U.S. markets closed

Edited Transcript of HOT.UN.TO earnings conference call or presentation 13-May-20 9:30pm GMT

Q1 2020 American Hotel Income Properties REIT LP Earnings Call

Vancouver Jun 23, 2020 (Thomson StreetEvents) -- Edited Transcript of American Hotel Income Properties REIT LP earnings conference call or presentation Wednesday, May 13, 2020 at 9:30:00pm GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Azim Lalani

American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc.

* Bruce Pittet

American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc.

* Jamie Kokoska

American Hotel Income Properties REIT LP - Director of IR - American Hotel Income Properties REIT GP Inc

* John Christopher O'Neill

American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc.

================================================================================

Conference Call Participants

================================================================================

* Dean Mark Wilkinson

CIBC Capital Markets, Research Division - Director of Institutional Equity Research

* Lorne Kalmar

TD Securities Equity Research - Associate

* Mario Saric

Scotiabank Global Banking and Markets, Research Division - Analyst

* Matt Logan

RBC Capital Markets, Research Division - Analyst

* Tal Woolley

National Bank Financial, Inc., Research Division - Research Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Good afternoon, and welcome to the American Hotel Income Properties REIT LP's First Quarter 2020 Analyst Call. (Operator Instructions)

At this time, I'll turn the call over to Jamie Kokoska, Director of Investor Relations. You may begin your call.

--------------------------------------------------------------------------------

Jamie Kokoska, American Hotel Income Properties REIT LP - Director of IR - American Hotel Income Properties REIT GP Inc [2]

--------------------------------------------------------------------------------

Thank you, operator. Good afternoon, everyone, and thanks for joining us for our first quarter 2020 results conference call. Discussing AHIP's performance today are John O'Neill, Chief Executive Officer; Bruce Pittet, Chief Operating Officer; and Azim Lalani, Chief Financial Officer.

The following discussion will include forward-looking statements as required by securities regulators in Canada. Comments that are not a statement of fact, including projections of future earnings, revenue, income and FFO are considered forward-looking and involve risks and uncertainties. The risks and uncertainties that could cause our actual financial and operating results to differ significantly from our forward-looking statements are detailed in our MD&A for the 3 months ended March 31, 2020, and our other Canadian securities filings available on SEDAR and our website at ahipreit.com.

AHIP does not undertake to update or revise any forward-looking statements to reflect new events or circumstances, except as required by law. Listeners are urged to review the full discussion of Risk Factors on AHIP's annual information form dated March 27, 2020, which has been filed on SEDAR at sedar.com.

Our first quarter results are made available earlier today. We encourage you to review our earnings release, MD&A and financial statements, which are available on our website as well as SEDAR.

On this call, we will discuss certain non-IFRS financial measures, including NOI, FFO and AFFO. For the identification of these non-IFRS financial measures, the most direct comparable IFRS financial measures and a reconciliation between the 2 here on MD&A.

All figures discussed on today's call are in U.S. dollars unless otherwise indicated. I would like to remind everyone that this call is being recorded today, May 13, 2020. A replay of this call will be available on our website.

John will begin today's call with an update regarding recent initiatives and portfolio strategy. Bruce will provide a brief update on hotel operations, and Azim will review our financial results.

I'll now turn the call over to John O'Neill, CEO.

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [3]

--------------------------------------------------------------------------------

Thank you, Jamie, and thank you, everyone, for joining us today. Clearly, the world and economic conditions have changed dramatically since we held our call last quarter just 9 weeks ago. The impacts of COVID-19 have had a significant impact on the hotel sector as a whole. As a business, we've been agile in adjusting our hotel operations and in making important decisions to ensure the health and safety of our guests and employees, reduce costs and preserve capital. These measures have effectively positioned us to weather this period of ongoing disruption.

The composition of our hotel portfolio has also shielded us from some of the worst impacts on our industry. With locations in secondary markets, not large gateway cities or resort locations, and with 24 extended stay hotels that represents 30% of our total, our properties have continued to operate at higher occupancy levels than reported by many other hotel owners over the past 2 months.

We had a strong start to the year with better-than-expected contributions from our 12 recently acquired Premium Branded Hotels and a 9.8% net operating income growth from our other 67 hotels in January and February. Our first quarter was also the first quarter in recent years that we did not have any of our properties affected by renovation activity. We are very pleased with how our portfolio was performing before COVID-19 impacts hit in mid-March.

We continue to believe that our shift to become a pure-play Premium Branded hotel portfolio with the recent sale of our 45 economy properties and recent acquisition of 12 new Premium Branded properties was the right strategy, both for long-term growth and near-term performance. In this economic downturn, extended-stay hotels continue to be the best-performing segment, and 8 of the 12 hotels we acquired in December are extended-stay properties, including 5 of the 6 hotels located in Texas. Today, 80% of our hotels remain open and accepting reservations, a much higher proportion than many of our hotel REIT peers. These hotels are all contributing revenue to our business.

On the whole, we're seeing a sustained uptick in occupancy levels from the lows we experienced in mid-April.

So far in May, we have averaged 38% occupancy across the 63 hotels we currently have open. This is up from approximately 22% occupancy when COVID-19 measures had its worst impact on our hotel occupancy in mid-April. Occupancy levels at some of our open hotels have been very high despite the overall downturn due in part to large groups, such as government agencies, military and the medical sector. For example, yesterday, we had 24 of our 79 hotels operating at over 50% occupancy, with 12 hotels at 70% or better.

