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Hersha Hospitality Announces First Quarter Results



  Hersha Hospitality Announces First Quarter Results

                 - Consolidated Hotel RevPAR Improved 12.0% -

              - Consolidated Average Daily Rate Increased 5.8% -

    - Same Store Hotel RevPAR, excluding renovations, increased by 16.0% -

- Same Store Hotel EBITDA Margins, excluding renovations, increased 260 bps -

Business Wire

PHILADELPHIA -- April 30, 2013

Hersha Hospitality Trust (NYSE: HT), owner of upscale hotels in urban gateway
markets, today announced results for the first quarter ended March 31, 2013.

First Quarter 2013 Financial Results

Adjusted Funds from Operations (“AFFO”) in the first quarter increased by $4.3
million to $7.0 million, compared to $2.7 million for the first quarter of
2012. AFFO per diluted common share and unit of limited partnership interest
in Hersha Hospitality Limited Partnership (“OP Unit”) increased 50% to $0.03
compared to $0.02 in same quarter in 2012. The Company’s weighted average
diluted common shares and OP Units outstanding were approximately 208.9
million in the first quarter of 2013, up from approximately 180.5 million in
the comparable quarter of 2012.

Net loss applicable to common shareholders was ($13.1) million for the first
quarter ended March 31, 2013, compared to a net loss of ($10.7) million for
the comparable quarter of 2012.

“As we discussed on our year-end call, our first quarter performance was
tracking above our internal forecasts and that of our competitive set and we
were pleased to see the momentum continue throughout the entire period. We
took advantage of the typical seasonal weakness in our portfolio by completing
the majority of our 2013 renovations. Despite ongoing renovations at 11 of our
properties during the first quarter, our portfolio was still able to generate
12.4% Same Store RevPAR growth and we were pleased with the results from our
aggressive asset management program and active revenue management strategies
during the quarter,” commented Mr. Jay H. Shah, the Company’s Chief Executive
Officer.

Mr. Shah continued, “Hersha’s results led the market and once again validate
that our portfolio of young, well-located urban transient hotels will continue
to capture market share even in seasonally softer periods. With the majority
of our development projects closer to completion, we remain focused on our
targeted acquisition strategy, well-timed value add ROI projects and ongoing
aggressive asset management as a way to continue to create long-lasting value
for our shareholders.”

First Quarter 2013 Operating Results

For the quarter ended March 31, 2013, revenue per available room (“RevPAR”)
for the Company's consolidated hotels, 56 hotels at March 31, 2013 compared to
53 hotels as of March 31, 2012, was up 12.0% to $105.43 compared to $94.16 in
the prior year period. The Company’s average daily rate (ADR) for its
consolidated hotels increased by 5.8% to $151.19, and occupancy for its
consolidated hotels increased by 385 basis points to 69.7%. Hotel EBITDA for
the Company’s consolidated hotels grew approximately 14.6%, or $2.8 million,
to $22.0 million for the quarter ended March 31, 2013 compared to the same
period in 2012. Hotel EBITDA margin was 28.6% in the first quarter of 2013
compared to 29.6% in the same quarter of 2012. The decrease in margin was
driven by the mix of new full service assets to the portfolio and the
disruption from renovations and construction related activity at 11 of the
Company’s hotels. Excluding the hotels under renovation, RevPAR increased
14.4% while Hotel EBITDA margins increased by 180 basis points to 30.2% in the
first quarter of 2013.

On a same-store basis (53 hotels), RevPAR for the Company’s consolidated
hotels for the quarter ended March 31, 2013 was up 12.4% to $105.06 compared
to $93.46 in the prior year period. ADR for the Company’s same-store
consolidated hotels increased by 5.3% to $149.70, while occupancy for its
same-store consolidated hotels increased by 447 basis points to 70.2%.
Excluding the hotels under renovation, same-store RevPAR increased by 16.0%
year over year.

