AHP Allied Hotel Properties Inc

Allied Hotel Properties Inc. (TSX-V: AHP) (the “Company” or “Allied”) is pleased to announce that it has entered into an arrangement agreement (the “Arrangement Agreement”) with Allied Holdings Ltd. (“Allied Holdings”) (a private entity controlled by the current Chairman and Chief Executive Officer of the Company, Peter Y.L. Eng). Pursuant to the Arrangement Agreement the Company will redeem all of the issued and outstanding common shares (“Shares”) in the capital of Allied (other than those Shares currently owned by Allied Holdings) (the “Minority Shares”) by paying $0.28 in cash for each Minority Share (the “Consideration”), pursuant to a plan of arrangement under the Business Corporations Act (British Columbia) (the “Arrangement”). The Consideration represents a 19% premium to the volume weighted average trading price (“VWAP”) of the Shares on the TSX Venture Exchange (“TSX-V”) for the 20 trading days ended October 22, 2021, a 24% premium to the VWAP of the Shares for the 10 days ended October 22, 2021, and a nil premium to the closing price of the Shares on the TSX-V on October 25, 2021, being the date of the Arrangement Agreement and one business day before the date of this news release. Upon the completion of the Arrangement, the Company will become a wholly owned subsidiary of Allied Holdings.

Mr. Eng is the Chairman, Chief Executive Officer and a current director of the Company, in part through Allied Holdings, owns or controls a total of 74,493,254 Shares, representing in aggregate approximately 70.1% of the currently issued and outstanding Shares.

“We are pleased to have entered into a definitive agreement that will result in the privatization of the Company,” said Peter Y.L. Eng, CEO. “The transaction, should it receive all required approvals, provides our Minority Shareholders an attractive valuation and significant premium to the current trading price of the Company’s Shares. After careful consideration, the Special Committee and the Board unanimously concluded that the Agreement is fair to Allied’s shareholders and is in the best interests of the Company.”

Summary of the Arrangement

The Arrangement is structured as a plan of arrangement pursuant to the Business Corporations Act (British Columbia) and will, among other conditions, require the approval of: (i) the Supreme Court of British Columbia, and (ii) the shareholders of the Company at a meeting of securityholders to be held by the Company by (a) at least two-thirds of the votes cast by shareholders at such meeting; and (b) a simple majority of the votes cast by Minority Shareholders at such meeting, excluding any shareholders excluded for the purpose of such vote in accordance with Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”).

The board of directors of Allied (the “Board”), having received legal and financial advice and a unanimous recommendation from a special committee of the Board consisting entirely of independent directors of the Company (the “Special Committee”), has approved the Arrangement (with interested directors abstaining from voting) and recommends that shareholders of the Company vote in favour of the Arrangement. The Special Committee, in conducting its review of the Arrangement, was advised by Evans & Evans, Inc. (“Evans & Evans”) as its financial advisor. In addition, Evans & Evans provided the Special Committee with a formal valuation in accordance with MI 61-101, and a fairness opinion stating that in its opinion, based upon and subject to the assumptions, limitations, and qualifications set forth therein, the Consideration to be received by Minority Shareholders under the Arrangement is fair, from a financial point of view, to the Minority Shareholders.

In connection with the Arrangement, the Company has entered into support and voting agreements (the “Support and Voting Agreements”) with Peter Y.L Eng, Allied Holdings and certain Minority Shareholders (the “Specified Shareholders”) and each director and officer of the Company who owns Shares. Pursuant to the Support and Voting Agreements, the Specified Shareholders and such directors and officers have agreed, subject to the terms and conditions of the Support and Voting Agreements, to vote their Shares in favour of the Arrangement. The Specified Shareholders and such directors and officers of the Company collectively beneficially own or exercise control over 104,627,858 Shares, representing approximately 98.4% of the issued and outstanding Shares and approximately 94.7% of the Minority Shares.

In addition to the aforementioned approvals, completion of the Arrangement is subject to other customary conditions. The Arrangement is expected to close in December 2021.

The Arrangement Agreement provides for customary non-solicitation covenants on the part of the Company and a right in favour of Allied Holdings to match any unsolicited superior proposal.

The full details of the Arrangement will be set out in a management information circular, which will be mailed to shareholders and filed with the Canadian securities regulatory authorities during November 2021. The documents will also be available under Allied’s profile on SEDAR (www.sedar.com).

Advisors

The Company’s legal advisor is Borden Ladner Gervais LLP. The Special Committee’s financial advisor is Evans & Evans, Inc. and its independent legal advisor is Dentons Canada LLP.

About Allied Hotel Properties Inc.

Allied is involved in the ownership, management and development of hotels and real estate in Canada, having a history of real estate development particularly where such development can be undertaken on hotel lands. On January 6, 2020 the Company completed the sale of all or substantially all of the assets of the Company. Interested parties can find further information at www.alliedhotels.com.

On behalf of the Board of Directors:

(signed) Michael F. Chan

Michael F. ChanPresident, Chief Financial Officer, Secretary and Director

For more information please contact:Allied Hotel Properties Inc.Tel: 604-669-5335Fax: 604-682-8131e-mail: mikechan@alliedhotels.com

Neither the TSX Venture Exchange nor its regulation services provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward-Looking Information

This release may contain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities legislation. All information contained herein that is not historical in nature may constitute forward-looking information. Often, but not always, forward-looking statements can be identified by the use of words such as “will” and “expected” or variations of such words and phrases. Forward-looking statements herein include, but are not limited to, statements regarding the anticipated Arrangement, including receipt of any required approvals, and the timing and anticipated benefits thereof and are based on management’s current expectations and assumptions. Those expectations and assumptions are currently considered reasonable by management but are inherently subject to business, market and economic risks, uncertainties, and contingencies which may cause the actual results, performance, or achievements of Allied to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements.

These forward-looking statements are based on management’s current expectations and beliefs but given the uncertainties, assumptions and risks, readers are cautioned not to place undue reliance on such forward-looking statements or information. The Company disclaims any obligation to update, or to publicly announce, any such statements, events or developments except as required by law. Risk factors include, among others: the risk that the Arrangement may not close on a timely basis, the risk that the Arrangement Agreement may be terminated, the risk that all conditions precedent to the Arrangement may not be satisfied, the risk that Allied will incur costs and the risk that the market price for Shares may decline.

For additional information on these risks and uncertainties, see Allied’s most recently filed Annual MD&A (“MD&A”) and interim MD&A (“Interim MD&A”), which are available on SEDAR at www.sedar.com. The risk factors identified in the MD&A and Interim MD&A are not intended to represent a complete list of factors that could affect Allied. Accordingly, readers should not place undue reliance on forward-looking statements. Allied does not assume any obligation to update the forward-looking information contained in this press release, unless required by law.