I would like to acknowledge and thank our executive team, our hotel management and the staff across all 79 of our hotels as they have responded well in adjusting to new and ever-changing business levels, local health and safety orders and shifting guest needs during this exceptional time.

In the past several weeks, we announced many important initiatives to reduce our costs and preserve cash. We have dramatically reduced staffing levels across our hotels, reducing hotel headcount by approximately 70%. That's 1,750 positions. We have reduced our corporate staffing levels by approximately 27%, with all senior management team members agreeing to a 15% reduction in salary for the remainder of 2020. And I have also agreed to reduce my salary by half for the remainder of the year and continue to take all my compensation in equity. Our Board of Directors have agreed to receive 100% of their remaining 2020 fees in units rather than cash. And with the approval of our hotel brands, we have deferred all planned 2020 capital expenditures into 2021. Where we have multiple hotels in close proximity, we have consolidated certain hotel operations into 1 hotel, allowing us to operate in certain markets more efficiently. Our third-party hotel manager, Aimbridge, has agreed to reduce some direct and third-party service fees until at least June 30, 2020. And based on our discussions with our loan servicers, we are receiving waivers to temporarily stop funding FF&E reserves as well as use our existing cash reserves to fund future debt service payments. And as we announced on March 20, our Board approved the temporary suspension of our monthly cash distributions as another way to preserve capital during this period of disruption.

In total, the cost reduction and capital preservation initiatives we put in place are expected to capture more than $100 million of annualized cash flow savings, reducing our monthly cash outlay by more than $8 million.

We have also been in active discussions with our lending syndicate over the last several weeks to waive our financial covenants through the first quarter of 2021 and modify covenants through the remaining quarters into 2022 as well as to provide additional revolver capacity. We expect to complete these discussions shortly.

Like other hotel REITs, we also qualified for and subsequently received U.S. government loans issued under the CARES Act, which are intended to mitigate the impact of COVID-19 by supporting payroll and hotel operations. We are pleased with our liquidity levels given these initiatives and ongoing discussions to date.

This is clearly an unusual time in the markets, for the macroeconomic environment and for the hotel sector in particular. However, AHIP remains one of the best-positioned hotel REITs to withstand these temporary coronavirus-related headwinds and prepare for future opportunities for growth. Our select service properties are located in secondary U.S. markets. Our hotels are rooms-focused with an efficient operating model and generally appeal to individual leisure or corporate travelers, not conferences and groups. Approximately 30% of our guest rooms are in extended-stay properties, which continues to be the best-performing segment of the hotel industry in today's economic environment. And almost all of our guests are domestic U.S. guests, not international travelers.

With many of these initiatives to best counteract the impacts of COVID-19 now already implemented, we are turning our attention towards how we can best capture market share as the economy begins to recover. Like everyone, we continue to monitor our markets and the coronavirus situation closely. As regions begin to reopen across the U.S. with shelter-at-home regulations starting to be lifted, the markets we operate in should recover. In the meantime, we will continue to do everything we can to properly protect our hotel employees and guests, our business and our market position in these circumstances.

With that update on our recent initiatives, I'll now turn the call over to Bruce to discuss hotel operations in more detail. Azim will then discuss our first quarter performance. Bruce?

--------------------------------------------------------------------------------

Bruce Pittet, American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc. [4]

--------------------------------------------------------------------------------

Thank you, John, and good afternoon, everyone. This quarter proved to be an extremely busy time for managing our assets with 2 very different and distinct operating periods. In January and February, we were very involved in ensuring a seamless transition of the 12 recently acquired Premium Branded Hotels into our portfolio. And beginning in the second half of March, our attention quickly turned to efficiently reducing our operating costs and implementing health and safety protocols in our hotels due to COVID-19.

To start, I don't want to lose sight of the 12 hotels we acquired in December. They have performed in line or above our expectations during the January and February period. As Aimbridge had previously managed these hotels, the transition was somewhat seamless from an operational perspective. Over the first 2 months of the year, we were particularly pleased with our 2 hotels in the Pittsburgh Airport Robinson Township submarket and our 2 hotels in San Angelo, Texas. Our hotels in both markets demonstrated dramatic RevPAR increases of 37% and 7%, respectively.

As well, during the first quarter, these 12 properties achieved a STR index of 131.5 with 100 representing the fair share of their respective markets. These 12 hotels have proven to be some of the best-performing properties in our portfolio year-to-date, including during the sector downturn. 67% or 8 of the 12 hotels are extended-stay properties, and we see this segment as being the most resilient segment at holding occupancy over the last 8 weeks.

Turning to the dramatic shift in hotel operations that began during mid-March. Starting on the health and safety front. Our manager, Aimbridge, quickly reacted to government mandates and local health regulations, eliminating nonessential amenities and hotel services across our portfolio. As an example, wherever breakfast service was included, we have shifted to a grab-and-go breakfast to limit the amount of food preparation and maintain required levels of social distancing. Aimbridge has instituted AimClean, an enhanced hotel cleaning regime in high-touch areas of the guestroom and hotel common areas. Their cleaning protocols will be supported by recently announced brand cleaning programs. Guestroom housekeeping protocols have been modified to limit interaction between guests and employees. All guestrooms are now provided with supplies and provisions needed for the entire length of the guest stay, and daily housekeeping is suspended unless requested by the guest. For extended stay guests, the rooms are being serviced once per week.

We have also modified our check-in procedures across our properties with appropriate distancing now in place between guests and front desk staff.

