Thank you for standing by. This is the conference operator. Welcome to the annual and special meeting of the unitholders of American Hotel Income Properties REIT LP, being held this year via conference call. As a reminder, all participants are in listen-only mode. After the formal part of the meeting, there will be an opportunity for unitholders to ask questions. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Mr. Charles van der Lee. Please go ahead, Mr. van der Lee.
Thank you, operator. Ladies and gentlemen, the annual and special meeting of American Hotel Income Properties REIT LP will now come to order. I'll refer to the LP as the REIT throughout this meeting. My name is Charles van der Lee, Vice Chair of the REIT's general partner, American Hotel Income Properties REIT GP Inc. I will act as Chairman of this meeting and in accordance with the amended and restated limited partnership agreement of the REIT, and with consent of the board of directors of the general partner of the REIT, who have resolved that I will act in this capacity, given that Michael Murphy, Chairman of the general partner, is not able to attend, given the current restriction on non-essential travel into Canada.
Before beginning, I'd like to comment on the procedure we've adopted to hold this meeting in light of the ongoing COVID-19 pandemic and the need for all of us to comply with physical distancing requirements. For the second year in a row, due to the pandemic, in consideration of the health and safety of our unitholders, colleagues, stakeholders, and our broader community, we have requested in the meeting materials that unitholders attend this meeting by teleconference only. Our Chief Executive Officer, Jonathan Korol, and myself, hold the proxies for unitholders for the meeting and are also attending as registered unitholders. We are certain other representatives are attending today with appropriate physical distancing. Our attendance in person satisfies the requirements of the amended and restated limited partnership agreement of the REIT.
We have made it possible for unitholders and guests to participate in this meeting by teleconference, although they will not be considered to be in attendance at the meeting itself, nor will they be entitled to vote. This is a hybrid solution to the manner in which annual meetings are being held at this time. We hope to return to the normal style of holding in-person annual meetings next year. I will ask Mr. Brian Canfield to act as secretary for this meeting. With the consent of the meeting, I will ask that Marissa Beintema of Computershare Investor Services, Inc. act as a scrutineer of the meeting.
The secretary has tabled for inspection by any unitholder or proxyholder, a confirmation that the notice calling this annual and special meeting was made available to unitholders in accordance with the amended and restated limited partnership agreement by which the REIT is governed and applicable law. With the consent of the meeting, the reading of the notice of the meeting will be dispensed with, and I will ask the secretary to append this confirmation to the minutes of this meeting as a schedule. Has the scrutineer submitted the report on attendance to the secretary?
Yes.
The secretary will now read the scrutineer's report.
Thank you, Mr. Chair. We have three unitholders in person representing 156,438 units. We have 758 unitholders by proxy, representing an aggregate 8,799,718 units. That's a total of 761 unitholders holding an aggregate 8,956,156 units. That's 11.4%.
Thank you. I adopt the scrutineer's report and declare accordingly that a quorum is present. As there is a quorum present and as adequate notice of this meeting has been given, I now declare this annual and special meeting to be regularly called and properly constituted for the transaction of business. Before continuing with the formal part of the meeting, I'd like to introduce you to the other representatives of the REIT who are with me here today. Jonathan Korol, our Chief Executive Officer, Robert O'Neill, a Director and Co-founder, Anne Yu, our Vice President of Finance, and you've already met Brian Canfield, our counsel, who is acting as secretary for the meeting. We will first deal with the formal business to fulfill the legal requirements of this meeting, following which, our Chief Executive Officer will present a report and answer any questions that you may have.
As a matter of procedure, I ask that unitholders wishing to speak during this meeting please identify themselves by name and indicate that they are a unitholder or, if a proxyholder, their name and the name of the unitholder they represent by proxy. Only those registered unitholders and duly appointed proxyholders that are attending the meeting and have been already given a unique pin from Computershare, will be permitted to ask questions. Other persons attending the meeting as guests will not be permitted to ask questions. Questions will only be addressed during the question period at the end of the meeting, following the Chief Executive Officer's report on the business of the REIT.
I would like to confirm that the voting on all resolutions today will be by a show of hands by registered holders and duly appointed proxyholders present in person at the meeting, unless a ballot is required or called for, as described in the information circular for the meeting. There will be no voting by those participating via the teleconference. I now ask the Secretary to read a proposed motion to approve the minutes of the annual and special meeting of the REIT, held on June 17th, 2020.
Thank you, Mr. Chair. Be it resolved that the minutes of the annual and special meeting held on June 17th, 2020, be approved without reading stand.
Who will move the motion?
Moved.
Who will second the motion?
I second the motion.
Is there any discussion on this motion? All in favor of this motion, please signify by raising your right hand. Against? I declare the resolution to be carried. The financial statements of the REIT for the year ended December 31st, 2020, and the report of the auditors thereon, were made available to the unitholders prior to this meeting. If there are any questions which any unitholder would like to ask in respect of the financial statements and the report, I would be glad to answer them, or call on others to do so during the question period at the end of the meeting. It is now in order to proceed with the nomination and election of directors of the general partner of the REIT.
