American Hotel Income Properties REIT (TSE:HOT.UN) executives used the company’s fourth-quarter conference call to outline progress on asset sales and refinancing activity aimed at strengthening the balance sheet ahead of key 2026 obligations, while also detailing a year marked by flat revenue, modest RevPAR volatility, and ongoing cost pressures.
Leadership update and balance sheet priorities
Chief Executive Officer John O’Neill said he “stepped back in as CEO of AHIP at the end of 2025,” adding that the board and management are focused on “strengthen[ing] AHIP’s financial position and preserv[ing] long-term value” by addressing upcoming obligations through asset sales and loan refinancings.
Since 2024, the company has sold 35 assets for total gross proceeds of $334 million, he said.
Asset sales pipeline and capital obligations
O’Neill highlighted additional disposition activity in the fourth quarter, when AHIP sold six hotel properties for total gross proceeds of $70 million. For the year, he said the combined sales price for the 18 properties represented “a blended cap rate of 7.6% on 2024 hotel EBITDA,” which he said demonstrated value “well beyond AHIP’s current unit price for its portfolio.”
After quarter-end, AHIP closed on the sale of a Pennsylvania hotel for approximately $8 million, according to O’Neill. He also said the REIT had eight additional properties under purchase and sale agreements for estimated total gross proceeds of $137 million, with closings expected in the first half of 2026.
O’Neill said AHIP has no secured debt maturities until the fourth quarter of 2026, but flagged two capital items management is working to address:
- Series C preferred shares: O’Neill said the dividend rate increased effective Jan. 28, 2026, from 9% to 14% per annum. He added that AHIP redeemed $25 million of the preferred shares earlier in March, leaving $25 million outstanding.
- Convertible debentures: The company’s 6% unsecured subordinated convertible debentures are due Dec. 31, 2026, O’Neill said.
Looking ahead, O’Neill said AHIP will evaluate which hotel sales offer the “most attractive combination of certainty, valuation, and net proceeds” to address these obligations, noting that the number of dispositions will depend on factors including regional markets, hotel performance, hotel size, and the “nature and value of the offers.”
Hotel operating results: flat revenue, mixed demand, and margin pressure
Chief Operating Officer Bruce Pittet described 2025 operating conditions as “choppy,” with same-store revenue flat year-over-year and expense pressures weighing on profitability. AHIP’s premium branded select-service portfolio posted a 20-basis-point RevPAR decline for full-year 2025 to $101, Pittet said. In the fourth quarter, RevPAR increased 10 basis points year-over-year.
Pittet also pointed to market share performance, saying the portfolio finished 2025 at a RevPAR index of 117, up 4% year-over-year, which he said “speaks to the quality of AHIP’s assets.”
By demand segment, Pittet said leisure-linked segments remained strong, while:
- Government revenue declined 2% year-over-year, attributed to a shift in government spending priorities.
- Group revenue fell about 5%, driven by sales performance and market demand shifts.
For AHIP’s 31 hotels, full-year occupancy was 72%, flat to 2024, according to Pittet. Fourth-quarter occupancy was 69%, down 1% year-over-year, with Pittet citing travel disruptions related to a government shutdown in October and early November. He also said the Courtyard Tampa North in Florida experienced a guest room fire in October, resulting in a three-day closure and additional rooms out of service during October and November.
Average daily rate (ADR) was largely stable year-over-year. Pittet said full-year ADR was $141, in line with 2024, while fourth-quarter ADR was $137, up 1.5% year-over-year.
Performance varied by business segment, Pittet said:
- Excluding extended stay was the strongest vertical, with RevPAR of $107, or 104% of 2024 levels.
- Select service RevPAR was $97, a 3% decline versus 2024.
- Embassy Suites RevPAR was $103, up slightly year-over-year.
Margins declined as costs outpaced revenue. Pittet said NOI margin decreased 313 basis points to 27.9% for 2025 and fell 565 basis points to 19.7% in the fourth quarter compared with the prior-year quarter. He cited inconsistent asset-level performance, operational disruptions such as general manager turnover, elevated maintenance and utility expenses, and “unanticipated year-end operating adjustments.” Pittet added that fourth-quarter results included a one-time non-cash expense of $1.3 million tied to a reduction in other accounts receivable, due to a change in collectibility estimates related to 2024 and prior years.
FFO, liquidity, and structural change
Chief Financial Officer Travis Beatty said full-year 2025 same-store revenue was $154.7 million, flat versus 2024. Normalized diluted funds from operations (FFO) was “nil for the year” and negative $0.07 per unit for the fourth quarter, compared with normalized FFO of $0.19 per unit for full-year 2024 and nil in the fourth quarter of 2024.
Beatty said the quarter included $3.1 million in one-time expenses related to an employment agreement settlement and the receivables collectibility adjustment.
On liquidity, Beatty reported unrestricted cash of $36.4 million at Dec. 31, 2025, up from $27.8 million a year earlier, driven primarily by net inflows from 2025 dispositions. At year-end, restricted cash was $23.2 million, and the REIT also had $15 million available under the portfolio loan for capital improvements. As of March 24, 2026, Beatty said unrestricted cash was approximately $12 million and restricted cash approximately $23.5 million, with the decline in unrestricted cash primarily due to the $25 million redemption of Series C preferred shares on March 13, 2026.
Beatty said debt-to-gross book value was 48.7% at Dec. 31, 2025, down 60 basis points year-over-year, while debt-to-EBITDA rose to 9.4 times, up 1.4 times from the prior year.
He also noted that unitholders approved an amendment in 2025 giving the board discretion to cause the U.S. subsidiary to cease qualifying as a REIT. Beatty said those steps were completed in the third quarter, and the U.S. subsidiary “no longer qualifies as a REIT.” He said being treated as a taxable C corporation rather than a REIT provides flexibility to manage obligations and pursue alternatives to maximize value, including asset sales.
Early 2026 operating trends and outlook
Pittet provided early-year operating color, saying January results for the “AHIP 30” showed occupancy of 58%, ADR of $132, and RevPAR of $77—94% of January 2025 levels—impacted by frigid and stormy weather in parts of the Midwest, Mid-Atlantic, and Northeast. Preliminary February results, he said, improved to 71% occupancy, ADR of $145, and RevPAR of $102, or 3% above February 2025.
In closing remarks, O’Neill called 2025 “a challenging year across the industry” and said the macro backdrop for 2026 remains uncertain. However, he said management believes the portfolio is “well-positioned to generate long-term value,” emphasizing progress on asset sales, reduced leverage, and buyer interest. He said AHIP’s near-term objective remains addressing the preferred shares and debentures and that, with recent sales and refinancings and no secured debt maturities until the fourth quarter of 2026, the company has time to consider alternatives “in an orderly manner.”
About American Hotel Income Properties REIT (TSE:HOT.UN)
American Hotel Income Properties REIT LP is a trust that invests in hotel real estate properties. The company’s primary business is owning Premium Branded hotels, which have franchise agreements with international hotel brands including Marriott, Hilton, and IHG. It generates revenue from the room, food, beverage, and other revenue. The other revenue is comprised of conference room rentals, parking revenues, and other incidental income.
