Hersha Hospitality Trust (NYSE: HT), owner of upscale and select service hotels in major metropolitan markets, announced that it has purchased the remaining 50% interest it did not previously own in the 228-room Holiday Inn Express 29 th Street in New York, NY. Including its initial investment at the commencement of operations in February 2007, the total acquisition price is $87.5 million, or $383,772 per key. Since the Company’s initial acquisition, the asset had been accounted for as an unconsolidated joint venture investment but will now become a consolidated asset for 2012.
“The purchase of the Holiday Inn Express 29 th Street helps accomplish two important strategic objectives for Hersha,” commented Jay H. Shah, Chief Executive Officer. “First, it adds another high quality, well-located hotel to our Manhattan portfolio that further strengthens our presence as the market fundamentals in the midtown region return to prior peak RevPAR levels. Second, with this acquisition we have streamlined our balance sheet and further reduced our exposure to unconsolidated joint ventures. This has been a multi-year process, and I am pleased with the composition of our portfolio as we continue to focus on maximizing the growth opportunity in our wholly-owned hotels.”
The Company’s purchase of the remaining ownership in the joint venture for $10.0 million follows its February 2007 purchase of a 50% ownership stake for $7.5 million. The property has an outstanding first mortgage loan balance of $54.6 million which bears interest at a rate of 6.50% and matures in November 2016, and a $15.0 million mezzanine loan which the Company intends to pay off by the end of the second quarter.
The Holiday Inn Express 29 th Street is ideally located in Midtown South on 29 th Street between 8 th Avenue and 7 th Avenue and complements Hersha’s New York City portfolio. It is just two blocks from Madison Square Garden and Penn Station, one of the largest intercity train stations and major commuter rail hubs in Manhattan. The 12-story, fee-simple property contains 228 rooms, an 80-seat breakfast area, a business center and a fitness center. The total purchase price represents an initial capitalization rate of 8.4% based upon net operating income for the twelve months ended December 2012 and an expected stabilized capitalization rate of 10.5%.About Hersha Hospitality Trust Hersha Hospitality Trust is a self-advised real estate investment trust, which owns 64 hotels in major urban gateway markets including New York, Washington, Boston, Philadelphia, Los Angeles and Miami totaling 9,221 rooms. HT follows a highly selective investment approach and leverages operational advantage through rigorous and sustainable asset management practices. For further information on the Company visit our website at www.hersha.com. Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements related to the expected timing of the transaction described above, 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. For a description of these factors, 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, 2011, filed with the U.S. Securities Exchange Commission.