The board has determined that the number of directors appropriate for the current size of the REIT is eight, and has resolved to fix the number of directors at eight for the purposes of election of directors at this meeting. As has been explained in the information circular for this meeting, although the election of directors of the general partner would usually fall within the authority of the shareholders of the general partner to approve, a voting trust agreement was entered into with a third-party trustee at the time of the REIT's initial public offering. It effectively allows unitholders to vote for the election of directors by providing a direction to this trustee to ensure the election of directors is carried out in accordance with the wishes of the unitholders.
We have received no nominations for election as a director for the ensuing year from outside parties, in accordance with the REIT's limited partnership agreement. I now ask the secretary to read the names of the persons nominated as directors, as listed in the REIT's information circular.
Mr. Chair, the names of the persons nominated as directors of the REIT for the ensuing year are: Stephen Evans, Richard Frank, Mahmood Khimji, Tamara Lawson, Michael Murphy, Robert O'Neill, Charles van der Lee, Mark Van Zandt. I confirm that the REIT has received a written consent from each of these nominees to act as director of the general partner.
Thank you. Since the number of nominees is the same as the number of vacancies to be filled, I now ask for someone to move a resolution that the third-party trustee I have already mentioned, be directed to elect those persons nominated for election as directors of the General Partner, to hold office until the next annual meeting. Who will move the motion?
Moved.
Who will second the motion?
I second the motion.
Is there any discussion on this motion? All in favor of the motion, please signify by raising your right hand. Against? I declare this resolution duly carried. The next item of business before the meeting relates to the appointment of auditors of the REIT. I now ask for someone to move a resolution that KPMG LLP, chartered professional accountants, be appointed as auditors for the REIT for the ensuing year, and that the directors of the general partner be authorized to fix the remuneration to be paid to the auditors. Who will move the motion?
Moved.
Who will second the motion?
I second the motion.
Is there any discussion on this motion? All those in favor of this motion, please signify by raising your right hand. Against? I declare this motion duly carried. The next item of business before the meeting is to consider, and if thought fit, to approve, with or without variation, a special resolution for the amendments to the amended and restated limited partnership agreement of the REIT. All, as more particularly described in, and subject to the information circular accompanying the notice of this meeting. The text of the proposed special resolution approving the amended and restated limited partnership agreement of the REIT is set forth in the information circular accompanying the notice of this meeting. Does any unitholder ask that the text of the special resolution be read?
Hearing none, I declare that the text of the special resolution to appear in the minutes of the meeting be as set forth in the information circular. Who will move the motion?
Moved.
Who will second the motion?
I second the motion.
This special resolution requires the affirmative votes of two-thirds of the unitholders represented at the meeting, and who voted upon such resolution. Is there any discussion on this motion? In order to ensure we have an accurate record of this vote, I will order a ballot on this resolution. Registered unitholders and duly appointed proxy holders present in person should have been provided with a ballot on this resolution, if they have not already provided their proxy in advance of the deadline. Has everybody submitted their ballots?
Yes.
I now declare the ballot closed. I will now ask the secretary to read the results of the ballot.
Mr. Chair, for the motion, we've got 7,433,136 units. That's 97.56% in favor. Against, we've got 185,918 units. That's a mere 2.44% against.
I declare that this resolution has been duly carried. Is there any further business to be brought before the meeting? If not, I would like to call for a motion to conclude the formal portion of the meeting. Who will move the motion?
So moved.
Who will second the motion?
I second the motion.
All those in favor of the motion, please signify by raising your right hand. I declare this resolution duly carried, the formal portion of this meeting to be concluded. I would now like to call upon Jonathan Korol, our Chief Executive Officer, to review the business of the REIT.
Thank you, Chuck. Good morning, everyone, and thank you for joining us for our annual and special meeting of unitholders. In continued consideration of health and safety recommendations, we are once again hosting this year's meeting virtually by teleconference for many of our unitholders today. I hope that you and your families continue to stay safe and healthy. As with all of our investor discussions, I need to point out that my remarks today will include forward-looking information as defined by applicable Canadian Securities Laws. Comments that are not a statement of fact, including projections of future performance, are considered forward-looking information and are based on various assumptions, which we believe are reasonable, based on currently available information that may not prove to be true, and involve various risks and uncertainties and should not be read as guarantees of future performance or results.
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 and our other Canadian securities filings, available on SEDAR and our website at ahipreit.com. It's my privilege to address all of you today on what is my first annual and special meeting as chief executive officer of AHIP. It has been a very busy time since joining the company in early October of last year. I'm very impressed with the dedication of our team, our external manager, and the many associates at our hotels, whose combined efforts have allowed us to operate profitably in a very difficult macro environment. 2020 was a uniquely challenging year in the global lodging industry.