Hotel EBITDA for the Company’s same-store consolidated hotels for the quarter
ended March 31, 2013 increased approximately 15.0% or $3.0 million, to $23.0
million compared to the quarter ended March 31, 2012. Hotel EBITDA margins for
the Company’s same-store consolidated hotels increased by approximately 100
basis points to 31.6% in the first quarter of 2013 compared to 30.5% in the
first quarter of 2012. Excluding the hotels under renovation, same-store Hotel
EBITDA margins increased by 260 basis points to 30.9% in the first quarter of
2013.

The Company’s top performing markets during the quarter based on RevPAR
growth, excluding the New York City and Manhattan markets discussed below,
were the NY-NJ Metro, the Washington D.C. Urban and the California-Arizona
markets with RevPAR growth of 38.1%, 22.6% and 12.8%, respectively.

New York City and Manhattan

The New York City hotel portfolio, which includes the five boroughs, consisted
of 15 hotels as of March 31, 2013. For the first quarter of 2013, the
Company’s same-store New York City hotel portfolio (14 hotels) recorded a
14.1% increase in RevPAR to $146.60 as ADR increased 11.9% to $172.83 and
occupancy increased 162 basis points to 84.8%. Hotel EBITDA margins increased
250 basis points to 32.2%.

The Manhattan hotel portfolio consisted of 12 hotels as of March 31, 2013. For
the first quarter of 2013, the Company’s same-store Manhattan hotel portfolio
(11 hotels) recorded a 7.8% increase in RevPAR to $142.83 as occupancy
decreased 67 basis points to 84.1% but ADR increased 8.7% to $169.92. Hotel
EBITDA margins increased 30 basis points to 30.5%. Excluding the impact of
renovations at two of the Company’s Manhattan hotels during the quarter, the
Company’s same-store Manhattan portfolio recorded a 10.6% increase in RevPAR
and increased Hotel EBITDA margins by 130 basis points.

As a result of hurricane related damage, the Holiday Inn Express - Water
Street, located in Lower Manhattan, remained closed for the entire first
quarter of 2013. This closure negatively impacted Hotel EBITDA by
approximately $250,000 for the quarter. The hotel reopened for business in
April 2013 and is fully operational at this time.

Financing

On March 6, 2013, the Company completed a public offering of a new series of
preferred shares in which it sold 3.0 million 6.875% Series C Cumulative
Redeemable Preferred Shares (“Series C Preferred Shares”) and raised net
proceeds of approximately $72.5 million, after deducting underwriting
discounts and offering-related expenses. The Company utilized the net proceeds
of the offering to redeem all of the outstanding 8.00% Series A Cumulative
Redeemable Preferred Shares (“Series A Preferred Shares”) on March 28, 2013,
and for general corporate purposes. Due to the issuance of the Series C
Preferred Shares prior to the redemption of the Series A Preferred Shares, the
Company had both the Series A Preferred Shares and the Series C Preferred
Shares outstanding for approximately one month. This overlap resulted in
approximately $344,000 of additional preferred share dividends during the
quarter.

As of March 31, 2013, the Company maintained significant financial flexibility
with approximately $83.1 million of cash and cash equivalents and no
borrowings on its $250 million senior unsecured revolving line of credit. The
Company had $150 million drawn on its unsecured term loan facility as of March
31, 2013. As of March 31, 2013, 100% of the Company’s consolidated debt is
fixed rate debt or effectively fixed through interest rate swaps and caps and
has a weighted average interest rate of approximately 5.12%. The weighted
average life to maturity of total consolidated debt is approximately 4.3
years.

Dispositions

In February 2013, the Company sold its 66.7% interest in a 92-room Courtyard
by Marriott located in Warwick, Rhode Island to its joint venture partner in a
transaction valuing the property at $7.15 million.

Subsequent Events

In April 2013, the Company completed its previously announced acquisition of
the brand new 178-room Hyatt Union Square for total consideration of $105.0
million, or approximately $590,000 per key. The hotel had a soft opening on
April 22, 2013 with limited inventory and is expected to fully open for
business on May 15, 2013.