We took quick action to reduce operating expenses wherever possible, including the dramatic reduction of our staffing model, which reduced headcount by 70%. This rightsizing of staffing levels better aligns the hotels with the significant drop we have seen in demand. Today, the majority of our hotels are staffed to minimum requirements. These staff reductions are expected to save us approximately $40 million in annualized labor costs.

As well, we have minimized the operational footprint of all our hotels. And wherever feasible, we have consolidated hotel operations into 1 property in markets where we own 2 or more assets. As of today, 63 or 80% of our 79 hotels remain open and are accepting guests nightly. 6 properties are temporarily suspended [to our rivals], and 10 properties have consolidated operations with other nearby properties. We believe that most, if not all, properties should be reopened by the end of June. These properties can reopen very quickly as required.

We continue to believe our portfolio is well positioned to weather the downturn. Our hotels are concentrated in secondary markets, [frequently] with close proximity to interstates and drive to demand generators. 83% our guestrooms are in upper or upper mid-scale chain scales rather than full-service properties in large gateway cities or resort markets. And 30% of our hotels are considered extended-stay properties, which is the best-performing agreement of the hotel sector at the moment.

On average, occupancy during the first quarter was 62.2%, down from 72.4% in the first quarter last year but higher than many other hotel REITs have reported. The year-over-year decline is due solely to the impact of COVID-19 in March. Occupancy levels in January and February averaged 69.7%, in line with the same period of 2019. In March, our occupancy fell to 47.6%. We are cautiously optimistic that we are rebounding from occupancy lows seen in mid-April. We have seen a steady yet gradual increase in our occupancy levels since then, with our 79 hotels averaging occupancy of 29% so far this month, our 63 hotel [open properties] averaging 38%, our 24 extended stay properties are averaging over 50% occupancy month-to-date in May.

As John mentioned at the start of today's call, in consultation with our brand partners, we have deferred all previously planned hotel renovations for 2020 to future years as part of our cash preservation strategy. While the impacts of COVID-19 have had a significant impact on demand across the entire hotel sector, our properties have continued to outperform their competitive sets and capture a higher proportion of available business. During the first quarter, our entire portfolio of 79 hotels achieved a STR index rating of 122.4, and the 67 same-property hotels achieved an index of 121.1 with 100 representing a fair share.

Geographically, our hotels in Virginia, Maryland and Florida were the best-performing during the quarter. Our Embassy Suites properties, which are located in larger secondary markets and have some exposure to meetings and conference business segments, have been the most challenged properties since the onset of the pandemic.

In Q1, our entire portfolio grew RevPAR by 50 basis points to $70.83, and largely due to the high grading of our portfolio and the 12 sets we acquired in December. In fact, those 12 hotels generated ADR premium of almost $63 compared to the Economy Lodging hotels for January and February compared to the same period last year. This compares to the U.S. hotel industry average RevPAR decline of 19.3%. For our same-property portfolio of 67 hotels, RevPAR declined 17.1%.

Our hotel manager continues to find new and innovative ways to capture business for us during this downturn. We've seen a meaningful uptick in business from military, government agency, logistical and medical sector guests over the past few weeks. We are even monetizing one of our parking lots near a logistics warehouse, where delivery agents needed space for training for loading and unloading of trucks.

And with that update on our hotel operations, I'll now turn the call to Azim to discuss financial and capital metrics. Azim?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [5]

--------------------------------------------------------------------------------

Thank you, Bruce. Good afternoon, everyone. As mentioned earlier, the first quarter was marked by 2 different periods. We were pleased with the strong performance of our hotels in January and February, with strong contributions from the 12 hotels we acquired in December and our recently renovated properties.

For the first 2 months, revenues grew by 2.6% and NOI grew by 2.1%. The impact of COVID-19 had a materially negative impact on our quarterly results beginning in mid-March. Overall, March RevPAR declined by 39%, driven by a 38.5% decline in occupancy, reflecting the various travel bans and health measures implemented to contain the virus. As a result, total revenues for the first quarter declined by 23% to $61.9 million, and we took quick actions to reduce our expenses to mitigate the impacts of the revenue declines and preserve liquidity.

Our NOI margin declined 3.2 percentage points during the quarter, with NOI down 30.8% from the comparable period last year to $17.9 million. Loss and comprehensive loss for the seasonally weaker first quarter was $12.6 million, down from a loss of $500,000 last year. Contributing to the reported loss this quarter were approximately $5.8 million from the unrealized loss on the fair value of interest rate swaps due to declining interest rates over the past few weeks and $1.9 million in noncash impairment charges related to 4 hotels. Reported diluted loss per unit for the quarter was $0.16 compared to a diluted loss per unit of $0.01 last year.

Diluted FFO per unit was $0.06, down from $0.15 last year. And diluted AFFO per unit was $0.05, down from $0.13.

It's important to note that our portfolio has changed quite significantly during the past 12 months, with the sale of 45 Economy Lodging properties and the acquisition of 12 Premium Branded Hotels at the end of last year. As a result, same-property metrics provide a more meaningful indication of performance, though these, too, were impacted by COVID-19.

Same-property metrics represent the 67 hotels owned continuously since January 1, 2019. For the quarter, same-property revenues declined 15.9% to $53.5 million, and same-property NOI was $15.2 million, down 28% from last year, reflecting the impacts of COVID-19. However, for January and February of 2020, same-property revenues were up $1.3 million or 3.4%, and same-property NOI grew $1.1 million or 9.8% to $12.3 million as a result of higher revenues from recently renovated properties. As well, NOI margins increased by 180 basis points to 30.9%. And so the decline in revenue and NOI this quarter was due solely to the impacts of COVID-19 in March.