No owner or operator of hotel properties had a playbook for the type of demand disruption that occurred beginning in March of last year, as the COVID-19 pandemic took hold in North America. Today, as we look back on 2020 and the company's activities to date in 2021, we can report that AHIP's strategy of investing in a diversified portfolio of premium-branded select service hotels in suburban markets across the United States, allowed it to outperform the broader lodging industry. Indeed, the efforts of the team have reaped significant benefits to the company and its unitholders. Let me begin my report by highlighting the efforts undertaken by the company at the onset of the pandemic in March of last year. These efforts were focused on rationalizing operations, preserving liquidity, and strengthening the balance sheet.
The company made immediate efforts to consolidate operations and, in some cases, temporarily closed properties. At the peak of the pandemic, we reduced hotel staffing levels by 70%, corporate staffing by 27%, and implemented temporary salary reductions across the senior management team. Aimbridge Hospitality, our external manager, provided temporary fee reductions for hotel management services. To preserve liquidity, we suspended unitholder distributions in March. We reached agreements with each of our brand partners to defer 2020 hotel capital expenditures, and then extended the repayment periods for our most significant short-term payables. We successfully negotiated covenant waivers on our corporate credit facility, as well as the majority of our CMBS loans.
Collectively, these measures re-resulted in more than $100 million of annualized cash flow savings in 2020, and allowed the company to retain operational flexibility as the duration of the pandemic remained unknown. The timing of the aforementioned initiatives corresponded with an overall uptick in business levels that started in the latter half of Q2 2020. In May of 2020, hotel EBITDA across the portfolio was once again above breakeven levels. In June, the few hotels that remained closed were reopened, and for the month, occupancy levels approached 50%, a level that the company sustained until late Q4, when typical winter seasonality led to lower demand. For the year, AHIP's portfolio of 78 Marriott, Hilton, and IHG-branded select service properties outperformed the majority of its peers.
Our properties proved to be able to operate efficiently at low occupancy levels, speaking to the ability of the select service operating model to expand and contract for varying demand environments. In Q2, we were one of the first lodging REITs to report that all properties had reopened. In Q3, we were one of the few to report positive FFO for the quarter, and by the end of Q4, our ADR occupancy and RevPAR levels for the year ranked us ahead of the majority of our lodging REIT peers. Going forward, our association with top global hospitality brands, combined with the strong value proposition of the premium branded select service model, bodes well for continued outperformance. In short, the portfolio, as assembled, provides us with security in uncertain times and the potential to produce strong returns for our investors during periods of economic prosperity.
As 2020 ended and uncertainty around the duration of the pandemic persisted, our efforts to strengthen the balance sheet continued. In late January 2021, we announced a $50 million strategic investment in AHIP by a joint venture limited partnership formed by BentallGreenOak Real Estate Advisors LP, and Highgate Capital Investments, LP. The investment was made on a private placement basis. As part of the investment, we were able to welcome Mark Van Zandt, Managing Partner of BentallGreenOak, and Mahmood Khimji, Co-Founder and Managing Principal of Highgate, to our board of directors. In addition to strengthening the balance sheet, this investment adds two well-capitalized strategic partners as AHIP positions itself to pursue and execute on attractive acquisition opportunities. As disclosed at the end of Q1, the recovery in the U.S. hospitality market is underway.
We continue to see a direct correlation between vaccine distribution and administration and customer demand across the lodging industry. Once again, our Q1 results distinguish AHIP from its public lodging REIT peers in terms of top-line demand metrics and operating margins. As we look ahead, we'll continue to focus our asset management efforts on expense control and margin preservation to ensure that as higher occupancies lead to rate growth, those gains flow directly to our bottom line. Our portfolio remains uniquely positioned to cater to the increased proportion of domestic leisure travel demand, with a suite-focused, select service hotel product and hotels strategically located in drive-to locations outside of large urban centers. Recently, I was very pleased to announce the addition of Travis Beatty to our executive team as Chief Financial Officer.
Travis brings a wealth of experience in the Canadian public REIT space and enhances our collective financial and capital markets expertise. I'm very excited to be having him join our team. I'd like to close today by thanking all of our corporate teams, our hotel manager, and all hotel staff for their efforts in these unique times. I would also like to thank our lending partners and fellow unitholders for their ongoing support, and look forward to growing our relationships in the future as our business recovers and grows in the years ahead. While the pandemic has presented challenges, challenging conditions for all hotel owners, we are pleased overall with how our portfolio performed within this context.
The pace of occupancy and RevPAR recovery underway across our 78 hotels has provided us with renewed confidence that our portfolio will emerge from the pandemic in a position of strength, with increased market share and a more efficient operating model. Let's open up the call to questions from registered unitholders. Operator?
Thank you. We will now begin the question and answer session. Registered unitholders and duly appointed proxy holders who properly pre-registered for this meeting and wish to join the question queue may press star and then one on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star and then two. We will pause for a moment to allow any eligible callers to join the queue. We currently have no callers who are in the queue.
Thank you, operator. That concludes the agenda for the meeting. I thank you for your attendance.
Okay. Thank you, thank you, operator.
Thank you. This concludes the conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.