The sale of the two suburban Washington, DC hotels represented a blended trailing economic capitalization rate of 7.4% based on the hotels' net operating income for the twelve-month period ended December 31, 2016, and a hotel EBITDA multiple of 12.1x. The sale resulted in net proceeds of $60.1 million, with taxable gains on the sale approximating $20.0 million.Exiting of Mystic Partners Joint-Venture Additionally, Hersha transferred to its former joint-venture partner all of its partnership interests in the Hartford Marriott and the Hartford Hilton for $8.5 million, which represented a 100% recovery of the Company's equity investment in these assets. The Company simultaneously assumed full ownership of the Mystic Marriott Hotel & Spa without any additional cash payment to the joint-venture partner. Mr. Shah continued, "The liquidation of the Mystic Partners joint-venture adds the high-quality Mystic Marriott to our consolidated hotel portfolio, further simplifying our balance sheet and eliminating our exposure to full service assets in Hartford, CT. HHM assumed operational management of the Mystic Marriott at the end of 2015, and combined with our proactive asset management, has driven over a $1.0 million increase in EBITDA in the past 12 months. Moving forward, we expect to implement additional revenue and asset management strategies to drive profitability and further enhance the hotel's value." Hersha Hospitality Trust (HT) is a self-advised real estate investment trust in the hospitality sector, which owns and operates high quality upscale hotels in urban gateway markets. The Company's 51 hotels totaling 7,675 rooms are located in New York, Washington, DC, Boston, Philadelphia, Miami and select markets on the West Coast. The Company's common shares are traded on The New York Stock Exchange under the ticker "HT". Forward Looking Statement 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, including, without limitation, Hersha's ability to close on its planned disposition on the terms and timing it expects, if at all. For a description of these factors, please review the information under the heading "Risk Factors" included in Hersha Hospitality Trust's filings with the U.S. Securities and Exchange Commission Annual Report on Form 10-K for the year ended December 31, 2015.
Hersha Hospitality Trust (NYSE: HT, "Hersha" or the "Company"), owner of upscale hotels in urban gateway markets, announced the Company closed on the sale of the 203-room Courtyard by Marriott in Alexandria, VA, and the 120-room Residence Inn in Greenbelt, MD for $62.0 million. The Company has agreed to a 6-month extension to close on the sale of three suburban West Coast hotels for $130.5 million, a $7.5 million increase from the original purchase price. In addition, the Company has redeemed its interest in its Mystic Partners joint-venture, acquiring all ownership interest of the 285-room Mystic Marriott Hotel & Spa in Mystic, CT, and redeeming the Company's minority ownership interests in the Marriott and Hilton in Hartford, CT. Sale of Suburban Washington, DC Hotels "The successful disposition of two stabilized suburban hotels with an average age of thirteen years reflects the Company's ongoing ability to execute accretive capital recycling, further concentrates our footprint to higher barrier-to-entry urban gateway and destination markets, and focuses our resources on higher quality, higher growth hotels. We expect to redeploy sales proceeds in strategic growth markets to offset taxable gains given our low basis in the hotels that we sold. We are also pleased to have structured a deal that delays the closing of the three suburban West Coast hotels for six months at improved pricing, as it allows us to continue to capture strong operational performance of these hotels while we seek replacement assets that meet the Company's strategic goals," stated Mr. Jay H. Shah, Hersha's Chief Executive Officer. The Company's agreement to delay the closing of the three suburban West Coast hotels includes a $7.5 million increase in the purchase price, valuing the entire 757-room, 5-hotel suburban portfolio at $192.5 million, or $254,000 per key. In addition to the price increase, the Company has secured a $10.0 million non-refundable deposit from the purchaser. The suburban West Coast portfolio sale is anticipated to close in July 2017, and is subject to customary closing conditions, with no assurance that this portfolio will be sold within the expected time frame, or at all.