As the impact of COVID-19 became more significant, our Board of Directors approved changes to our monthly distribution in order to conserve capital during this time of uncertainty. On March 10, we announced that our March 2020 distribution would be reduced to $0.038 per unit per month. As conditions in our sector continued to worsen, we then announced the suspension of our monthly distributions beginning in April 2020 until the impacts of COVID-19 abated and the performance of our hotels sufficiently improved.

In addition, the payment of the March 2020 distribution was also subsequently deferred to a later date to be determined by our Board. We believe that cash preservation was of utmost importance to mitigate the economic impacts of COVID-19. The suspension of the distribution will save approximately $36 million of annualized cash flow.

Turning to capital and liquidity metrics. As of March 31, AHIP had unrestricted cash balances of $19.8 million and restricted cash balances of approximately $30 million consisting of $19 million in FF&E and PIP reserves and $11 million in property tax and insurance reserves. We are currently in discussions with our loan servicers about applying these reserves for upcoming debt service payments and defer funding FF&E reserve contributions to further enhance our liquidity. We have already received waivers and consents from certain CMBS loan servicers, and discussions are ongoing with the remainder of our CMBS loan servicers.

As well, we are in active discussions with our lending syndicate to obtain covenant waivers through Q1 2021, modified covenants to the end of 2021 and accessing extra revolver capacity. We are current on all of our debt service payments and financial obligations and we're compliant with all of our lending agreements for the quarter ended March 31, 2020.

Based on current hotel occupancy levels, AHIP estimates the monthly cash burn rate covering all expenses, including all monthly debt service payments, to be approximately $2.2 million per month. At current occupancy levels, we expect to have sufficient liquidity to maintain all current expenses and debt payments for approximately 20 months. As overall occupancy levels reach 50%, we anticipate an overall breakeven cash level.

Based on our cash on hand, use of restricted cash reserves, increasing lines of credit and government loans, we remain comfortable with our access to liquidity, which we expect will be approximately $45 million as we finalize our discussions with our lending partners. At the end of March, we had a weighted average remaining term on our total debt of 5.3 years and a weighted average interest rate of 4.36%. We also do not have any significant debt maturities until June 30, 2022.

With that financial discussion, I'll turn the call back to John for some closing remarks. John?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [6]

--------------------------------------------------------------------------------

Thank you, Azim. The impacts of COVID-19 have presented some unforeseen challenges for the hospitality industry and overall economy in the near term. The actions we've taken will help us to withstand and quickly recover from this period of disruption. We have reduced operating costs wherever possible. We've taken several cash preservation strategies to enhance our liquidity. We expect to receive waivers on financial covenants shortly to further provide us with financial flexibility, and we are continuing to operate 80% of our hotels at occupancy levels higher than many other hotel owners.

As our occupancy and market share index ratings show, our hotels are continuing to outperform our competitive set within this challenging environment. And the actions we have taken to conserve and increase our liquidity will ensure that AHIP will be able to meet its ongoing costs and debt service obligations for an extended period of time even during low occupancy times.

Overall, we are optimistic that the worst of the impact from COVID-19 is now behind us and that a path to economic recovery is underway. Our occupancy levels are slowing -- are slowly recovering, and we are seeing an increase in business opportunities and guest inquiries compared to April. We are now focusing our efforts to ensure our properties are well positioned to capture new business as regions of the United States begin to reopen and expect that the first wave of returning travelers will be leisure-oriented to nearby drive markets for the summer season, with AHIP properties well positioned to benefit from this renewed travel.

Our unit price has clearly been affected by this downturn alongside all other U.S. hotel REITs due to ongoing anxiety in the equity markets and the hotel sector's broad appeal to retail investors. That said, we continue to believe our business is significantly undervalued, and that the temporary impacts of COVID-19 on our sector will pass. And the real value of our properties and normalized cash flow will eventually be reflected in our unit price. As an indication of this, fellow AHIP executives and Board members joined me in collectively purchasing more than 500,000 additional units in the market before entering into our trading blackout on April 1.

So with that overview of our first quarter and recent initiatives, we'll now open the call to questions from analysts. Operator?

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) Your first question comes from Lorne Kalmar with TD Securities.

--------------------------------------------------------------------------------

Lorne Kalmar, TD Securities Equity Research - Associate [2]

--------------------------------------------------------------------------------

One quick clarification question. I think I heard Azim say that the burn rate is $2.2 million per month, which I was just wondering what the difference between that and the $3.8 million was? Or maybe I misheard?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [3]

--------------------------------------------------------------------------------

Azim?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [4]

--------------------------------------------------------------------------------

Sure. So that just reflects the difference in occupancy. So our current occupancy levels in the high 30s is about $2.2 million. The $3.8 million reflects occupancy at around the 30% mark.

--------------------------------------------------------------------------------

Lorne Kalmar, TD Securities Equity Research - Associate [5]

--------------------------------------------------------------------------------

Okay. That makes sense. And then you guys said you needed about 50% occupancy to get to breakeven. But do you have maybe have a RevPAR figure that -- instead?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [6]

--------------------------------------------------------------------------------

I'll take that first and then maybe turn it back to Bruce. We're essentially on that assumption, assuming our average rate stays at the approximate $100 level where it's at approximately right now. So that's at about, therefore, a $50 REVPAR, 50% of the $100. So that's about the level that we expect a breakeven corporately (inaudible) .

