American Hotel Income Properties REIT LP has exercised its option to buy out the ground lease associated with its Fairfield Inn & Suites White Marsh hotel in Baltimore, Maryland, and has completed the purchase of land for $1.9 million plus closing costs.
According to a prepared statement, this acquisition is expected to increase AHIP’s cash flow by approximately $165,000 annually, through the elimination of lease payments previously expensed for this property.
“The option to purchase this land was a great opportunity to ensure the long-term security and optionality of our Fairfield Inn & Suites White Marsh property,” said John O’Neill. “By removing the monthly lease expense for this land from our operations, this investment is expected to result in an annual cash-on-cash yield of approximately 8.7%.”
The 116-room Fairfield Inn & Suites White Marsh was acquired by AHIP in June 2017, alongside 17 other properties along the U.S. eastern seaboard. It is the only hotel AHIP owns that was subject to a ground lease; one other hotel is subject to an air rights lease. With the purchase of this land, 99% of AHIP’s hotels are now located on owned property.
AHIP currently has 112 hotels, and is engaged in growing its portfolio of premium branded, select-service hotels in larger secondary markets that have diverse and stable demand. AHIP hotels operate under brands affiliated with Marriott, Hilton, IHG, Wyndham and Choice Hotels through license agreements.