Simultaneous with the closing, the Company paid off the existing construction
financing and entered into a new secured mortgage for $55.0 million. This
interest only non-recourse loan is priced at 30 Day LIBOR plus 4.19% and
matures in April 2016 with a one year extension option.

Outlook for 2013

The Company is tightening its range of operating expectations for 2013. Based
on management’s current outlook, the Company is issuing the following
operating expectations for 2013 as follows:

Metric                           Prior 2013             Adjusted 2013       
                                 Expectation            Expectation
                                                                              
Total consolidated RevPAR        5.5% to 7.5%           6.0% to 7.5%
growth:
Total consolidated Hotel         Improvement of 25      Improvement of 25
EBITDA margins:                  basis points to 50     basis points to 50
                                 basis points           basis points
Same-store consolidated          5.0% to 7.0%           5.5% to 7.0%
RevPAR growth:
Same-store consolidated          Improvement of 25      Improvement of 25
Hotel EBITDA margin              basis points to 75     basis points to 75
improvement:                     basis points           basis points
                                                                              

Dividend

For the first quarter of 2013, the Company paid a dividend of $0.50 per Series
B Preferred Share and a partial quarterly dividend of $0.1862 per Series C
Preferred Share. The regular quarterly dividend payable on the Series C
Preferred Shares is $0.4297 per share.

The Company also paid a dividend of $0.06 per Common Share and per OP unit for
the first quarter ended March 31, 2013.

First Quarter 2013 Conference Call

The Company will host a conference call to discuss its financial results at
9:00 AM Eastern time on Wednesday, May 1, 2013. A live webcast of the
conference call will be available online on the Company’s website at
www.hersha.com. The conference call can be accessed by dialing (888) 466-4462
or (719) 325-2464 for international participants. A replay of the call will be
available from 12:00 p.m. Eastern Time on Wednesday, May 1, 2013, through
midnight Eastern Time on May 15, 2013. The replay can be accessed by dialing
(877) 870-5176 or (858) 384-5517 for international participants. The passcode
for the call and the replay is 3489591. A replay of the webcast will be
available on the Company’s website for a limited time.

About Hersha Hospitality

Hersha Hospitality Trust is a self-advised real estate investment trust, which
owns 64 hotels in major urban gateway markets including New York City,
Washington DC, Boston, Philadelphia, Los Angeles and Miami totaling 9,307
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.

Non-GAAP Financial Measures

An explanation of Funds from Operations (“FFO”), AFFO, Earnings Before
Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA and
Hotel EBITDA, as well as reconciliations of FFO, AFFO, EBITDA and Adjusted
EBITDA to net income or loss, the most directly comparable U.S. GAAP measures,
is included at the end of this release.

Forward Looking Statement

Certain matters within this press release are discussed using forward-looking
language as specified in 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
projected in the forward-looking statement. These forward-looking statements
may include statements related to the Company’s ability to outperform, the
ongoing recovery of the lodging industry and the markets in which the
Company’s hotel properties are located, the Company’s ability to generate
internal and external growth, the completion of acquisitions under contract,
the Company’s ability to identify and complete the acquisition of hotel
properties in new markets, the Company’s ability to enter into contracts for
and complete the disposition of non-core assets, the Company’s ability to
complete the hotel redevelopment projects, the Company’s ability to increase
margins, including Hotel EBITDA margins, and the Company’s operating
expectations for the full 2013 calendar year. For a description of factors
that may cause the Company’s actual results or performance to differ from its
forward-looking statements, please review the information under the heading
“Risk Factors” included in the Company’s Annual Report on Form 10-K for the
year ended December 31, 2012 filed by the Company with the Securities and
Exchange Commission and other documents filed by the Company with the
Securities and Exchange Commission.

