Hotel Online  Special Report

 
Molinaro Koger Structures $169 Million Sale of Summerfield
Suites Portfolio to Hersha Hospitality Trust
on behalf of LodgeWorks

 
McLean, Virginia – January 16, 2007 – Molinaro Koger (MK), announced today that the firm successfully marketed and structured the sale of seven extended-stay Hyatt Summerfield Suites hotels to Hersha Hospitality Trust on behalf of LodgeWorks, L.P.  The sale price for   the upscale extended-stay portfolio of 1,005 suites was approximately $169 million. The properties involved are well-located in top-tier, high barrier to entry markets in the Northeast, Mid-Atlantic and West coast.
Following the sale, LodgeWorks will continue to manage the hotels and ensure brand compliance and quality for this portfolio. Hersha Hospitality Trust (AMEX: HT), a real estate investment trust (REIT), which owns interests in 68 nationally franchised, upper-upscale, upscale and midscale limited service and extended-stay hotels, anticipates the investment of an additional $2.5 million for capital improvements following the sale.

“I believe this purchase will be viewed as a bold and smart move by Hersha,” commented Mark Morris, Senior Vice President of MK, who structured the transaction in conjunction with Rob Koger, President of MK. 

“Hyatt has devoted significant marketing resources to create brand recognition for the Summerfield Suites product and is very committed to this segment of the lodging industry. The extended stay segment is recognized as a worthy and stable niche within hospitality, with some of the highest profit margins in the industry. History is going to look back at this portfolio transaction as both a savvy execution of LodgeWorks’ development plans and as a prime strategic acquisition by Hersha essential to their corporate development,” concluded Mr. Morris.

B. Anthony (Tony) Isaac, President of LodgeWorks is pleased with the outcome of MK’s handling of this significant assignment. “The sale of the Hyatt Summerfield portfolio to Hersha was beneficial to all parties involved,” commented Mr. Isaac. “Our private real estate investors were pleased with the pricing that resulted. In turn, we believe Hersha will benefit from assets that are well located and in outstanding physical condition.  The continuity of LodgeWorks as manager of the properties ensures the hotels will continue to perform at the top of their markets without any distractions or disruptions.”

The following Summerfield Suites hotels comprised the transaction:

  • 159-suite property in White Plains, New York, 
  • 128-suite property in Bridgewater, New Jersey, 
  • 140-suite property in Gaithersburg, Maryland and 
  • 144-suite property in Charlotte, North Carolina
  • 164-suite property in Scottsdale, Arizona 
Two hotels in northern California, near San Francisco:
  • 142-suite property in Pleasant Hill/Walnut Creek and 
  • 128-suite property in Pleasanton, California. 
Mr. Jay H. Shah, Chief Executive Officer, of Hersha commented, “We could not pass up this transaction for many reasons, but foremost it is projected to be accretive to our earnings in 2007, as we were able to acquire these assets at favorable cap rates and at prices below replacement cost in these key markets. Extended-stay hotels, which we believe better weather market cycles and offer high absolute RevPAR, will become more than 35% of our portfolio, post closing of the transaction. We are also pleased to be able to begin a relationship with LodgeWorks, our fifth independent management company, the pioneer of the extended-stay segment, and a leading developer and manager in northern California and other key markets. This transaction is very complementary to our existing upscale extended-stay portfolio." 

Mr. Shah added, "Although the hotels had initially been underwritten without the benefits of a top-tier brand, the new relationship with Hyatt is expected to provide substantial rate and occupancy upside to these assets. These properties represent the embodiment of Hyatt's new brand for the upscale extended-stay segment - the extended-stay model combined with urban design and lifestyle elements. Additionally, these assets already attain a premium rate versus Residence Inn and Homewood Suites in their markets. Combined with Hyatt's brand launch, frequent stay program, and enhanced food and beverage offerings, these assets may grow at an even faster rate than their high growth sub-markets." 
During the last 12 months MK has structured more than $3 billion in hotel real estate transactions worldwide, including such significant transactions as the Summerfield Suites portfolio. For further information about this transaction and current hotel property offerings, please contact MK at 703.760.9600 or via www.mkhotels.com.
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About Molinaro Koger
Founded in 1959, Molinaro Koger (MK) is the world’s leading hotel-exclusive real estate brokerage, advisory and capital markets firm. MK provides clients with unparalleled service and commitment. During the past four decades the company has closed more than $15 billion in hotel property sales. Headquartered in Washington, DC, MK’s offices are located in Atlanta, Chicago, Cincinnati, Dallas, Los Angeles, Phoenix, San Francisco, London, Beijing, and Shanghai. 

MK structures the transactions of luxury hotels and resorts, and urban and mid-scale properties throughout the Americas, Europe, and the Far East.  In the last 12 months MK has completed more than $3 billion in hotel transactions.  The firm closes, on average, more than 75 hotel property sales each year.  MK employs 20 hospitality advisor professionals and 40 support staff in administration, marketing, finance, technology and operations.  Each member of the MK team possesses a unique perspective and invaluable insight. Together they have leading-edge expertise in every aspect of the hospitality business.  The tremendous pool of talent among MK’s professionals makes for a powerful, results-driven sales team.  MK can be accessed online at www.mkhotels.com.

About LodgeWorks 
The LodgeWorks L.P. partner team pioneered extended-stay lodging with the development of the Residence Inn® concept (which was later sold to Marriott) and the upscale Summerfield Suites® hotel chain (which was sold to Wyndham International and then Global Hyatt). Currently the company owns and operates Sierra Suites Hotels, an upscale suite brand with locations in Branchburg and Parsippany, New Jersey; San Ramon and Santa Clara, California, and Fishkill, New York. Development plans call for 2007 openings in Dulles Airport-Sterling, Virginia and Seattle-Bellevue, Washington. The company has also launched an upper-upscale boutique collection with 2008 openings in Napa and Long Beach, California, and Savannah-Historic District, Georgia. 

About Hersha Hospitality Trust
Hersha Hospitality Trust is a self-advised real estate investment trust, which owns interests in 68 high quality, upper-upscale, upscale and midscale limited service and extended-stay hotel properties with 8,818 rooms located in high barrier to entry markets primarily from Metro Boston, Massachusetts to Metro Washington, DC with strong, national franchise affiliations. The company focuses on acquisition and joint venture opportunities in primary and secondary markets near major metropolitan markets. 

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Contact:

Sharon Lemon
slemon@mkhotels.com
+1.651.324.8469 


 
Also See: MK Structures Disposition of Three Select Service Hotels in Metro-Birmingham, Alabama / December 2006
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