from LodgeWorks, L.P. for Approximately $169 million
PHILADELPHIA - December 22, 2006 - Hersha Hospitality Trust (AMEX: HT), a real estate investment trust (REIT), which owns interests in 59 nationally franchised, upper-upscale, upscale and midscale limited service and extended-stay hotels, today announced that the Company has signed a definitive agreement to purchase seven extended-stay Hyatt Summerfield Suites hotels with a total of 1,005 suites from LodgeWorks, L.P. for approximately $169 million. The Company anticipates spending an additional approximately $2.5 million for capital improvements. LodgeWorks will continue to manage the hotels and bear any additional costs for brand compliance.
Mr. Jay H. Shah, Chief Executive Officer, 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."
The Hyatt Summerfield Suites transaction includes four hotels in the Company's core Northeast and Mid-Atlantic markets comprising of
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."
The purchase of the seven hotels will be financed with an interest only 10-year first mortgage for $120 million, bearing interest at approximately 5.5% per annum and available cash on hand, including the Company's proceeds from the recently completed sale of its four Atlanta hotels.
The transaction is expected to be closed by the end of the first quarter 2007.
Closing of this acquisition is subject to customary closing conditions, including completion of due diligence, obtaining financing and consent from the franchisor (or other third parties). There can be no assurances that Hersha will be able to close this transaction in the timeframe contemplated, on the proposed terms, or at all.
About Hersha Hospitality
Forward Looking Statement
Hersha Hospitality Trust
|Also See:||LodgeWorks, L.P., Parent Company of the Sierra Suites Hotel Chain, Opens Sixth Property in Fishkill, New York / March 2006|
|Partnership Led by Rolf E. Ruhfus and B. Anthony Isaac Acquire Sierra Suites Hotel Brand and Properties from Wyndham / Mar 2000|