                                                         
                                                                              
HERSHA HOSPITALITY TRUST
Balance Sheet (unaudited)
(in thousands, except shares and per share data)
                                                                              
                                       March 31, 2013     December 31, 2012
Assets:
Investment in Hotel Properties,
net of Accumulated Depreciation,
(including consolidation of            $  1,469,719       $   1,466,713
variable interest entity assets
of $86,673 and $86,657)
Investment in Unconsolidated              14,257              16,007
Joint Ventures
Development Loans Receivable              15,282              28,425
Cash and Cash Equivalents                 83,060              69,059
Escrow Deposits                           31,523              26,792
Hotel Accounts Receivable, net
of allowance for doubtful                 11,185              11,538
accounts of $44 and $365
Deferred Financing Costs, net of
Accumulated Amortization of               7,987               8,695
$5,367 and $4,841
Due from Related Parties                  12,064              8,488
Intangible Assets, net of
Accumulated Amortization of               8,334               8,698
$2,783 and $2,413
Deposits on Hotel Acquisitions            40,236              37,750
Other Assets                              25,069              25,514
                                                           
Total Assets                           $  1,718,716       $   1,707,679   
                                                                              
Liabilities and Equity:
Line of Credit                         $  -               $   -
Unsecured Term Loan                       150,000             100,000
Mortgages and Notes Payable,
including net Unamortized
Premium (including consolidation          656,058             692,708
of variable interest entity debt
of $56,864 and $57,256)
Accounts Payable, Accrued                 39,755              33,838
Expenses and Other Liabilities
Dividends and Distributions               15,223              15,621
Payable
Due to Related Parties                    5,088               4,403
                                                           
Total Liabilities                         866,124             846,570     
                                                                              
Redeemable Noncontrolling              $  -               $   15,321
Interests - Common Units
                                                                              
Equity:
Shareholders' Equity:
Preferred Shares: $.01 Par
Value, 29,000,000 shares
Authorized, 7,600,000 Series B
and C Shares Issued and
Outstanding at March 31, 2013             76                  70
and 7,000,000 Series A and B
shares Issued and Outstanding at
December 31, 2012, with
liquidation preferences of $25
per share
Common Shares: Class A, $.01 Par
Value, 300,000,000 Shares
Authorized at March 31, 2013 and
December 31, 2012, 202,553,150            2,026               1,986
and 198,672,356 Shares Issued
and Outstanding at March 31,
2013 and December 31, 2012,
respectively
Common Shares: Class B, $.01 Par
Value, 1,000,000 Shares                   -                   -
Authorized, None Issued and
Outstanding
Accumulated Other Comprehensive           (1,630    )         (1,786     )
Loss
Additional Paid-in Capital                1,194,839           1,178,292
Distributions in Excess of Net            (372,831  )         (348,734   )
Income
Total Shareholders' Equity                822,480             829,828
                                                                              
Noncontrolling Interests:
Noncontrolling Interests -                29,837              15,484
Common Units
Noncontrolling Interests -
Consolidated Variable Interest            275                 476         
Entity
Total Noncontrolling Interests            30,112              15,960
                                                           
Total Equity                              852,592             845,788
                                                           
Total Liabilities and Equity           $  1,718,716       $   1,707,679   

                                                                            
                                                                              
HERSHA HOSPITALITY TRUST
Summary Results (unaudited)
(in thousands, except shares and per share data)
                                     Three Months Ended
                                     March 31, 2013        March 31, 2012
Revenues:
Hotel Operating Revenues             $ 76,790              $ 64,854
Interest Income from                   146                   621
Development Loans
Other Revenue                          34                    62           
Total Revenues                         76,970                65,537       
                                                                              
Operating Expenses:
Hotel Operating Expenses               48,364                40,350
Gain on Insurance Settlements          (403        )         -
Hotel Ground Rent                      228                   194
Real Estate and Personal
Property Taxes and Property            6,666                 5,110
Insurance
General and Administrative             2,608                 3,035
Stock Based Compensation               2,388                 2,133
Acquisition and Terminated             3                     958
Transaction Costs
Depreciation and Amortization          15,096                13,441       
Total Operating Expenses               74,950                65,221       
                                                                              
