plans (“PIPs“).

The Acquisition Properties will be purchased at a weighted-average
capitalization rate of 8.2% on pro-forma 2014 net operating income
(after inclusion of all hotel management fees, administration fees,
brand franchise fees and a 4% FF&E reserve contribution).

Acquisition Highlights:

• The Acquisition Properties contain 387 total guest rooms and are being
  acquired for approximately US$82,700 per guest room inclusive of the
  cost of the PIPs, which is below management’s estimate of replacement
  cost.
• The four select-service hotel properties are located in North Carolina
  and Georgia, and consist of two Fairfield Inn & Suites hotels, one
  SpringHill Suites hotel (brands controlled by Marriott International
  Inc.), and one Hampton Inn hotel (a brand controlled by Hilton
  Worldwide Inc.).
• The Acquisition Properties are located in Asheboro, North Carolina;
  Pinehurst, North Carolina; and Kingsland, Georgia, near transportation
  hubs and other major demand generators such as military bases,
  manufacturing facilities, medical centres, and golf and leisure
  attractions.
• The investment is expected to be immediately accretive to adjusted funds
  from operations (“AFFO”) per unit.
• The total acquisition price including the cost of the PIPs is
  significantly below the total as-stabilized appraised value of US$34.5
  million, which was determined by a third party appraiser.
• AHIP expects to fund the purchase price of the Acquisition Properties,
  including the PIPs, using a combination of cash from AHIP’s bought deal
  offering of units that closed on June 4, 2014, the assumption of
  existing CMBS loans of approximately US$13.4 million on the SpringHill
  Suites and Hampton Inn properties, and new CMBS debt on the two
  Fairfield Inn & Suites properties. The two assumed loans have principal
  balances of approximately US$7.7 million and US$5.7 million, bear
  interest at 5.28% and 5.69%, and are scheduled to mature on February 1,
  2024 and August 1, 2018, respectively. The new US$6.0 million CMBS
  mortgage will be for a 10 year term with a fixed interest rate of
  4.72%.
• The transaction is expected to close imminently.

Robert O’Neill, AHIP’s Chief Executive Officer, commented, “This
investment is consistent with our stated growth strategy targeting
acquisitions of transportation-oriented and select-service hotels,
located in secondary markets in the United States close to railroads,
airports, highway interchanges, other transportation hubs, and major
demand generators. The Asheboro and Kingsland properties are located
near Interstate highway exits. Pinehurst is adjacent to Fort Bragg, the
U.S. Army’s largest installation. Pinehurst is also the quintessential
American golf resort destination, and earlier this month the Men’s and
Women’s U.S. Open Championships were held at the famed Pinehurst No. 2
course. Locking in 10-year, 4.72% fixed interest rate CMBS financing on
the two Fairfield Inn & Suites properties also highlights a key aspect
of our conservative approach to leverage, aimed at providing highly
stable returns to AHIP’s unitholders.”

The Acquisition Properties will be managed for AHIP by its exclusive
hotel manager, Tower Rock Hotels & Resorts Inc., a wholly owned
subsidiary of O’Neill Hotels & Resorts Ltd.

Forward-Looking Information

Certain statements contained in this news release may constitute
forward-looking statements. Forward-looking statements are often, but
not always, identified by the use of words such as “anticipate”,
“plan”, “expect”, “may”, “will”, “intend”, “should”, and similar
expressions. These statements involve known and unknown risks,
uncertainties and other factors that may cause actual results or events
to differ materially from those anticipated in such forward-looking
statements. Forward-looking statements in this news release include,
without limitation, the following: references to the purchase and
closing costs of the Acquisition Properties; local lodging demand
generators; the completion and estimated costs of PIPs; the near term
growth of the Acquisition Properties and US hotel industry overall; the
availability of accretive acquisition opportunities; the degree to
which the Acquisition Properties are accretive; the anticipated closing
date of the Acquisition Properties transaction; and future availability
of low cost CMBS financing.

Forward-looking information is based on a number of key expectations and
assumptions made by AHIP, including, without limitation: a reasonably
stable North American economy and stock market and the ability to
successfully integrate the Acquisition Portfolio. Although the
forward-looking information contained in this news release is 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 reflects current expectations of AHIP’s
management regarding future events and operating performance as of the
date of this news release. Such information involves significant risks
and uncertainties, should not be read as guarantees of future
performance or results, and will not necessarily be accurate
indications of whether or not such results will be achieved. Actual
results could differ materially from those currently anticipated due to
a number of factors and risks. These include, without limitation, those
factors that can be found under “Risk Factors” in AHIP’s Annual
Information Form dated March 26, 2014 and AHIP’s Short form Prospectus
dated May 29, 2014.

The forward-looking statements contained herein represent AHIP’s
expectations as of the date of this news release, and are subject to
change after this date. AHIP assumes no obligation to update or revise
any forward-looking statements whether as a result of new information,
future events or otherwise, except as required by applicable law.

About American Hotel Income Properties REIT LP

AHIP is a limited partnership formed under the Limited Partnerships Act (Ontario) to invest in hotel real estate properties located
substantially in the United States and engaged primarily in the
railroad employee accommodation, transportation and contract-focused
lodging sectors. AHIP’s long-term objectives are to: (i) generate
stable and growing cash distributions from hotel properties
substantially in the US; (ii) enhance the value of its assets and
maximize the long-term value of the hotel properties through active
management; and (iii) expand its asset base and increase its AFFO per
Unit through an accretive acquisition program, participation in
strategic development opportunities and improvements to its properties
through targeted value-added capital expenditure programs.

Additional information relating to AHIP, including its other public
filings, is available on SEDAR at www.sedar.com and on AHIP’s website at www.ahipreit.com.

THE TORONTO STOCK EXCHANGE HAS NOT REVIEWED AND DOES NOT ACCEPT
RESPONSIBILITY FOR THE ADEQUACY OR THE ACCURACY OF THIS RELEASE.

SOURCE American Hotel Income Properties REIT LP