--------------------------------------------------------------------------------

Lorne Kalmar, TD Securities Equity Research - Associate [7]

--------------------------------------------------------------------------------

Okay. That kind of answers my next question. I was going to ask about ADR. But are you guys finding you have to give up a lot of -- a lot in terms of rates to push occupancy? Or do you think the 100 is a pretty steady level?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [8]

--------------------------------------------------------------------------------

Bruce?

--------------------------------------------------------------------------------

Bruce Pittet, American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc. [9]

--------------------------------------------------------------------------------

Yes. It's a good question. We have certainly seen a drop in ADR over the last 8 weeks. Some of that has to do with the mix of customers we have in our hotel, but the shift in rate is nowhere near the decline we've seen in occupancy. And actually, the ADR decline has been fairly stable over the last 6 weeks. So we don't expect that we're going to have to aggressively drop rates to maintain the occupancy that we have today or even, frankly, grow the occupancy.

--------------------------------------------------------------------------------

Lorne Kalmar, TD Securities Equity Research - Associate [10]

--------------------------------------------------------------------------------

Okay. And then this one, I guess, maybe also for you, Bruce. Are you guys seeing positive momentum on reservations as the shelter-at-home restrictions are being lifted?

--------------------------------------------------------------------------------

Bruce Pittet, American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc. [11]

--------------------------------------------------------------------------------

Yes. I think it's fair to say that as those restrictions are being lifted in the various states around the country, occupancy start to move in our hotels in that region. So I think there's clearly a direct correlation between the 2.

--------------------------------------------------------------------------------

Lorne Kalmar, TD Securities Equity Research - Associate [12]

--------------------------------------------------------------------------------

Okay. And then just one last housekeeping item for me, and I'll turn it back. I was just wondering if there are any -- excluding the [IFRIC] target, are there any onetime items in property taxes and insurance? And what's a good run rate forward?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [13]

--------------------------------------------------------------------------------

Azim?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [14]

--------------------------------------------------------------------------------

Yes. There's nothing significant on the property tax side. Probably the biggest change is the fact that we had lodging last year and property taxes. And so with the Premium Branded Hotels we acquired in December, some of those had higher property tax expenses compared to the lodging hotels.

--------------------------------------------------------------------------------

Lorne Kalmar, TD Securities Equity Research - Associate [15]

--------------------------------------------------------------------------------

And what are you sort of looking at a run rate? Is this sort of -- is Q1 a good run rate going forward for 2020?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [16]

--------------------------------------------------------------------------------

Yes. I think so. Yes.

--------------------------------------------------------------------------------

Operator [17]

--------------------------------------------------------------------------------

Your next question comes from Matt Logan with RBC Capital Markets.

--------------------------------------------------------------------------------

Matt Logan, RBC Capital Markets, Research Division - Analyst [18]

--------------------------------------------------------------------------------

Based on the current trends that you're seeing, do you guys have a sense of when you'll reach 50% occupancy breakeven levels?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [19]

--------------------------------------------------------------------------------

First comment I'd make, and I'll let Bruce jump in, is when we talk about 50% breakeven, we're talking on an annualized basis. So the question is when will we first start to hit 50%. Well, as we indicated in our prepared remarks, even in the past 10 days, we're in our open hotels, Matt, we're running in the 40% range. So the jump up to 50% and getting the other 16 hotels back fully open, which we hope and expect to do by the end of June, we may very well be back up to 50% throughout the whole portfolio. It could be as soon as next month. As we are entering into a summer season, which is traditionally, in normal circumstances, the best quarter and the best season of the year, in particular, this year, we expect to see a lot of drive business and close-to-home business, which would definitely benefit our portfolio. So my crystal ball isn't perfect, but we're expecting to be hoping to be back in the 50% level by the time June or early July. Bruce?

--------------------------------------------------------------------------------

Bruce Pittet, American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc. [20]

--------------------------------------------------------------------------------

Just, John, the one thing I'll add, your comment about -- we are looking at it kind of on an annualized basis. Coming out of March, year-to-date, the 79 hotels were running about 62% occupancy, I think, was the number, right? So clearly, we've had a step back in April and May. But we're certainly seeing positive signs that we should hit that 50% level, I think, over the next 2 months.

--------------------------------------------------------------------------------

Matt Logan, RBC Capital Markets, Research Division - Analyst [21]

--------------------------------------------------------------------------------

And just to clarify, when you guys talk about breakeven, is that based on FFO, AFFO or free cash flow?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [22]

--------------------------------------------------------------------------------

That would be more equivalent -- yes, that would be more equivalent to FFO.

--------------------------------------------------------------------------------

Matt Logan, RBC Capital Markets, Research Division - Analyst [23]

--------------------------------------------------------------------------------

On an FFO basis?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [24]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Matt Logan, RBC Capital Markets, Research Division - Analyst [25]

--------------------------------------------------------------------------------

And maybe just thinking about the mix shift between the government and health care business and the leisure and business travel. How do you see that evolving over the next few quarters?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [26]

--------------------------------------------------------------------------------

Bruce?

--------------------------------------------------------------------------------

Bruce Pittet, American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc. [27]

--------------------------------------------------------------------------------

Yes. Thanks, John. Well, I think it's very safe to say that over, say, the last 8 weeks, almost exclusively, our occupancy has been driven by corporate or essential business requirements across the portfolio. As travel restrictions are dropped, we truly expect to see that leisure segment grow at a faster clip than the corporate segment for what it's worth. So certainly through, I'd say, August, we're anticipating leisure growth at a greater rate than corporate. And then as we get into the fall, I suspect we'll start to see the corporate business coming back more significantly.