Operating Income                       2,020                 316
                                                                              
Interest Income                        456                   106
Interest Expense                       10,420                11,482
Other Expense                          205                   236
Loss on Debt Extinguishment            261                   6            
Loss before Loss from
Unconsolidated Joint Ventures          (8,410      )         (11,302     )
Investments, Income Taxes and
Discontinued Operations
                                                                              
Loss from Unconsolidated Joint         (396        )         (730        )
Venture Investments
                                                                              
Loss before Income Taxes               (8,806      )         (12,032     )
                                                                              
Income Tax Benefit                     1,130                 -            
Loss from Continuing                   (7,676      )         (12,032     )
Operations
                                                                              
Discontinued Operations
Gain on Disposition of Hotel           -                     4,502
Properties
Loss from Discontinued                 -                     (384        )
Operations
Income from Discontinued               -                     4,118
Operations
                                                            
Net Loss                               (7,676      )         (7,914      )
                                                                              
Loss Allocated to                      673                   741
Noncontrolling Interests
Preferred Distributions                (3,844      )         (3,500      )
Extinguishment of Issuance
Costs Upon Redemption of               (2,250      )         -            
Series A Preferred Stock
                                                                              
Net Loss Applicable to Common        $ (13,097     )       $ (10,673     )
Shareholders
                                                                              
Earnings per Share:
BASIC
Loss from Continuing
Operations Applicable to             $ (0.07       )       $ (0.09       )
Common Shareholders
Income from Discontinued               0.00                  0.03         
Operations
                                                                              
Net Loss Applicable to Common        $ (0.07       )       $ (0.06       )
Shareholders
                                                                              
DILUTED
Loss from Continuing
Operations Applicable to             $ (0.07       )       $ (0.09       )
Common Shareholders
Income from Discontinued               0.00                  0.03         
Operations
                                                                              
Net Income (Loss) Applicable         $ (0.07       )       $ (0.06       )
to Common Shareholders
                                                                              
Weighted Average Common Shares
Outstanding:
Basic                                  197,029,017           170,427,428
Diluted                                197,029,017           170,427,428
                                                                              

Non-GAAP Measures

FFO and AFFO

The National Association of Real Estate Investment Trusts (“NAREIT”) developed
Funds from Operations (“FFO”) as a non-GAAP financial measure of performance
of an equity REIT in order to recognize that income-producing real estate
historically has not depreciated on the basis determined under GAAP. We
calculate FFO applicable to common shares and Common Units in accordance with
the April 2002 National Policy Bulletin of NAREIT, which we refer to as the
White Paper. The White Paper defines FFO as net income (loss) (computed in
accordance with GAAP) excluding extraordinary items as defined under GAAP and
gains or losses from sales of previously depreciated assets, plus certain
non-cash items, such as loss from impairment of assets and depreciation and
amortization, and after adjustments for unconsolidated partnerships and joint
ventures. Our interpretation of the NAREIT definition is that noncontrolling
interest in net income (loss) should be added back to (deducted from) net
income (loss) as part of reconciling net income (loss) to FFO. Our FFO
computation may not be comparable to FFO reported by other REITs that do not
compute FFO in accordance with the NAREIT definition, or that interpret the
NAREIT definition differently than we do.

The GAAP measure that we believe to be most directly comparable to FFO, net
income (loss) applicable to common shareholders, includes loss from the
impairment of certain depreciable assets, our investment in unconsolidated
joint ventures and land, depreciation and amortization expenses, gains or
losses on property sales, noncontrolling interest and preferred dividends. In
computing FFO, we eliminate these items because, in our view, they are not
indicative of the results from our property operations. We determined that the
loss from the impairment of certain depreciable assets, including investments
in unconsolidated joint ventures and land, was driven by a measurable decrease
in the fair value of certain hotel properties and other assets as determined
by our analysis of those assets in accordance with applicable GAAP. As such,
these impairments have been eliminated from net income (loss) to determine
FFO.

