News for the Hospitality Executive
Hersha Hospitality Trust Acquires Three Newly Opened Hotels
New York City for $165 million / $284,000 per Key
PHILADELPHIA - February 10, 2010 - Hersha Hospitality Trust (NYSE: HT), owner of upscale, mid-scale and extended stay hotels in major metropolitan markets, announced that it has closed on the acquisition of three newly opened hotels in Times Square, New York City.
In addition to the previously announced Hampton Inn and Candlewood Suites, the Company was able to negotiate more favorable terms with the unaffiliated sellers to also acquire the Holiday Inn Express Times Square, on which it had a right of first offer. The total purchase price for the three Times Square properties was $165.0 million, which includes 1,451,613 units of limited partnership interest in the Company’s operating partnership that were issued to the sellers.
“This acquisition furthers that goal, reduces the average age of Hersha’s overall portfolio and increases our New York City room mix. We are confident that New York City will be an early recovery market and outperform most other markets on a relative basis over the next several years.”
Jay H. Shah, Chief Executive Officer commented, “We are excited to add these three newly built hotels to our portfolio of select service hotels in New York City. We were able to acquire the Holiday Inn Express in Times Square for an incremental $55 million, thereby lowering our basis for the three hotels to approximately $284,000 per key, which is below replacement cost and is expected to further increase our initial cash yield on the investment. Additionally, we believe that owning properties in one of the busiest locations in the world will provide meaningful synergies and allow us to optimize our operating margins.”
“Expanding our presence in New York City, which has historically been one of the strongest markets in the country, is one of our long-term strategic objectives,” Mr. Shah continued. “This acquisition furthers that goal, reduces the average age of Hersha’s overall portfolio and increases our New York City room mix. We are confident that New York City will be an early recovery market and outperform most other markets on a relative basis over the next several years.”
The acquisition reduces the average age of the Company’s hotel portfolio and has reduced the average age of the New York City portfolio to approximately two years. The New York Metro region now accounts for 27% of the Company’s hotel rooms.
The total purchase price is approximately 12 times the assets’ estimated 2010 pro-forma cash flow. At stabilization, the Company expects the price to be approximately 9 times the assets’ estimated cash flow.
The 184-room Hampton Inn, 188-room Candlewood Suites and 210-room Holiday Inn Express were recently opened in July 2009, are all unencumbered of debt and are managed by Hersha Hospitality Management, L.P.
About Hersha Hospitality Trust
Hersha Hospitality Trust
|Also See:||Hersha Hospitality Management Adds 1,000-plus Rooms to Portfolio, Outlines Aggressive Growth Plans Via Third-Party Management/Joint Ventures / October 2009|
|Hersha Hospitality Trust Acquires the 45-room Duane Street Hotel in the Tribeca Area of New York City for $24.75 million / January 2008|