--------------------------------------------------------------------------------

Matt Logan, RBC Capital Markets, Research Division - Analyst [28]

--------------------------------------------------------------------------------

And do you think any of that government and health care business will fall off kind of as the pandemic subsides?

--------------------------------------------------------------------------------

Bruce Pittet, American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc. [29]

--------------------------------------------------------------------------------

Again, it's a bit of a crystal ball question. At the moment, there's nothing that suggests we're going to see that. We're still entertaining requests or Aimbridge is retaining requests for our hotels for that sort of business in future months. So certainly, to date, we haven't seen the demand wane for that sort of business.

--------------------------------------------------------------------------------

Matt Logan, RBC Capital Markets, Research Division - Analyst [30]

--------------------------------------------------------------------------------

That's good color. And maybe just one last question for me. In terms of the deferred payment for your Economy Lodging hotels, can you give us an update on where that stands and if the criteria for the earnout has been amended at all?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [31]

--------------------------------------------------------------------------------

Azim?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [32]

--------------------------------------------------------------------------------

Sure. So currently, the [discussions] are ongoing with the buyer, and they're making progress on meeting the conditions. And so from our perspective today, that amount is collectible, and we'll have more information as we progress through summer.

--------------------------------------------------------------------------------

Operator [33]

--------------------------------------------------------------------------------

Your next question comes from Mario Saric with Scotiabank.

--------------------------------------------------------------------------------

Mario Saric, Scotiabank Global Banking and Markets, Research Division - Analyst [34]

--------------------------------------------------------------------------------

Just coming back to the breakeven point on the 50% occupancy. I just want to confirm that that's on the 79 hotels as opposed to 63? Is that correct?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [35]

--------------------------------------------------------------------------------

Yes. That's correct.

--------------------------------------------------------------------------------

Mario Saric, Scotiabank Global Banking and Markets, Research Division - Analyst [36]

--------------------------------------------------------------------------------

Okay. And then in terms of the liquidity savings of $8 million per month, is that achievable at the 50% occupancy or in terms of, let's say, hiring, rehiring, does that eat into the $8 million the $8 million a month out of 50% occupancy level?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [37]

--------------------------------------------------------------------------------

I think it does eat in. I'll let Azim or Bruce jump in, in a minute, but it does. As we move from sort of our lows of 30% back up to, say, 50%, there will be some rehiring. And that will certainly eat into the to the $8 million savings. But on the flip side, of course, you're enjoying more revenue at 50%. So all that's taken into consideration in our modeling and our forecast in terms of what our bottom line and earnings contribution is at the 50% level. So you are correct in that assumption.

--------------------------------------------------------------------------------

Mario Saric, Scotiabank Global Banking and Markets, Research Division - Analyst [38]

--------------------------------------------------------------------------------

Okay. Can you maybe walk us through mechanics and the quantum of the government-guaranteed loans that were received and whether that's included in those liquidity numbers that you're providing?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [39]

--------------------------------------------------------------------------------

Azim?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [40]

--------------------------------------------------------------------------------

Sure. So we received $9.9 million under the CARES Act. It's all included in our liquidity calculations. The program is still evolving a little bit in terms of the criteria for eligible expenses as well as the mechanics for repayment. So we're still waiting for the final criteria, but we have received the funds.

--------------------------------------------------------------------------------

Mario Saric, Scotiabank Global Banking and Markets, Research Division - Analyst [41]

--------------------------------------------------------------------------------

Okay. And is that the extent that you're anticipating in the year?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [42]

--------------------------------------------------------------------------------

That's correct.

--------------------------------------------------------------------------------

Mario Saric, Scotiabank Global Banking and Markets, Research Division - Analyst [43]

--------------------------------------------------------------------------------

Okay. The $21 million of other commitments listed in your MD&A for 2020, is that simply 3 installments of $7 million, the first of which didn't go through in the quarter? Or is that something else?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [44]

--------------------------------------------------------------------------------

Azim?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [45]

--------------------------------------------------------------------------------

Sure. So that represents a couple of items. So the first item is a termination penalty payable to the manager on the sale of Economy Lodging. So that's due in the fourth quarter. And then the second one is the deferred purchase price on the acquisition of the 12 Premium Branded, and that's due at the end of December.

--------------------------------------------------------------------------------

Mario Saric, Scotiabank Global Banking and Markets, Research Division - Analyst [46]

--------------------------------------------------------------------------------

Got it. Okay. And then from a disclosure standpoint, I'm just wondering, if we go to Page 12 of the MD&A, where you kind of break down the RevPAR growth by chain scale segment. Do you have that breakdown for your own portfolio for Q1?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [47]

--------------------------------------------------------------------------------

We do have it. We can certainly get it to all of the analysts after the call.

--------------------------------------------------------------------------------

Mario Saric, Scotiabank Global Banking and Markets, Research Division - Analyst [48]

--------------------------------------------------------------------------------

Okay. Just so maybe on a go-forward basis, it would be interesting to have that information once they normalize in particular.

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [49]

--------------------------------------------------------------------------------

Sure. Yes. That's good feedback.

--------------------------------------------------------------------------------

Mario Saric, Scotiabank Global Banking and Markets, Research Division - Analyst [50]

--------------------------------------------------------------------------------

Okay. And my last question, just coming out of the crisis, how do you think about the structure of the hotels? And assuming social distancing, to varied extents, will be here for a little while. Are there meaningful CapEx spend that you think you may need to incur in some of your hotels to adjust to the new norm, let's say, for the time being? Or are you pretty comfortable that the renovations that have been completed and the hotels as they exist today require little CapEx to deal with consumer behavior going forward out there?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [51]

--------------------------------------------------------------------------------

Mario, it's John. Great. Great question. There's a few parts to that. I'll start, and then I'll ask Bruce to jump in.