Hersha also presents Adjusted Funds from Operations (AFFO), which reflects FFO
in accordance with the NAREIT definition further adjusted by:

  * adding back write-offs of deferred financing costs on debt extinguishment,
    both for consolidated and unconsolidated properties;
  * adding back amortization of deferred financing costs;
  * making adjustments for the amortization of original issue
    discount/premium;
  * adding back non-cash stock expense;
  * adding back acquisition and terminated transaction expenses;
  * adding back FFO attributed to our partners in consolidated joint ventures;
    and
  * making adjustments to ground lease payments, which are required by GAAP to
    be amortized on a straight-line basis over the term of the lease, to
    reflect the actual lease payment.

FFO and AFFO do not represent cash flows from operating activities in
accordance with GAAP and should not be considered an alternative to net income
as an indication of the Company’s performance or to cash flow as a measure of
liquidity or ability to make distributions. We consider FFO and AFFO to be
meaningful, additional measures of our operating performance because they
exclude the effects of the assumption that the value of real estate assets
diminishes predictably over time, and because they are widely used by industry
analysts as performance measures. We show both FFO from consolidated hotel
operations and FFO from unconsolidated joint ventures because we believe it is
meaningful for the investor to understand the relative contributions from our
consolidated and unconsolidated hotels. The display of both FFO from
consolidated hotels and FFO from unconsolidated joint ventures allows for a
detailed analysis of the operating performance of our hotel portfolio by
management and investors. We present FFO and AFFO applicable to common shares
and Partnership units because our Partnership units are redeemable for common
shares. We believe it is meaningful for the investor to understand FFO and
AFFO applicable to all common shares and Partnership units.

Certain amounts related to depreciation and amortization and depreciation and
amortization from discontinued operations in the prior year FFO reconciliation
have been recast to conform to the current year presentation. In addition,
based on guidance provided by NAREIT, we have eliminated loss from the
impairment of certain depreciable assets, including investments in
unconsolidated joint ventures and land, from net (income) loss to arrive at
FFO in each year presented. The following table reconciles FFO and AFFO for
the periods presented to the most directly comparable GAAP measure, net income
(loss) applicable to common shares, for the same periods:

                                                                            
                                                                              
HERSHA HOSPITALITY TRUST
Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO)
(in thousands, except shares and per share data)
                                                          
                                       Three Months Ended
                                       March 31, 2013      March 31, 2012
                                                                              
Net loss applicable to common          $ (13,097     )     $ (10,673     )
shares
Loss allocated to noncontrolling         (673        )       (741        )
interest
Loss from unconsolidated joint           396                 730
ventures
Gain on disposition of hotel             -                   (4,502      )
properties
Depreciation and amortization            15,096              13,441
Depreciation and amortization            -                   25
from discontinued operations
FFO allocated to noncontrolling
interests in consolidated joint          -                   139          
ventures
Funds from consolidated hotel
operations applicable to common
shares and Partnership units             1,722               (1,581      )

 
                                                                              
Loss from unconsolidated joint           (396        )       (730        )
venture investments
Depreciation and amortization of
purchase price in excess of              154                 320
historical cost
Interest in depreciation and
amortization of unconsolidated           876                 661          
joint ventures
Funds from unconsolidated joint
venture operations applicable to         634                 251
common shares and Partnership
units
                                                            
Funds from Operations applicable
to common shares and Partnership         2,356               (1,330      )
units
                                                                              
Add:
FFO allocated to noncontrolling
interests in consolidated joint          -                   (139        )
ventures
Non-cash extinguishment of
issuance costs upon redemption           2,250               -
of series A preferred stock
Non-cash income tax benefit              (1,130      )       -
Non-cash stock compensation              2,388               2,133
expense
Acquisition and terminated               3                   958
transaction costs
Amortization of deferred                 616                 1,017
financing costs
Amortization of discounts and            (209        )       31
premiums
Deferred financing costs written         261                 6
off in debt extinguishment
Straight-line amortization of            1                   34
ground lease expense
Real estate taxes expense
related to reassessment of prior         434                 -            
period assessment
                                                                              
