American Hotel Income Properties REIT LP ($HOTUN)

Good morning, and welcome to American Hotel Income Properties REIT LP's First Quarter Results Conference Call. [Operator Instructions] Before beginning the call, AHIP would like to remind listeners that the following discussions will include forward-looking information within the meaning of applicable Canadian securities laws, which forward-looking information is qualified by the statement. Comments that are not a statement of fact, including projections of future earnings, revenues, income and FFO are considered forward-looking. Participants on this call should not place undue reliance on such information, which is provided based on management's expectations and assumptions as of the date of this call. AHIP does not undertake any obligation to publicly update such information to reflect subsequent events or circumstances, except as required by law. On this call, AHIP will discuss certain non-IFRS financial measures. For the definition of these non-IFRS financial measures, the most directly comparable IFRS financial measure and a reconciliation between the two, please refer to their MD&A. Reference to prior year's operating results are in comparison of AHIP's portfolio of 31 properties results in that period versus the same properties results today. All figures discussed on today's call are in U.S. dollars, unless otherwise indicated. Discussing AHIP's performance today are John O'Neill, Executive Officer; Bruce Pittet, Chief Operating Officer; and Travis Beatty, Chief Financial Officer. I'll now turn the call over to John O'Neill, Chief Executive Officer.

Thank you, operator, and thank you, everyone, for joining us today for our first quarter financial results conference call. On May 4, 2026, AHIP announced that the company has initiated a review of strategic alternatives to maximize unitholder value. During this strategic review, the Board will analyze and evaluate a range of alternatives. AHIP has retained Robert W. Baird & Co. as financial adviser to advise AHIP in connection with its strategic review. AHIP's board and management team continues to advance our plan to strengthen AHIP's financial position and preserve long-term value for our unitholders by addressing upcoming obligations with asset sales and loan refinancings. In 2025, AHIP completed the dispositions of 18 hotel properties for total gross proceeds of $161 million. The dispositions completed in 2025 have a blended cap rate of 7.6%, demonstrating value beyond AHIP's current unit price for its portfolio. So far in 2026, AHIP has sold 3 hotel properties for total gross proceeds of $67 million. AHIP currently has 6 additional hotel properties under purchase and sale agreements for estimated total gross proceeds of approximately $78 million at a blended cap rate of 5.9%, which are expected to close in Q2 of this year. AHIP also completed 2 loan refinancings in 2025 for total gross proceeds of $144 million. The net proceeds from these sales, along with a portion of the proceeds from the loan refinancings were used to repay the CMBS loans secured by those properties, a portion of the portfolio loan and to redeem $25 million of the outstanding Series C shares. We believe that our units are currently trading below their underlying value based on AHIP's assets. In December 2025, the TSX approved AHIP's notice of intention to make a normal course issuer bid. The notice provides that AHIP may during the 12-month period commencing December 30, 2025, and ending December 29, 2026, purchase up to 6.8 million units, trading representing 10% of the public float. So far, in 2026, AHIP has purchased approximately 300,000 units under the 2026 NCIB at an average purchase price per unit of CAD 0.48. I'll now turn the call over to Bruce to discuss first quarter hotel operations. Travis will then highlight key financial metrics. Bruce?