Coming out of COVID, whenever that actually happen, it will happen slowly or -- and incrementally. We fully expect essentially a new operating model post-COVID with essentially less services, less touch points, higher margins, essentially a leaner operating model. And a lot of that is indeed driven by the health and safety realities of a post COVID return to business. So it will probably drive higher margins. There's less service, especially in the higher cost areas of our business, which are essentially housekeeping and food and beverage. Both will be a little lighter touch, essentially, coming out of COVID. So that's, I guess, if there's a positive, it's not really just our business. I think it's the entire industry is going to see that sort of a new operating reality coming out of COVID, which should drive higher margins at least.

Maybe I'll turn it over to Bruce to sort of add anything with respect to the changes that need to be made from a health and safety point of view. They're not high capital types of changes. But Bruce?

--------------------------------------------------------------------------------

Bruce Pittet, American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc. [52]

--------------------------------------------------------------------------------

Yes. Thanks, John. I'll first say that I agree completely with what you just said. I think brands are going to have to recalibrate their service and amenity standards in the hotels, and that will most likely lead to reduced -- reduction in costs. I don't envision any significant capital requirements for the hotels to maintain, say, appropriate social distancing requirements and that sort of a thing. So I actually think it will end up being a bit of a net gain for us as far as the profitability of our hotels. This is something that's going to evolve over the next 6 to 12 months. But yes, I think it will actually have a positive impact on our margins.

--------------------------------------------------------------------------------

Mario Saric, Scotiabank Global Banking and Markets, Research Division - Analyst [53]

--------------------------------------------------------------------------------

Okay. And then last question. Early on in terms of the crisis, but how do you look longer term? How do you think this crisis has changed, if at all, your long-term capital allocation strategy in terms of the types of hotels that you want to own, locations that you want to own? Did that get adjusted at all because of this?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [54]

--------------------------------------------------------------------------------

I think just the exact opposite. I think it reaffirms, for us, the kind of hotels we want to own and in what market segments and in what markets. So secondary market, focus more on extended stay, Premium Branded. If anything, the events of the last 60 days have solidified that strategy. So if and when market activity starts up again and there's -- as you probably know, there's been very, of course, little market transactions, hotel [M&A] in the last 60 days is basically being nonexistent. But if and when that does start up again, if we were to continue to grow, I think our current market segmentation and focus is where we want to be. So we're happy with the changes we made at the end of 2019 and even borne out very much so given the current environment.

--------------------------------------------------------------------------------

Operator [55]

--------------------------------------------------------------------------------

Your next question comes from Dean Wilkinson with CIBC.

--------------------------------------------------------------------------------

Dean Mark Wilkinson, CIBC Capital Markets, Research Division - Director of Institutional Equity Research [56]

--------------------------------------------------------------------------------

Azim, said you were in conversations with your lenders on covenant waivers through the end of 2021. Compliant to the quarter end, would we assume then that perhaps you -- that may have tripped some of those during Q2 and those are where the discussions are? And can you give us a little more detail on what those specifically are?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [57]

--------------------------------------------------------------------------------

Sure. So you're absolutely right. We were on side with covenants in Q1. We still are in the middle of Q2, but we do expect that, given the low income in April, that we will be challenged on all the income-based covenants. And so to be proactive, we're getting in front of our lender to highlight the issue and really get covenant relief that, quite frankly, all the other U.S. hotel REITs have got as well. So it's just a reflection of the lower income that we're expecting.

--------------------------------------------------------------------------------

Dean Mark Wilkinson, CIBC Capital Markets, Research Division - Director of Institutional Equity Research [58]

--------------------------------------------------------------------------------

Okay. I'm assuming that those conversations are being met probably positively, just given that we're all in this together?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [59]

--------------------------------------------------------------------------------

Absolutely. Yes.

--------------------------------------------------------------------------------

Dean Mark Wilkinson, CIBC Capital Markets, Research Division - Director of Institutional Equity Research [60]

--------------------------------------------------------------------------------

Okay. Second question was just on the credit facility, what would be the available borrowing base? If there's a formula behind that, I'm not sure what that is.

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [61]

--------------------------------------------------------------------------------

So the way the facility is designed, we do have the ability to access more capital. And the way we would do that is we would have to defease existing loans and roll them into the facility to access the higher leverage that's available.

--------------------------------------------------------------------------------

Dean Mark Wilkinson, CIBC Capital Markets, Research Division - Director of Institutional Equity Research [62]

--------------------------------------------------------------------------------

Okay. But is there a material cost to defease those?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [63]

--------------------------------------------------------------------------------

Well, over the last few weeks, given what's happened to the 10-year rate, the cost of defeasance has gone up significantly. And so we're currently evaluating alternatives.

--------------------------------------------------------------------------------

Dean Mark Wilkinson, CIBC Capital Markets, Research Division - Director of Institutional Equity Research [64]

--------------------------------------------------------------------------------

Okay. But that's outside of the $45 million of the expected liquidity that you quoted in?

--------------------------------------------------------------------------------

Azim Lalani, American Hotel Income Properties REIT LP - CFO & Corporate Secretary of American Hotel Income Properties REIT (GP) Inc. [65]

--------------------------------------------------------------------------------

That's correct.