Adjusted Funds from Operations         $ 6,970             $ 2,710        
                                                                              
AFFO per Diluted Weighted
Average Common Shares and Units        $ 0.03              $ 0.02         
Outstanding
                                                                              
Diluted Weighted Average Common          208,937,350         180,470,880
Shares and Units Outstanding
                                                                              

Adjusted EBITDA

Adjusted Earnings Before Interest, Taxes, and Depreciation and Amortization
(EBITDA) is a non-GAAP financial measure within the meaning of the Securities
and Exchange Commission rules. Our interpretation of Adjusted EBITDA is that
EBITDA derived from our investment in unconsolidated joint ventures should be
added back to net income (loss) as part of reconciling net income (loss) to
Adjusted EBITDA. Our Adjusted EBITDA computation may not be comparable to
EBITDA or Adjusted EBITDA reported by other companies that interpret the
definition of EBITDA differently than we do. Management believes Adjusted
EBITDA to be a meaningful measure of a REIT's performance because it is widely
followed by industry analysts, lenders and investors and that it should be
considered along with, but not as an alternative to, net income, cash flow,
FFO and AFFO, as a measure of the company's operating performance.

                                                                              
                                                                              
HERSHA HOSPITALITY TRUST
Adjusted EBITDA
(in thousands)
                                           Three Months Ended
                                           March 31, 2013     March 31, 2012
                                                                              
Net loss applicable to common              $  (13,097  )      $  (10,673  )
shareholders
Loss from unconsolidated joint                396                730
ventures
Gain on disposition of hotel                  -                  (4,502   )
properties
Loss allocated to noncontrolling              (673     )         (741     )
interest
Non-operating interest income                 (33      )         (106     )
Distributions to Preferred                    3,844              3,500
Shareholders
Interest expense from continuing              10,420             11,482
operations
Interest expense from discontinued            -                  1,012
operations
Extinguishment of issuance costs
upon redemption of series A                   2,250              -
preferred stock
Income tax benefit                            (1,130   )         -
Deferred financing costs written off          261                6
in debt extinguishment
Depreciation and amortization from            15,096             13,441
continuing operations
Depreciation and amortization from            -                  25
discontinued operations
Acquisition and terminated                    3                  958
transaction costs
Non-cash stock compensation expense           2,388              2,133
Straight-line amortization of ground          1                  34
lease expense
Real estate taxes expense related to
reassessment of prior period                  434                -         
assessment
                                                                              
Adjusted EBITDA from consolidated             20,160             17,299    
hotel operations
                                                                              
Loss from unconsolidated joint                (396     )         (730     )
venture investments
Depreciation and amortization of
purchase price in excess of                   154                320
historical cost
Adjustment for interest in interest
expense, depreciation and                     2,140              3,309     
amortization of unconsolidated joint
ventures
                                                                              
Adjusted EBITDA from unconsolidated           1,898              2,899     
joint venture operations
                                                                              
Adjusted EBITDA                            $  22,058          $  20,198    
                                                                              

Hotel EBITDA

Hotel EBITDA is a commonly used measure of performance in the hotel industry
for a specific hotel or group of hotels. We believe Hotel EBITDA provides a
more complete understanding of the operating results of the individual hotel
or group of hotels. We calculate Hotel EBITDA by utilizing the total revenues
generated from hotel operations less all operating expenses, property taxes,
insurance and management fees, which calculation excludes Company expenses not
specific to a hotel, such as corporate overhead. Because Hotel EBITDA is
specific to individual hotels or groups of hotels and not to the Company as a
whole, it is not directly comparable to any GAAP measure and should not be
relied on as a measure of performance for our portfolio of hotels taken as a
whole.

Supplemental Schedules

The Company has published supplemental earnings schedules in order to provide
additional disclosure and financial information for the benefit of the
Company’s stakeholders. These can be found in the Investor Relations section
and the “SEC Filings and Presentations” page of the Company’s web site,
www.hersha.com.

Contact:

Hersha Hospitality Trust
Ashish Parikh, CFO, 215-238-1046
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