The Company’s acquisition of the hotel is subject to a variety of conditions, including the substantial completion of the hotel by the seller and completion of the construction within the contractual scope, as well as the satisfaction of other customary closing conditions. As a result, there can be no assurance that the Company will complete the acquisition of the 52 nd Street Hotel described above on the schedule or on the terms described above or at all.The Company has posted a presentation of supplemental information about the HGI Midtown East acquisition located at www.hersha.com on the investor relations section under “Presentations.” 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 the anticipated closing of the transaction described in this press release, the completion of construction of the hotel being acquired and the Company’s projected first year and stabilized capitalization rates and hotel EBITDA multiples, 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.
Hersha Hospitality Trust (NYSE: HT) (the “Company”), owner of upscale and select service hotels in major metropolitan markets, announced that the Company has entered into a purchase and sale agreement to acquire the 205 room Hilton Garden Inn in New York City located at 52 nd Street near Third Avenue for total consideration of $74.0 million, or approximately $361,000 per key. The transaction is expected to close shortly after the developer completes the hotel’s construction, anticipated in the fourth quarter of 2013. “We have been able to source another extremely attractive off-market asset to add to our Manhattan portfolio. Not only will it be a high quality, well-located hotel, but we will be acquiring it at a basis that is approximately 25% below the average price per room for recent comparable transactions,” commented Jay H. Shah, Chief Executive Officer. “Appealing to both corporate and leisure travelers, the HGI Midtown East is ideally situated within a 19.8 million square foot office market and is proximate to a number of notable landmarks including the United Nations, Grand Central Station and Rockefeller Center. This asset will be only the second hotel to open in this submarket in the last 15 years speaking volumes of its high barriers to entry.” The Company has provided $17.0 million to the seller as a non-refundable deposit earning a current cash coupon of 10% per annum. At the completion of construction, the Company will assume or extinguish $42 million of first mortgage debt and make an additional cash payment of $15.0 million. While this purchase and sale agreement secures the Company’s right to acquire the completed hotel, the Company is not assuming any construction risk, including the risk of schedule and cost overruns. Upon acquisition, the hotel will be managed by HHM. Based on the Company’s current underwriting assumptions and estimates, the total consideration to be paid for the hotel is expected to represent a first year economic capitalization rate of approximately 7.0% and a hotel EBITDA multiple of 13.2x. The Company estimates, based on its current underwriting assumptions and estimates, that on a stabilized basis the hotel is being purchased at a stabilized capitalization rate of approximately 10.9% and a hotel EBITDA multiple of 8.4x.