--------------------------------------------------------------------------------

Operator [66]

--------------------------------------------------------------------------------

Your next question comes from Tal Woolley with National Bank Financial.

--------------------------------------------------------------------------------

Tal Woolley, National Bank Financial, Inc., Research Division - Research Analyst [67]

--------------------------------------------------------------------------------

Just when you look across the market right now or your biggest markets, what's your assessment of the competitive situation right now? How well are your competitors earning through this process?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [68]

--------------------------------------------------------------------------------

Well, kind of 2 answers to that. I'll start with, I think, the hotel market is general, and then maybe Bruce can talk a little bit about how we're doing against our competition. So I think the hotel experts are actually predicting a decrease in available hotel supply in 2020, hotels essentially being taken out of commission for a variety of reasons. Independently owned, over-levered and sort of with no available liquidity to sort of weather the storm or just old hotels that, I guess, this is the catalyst that closes them down forever, essentially. So we're expecting a decrease in supply. And as you probably heard us talk over the last few years at AHIP, new supply is always an issue in the hotel business. We were constantly seeing, especially post '08, anywhere from 1.5% to 3% new supply every year in our markets. And that's a lot. And so this clearly has stopped. I don't know that I've ever seen it going backwards as much as this. But if you're in the game and in the market and doing okay, well then, negative supply increase is a good thing. So I don't like how it's happening or why it's happening, but the result is okay for us. So that's in general. Maybe Bruce can talk a little bit about how we're doing against our supply, our competitive supply in our markets.

--------------------------------------------------------------------------------

Bruce Pittet, American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc. [69]

--------------------------------------------------------------------------------

Yes. Happy to. Thanks, John. As mentioned kind of for the first quarter, our index for our 67 hotels is running in the 122 range. And for our new 12 hotels, more like in the 132 range. What we found in April is that our penetration has actually improved. So I think that's a follow-up from the fact that we have some of our competitors that have just simply closed in some of the markets that we're operating in. And I think it also speaks to the strength, the type of product and quality of product that we have in the market. So we've seen our penetration indexes improve over the last 6 weeks. And we expect to have that continue going forward. Notwithstanding the fact that we do have 6 hotels that are close to our rivals at the moment.

--------------------------------------------------------------------------------

Tal Woolley, National Bank Financial, Inc., Research Division - Research Analyst [70]

--------------------------------------------------------------------------------

Okay. So those index figures though, as your competitors reopen, you would expect those index figures to decline a bit though, right?

--------------------------------------------------------------------------------

Bruce Pittet, American Hotel Income Properties REIT LP - Senior VP of Asset Management & COO - American Hotel Income Properties REIT (GP) Inc. [71]

--------------------------------------------------------------------------------

Yes, they will. Although I think, as John said, I'm not so sure in some markets, we won't have some -- there will be some competitors that just won't open again, right? They will have fallen by the wayside for lack of a better term. So -- and as our hotels stay open, we obviously only strengthen our position in the marketplace going forward as opposed to a hotel that's closed.

--------------------------------------------------------------------------------

Tal Woolley, National Bank Financial, Inc., Research Division - Research Analyst [72]

--------------------------------------------------------------------------------

Okay. And then if -- you're going to have a more -- I think the phrase you used was lighter touch on service and amenities. Can you hold, like, your ADRs if that service -- like if it is lighter touch going forward? Or do you think there will be sort of a consumer response or competitive response you might need to think about?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [73]

--------------------------------------------------------------------------------

That's a good question. On one hand, from a health and safety point of view, I think the customer will demand it, expect it. On the other hand, hotel pricing is elastic and variable. And it's beholden on us not to drop our rates too much, if at all. And the hotel industry historically hasn't been the best at that yield management strategy. But so far during this pandemic, we've been pleased that rates have generally held in there. So it's a good question. Again, the crystal ball doesn't know exactly what the market is going to bring. But if you're giving the customer what they want and expect from a "lighter touch," it doesn't mean there's no services. It just means they changed. And so maintaining rate is always a focus for us.

--------------------------------------------------------------------------------

Tal Woolley, National Bank Financial, Inc., Research Division - Research Analyst [74]

--------------------------------------------------------------------------------

Okay. Understood. And then just lastly, because I'm not quite -- I haven't sort of seen this kind of negotiation before. So if you negotiate to be able to use your FF&E reserves to help cover some of the costs that you're servicing, will we have a period then where you're probably going to have to replace those afterwards?

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [75]

--------------------------------------------------------------------------------

Yes. Short answer is yes. Once the waiver/relief period is over, then the norm that we're experiencing right now is you repay those reserves but not instantly, over an extended period of time. So you're essentially over contributing for the next -- on average now, we're finding 12 months but that -- to get back up the reserves to what their level should have been. But that would only start when the relief period is over, so -- and spread out over a year. So that's still very beneficial for us, and it gives us an especially positive help to our liquidity during these very low occupancy times.

--------------------------------------------------------------------------------

Operator [76]

--------------------------------------------------------------------------------

And there are currently no further telephonic questions at this time. I'll turn the call back to the presenters for any closing remarks.

--------------------------------------------------------------------------------

John Christopher O'Neill, American Hotel Income Properties REIT LP - CEO of American Hotel Income Properties REIT GP Inc. [77]

--------------------------------------------------------------------------------

Great. Thank you very much, operator. Well, to our investors and analysts, thank you again for joining us on our call today. We look forward to speaking with you in August when we report our second quarter results. So be well, everyone. Thank you, and thank you for listening. Bye now.