Hersha Hospitality Completes New York City Acquisitions and Increases Presence in Manhattan
February 10 2010 - 4:01PM
Business Wire
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.
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, a self-advised real estate investment
trust, owns interests in 76 hotels, totaling 9,838 rooms, primarily
along the Northeast Corridor from Boston to Washington D.C. Hersha
also owns hotels in Northern California and Scottsdale, Arizona.
Hersha focuses on upscale, mid-scale and extended stay hotels in
major metropolitan markets.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, and, as such, may involve known and unknown risks,
uncertainties and other factors that may cause the actual results
or performance to differ from those reflected in the
forward-looking statement. The forward-looking statements in this
press release include statements related to the Company’s initial
cash yield on its investment, synergies related to the properties
that are expected to optimize operating margins and the recovery
and outperformance of the New York City hotel market. For a
description of factors that could cause actual results or
performance to differ from our forward-looking statements, please
review the information under the heading “Risk Factors” included in
Hersha Hospitality Trust’s Annual Report on Form 10-K for the year
ended December 31, 2008, filed with the U.S. Securities Exchange
Commission.
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