Thank you, John, and good morning, everyone. Looking at the first quarter, AHIP's portfolio of premium branded select service hotel properties continued to demonstrate strong demand metrics during what is traditionally the slowest demand quarter of the year, with RevPAR finishing at $98, which represents a 1.4% increase versus last year. Total revenue increased $770,000 for our portfolio of 30 assets. In January, we experienced a slow ramp out of the holiday period coupled with significant winter weather, resulting in a RevPAR decline of 5.9% for the month compared to prior year. Since that time, we have seen RevPAR grow in February and March, up 3.2% and 5.4%, respectively, with RevPAR growth continuing in April. Revenue from leisure linked segments and negotiated segments, grew year-over-year, 1% and 3%, respectively. Government revenue dropped 8% year-over-year, and the group segment saw a slight decline of 1% year-over-year. In the quarter, the partial U.S. government shutdown, which started in February, caused disruption to the TSA impacting air travel and hotel demand for a period of time throughout the United States during the quarter. Q1 2026 occupancy was 68.7%, down 27 basis points compared to the same period of 2025. While year-over-year ADR growth was strong, up 1.8%, finishing at $142. For the quarter, the portfolio RevPAR index was 116.4%, up 2.4%. We referenced 3 distinct segments of our business, Extended Stay, Select Service and our Embassy Suites hotels. During Q1 2026, Extended Stay had another strong quarter, with RevPAR finishing at $98 or up 2% versus Q1 2025. The Select Service segment achieved a RevPAR of $89, this represents a 6% decline versus Q1 2025 levels. The Embassy Suites segment was our strongest performing vertical in Q1, achieving a RevPAR of $111 up 13% year-over-year driven by the performance of our Tempe, Arizona and Covington, Kentucky properties. Margins continue to face pressures with costs outpacing revenues resulting in negative flow. NOI margin decreased by 426 basis points to 24.1% for the quarter compared to 2025. Cost escalations between rooms, nonlabor and undistributed expenses, particularly repairs and maintenance and utilities driven by costs related to extreme weather events had a material negative impact on Q1 results. Turning to AHIP's capital program. Capital spend on PIPs and FF&E was $1.3 million and $1 million, respectively, for the first quarter. 80% of the capital was funded through restricted cash contributed by AHIP in prior periods, for a net spend of $460,000 from AHIP's Treasury. PIP spend was focused on the renovation of the Fairfield Inn & Suites South Hill, Virginia, which was substantially complete at the end of the first quarter of 2026, and to prepare for the renovation of the Hampton Inn. Emporia, Virginia planned for the second quarter of 2026. Preliminary results -- preliminary April results for the AHIP 28 show occupancy at 77%, ADR at $141 and RevPAR at $108 or 3% above April 2025 RevPAR levels. And with that update on our hotel operations, I'll now turn the call over to Travis to highlight key financial and capital metrics for the first quarter.

Thank you, Bruce. On April 17, 2026, AHIP and certain of its subsidiaries entered into a settlement agreement with One Lodging Management, a subsidiary of Aimbridge Hospitality and certain of its subsidiaries to resolve the previously disclosed dispute between the parties. The settlement agreement achieves AHIP's objectives of financial relief and a specific end date for the management of AHIP's portfolio by Aimbridge. Under the settlement agreement, AHIP made a onetime payment of $2.3 million to the Master Hotel Manager to settle a current liability of $6.2 million in respect of currently deferred termination fees. Back to our Q1 results on a same-store basis in the first quarter of 2026, revenue was $36.2 million, up 2.2% compared to the prior year. Normalized diluted funds from operations, or FFO, was negative $0.03 for the quarter compared to normalized diluted FFO of negative $0.02 for the same period last year. At March 31, 2026, AHIP had an unrestricted cash balance of $15.5 million compared to $36.4 million at December 31, 2025. The decrease in cash during the quarter was primarily due to the redemption of $25 million, up to $50 million outstanding Series C shares. At March 31, 2026, AHIP held a restricted cash balance of $22.9 million and had an additional $13.1 million available under the portfolio loan for capital improvements related to properties secured by the loan. Debt to gross book value was 50.1% at March 31, 2026, an increase of 140 basis points compared to December 31, 2025. Debt to EBITDA at March 31, 2026 was 10.4x, an increase of 1.0x compared to December 31, 2025. The change in debt to gross book value and debt-to-EBITDA ratios was driven by a reduction in unrestricted cash balances from the Series C redemption of $25 million and use of net proceeds from completed dispositions to reduce outstanding debt. I will now turn the call back to John for some closing remarks.

Thank you, Travis. That concludes our prepared remarks. Thank you, again, everyone, for joining us on our call today. I look forward to speaking with you in August to report our second quarter 2026 results. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.